This compares with $720 million, or $3.09 per diluted share, on net sales of $4.5 billion for the same period last year.

SIGNIFICANT FIRST QUARTER 2008 AFTER-TAX ITEMS

Excluding these items, the company’s net loss was $51 million, or 24 cents per diluted share, in the first quarter of 2008.

SIGNIFICANT FIRST QUARTER 2007 AFTER-TAX ITEMS

Excluding these items, the company earned $48 million, or 20 cents per diluted share, in the first quarter of 2007.

“Business conditions are extremely challenging,” said Daniel S. Fulton, president and chief executive officer. “The number of single-family housing starts is now below the previous lows of 1979-82. Since many of our products are dependent upon single-family housing starts, we’ve experienced record low product prices when adjusted for inflation. In response, we’ve taken out oriented strand board and softwood lumber capacity and we will continue to take action as necessary to balance production to demand.

“At the same time, we continue to focus on our long-term strategic direction. This quarter we announced the sale of our containerboard packaging and recycling assets to International Paper for $6 billion, a value-creating transaction for shareholders.”

Summary of FIRST quarter financial highlights

Weyerhaeuser has reclassified the Containerboard, Packaging and Recycling operations as discontinued operations due to the expected sale of the segment’s assets to International Paper. The segment’s sales are included in net sales from discontinued operations for the first quarters of both 2008 and 2007. Net sales from discontinued operations for the first quarter of 2007 also includes nine weeks of sales from the fine paper and related assets that were divested in the March 2007 transaction with Domtar.

Segment results for FIRST quarter

(Contributions to Pre-Tax Earnings)

1Q 2008Performance – Excluding the fourth quarter items noted below, first quarter contribution to earnings decreased $19 million from the fourth quarter of 2007.

Fourth quarter 2007 included a gain of $27 million on the sale of a Washington log export facility and a charge of $10 million for casualty losses resulting from the severe December wind storms in the West.

Fiber log prices in the South increased slightly, but export and domestic log prices were modestly lower in the West. Earnings from the sales of non-strategic timberlands were lower in the first quarter.

2Q 2008Outlook – Weyerhaeuser expects Timberlands earnings to be slightly lower compared with first quarter. The company expects the continued weakness in the housing market, storm salvage costs in the West, higher diesel fuel costs and seasonally higher silviculture costs to negatively affect the segment’s second quarter earnings.

1Q 2008 Performance – The segment continued to experience difficult market conditions. Excluding the items noted below, the segment’s first quarter net loss was comparable to the fourth quarter loss.

First quarter 2008 included charges of $56 million for facility closures and asset impairments and $18 million for a reserve for oriented strand board litigation.

Fourth quarter 2007 included charges of $98 million for facility closures, asset impairments and restructuring costs.

Average price realizations for lumber, OSB and engineered wood products declined in the first quarter.  Log costs were lower and sales and distribution costs declined.

2Q 2008 Outlook – Weyerhaeuser expects operating losses to be lower than the first quarter due to modestly improving lumber prices and lower raw material costs.

1Q 2008 Performance – Average price realizations for both pulp and liquid packaging board increased. However, this was more than offset by expenses associated with annual scheduled maintenance and higher energy, chemicals and fiber costs. Pulp shipments declined due to the expiration of a brokerage agreement with Domtar at the end of 2007.

2Q 2008 Outlook – Weyerhaeuser expects earnings for the segment to be slightly lower compared with first quarter. Market conditions for the segment are projected to remain favorable. However, maintenance costs are expected to be higher due to an increase in annual scheduled maintenance activities in the pulp mills.

1Q 2008 Performance – Excluding the first and fourth quarter items noted below, first quarter earnings for the segment were $25 million lower than fourth quarter 2007.

First quarter 2008 included charges of $8 million for facility closures and a benefit of $6 million for insurance proceeds received for the fire last year at the Closter, N.J. facility. Fourth quarter results included charges of $6 million for facility closures and legal settlements. In addition, because of the announced sale of the segment’s assets to International Paper, the segment’s operations are presented as discontinued operations and depreciation of its assets ceased upon signing of the agreement on March 15. This resulted in an $11 million reduction in first quarter depreciation expense. 

Average packaging price realizations increased, but packaging shipment volumes were seasonally lower in the first quarter.  Fiber costs increased as prices for both chips and old corrugated containers were higher. Transportation and energy costs increased due to higher fuel prices and seasonally higher energy usage.

2Q 2008 Outlook – Excluding the effect of lower depreciation, Weyerhaeuser expects earnings for the segment to be comparable to the first quarter. Box prices and shipments are expected to be seasonally higher. However, these benefits are expected to be largely offset by higher OCC and energy prices and cost increases associated with scheduled annual maintenance downtime at several containerboard mills.

1Q 2008 Performance– Excluding the first and fourth quarter items noted below, first quarter earnings for the segment decreased $165 million from the fourth quarter.

First quarter 2008 included charges of $33 million for homebuilding asset impairments and $19 million related to investment activities of Weyerhaeuser Realty Investors.

Fourth quarter 2007 included charges of $93 million for the impairment of homebuilding assets and $28 million related to investment activities of WRI.

First quarter gains from land sales decreased $80 million from fourth quarter 2007. Earnings from single-family homebuilding declined due to lower margins and closings during the quarter. Homebuilding operations closed 844 units, a 32 percent decrease from the fourth quarter, reflecting both a seasonal decline and the continued weak housing markets. The backlog of homes sold, but not closed, was approximately four months.

2Q 2008 Outlook – Weyerhaeuser expects the loss from this segment’s single-family homebuilding operations to be comparable to the first quarter.

OTHER FINANCIAL INFORMATION

First quarter 2008 results include a net pension benefit of $39 million compared with a net benefit of $20 million in the fourth quarter of 2007. Beginning first quarter 2008, the company’s net pension benefit is reflected in the Corporate and Other segment. During 2007, a portion of the net pension benefit was included in the contribution to earnings for each of the segments.

During first quarter 2008, the company recognized a pre-tax charge of $17 million for an adjustment related to environmental remediation reserves.  This charge was included in the Corporate and Other segment.

ABOUT Weyerhaeuser

Weyerhaeuser Company, one of the world’s largest forest products companies, was incorporated in 1900. In 2007, sales were $16.3 billion. It has offices or operations in 13 countries, with customers worldwide. Weyerhaeuser is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development and related activities. Additional information about Weyerhaeuser’s businesses, products and practices is available at http://www.weyerhaeuser.com.

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