Weyerhaeuser
WY
#1224
Rank
A$26.70 B
Marketcap
A$37.05
Share price
-0.09%
Change (1 day)
-24.23%
Change (1 year)
Weyerhaeuser Company is an American timberland company. The company also manufactures wood products.

Weyerhaeuser - 10-Q quarterly report FY


Text size:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


For the thirteen weeks ended March 29, 1998 or


TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from_______ to_______


Commission File Number 1-4825

WEYERHAEUSER COMPANY

A Washington Corporation (IRS Employer Identification
No. 91-0470860)

Tacoma, Washington 98477
Telephone (253) 924-2345

Securities registered pursuant to Section 12(b) of the Act:

Name of Each Exchange on
Title of Each Class Which Registered
- --------------------------------- -------------------------
Common Shares ($1.25 par value) Chicago Stock Exchange
New York Stock Exchange
Pacific Stock Exchange




Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes
_X_ No ___.

The number of shares outstanding of the registrant's class of common
stock, as of May 1, 1998 was 198,976,447 common shares ($1.25 par
value).
Weyerhaeuser Company
- -2-
<TABLE>
<CAPTION>
WEYERHAEUSER COMPANY AND SUBSIDIARIES

Index to Form 10-Q Filing
For the Thirteen weeks ended March 29, 1998

Page No.
-----------------
<S> <C>
Part I. Financial Information

Item 1. Financial Statements
Consolidated Statement of Earnings 3
Consolidated Balance Sheet 4-5
Consolidated Statement of Cash Flows 6-7
Notes to Financial Statements 9-16
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 17-21

Part II. Other Information

Item 1. Legal Proceedings 21-22
Item 2. Changes in Securities (not applicable)
Item 3. Defaults upon Senior Securities (not applicable)
Item 4. Submission of Matters to a Vote of
Security Holders (not applicable)
Item 5. Other Information (not applicable)
Item 6. Exhibits and Reports on Form 8-K 22

</TABLE>

The financial information included in this report has been prepared in
conformity with accounting practices and methods reflected in the
financial statements included in the annual report (Form 10-K) filed with
the Securities and Exchange Commission for the year ended December
28, 1997. Though not examined by independent public
accountants, the financial information reflects, in the opinion of
management, all adjustments necessary to present a fair statement of
results for the interim periods indicated. The results of operations for
the thirteen-week period ending March 29, 1998 should not be regarded
as necessarily indicative of the results that may be expected for the full
year.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.

WEYERHAEUSER COMPANY

By /s/ K. J. Stancato
----------------------------
K. J. Stancato
Duly Authorized Officer and
Principal Accounting Officer

May 12, 1998
Weyerhaeuser Company
- -3-

<TABLE>
<CAPTION>

WEYERHAEUSER COMPANY AND SUBSIDIARIES
---------------

CONSOLIDATED EARNINGS
For the periods ended
March 29, 1998 and March 30, 1997
(Dollar amounts in millions except as noted and per share figures)
(Unaudited)
Thirteen weeks ended:
March 29, March 30,
1998 1997
--------- ---------
<S> <C> <C>
Net sales and revenues:
Weyerhaeuser $ 2,338 $ 2,394
Real estate and related assets 265 214
--------- ---------
Total net sales and revenues 2,603 2,608
--------- ---------

Costs and expenses:
Weyerhaeuser:
Costs of products sold 1,814 1,888
Depreciation, amortization and
fee stumpage 148 161
Selling, general and administrative
expenses 164 152
Research and development expenses 14 13
Taxes other than payroll and income taxes 34 37
Charge for closure or disposition of
facilities -- 49
--------- ---------
2,174 2,300
--------- ---------

Real estate and related assets:
Costs and operating expenses 225 153
Depreciation and amortization 1 4
Selling, general and administrative
expenses 13 45
Taxes other than payroll and income taxes 2 2
--------- ---------
241 204
--------- ---------
Total costs and expenses 2,415 2,504

Operating income 188 104

Interest expense and other:
Weyerhaeuser:
Interest expense incurred 67 69
Less interest capitalized 1 4
Other income (expense), net 12 (2)
Real estate and related assets:
Interest expense incurred 21 33
Less interest capitalized 15 18
Other income, net 7 11
--------- ---------
Earnings before income taxes 135 33
Income taxes (Note 4) 50 12
--------- ---------
Net earnings $ 85 $ 21
========= =========

Net earnings per common share (Note 1):
Basic and diluted $ .43 $ .10

Average shares outstanding (thousands) 198,747 198,516
Dilutive effect of stock options 525 524
--------- ---------
Average shares outstanding assuming dilution 199,272 199,040
========= =========

Dividends paid per share $ .40 $ .40

See Accompanying Notes to Financial Statements
</TABLE>
Weyerhaeuser Company
- -4-
<TABLE>
<CAPTION>
WEYERHAEUSER COMPANY AND SUBSIDIARIES
-----------
CONSOLIDATED BALANCE SHEET
March 29, 1998 and December 28, 1997
(Dollar amounts in millions)
March 29, Dec. 28,
1998 1997
--------- --------
(Unaudited)
<S> <C> <C>
Assets
- ------
Weyerhaeuser
Current assets:
Cash and short-term investments (Note 1) $ 30 $ 100
Receivables, less allowances 924 913
Inventories (Note 5) 1,053 983
Prepaid expenses 337 298
--------- --------
Total current assets 2,344 2,294

Property and equipment (Notes 6 and 10) 6,342 6,974
Construction in progress 264 313
Timber and timberlands at cost, less fee
stumpage charged to disposals 999 996
Investments in and advances to equity
affiliates (Notes 3 and 10) 415 249
Other assets and deferred charges 259 245
--------- --------
10,623 11,071
--------- --------
Real estate and related assets
Cash and short-term investments,
including restricted deposits 2 22
Receivables, less discounts and allowances 54 62
Mortgage-related financial instruments, less
discounts and allowances 179 173
Real estate in process of development and for sale 579 593
Land being processed for development 850 845
Investments in and advances to joint ventures
and limited partnerships, less reserves (Note 3) 110 116
Other assets 185 193
--------- --------
1,959 2,004
--------- --------

Total assets $12,582 $13,075
========= ========

</TABLE>

See Accompanying Notes to Financial Statements
Weyerhaeuser Company
- -5-

<TABLE>
<CAPTION>
March 29, Dec. 28,
1998 1997
--------- --------
(Unaudited)
<S> <C> <C>
Liabilities and shareholders' interest
- --------------------------------------
Weyerhaeuser
Current liabilities:
Notes payable $ 14 $ 25
Current maturities of long-term debt 22 17
Accounts payable (Note 1) 673 694
Accrued liabilities (Note 7) 641 648
--------- --------
Total current liabilities 1,350 1,384

Long-term debt (Note 9) 3,486 3,483
Deferred income taxes (Note 10) 1,291 1,418
Deferred pension and other liabilities 496 498
Minority interest in subsidiaries (Note 10) -- 121
Commitments and contingencies (Note 12)
--------- --------
6,623 6,904
--------- --------
Real estate and related assets
Notes payable and commercial paper 271 228
Long-term debt (Note 9) 852 1,032
Other liabilities 216 262
Commitments and contingencies (Note 12)
--------- --------
1,339 1,522
--------- --------
Total liabilities 7,962 8,426
--------- --------

Shareholders' interest (Note 11)
Common shares: authorized 400,000,000 shares,
issued 206,072,890 shares, $1.25 par value 258 258
Other capital 407 407
Retained earnings 4,402 4,397
Cumulative other comprehensive (expense) (Note 2):
Foreign currency translation adjustment (120) (123)
Treasury common shares, at cost:
7,403,404 and 6,586,939 (327) (290)
--------- --------
Total shareholders' interest 4,620 4,649
--------- --------

Total liabilities and shareholders' interest $ 12,582 $13,075
========= ========

</TABLE>
Weyerhaeuser Company
- -6-

<TABLE>
<CAPTION>
WEYERHAEUSER COMPANY AND SUBSIDIARIES
---------------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the thirteen week periods ended March 29, 1998 and March 30, 1997
(Dollar amounts in millions)
(Unaudited)
Consolidated
--------------------
March 29, March 30,
1998 1997
--------- ---------
<S> <C> <C>
Cash provided by (used for) operations:
Net earnings $ 85 $ 21
Non-cash charges to income:
Depreciation, amortization and fee stumpage 149 165
Deferred income taxes, net 28 7
Charge for closure or disposition of facilities -- 49
Decrease (increase) in working capital:
Accounts receivable (47) (48)
Inventories, real estate and land (84) (133)
Prepaid expenses (39) (14)
Mortgage notes held for sale and mortgage loans
receivable (16) (60)
Accounts payable and accrued liabilities (53) (73)
(Gain) loss on disposition of assets (8) 11
Loss on disposition of a business -- 8
Other (20) (7)
--------- ---------
Net cash provided by (used for) operations (5) (74)
--------- ---------

Cash provided by (used for) investing activities:
Property and equipment (73) (109)
Timber and timberlands (12) (20)
Investments in and advances to equity affiliates 19 21
Proceeds from sale of:
Property and equipment 19 3
Businesses -- 12
Mortgage and investment securities 18 6
Restructuring the ownership of a subsidiary (Note 10) 218 --
Intercompany advances -- --
Other -- 2
--------- ---------
Net cash provided by (used for) investing activities 189 (85)
--------- ---------

Cash provided by (used for) financing activities:
Issuances of debt 7 8
Sale of industrial revenue bonds 48 --
Notes and commercial paper borrowings, net 54 296
Cash dividends (80) (80)
Payments on debt (255) (57)
Purchase of treasury common shares (42) --
Exercise of stock options 5 9
Other (11) (1)
--------- ---------
Net cash provided by (used for) financing activities (274) 175
--------- ---------

Net increase (decrease) in cash and short-term
investments (90) 16
Cash and short-term investments at beginning of year 122 71
--------- ---------
Cash and short-term investments at end of period $ 32 $ 87
========= =========

Cash paid (received) during the period for:
Interest, net of amount capitalized $ 112 $ 120
========= =========
Income taxes $ 38 $ 6
========= =========

See Accompanying Notes to Financial Statements
</TABLE>
Weyerhaeuser Company
- -7-

<TABLE>
<CAPTION>


Real Estate and
Weyerhaeuser Related Assets
- -------------------- --------------------
March 29, March 30, March 29, March 30,
1998 1997 1998 1997
- --------- --------- --------- ---------
<C> <C> <C> <C>
$ 69 $ 17 $ 16 $ 4

148 161 1 4
24 -- 4 7
-- 49 -- --

(42) (54) (5) 6
(101) (80) 17 (53)
(39) (14) -- --

-- -- (16) (60)
(5) (72) (48) (1)
-- 11 (8) --
-- 8 -- --
(18) (28) (2) 21
- --------- --------- --------- ---------
36 (2) (41) (72)
- --------- --------- --------- ---------


(72) (108) (1) (1)
(12) (20) -- --
8 -- 11 21

4 3 15 --
-- 12 -- --
-- -- 18 6
218 -- -- --
(121) 6 121 (6)
-- 3 -- (1)
- --------- --------- --------- ---------
25 (104) 164 19
- --------- --------- --------- ---------


3 2 4 6
48 -- -- --
18 208 36 88
(80) (80) -- --
(72) (27) (183) (30)
(42) -- -- --
5 9 -- --
(11) (1) -- --
- --------- --------- --------- ---------
(131) 111 (143) 64
- --------- --------- --------- ---------


(70) 5 (20) 11
100 33 22 38
- --------- --------- --------- ---------
$ 30 $ 38 $ 2 $ 49
========= ========= ========= =========


$ 106 $ 104 $ 6 $ 16
========= ========= ========= =========
$ (1) $ 44 $ 39 $ (38)
========= ========= ========= =========

</TABLE>
Weyerhaeuser Company
- -8-

This page intentionally left blank.
Weyerhaeuser Company
- -9-

WEYERHAEUSER COMPANY AND SUBSIDIARIES
--------------------

NOTES TO FINANCIAL STATEMENTS
For the thirteen week periods ended March 29, 1998 and March 30, 1997


Note 1: Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of Weyerhaeuser
Company and all of its majority-owned domestic and foreign subsidiaries.
Investments in and advances to equity affiliates which are not majority
owned or controlled are accounted for using the equity method with taxes
provided on undistributed earnings. Significant intercompany transactions
and accounts are eliminated.

Certain of the consolidated financial statements and notes to financial
statements are presented in two groupings: (1) Weyerhaeuser (the company),
principally engaged in the growing and harvesting of timber and the
manufacture, distribution and sale of forest products, and (2) Real estate
and related assets, principally engaged in real estate development and
construction and other real estate related activities.

Nature of Operations

The company's principal business segments, which account for the majority
of sales, earnings and the asset base, are:

. Timberlands and wood products, which is engaged in the management of
5.1 million acres of company-owned and .2 million acres of leased
forestland in the United States and 23.7 million acres of forestland in
Canada under long-term licensing arrangements and the production of a
full line of solid wood products that are sold primarily through the
company's own sales organizations to wholesalers, retailers and
industrial users in North America, the Pacific Rim and Europe.

. Pulp, paper and packaging, which manufactures and sells pulp, paper,
paperboard and containerboard in North American, Pacific Rim and
European markets, and packaging products for the domestic markets, and
which operates an extensive wastepaper recycling system that serves
company mills and worldwide markets.

Accounting Pronouncements Implemented

In the first quarter, the company has implemented Statement of Financial
Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income, that
establishes standards for reporting and display of comprehensive income and
its components in a full set of financial statements. Comprehensive income
describes the total of all components of comprehensive income, including
net income. Other comprehensive income refers to revenues, expenses, gains
and losses that under generally accepted accounting principles are included
in comprehensive income, but excluded from net income. See Note 2.

Prospective Accounting Pronouncements

The Financial Accounting Standards Board (FASB) has issued the following
pronouncements:

. SFAS No. 131, Disclosure about Segments of an Enterprise and Related
Information, that will require companies to determine segments based on
how management makes decisions about allocating resources to segments
and measuring their performance. Disclosures for each segment are
similar to those required under current standards, with the addition of
certain quarterly requirements. This statement will also require
entity-wide disclosure about products and services, the countries in
which the company holds material assets and reports material revenues,
and its significant customers. This statement is effective for fiscal
years beginning after December 15, 1997, with reclassification of prior
periods' comparative financial statements required; however, no interim
reporting is required in the initial year. Management is evaluating
the effect of this statement on reported segment information.
Weyerhaeuser Company
- -10-

. SFAS No. 132, Employers' Disclosures about Pensions and Other
Postretirement Benefits, an amendment of FASB Statements No. 87, 88 and
106, which revises employers' disclosures about pensions and other
postretirement benefit plans. It does not change the measurement or
recognition of those plans. It standardizes the disclosure
requirements for pensions and other postretirement benefits to the
extent practicable, requires additional information on changes in
benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain disclosures that are no
longer as useful as they were when the original pronouncements were
issued. This statement is effective for fiscal years beginning after
December 15, 1997.

The American Institute of Certified Public Accountants (AICPA) Accounting
Standards Executive Committee has issued the following Statements of
Position (SOP):

. SOP 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use, which provides guidelines on the accounting
for internally developed computer software. This SOP is effective for
fiscal years beginning after December 15, 1998. The company believes
that the future adoption of this SOP will not have a significant impact
on its results of operations or financial position.

. SOP 98-5, Reporting on the Costs of Start-up Activities, which requires
that the costs of start-up activities be expensed as incurred. This
SOP must be adopted in fiscal years beginning after December 15, 1998.
When this SOP is adopted, the company must record a cumulative effect
of a change in accounting principle to write off any unamortized start-
up costs that remain on the balance sheet at the date the new SOP is
adopted. The company believes that the future adoption of this SOP
will have a significant impact on its results of operations in the
period in which it is implemented; however, it cannot quantify the
impact at this time.

Net Earnings Per Common Share

Basic net earnings per common share are based on the weighted average
number of common shares outstanding during the period. Diluted net
earnings per common share are based on the weighted average number of
common shares outstanding and stock options outstanding at the beginning of
or granted during the period.

Options to purchase 1,371,080 shares at $51.09 per share and 150,000 shares
at $53.06 per share were outstanding during the thirteen weeks ending March
29, 1998. Options to purchase 1,159,150 shares at $48.13 per share were
outstanding during the thirteen weeks ending March 30, 1997. These options
were not included in the computation of diluted earnings per share for the
respective periods because the option exercise prices were greater than the
average market prices of common shares during those periods.

Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

Derivatives

The company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to
manage well-defined interest rate and foreign exchange risks. These include:

. Foreign exchange contracts, which are hedges for foreign denominated
accounts receivable, accounts payable and short-term debt, that have
gains or losses recognized at settlement date.

. Interest rate swaps entered into with major banks or financial
institutions in which the company pays a fixed rate and receives a
floating rate with the interest payments being calculated on a notional
amount. The premiums received by the company on the sale of these
swaps are treated as deferred income and amortized against interest
expense over the term of the agreements.

The company is exposed to credit-related gains or losses in the event of
nonperformance by counterparties to financial instruments but does
not expect any counterparties to fail to meet their obligations. The
company deals only with highly rated counterparties.
Weyerhaeuser Company
- -11-

The notional amounts of these derivative financial instruments are $369
million and $492 million at March 29, 1998, and December 28, 1997,
respectively. These notional amounts do not represent amounts exchanged by
the parties and, thus, are not a measure of exposure to the company through
its use of derivatives. The exposure in a derivative contract is the net
difference between what each party is required to pay based on the
contractual terms against the notional amount of the contract, such as
interest rates or exchange rates. The use of derivatives does not have a
significant effect on the company's results of operations or its financial
position.

Cash and Short-Term Investments

For purposes of cash flow and fair value reporting, short-term investments
with original maturities of 90 days or less are considered as cash
equivalents. Short-term investments are stated at cost, which approximates
market.

Inventories

Inventories are stated at the lower of cost or market. Cost includes
labor, materials and production overhead. The last-in, first-out (LIFO)
method is used to cost the majority of domestic raw materials, in process
and finished goods inventories. LIFO inventories were $292 million and
$250 million at March 29, 1998, and December 28, 1997, respectively. The
balance of domestic raw material and product inventories, all materials and
supplies inventories, and all foreign inventories is costed at either the
first-in, first-out (FIFO) or moving average cost methods. Had the FIFO
method been used to cost all inventories, the amounts at which product
inventories are stated would have been $233 million and $234 million
greater at March 29, 1998, and December 28, 1997, respectively.

Property and Equipment

The company's property accounts are maintained on an individual asset
basis. Betterments and replacements of major units are capitalized.
Maintenance, repairs and minor replacements are expensed. Depreciation is
provided generally on the straight-line or unit-of-production method at
rates based on estimated service lives. Amortization of logging railroads
and truck roads is provided generally as timber is harvested and is based
upon rates determined with reference to the volume of timber estimated to
be removed over such facilities.

The cost and related depreciation of property sold or retired is removed
from the property and allowance for depreciation accounts and the gain or
loss is included in earnings.

Timber and Timberlands

Timber and timberlands are carried at cost less fee stumpage charged to
disposals. Fee stumpage is the cost of standing timber and is charged to
fee timber disposals as fee timber is harvested, lost as the result of
casualty or sold. Depletion rates used to relieve timber inventory are
determined with reference to the net carrying value of timber and the
related volume of timber estimated to be available over the growth cycle.
Timber carrying costs are expensed as incurred. The cost of timber
harvested is included in the carrying values of raw material and product
inventories, and in the costs of products sold as these inventories are
disposed of.

Accounts Payable

The company's banking system provides for the daily replenishment of major
bank accounts as checks are presented. Accordingly, there were negative
book cash balances of $127 million and $185 million at March 29, 1998, and
December 28, 1997, respectively. Such balances result from outstanding
checks that had not yet been paid by the bank and are reflected in accounts
payable in the consolidated balance sheets.

Income Taxes

Deferred income taxes are provided to reflect temporary differences between
the financial and tax bases of assets and liabilities using presently
enacted tax rates and laws.
Weyerhaeuser Company
- -12-

Pension Plans

The company has pension plans covering most of its employees. The U.S.
plan covering salaried employees provides pension benefits based on the
employee's highest monthly earnings for five consecutive years during the
final ten years before retirement. Plans covering hourly employees
generally provide benefits of stated amounts for each year of service.
Contributions to U.S. plans are based on funding standards established by
the Employee Retirement Income Security Act of 1974 (ERISA).

Postretirement Benefits Other Than Pensions

In addition to providing pension benefits, the company provides certain
health care and life insurance benefits for some retired employees and
accrues the expected future cost of these benefits for its current eligible
retirees and some employees. All of the company's salaried employees and
some hourly employees may become eligible for these benefits when they
retire.

Reclassifications

Certain reclassifications have been made to conform prior years' data to
the current format.

Real Estate and Related Assets

With the sale of the mortgage banking business in 1997, the financial
services segment is no longer material to the results of the company.
Therefore, the remaining activities in financial services that are
principally real estate related have been combined with real estate into
one segment entitled real estate and related assets.

Real estate held for sale is stated at the lower of cost or fair value. The
determination of fair value is based on appraisals and market pricing of
comparable assets, when available, or the discounted value of estimated
future cash flows from these assets. Real estate held for development is
stated at cost to the extent it does not exceed the estimated undiscounted
future net cash flows, in which case, it is carried at fair value.

Mortgage-backed certificates are carried at par value, adjusted for any
unamortized discount or premium. These certificates and other financial
instruments are pledged as collateral for the collateralized mortgage
obligation (CMO) bonds and are held by banks as trustees. Principal and
interest collections are used to meet the interest payments and reduce the
outstanding principal balance of the bonds. Related CMO bonds are the
obligation of the issuer, and neither the company nor any affiliated company
has guaranteed or is otherwise obligated with respect to the bonds.

Note 2: Comprehensive Income

The company's comprehensive income is as follows:

<TABLE>
<CAPTION>

Thirteen weeks ended
--------------------
March 29, March 30,
Dollar amounts in millions 1998 1997
--------- ---------
<S> <C> <C>
Net income $ 85 $ 21
Other comprehensive income (expense),
net of income taxes of $(2) and $5:
Foreign currency translation 3 (8)
--------- ---------
Comprehensive income $ 88 $ 13
========= =========
</TABLE>
Weyerhaeuser Company
- -13-

Note 3: Equity Affiliates

Weyerhaeuser

The company's investments in affiliated companies that are not majority
owned or controlled are accounted for using the equity method with taxes
provided on undistributed earnings. Investments carried at equity and the
percentage interest owned consist of Cedar River Paper Company (50%), SCA
Weyerhaeuser Packaging Holding Company Asia Limited (50%), RII Weyerhaeuser
World Timberfund, L. P. (50%), Nelson Forests Joint Venture (51%) and North
Pacific Paper Corporation (50%).

Unconsolidated financial information for affiliated companies which are
accounted for by the equity method is as follows:

<TABLE>
<CAPTION>
March 29, Dec. 28,
Dollar amounts in millions 1998 1997
--------- --------
<S> <C> <C>
Current assets $ 154 $ 94
Non-current assets 1,328 678
Current liabilities 68 56
Non-current liabilities 764 420
</TABLE>

<TABLE>
<CAPTION>
Thirteen weeks ended
--------------------
March 29, March 30,
1998 1997
--------- ---------
<S> <C> <C>
Net sales and revenues $ 173 $ 49
Operating income 28 5
Net income (loss) 14 (2)

</TABLE>

The company provides goods and services to these affiliates, which vary by
entity, in the form of raw materials, management and marketing fees,
support services, shipping services and payroll. Additionally, the company
purchases finished product from certain of these entities. The aggregate
total of these transactions is not material to the results of operations of
the company.

Real Estate and Related Assets

Investments in and advances to joint ventures and limited partnerships that
are not majority owned or controlled are accounted for using the equity
method with taxes provided on undistributed earnings.

Unconsolidated financial information for joint ventures and limited
partnerships which are accounted for by the equity method is as follows:

<TABLE>
<CAPTION>
March 29, Dec. 28,
Dollar amounts in millions 1998 1997
--------- --------
<S> <C> <C>
Current assets $ 1,720 $ 1,689
Non-current assets 285 284
Current liabilities 1,331 1,306
Non-current liabilities 137 145
</TABLE>

<TABLE>
<CAPTION>
Thirteen weeks ended
--------------------
March 29, March 30,
1998 1997
--------- ---------
<S> <C> <C>
Net sales and revenues $ 57 $ 47
Operating income 34 22
Net income 27 16

</TABLE>
Weyerhaeuser Company
- -14-


The company may charge management and/or development fees to the joint
ventures or limited partnerships. The aggregate total of these
transactions is not material to the results of operations of the company.

Note 4: Income Taxes

Provisions for income taxes include the following:
<TABLE>
<CAPTION>
Thirteen weeks ended
--------------------
March 29, March 30,
Dollar amounts in millions 1998 1997
--------- ---------
<S> <C> <C>
Federal:
Current $ 16 $ 3
Deferred 26 6
--------- ---------
42 9
--------- ---------
State:
Current 3 --
Deferred 1 1
--------- ---------
4 1
--------- ---------
Foreign:
Current 3 2
Deferred 1 --
--------- ---------
4 2
--------- ---------

Total $ 50 $ 12
========= =========
</TABLE>

Income tax provisions for interim periods are based on the current best
estimate of the effective tax rate expected to be applicable for the full
year. The effective tax rate reflects anticipated tax credits, foreign
taxes and other tax planning alternatives.

For the periods ended March 29, 1998, and March 30, 1997, the company's
provision for income taxes as a percent of earnings before income taxes is
greater than the 35 percent federal statutory rate due principally to the
effect of state income taxes. The effective tax rate for the thirteen-week
periods ended March 29, 1998, and March 30, 1997, was 37%.

Deferred taxes are provided for the temporary differences between the
financial and tax bases of assets and liabilities, applying presently
enacted tax rates and laws. The major sources of these temporary
differences include depreciable and depletable assets, real estate, and
pension and retiree health care liabilities.

Note 5: Inventories

<TABLE>
<CAPTION>
March 29, Dec. 28,
Dollar amounts in millions 1998 1997
--------- --------
<S> <C> <C>
Logs and chips $ 136 $ 103
Lumber, plywood and panels 191 154
Pulp, newsprint and paper 177 185
Containerboard, paperboard and packaging 127 107
Other products 154 152
Materials and supplies 268 282
--------- --------
$ 1,053 $ 983
========= ========
</TABLE>
Weyerhaeuser Company
- -15-

Note 6: Property and Equipment

<TABLE>
<CAPTION>

March 29, Dec. 28,
Dollar amounts in millions 1998 1997
--------- --------
<S> <C> <C>
Property and equipment, at cost:
Land $ 158 $ 158
Buildings and improvements 1,620 1,721
Machinery and equipment 9,291 9,954
Rail and truck roads and other 595 599
--------- --------
11,664 12,432

Less allowance for depreciation
and amortization 5,322 5,458
--------- --------
$ 6,342 $ 6,974
========= ========
</TABLE>

Note 7: Accrued Liabilities

<TABLE>
<CAPTION>
March 29, Dec. 28,
Dollar amounts in millions 1998 1997
--------- --------
<S> <C> <C>
Payroll - wages and salaries, incentive awards,
retirement and vacation pay $ 248 $ 268
Taxes - social security and real and personal property 60 53
Interest 51 91
Income taxes 61 42
Other 221 194
--------- --------
$ 641 $ 648
========= ========
</TABLE>

Note 8: Short-Term Debt

Lines of Credit

The company has short-term bank credit lines that provide for borrowings of
up to the total amount of $425 million, all of which could be availed of by
the company and Weyerhaeuser Real Estate Company (WRECO) at March 29, 1998,
and December 28, 1997. No portion of these lines has been availed of by
the company or WRECO at March 29, 1998, or December 28, 1997. Neither of
the entities referred to herein is a guarantor of the borrowings of the
other.

Note 9: Long-Term Debt

Lines of Credit

The company's lines of credit include a five-year revolving credit facility
agreement entered into in 1997 with a group of banks that provides for
borrowings of up to the total amount of $400 million, all of which is
available to the company. Borrowings are at LIBOR plus a spread or other
such interest rates mutually agreed to between the borrower and lending
banks.

Weyerhaeuser Financial Services, Inc. (WFS), a wholly owned subsidiary, has
a revolving/term credit facility agreement that provides for: (1)
borrowings of up to $75 million at March 29, 1998, and December 28, 1997 at
LIBOR or other such rates as may be agreed upon by WFS and the banks; and
(2) a commitment fee on the unused portion of the credit facility. $75
million was outstanding under this facility at March 29, 1998, and December
28, 1997.

To the extent that these credit commitments expire more than one year after
the balance sheet date and are unused, an equal amount of commercial paper
is classifiable as long-term debt. Weyerhaeuser reclassified $263 million
and $194 million as of March 29, 1998, and December 28, 1997, respectively.

No portion of these lines has been availed of by the company, WRECO or WFS
at March 29, 1998, and December 28, 1997, except as noted.

The company's compensating balance agreements were not significant.
Weyerhaeuser Company
- -16-

Note 10: Restructuring the Ownership of a Subsidiary

During the quarter, the company and Nippon Paper Industries Co., Ltd. (NPI)
completed the restructuring of their North Pacific Paper Corporation
(NORPAC) joint venture. Through this restructuring, the ownership of
NORPAC changed from 80 percent company ownership and 20 percent NPI
ownership to 50 percent for each shareholder. This transaction changed the
reporting status of NORPAC from a fully consolidated subsidiary, with
minority elimination, to a joint venture accounted for on the equity method
of accounting. The change in accounting for this venture resulted in the
following significant non-cash changes in the company's consolidated balance
sheet: decreases of $621 million in property and equipment, $151 million in
deferred taxes, and $121 million in minority interest in subsidiaries; and
an increase of $168 million in investments in and advances to equity
affiliates. The company received net funds of $218 million and recognized
a gain of $5 million on this transaction.

Note 11: Shareholders' Interest

Common shares reserved for stock option plans were 7,054,000 shares at
March 29, 1998, and 5,848,000 shares at December 28, 1997.

Note 12: Commitments and Contingencies

The company's capital expenditures, excluding acquisitions, were $656
million in 1997, and are expected to be approximately $750 million in 1998;
however, that expenditure level could be increased or decreased as a
consequence of future economic conditions.

The company is a party to legal proceedings and environmental matters
generally incidental to its business. Although the final outcome of any
legal proceeding or environmental matter is subject to a great many
variables and cannot be predicted with any degree of certainty, the company
presently believes that the ultimate outcome resulting from these
proceedings and matters would not have a material effect on the company's
current financial position, liquidity or results of operations; however, in
any given future reporting period, such proceedings or matters could have a
material effect on results of operations.
Weyerhaeuser Company
- -17-

WEYERHAEUSER COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations

Results of Operations

Net sales and revenues and earnings before interest expense and income
taxes by segment are:

<TABLE>
<CAPTION>
Thirteen weeks ended
--------------------
March 29, March 30,
Dollar amounts in millions 1998 1997
--------- ---------
<S> <C> <C>
Net sales and revenues:
Timberlands and wood products $ 1,181 $ 1,251
Pulp, paper and packaging 1,120 1,106
Real estate and related assets 265 214
Corporate and other 37 37
--------- ---------
$ 2,603 $ 2,608
========= =========

Earnings before interest expense and
income taxes:
Timberlands and wood products $ 173 $ 171
Pulp, paper and packaging(1) 52 (43)
Real estate and related assets(2) 25 6
Corporate and other(3) (49) (36)
--------- ---------
$ 201 $ 98
========= =========

(1) 1997 results include a special charge of $49 million for the
consolidation, closure or disposition of certain recycling facilities
and the permanent closure of the Longview, Washington corrugated
medium machine.
(2) Includes net interest expense of $6 million and $15 million related
to the financial services businesses.
(3) 1997 results include income of $10 million from the net effect of
interest income from a favorable federal income tax decision and the loss
incurred in the sale of Shemin Nurseries.
</TABLE>

Consolidated Results

Consolidated net earnings for the first quarter were $85 million, or 43
cents basic and diluted earnings per common share, compared with 1997 first
quarter earnings of $21 million, or 10 cents basic and diluted earnings per
common share. The 1997 results include net special items of $25 million,
or 12 cents per common share, which were the result of: losses from
restructuring in the recycling business; closing the Longview, WA
corrugated medium machine; sale of Shemin Nurseries; and receipt of
interest income related to a favorable federal income tax decision.

Consolidated net sales and revenues for the quarter were $2.6 billion,
unchanged from the same quarter last year. Increased U.S. domestic sales
offset weak export demand and lower pricing in the pulp, paper and
packaging segment.

Timberlands and Wood Products

Operating earnings for the first quarter were $173 million, which is up
slightly from the $171 million reported for first quarter 1997 and an
increase of 14% over 1997 fourth quarter earnings of $152 million. A
combination of increased domestic product prices and higher-margin
product mix offset the weak demand in the export market.

Net sales were $1.2 billion for the quarter, slightly lower than 1997 first
quarter sales of $1.3 billion, but virtually unchanged from 1997 fourth
quarter sales. Increased pricing for domestic logs, oriented strand board
and hardwood doors, plus sales of higher-grade logs into Asia offset lower
export prices in most product lines.
Weyerhaeuser Company
- -18-

Third party sales and total production volumes for the major products in
this segment for the thirteen weeks ended March 29, 1998, and March
30, 1997, are as follows:
<TABLE>
<CAPTION>
Third Party Sales Total Production
-------------------- -------------------
Thirteen weeks Thirteen weeks
ended ended
-------------------- -------------------
March 29, March 30, March 29, March 30,
Products (in millions) 1998 1997 1998 1997
- -------------------------------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Raw materials-cubic feet 138 146 -- --
Logs-cubic feet -- -- 126 275
Softwood lumber-board feet 1,131 1,136 987 993
Softwood plywood and
veneer-square feet (3/8") 436 489 237 279
Composite panels-
square feet (3/4") 145 143 127 123
Oriented strand board-square
feet (3/8") 640 562 533 486
Hardwood lumber-board feet 86 90 87 85
Engineered wood products-
lineal feet 32 27 -- --
Hardwood doors (thousands) 188 168 209 182

</TABLE>

Pulp, Paper and Packaging

First quarter operating earnings of $52 million compare favorably to 1997
first quarter earnings of $6 million before special items, due to improved
performances by the paper, containerboard packaging and newsprint
businesses. Although earnings are improved from last year, they are down
compared to the previous quarter. Lower pricing, particularly in the pulp
business, plus higher raw material costs, were the major factors in the
quarter-to-quarter decrease. Segment results are also impacted by the
ownership restructure of the North Pacific Paper Corporation (NORPAC)
newsprint facility from a fully consolidated subsidiary to an equity
affiliate in February 1998. Both operating earnings and sales reflect one
month's operation.

Net sales for the quarter were $1.1 billion, which are comparable to 1997
first quarter sales, but down slightly from 1997 fourth quarter sales of
$1.2 billion. The decrease in pulp prices and the impact of the NORPAC
restructure were somewhat offset by higher prices for containers.

Third party sales and total production volumes for the major products in this
segment for the thirteen weeks ended March 29, 1998, and March 30,
1997, are as follows:
<TABLE>
<CAPTION>
Third Party Sales Total Production
-------------------- -------------------
Thirteen weeks Thirteen weeks
ended ended
-------------------- -------------------
March 29, March 30, March 29, March 30,
Products (in thousands) 1998 1997 1998 1997
- -------------------------------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Pulp-air-dry metric tons 520 454 495 520
Paper-tons 266 304 289 284
Containerboard-tons 81 99 612 602
Packaging-MSF 10,927 10,953 11,531 11,465
Newsprint-metric tons 62 160 69 173
Paperboard-tons 59 59 64 49
Recycling-tons 616 550 954 929

</TABLE>

Real Estate and Related Assets

First quarter operating earnings for this segment were $25 million,
compared to $6 million in first quarter 1997. Strong demand in the U.S.
housing market and improved operating performance contributed to the
quarter's results.

Costs and Expenses

Weyerhaeuser's costs of products sold of $1.8 billion is down slightly from
1997 first quarter costs of $1.9 billion. Costs of products sold, as a
percentage of sales is 78% for the current quarter, compared to 79% in
first quarter 1997. The decrease relates to operating efficiencies, lower
production volumes for some product lines and a reduction of outside log
purchases.
Weyerhaeuser Company
- -19-

Depreciation, amortization and fee stumpage were down 8% from the 1997
first quarter and down 5% from the 1997 fourth quarter. Part of this
decrease is attributable to the ownership restructure of our NORPAC
subsidiary from a fully consolidated subsidiary to an equity affiliate. Non-
cash charges of $49 million in the first quarter of 1997 relate to
restructuring of the recycling business and closure of a corrugated medium
machine.

Total costs and expenses for the real estate and related assets segment
were up 18% from the 1997 first quarter due to increased sales activity.
Selling, general and administrative expenses are down as a result of the
sale of the company's mortgage banking subsidiary in May 1997.

Other income (expense) is an aggregation of both recurring and occasional
income or expense items and, as a result, fluctuates from period to period.
Excluding net special items of $10 million income as a result of a
favorable tax decision and the sale of Shemin Nurseries in 1997, no
individual income or (expense) items for the thirteen weeks ended March 29,
1998, and March 30, 1997, were significant in relation to net earnings.

Liquidity and Capital Resources

General

The company is committed to the maintenance of a sound, conservative
capital structure. This commitment is based upon two considerations: the
obligation to protect the underlying interests of its shareholders and
lenders and the desire to have access, at all times, to all major financial
markets.

The important elements of the policy governing the company's capital
structure are as follows:

. To view separately the capital structures of Weyerhaeuser Company,
Weyerhaeuser Real Estate Company and related subsidiaries, given the very
different nature of their assets and business activities. The amount of
debt and equity associated with the capital structure of each will
reflect the basic earnings capacity, real value and unique liquidity
characteristics of the assets dedicated to that business.

. The combination of maturing short-term debt and the structure of long-
term debt will be managed judiciously to minimize liquidity risk.

Operations

Weyerhaeuser's net cash provided by operations was $36 million in the first
quarter of 1998 compared to a use of $2 million in 1997. 1998 funds,
before net changes in working capital, were provided by net income of $69
million along with $148 million from depreciation, amortization and fee
stumpage. Working capital, net of the effects of the NORPAC ownership
restructuring, required funds of $187 million in the quarter. Significant
items were an increase of $101 million in inventories reflected in all
product lines; and increases in accounts receivable of $42 million and
prepaid expenses of $39 million. The product inventory turnover rate was
10.7 turns in the quarter, down slightly from the 10.9 turns in the first
quarter of 1997; but a significant decline from the 12.1 turns in the
fourth quarter of 1997.

In the same quarter of 1997, working capital used funds of $220 million
principally from increases of $80 million in inventories and $54 million in
accounts receivable, along with a reduction of $72 million in accounts
payable and accrued liabilities.

Earnings before interest expense and income taxes plus non-cash charges for
the quarter for the timberlands and wood products segment were $233
million, up from the $224 million in 1997 as a result of higher
depreciation. The pulp, paper and packaging segment had $136 million in
1998 compared to $111 million in the prior year. This difference is
attributable to several factors: (1) an operating profit this year against
an operating loss last year, (2) a non-cash charge of $49 million in 1997
for facility closures, and (3) reduced depreciation this year due to NORPAC
being included in consolidated results for only one month.
Weyerhaeuser Company
- -20-

The net cash used by operations in the real estate and related assets
segment in the current quarter was $41 million, primarily in working
capital as accounts payable and accrued liabilities decreased by $48
million. In the previous year, cash used for operations was $72 million,
primarily in working capital as $53 million was used for real estate and
land purchases and development and $60 million was used in originations of
mortgage notes held for sale.

Investing

Capital expenditures for the quarter were $85 million, down from the $129
million expended in the first quarter of 1997. The 1998 spending by
segment was $42 million for timberlands and wood products, $40 million for
the pulp, paper and packaging segment and $3 million for other segments.
The company currently anticipates capital expenditures, excluding
acquisitions, to approximate $750 million for the year. However, this
expenditure level could increase or decrease as a consequence of future
economic conditions.

The cash needed to meet these and other company needs is generated from
internal cash flow and short-term borrowing. The company also received net
funds of $218 million from the restructuring of its equity position in
NORPAC, and recognized a gain of $5 million on this transaction.

Financing

The company's debt position at the end of the quarter was relatively
unchanged from the end of 1997. Cash provided by the sale of industrial
revenue bonds and an increase in commercial paper borrowings was offset by
payments on other debt. The company's debt to total capital ratio was 40%
at the end of the quarter, down from 41.5% a year earlier. A reduction of
$265 million in long-term debt from period to period accounted for this
change.

The increase in cash from financing activities in the 1997 first quarter
was due primarily to an increase of $208 million in notes and commercial
paper borrowings.

The real estate and related assets segment utilized net cash inflows from
intercompany and commercial paper borrowings to reduce long-term debt by
$183 million in the quarter.

During the first quarter of 1998, the company paid $80 million in cash
dividends; the same amount paid in the 1997 first quarter.

The company expended $42 million to purchase 924 thousand shares of its
common stock during the quarter to complete the 11 million share repurchase
program, which commenced in 1995.

Market Risk of Financial Instruments

The company has exposure to market risk including changes in interest rates
and currency exchange rates. To manage the volatility relating to these
exposures, the company has entered into limited derivative transactions to
manage well-defined interest rate and foreign exchange risks. The company
does not hold or issue derivative financial instruments for trading. The
majority of the company's derivative instruments are "pay fixed, receive
variable" interest rate swaps with highly rated counterparties in which the
interest payments are calculated on a notional amount. The notional
amounts do not represent amounts exchanged by the parties and, thus, are
not a measure of exposure to the company through its use of derivatives.
The company is exposed to credit-related gains or losses in the event of
non-performance by counterparties to these financial instruments; however,
the company does not expect any counterparties to fail to meet their
obligations. Interest rate swaps are described as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Variable Rate at
Dollar amount in millions March 29, 1998
- --------------------------------------------------------------------------
Notional Maturity Fixed Fair Value
Amount Date Rate % % Based On of Swap(1)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$150 5/17/98 6.36 5.69 90 day LIBOR $ (0.1)
50 6/8/98(2) 5.54 5.69 90 day LIBOR --
27 5/1/99 6.70 8.29 11.95% - Kenny index .4
75 12/6/99(3) 6.85 5.69 30 day LIBOR (2.6)
- --------------------------------------------------------------------------
$302 $(2.3)
- --------------------------------------------------------------------------

(1) The amount of the obligation under each swap is based on the
assumption that such swap had terminated at the end of the fiscal
period, and provides for the netting of amounts payable by and to the
counterparty. In each case, the amount of such obligation is the net
amount so determined.
(2) Includes the value of an option, by the counterparty, to extend for
one year at maturity date.
(3) Includes the value of an option, by the counterparty, to extend for
two years at maturity date.

</TABLE>
Weyerhaeuser Company
- -21-

Environmental Matters

Effective May 18, 1998, two populations of steelhead trout will be listed
as threatened species under the Endangered Species Act (ESA), one in the
Lower Columbia River and one in the Central Valley of California.
Regulatory actions taken by the states of Washington, Oregon and California
to protect habitat for these species may, in the future, result in
restrictions on timber harvests and could affect forest management
practices in such states, including company timberlands in Southwest
Washington. Several additional species have been proposed to be listed as
threatened or endangered under the ESA, including certain Chinook salmon,
steelhead trout, chum salmon and sockeye salmon in parts of Washington,
Oregon and California. A consequence of such future listings may be
reductions in the sale and harvest of federal timberlands in the Pacific
Northwest and California. Requirements to protect habitat for threatened
and endangered species on non-federal timberlands has resulted, and may in
the future result, in restrictions on timber harvests on some nonfederal
timberlands in the Pacific Northwest, including some timberlands of the
company, could affect future harvest and forest management practices in
some of the company's timberlands, could increase operating costs, and
could affect timber supply and prices in some regions. The company does
not believe that such restrictions and effects will have a significant
effect on the company's total harvest of timber in 1998 or 1999, although
they may have such an effect in the future.

Year 2000

Weyerhaeuser, like all other companies using computers and microprocessors,
is faced with the task of addressing the Year 2000 problem over the next
two years. The Year 2000 challenge arises from the nearly universal
practice in the computer industry of using two digits rather than four
digits to designate the calendar year (e.g., DD/MM/YY). This can lead to
incorrect results when computer software performs arithmetic operations,
comparisons or data field sorting involving years later than 1999. The
company has embarked on a comprehensive approach to identify where this
problem may occur in its information technology, manufacturing and
facilities systems. The company plans to modify or replace its affected
systems in a manner that will minimize any detrimental effects on
operations, with a goal of correcting affected systems that will have a
critical effect on its business operations by the end of 1998. While it
is not possible, at present, to quantify the overall cost of this work, the
company presently believes that it will not have a material effect on the
company's current financial position or liquidity; however, in any given
future reporting period such costs could have a material effect on results
of operations. The company expects substantial costs to be incurred in the
third and fourth quarters of 1998.


Contingencies

The company is a party to legal proceedings and environmental matters
generally incidental to its business. Although the final outcome of any
legal proceeding or environmental matter is subject to a great many
variables and cannot be predicted with any degree of certainty, the company
presently believes that the ultimate outcome resulting from these
proceedings and matters would not have a material effect on the company's
current financial position, liquidity or results of operations; however, in
any given future reporting period such proceedings or matters could have a
material effect on results of operations.

Part II. Other Information

Item 1. Legal Proceedings

The company conducted a review of its 10 major pulp and paper facilities to
evaluate the facilities' compliance with federal Prevention of Significant
Deterioration (PSD) regulations. The results of the reviews were disclosed
to seven state agencies and the Environmental Protection Agency (EPA)
during 1994 and 1995. At the Cosmopolis, Washington, Columbus,
Mississippi, and Flint River, Georgia, facilities, the state regulatory
agencies agreed with the company's conclusions regarding the status of each
facility. For the Cosmopolis facility, the Washington Department of
Ecology agreed the changes made at the facility did not require PSD review.
For the Columbus and Flint River facilities, the states concluded the
original PSD permits issued to the facilities require updating. The
company updated emissions data for the Columbus and Flint River facilities
as part of the Title V permitting process. No penalties were assessed for
the issues identified at Columbus and Flint River. Agreements resolving
the alleged PSD issues have been reached with the states of Washington,
Oklahoma and North Carolina, as noted below. No issues were identified at
the company's Rothschild, Wisconsin, facility. In April 1995, EPA Region X
issued a Notice of Violation (NOV) to the company and to North Pacific
Paper Corporation (NORPAC), a joint venture in which the company currently
has a 50 percent ownership interest. The NOV addresses alleged PSD
violations at NORPAC's Longview, Washington, newsprint manufacturing
facility. A settlement resolving alleged PSD issues at the Longview/NORPAC
complex was reached with the State of Washington on January 26, 1996. On
November 14, 1995, the company entered into a settlement with the State of
Oklahoma to resolve alleged PSD violations at the company's Valliant,
Oklahoma, containerboard manufacturing facility. The company also entered
into Special Orders by Consent with the State of North Carolina to resolve
alleged PSD issues at the New Bern, North Carolina, pulp mill and the
Plymouth, North
Weyerhaeuser Company
- -22-

Part II
- --------------------------------------------------------------------------

Item 1. Legal Proceedings (continued)
- --------------------------------------

Carolina, pulp and paper complex. A final decision is expected to be made
by the Lane County Oregon Regional Air Pollution Control Authority
concerning alleged PSD and permit violations at the company's Springfield,
Oregon, containerboard manufacturing facility upon issuance of the
facility's Title V permit in 1999.

On October 2, 1996, the Wisconsin Department of Natural Resources (WDNR)
conducted an inspection of a building demolition project at the company's
Marshfield, Wisconsin facility. The WDNR noted several potential non-
compliance issues in the work performed by the asbestos abatement
subcontractor retained for the project. Upon learning of the issues
observed by WDNR, the company removed the asbestos abatement subcontractor
from the plantsite. The EPA Region V reviewed the work performed to
evaluate whether an enforcement action should be brought against the
asbestos abatement subcontractor, the general contractor, and/or the
company. In April 1998, a criminal indictment was issued against
the asbestos abatement subcontractor and certain of its employees.

In November 1996, an action was filed against the company in Superior Court
for King County, Washington, on behalf of a purported class of all
individuals and entities that own property in the United States on which
exterior hardboard siding manufactured by the company has been installed
since 1980. The action alleges the company has manufactured and
distributed defective hardboard siding and has breached express warranties
and consumer protection statutes in its sale of hardboard siding. The
action seeks compensatory damages, including prejudgment interest, and
seeks damages for the cost of replacing siding that rots subsequent to the
entry of any judgment. In January 1997, an action was filed, also in
Superior Court for King County, Washington, on behalf of a purported class
of all individuals, proprietorships, partnerships, corporations, and other
business entities in the United States on whose homes, condominiums,
apartment complexes or commercial buildings hardboard siding manufactured
by the company has been installed. The action alleges the company has
breached express and implied warranties in its sale of hardboard siding and
also has violated the Consumer Protection Act of the State of Washington.
The action seeks damages, prejudgment interest, costs and reasonable
attorney fees. In December 1997, the two cases were consolidated for the
purpose of discovery and resolution of the class certification issue.
Also, in December 1997, the plaintiffs in the first of the two cases filed
a motion to change the trial date and for leave to move for class
certification. In January 1998, the court denied this motion. The first
case was settled for approximately $11 thousand in March 1998. The second
case was settled for approximately $4 thousand in April 1998. The company
is a defendant in approximately sixteen other hardboard siding cases, two
of which purport to be state-wide class actions on behalf of purchasers of
single- or multi-family residences that contain the company's hardboard
siding, one in Nebraska and one in Iowa.

The Washington Department of Ecology has issued a NOV and a $40 thousand
penalty because of an accidental spill of an estimated 8,700 gallons of
crude sulfate turpentine in January 1997 at the company's pulp and paper
operations in Longview. The penalty was paid. In March 1998, the company
and the EPA reached agreement on a settlement of an EPA enforcement action
relating to the January 1997 accident. Under the agreement, the company
paid approximately $706 thousand, consisting of a $400 thousand penalty and
approximately $306 thousand for a supplemental environmental project
directed toward improving community emergency responses.

The company is also a party to various proceedings relating to the clean-up
of hazardous waste sites under the Comprehensive Environmental Response
Compensation and Liability Act, commonly known as "Superfund," and similar
state laws. The EPA and/or various state agencies have notified the
company that it may be a potentially responsible party with respect to
other hazardous waste sites as to which no proceedings have been instituted
against the company. The company is also a party to other legal
proceedings generally incidental to its business. Although the final
outcome of any legal proceeding or environmental matter is subject to a
great many variables and cannot be predicted with any degree of certainty,
the company presently believes that any ultimate outcome resulting from the
proceedings or matters discussed herein, or all of them combined, would not
have a material effect on the company's current financial position,
liquidity or results of operations; however, in any given future reporting
period, such proceedings or matters could have a material effect on results
of operations.

Item 6. Exhibits and Reports on Form 8-K

(a) None.

(b) The registrant filed reports on Form 8-K dated January 23 and April
16, 1998, reporting information under Item 5, Other Events.
Weyerhaeuser Company
- -23-

Exhibits Index
- --------------------------------------------------------------------------

Exhibits:

3 - (ii) Bylaws

27 - Financial Data Schedule-Current Reporting Period

27 - Financial Data Schedule-Restated Prior Periods