WEYERHAEUSER CO (Form: 10-K, Received: 03/03/2005 17:34:52)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 26, 2004

¨ 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

91-0470860

(IRS Employer Identification No.)

FEDERAL WAY, WASHINGTON 98063-9777 TELEPHONE (253) 924-2345

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:


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

Exchangeable Shares (no par value)		Toronto 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. x Yes ¨ No.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ .

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). x Yes ¨ No.

As of June 25, 2004, 239,395,184 shares of the registrant’s common stock ($1.25 par value) were outstanding and the aggregate market value of the registrant’s voting shares held by non-affiliates was approximately $14,435,529,595.

As of January 28, 2005, 240,466,236 shares of the registrant’s common stock ($1.25 par value) were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Notice of Annual Meeting of Shareholders and Proxy Statement for the company’s Annual Meeting of Shareholders to be held April 21, 2005, are incorporated by reference into Part II and III.

TABLE OF CONTENTS


Part I		Page No.

Item 1.	Business	3

Item 2.	Properties	13

Item 3.	Legal Proceedings	16

Item 4.	Submission of Matters to a Vote of Security Holders	16

Part II

Item 5.	Market Price for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16

Item 6.	Selected Financial Data	18

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 8.	Financial Statements and Supplementary Data	44

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	89

Item 9A.	Controls and Procedures	89

Part III

Item 10.	Directors and Executive Officers of the Registrant	90

Item 11.	Executive Compensation	92

Item 12.	Security Ownership of Certain Beneficial Owners and Management	92

Item 13.	Certain Relationships and Related Transactions	92

Item 14.	Principal Accounting Fees and Services	93

Part IV

Item 15.	Exhibits and Financial Statement Schedules	93

	Signatures	95

	Report of Independent Registered Public Accounting Firm on Financial Statement Schedule	96

	Schedule II – Valuation and Qualifying Accounts	97

DESCRIPTION OF THE BUSINESS OF THE COMPANY

Weyerhaeuser Company (the company) was incorporated in the state of Washington in January 1900 as Weyerhaeuser Timber Company. It is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate development and construction. Its business segments are:

Timberlands, which includes logs, chips and timber.

Wood Products, which includes softwood lumber, plywood, veneer, composite panels, oriented strand board, hardwood lumber, engineered lumber, raw materials and building materials distribution.

Pulp and Paper, which includes pulp, paper and liquid packaging board.

Containerboard, Packaging and Recycling.

Real Estate and Related Assets.

Corporate and Other

Throughout this document, the term “company” refers to Weyerhaeuser Company and all of its majority-owned domestic and foreign subsidiaries and variable interest entities of which Weyerhaeuser Company or its subsidiaries are determined to be the primary beneficiary. The term “Weyerhaeuser” refers to the forest products-based operations and excludes the Real Estate and Related Assets operations.

The company has approximately 53,600 employees, of whom 52,200 are employed by Weyerhaeuser, and of this number, approximately 23,000 are covered by collective bargaining agreements, which generally are negotiated on a multi-year basis. Approximately 1,400 of the company’s employees are involved in the activities of its Real Estate and Related Assets segment.

The major markets, both domestic and foreign, in which Weyerhaeuser sells its products are highly competitive, with numerous strong sellers competing in each. Many of Weyerhaeuser’s products also compete with substitutes for wood and wood fiber products. The company’s subsidiaries in the Real Estate and Related Assets segment operate in highly competitive markets, competing with numerous regional and national firms in real estate development and construction and other real estate related activities. The company competes in its markets primarily through price, product quality and service levels.

In recent years, the company has grown substantially through acquisitions with the purchases of MacMillan Bloedel in 1999, Trus Joist International (Trus Joist) in 2000, and Willamette Industries, Inc. (Willamette) in 2002.

In 2004, the company’s sales to customers outside the United States totaled $4.3 billion (including exports of $1.8 billion from the United States, $1.9 billion of Canadian export and domestic sales and $0.6 billion of other foreign sales), or 19 percent of total consolidated sales and revenues, compared with 18 percent in 2003. All sales to customers outside the United States are subject to risks related to international trade and to political, economic and other factors that vary from country to country.

Financial information with respect to industry segments and geographical areas is included in Notes 23 and 24 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

AVAILABLE INFORMATION

The company is subject to the information reporting requirements of the Securities Exchange Act of 1934 (the Exchange Act) and the company files periodic reports, proxy statements and other information with the Securities and Exchange Commission (SEC) relating to the company’s business, financial results and other matters. The reports, proxy statements and other information the company files may be inspected and copied at prescribed rates at the SEC’s Public Reference Room at 450 Fifth Street NW, Washington, D.C. 20549. You may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that contains reports, proxy statements and other information regarding issuers like the company that file electronically with the SEC. The

address of the SEC’s internet site is www.sec.gov. The company also posts its reports, proxy statements and other information that are transmitted electronically to the SEC on the company’s internet site as soon as reasonably practicable after such material is filed with, or furnished to, the SEC and such information is available free of charge. The company’s internet site is www.weyerhaeuser.com.

BUSINESS SEGMENTS

TIMBERLANDS

Weyerhaeuser is engaged in the management of 6.4 million acres of company-owned and .8 million acres of leased commercial forestland in North America (4.2 million acres in the southern United States and 3.0 million acres in the Pacific Northwest and Canada), most of it highly productive and located extremely well to serve both domestic and international markets. Weyerhaeuser also has renewable, long-term licenses on 30.4 million acres of forestland located in five provinces throughout Canada that are managed by its Canadian operations. The standing timber inventory on these lands is approximately 468 million cunits (a cunit is 100 cubic feet of solid wood). The relationship between cubic measurement and the quantity of end products that may be produced from timber varies according to the species, size and quality of timber, and will change through time as the mix of these variables changes. The end products are generally measured in board feet for lumber and square feet for panel products. To sustain the timber supply from its fee timberlands, Weyerhaeuser is engaged in extensive planting, suppression of nonmerchantable species, precommercial and commercial thinning, fertilization, and operational pruning, all of which increase the yield from its fee timberland acreage.

Weyerhaeuser accounts for the revenues and expenses associated with the management of company-owned and leased forestland in its Timberlands segment. Revenues and expenses associated with the management of licensed forestlands are included with the results of the operations they support, generally in the Wood Products segment.

Weyerhaeuser also manages forestlands in the Southern Hemisphere. The results of these international operations are included in the Corporate and Other segment.


	MILLIONS OF CUNITS	THOUSANDS OF ACRES AT DECEMBER 26, 2004
GEOGRAPHIC AREA	INVENTORY	FEE OWNERSHIP	LONG-TERM LEASES	LICENSE ARRANGEMENTS	TOTAL
United States
West	63	2,253	—	—	2,253
South	52	3,459	779	—	4,238

Total United States	115	5,712	779	—	6,491

Canada
Alberta	79	—	—	5,309	5,309
British Columbia ⁽¹⁾ :
Coastal ⁽²⁾	131	639	—	2,604	3,243
Interior	10	27	—	2,797	2,824
New Brunswick	1	—	—	177	177
Ontario	50	1	—	7,334	7,335
Saskatchewan	82	—	—	12,214	12,214

Total Canada	353	667	—	30,435	31,102

Subtotal North America	468	6,379	779	30,435	37,593
International ⁽³⁾⁽⁴⁾	4	205	13	76	294

Total	472	6,584	792	30,511	37,887


	THOUSANDS OF ACRES		MILLIONS OF SEEDLINGS PLANTED	THOUSANDS OF ACRES
2004 ACTIVITY	HARVESTED ⁽⁵⁾	PLANTED ⁽⁶⁾	MILLIONS OF SEEDLINGS PLANTED	STOCKING CONTROL	FERTILIZATION
United States
West	47.5	43.6	19.5	9.1	42.2
South	128.7	115.7	50.5	7.8	423.7

Total United States	176.2	159.3	70.0	16.9	465.9

Canada
Alberta	22.3	22.0	8.0	11.9	—
British Columbia	41.5	26.2	15.1	10.4	0.4
New Brunswick	1.7	0.1	0.2	1.7	—
Ontario	26.9	12.7	6.4	5.6	—
Saskatchewan	42.1	16.4	8.9	0.7	—

Total Canada	134.5	77.4	38.6	30.3	0.4

International ^{(3) (4)}	3.7	4.9	2.0	14.7	2.1

Total	314.4	241.6	110.6	61.9	468.4

(1)

Under the terms of a tenure reallocation agreement reached with the British Columbia (B.C.) government during 2004, the company expects to return to the B.C. government timber licenses covering approximately 1.2 million cubic meters of cutting rights and 8,000 hectares (approximately 20,000 acres). Until formally identified and taken back by the B.C. government, these inventories and lands are still under license to the company and are included in the table above.

(2)	The company has announced an agreement to sell its B.C. Coastal assets and expects to complete the sale in the second quarter of 2005.

(3)	International represents timberlands outside of North America, the activities of which are reported in the Corporate and Other segment.

(4)	Includes Weyerhaeuser percentage ownership of timberlands owned and managed through joint ventures.

(5)	Includes 1,200 acres of right-of-way and other harvest that does not require planting.

(6)	Represents acres planted with seedlings. In Canada, natural regeneration is also used to reforest areas that have been harvested.



NET SALES ^{(1) (2)} :	2004		2003		2002		2001		2000

In millions of dollars
To unaffiliated customers:
Logs	$	822	$	730	$	657	$	519	$	646
Other products		280		264		273		220		197

	$	1,102	$	994	$	930	$	739	$	843

Intersegment sales	$	1,622	$	1,605	$	1,545	$	1,242	$	1,356

SALES VOLUMES ^{(1) (2)} :	2004		2003		2002		2001		2000

In thousands
Logs– cunits		3,920		4,125		3,600		2,745		2,923

SELECTED PUBLISHED PRODUCT PRICES:	2004		2003		2002		2001		2000

Export logs (#2 sawlog-bark on)– $/MBF
Coastal– Douglas fir - Longview	$	780	$	707	$	697	$	757	$	888
Coastal– Hemlock		386		354		416		398		545

(1)	Reflects the acquisition of Willamette Industries in February 2002.

(2)	Prior year information has been restated to conform with the current year presentation and to reflect a change in segments. See Note 23 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

WOOD PRODUCTS

Weyerhaeuser’s wood products businesses produce and sell softwood lumber, plywood, veneer, composite panels, oriented strand board, hardwood lumber, and engineered lumber products. These products are sold primarily through Weyerhaeuser’s own sales organizations and building materials distribution business. The raw materials required to produce these products are purchased from third parties, transferred at market price from Weyerhaeuser’s Timberlands segment, or obtained from long-term licensing arrangements. Building materials, including products not produced by Weyerhaeuser, are sold to wholesalers, retailers and industrial users.


NET SALES ⁽¹⁾⁽²⁾ :	2004		2003		2002		2001		2000

In millions of dollars
Softwood lumber	$	3,915	$	3,281	$	3,186	$	2,751	$	2,996
Plywood		929		784		700		519		592
Veneer		44		39		34		21		33
Composite panels		501		393		379		162		184
Oriented strand board		1,390		1,109		649		579		708
Hardwood lumber		365		350		333		318		336
Engineered lumber products		1,505		1,179		1,148		1,070		966
Logs		125		105		253		227		222
Other products		1,069		945		865		815		972

	$	9,843	$	8,185	$	7,547	$	6,462	$	7,009


SALES VOLUMES ⁽¹⁾⁽²⁾ :	2004		2003		2002		2001		2000

In millions
Softwood lumber – board feet		8,890		8,981		8,623		7,351		7,442
Plywood– square feet (3/8”)		2,629		2,665		2,685		1,891		2,141
Veneer – square feet (3/8”)		225		239		218		151		156
Composite panels – square feet (3/4”)		1,234		1,162		1,092		331		452
Oriented strand board – square feet (3/8”)		4,213		4,361		4,205		3,738		3,634
Hardwood lumber – board feet		417		435		435		420		430
Logs – cunits (in thousands)		934		799		1,657		1,575		1,550

SELECTED PUBLISHED PRODUCT PRICES:	2004		2003		2002		2001		2000

Lumber (common) – $/MBF
2x4 Douglas fir (kiln dried)	$	459	$	347	$	328	$	334	$	341
2x4 Douglas fir (green)		406		307		289		297		314
2x4 Southern yellow pine (kiln dried)		387		330		302		325		339
2x4 Spruce-pine-fir (kiln dried)		361		242		236		250		257
Plywood (1/2” CDX) – $/MSF
West		448		367		287		294		300
South		403		335		248		263		264
Oriented strand board (7/16”-24/16”)
North Central price – $/MSF		374		295		160		160		206

(1)	Reflects the acquisition of Willamette Industries in February 2002.

(2)	Prior year information has been restated to conform with the current year presentation and to reflect a change in segments. See Note 23 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

PULP AND PAPER

Weyerhaeuser’s pulp and paper businesses include: Pulp, which includes the manufacture of papergrade, absorbent, dissolving and specialty pulp grades that are marketed worldwide; Paper, which manufactures a range of both coated and uncoated papers and business forms marketed through Weyerhaeuser’s own sales force and through paper merchants and printers; and Liquid Packaging, which includes the manufacture and sales of liquid packaging board used primarily in the production of containers designed to hold liquid products.

In addition, Weyerhaeuser has a 50 percent interest in North Pacific Paper Corporation (NORPAC), a joint venture that owns a newsprint manufacturing facility in Washington state.


NET SALES ^{(1) (2)} :	2004		2003		2002		2001		2000

In millions of dollars
Pulp	$	1,471	$	1,305	$	1,196	$	1,134	$	1,416
Paper		2,226		2,182		2,163		1,037		1,115
Coated groundwood		156		140		126		148		169
Liquid packaging board		208		198		179		198		198
Other products		54		26		19		19		45

	$	4,115	$	3,851	$	3,683	$	2,536	$	2,943


SALES VOLUMES ⁽¹⁾ :	2004		2003		2002		2001		2000

In thousands
Pulp – air-dry metric tons		2,558		2,479		2,378		2,113		2,129
Paper – tons		2,876		2,822		2,742		1,301		1,375
Coated groundwood – tons		243		234		210		206		214
Liquid packaging board – tons		276		256		229		243		255
Paper converting – tons		1,894		1,882		1,859		831		829

SELECTED PUBLISHED PRODUCT PRICES:	2004		2003		2002		2001		2000

Per ton
Pulp – NBKP-air-dry metric-U.S.	$	640	$	553	$	488	$	547	$	685
Paper – uncoated free sheet-U.S.		658		622		658		695		730

(1)	Reflects the acquisition of Willamette Industries in February 2002.

(2)	Prior year information has been restated to conform with the current year presentation and to reflect a change in segments. See Note 23 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

CONTAINERBOARD, PACKAGING AND RECYCLING

Weyerhaeuser’s containerboard, packaging and recycling businesses include: Containerboard, which manufactures linerboard, corrugating medium and kraft paper, primarily used to produce corrugated boxes and paper bags and sacks at Weyerhaeuser’s packaging facilities and also sells product to domestic and foreign customers through Weyerhaeuser’s own sales force and agents; Packaging, which manufactures industrial and agricultural packaging marketed through Weyerhaeuser’s own sales force; Specialty Packaging, which produces inks, printing plates, graphics packaging, single-face and pre-print products, and retail packaging displays; and Recycling, which operates an extensive wastepaper collection system and sells to company mills and worldwide customers. The segment also operates facilities that manufacture paper bags and sacks.


NET SALES ⁽¹⁾ :	2004		2003		2002		2001		2000

In millions of dollars
Containerboard	$	368	$	304	$	350	$	346	$	450
Packaging		3,584		3,544		3,466		2,471		2,670
Recycling		347		247		229		212		370
Kraft bags and sacks		80		80		75		—		—
Other products		156		147		92		67		69

	$	4,535	$	4,322	$	4,212	$	3,096	$	3,559


SALES VOLUMES ⁽¹⁾ :	2004		2003		2002		2001		2000

In thousands
Containerboard – tons		1,001		890		983		883		1,055
Packaging – MSF		72,885		72,741		70,330		48,870		52,886
Recycling – tons		2,694		2,290		2,292		2,837		3,177
Kraft bags and sacks – tons		95		100		93		—		—

SELECTED PUBLISHED PRODUCT PRICES:	2004		2003		2002		2001		2000

Per ton
Linerboard – 42 lb.-Eastern U.S.	$	411	$	366	$	383	$	424	$	453
Recycling – old corrugated containers		80		61		60		40		79
Recycling – old newsprint		57		40		36		25		56

(1)	Reflects the acquisition of Willamette Industries in February 2002.

REAL ESTATE AND RELATED ASSETS

The Real Estate and Related Assets segment includes Weyerhaeuser Real Estate Company (WRECO), a wholly-owned subsidiary, and the company’s other real estate related activities. WRECO is primarily engaged in developing single-family housing and residential lots for sale, including development of master-planned communities. Operations are concentrated mainly in selected metropolitan areas in southern California, Nevada, Washington, Texas, Maryland and Virginia. Additionally, WRECO is an investor and investment manager for institutional investors in residential real estate.


REVENUE:	2004			2003			2002			2001			2000

In millions of dollars
	$	2,495		$	2,029		$	1,750		$	1,461		$	1,377

SINGLE-FAMILY UNIT STATISTICS:	2004			2003			2002			2001			2000

Homes sold		5,375			5,005			4,374			3,868			3,833
Homes closed		5,264			4,626			4,280			3,651			3,369
Homes sold but not closed		2,372			2,261			1,882			1,788			1,571
Gross margin (%)		29.7	%		25.7	%		24.2	%		23.1	%		22.1	%

CORPORATE AND OTHER

Corporate and Other includes marine transportation (Westwood Shipping Lines, a wholly-owned subsidiary), distribution and converting facilities located outside North America, and general corporate support activities.

The following international operations are included in Corporate and Other:

Weyerhaeuser, through its wholly-owned subsidiary Weyerhaeuser New Zealand Inc., owns a 51 percent financial interest and has a 50 percent voting interest in Nelson Forests Joint Venture, a New Zealand joint venture located on the northern end of the South Island. The joint venture assets consist of 148,000 acres of Crown Forest License cutting rights, 39,000 acres of freehold land and the Kaituna sawmill, with a capacity of 21 million board feet. Weyerhaeuser is responsible for the management and marketing activities of this joint venture.

Weyerhaeuser, through its wholly-owned subsidiary Weyerhaeuser Australia Pty. Ltd., owns a 70 percent interest in Pine Solutions, Australia’s largest softwood timber distributor, and two sawmills with a combined production capacity of 158 million board feet of lumber.

Weyerhaeuser, through its wholly-owned subsidiary Weyerhaeuser Forestlands International, is a 50 percent owner and managing general partner in RII Weyerhaeuser World Timberfund, L.P. (WTF), a limited partnership, which makes investments outside the United States. In Australia, WTF owns 55,900 acres of freehold land; leases 3,000 acres of radiata pine plantations; and owns two softwood lumber mills with a capacity of 115 million board feet, a lumber treating operation, a pine moulding plant and remanufacturing plant, a chip export business and a 30 percent interest in Pine Solutions. This partnership also owns a Uruguayan venture, Colonvade, S.A., which has acquired 246,000 acres of private grazing land that is currently being converted into plantation forests.

Weyerhaeuser, through its wholly-owned subsidiary Southern Cone Timber Investors Holding Company, LLC, owns a 50 percent interest in Southern Cone Timber Investors Limited, a joint venture that focuses on plantation forests in the Southern Hemisphere. This joint venture holds as its principal assets 69,000 acres of intensively managed eucalyptus and pine tree plantings in Uruguay.

Weyerhaeuser, through its wholly-owned subsidiary, Weyerhaeuser Uruguay, owns 10,000 acres of softwood cutting rights in Uruguay, and will focus on land and plantation forests and provide international marketing activities on behalf of Weyerhaeuser managed joint ventures in Uruguay.

Weyerhaeuser, through its wholly-owned subsidiary, Weyerhaeuser Brazil S.A., owns 67 percent of Aracruz Produtos de Madeira, a hardwood sawmill with a capacity of 23 million board feet. Weyerhaeuser manages the sawmill on behalf of the joint venture partners to produce high-value eucalyptus lumber and related appearance wood products.

Weyerhaeuser owns three composite panel facilities in Europe with production capacity of 240 million square feet (3/4” basis) of particleboard and 316 million square feet (3/4” basis) of medium density fiberboard.


NET SALES ⁽¹⁾ :	2004	2003	2002	2001	2000
In millions of dollars
	$575	$492	$399	$251	$249

(1)	Reflects the acquisition of Willamette Industries in February 2002.

NATURAL RESOURCE AND ENVIRONMENTAL MATTERS

Growing and harvesting timber are subject to numerous laws and government policies to protect the environment, nontimber resources such as wildlife and water, and other social values. Changes in those laws and policies can significantly affect local or regional timber harvest levels and market values of timber-based raw materials.

In the United States, a number of fish and wildlife species that inhabit geographic areas near or within company timberlands have been listed as threatened or endangered under the federal Endangered Species Act (ESA) or similar state laws. Federal ESA listings include the northern spotted owl, marbled murrelet, a number of salmon species, bull trout and

steelhead trout in the Pacific Northwest and the red-cockaded woodpecker, gopher tortoise and American burying beetle in the Southeast. Listings of additional species or populations may result from pending or future citizen petitions or be initiated by federal or state agencies. Federal and state requirements to protect habitat for threatened and endangered species have resulted in restrictions on timber harvest on some timberlands, including some timberlands of the company. Additional listings of fish and wildlife species as endangered, threatened or sensitive under the ESA and similar state laws as well as regulatory actions taken by federal or state agencies to protect habitat for these species may, in the future, result in additional restrictions on timber harvests and other forest management practices, could increase operating costs, and could affect timber supply and prices.

In the United States, federal, state and local regulations protecting water quality and wetlands also could affect future harvest and forest management practices on some of the company’s timberlands. Forest practice acts in some states in the United States increasingly affect present or future harvest and forest management activities. For example, in some states, these acts limit the size of clearcuts, require some timber to be left unharvested to protect water quality and fish and wildlife habitat, regulate construction and maintenance of forest roads, require reforestation following timber harvest, and contain procedures for state agencies to review and approve proposed forest practice activities. Some states and some local governments regulate certain forest practices through various permit programs. Each state in which the company owns timberlands has developed best management practices to reduce the effects of forest practices on water quality and aquatic habitats. Additional and more stringent regulations may be adopted by various state and local governments to achieve water-quality standards under the federal Clean Water Act, protect fish and wildlife habitats, or achieve other public policy objectives.

The company operates under the Sustainable Forestry Initiative ^® , a certification standard designed to supplement government regulatory programs with voluntary landowner initiatives to further protect certain public resources and values. The Sustainable Forestry Initiative ^® is an independent standard, overseen by a governing board consisting of conservation organizations, academia, the forest industry, and large and small forest landowners. Compliance with the Sustainable Forestry Initiative ^® may result in some increases in operating costs and curtailment of timber harvests in some areas.

The regulatory and nonregulatory forest management programs described above have increased operating costs, resulted in changes in the value of timber and logs from the company’s timberlands, and contributed to increases in the prices paid for wood products and wood chips during periods of high demand. These kinds of programs also can make it more difficult to respond to rapid changes in markets, extreme weather or other unexpected circumstances. One additional effect may be further reductions in usage of, and some substitution of other products for, lumber and plywood. The company does not believe that these kinds of programs have had, or in 2005 will have, a significant effect on the company’s total harvest of timber in the United States or any major U.S. region, although they may have such an effect in the future. Further, the company does not expect to be disproportionately affected by these programs as compared with typical owners of comparable timberlands. Likewise, management does not expect that these programs will significantly disrupt its planned operations over large areas or for extended periods.

Weyerhaeuser’s forest operations in Canada are primarily carried out on public forestlands under forest licenses, although the company also owns substantial amounts of timberland in western British Columbia (B.C.). The announced sale of B.C. timberlands is expected to close in the second quarter of 2005. All forest operations are subject to forest practices and environmental regulations, and operations under licenses also are subject to contractual requirements between the company and the relevant province designed to protect environmental and other social values. In Canada, the federal Species at Risk Act (SARA) was enacted in 2002. SARA enacted protective measures for species identified as being at risk and for critical habitat. To date, SARA has not had an effect on the operations of the company; however, it is anticipated that SARA will result in some additional restrictions on timber harvests and other forest management practices and will increase some operating costs for operators of forestlands in Canada. SARA is also expected to affect timber supply and prices in the future.

The company participates in the Canadian Standards Association Sustainable Forest Management System standard, a voluntary certification system that further protects certain public resources and values. Compliance with this standard will result in some increases in operating costs and curtailment of timber harvests in some areas in Canada.

Many of these Canadian forestlands also are subject to the constitutionally protected treaty or common-law rights of the aboriginal peoples of Canada. Most of B.C. is not covered by treaties and, as a result, the claims of B.C.’s aboriginal peoples

relating to forest resources are largely unresolved, although many aboriginal groups are actively engaged in treaty discussions with the governments of B.C. and Canada. Final or interim resolution of aboriginal claims may be expected to result in a negotiated decrease in the lands or timber available for forest operations under license in B.C., including the company’s licenses. In a case brought by the Council of Haida Nations against B.C., the Supreme Court of Canada ruled in 2004 that the province of B.C. has legally enforceable duties to the Haida to consult with and accommodate them with respect to forestry activities on the Queen Charlotte Islands. In October 2004, the Lyackson First Nation registered an objection to the proposed subdivision by the company of privately owned lands on Valdes Island in B.C. on the basis that the Lyackson First Nations’ aboriginal interests had not been sufficiently addressed. In December 2004, the Hupacasath First Nation petitioned a court of general jurisdiction in B.C. for a declaration that the province had failed to meaningfully consult with them before deciding to remove private lands owned by the company from a company Tree Farm License, and that they have aboriginal interests in these lands. The negotiation and resolution of aboriginal land claims and any claim such as those brought by these aboriginal groups are expected to result in additional restrictions on the sale or harvest of timber and may increase operating costs and affect timber supply and prices in Canada. The company believes that such claims will not have a significant effect on the company’s total harvest of timber or production of forest products in 2005, although they may have such an effect in the future.

The company is also subject to federal, state and provincial, and local pollution controls with regard to air, water and land; solid and hazardous waste management, disposal and remediation laws and regulations in all areas in which it has operations; as well as market demands with respect to chemical content of some products and use of recycled fiber. Compliance with these laws, regulations and demands usually involves capital expenditures as well as additional operating costs. The company cannot easily quantify future amounts of capital expenditures required to comply with these laws, regulations and demands, or the effects on operating costs, because in some instances, compliance standards have not been developed or have not become final or definitive. In addition, compliance with standards frequently serves other purposes such as extension of facility life, increase in capacity, changes in raw material requirements, or increase in economic value of assets or products. While it is difficult to isolate the environmental component of most manufacturing capital projects, the company estimates that capital expenditures for environmental compliance were approximately $46 million in 2004 (9 percent of total capital expenditures, excluding acquisitions and Real Estate and Related Assets). Based on its understanding of current regulatory requirements in the United States and Canada, the company expects that capital expenditures for environmental compliance will be approximately $44 million in 2005 (5 percent of expected total capital expenditures, excluding acquisitions and Real Estate and Related Assets).

The company is involved in the environmental investigation or remediation of numerous sites. Some of the sites are on property presently or formerly owned by the company where the company has the sole obligation to remediate the site or shares that obligation with one or more parties; others are third-party sites involving several parties who have a joint and several obligation to remediate the site; and some are superfund sites where the company has been named as a potentially responsible party. The company’s liability with respect to these sites ranges from insignificant at some sites to substantial at others, depending on the quantity, toxicity and nature of materials deposited by the company at the site and, with respect to some sites, the number and economic viability of the other responsible parties.

The company spent approximately $10 million in 2004, and expects to spend approximately $18 million in 2005, on environmental remediation of these sites. It is the company’s policy to accrue for environmental remediation costs when it is determined that it is probable that such an obligation exists and the amount of the obligation can be reasonably estimated. Based on currently available information, the company believes that it is reasonably possible that costs associated with all identified sites may exceed current accruals of $38 million by amounts that may prove insignificant or that could range, in the aggregate, up to approximately $60 million over several years. This estimate of the upper end of the range of reasonably possible additional costs is much less certain than the estimates upon which accruals are currently based and utilizes assumptions less favorable to the company among the range of reasonably possible outcomes.

The United States Environmental Protection Agency (U.S. EPA) has promulgated regulations dealing with air emissions from pulp and paper manufacturing facilities, including regulations on hazardous air pollutants that require use of maximum achievable control technology (MACT) and controls for pollutants that contribute to smog and haze. The final Cluster Rule package of regulations affecting the Pulp and Paper segment of the industry went into effect in 1998. The U.S. EPA has also adopted MACT standards for air emissions from wood products facilities and industrial boilers. The company anticipates that it might spend as much as $64 million over the next several years to comply with the MACT standards, including the Cluster Rules. The company cannot quantify future capital requirements needed to comply with new

regulations being developed by the U.S. EPA or Canadian environmental agencies because final rules have not been promulgated. However, the company does not anticipate at this time that compliance with the new regulations will result in capital expenditures in any year that are material in relation to the company’s annual capital expenditures.

The American Forest & Paper Association has made a commitment on behalf of all members of the association to reduce greenhouse gas emissions intensity by 2012. The company also is actively participating in negotiations between the Forest Products Association of Canada and Natural Resources Canada to define industry obligations for complying with Canada’s national plan for reducing greenhouse gas emissions over the next several years. The company cannot estimate what expenditures may ultimately be required to contribute to these commitments but does not expect significant expenditures in 2005. During 2004, the company continued its work with international, national and regional policy makers in their efforts to develop technically sound and economically viable policies, practices and procedures for measuring, reporting and managing greenhouse gas emissions.

The U.S. EPA has repealed the regulations promulgated in 2000 that would have required states to develop total maximum daily load (TMDL) allocations for pollutants in water bodies determined to be water-quality-impaired. However, states continue to promulgate TMDL requirements. The state TMDL requirements may set limits on pollutants that may be discharged to a body of water or set additional requirements, such as best management practices for nonpoint sources, including timberland operations, to reduce the amounts of pollutants. It is not possible to estimate the capital expenditures that may be required for the company to meet pollution allocations across the various proposed state TMDL programs until a specific TMDL is promulgated.

PROPERTIES

TIMBERLANDS

Timberlands annual fee depletion, which reflects the acquisition of Willamette Industries (Willamette) in February 2002, follows:


PRODUCTION:	2004	2003	2002	2001	2000
In thousands
Fee depletion – cunits	9,013	9,428	9,358	7,662	7,033

WOOD PRODUCTS

Production capacities, facilities and annual production, which reflect the acquisition of Willamette in February 2002, are summarized by major product as follows:


PRODUCTION:	PRODUCTION CAPACITY	NUMBER OF FACILITIES	2004	2003	2002	2001	2000
In millions
Softwood lumber – board feet	7,760	41	7,187	7,113	6,831	5,335	5,645
Plywood – square feet (3/8”) ⁽¹⁾	1,230	7	1,628	1,708	1,776	818	1,151
Veneer – square feet (3/8”) ^{(1) (2)}	2,130	11	2,386	2,199	2,187	1,050	1,241
Composite panels – square feet (3/4”)	1,130	6	1,066	988	864	93	206
Oriented strand board – square feet (3/8”)	4,100	9	4,081	4,170	4,020	3,443	3,438
Hardwood lumber – board feet	360	9	349	373	372	373	360

(1)	All Weyerhaeuser plywood facilities also produce veneer .

(2)	Veneer production represents lathe production and includes volumes that are further processed into plywood and engineered lumber products by company mills .

Principal manufacturing facilities are located as follows:

Lumber, plywood and veneer

Alabama, Arkansas, Louisiana, Mississippi, North Carolina, Oklahoma, Oregon, Washington; Alberta, British Columbia, Ontario and Saskatchewan, Canada

Composite panels

Arkansas, Louisiana, Oregon and South Carolina

Oriented strand board

Louisiana, Michigan, North Carolina, West Virginia; Alberta, New Brunswick, Ontario and Saskatchewan, Canada

Engineered lumber

Alabama, California, Georgia, Kentucky, Louisiana, Minnesota, Ohio, Oregon, West Virginia; Alberta, British Columbia and Ontario, Canada; and New South Wales, Australia

Hardwood lumber

Michigan, Oklahoma, Oregon, Washington, Wisconsin; and British Columbia, Canada

PULP AND PAPER

Production capacities, facilities and annual production, which reflect the acquisition of Willamette in February 2002, are summarized by major product as follows:


PRODUCTION:	PRODUCTION CAPACITY	NUMBER OF FACILITIES	2004	2003	2002	2001	2000
In thousands
Pulp – air-dry metric tons	2,910	12	2,546	2,522	2,281	2,140	2,282
Paper – tons ⁽¹⁾	3,010	8	3,006	2,833	2,611	1,244	1,388
Coated groundwood – tons	240	1	240	239	210	211	215
Liquid packaging board – tons	260	1	266	261	227	240	261
Paper converting – tons	1,970	15	1,954	1,882	1,844	777	850

(1)	Paper production includes unprocessed rolls and converted paper volumes.

Principal manufacturing facilities are located as follows:

Pulp

Georgia, Kentucky, Mississippi, North Carolina, South Carolina and Washington; Alberta, British Columbia, Ontario and Saskatchewan, Canada

Paper

Kentucky, North Carolina, Pennsylvania, South Carolina, Tennessee, and Wisconsin; Ontario and Saskatchewan, Canada

Coated groundwood

Mississippi

Liquid packaging board

Washington

Paper converting

California, Indiana, Kentucky, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, and Wisconsin; Ontario and Saskatchewan, Canada

CONTAINERBOARD, PACKAGING AND RECYCLING

Production capacities, facilities and annual production, which reflect the acquisition of Willamette in February 2002, are summarized by major product as follows:


PRODUCTION:	PRODUCTION CAPACITY	NUMBER OF FACILITIES	2004	2003	2002	2001	2000
In thousands
Containerboard – tons ⁽¹⁾	6,500	10	6,291	6,003	6,004	3,699	3,578
Packaging – MSF	97,400	88	77,822	77,830	75,100	51,646	55,932
Recycling – tons ⁽²⁾	N/A	19	6,718	6,216	6,092	4,726	4,448
Kraft bags and sacks – tons	160	4	94	98	93	—	—

(1)	Containerboard production represents machine production and includes volumes that are further processed into packaging and kraft bags and sacks by company facilities .

(2)	Recycling production includes volumes processed in Weyerhaeuser recycling facilities that are consumed by company facilities and brokered volumes.

Principal manufacturing facilities are located as follows:

Containerboard

Alabama, California, Iowa, Kentucky, Louisiana, North Carolina, Oklahoma and Oregon; Xalapa, Mexico

Packaging

Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Tennessee, Texas, Virginia, Washington and Wisconsin; Guanajuato, Ixtac, Mexico City and Monterrey, Mexico

Specialty packaging

California, Georgia, Illinois, Indiana, Kentucky, North Carolina, Ohio and Oregon

Recycling

Arizona, California, Colorado, Illinois, Iowa, Kansas, Maryland, Minnesota, Nebraska, North Carolina, Oregon, Tennessee, Texas, Utah, Virginia and Washington

Kraft bags and sacks

California, Missouri, Oregon, and Texas

REAL ESTATE AND RELATED ASSETS

Real estate operations are located as follows:

Single-family housing

California, Maryland, Nevada, Texas, Virginia and Washington

Residential land development

California, Maryland, Nevada, Texas, Virginia and Washington

Commercial and retail land development

California, Texas and Washington

Commercial projects

California

Real estate investments

Arizona, California, Colorado, Florida, Idaho, Illinois, Maryland, Nevada, Oregon, Utah, Virginia and Washington

LEGAL PROCEEDINGS

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below for a summary of legal proceedings.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 26, 2004.

MARKET PRICE FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The company’s common stock trades on the following exchanges under the symbol WY: New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange. Exchangeable shares of the company trade on the Toronto Stock Exchange under the symbol WYL. At December 26, 2004, there were approximately 12,819 holders of record of common shares and 1,320 holders of record of exchangeable shares of the company. Dividends per share data and the range of closing market prices for the company’s common stock for each of the four quarters in 2004 and 2003 are included in Note 25 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

On May 5, 2004, the company issued 16,675,000 common shares and received net proceeds from the offering, after deduction of the underwriting discount and other transaction costs, of $954 million.

Following is information about securities authorized for issuance under the company’s equity compensation plans:


	NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (A)	WEIGHTED AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (B)	NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (A)) (C)
Equity compensation plans approved by security holders	15,515,712	$56.12	17,010,999
Equity compensation plans not approved by security holders	N/A	N/A	N/A
Total	15,515,712	$56.12	17,010,999

SELECTED FINANCIAL DATA

Dollar amounts in millions, except per-share figures


PER SHARE	2004			2003		2002		2001		2000

Basic net earnings before effect of accounting changes	$	5.45		1.30		1.09		1.61		3.72
Effect of accounting changes		—		(.05	) ⁽²⁾	—		—		—

Basic net earnings	$	5.45		1.25		1.09		1.61		3.72

Diluted net earnings before effect of accounting changes	$	5.43		1.30		1.09		1.61		3.72
Effect of accounting changes		—		(.05	) ⁽²⁾	—		—		—

Diluted net earnings	$	5.43		1.25		1.09		1.61		3.72

Dividends paid	$	1.60		1.60		1.60		1.60		1.60
Shareholders’ interest (end of year)	$	38.17		31.95		29.93		30.45		31.17

FINANCIAL POSITION		2004		2003		2002		2001		2000

Total assets:
Weyerhaeuser	$	27,482		26,595		26,347		16,276		16,139
Real Estate and Related Assets		2,472		2,004		1,970		2,017		2,035

	$	29,954		28,599		28,317		18,293		18,174

Long-term debt (net of current portion):
Weyerhaeuser:
Long-term debt	$	9,277		11,503		11,907		5,095		3,953
Capital lease obligations		86		3		1		—		2

	$	9,363		11,506		11,908		5,095		3,955

Real Estate and Related Assets:
Long-term debt	$	853		870		745		522		200

Shareholders’ interest	$	9,255		7,109		6,623		6,695		6,832
Percent earned on average shareholders’ interest		15.7	%	4.0	%	3.6	%	5.2	%	12.0	%

OPERATING RESULTS		2004		2003		2002		2001		2000

Net sales and revenues:
Weyerhaeuser	$	20,170		17,844		16,771		13,084		14,603
Real Estate and Related Assets		2,495		2,029		1,750		1,461		1,377

	$	22,665		19,873		18,521		14,545		15,980

Net earnings before effect of accounting changes:
Weyerhaeuser	$	907 ⁽¹⁾		43 ⁽²⁾		30 ⁽³⁾		180 ⁽⁴⁾		676 ⁽⁵⁾
Real Estate and Related Assets		376		245		211		174		164

		1,283		288		241		354		840
Effect of accounting changes		—		(11	) ⁽²⁾	—		—		—

Net earnings	$	1,283		277		241		354		840


STATISTICS (UNAUDITED)		2004		2003		2002		2001		2000

Number of employees		53,646		55,162		56,787		44,843		47,244
Salaries and wages	$	3,043		3,071		2,928		2,296		2,260
Employee benefits	$	857		795		689		483		500
Total taxes	$	1,087		567		528		486		826
Timberlands (thousands of acres):
U.S. and Canadian fee ownership		6,379		6,677		7,159		5,935		5,938
U.S. and Canadian long-term leases		779		788		802		514		521
Long-term license arrangements in Canada		30,435		29,862		34,715		32,605		31,648
Number of shareholder accounts at year-end:
Common		12,819		13,726		14,551		16,127		17,437
Exchangeable		1,320		1,388		1,450		1,573		1,736
Weighted average shares outstanding (thousands)		235,453		221,595		220,927		219,644		225,419


1999		1998		1997		1996		1995		1994

2.99		1.48		1.72		2.34		3.93		2.86
(.43	) ⁽⁶⁾	—		—		—		—		—

2.56		1.48		1.72		2.34		3.93		2.86

2.98		1.47		1.72		2.33		3.92		2.86
(.43	) ⁽⁶⁾	—		—		—		—		—

2.55		1.47		1.72		2.33		3.92		2.86

1.60		1.60		1.60		1.60		1.50		1.20
30.54		22.74		23.30		23.21		22.57		20.86

1999		1998		1997		1996		1995		1994


16,400		10,934		11,071		10,968		10,359		9,750
1,939		1,900		2,004		2,628		2,894		3,408

18,339		12,834		13,075		13,596		13,253		13,158



3,945		3,397		3,483		3,546		2,983		2,713
1		2		2		2		2		—

3,946		3,399		3,485		3,548		2,985		2,713


357		580		682		814		1,608		1,873

7,173		4,526		4,649		4,604		4,486		4,290
9.0	%	6.4	%	7.4	%	10.2	%	18.2	%	14.3	%

1999		1998		1997		1996		1995		1994


11,544		10,050		10,611		10,568		11,318		9,714
1,236		1,192		1,093		1,009		919		1,117

12,780		11,242		11,704		11,577		12,237		10,831


495	⁽⁶⁾	214 ⁽⁷	⁾	271 ⁽⁸	⁾	434		981		576
121		80		71		29		(182	) ⁽⁹⁾	13

616		294		342		463		799		589
(89	) ⁽⁶⁾	—		—		—		—		—

527		294		342		463		799		589


1999		1998		1997		1996		1995		1994

44,770		36,309		35,778		39,020		39,558		36,665
1,895		1,695		1,706		1,781		1,779		1,610
392		351		355		370		408		357
579		437		478		557		736		618

5,914		5,099		5,171		5,326		5,302		5,587
495		241		237		229		171		156
32,786		27,002		23,715		22,863		22,866		17,849

18,732		19,559		20,981		22,528		23,446		24,131
1,590		—		—		—		—		—
205,599		198,914		198,967		198,318		203,525		205,543

(1)

2004 results reflect charges of $243 million less related tax effects of $83 million, or $160 million, for the early extinguishment of debt, impairment of assets, change in the method of estimating workers’ compensation liabilities, the net book value of technology donated to a university, closure of facilities, litigation charges, and integration and restructuring activities. 2004 results also reflect benefits of $387 million less related tax effects of $132 million, or $255 million, for the significant sale of nonstrategic timberlands in Georgia, sales of facilities, a tenure reallocation agreement with the British Columbia government, and a reduction in the reserve for hardboard siding claims.

(2)

2003 results reflect charges of $379 million less related tax effects of $130 million, or $249 million, for the sale or closure of facilities, integration and restructuring activities, terminating the MacMillan Bloedel pension plan for salaried employees in the United States, litigation charges, and the cumulative effect of a change in an accounting principle. 2003 results also reflect benefits of $230 million less related tax effects of $88 million, or $142 million, for the significant sales of nonstrategic timberlands in western Washington, Tennessee and the Carolinas and a gain on the settlement of an insurance claim .

(3)

2002 results reflect charges of $249 million less related tax effects of $86 million, or $163 million, for the closure of facilities, integration of acquisitions, terminating the MacMillan Bloedel pension plan for salaried employees in the United States, business interruption costs, and the write-off of debt issuance costs. 2002 results also reflect benefits of $164 million less related tax effects of $57 million, or $107 million, for the reversal of countervailing and anti-dumping accruals and the significant sale of nonstrategic timberlands in western Washington.

(4)

2001 results reflect charges of $157 million less related tax effects of $59 million, or $98 million, for the closure of facilities and integration of acquisitions, costs associated with streamlining internal support services, and costs of transitioning to a new shipping fleet. 2001 results also reflect tax benefits of $29 million.

(5)	2000 results reflect charges of $205 million less related tax effects of $76 million, or $129 million, for settlement of hardboard siding claims, closure of facilities, integration of acquisitions, and costs associated with streamlining internal support services.

(6)	1999 results reflect charges of $276 million less related tax effects of $102 million, or $174 million, for the cumulative effect of a change in an accounting principle, impairment of long-lived assets to be disposed of, closure costs related to acquisitions and Year 2000 remediation.

(7)	1998 results reflect charges of $67 million less related tax effects of $25 million, or $42 million, for closure of facilities.

(8)	1997 results reflect net charges of $13 million less related tax effects of $4 million, or $9 million, for closure and restructuring charges, net of gains on the sale of businesses.

(9)	1995 results reflect a charge for disposal of certain real estate assets of $290 million less related tax effect of $106 million, or $184 million.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ECONOMIC AND INDUSTRY FACTORS AFFECTING OPERATIONS

Historically, the company’s operating results have been affected by a variety of market conditions that influence demand and pricing for the company’s products. Certain factors, such as the health of the economy and the strength of the U.S. dollar, are cyclical in nature. The global economy, which affects the demand for a number of the company’s products, expanded strongly in 2004. In addition, the U.S. dollar weakened in 2004, making the company’s exports more competitive in offshore markets and also boosting U.S. manufacturing levels in general. Other factors, such as the surge in containerboard capacity in Asia and a trend toward electronic substitution for paper, may represent fundamental changes in the marketplace for the company’s products. The company’s results have also been affected by recent acquisitions, which have added substantial production capacity and significantly strengthened the company’s position in key market segments.

The pulp market continued to improve in 2004. Market pulp demand increased primarily as a result of the growth in Asia, especially China. In addition, the U.S. dollar weakened an additional 10 percent from 2003 levels relative to the euro, which enhanced the competitive position of North American market pulp producers by making pulp in Europe more costly relative to North American market pulp. The combined effect of stronger demand and the weaker dollar resulted in significantly higher pulp prices in 2004. However, approximately 35 percent of the company’s pulp capacity is based in Canada, and the appreciation of the Canadian dollar negatively affected the competitive position of these mills.

Demand for uncoated free sheet (UCFS) continued to be adversely affected by electronic technologies and the introduction of other paper products that have been designed to compete with UCFS in commercial printing markets. Despite favorable economic growth, U.S. industry shipments of UCFS increased only 1 percent in 2004. Industry prices for UCFS improved in 2004, due primarily to a weaker U.S. dollar and an improved economic environment.

Industrial production of non-durable goods, the primary factor affecting demand for boxes, grew 2.1 percent in 2004 after five years of no or declining growth. The weaker U.S. dollar made imported goods more costly and exports more competitive, which contributed to an increase in sales of U.S. manufactured goods. As a result, demand for boxes grew in 2004. Because the industry’s containerboard capacity has been decreasing for several years, the rebound in shipments also increased operating rates sharply in mid-2004. After three years of declining containerboard prices, prices increased in 2004.

Continued low interest rates allowed housing starts to remain at high levels in 2004. The company’s real estate business benefited from high levels of housing starts, and from its location in some of the stronger housing markets in the United States, such as Southern California, Las Vegas and the Washington D.C. area.

The company’s wood products businesses also benefited from strong markets for both new housing and for repair and remodeling due to high existing home sales. Lumber, oriented strand board (OSB) and plywood prices increased significantly in the first half of 2004, but fell sharply in the fourth quarter, in part due to seasonal factors.

The company’s Canadian lumber and OSB operations were negatively affected by the strong Canadian dollar. The U.S./Canadian lumber trade dispute has not been resolved. Lumber financial performance was adversely affected by duties paid as a result of countervailing duties assessed on products shipped to the U.S. The company’s average duty paid, including both the countervailing duty (CVD) and anti-dumping penalty, was 31.2 percent for most of 2004.

The timberlands business was positively affected by two key factors in 2004: record domestic demand for wood products and the weaker U.S. dollar, which boosted the demand for logs in the Japanese market. Western timber prices benefited from strong demand for Douglas fir lumber in California and increased demand for logs exported to Japan, while Southern timber prices benefited from tight supply conditions caused by weather and market-related factors.

RESULTS OF OPERATIONS


CONSOLIDATED RESULTS							AMOUNT OF CHANGE
Dollar amounts in millions, except per-share figures	2004		2003		2002		2004 vs. 2003		2003 vs. 2002
Net sales and revenues	$	22,665	$	19,873	$	18,521	$	2,792	$	1,352
Operating income		2,653		1,168		1,063		1,485		105
Net earnings		1,283		277		241		1,006		36
Net earnings per share, basic		5.45		1.25		1.09		4.20		0.16
Net earnings per share, diluted		5.43		1.25		1.09		4.18		0.16

Net sales and revenues increased $2.8 billion, or 14 percent, in 2004 as compared with 2003. Third-party sales were up in all of the company’s segments in 2004. The largest contributors to the increase were a $1.7 billion increase in sales of wood products, primarily due to a robust housing market and exceptionally strong prices for wood products recognized in the second and third quarters of 2004, and a $463 million increase in single-family home sales, due to both strong demand and higher average sales prices realized in 2004.

Net sales and revenues increased $1.4 billion, or 7 percent, in 2003 as compared with 2002. Third-party sales were up in all of the company’s segments in 2003. The largest contributors to the increase consisted of a $474 million increase in OSB and composite panel sales, due primarily to exceptionally strong demand and prices in the second half of 2003, and a $275 million increase in single-family home sales, due to both strong demand and higher average sales prices realized in 2003.

A summary of some significant items that are included in operating income and net earnings follows:


	OPERATING INCOME									NET EARNINGS
Dollar amounts in millions	2004			2003			2002			2004			2003			2002
(Charge) benefit:
Gains on sales of nonstrategic timberlands (including those disclosed in Note 18)	$	439		$	331		$	247		$	290		$	218		$	161
Gain on British Columbia tenure reallocation agreement		25			—			—			17			—			—
Integration and restructuring		(39	)		(103	)		(72	)		(26	)		(68	)		(47	)
Facility closures or sales		28			(143	)		(95	)		18			(94	)		(62	)
Pension and other postretirement benefits		(185	)		(140	)		28			(122	)		(92	)		18
Countervailing and anti-dumping charges		(118	)		(97	)		(64	)		(78	)		(64	)		(42	)
Countervailing duty reversal		—			—			47			—			—			31
Net litigation charges		(58	)		(84	)		—			(38	)		(65	)		—
Reversal of hardboard siding reserves		20			—			—			13			—			—
Donation of technology		(23	)		—			—			(15	)		—			—
Early extinguishment of debt		—			—			—			(48	)		—			(23	)
Change in accounting principle		—			—			—			—			(11	)		—

These and other factors that affected the comparison of net sales and revenues, operating income and net earnings are discussed below in the segment analyses.

As announced on February 18, 2005, the company reached a definitive agreement to sell its B.C. Coastal Group assets to Coastal Acquisition Ltd., a wholly-owned subsidiary of Brascan Corporation of Toronto, Canada for approximately $1.2 billion (Canadian), plus working capital. The transaction is not conditioned on financing, but is subject to regulatory approvals. The company expects to complete the sale in the second quarter of 2005. The company’s B.C. Coastal Group assets are divided between the Timberlands and Wood Products segments and the sale of these operations will affect results of operations for both of these segments in future periods.

TIMBERLANDS

Timberlands sales volume and annual production data is included in “Business” and “Properties” above. Following is a comparison of Timberlands net sales and revenues and contribution to earnings from year to year:


							AMOUNT OF CHANGE
Dollar amounts in millions	2004		2003		2002		2004 vs. 2003		2003 vs. 2002
Net sales and revenues ⁽¹⁾ :
Logs	$	822	$	730	$	657	$	92	$	73
Other products		280		264		273		16		(9	)

	$	1,102	$	994	$	930	$	108	$	64

Contribution to earnings	$	1,027	$	777	$	702	$	250	$	75

(1)	Prior year information has been restated to conform with the current year presentation and to reflect a change in segments. See Note 23 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

2004 COMPARED WITH 2003

Net sales and revenues in 2004 increased $108 million, or 11 percent, over 2003, due primarily to a $92 million increase in log sales. The volume of logs sold to export markets increased 6 percent and the volume of logs sold to domestic markets decreased 9 percent in 2004 compared to 2003. Log price realizations (which include freight and are net of normal sales deductions) increased 18 percent in the West and 4 percent in the South, resulting in an increase in net sales and revenues in 2004 even though overall volumes declined.

Contribution to earnings, which represents segment earnings before interest and taxes, increased $250 million, or 32 percent, in 2004. Items that affected the comparison of Timberlands contribution to earnings included the following:

Improved price realizations in the West resulted in a $123 million increase in contribution to earnings and improved price realizations in the South resulted in a $25 million increase in contribution to earnings in 2004 compared to 2003. Strong demand and improved export log prices contributed to the improvement in the West, while tight supplies as a result of weather and other market factors resulted in increased prices in the South. Higher prices in the B.C. Coastal operations contributed an additional $8 million in 2004.

Lower harvest levels on fee lands, primarily in the South, negatively affected segment earnings by $27 million in 2004 compared to 2003. The decrease in harvest levels in the South was primarily due to the sale of timberlands in Tennessee and the Carolinas, which occurred in the fourth quarter of 2003, and in part due to the sale of timberlands in Georgia in the third quarter of 2004.

Higher harvest costs in the West and South, primarily caused by increased fuel costs and difficult hurricane salvage operations, negatively affected earnings by $17 million in 2004. This was partially offset by a $14 million reduction in costs in the B.C coastal operations in 2004 compared to 2003.

Gains on sales of nonstrategic timberlands increased $108 million, or 33 percent, in 2004. Results for 2004 include a pretax gain of $271 million on the third quarter sale of timberlands in Georgia, compared to pretax gains of $205 million on the sales of timberlands in western Washington, Tennessee and the Carolinas in 2003. Sales of other nonstrategic timberlands that closed earlier than expected resulted in a $42 million increase in 2004 contribution to earnings compared to 2003. See Note 18 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

2003 COMPARED WITH 2002

Net sales and revenues increased $64 million, or 7 percent, in 2003 compared to 2002. The increase was primarily due to the inclusion of log sales from the former Willamette timberlands beginning February 11, 2002, while 2003 sales include a full period of sales from the former Willamette timberlands. The volume of logs sold increased approximately 525 thousand cunits, or 15 percent, in 2003. The impact of the increase in volumes was partially offset by a slight decrease in average prices realized for log sales.

Gains on sales of nonstrategic timberlands increased $84 million, or 34 percent, in 2003. Results for 2003 include a pretax gain of $144 million on sales of timberlands in western Washington and pretax gains of $61 million on the sales of timberlands in Tennessee and the Carolinas, compared to a pretax gain of $117 million on the sale of western Washington timberlands in 2002. Sales of other nonstrategic timberlands decreased $4 million in 2003. See Note 18 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

OUTLOOK

Timberlands earnings in the first quarter of 2005 are expected to be lower than fourth quarter 2004. Market conditions are expected to be similar to fourth quarter, but sales of nonstrategic timberlands are expected to be lower.

WOOD PRODUCTS

Wood Products sales volume and annual production data is included in “Business” and “Properties” above. Following is a comparison of Wood Products net sales and revenues and contribution (charge) to earnings from year to year:


								AMOUNT OF CHANGE
Dollar amounts in millions	2004		2003		2002			2004 vs. 2003		2003 vs. 2002
Net sales and revenues ⁽¹⁾ :
Softwood lumber	$	3,915	$	3,281	$	3,186		$	634	$	95
Plywood		929		784		700			145		84
Veneer		44		39		34			5		5
Composite panels		501		393		379			108		14
Oriented strand board		1,390		1,109		649			281		460
Hardwood lumber		365		350		333			15		17
Engineered lumber products		1,505		1,179		1,148			326		31
Logs		125		105		253			20		(148	)
Other products		1,069		945		865			124		80

	$	9,843	$	8,185	$	7,547		$	1,658	$	638

Contribution (charge) to earnings	$	1,055	$	59	$	(20	)	$	996	$	79

(1)	Prior year information has been restated to conform with the current year presentation and to reflect a change in segments. See Note 23 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

2004 COMPARED WITH 2003

Net sales and revenues increased $1.7 billion, or 20 percent, in 2004 compared with 2003. The increase was primarily due to higher average sales prices realized in most product lines, caused by strong markets in both new housing and in repair and remodeling related to high levels of existing home sales. The change in shipment volumes from 2003 did not have a significant effect on either the change in net sales and revenues or on the change in contribution (charge) to earnings.

Contribution to earnings, which represents segment earnings before interest and taxes, increased approximately $1.0 billion in 2004. Items that affected the comparison of Wood Products’ contribution to earnings included the following:

Higher average prices for most wood products, including structural panels, composite panels, softwood and hardwood lumber, and engineered lumber products contributed approximately $1.5 billion to segment earnings in 2004 compared to 2003.

Increases in costs for delivered raw materials, production costs, and prices for building materials purchased for resale negatively affected segment earnings by approximately $600 million in 2004 compared to 2003. Approximately half of that increase was attributable to price increases on building materials purchased for resale. Of the remaining increase, approximately $210 million represented increases in costs for delivered logs, oriented strand board (OSB), veneer, machine stress rated (MSR) lumber, and chemical additives. Log costs in the West increased due to strong export and domestic demand. Log costs in the South increased due to the effects of weather and other market factors. Log costs in Canada increased primarily as a result of increases in provincial stumpage rates. Costs of OSB, veneer, and MSR lumber used in the manufacture of engineered lumber products increased due to the strong new housing and repair and remodeling markets noted above. Purchase costs for chemical additives used in the manufacture of panels and engineered lumber continued to increase due to an ongoing world-wide supply shortage and high demand. The remaining cost variance was attributable to a variety of factors, including press downtime and repair costs at three OSB mills, as well as the strengthening of the Canadian dollar against the U.S. dollar in 2004 compared to 2003.

Wood Products recognized a net pretax gain of $66 million for integration, restructuring and closure or sale of facilities in 2004 compared to net charges of $101 million in 2003. The net gain in 2004 includes pretax gains of $68 million for the sale of facilities, including an OSB mill in Slave Lake, Alberta, and a mill site on Vancouver Island, British Columbia.

Segment earnings for 2004 include a pretax gain of $20 million for compensation related to the tenure reallocation agreement in British Columbia and a $20 million gain recognized on the reduction in the reserve for hardboard siding claims. In addition, charges recognized in connection with settlements and an adverse judgment in alder litigation matters were $65 million in 2004, compared to $79 million in 2003. See Note 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

2003 COMPARED WITH 2002

Net sales and revenues increased $638 million, or 8 percent, in 2003 compared with 2002. The increase was primarily due to higher average sales prices realized for OSB and plywood, offset somewhat by lower sales prices realized for structural and appearance grades of softwood lumber. Partially offsetting this increase was a $148 million decrease in log sales and revenues compared with 2002. Most of this decrease was in the segment’s coastal British Columbia operations, which experienced a strike in the latter part of 2003. 2002 results for Wood Products include sales made by former Willamette facilities beginning February 11, 2002, while results for 2003 include sales made by former Willamette facilities for the full year.

Contribution to earnings in 2003 was favorably impacted by price increases in structural panels due to strong demand and restricted supply. Low dealer inventories early in the year, coupled with no major new capacity added by the industry in 2003, served to create significant upward pressure on OSB and plywood prices in the second half of 2003. The Random Lengths 7/16” North Central indicator for OSB peaked at $465 per thousand square feet and remained at that level for eight weeks until it dropped sharply at the end of November 2003 and ultimately hit $220 per thousand square feet in early December 2003. Plywood experienced a similar pricing trend. The increase in average realizations for OSB, plywood and veneer, net of the effect of increased OSB, plywood and veneer costs, contributed approximately $430 million to earnings in 2003.

Softwood lumber unit shipments increased 358 million board feet, or 4 percent, in 2003, which was partially offset by a decline in average sales prices realized of $4 per thousand board feet. Most of the decline in the average lumber prices realized was due to the CVD and anti-dumping duties incurred by the segment for the full year of 2003, compared with the partial period from May 22 to December 29 in 2002. This combination of price/mix and volume effects for softwood lumber had an unfavorable effect of approximately $100 million on the segment’s contribution to earnings in 2003.

OSB and veneer comprise a significant portion of the raw material base for engineered lumber products. Consequently, the rise in OSB and veneer prices had a negative effect on this portion of the segment’s business, and the contribution to earnings from engineered lumber products declined approximately $50 million in 2003 when compared with 2002. This decline occurred despite very robust demand. A price increase was announced for engineered lumber in the fourth quarter of 2003, but the effect of the price increase was not fully realized until the first half of 2004.

The company recognized a charge of $79 million against first quarter 2003 earnings as a result of an adverse verdict in an alder log antitrust case. See Note 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

Net pension expense was $22 million in 2003 compared with pension income of $55 million in 2002. This change in pension cost negatively affected the segment’s contribution to earnings by $77 million in 2003 as compared with 2002.

Wood Products recognized charges for integration, restructuring and closure or sale of facilities of $101 million in 2003 compared with charges of $55 million in 2002.

OUTLOOK

Wood Products earnings in the first quarter of 2005 are expected to increase from fourth quarter 2004, due to improving prices and strong housing starts.

PULP AND PAPER

Pulp and Paper sales volume and annual production data is included in “Business” and “Properties” above. Following is a comparison of Pulp and Paper net sales and revenues and contribution (charge) to earnings from year to year:


								AMOUNT OF CHANGE
Dollar amounts in millions	2004		2003			2002		2004 vs. 2003		2003 vs. 2002
Net sales and revenues ⁽¹⁾ :
Pulp	$	1,471	$	1,305		$	1,196	$	166	$	109
Paper		2,226		2,182			2,163		44		19
Coated groundwood		156		140			126		16		14
Liquid packaging board		208		198			179		10		19
Other products		54		26			19		28		7

	$	4,115	$	3,851		$	3,683	$	264	$	168

Contribution (charge) to earnings	$	104	$	(82	)	$	82	$	186	$	(164	)

(1)	Prior year information has been restated to conform with the current year presentation and to reflect a change in segments. See Note 23 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

2004 COMPARED WITH 2003

Net sales and revenues increased $264 million, or 7 percent, for 2004 compared to 2003. This was largely due to an increase in pulp price realizations (which include freight and are net of normal sales deductions) of approximately $49 per ton, or 9 percent, in 2004 compared to 2003. Average fine paper price realizations remained constant in 2004 compared to 2003. Stronger demand resulting from growth in Asia and a weaker U.S. dollar resulted in an improved pulp market in 2004. During the second half of 2004, general market conditions for fine paper improved significantly, resulting in improved product pricing, and offsetting general market weakness in the first half of the year when prices were below 2003 levels. Unit shipments for both pulp and fine paper sales were higher in 2004 than in 2003. Pulp shipments increased approximately 79,000 tons or 3 percent, and paper shipments increased approximately 54,000 tons, or 2 percent, compared to 2003.

Contribution (charge) to earnings, which represents segment earnings before interest and taxes, was $104 million in 2004, compared to a loss of $82 million in 2003. Items that affected the comparison of Pulp and Paper’s contribution to earnings included the following:

Increases in pulp prices contributed approximately $123 million to segment earnings in 2004 compared to 2003.

Operating efficiencies, reduced market downtime and ongoing cost savings associated with the closure of two paper machines during 2003, and other productivity improvements resulted in cost reductions of approximately $136 million in 2004 compared to 2003. This was partially offset by the strengthening of the Canadian dollar against the U.S. dollar in 2004, which increased operating costs of the segment’s Canadian facilities translated into U.S. dollars, and negatively affected the segment’s earnings by approximately $62 million in 2004 as compared with 2003.

Increased costs for raw materials, primarily chips, negatively affected segment earnings by approximately $45 million in 2004.

Freight costs were approximately $34 million higher in 2004 than in 2003, due primarily to fuel surcharges and higher costs resulting from decreased availability of trucks, rail cars, and marine vessels.

Pulp and Paper costs associated with integration, restructuring and closure or sale activities were $18 million in 2004, a decrease of $44 million from $62 million in 2003, which included costs relating to the closure of two fine paper machines.

2003 COMPARED WITH 2002

Net sales and revenues increased $168 million, or 5 percent, in 2003 compared to 2002, due primarily to an increase in pulp unit shipments of 101,000 tons and a 5 percent increase in the prices realized for pulp sales. The price increase was largely driven by improved demand and pricing for paper grade pulp in North America, Europe and Asia. Fine paper unit shipments increased 80,000 tons, and sales prices realized for fine paper declined 2 percent in 2003 compared with 2002. The 2003 results include sales made by former Willamette facilities for the full period, while 2002 results include sales made by the former Willamette facilities beginning February 11, 2002.

Market-related downtime at the fine paper mills increased by 176,000 tons in 2003 compared with 2002 in spite of the permanent closure of two paper machines during 2003 as productivity continues to increase.

The strengthening of the Canadian dollar against the U.S. dollar in 2003 adversely affected the segment’s net manufacturing costs, primarily due to the size of its presence in Canada.

Integration, restructuring and facility closure charges were $68 million higher in 2003 compared with 2002.

Depreciation expense increased approximately $64 million in 2003 compared with 2002, mostly due to inclusion of depreciation on the assets acquired from Willamette for the full year in 2003 and capital additions completed in 2002 and 2003.

An increase in net pension expense negatively affected the segment’s contribution to earnings by $31 million in 2003 compared with 2002.

OUTLOOK

First quarter 2005 Pulp and Paper earnings are expected to be similar to the fourth quarter of 2004. Prices for papergrade pulp, which began to improve late in the fourth quarter of 2004, should continue to improve. Prices for fine paper products are expected to experience a seasonably modest decline.

CONTAINERBOARD, PACKAGING AND RECYCLING

Containerboard, Packaging and Recycling sales volume and annual production data is included in “Business” and “Properties” above. Following is a comparison of Containerboard, Packaging and Recycling net sales and revenues and contribution to earnings from year to year:


							AMOUNT OF CHANGE
Dollar amounts in millions	2004		2003		2002		2004 vs. 2003			2003 vs. 2002
Net sales and revenues:
Containerboard	$	368	$	304	$	350	$	64		$	(46	)
Packaging		3,584		3,544		3,466		40			78
Recycling		347		247		229		100			18
Kraft bags and sacks		80		80		75		—			5
Other products		156		147		92		9			55

	$	4,535	$	4,322	$	4,212	$	213		$	110

Contribution to earnings	$	249	$	262	$	335	$	(13	)	$	(73	)

2004 COMPARED WITH 2003

Net sales and revenues increased $213 million, or 5 percent, in 2004 as compared with 2003. Approximately half of the increase is due to a 40 percent increase in sales of recycled materials, resulting from both higher price realizations (which include freight and are net of normal sales deductions) and higher unit shipments of recycled materials. The increase in sales of recycled materials reflects an overall increase in the demand for pulp, paper and containerboard, coupled with incremental sales from a new supply source acquired in 2004. In addition, containerboard price realizations increased approximately $26 per ton, or 8 percent, in 2004 compared to 2003, and unit shipments increased approximately 111,000 tons, or 12 percent, in 2004, primarily due to productivity improvements in the company’s mills. Price realizations for corrugated packaging increased approximately 1 percent, while packaging unit shipments remained comparable in 2004 and 2003. According to the Fiber Box Association, industry unit shipments for packaging increased 2.8 percent in 2004 compared to 2003.

Contribution to earnings, which represents segment earnings before interest and taxes, declined $13 million from $262 million in 2003 to $249 million in 2004. Items that affected the comparison of Containerboard, Packaging and Recycling contribution to earnings included the following:

Increases in packaging price realizations in 2004 positively affected the segment’s contribution to earnings by approximately $34 million and increases in containerboard price realizations contributed approximately $26 million in 2004. Increased price realizations for recycled materials were substantially offset by increases in costs for materials purchased or brokered by the recycling division.

Non-fiber manufacturing costs at the company’s containerboard mills and packaging plants were approximately $12 million lower in 2004 than in 2003, due primarily to a facility closure in the third quarter of 2003 and increased

productivity in the containerboard mill system. The overall reduction in non-fiber manufacturing costs was achieved despite increased costs for energy in 2004, which resulted mainly from higher purchase prices for natural gas. Productivity in the containerboard mill system, measured on a tons produced per operating day basis, improved 2.5 percent in 2004 compared to 2003.

Freight costs were approximately $12 million higher in 2004 than in 2003, due primarily to fuel surcharges and higher costs resulting from decreased availability of trucks, rail cars, and marine vessels.

Increases in raw material costs in 2004 negatively affected contribution to earnings by approximately $90 million. The cost of old corrugated containers (OCC) delivered to the company’s containerboard mills increased approximately $20 per ton and costs for chips delivered to the company’s containerboard mills increased approximately $3 per ton in 2004.

Market-related downtime at the containerboard mills decreased by approximately 269,000 tons in 2004 compared with 2003, primarily due to a facility closure in 2003 and improving economic conditions.

Net pension expense was $19 million in 2004 compared to a net pension expense of $2 million in 2003.

Segment results for 2004 include net charges for property casualty losses, integration, restructuring, sale or closure of facilities of $13 million, compared to $18 million in 2003. 2003 also included a $23 million pretax charge for the settlement of a class action linerboard antitrust lawsuit. See Note 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

2003 COMPARED WITH 2002

Net sales and revenues increased $110 million, or 3 percent, in 2003 compared to 2002. The increase was primarily due to the inclusion of sales made by former Willamette facilities for the full year in 2003, while 2002 results included sales made by the former Willamette facilities beginning February 11, 2002. This increase was primarily evident in packaging, where unit shipments increased approximately 2.4 billion square feet, or 3 percent, in 2003. Conversely, containerboard unit shipments declined 93,000 tons, or 9 percent, in 2003 compared to 2002, due primarily to a higher degree of integration within the company facilitated by the Willamette acquisition. Prices realized for containerboard and packaging were down 4 percent and 1 percent, respectively, in 2003, due largely to sluggish economic conditions.

Contribution to earnings was negatively impacted by higher manufacturing costs. Energy and chip costs increased significantly in 2003, primarily due to an increase in purchase prices for these items. These increases were mostly offset by lower maintenance and other manufacturing costs, coupled with a decrease in the delivered cost for old corrugated containers (OCC).

Market-related downtime at the containerboard mills increased by approximately 108,000 tons in 2003 compared with 2002 in spite of the permanent closure of three machines in 2002 and one machine in 2003.

Integration, restructuring and facility closure costs were $18 million in 2003, compared to $60 million in 2002.

A charge of $23 million was recognized in the third quarter of 2003 for the settlement of the class action linerboard antitrust lawsuit. See Note 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

Net pension expense was $2 million in 2003 compared with pension income of $47 million in 2002, resulting in a negative impact on contribution to earnings of $49 million in 2003 compared to 2002.

OUTLOOK

Containerboard, Packaging and Recycling earnings for the first quarter of 2005 are expected to be lower than fourth quarter 2004 earnings, primarily due to the continuing rain in southern California and Arizona and its anticipated adverse

effect on agricultural production in that region. The company has recently announced a $50 per ton price increase for containerboard. Implementation of this increase is expected to begin during the second quarter of 2005.

REAL ESTATE AND RELATED ASSETS

Single-family unit statistics for Real Estate and Related Assets are included in “Business” and “Properties” above.


							AMOUNT OF CHANGE

Dollar amounts in millions	2004		2003		2002		2004 vs. 2003		2003 vs. 2002

Net sales and revenues	$	2,495	$	2,029	$	1,750	$	466	$	279

Contribution to earnings	$	610	$	392	$	336	$	218	$	56

Following are the key items that affected the comparison of net sales and revenues and contribution to earnings for Real Estate and Related Assets from year to year:


							AMOUNT OF CHANGE

Dollar amounts in millions, except average sales price	2004		2003		2002		2004 vs. 2003		2003 vs. 2002

Single-family operations:
Net sales and revenues	$	2,193	$	1,730	$	1,455	$	463	$	275
Units closed		5,264		4,626		4,280		638		346
Average sales price	$	417,000	$	374,000	$	340,000	$	43,000	$	34,000

2004 COMPARED WITH 2003

Net sales and revenues and contribution to earnings, which represents segment earnings before taxes, increased in 2004 compared to 2003, primarily due to increases in the quantity and prices for single-family home sales closed. All of the geographic markets in which Real Estate and Related Assets homebuilding businesses operate remained strong in 2004 due largely to low mortgage interest rates. Single-family gross margin for the homebuilding businesses (net sales less cost of goods sold and period costs) was 29.7 percent in 2004 compared to 25.7 percent in 2003.

Contribution to earnings for 2004 includes net pretax gains of $75 million on land and lot sales compared to $41 million in 2003. Net gains on commercial and multi-family project sales were $14 million in 2003. There were no comparable sales in 2004.

2003 COMPARED WITH 2002

Net sales and revenues and contribution to earnings increased in 2003 compared to 2002, primarily due to increases in the quantity and prices for single-family home sales closed. All of the geographic markets in which Real Estate and Related Assets homebuilding businesses operate were strong in 2003 due largely to low mortgage interest rates. Single-family gross margin for the homebuilding businesses was 25.7 percent in 2003 compared to 24.2 percent in 2002.

Contribution to earnings for 2003 includes net pretax gains of $41 million on land and lot sales compared to $34 million in 2002. Net gains on commercial and multi-family project sales were $14 million in 2003 compared to $27 million in 2002.

OUTLOOK

The backlog of homes sold, but not closed, as of December 26, 2004, is near six months. Real Estate and Related Assets earnings in the first quarter of 2005 are expected to decline seasonally from the fourth quarter of 2004 due to decreased single-family home closings in the markets in which Real Estate and Related Assets operates.

CORPORATE AND OTHER


										AMOUNT OF CHANGE

Dollar amounts in millions	2004			2003			2002			2004 vs. 2003			2003 vs. 2002

Net sales and revenues	$	575		$	492		$	399		$	83		$	93

Contribution (charge) to earnings	$	(271	)	$	(176	)	$	(293	)	$	(95	)	$	117

Corporate and Other includes marine transportation (Westwood Shipping Lines, a wholly owned subsidiary); distribution and converting facilities located outside North America; and general corporate support activities.

2004 COMPARED WITH 2003

Net sales and revenues of the Corporate and Other segment increased $83 million, or 19 percent, in 2004 compared to 2003.

Net sales and revenues of the company’s international operations increased approximately 29 percent in 2004, due in part to a strong Australian housing market that resulted in increased prices and increased sales volumes for the company’s Australian wood products distribution business. In addition, sales volumes in the company’s European composites business increased in 2004 primarily resulting from increased production on a continuous press that was installed during 2003.

Net sales and revenues of Westwood Shipping Lines increased approximately 12 percent in 2004 compared to 2003, primarily as a result of increases in container rates, primarily import containers, and increased shipment volumes.

Charge to earnings, which represents segment earnings before interest and taxes, increased $95 million in 2004 compared to 2003. Items that affected the comparison of Corporate and Other charge to earnings included the following:

Foreign exchange transactions gains were $26 million in 2004 compared to $107 million in 2003. Foreign exchange gains and losses result from changes in exchange rates primarily related to the company’s Canadian and New Zealand operations.

Variable compensation expense, which relates primarily to corporate-sponsored employee incentive compensation plans with awards based on either total company financial performance or changes in the price of the company’s common shares, was $69 million in 2004 compared to $44 million in 2003.

Pretax gains recognized in connection with the settlement of Cemwood insurance claims were $7 million in 2004 compared to $25 million in 2003.

Charges for integration and restructuring in the Corporate and Other segment were $20 million in 2004 compared to $63 million in 2003. The decrease in integration and restructuring charges in 2004 is primarily due to a $26 million decrease in expenses recognized in connection with change-in-control agreements related to the Willamette acquisition and a decrease in severance costs recognized in connection with the company’s overall cost-reduction efforts. See Note 16 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

Charges for 2004 also include a pretax charge of $29 million recognized in connection with the impairment of assets in the company’s European manufacturing operations and a pretax charge of $23 million recognized in connection with the donation of technology to a university. There were no comparable charges in 2003.

2003 COMPARED WITH 2002

Net sales and revenues of the Corporate and Other segment increased $93 million, or 23 percent, in 2003 compared to 2002.

Net sales and revenues of the company’s international operations increased approximately 28 percent in 2003 compared to 2002, due in part to a strong Australian housing market that resulted in increased prices and increased sales volumes for the company’s Australian wood products distribution business. In addition, sales volumes in the company’s European composites business increased in 2003 primarily resulting from increased production on a continuous press that was installed during 2003.

Net sales and revenues of Westwood Shipping Lines increased approximately 16 percent in 2003 compared to 2002. Increases in container rates, primarily import containers, and increased shipment volumes were the primary reasons for the increase.

Charge to earnings, which represents segment earnings before interest and taxes, decreased $117 million in 2003 compared to 2002. Items that affected the comparison of Corporate and Other charge to earnings included the following:

Foreign exchange transactions gains were $107 million in 2003 compared to $32 million in 2002. Foreign exchange gains and losses result from changes in exchange rates primarily related to the company’s Canadian and New Zealand operations.

Variable compensation expense, which relates primarily to corporate-sponsored employee incentive compensation plans with awards based on either total company financial performance or changes in the price of the company’s common shares, was $44 million in 2003 compared to $10 million in 2002.

Pretax charges recognized in connection with the termination of the MacMillan Bloedel pension plan for U.S. employees were $6 million in 2003 compared to $35 million in 2002.

A pretax gain of $25 million was recognized in 2003 in connection with the settlement of Cemwood insurance claims.

INTEREST EXPENSE

Interest expense incurred by Weyerhaeuser was $838 million, $815 million and $821 million in 2004, 2003 and 2002, respectively. Interest expense incurred includes pretax charges of $73 million recognized in the second and fourth quarters of 2004 and $35 million recognized in the first quarter of 2002 in connection with the early extinguishment of debt. Excluding these charges, interest expense incurred in 2004 was $50 million less than in 2003, principally a result of approximately $1.9 billion of debt repayments that occurred throughout 2004. Excluding the charge for early extinguishment of debt recognized in 2002, interest expense incurred in 2003 increased over 2002, principally due to the debt issued during the first quarter of 2002 to finance the Willamette acquisition.

INCOME TAXES

The company’s effective income tax rate was 34.0 percent for 2004 and 2003, and 35.0 percent for 2002. The company’s effective income tax rate is affected by state income taxes, the benefits of tax credits and the export sales incentive.

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE

The company adopted the provisions of Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations , as of the beginning of 2003. The cumulative effect of adopting the accounting principle was $11 million, or 5 cents per share, after taxes. The effect on results reported for 2002 would not have been material had the provisions of Statement 143 been in place during the comparable period.

LIQUIDITY AND CAPITAL RESOURCES

General

The company is committed to the maintenance of a sound and conservative capital structure. This commitment is based on 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 and Weyerhaeuser Real Estate Company (WRECO) and related assets, 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

Consolidated net cash provided by operations was $2.2 billion in 2004, an increase of $394 million over $1.8 billion of net cash provided by operations in 2003. The primary components of that net increase are as follows:

Cash received by the company from customers increased approximately $2.7 billion in 2004 as compared with 2003. This increase was due primarily to an increase in cash received from the sale of wood products and increased proceeds from Real Estate and Related Assets home sales.

Net cash paid to employees, suppliers and others by the company increased approximately $1.7 billion in 2004, compared with 2003. The $1.2 billion increase for Weyerhaeuser is largely attributable to increases in the costs of raw materials used in the manufacture of various wood products, pulp, paper and containerboard, and in the cost of building materials purchased for resale. The increase of approximately $475 million for Real Estate and Related Assets is attributable to an increase in the number of homes constructed and land acquired for future development.

Cash paid for interest, net of the amount capitalized, was $69 million higher in 2004 than in 2003. This increase included approximately $68 million of premiums and related costs paid in connection with the early extinguishment of debt in the second and fourth quarters of 2004.

Net cash paid for income taxes was $521 million in 2004, an increase of $542 million over cash received of $21 million in 2003. The increase in taxes paid is primarily due to tax payments made on significantly higher pretax earnings during 2004.

Consolidated net cash provided by operations was $1.8 billion in 2003, an increase of $323 million from $1.5 billion in 2002. The primary components of that change are as follows:

Cash received by the company from customers increased approximately $1.4 billion in 2003 compared with 2002. This increase is primarily due to an increase in cash received from the sale of oriented strand board and composite panels and the inclusion of activity of the former Willamette operations for a full year in 2003 and only after February 11 in 2002.

Net cash paid to employees, suppliers and others by the company increased approximately $900 million in 2003 compared with 2002. The increase was largely attributable to an increase in manufacturing costs and unit shipments in certain of the company’s product lines, due in part to inclusion of activity of the former Willamette operations for a full year in 2003 and only after February 11 in 2002.

Cash paid for interest, net of the amount capitalized, was $188 million higher in 2003 than in 2002. The increase was due to a higher average level of debt outstanding during 2003, incurred primarily as a result of the Willamette acquisition.

Net cash paid received for income taxes was $21 million in 2003, which represented a net increase of $67 million over $46 million of cash paid in 2002.

Investing

Capital spending by segment, excluding acquisitions and Real Estate and Related Assets, were as follows:


Dollar amounts in millions	2004		2003		2002

Timberlands	$	55	$	58	$	63
Wood Products		147		145		219
Pulp and Paper		154		290		424
Containerboard, Packaging and Recycling		85		86		167
Corporate and Other		63		47		87

	$	504	$	626	$	960

Weyerhaeuser currently anticipates capital expenditures for 2005, excluding acquisitions and Real Estate and Related Assets, of approximately $850 million; however, this level of capital expenditures could increase or decrease as a consequence of a number of factors, including future economic conditions and weather.

Weyerhaeuser received net cash proceeds from significant sales of nonstrategic timberlands of $384 million in 2004, $437 million in 2003 and $174 million in 2002. Proceeds from the sale of property, equipment and other assets for 2004 include approximately $105 million related to the sale of Wood Products facilities. See Notes 15 and 18 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

The company spent $6.1 billion, net of cash acquired, during the first quarter of 2002 to purchase the outstanding shares of Willamette stock.

Internally generated cash flows provided the cash needed to meet the company’s capital expenditure, investment and other requirements in 2004.

Financing

On May 5, 2004, the company issued 16,675,000 common shares and received net proceeds from the offering, after deduction of the underwriting discount and other transaction costs, of $954 million. The company also received $180 million in cash proceeds from the exercise of stock options during 2004, compared to $60 million received in 2003 and $67 million received in 2002. Higher average market prices for the company’s common shares during 2004 compared to 2003 and 2002, resulted in a significant increase in the number of employee stock option exercises. The company used the proceeds from the stock offering, along with proceeds from the sale of nonstrategic timberlands and cash provided by operations, to reduce its outstanding debt by approximately $1.9 billion during 2004. As of December 26, 2004, the company, including Real Estate and Related Assets, had approximately $10.6 billion in outstanding debt, compared to approximately $12.5 billion outstanding as of December 28, 2003.

The company’s debt-to-total capital ratio is as follows:


Dollar amounts in millions	2004			2003			2002
Notes payable and commercial paper:
Weyerhaeuser	$	3		$	4		$	788
Real Estate and Related Assets		2			1			63
Long-term debt:
Weyerhaeuser		9,766			11,593			11,907
Real Estate and Related Assets		867			893			814
Capital lease obligations:
Weyerhaeuser		103			4			5

Total debt		10,741			12,495			13,577
Minority Interest:
Weyerhaeuser		25			5			5
Real Estate and Related Assets		73			30			40
Deferred income taxes:
Weyerhaeuser		4,533			4,294			4,056
Real Estate and Related Assets		(22	)		(10	)		16
Shareholders’ interest		9,255			7,109			6,623

Total capital	$	24,605		$	23,923		$	24,317

Debt-to-total-capital ratio		43.7	%		52.2	%		55.8	%

Excluding the Real Estate and Related Assets amounts disclosed above and excluding Weyerhaeuser’s investment in Real Estate and Related Assets of $1.1 billion as of December 26, 2004, $703 million as of December 28, 2003, and $620 million as of December 29, 2002, Weyerhaeuser’s debt-to-total-capital ratio was 43.6 percent, 52.0 percent and 55.8 percent as of the end of fiscal 2004, 2003 and 2002, respectively.

The company’s intent, over time, is to pay dividends to common shareholders in the range of 35 to 45 percent of common share earnings. The company paid dividends of $372 million in 2004, $355 million in 2003 and $353 million in 2002. Dividends paid in 2004 increased over amounts paid in 2003 and 2002 due to the increased number of common shares outstanding as a result of the issuance of 16,675,000 shares of common stock in May 2004. Weyerhaeuser received payments of $1 million, $157 million and $170 million in 2004, 2003 and 2002, respectively, from its Real Estate and Related Assets subsidiaries in the form of intercompany dividends and returns of capital. These intercompany payments are eliminated on a consolidated basis.

Weyerhaeuser Company and WRECO had 364-day and multi-year revolving lines of credit in the maximum aggregate amount of $2.5 billion as of December 26, 2004. The multi-year revolving line of credit expires in March 2007. WRECO can borrow up to $400 million under the 364-day facility. Neither of the entities is a guarantor of the borrowing of the other under either of these credit facilities. As of December 26, 2004, approximately $2.5 billion was available under these bank facilities for incremental borrowings.

The company is currently a defendant in the Paragon Trade Brands bankruptcy lawsuit. Findings of fact and conclusions of law on the damages phase in the Paragon Trade Brands litigation were submitted on February 9, 2004. The bankruptcy court has not yet issued an opinion on damages. The company has not recorded a reserve related to the Paragon Trade Brands lawsuit and is unable to estimate at this time the amount of damages, if any, that may be awarded in this lawsuit. This case is described in Note 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below. The company disagrees with the assertions in the Paragon Trade Brands lawsuit and intends to appeal any

judgment of liability and damage award that may be issued by the bankruptcy court in this lawsuit. In the event of any such appeal, the company will be required to post cash or bonds in the amount of the damage award being appealed. The company believes that if judgment is entered against the company in the lawsuit and damages are awarded in the amounts claimed by the plaintiffs, the company has sufficient liquidity to enable the company to post the required appeal bonds for the Paragon Trade Brands lawsuit.

Off-Balance Sheet Arrangements

Off-balance sheet arrangements have not had, and are not reasonably likely to have, a material effect on the company’s current or future financial condition, results of operations or cash flows. See Notes 1, 11 and 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below for disclosures of the company’s accounts receivable sales, surety bonds, letters of credit and guarantees and lot purchase option contracts with and subordinated financing provided to unconsolidated variable interest entities. See Note 18 of Notes to Financial Statements for information regarding special purpose entities the company has consolidated.

Contractual Obligations and Commercial Commitments

The following table summarizes the company’s significant contractual obligations as of December 26, 2004. See Notes 6, 12 and 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.


	PAYMENTS DUE BY PERIOD

Dollar amounts in millions	TOTAL		LESS THAN 1 YEAR		1–3 YEARS		3–5 YEARS		MORE THAN 5 YEARS

Long-term debt obligations:
Weyerhaeuser	$	9,771	$	489	$	1,806	$	882	$	6,594
Real Estate and Related Assets		867		14		251		192		410
Interest on long-term debt obligations: ⁽¹⁾
Weyerhaeuser		8,750		653		1,182		1,013		5,902
Real Estate and Related Assets		278		55		81		59		83
Operating lease obligations:
Weyerhaeuser		630		126		144		85		275
Real Estate and Related Assets		61		13		17		13		18
Purchase obligations ⁽²⁾		1,290		540		215		125		410
Estimated minimum pension funding requirement		41		41		—		—		—

Total	$	21,688	$	1,931	$	3,696	$	2,369	$	13,692

(1)

Amounts presented for interest payments assume that all long-term debt obligations outstanding as of December 26, 2004 will remain outstanding until maturity, and interest rates on variable-rate debt in effect as of December 26, 2004 will remain in effect until maturity. As of December 26, 2004, entities that Weyerhaeuser consolidated under Interpretation 46R had $41 million of long-term debt obligations subject to interest rate swap agreements. See Note 1 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below. Interest payments related to this debt are included in the above amounts at the fixed rate obligation the consolidated entities have incurred under these interest rate swap agreements. Based on the variable interest rates in effect as of December 26, 2004, payments under these swap agreements are expected to be approximately $1 million in 2005, and are expected to decline annually through the expiration of the swap agreements, which expire from 2006 to 2009.

(2)

ENVIRONMENTAL MATTERS, LEGAL PROCEEDINGS AND OTHER CONTINGENCIES

Hardboard Siding Claims

The company announced in June 2000 it had entered into a proposed nationwide settlement of class action suits relating to sales of hardboard siding and, as a result, took a pretax charge of $130 million to cover the estimated cost of the settlement and related claims. The court approved the settlement in December 2000. An appeal of the settlement was denied in March 2002, and the settlement is now binding on all parties.

The company reassessed the adequacy of these reserves and increased its reserves by an additional $43 million during 2001. Claims and related costs in the amount of $7 million in 2004, $11 million in 2003 and $11 million in 2002 were

paid against the reserve. In the third quarter of 2004, an adjustment was made to reduce the reserve by $20 million based upon a review of the activities and trends over the last four years.

The company has negotiated settlements with its insurance carriers for recovery of certain costs related to these claims. As of the end of 2004, the company had received payments from insurance carriers in the amount of $52 million. For further discussion regarding this matter, including claims data, see Note 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

Other

Additional discussion of environmental matters, legal proceedings and other contingencies is included in Note 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below.

ACCOUNTING MATTERS

Critical Accounting Policies

The company’s significant accounting policies are described in Note 1 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below. The company’s critical accounting policies are those that may involve a higher degree of judgment, estimates and complexity. The company believes its most critical accounting policies include those related to the company’s pension and postretirement benefit plans, potential impairments of long-lived assets and goodwill, reserves for matters such as legal and environmental issues and product liability reserves, and depletion accounting. While the company bases its judgments and estimates on historical experience and other assumptions that management believes are appropriate and reasonable under current circumstances, actual resolution of these matters may differ from recorded estimated amounts.

Pension and Postretirement Benefit Plans The company sponsors several pension and postretirement benefit plans for its employees. Key assumptions used to determine the amounts recorded in the company’s financial statements include the discount rate, the expected return on plan assets, anticipated trends in health care costs, assumed increases in salaries, mortality rates, and other factors. These assumptions are reviewed with external advisors at the end of each fiscal year and are updated as appropriate. Actual experience that differs from the assumptions could have a significant effect on the company’s financial position, results from operations or cash flows. Other factors that affect the level of net periodic benefit income or expense recognized in a given year include actual pension fund performance, plan changes, and changes in plan participation or coverage.

The company’s expected rate of return on plan assets reflects the company’s best estimate regarding the long-term rate of return on plan assets based on the information that was available as of the measurement date, including historical returns for the last 20 years. As of December 26, 2004, the company is using an expected rate of return on pension plan assets assumption of 9.5 percent. This assumption, which will be used in the determination of the 2005 net periodic benefits costs, is the same assumption that was used for 2004 and 2003. Each 0.5 percent reduction in the expected return on plan assets would increase the 2005 pension plan expense by approximately $17 million for the company’s U.S. qualified pension plans and by approximately $4 million for the company’s Canadian registered pension plans.

The discount rate is based on rates of interest on long-term corporate bonds. As of December 26, 2004, the company reduced the discount rate from 6.25 percent to 6.00 percent for both the U.S. and Canadian plans to reflect decreases in the benchmark rates of interest. Pension and postretirement benefit expenses for 2005 will be based on the 6.00 percent assumed discount rate for U.S. and Canadian plans. Future discount rates may differ. Each 0.5 percent reduction in the assumed discount rate would increase pension expense by approximately $36 million for the company’s U.S. qualified pension plans and by approximately $6 million for the company’s Canadian registered pension plans.

The company was not required to and did not make any contributions to its U.S. plans during 2004. The company contributed approximately $40 million to its Canadian pension plans in 2004, which includes approximately $9 million of contributions made in connection with the sale of its oriented strand board facility in Slave Lake, Alberta; the terminations of the pension plans at its operations in Sturgeon Falls, Ontario and Grande Cache, Alberta; and an early retirement incentive program at its operations in Dryden, Ontario.

The company expects it will not be required to make contributions to the U.S. plans during 2005 and will contribute approximately $41 million to its Canadian plans during 2005.

Long-Lived Assets and Goodwill The company reviews the carrying value of its long-lived assets and goodwill when events and changes in circumstances indicate that the carrying value of an asset group may not be recoverable through future operations. To determine whether the carrying value of an asset group is impaired, the company estimates the cash flows that could be generated after considering the range and likelihood of possible outcomes. If the carrying value of an asset group is not recoverable through the weighted average cash flows under the possible outcomes, it is considered impaired. When necessary, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its estimated fair value. Estimated fair value is based on market comparisons, when available, or discounted cash flows under the possible outcomes.

The valuation of goodwill is assessed annually. If goodwill is considered impaired, the company is required to estimate the fair values of the assets and liabilities of the reporting unit carrying the goodwill, similar to the fair-value allocation under the purchase method of accounting for a business combination. The excess of the fair value of the reporting unit over the fair value of the assets and liabilities of the reporting unit equals the implied value of goodwill. When necessary, an impairment charge is recognized to the extent the carrying value of goodwill of the reporting unit exceeds its implied fair value.

The company has grown substantially through acquisitions in recent years. A large portion of the net book value of the company’s property and equipment and timber and timberlands represent amounts allocated to those assets as part of the allocation of the purchase price of recent acquisitions. Due to these allocations, a large portion of the company’s long-term assets are valued at relatively current amounts. In addition, the company had goodwill of $3.2 billion as of December 26, 2004, which represented approximately 11 percent of the company’s consolidated assets.

In order to determine the amount and timing of impairment charges for these assets, the company is required to estimate future cash flows, residual values and fair values of the related assets, and the probability of alternative outcomes. In addition, the company must make assumptions regarding product pricing, raw material costs, volumes of product sold, and discount rates to analyze the future cash flows for goodwill impairment assessments. Management believes that the estimates of future cash flows and fair values are reasonable; however, changes in estimates of such cash flows, changes in the likelihood of alternative outcomes, and changes in estimates of fair value could affect the evaluations.

Legal, Environmental and Product Liability Reserves Contingent liabilities, principally for legal, environmental and product liability matters, are recorded when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Liabilities accrued for legal matters require judgments regarding projected outcomes and range of loss based on historical experience and recommendations of legal counsel. However, litigation is inherently unpredictable, and excessive verdicts do occur. As disclosed in Note 14 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below, the company’s legal exposures are significant and the ultimate outcome of these legal proceedings could be material to operating results or cash flows in any given quarter or year.

Liabilities for environmental matters require evaluations of relevant environmental regulations and estimates of future remediation alternatives and costs. The company determines these estimates after a detailed evaluation of each site. In establishing its accruals for environmental remediation, the company has assumed that it will not bear the entire cost of remediation of every site to the exclusion of other known potentially responsible parties who may be jointly and severally liable. The ability of other potentially responsible parties to participate has been taken into account, based generally on each party’s financial condition and probable contribution on a per-site basis. The company does not record amounts for recoveries from insurance carriers until a binding agreement has been reached between the company and the carrier.

Additionally, as discussed in Note 14 of the Notes to Financial Statements in “Financial Statements and Supplementary Data” below, reserves for future claims settlements relating to hardboard siding cases require judgments regarding projections of future claims rates and amounts.

Depletion Depletion, or costs attributed to timber harvested, is recorded as trees are harvested. Depletion rates are adjusted annually. Depletion rates are computed by dividing the original cost of the timber less previously recorded depletion by the total timber volume that is estimated to be harvested over the harvest cycle. The length of the harvest cycle varies by geographic region and species of timber. The depletion rate calculations do not include an estimate for future silviculture costs associated with existing stands, future reforestation costs associated with a stand’s final harvest, or future volume in connection with the replanting of a stand subsequent to its final harvest.

Significant estimates and judgments are required to determine the volume of timber available for harvest over the harvest cycle. Some of the factors affecting the estimates are changes in weather patterns, the effect of fertilizer and pesticide applications, changes in environmental regulations and restrictions that may limit the company’s ability to harvest certain timberlands, changes in harvest plans, the scientific advancement in seedling and growing technology, and changes in harvest cycles.

Prospective Pronouncements

See Note 1 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below for a summary of prospective accounting pronouncements.

FORWARD-LOOKING STATEMENTS

Some information included in this report contains statements concerning the company’s future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these forward-looking statements can be identified by the use of forward-looking terminology such as “expects,” “may,” “will,” “believes,” “should,” “approximately,” anticipates,” “estimates,” and “plans,” and the negative or other variations of those terms or comparable terminology or by discussions of strategy, plans or intentions. In particular, some of these forward-looking statements deal with expectations regarding the company’s markets in the first quarter of 2005; expected earnings and performance of the company’s business segments during the first quarter of 2005, demand and pricing for the company’s products in the first quarter of 2005, non-strategic timberland sales in the first quarter of 2005, seasonal decline in single-family home closings in the first quarter of 2005, expected capital expenditures in 2005, effect of Canadian exchange rate, contributions to pension plans, closing of the sale of B.C. Coastal assets in the second quarter of 2005, and other matters. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to:

the effect of general economic conditions, including the level of interest rates and housing starts;

market demand for the company’s products, which may be tied to the relative strength of various U.S. business segments;

energy prices;

weather conditions;

availability and pricing of raw materials;

performance of the company’s manufacturing operations;

the successful execution of internal performance plans;

the level of competition from domestic and foreign producers;

the effect of forestry, land use, environmental and other governmental regulations;

fires, floods and other natural disasters;

performance of pension plan investments;

disruption of transportation;

regulatory approvals; and

legal proceedings.

The company is also a large exporter and is affected by changes in economic activity in Europe and Asia, particularly Japan, and by changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Euro, the Canadian dollar, the Australian dollar and the New Zealand dollar; and restrictions on international trade or tariffs imposed on imports, including the countervailing and dumping duties imposed on the company’s softwood lumber shipments from Canada to the United States. These and other factors that could cause or contribute to actual results differing materially from such forward-looking statements are discussed in greater detail in the company’s Securities and Exchange Commission filings.

MARKET RISK OF FINANCIAL INSTRUMENTS

The fair value of the company’s fixed-rate debt is affected by changes in market rates of interest. A summary of the company’s long-term debt obligations, including scheduled principal repayments and weighted average interest rates, as of December 26, 2004, follows:


Dollar amounts in millions	2005			2006			2007			2008			2009			Thereafter			Total			Fair Value
Weyerhaeuser:
Fixed-rate debt	$	489		$	1,029		$	770		$	552		$	323		$	6,594		$	9,757		$	10,955
Average interest rate		5.83	%		6.13	%		6.59	%		5.99	%		5.52	%		7.17	%		6.83	%
Variable-rate debt	$	—		$	7		$	—		$	—		$	7		$	—		$	14		$	14
Average interest rate		n/a			5.03	%		n/a			n/a			1.92	%		n/a			3.60	%
Real Estate and Related Assets:
Fixed-rate debt	$	14		$	250		$	1		$	139		$	53		$	385		$	842		$	890
Average interest rate		6.5	%		6.9	%		5.7	%		6.6	%		5.6	%		6.2	%		6.5	%
Variable-rate debt	$	—		$	—		$	—		$	—		$	—		$	25		$	25		$	25
Average interest rate		n/a			n/a			n/a			n/a			n/a			1.7	%		1.7	%

Occasionally, the company uses derivative instruments to achieve a desired mix of fixed versus floating rate debt in its capital structure, to hedge commitments for short or long positions in commodities the company produces or purchases, to manage exposure to foreign exchange rate fluctuations, and to eliminate or create other exposures to investments or liability commitments that are less efficiently managed in the cash or physical markets. The fair value of derivative contracts may vary due to the volatility of the expected underlying forward prices or index rates associated with such contracts.

As of December 26, 2004, the company had commodity futures, swaps and collars with an annual notional value of $186 million, an aggregate notional value of $285 million and fair value of approximately $5 million. With the exception of commodity futures contracts with an aggregate notional value of $4 million, all of these commodity contracts were accounted for as cash flow hedges. A 10 percent change in the forward price levels would result in a change in the fair value of the commodity contracts of approximately $26 million. This sensitivity excludes the offsetting impact of the price changes on underlying physical product purchases or sales.

The company had an investment swap with a notional value of $160 million and a fair value of approximately $1 million at December 26, 2004. The value at risk for this derivative is approximately $6 million, calculated by applying conservative probabilities of changes in the expected return based on historical results.

As of December 26, 2004, entities that the company has consolidated under Financial Accounting Standards Board Interpretation No. 46 (revised), have interest swap agreements with an aggregate notional value of $41 million and a fair value representing a loss of approximately $2 million. See Note 1 of Notes to Financial Statements in “Financial Statements and Supplementary Data” below for additional information related to Interpretation 46R.

As of December 26, 2004, the company had no foreign exchange contracts in place.

AUDIT COMMITTEE

As of December 26, 2004, the Audit Committee was comprised of four independent directors (as defined in the listing requirements of the New York Stock Exchange) and is responsible for appointing the independent registered public accounting firm, overseeing the audit work, and establishing procedures for receiving and processing complaints regarding accounting, internal controls or auditing matters. The Audit Committee reviewed with the company’s management and with its independent registered public accounting firm the scope and results of the company’s internal and external audit activities and the adequacy of the company’s internal control over financial reporting. The committee also reviewed current and emerging accounting and reporting requirements and practices affecting the company.

CERTIFICATIONS

The company has filed certifications under Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, as exhibits to this Annual Report on Form 10-K. In addition, the company has submitted to the New York Stock Exchange a certification that it is in compliance with the listing standards of the New York Stock Exchange.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities and Exchange Act of 1934 rules. Management, under our supervision, conducted an evaluation of the effectiveness of the company’s internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under the framework in Internal Control - Integrated Framework , management concluded that the company’s internal control over financial reporting was effective as of December 26, 2004. Management’s assessment of the effectiveness of the company’s internal control over financial reporting as of December 26, 2004, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein.

/s/ S TEVEN R. R OGEL

Steven R. Rogel

Chairman, President and Chief Executive Officer

Dated: March 2, 2005

/s/ R ICHARD J. T AGGART

Richard J. Taggart

Executive Vice President and Chief Financial Officer

Dated: March 2, 2005

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Weyerhaeuser Company:

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Weyerhaeuser Company maintained effective internal control over financial reporting as of December 26, 2004, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) . Weyerhaeuser Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Weyerhaeuser Company maintained effective internal control over financial reporting as of December 26, 2004, is fairly stated, in all material respects, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, Weyerhaeuser Company maintained, in all material respects, effective internal control over financial reporting as of December 26, 2004, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Weyerhaeuser Company and subsidiaries as of December 26, 2004 and December 28, 2003, and the related consolidated statements of earnings, cash flows and shareholders’ interest and comprehensive income for each of the years in the three-year period ended December 26, 2004, and our report dated March 2, 2005, expressed an unqualified opinion on those consolidated financial statements .

As discussed in Note 1 to the consolidated financial statements, Weyerhaeuser Company and subsidiaries adopted the provisions of Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations , in 2003. Also, as discussed in Note 1 to the consolidated financial statements, Weyerhaeuser Company and subsidiaries adopted the provisions of Financial Accounting Standards Board Interpretation No. 46(R), Consolidation of Variable Interest Entities an interpretation of ARB No. 51 , in 2004.

/s/ KPMG LLP

Seattle, Washington

March 2, 2005

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Weyerhaeuser Company:

We have audited the accompanying consolidated balance sheet of Weyerhaeuser Company and subsidiaries as of December 26, 2004, and December 28, 2003, and the related consolidated statements of earnings, cash flows and shareholders’ interest and comprehensive income for each of the years in the three-year period ended December 26, 2004. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Weyerhaeuser Company and subsidiaries as of December 26, 2004, and December 28, 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 26, 2004, in conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Weyerhaeuser Company’s internal control over financial reporting as of December 26, 2004, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 2, 2005, expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

/s/ KPMG LLP

Seattle, Washington

March 2, 2005

CONSOLIDATED STATEMENT OF EARNINGS (Dollar amounts in millions except per-share figures)


FOR THE THREE-YEAR PERIOD ENDED DECEMBER 26, 2004	2004			2003			2002
Net sales and revenues:
Weyerhaeuser	$	20,170		$	17,844		$	16,771
Real Estate and Related Assets		2,495			2,029			1,750

Total net sales and revenues		22,665			19,873			18,521

Costs and expenses:
Weyerhaeuser:
Costs of products sold		15,249			14,078			13,211
Depreciation, depletion and amortization		1,308			1,307			1,214
Selling expenses		488			457			450
General and administrative expenses		955			950			847
Research and development expenses		55			51			52
Taxes other than payroll and income taxes		194			185			178
Charges for integration and restructuring (Note 16)		39			103			72
Charges for closure of facilities (Note 17)		14			127			95
Other operating costs, net (Note 15)		(258	)		(244	)		(139	)

		18,044			17,014			15,980

Real Estate and Related Assets:
Costs and operating expenses		1,763			1,516			1,326
Depreciation and amortization		14			11			11
Selling expenses		125			107			90
General and administrative expenses		81			63			48
Taxes other than payroll and income taxes		2			3			4
Other operating costs, net		(17	)		(9	)		(1	)

		1,968			1,691			1,478

Total costs and expenses		20,012			18,705			17,458

Operating income		2,653			1,168			1,063
Interest expense and other:
Weyerhaeuser:
Interest expense incurred		(838	)		(815	)		(821	)
Less interest capitalized		9			19			50
Interest income and other		24			17			28
Equity in income (loss) of affiliates (Note 3)		14			(6	)		(13	)
Real Estate and Related Assets:
Interest expense incurred		(57	)		(53	)		(53	)
Less interest capitalized		57			53			53
Interest income and other		31			33			33
Equity in income of unconsolidated entities (Note 3)		52			20			31

Earnings before income taxes and cumulative effect of a change in accounting principle		1,945			436			371
Income taxes (Note 5)		(662	)		(148	)		(130	)

Earnings before cumulative effect of a change in accounting principle		1,283			288			241
Cumulative effect of a change in accounting principle, net (Note 1)		—			(11	)		—

Net earnings	$	1,283		$	277		$	241

Basic net earnings per share (Note 2):
Before cumulative effect of a change in accounting principle	$	5.45		$	1.30		$	1.09
Cumulative effect of a change in accounting principle, net		—			(0.05	)		—

Net earnings	$	5.45		$	1.25		$	1.09

Diluted net earnings per share (Note 2):
Before cumulative effect of a change in accounting principle	$	5.43		$	1.30		$	1.09
Cumulative effect of a change in accounting principle, net		—			(0.05	)		—

Net earnings	$	5.43		$	1.25		$	1.09

Dividends paid per share	$	1.60		$	1.60		$	1.60

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED BALANCE SHEET (Dollar amounts in millions except per-share figures)


ASSETS	DECEMBER 26, 2004		DECEMBER 28, 2003

Weyerhaeuser
Current assets:
Cash and cash equivalents	$	1,044	$	171
Receivables, less allowances of $17 and $16		1,604		1,484
Inventories (Note 7)		2,045		1,911
Prepaid expenses (Note 5)		600		455

Total current assets		5,293		4,021
Property and equipment, net (Note 8)		11,843		12,243
Construction in progress		269		403
Timber and timberlands at cost, less depletion charged to disposals		4,212		4,287
Investments in and advances to equity affiliates (Note 3)		489		546
Goodwill (Note 4)		3,244		3,237
Deferred pension and other assets (Note 6)		1,223		1,311
Restricted assets held by special purpose entities (Note 18)		909		547

		27,482		26,595

Real Estate and Related Assets
Cash and cash equivalents		153		31
Receivables, less discounts and allowances of $4 and $6		43		64
Real estate in process of development and for sale (Note 9)		861		723
Land being processed for development		1,028		922
Investments in unconsolidated entities, less reserves of $3 and $3 (Note 3)		59		38
Other assets		283		226
Consolidated assets not owned (Note 1)		45		—

		2,472		2,004

Total assets	$	29,954	$	28,599

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED BALANCE SHEET (continued)


LIABILITIES AND SHAREHOLDERS’ INTEREST	DECEMBER 26, 2004		DECEMBER 28, 2003

Weyerhaeuser
Current liabilities:
Notes payable and commercial paper (Note 11)	$	3	$	4
Current maturities of long-term debt (Notes 12 and 13)		489		90
Accounts payable		1,197		1,041
Accrued liabilities (Note 10)		1,460		1,390

Total current liabilities		3,149		2,525
Long-term debt (Notes 12 and 13)		9,277		11,503
Deferred income taxes (Note 5)		4,533		4,294
Deferred pension, other postretirement benefits and other liabilities (Note 6)		1,510		1,377
Liabilities (nonrecourse to Weyerhaeuser) held by special purpose entities (Note 18)		815		490
Commitments and contingencies (Note 14)

		19,284		20,189

Real Estate and Related Assets
Notes payable (Note 11)		2		1
Long-term debt (Notes 12 and 13)		867		893
Other liabilities		501		407
Consolidated liabilities not owned (Note 1)		45		_
Commitments and contingencies (Note 14)

		1,415		1,301

Total liabilities		20,699		21,490

Shareholders’ interest (Note 19):
Common shares: $1.25 par value; authorized 400,000,000 shares; issued and outstanding:
240,360,619 and 220,200,564 shares		300		275
Exchangeable shares: no par value; unlimited shares authorized; issued and held by nonaffiliates:
2,111,255 and 2,292,825 shares		144		156
Other capital		4,075		2,940
Retained earnings		4,573		3,662
Cumulative other comprehensive income		163		76

Total shareholders’ interest		9,255		7,109

Total liabilities and shareholders’ interest	$	29,954	$	28,599

CONSOLIDATED STATEMENT OF CASH FLOWS (Dollar amounts in millions)


	CONSOLIDATED

FOR THE THREE-YEAR PERIOD ENDED DECEMBER 26, 2004	2004			2003			2002

Cash flows from operations:
Net earnings	$	1,283		$	277		$	241
Noncash charges (credits) to income:
Depreciation, depletion and amortization		1,322			1,318			1,225
Deferred income taxes (Note 5)		136			18			57
Pension and other postretirement benefits expense (income) (Note 6)		185			140			(28	)
Equity in (income) loss of affiliates and unconsolidated entities (Note 3)		(66	)		(14	)		(18	)
Countervailing duties and anti-dumping penalties (Note 14)		—			—			(47	)
Charges for litigation (Notes 14 and 15)		65			109			—
Credit for reversal of hardboard siding reserves (Note 14)		(20	)		—			—
Credit for Cemwood settlement (Note 15)		—			(25	)		—
Charges for impairment of long-lived assets (Notes 15 and 17)		34			103			64
Donation of technology		23			—			—
Loss on early extinguishment of debt		—			—			35
Gain on significant sales of nonstrategic timberlands (Note 18)		(271	)		(205	)		(117	)
(Gain) loss on disposition of assets (Note 15)		(61	)		(5	)		7
Foreign exchange gains (Note 15)		(27	)		(108	)		(33	)
Cumulative effect of a change in an accounting principle (Note 1)		—			17			—
Decrease (increase) in working capital, net of acquisitions:
Receivables		(150	)		(9	)		31
Inventories, real estate and land		(269	)		199			17
Prepaid expenses		(62	)		7			18
Mortgage-related financial instruments		—			1			29
Accounts payable and accrued liabilities		210			121			(115	)
Other		(132	)		(138	)		117

Net cash from operations		2,200			1,806			1,483

Cash flows from investing activities:
Property and equipment		(492	)		(608	)		(930	)
Timberlands reforestation		(30	)		(34	)		(36	)
Acquisition of timberlands		(100	)		(129	)		(89	)
Acquisition of businesses and facilities, net of cash acquired (Note 21)		(17	)		(8	)		(6,119	)
Net distributions from (investments in) equity affiliates		9			(10	)		33
Investment in restricted assets held by special purpose entities (Note 18)		(362	)		(437	)		(110	)
Proceeds from sale of:
Property, equipment and other assets		159			119			75
Significant nonstrategic timberlands (Note 18)		384			437			174
Mortgage-related financial instruments		—			1			35
Intercompany advances		—			—			—
Other		48			(42	)		(8	)

Net cash from investing activities		(401	)		(711	)		(6,975	)

Cash flows from financing activities:
Issuances of debt		—			194			14,432
Notes, commercial paper borrowings and revolving credit facility, net		25			(372	)		(496	)
Cash dividends		(372	)		(355	)		(353	)
Intercompany return of capital and cash dividends		—			—			—
Payments on debt		(1,892	)		(898	)		(8,322	)
Proceeds from stock issuance, net (Note 19)		954			—			—
Exercise of stock options		180			60			67
Proceeds from liabilities (nonrecourse to Weyerhaeuser) held by special purpose entities (Note 18)		302			358			91
Other		(1	)		(2	)		(9	)

Net cash from financing activities		(804	)		(1,015	)		5,410

Net change in cash and cash equivalents		995			80			(82	)
Cash and cash equivalents at beginning of year		202			122			204

Cash and cash equivalents at end of year	$	1,197		$	202		$	122

Cash paid (received) during the year for:
Interest, net of amount capitalized	$	858		$	789		$	601

Income taxes	$	521		$	(21	)	$	46

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)


WEYERHAEUSER									REAL ESTATE AND RELATED ASSETS

2004			2003			2002			2004			2003			2002


$	907		$	32		$	30		$	376		$	245		$	211

	1,308			1,307			1,214			14			11			11
	151			41			56			(15	)		(23	)		1

	181			137			(28	)		4			3			—

	(14	)		6			13			(52	)		(20	)		(31	)
	—			—			(47	)		—			—			—
	65			109			—			—			—			—
	(20	)		—			—			—			—			—
	—			(25	)		—			—			—			—
	34			102			63			—			1			1
	23			—			—			—			—			—
	—			—			35			—			—			—
	(271	)		(205	)		(117	)		—			—			—
	(61	)		3			8			—			(8	)		(1	)
	(27	)		(108	)		(33	)		—			—			—

	—			17			—			—			—			—

	(170	)		(16	)		30			20			7			1
	(100	)		133			14			(169	)		66			3
	(56	)		10			32			(6	)		(3	)		(14	)
	—			—			—			—			1			29
	130			170			(177	)		80			(49	)		62
	(45	)		(82	)		156			(87	)		(56	)		(39	)

	2,035			1,631			1,249			165			175			234


	(474	)		(592	)		(924	)		(18	)		(16	)		(6	)
	(30	)		(34	)		(36	)		—			—			—
	(100	)		(129	)		(89	)		—			—			—
	(17	)		(8	)		(6,119	)		—			—			—
	(3	)		5			(17	)		12			(15	)		50

	(362	)		(437	)		(110	)		—			—			—

	159			78			75			—			41			—
	384			437			174			—			—			—
	—			—			—			—			1			35
	21			7			51			(21	)		(7	)		(51	)
	48			(40	)		(6	)		—			(2	)		(2	)

	(374	)		(713	)		(7,001	)		(27	)		2			26


	—			44			14,142			—			150			290
	16			(300	)		(219	)		9			(72	)		(277	)
	(372	)		(355	)		(353	)		—			—			—
	1			157			170			(1	)		(157	)		(170	)
	(1,868	)		(824	)		(8,224	)		(24	)		(74	)		(98	)
	954			—			—			—			—			—
	180			60			67			—			—			—

	302			358			91			—			—			—
	(1	)		(2	)		(9	)		—			—			—

	(788)			(862	)		5,665			(16	)		(153	)		(255	)

	873			56			(87	)		122			24			5
	171			115			202			31			7			2

$	1,044		$	171		$	115		$	153		$	31		$	7


$	858		$	789		$	600		$	—		$	—		$	1

$	265		$	(265	)	$	(39	)	$	256		$	244		$	85

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ INTEREST AND COMPREHENSIVE INCOME (Dollar amounts in millions)


FOR THE THREE-YEAR PERIOD ENDED DECEMBER 26, 2004	2004			2003			2002
Common shares:
Balance at beginning of year	$	275		$	274		$	271
Issued for exercise of stock options		4			1			2
New shares issued		21			—			—
Issued in retraction of exchangeable shares		—			—			1

Balance at end of year	$	300		$	275		$	274

Exchangeable shares:
Balance at beginning of year	$	156		$	156		$	224
Retraction		(12	)		—			(68	)

Balance at end of year	$	144		$	156		$	156

Other capital — common and exchangeable:
Balance at beginning of year	$	2,940		$	2,875		$	2,693
Issued for exercise of stock options		176			59			65
New shares issued		933			—			—
Issued in retraction of exchangeable shares		12			1			67
Other transactions, net		14			5			50

Balance at end of year	$	4,075		$	2,940		$	2,875

Retained earnings:
Balance at beginning of year	$	3,662		$	3,740		$	3,852
Net earnings		1,283			277			241
Cash dividends on common shares		(372	)		(355	)		(353	)

Balance at end of year	$	4,573		$	3,662		$	3,740

Cumulative other comprehensive income (loss):
Balance at beginning of year	$	76		$	(422	)	$	(345	)
Annual changes — net of tax:
Foreign currency translation adjustments		74			434			36
Additional minimum pension liability adjustments		13			60			(111	)
Cash flow hedge fair value adjustments		(1	)		2			(2	)
Unrealized gain on available-for-sale securities		1			2			—

Balance at end of year	$	163		$	76		$	(422	)

Total shareholders’ interest:
Balance at end of year	$	9,255		$	7,109		$	6,623

Comprehensive income:
Net earnings	$	1,283		$	277		$	241
Other comprehensive income:
Foreign currency translation adjustments		74			434			36
Additional minimum pension liability adjustments, net of tax expense (benefit) of $7 in 2004, $32 in 2003, and ($59) in 2002		13			60			(111	)
Cash flow hedges:
Net derivative gains (losses), net of tax expense (benefit) of $1 in 2004, ($1) in 2003 and ($2) in 2002		2			(1	)		(2	)
Reclassification of (gains) losses, net of tax (expense) benefit of ($1) in 2004 and $3 in 2003		(3	)		3			—
Unrealized gain on available-for-sale securities		1			2			—

Total comprehensive income	$	1,370		$	775		$	164

See accompanying Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE-YEAR PERIOD ENDED DECEMBER 26, 2004

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, and variable interest entities of which Weyerhaeuser Company or its subsidiaries are determined to be the primary beneficiary. As discussed in Note 21: Acquisitions, the accounts of Willamette Industries, Inc. (Willamette), are included beginning February 11, 2002. Intercompany transactions and accounts are eliminated. Investments in and advances to unconsolidated equity affiliates over which the company has significant influence are accounted for using the equity method with taxes provided on undistributed earnings.

Certain of the consolidated financial statements and notes to financial statements are presented in two groupings: (1)Weyerhaeuser, 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. The term “company” refers to Weyerhaeuser Company, all of its majority-owned domestic and foreign subsidiaries and variable interest entities of which Weyerhaeuser Company or its subsidiaries are determined to be the primary beneficiary. The term “Weyerhaeuser” refers to the forest products-based operations and excludes the Real Estate and Related Assets operations.

Nature of Operations The company’s business segments are:

Timberlands, which manages 6.4 million acres of company-owned and .8 million acres of leased commercial forestlands in North America (4.2 million acres in the southern United States and 3.0 million acres in the Pacific Northwest and Canada).

Wood Products, which produces a full line of wood products that are sold primarily through Weyerhaeuser’s own sales organizations to wholesalers, retailers and industrial users in North America, the Pacific Rim and Europe.

Pulp and Paper, which manufactures and sells pulp, coated and uncoated paper, and liquid packaging board in North American, Pacific Rim and European markets.

Containerboard, Packaging and Recycling, which manufactures and sells containerboard in North American, Pacific Rim and European markets and packaging products for domestic and Mexican markets, and which operates an extensive wastepaper recycling system that serves Weyerhaeuser mills and worldwide markets.

Real Estate and Related Assets, which is primarily engaged in developing single-family housing and residential lots for sale, including master planned communities, mainly in selected metropolitan areas in southern California, Nevada, Washington, Texas, Maryland and Virginia.

Corporate and Other, which includes marine transportation (Westwood Shipping Lines, a wholly-owned subsidiary), distribution and converting facilities located outside North America, and general corporate support activities.

Weyerhaeuser also has renewable long-term licenses on 30.4 million acres of forestland located in five provinces throughout Canada that are managed by Weyerhaeuser’s Canadian operations. Revenues and expenses associated with these licenses are included in the results of operations of the manufacturing operations they support. The terms of the licenses are described under “Timber and Timberlands” below.

Fiscal Year End The company’s fiscal year ends on the last Sunday of the calendar year. Each of the company’s fiscal years in 2004, 2003 and 2002 had 52 weeks.

Accounting Pronouncements Implemented The company adopted the provisions of Financial Accounting Standards Board Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (Interpretation 46R), as of March 28, 2004. Interpretation 46R addresses consolidation of certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The company did consolidate certain entities as a result of adopting Interpretation 46R, but the adoption did not have a material effect on the company’s financial position or results of operations. See Note 18: Significant Sales of Nonstrategic Timberlands for information about the special purpose entities that the company is consolidating under Interpretation 46R.

The company’s real estate development subsidiaries enter into options to acquire lots at fixed prices in the ordinary course of business, primarily for the purpose of building single-family homes. In addition, a subsidiary in the Real Estate and Related Assets segment provides subordinated financing to third-party developers and homebuilders. Both fixed-price purchase options and subordinated financing constitute variable interests under Interpretation 46R. The company’s real estate subsidiaries consolidated three entities created after December 30, 2003, with estimated assets and liabilities of $45 million as of December 26, 2004. The company’s real estate development subsidiaries entered into 26 lot option purchase agreements prior to December 31, 2003, and have deposits of approximately $51 million at risk. After exhaustive efforts, the company has not been able to obtain the information necessary to determine whether or not it is required to consolidate any of these entities under Interpretation 46R. The total amount that would be paid under these purchase options, if fully exercised, is approximately $232 million. In addition, the company’s real estate development subsidiaries have entered into 15 lot option purchase agreements with entities created after December 30, 2003, with deposits of approximately $10 million at risk, where the company is not the primary beneficiary and is not required to consolidate the entities. The total amount that would be paid under these option purchase agreements, if fully exercised, is approximately $190 million. One of the company’s real estate subsidiaries has approximately $9 million in subordinated loans at risk at December 26, 2004, in 27 variable interest entities.

The company adopted the provisions of Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (Statement 143), as of the beginning of 2003. Statement 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The cumulative effect of adopting the accounting principle, after a tax benefit of $6 million, was a charge of $11 million, or 5 cents per share, basic and diluted. The effect on results reported for the year ended December 29, 2002, would not have been material had the provisions of Statement 143 been in place during that year.

The adoption of the following recent accounting pronouncements did not have a material effect on the company’s results of operations or financial condition:

FASB Staff Position (FSP) No. 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 .

FSP No. 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004 .

Prospective Accounting Pronouncements The FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (Statement 123R) , in December 2004. Statement 123R is a revision of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees. Statement 123R requires the fair value of employee awards issued, modified, repurchased or cancelled after June 27, 2005, (the beginning of the company’s third quarter) under share-based payment arrangements to be measured as of the grant dates. The resulting cost will then be recognized in the statement of earnings over the service period. The company is not able to estimate at this time the effect that Statement 123R will have on its financial position, results of operations or cash flows when Statement 123R is adopted.

The FASB issued Statement of Financial Accounting Standards No. 151, Inventory Costs–An Amendment of ARB No. 43, Chapter 4 in November 2004. Statement 151 amends the guidance in Accounting Research Bulletin (ARB) No. 43, Chapter 4, Inventory Pricing , to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and

wasted material (spoilage). Among other provisions, the new rule requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal” as stated in ARB No. 43. Additionally, Statement 151 requires the allocation of fixed production overheads to the costs of conversions be based on normal capacity of the production facilities. Statement 151 is effective for fiscal years beginning after June 15, 2005, and is required to be adopted by the company in the first quarter of fiscal 2006. The company is currently evaluating the effect that the adoption of Statement 151 will have on its financial position and results of operation, but does not expect it to be material.

The FASB issued Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets–An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions in December 2004. Statement 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of Accounting Principles Board (APB) Opinion No. 29, Accounting for Nonmonetary Transactions , and replaces it with an exception for exchanges that do not have commercial substance. Statement 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. Statement 153 is effective for fiscal years beginning after June 15, 2005, and is required to be adopted by the company in the first quarter of fiscal 2006. The company is currently evaluating the effect that the adoption of Statement 153 will have on its financial position and results of operation, but does not expect it to be material.

Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Financial Instruments The company has, where appropriate, estimated the fair value of financial instruments. These fair value amounts may be significantly affected by the assumptions used, including the discount rate and estimates of cash flows. Accordingly, the estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange. Where these estimates approximate carrying value, no separate disclosure of fair value is shown.

Derivatives The company uses well-defined financial contracts in the normal course of its operations as a means to manage its foreign exchange, interest rate and commodity price risks. The company also uses other contracts that either do not provide for net settlement or are fixed-price contracts for future purchases and sales of various commodities that meet the definition of “normal purchases or normal sales” and, therefore, are not considered derivative instruments for accounting purposes. The company’s current accounting treatment for the limited number of contracts considered derivative instruments follows.

For derivatives accounted for as cash flow hedges, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in earnings when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings. Changes in the fair value of all other derivative instruments not accounted for as hedges are also recognized in earnings in the period in which the changes occur.

Commodity contracts, the objective of which is to hedge the variability of future cash flows associated with certain commodity transactions, are being accounted for as cash flow hedges. Gains or losses related to the cash flow hedges that have been recorded in other comprehensive income are reclassified into earnings at the contracts’ respective settlement dates.

Entities that operate mills on a contract basis for the company and that the company has consolidated under Interpretation 46R have variable-to-fixed interest rate swap agreements entered into with a bank in which the entities pay fixed rates and receive floating rates with the interest payments calculated on a notional amount. The interest rate swap agreements are being accounted for as cash flow hedges by the consolidated entities and changes in the fair value of the swaps are recorded in minority interest.

In addition, the company has the following contracts that are not being accounted for as hedges:

Variable rate swap agreement entered into with a major financial institution in which the company pays a floating rate based on LIBOR and receives a floating return based on an investment fund index, with payments calculated on a notional amount. The swap is an overlay to investments and provides diversification benefits. The swap is settled

quarterly and marked to market at each reporting date. All unrealized gains and losses are recognized in earnings currently.

Lumber and other commodity futures designed to manage the consolidated exposure to changes in inventory values due to fluctuations in market prices for selected business units. The company’s commodity futures positions are marked to market at each reporting date and all unrealized gains and losses are recognized in earnings currently. These contract positions have not had a material effect on the company’s financial position, results of operations or cash flows. These futures contracts settle daily, and as a result, the company’s net open position as of December 26, 2004, was immaterial.

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 annual notional amounts of the company’s derivative financial instruments were $387 million and $322 million at December 26, 2004, and December 28, 2003, respectively. The aggregate notional amounts of these derivative financial instruments were $486 million and $425 million at December 26, 2004, and December 28, 2003, 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 contractual terms. The company’s use of the derivative instruments discussed above resulted in gains of $12 million in 2004, $8 million in 2003 and $11 million in 2002.

Cash and Cash Equivalents Short-term investments with original maturities of 90 days or less are considered 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 more than half of domestic raw materials, in process and finished goods inventories. LIFO inventories were $670 million and $669 million at December 26, 2004, and December 28, 2003, 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 $203 million and $194 million greater at December 26, 2004, and December 28, 2003, respectively.

Property and Equipment The company’s property accounts are maintained on an individual asset basis. Improvements to and replacements of major units are capitalized. Maintenance, repairs and minor replacements are expensed. Depreciation is provided on the straight-line 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 accumulated depreciation of property sold or retired is removed from the accounts and the gain or loss is included in earnings.

Timber and Timberlands Timber and timberlands are carried at cost less depletion charged to disposals. Depletion is the cost of standing timber and is charged to fee timber disposals as fee timber is harvested, lost as a result of casualty, or sold. Generally, all initial site preparation and planting costs are capitalized as reforestation. Reforestation is transferred to a merchantable (harvestable) timber classification after 15 years in the South and 30 years in the West. Generally, costs incurred after the first planting, such as fertilization, vegetation and insect control, pruning and precommercial thinning, property taxes and interest, are considered to be maintenance of the forest and are expensed as incurred. Accounting practices for these costs do not change when timber becomes merchantable and harvesting commences.

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. The growth cycle volume considers regulatory and environmental constraints affecting operable acres, management strategies to be applied, inventory data improvements, growth rate revisions and recalibrations, and the exclusion of known dispositions and inoperable acreage. The cost of timber harvested is included in the carrying values of raw material and product inventories and in the cost of products sold as these inventories are sold to third parties.

Weyerhaeuser’s Canadian operations also hold forest management licenses in various Canadian provinces. The provincial governments grant these licenses for initial periods of 15–25 years, and the licenses are renewable every five years, provided the company meets normal reforestation, operating and management guidelines. Calculation of fees payable on

harvested volumes varies from province to province, but is tied to product market pricing and the allocation of land management responsibilities agreed to in the license.

Goodwill Goodwill represents the excess of purchase price over fair value of net assets acquired in a business combination. Goodwill is assessed for impairment at least annually using a fair-value-based approach.

Accounts Receivable The company periodically sells Canadian trade accounts receivable with limited recourse to an independently capitalized trust that, in turn, sells an undivided interest in the pool of receivables to a major international financial institution. The facility provides a competitive source of funding and is limited to $200 million (Canadian) at any one point in time, of which a maximum of $60 million can be denominated in U.S. dollars. The U.S. dollar equivalent of the sold receivables portfolio was $86 million as of December 26, 2004, and $87 million as of December 28, 2003. The program was terminated effective January 27, 2005.

Accounts Payable The company’s banking system provides for the daily replenishment of major bank accounts as checks are presented for payment. Accordingly, there were negative book cash balances of $227 million and $200 million at December 26, 2004, and December 28, 2003, 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 Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Pension Plans The company has pension plans covering most of its employees. Both the U.S. and Canadian plans covering salaried employees provide pension benefits based on the employee’s highest monthly earnings for five consecutive years during the final 10 years before retirement. Plans covering hourly employees generally provide benefits of stated amounts for each year of service. The benefit levels for these plans are typically set through collective bargaining agreements with the unions representing the employees participating in the plans. Contributions to U.S. plans are based on funding standards established by the Employee Retirement Income Security Act of 1974 (ERISA). Contributions to Canadian plans are based on funding standards established by the applicable Provincial Pension Benefits Act and by the Income Tax Act.

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 over the period during which those employees provide services to the company. All of the company’s salaried employees and some hourly employees may become eligible for these benefits when they retire.

Revenue Recognition Weyerhaeuser operations generally recognize revenue from product sales upon shipment to their customers, except for export sales where revenue is recognized when title transfers at the foreign port.

The company’s Real Estate and Related Assets operations are primarily engaged in the development, construction and sale of residential homes. Real estate revenues are recognized when closings have occurred, required down payments have been received, title and possession have been transferred to the buyer, and all other criteria for sale and profit recognition have been satisfied.

Shipping and Handling Costs The company classifies shipping and handling costs in costs of products sold in the consolidated statement of earnings.

Impairment of Long-lived Assets The company accounts for long-lived assets in accordance with FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets . This statement requires management to review long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Assets to be disposed of are reported at the lower of the carrying value or fair value less cost to sell.

Stock-Based Employee Compensation The company’s stock-based compensation plans are described in Note 20: Stock-Based Compensation Plans. The company continues to apply the intrinsic-value method for stock-based

compensation to employees prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations.

As described in “Prospective Accounting Pronouncements,” APB Opinion No. 25 will be superceded by Statement 123R effective as of June 27, 2005. Employee awards issued, modified, repurchased or cancelled after implementation of Statement 123R under share-based payment arrangements will be measured at fair value as of the grant dates and the resulting cost will be recognized in the statement of earnings over the service period.

The following table illustrates the effect on net earnings and net earnings per share as if the company had applied the fair-value-recognition provisions of Statement 123, Accounting for Stock-Based Compensation , to stock-based employee compensation. The company has consistently defined the past year as the service period for purposes of applying the fair value recognition provisions of Statement 123. As a result, stock-based employee compensation expense is reflected as of the option grant dates in the following table.


Dollar amounts in millions except per-share figures	2004		2003		2002
Net earnings, as reported	$	1,283	$	277	$	241
Less incremental stock-based employee compensation expense determined under fair-value-based method for all awards, net of related tax effects		(33)		(25)		(31)

Pro forma net earnings	$	1,250	$	252	$	210

Net earnings per share:
Basic — as reported	$	5.45	$	1.25	$	1.09
Basic — pro forma	$	5.31	$	1.14	$	.95
Diluted — as reported	$	5.43	$	1.25	$	1.09
Diluted — pro forma	$	5.28	$	1.13	$	.95

Foreign Currency Translation Local currencies are considered the functional currencies for most of the company’s operations outside the United States. Assets and liabilities are translated into U.S. dollars at the rate of exchange in effect at the balance sheet date. Revenues and expenses are translated into U.S. dollars at average monthly exchange rates prevailing during the year.

Real Estate and Related Assets Real estate held for sale is stated at the lower of cost or fair value, less costs to sell. 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.

Reclassifications Certain reclassifications have been made to conform prior years’ data to the current format. See Note 18: Significant Sales of Nonstrategic Timberlands regarding a change to consolidate special purpose entities as a result of Interpretation 46R.

NOTE 2. NET EARNINGS PER SHARE

Basic net earnings per share are based on the weighted average number of common and exchangeable shares outstanding during the respective periods. Diluted net earnings per share is based on the weighted average number of common and exchangeable shares and stock options outstanding at the beginning of or granted during the respective periods, calculated using the treasury stock method.

Options to purchase 153,900 shares in 2004, 4,377,743 shares in 2003 and 4,514,884 shares in 2002 were not included in the computation of diluted earnings per share because the option exercise prices were greater than the average market prices of common shares during those periods.

The dilutive effect of outstanding stock options on net earnings per share is presented in the following table:


Dollar amounts in millions, except per-share figures	NET EARNINGS		WEIGHTED AVERAGE SHARES (000)	NET EARNINGS PER SHARE

2004:
Basic	$	1,283	235,453	$	5.45
Effect of dilutive stock options		—	1,093

Diluted	$	1,283	236,546	$	5.43

2003:
Basic	$	277	221,595	$	1.25
Effect of dilutive stock options		—	405

Diluted	$	277	222,000	$	1.25

2002:
Basic	$	241	220,927	$	1.09
Effect of dilutive stock options		—	529

Diluted	$	241	221,456	$	1.09

NOTE 3. EQUITY AFFILIATES

Investments in unconsolidated equity affiliates over which the company has significant influence are accounted for using the equity method with taxes provided on undistributed earnings.

WEYERHAEUSER

Weyerhaeuser’s significant equity affiliates as of December 26, 2004, are:

Liaison Technologies, LLC (formerly known as ForestExpress, LLC) — A 39 percent owned joint venture formed to develop and operate global, web-enabled, business-to-business connectivity, catalog content and timber trading services for the paper, forest products and affiliated industries.

MAS Capital Management Partners, L.P. — A 50 percent owned limited partnership formed for the purpose of providing investment management services to institutional and individual investors.

Nelson Forests Joint Venture — An investment in which Weyerhaeuser owns a 51 percent financial interest and has a 50 percent voting interest, which holds Crown Forest License cutting rights and freehold land on the South Island of New Zealand.

North Pacific Paper Corporation — A 50 percent owned joint venture that has a newsprint manufacturing facility in Longview, Washington.

Optiframe Software LLC — A 50 percent owned joint venture that develops whole-house design and optimization software for the building industry.

RII Weyerhaeuser World Timberfund, L.P. — A 50 percent owned limited partnership that invests in timberlands and related assets outside the United States. This partnership’s primary focus is in pine forests in Uruguay and Australia.

Southern Cone Timber Investors Limited— A 50 percent owned joint venture that has invested in timberlands in Uruguay. The entity’s primary focus is on plantation forests in Uruguay.

Unconsolidated financial information for affiliated companies, which are accounted for by the equity method, follows. Unconsolidated net sales and revenues, operating income (loss) and net income (loss) include the results of Wilton Conner LLC for the periods prior to January 2003 and the results of SCA Weyerhaeuser Packaging Holding Company Asia Ltd. (SCA) for the periods prior to June 2004. Wilton Conner LLC became a wholly-owned subsidiary of Weyerhaeuser in January 2003 and the company sold its interest in SCA in June 2004.


Dollar amounts in millions	DECEMBER 26, 2004		DECEMBER 28, 2003
Current assets	$	173	$	179
Noncurrent assets		1,124		1,174
Current liabilities		146		148
Noncurrent liabilities		314		336


Dollar amounts in millions	2004		2003		2002
Net sales and revenues	$	636	$	600	$	600
Operating income (loss)		26		7		(29	)
Net income (loss)		12		5		(34	)

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

REAL ESTATE AND RELATED ASSETS

Unconsolidated financial information for unconsolidated entities that are accounted for by the equity method is as follows:


Dollar amounts in millions	DECEMBER 26, 2004		DECEMBER 28, 2003
Current assets	$	47	$	14
Noncurrent assets		868		208
Current liabilities		35		21
Noncurrent liabilities		570		130


Dollar amounts in millions	2004		2003		2002
Net sales and revenues	$	88	$	87	$	58
Operating income		64		47		37
Net income		67		34		13

NOTE 4. GOODWILL

The following table provides a reconciliation of changes in the carrying amount of goodwill during 2004:


Dollar amounts in millions	TIMBERLANDS		WOOD PRODUCTS			PULP AND PAPER		CONTAINERBOARD, PACKAGING AND RECYCLING		CORPORATE AND OTHER			TOTAL
Balance as of December 28, 2003	$	240	$	841		$	859	$	1,280	$	17		$	3,237
Reductions due to facility sales		—		(8	)		—		—		—			(8	)
Effect of foreign currency translation and other adjustments		9		—			4		5		(3	)		15

Balance as of December 26, 2004	$	249	$	833		$	863	$	1,285	$	14		$	3,244

NOTE 5. INCOME TAXES

Earnings before income taxes and the cumulative effect of a change in accounting principle are comprised of the following:


Dollar amounts in millions	2004		2003			2002
Domestic earnings	$	1,642	$	514		$	379
Foreign earnings (loss)		303		(78	)		(8	)

	$	1,945	$	436		$	371

Provisions for income taxes include the following:


Dollar amounts in millions	2004		2003			2002
Federal:
Current	$	441	$	71		$	23
Deferred		40		58			71

		481		129			94

State:
Current		55		29			27
Deferred		10		(7	)		6

		65		22			33

Foreign:
Current		30		25			23
Deferred		86		(28	)		(20	)

		116		(3	)		3

	$	662	$	148		$	130

A reconciliation between the federal statutory tax rate and the company’s effective tax rate is as follows:


	2004		2003		2002
U.S. federal statutory income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	2.2		3.4		6.8
Foreign income tax	—		4.2		0.4
Tax credits	(1.9	)	(5.8	)	(4.7	)
Export sales incentive	(0.7	)	(1.7	)	(2.0	)
All other, net	(0.6	)	(1.1	)	(0.5	)

Effective income tax rate	34.0	%	34.0	%	35.0	%

The net deferred income tax assets (liabilities) include the following components:


Dollar amounts in millions	DECEMBER 26, 2004			DECEMBER 28, 2003
Current (included in prepaid expenses)	$	353		$	272
Noncurrent		(4,533	)		(4,294	)
Real Estate and Related Assets (included in other liabilities)		22			10

Total	$	(4,158	)	$	(4,012	)

The deferred tax assets (liabilities) are comprised of the following:


Dollar amounts in millions	DECEMBER 26, 2004			DECEMBER 28, 2003
Postretirement benefits	$	166		$	206
Net operating loss carryforwards		156			206
Other		733			692

Gross deferred tax assets		1,055			1,104
Valuation allowance		(118	)		(105	)

Net deferred tax assets		937			999

Depreciation		(2,844	)		(3,058	)
Depletion		(1,384	)		(1,369	)
Pension		(235	)		(278	)
Other		(632	)		(306	)

Deferred tax liabilities		(5,095	)		(5,011	)

	$	(4,158	)	$	(4,012	)

As of December 26, 2004, the company and its subsidiaries have foreign net operating loss carryforwards of $494 million, which expire from 2007 through 2010; and $53 million of Canadian investment tax credits, which expire from 2004 through 2014. In addition, the company has $11 million of alternative minimum tax credit carryforwards which do not expire.

The company intends to reinvest undistributed earnings of certain foreign subsidiaries; therefore, no U.S. taxes have been provided. These earnings totaled approximately $1.7 billion at the end of 2004. Determination of the income tax liability that would result from repatriation is not practicable.

On October 22, 2004, the American Jobs Creation Act (AJCA) became law. The AJCA includes a deduction of 85 percent of certain foreign earnings that are repatriated, as defined in the AJCA. The company may elect to apply this provision to qualifying earnings repatriations in 2005. The company has begun an evaluation of the effects of the repatriation provision; however, the company does not expect to be able to complete this evaluation until after the U.S. Congress or the Treasury Department provide additional clarifying language on key elements of the provision. The company expects to complete its evaluation of the effects of the repatriation provision by the end of 2005. The range of possible amounts that the company is considering for repatriation under this provision is between zero and $1.1 billion. The related potential range of income tax is between zero and $83 million.

As of December 26, 2004, $32 million of the valuation allowance would be allocated to reduce goodwill if the tax benefits are subsequently recognized. The $13 million increase in the valuation allowance from December 28, 2003, to December 26, 2004, is due to an increase in foreign losses and credits, partially offset by expired tax credits.

NOTE 6. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The company sponsors several retirement programs for its employees. In the United States, this includes pension plans that are qualified under the Internal Revenue Code (qualified) as well as a plan that provides benefits in addition to those provided under the qualified plans for a select group of employees, which is not qualified under the Internal Revenue Code (nonqualified). In Canada, plans are registered under the Income Tax Act and under their respective provincial pension acts (registered), or plans may provide additional benefits to a select group of employees, and not be registered under the Income Tax Act or provincial pension acts (nonregistered). Retiree medical and life plans are offered in both countries. These plans are typically not prefunded. The company uses a December 31 measurement date for its plans.

The following table provides a reconciliation of the changes in the plans’ benefit obligations and fair value of plan assets over the two-year period ended December 26, 2004:


	PENSION						OTHER POSTRETIREMENT BENEFITS
Dollar amounts in millions	2004			2003			2004			2003
Reconciliation of benefit obligation:
Benefit obligation as of prior year-end	$	4,285		$	3,871		$	787		$	753
Service cost		128			115			24			26
Interest cost		270			252			52			51
Plan participants’ contributions		2			2			11			6
Actuarial loss		314			209			96			138
Foreign currency exchange rate changes		51			147			10			30
Benefits paid		(333	)		(324	)		(64	)		(58	)
Plan amendments		20			22			1			(159	)
Divestitures		(1	)		—			—			—
Curtailments		4			—			—			—
Settlements		(37	)		(12	)		—			—
Special termination benefits		2			3			—			—

Benefit obligation at end of year	$	4,705		$	4,285		$	917		$	787

Reconciliation of fair value of plan assets:
Fair value of plan assets at beginning of year (actual)	$	4,388		$	3,455		$	4		$	8
Actual return on plan assets		631			1,029			—			—
Foreign currency exchange rate changes		46			123			—			—
Employer contributions		57			36			52			48
Plan participants’ contributions		2			2			11			6
Benefits paid		(333	)		(324	)		(64	)		(58	)
Divestitures		(1	)		—			—			—
Settlements		(37	)		(12	)		—			—

Fair value of plan assets at end of year (estimated)	$	4,753		$	4,309		$	3		$	4

The company funds its qualified and registered pension plans and a portion of its nonregistered plans. The company accrues for nonqualified pension benefits and health and life postretirement benefits. The company expects to contribute approximately $41 million to its Canadian pension plans in 2005.

The company estimates the projected benefit payments under its U.S. and Canadian pension and other postretirement benefit plans over the next ten years will be as follows:


Dollar amounts in millions	PENSION		OTHER POSTRETIREMENT BENEFITS

2005	$	244	$	54
2006		257		53
2007		269		54
2008		290		56
2009		308		58
2010-2014		1,813		326

The funded status of these plans at December 26, 2004, and December 28, 2003, is as follows:


	PENSION						OTHER POSTRETIREMENT BENEFITS
Dollar amounts in millions	DECEMBER 26, 2004			DECEMBER 28, 2003			DECEMBER 26, 2004			DECEMBER 28, 2003

Funded status	$	48		$	24		$	(914	)	(783	)
Unrecognized prior service cost		274			288			(101	)	(114	)
Unrecognized net loss		458			504			421		347

Prepaid (accrued) benefit cost	$	780		$	816		$	(594	)	(550	)

Amounts recognized in balance sheet consist of:
Prepaid benefit cost	$	836		$	864
Accrued liability		(201	)		(219	)
Intangible asset		17			23
Cumulative other comprehensive loss		128			148

Net amount recognized	$	780		$	816

The accumulated benefit obligation for all of the company’s defined benefit pension plans was $4.4 billion and $3.9 billion at December 26, 2004, and December 28, 2003, respectively.

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $887 million, $818 million and $617 million, respectively, as of December 26, 2004, and $862 million, $776 million and $562 million, respectively, as of December 28, 2003.

The following plans have assets held in separate trusts: the U.S. qualified plans, the Canadian registered plans, the Canadian nonregistered plans, and the U.S. retiree life insurance plan for salaried employees. The U.S. qualified plans and Canadian registered plans are combined for disclosure purposes along with the U.S. nonqualified plans and the Canadian nonregistered plans. However, the asset information for the Canadian nonregistered plans is shown separately since it currently has a different investment strategy.

ALLOCATION OF ASSETS BY CATEGORY


QUALIFIED AND REGISTERED PENSION PLANS	DECEMBER 26, 2004		DECEMBER 28, 2003
Private equity and related funds	24.7	%	29.2	%
Real estate and related funds	9.5		13.0
Common stock and S&P 500 total return index exposure	3.4		5.1
Bonds, Lehman government/credit and T-bills	0.3		0.3
Short-term investments, cash and cash equivalents	23.1		21.2
Hedge funds	39.1		31.2
Net receivables	0.4		0.5
Accrued liabilities	(0.5	)	(0.5	)

Total	100.0	%	100.0	%

NONREGISTERED PLANS	DECEMBER 26, 2004		DECEMBER 28, 2003
Equities	47.5	%	37.7	%
Cash and cash equivalents	52.5		62.3

Total	100.0	%	100.0	%

RETIREE LIFE INSURANCE	DECEMBER 26, 2004		DECEMBER 28, 2003
Bonds	82.9	%	84.4	%
Commercial mortgages	9.5		9.0
Hedge funds	2.7		2.8
Short-term investments, cash and cash equivalents	3.8		2.7
Real estate	0.6		0.7
Equities	0.3		0.2
Other	0.2		0.2

	100.0	%	100.0	%

DESCRIPTION OF INVESTMENT POLICIES AND STRATEGIES

Qualified and Registered Plans The strategy of the U.S. pension trust is to invest directly and via total return partnership swaps in a diversified mix of nontraditional strategies, including hedge funds, private equity, opportunistic real estate and other externally managed alternative investment funds. Various financial instruments, such as S&P 500 swaps and fixed income futures, are used to supplement the market exposures embedded in such investments. The additional financial instruments constitute indirect investments held by the U.S. pension trust that serve to increase the return and risk profile of the investment portfolio. The Canadian pension trust has a similar investment strategy. However, it concentrates direct investments into cash and cash equivalents while gaining return exposures through financial instruments, such as total return and index swaps.

Nonregistered Plans The Canadian nonregistered plans are funded using Retirement Compensation Arrangements (RCAs). Under Canadian tax rules, 50 percent of any contribution to an RCA goes to a non-interest-bearing refundable tax account held by the government. This means that on average over time, it is expected that approximately 50 percent of the plans’ assets are not invested. The invested portion of the plans’ assets consists of a portfolio of equities.

Beginning in 2005, the company intends to mirror the investment strategy used for the qualified and registered plans for the RCAs.

Retiree Life Insurance The plan is funded by a Premium Deposit Fund (PDF) held by the insurance carrier. The fund is used to pay premiums for current retirees covered under the U.S. retiree life insurance plan for salaried employees. The company’s intent is to pay these premiums from the fund and to make no future contributions to the fund. It is expected that the fund will be fully drawn down in the next fiscal year or shortly thereafter.

The assumptions used in the measurement of the company’s benefit obligations are as follows:


	PENSION				OTHER POSTRETIREMENT BENEFITS
	DECEMBER 26, 2004		DECEMBER 28, 2003		DECEMBER 26, 2004		DECEMBER 28, 2003
Discount rate:
United States	6.00	%	6.25	%	6.00	%	6.25	%
Canada	6.00	%	6.25	%	6.00	%	6.25	%
Rate of compensation increase:
Salaried (United States and Canada)	3.50	%	3.50	%	3.50	%	3.50	%
Hourly:
United States	3.00	%	3.00	%	3.00	%	3.00	%
Canada	3.50	%	3.50	%	N/A		N/A

The components of net periodic benefit costs (income) are:


	PENSION									OTHER POST-RETIREMENT BENEFITS
Dollar amounts in millions	2004			2003			2002			2004			2003			2002
Service cost	$	128		$	115		$	97		$	24		$	26		$	19
Interest cost		270			251			240			52			50			46
Expected return on plan assets		(385	)		(379	)		(465	)		—			—			—
Amortization of loss (gain)		32			20			(39	)		25			18			8
Amortization of prior service cost		34			32			22			(12	)		(3	)		5
Amortization of unrecognized transition asset		—			—			(1	)		—			—			—
Loss due to closure, sale, plan termination and other		17			10			40			—			—			—

	$	96		$	49		$	(106	)	$	89		$	91		$	78


The assumptions used in the measurement of the company’s net periodic benefit costs (income) are as follows:
	PENSION									OTHER POST-RETIREMENT BENEFITS
	2004			2003			2002			2004			2003			2002
Discount rate:
United States		6.25	%		6.75	%		7.25	%		6.25%			6.75	%		7.25	%
Canada		6.25	%		6.50	%		7.00	%		6.25%			6.50	%		7.00	%
Expected return on plan assets:
Qualified/registered plans		9.50	%		9.50	%		10.50	%
Nonregistered plans		4.75	%		4.75	%		5.25	%
Retiree life insurance											3.99%			4.59	%		—
Rate of compensation increase:
Salaried (United States and Canada)		3.50	%		3.50	%		3.50	%		3.50%			3.50	%		3.50	%
Hourly:
United States		3.00	%		3.00	%		3.00	%		3.00%			3.00	%		3.00	%
Canada		3.50	%		3.50	%		3.50	%		N/A			N/A			N/A

DETERMINATION OF EXPECTED RETURN ON PLAN ASSETS ASSUMPTION

Qualified and Registered Plans The expected return on plan assets assumption reflects the company’s best estimate regarding the long-term expected return on the U.S. portfolio. The expected return assumption is based on historical fund returns. The Canadian fund’s investment strategy has mirrored that of the U.S. plan since 1998. Over the period of 20 years during which this investment strategy has been pursued, the U.S. fund has achieved a net compound annual return of 17.4

percent. The determination of the expected return on plan assets assumption requires a high degree of judgment and places more weight on more recent pension plan asset performance.

Nonregistered Plans The expected rate of return on the assets supporting the nonregistered plans is 4.75 percent per year. This includes an expected long-term rate of return on the equity portion of this portfolio of 9.50 percent per year based on a combination of historical experience and future return expectations. As noted above, 50 percent of contributions to this plan are held in a non-interest-bearing account held by the Canadian government.

Retiree Life Insurance The expected long-term rate of return on this fund is 3.99 percent. This is based on historical interest credited on the fund.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. For measurement purposes, the following assumptions were used for the annual rate of increase in the per capita cost of covered health care benefits:


	2004				2003
	UNITED STATES		CANADA		UNITED STATES		CANADA
Weighted health care cost trend rate assumed for next year	10.0	%	6.1	%	9.0	%	11.0	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5.0	%	4.2	%	5.0	%	5.0	%
Year that the rate reaches the ultimate trend rate	2011		2010		2010		2010

A one percent change in assumed health care cost trend rates would have the following effects:


As of December 26, 2004 (Dollar amounts in millions)	1% INCREASE		(1% DECREASE)
Effect on total of service and interest cost components	$	10	$	(8	)
Effect on accumulated postretirement benefit obligation		102		(85	)

In addition to the company-sponsored pension and postretirement plans discussed above, approximately 5,600 employees are covered by union-administered multi-employer pension plans to which the company makes negotiated contributions based generally on fixed amounts per hour per employee. Contributions to these plans were approximately $13 million in 2004, $16 million in 2003, and $10 million in 2002.

The company also sponsors multiple defined benefit postretirement plans for its U.S. employees. Medical plans have various levels of coverage and plan participant contributions. Life insurance plans are noncontributory. Canadian employees are covered under multiple defined benefit postretirement plans that provide medical and life insurance benefits.

The company sponsors various defined contribution plans for U.S. and Canadian salaried and hourly employees. The basis for determining plan contributions varies by plan. The amounts contributed to the plans for participating employees were approximately $57 million, $58 million, and $64 million in 2004, 2003 and 2002, respectively.

NOTE 7. INVENTORIES


Dollar amounts in millions	DECEMBER 26, 2004		DECEMBER 28, 2003


Logs and chips	$	216	$	169
Lumber, plywood, panels and engineered lumber		444		413
Pulp and paper		402		376
Containerboard and packaging		265		248
Other products		206		190
Materials and supplies		512		515

	$	2,045	$	1,911

NOTE 8. PROPERTY AND EQUIPMENT


Dollar amounts in millions	RANGE OF LIVES	DECEMBER 26, 2004			DECEMBER 28, 2003


Property and equipment, at cost:
Land		$	317		$	318
Buildings and improvements	10-40		3,160			2,989
Machinery and equipment	2-25		17,658			17,290
Rail and truck roads	10-20		563			550
Other	3-10		385			361

			22,083			21,508
Less allowance for depreciation and amortization			(10,240	)		(9,265	)

		$	11,843		$	12,243

Estimated service lives for buildings and improvements are generally at the high and low end of the range disclosed above, depending on the type and permanence of construction. Maximum service lives for machinery and equipment used in timberlands operations, wood products manufacturing facilities and primary pulp and paper mills are 15 years, 20 years, and 25 years, respectively. Estimated service lives of assets acquired in purchase business combinations represent the estimated remaining useful lives of the assets as of the date of the acquisitions and have shorter service lives than assets constructed or purchased new by the company. Depreciation expense for 2004, 2003 and 2002 was $1.2 billion, $1.2 billion and $1.1 billion, respectively.

NOTE 9. REAL ESTATE IN PROCESS OF DEVELOPMENT AND FOR SALE

Properties held by the company’s Real Estate and Related Assets segment include:


Dollar amounts in millions	DECEMBER 26, 2004		DECEMBER 28, 2003

Dwelling units	$	483	$	382
Residential lots		348		304
Commercial acreage and other inventories		30		37

	$	861	$	723

NOTE 10. ACCRUED LIABILITIES


Dollar amounts in millions	DECEMBER 26, 2004		DECEMBER 28, 2003

Payroll — wages and salaries, incentive awards, retirement and vacation pay	$	573	$	542
Income taxes		152		160
Taxes — Social Security and real and personal property		71		72
Current portion of product liability reserves		21		21
Interest		207		236
Other		436		359

	$	1,460	$	1,390

NOTE 11. SHORT-TERM BORROWINGS AND LINES OF CREDIT

Borrowings At December 26, 2004, Weyerhaeuser had $3 million in short-term borrowings outstanding. At December 28, 2003, Weyerhaeuser had $4 million in short-term borrowings outstanding.

The Real Estate and Related Assets segment’s short-term borrowings were $2 million on a non-interest bearing note at December 26, 2004, and $1 million with a weighted average interest rate of 3.4 percent at December 28, 2003.

Weyerhaeuser Company guarantees commercial paper borrowings of Weyerhaeuser Real Estate Company (WRECO) in return for a fee equal to one-quarter of 1 percent of the outstanding commercial paper balance. To keep the guarantee, WRECO has agreed to maintain unused non-guaranteed credit arrangements that are equal to or greater than the outstanding commercial paper. Fees paid by WRECO to Weyerhaeuser Company were less than $1 million in 2004 and 2003 and approximately $1 million in 2002.

Lines of Credit Weyerhaeuser Company had short-term bank credit lines of $1.2 billion at both December 26, 2004, and December 28, 2003. Both Weyerhaeuser Company and WRECO can borrow against this facility. WRECO has access to $400 million of the $1.2 billion facility. Neither Weyerhaeuser nor WRECO had any outstanding borrowings against this facility as of December 26, 2004, or December 28, 2003. Neither Weyerhaeuser Company nor WRECO is a guarantor of the borrowings of the other under this facility.

In addition, Weyerhaeuser Company has a five-year revolving credit facility agreement entered into with a group of banks that provides for borrowings up to a total amount of $1.3 billion, all of which is available to Weyerhaeuser Company. This credit facility expires March 2007. Borrowings are at LIBOR plus a spread or other such interest rates mutually agreed to between the borrower and lending banks. At the end of 2004, Weyerhaeuser Company had approximately $1.3 billion available under this facility.

Other Weyerhaeuser has entered into letters of credit in the amount of $124 million and surety bonds with an estimated amount of $249 million as of December 26, 2004. As of December 28, 2003, Weyerhaeuser had entered into letters of credit in the amount of $118 million and surety bonds with an estimated amount of $229 million.

The Real Estate and Related Assets segment has entered into letters of credit in the amount of $22 million and $43 million and surety bonds with an estimated amount of $575 million and $542 million as of December 26, 2004, and December 28, 2003, respectively.

The company’s compensating balance requirements were not significant.

NOTE 12. LONG-TERM DEBT

Weyerhaeuser long-term debt, including the current portion, is as follows:


Dollar amounts in millions	DECEMBER 26, 2004			DECEMBER 28, 2003

8.50% debentures due 2004	$	—		$	55
5.50% notes due 2005		300			1,000
6.45% debentures due 2005		100			100
6.75% notes due 2006		150			150
6.00% notes due 2006		840			840
8.375% debentures due 2007		150			150
6.125% notes due 2007		600			1,000
5.95% debentures due 2008		525			750
5.25% notes due 2009		250			325
6.75% notes due 2012		1,745			1,745
7.50% debentures due 2013		250			250
7.25% debentures due 2013		250			250
6.95% debentures due 2017		300			300
7.00% debentures due 2018		100			100
9.00% debentures due 2021		150			150
7.125% debentures due 2023		250			250
8.50% debentures due 2025		300			300
7.95% debentures due 2025		250			250
7.70% debentures due 2026		150			150
7.35% debentures due 2026 ⁽¹⁾		200			200
7.85% debentures due 2026		200			200
6.95% debentures due 2027		300			300
7.375% notes due 2032		1,250			1,250
6.875% notes due 2033		275			275
Industrial revenue bonds, rates from 1.25% (variable) to 9.0% (fixed), due 2007–2027		571			970
Medium-term notes, rates from 6.43% to 7.30%, due 2005–2013		233			233
Other		82			60

		9,771			11,603
Less unamortized discounts		(5	)		(10	)

	$	9,766		$	11,593

Portion due within one year	$	489		$	90

(1)	Holders have the option to demand repayment in 2006.

Real Estate and Related Assets segment long-term debt, including the current portion, is as follows:


Dollar amounts in millions	DECEMBER 26, 2004		DECEMBER 28, 2003


Notes payable, unsecured; weighted average interest rates are approximately 6.3% and 6.3%, due 2005-2027	$	866	$	892
Notes payable, secured; weighted average interest rates are approximately 8.5% and 8.5%, due 2035		1		1

	$	867	$	893

Portion due within one year	$	14	$	23


	DECEMBER 26, 2004
Dollar amounts in millions	WEYERHAEUSER		REAL ESTATE AND RELATED ASSETS
Long-term debt maturities:
2005	$	489	$	14
2006		1,036		250
2007		770		1
2008		552		139
2009		330		53
Thereafter		6,594		410

NOTE 13. FAIR VALUE OF FINANCIAL INSTRUMENTS


	DECEMBER 26, 2004				DECEMBER 28, 2003
Dollar amounts in millions	CARRYING VALUE		FAIR VALUE		CARRYING VALUE		FAIR VALUE

Weyerhaeuser:
Financial liabilities:
Long-term debt (including current maturities)	$	9,766	$	10,969	$	11,593	$	12,578

Real Estate and Related Assets:
Financial liabilities:
Long-term debt (including current maturities)	$	867	$	915	$	893	$	953

The fair value of long-term debt, including the Real Estate and Related Assets segment, is estimated based on quoted market prices for the same issues or on the discounted value of the future cash flows expected to be paid using incremental rates of borrowing for similar liabilities.

NOTE 14. LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

Hardboard Siding Claims The company announced in June 2000 it had entered into a proposed nationwide settlement of its hardboard siding class action cases and, as a result, took a charge of $130 million before taxes to cover the estimated cost of the settlement and related claims. The court approved the settlement in December 2000, and the settlement is now binding on all parties. In the third quarter of 2001, the company reassessed the adequacy of the reserve and increased the reserve by an additional $43 million. The company paid claims and related costs in the amount of $7 million, $11 million, and $11 million in 2004, 2003 and 2002, respectively, and charged those costs against the reserve. In the third quarter of 2004, an adjustment was made to reduce the reserve by $20 million based upon a review of the activities and trends over the last four years. At the end of 2004, the company had approximately $56 million in reserves remaining for hardboard siding claims. While the company believes that the reserve balances established for these matters are adequate, the company is unable to estimate at this time the amount of additional charges, if any, that may be required for these matters in the future.

The settlement class consists of all persons who own or owned structures in the United States on which the company’s hardboard siding had been installed from January 1, 1981, through December 31, 1999. This is a claims-based settlement, which means that the claims will be paid as submitted over a nine-year period. An independent adjuster will review each claim submitted and determine whether it qualifies for payment under the terms of the settlement agreement.

The following table presents an analysis of the claims activity related to the hardboard siding class action cases:


	2004	2003	2002
Number of claims filed during the period	1,740	3,830	2,995
Number of claims resolved	2,990	4,245	4,690
Number of claims unresolved at end of period	580	1,830	2,245
Number of damage awards paid	1,140	1,770	1,830
Average damage award paid	$2,790	$3,400	$1,900

The higher average damage award paid in 2003 was due primarily to a greater number of awards for multi-family structures and fewer awards for single-family residences in 2003 than in 2002 or 2004. The deadline for filing claims arising from hardboard siding installed between 1981 and 1987 occurred in December 2003.

The company negotiated settlements with its insurance carriers for recovery of $52 million of costs related to these claims. The company has received the full $52 million in recoveries from its insurance carriers.

The company currently has no litigation pending with any person or entity who has opted out of the settlement. Individuals and entities that have opted out of the settlement may file lawsuits against the company in the future.

Antitrust Litigation In May 1999, two civil antitrust lawsuits were filed against the company in U.S. District Court, Eastern District of Pennsylvania. Both suits named as defendants several other major containerboard and packaging producers. The complaint in the first case alleged the defendants conspired to fix the price of linerboard and that the alleged conspiracy had the effect of increasing the price of corrugated containers. The suit requested class certification for purchasers of corrugated containers during the period from October 1993 through November 1995. The complaint in the second case alleged that the company conspired to manipulate the price of linerboard and thereby the price of corrugated sheets. The suit requested class certification for purchasers of corrugated sheets during the period from October 1993 through November 1995. In September 2001, the district court certified both classes. In September 2003, the company, Georgia-Pacific and International Paper requested preliminary approval of a $68 million settlement of the class action litigation. The company recognized a pretax charge of $23 million in the third quarter of 2003, representing the company’s portion of the settlement. The court granted final approval of the settlement in December 2003. Approximately 165 members of the classes opted out of the class. In the fourth quarter of 2004, Weyerhaeuser settled one matter using the same calculation of damage as in the class action settlement. There are currently eleven opt-out lawsuits pending against the company and other producers. In most of the cases the plaintiffs are seeking both state and federal antitrust remedies. A trial date for one case pending in federal court has been set for September 2006. It is possible that additional class members that opted out may file lawsuits against the company in the future. The company has not recorded a reserve for the opt-out cases and is unable to estimate at this time the amount of charges, if any, that may be required for this matter in the future.

In March 2004, La Cie McCormick Canada Company filed a class action lawsuit in Superior Court of Justice, in Ontario, Canada against the company and other linerboard manufacturers on behalf of all Canadians who purchased corrugated products, including sheets and containers and/or linerboard, during the period of time from 1993 and continuing until at least the end of 1995. The allegations in this matter mirror the allegations in the U.S. cases. Relief is sought under various theories for $25 million in general damages and $10 million in punitive damages. At this stage, the company cannot calculate what portion of the damages requested would be argued as the company’s responsibility. Canadian law does not provide for a trebling of antitrust damages. The company has not recorded a reserve for this matter, and does not expect any future charges that may be taken for this matter to have a material adverse effect on the company’s results of operations, cash flows or financial position.

In December 2000, a lawsuit was filed against the company in U.S. District Court in Oregon (the Initial Alder Case) alleging that from 1996 to the present, the company had monopoly power or attempted to gain monopoly power in the Pacific Northwest market for alder logs and finished alder lumber. In April 2003, the jury returned a verdict in favor of one of the plaintiffs in the amount of $26 million, which was automatically trebled to $79 million under the antitrust laws. The company recognized a pretax charge of $79 million in the first quarter of 2003. The company’s motion for a judgment notwithstanding the verdict was denied in July 2003. The company has appealed the matter to the U.S. Court of Appeals for the Ninth Circuit. A hearing on the appeal occurred in December 2004 and the company is awaiting a decision on the merits. While the company believes that the reserve balance established for this matter is adequate, the company is unable

to estimate at this time the amount of additional charges, if any, which may be required for this matter in the future. In January 2005, the company received a copy of a “complaint in equity” filed in U.S. District Court of Oregon to set aside the judgment in the Initial Alder Case on behalf of a plaintiff who did not prevail in the jury trial held in April 2003. The plaintiff alleges a fraud was committed on the court during the initial trial and argues that as a result the judgment against the plaintiff should be vacated and a new trial set on plaintiff’s claim of monopolization of the alder sawlog market. The complaint alleges damages with trebling of $20 million. The company denies the allegations in the complaint and plans to actively defend this matter. The company has not recorded a reserve for this matter and it is unknown at this time what, if any, charges may be taken for this matter in the future.

In April 2003, two separate lawsuits were filed in U.S. District Court in Oregon alleging that the company violated antitrust laws by monopolizing the markets for alder sawlogs and finished alder lumber. The first suit (the Westwood case) was settled on March 9, 2004, for approximately $35 million and the company recognized a pretax charge of $35 million in the first quarter of 2004. The second suit was brought by Coast Mountain Hardwoods, Inc., a Canadian company that sold its assets to the company in 2000. On April 22, 2004, the company announced a settlement of the Coast Mountain case for $14 million, which resulted in the recognition of a pretax charge of $14 million in the first quarter of 2004.

In June 2003, an alder antitrust complaint was filed in U.S. District Court in Oregon by Washington Alder, an alder sawmill located in Washington. The complaint alleged monopolization of the alder log and lumber markets from 1998 to the present and sought damages, after trebling, of $32 million, which was increased to $36 million in March 2004, as well as divestiture of the company’s Northwest Hardwoods Division and alder sawmills in Oregon, Washington and British Columbia. In May 2004, a jury awarded damages, after trebling, of $16 million for the period for which the judge had determined there was issue preclusion as a result of the Initial Alder Case, but found no monopolization or attempted monopolization for the period for which issue preclusion did not apply. As a result of the judgment, the company recognized a pretax charge of $16 million in the second quarter of 2004. The company believes that the finding of issue preclusion was incorrect as a matter of law and that a number of significant legal errors were made by the trial court. The company filed a motion for judgment as a matter of law which was denied in July 2004. The company has filed an appeal with the U.S. Court of Appeals for the Ninth Circuit. The company is awaiting a date for oral argument. While the company believes that the reserve balance established for this matter is adequate, the company is unable to estimate at this time the amount of additional charges, if any, which may be required for this matter in the future.

In July 2004, a lawsuit was filed against the company by five hardwood mill owners in U.S. District Court in Oregon and was assigned to the same judge who has heard the other alder matters. The plaintiffs make the same allegations as the other alder complaints but also add a new species, maple. The plaintiffs originally sought trebled damages of $56 million, including $4 million related to maple sawlogs, and their complaint included a request that the judge enjoin some of the company’s business practices. Thereafter, a first amended complaint was filed which lowered the damage demand to trebled damages of $53 million, including $4 million related to maple sawlogs. The lawsuit also includes requests for the judge to enjoin many of the company’s key business practices with respect to both alder and maple and a request for divestiture of a part of the company’s hardwood business. The court has denied the company’s motion to stay all proceedings pending a decision by the U.S. Court of Appeals for the Ninth Circuit in the Initial Alder Case and has set a jury trial of May 10, 2005. A mandamus action by the company to the U.S. Court of Appeals for the Ninth Circuit asking that trial of this lawsuit be stayed pending the U.S. Court of Appeals for the Ninth Circuit’s decision on the Initial Alder Case currently on appeal was denied in December 2004. The company has not recorded a reserve related to this matter and is unable to estimate at this time the amount of charges, if any, that may be required for this matter in the future.

On April 29, 2004, a civil antitrust lawsuit was filed against the company in U.S. District Court in Oregon. The complaint alleged that as a result of the company’s alleged monopolization of the alder sawlog market in the Pacific Northwest as determined in the Initial Alder Case currently on appeal, the company monopolized the market for finished alder lumber in the Pacific Northwest and, as a consequence, has been able to charge monopoly prices for finished alder lumber. The lawsuit requested class certification primarily for businesses that purchased finished alder lumber produced by the company from 2000 to the present. The original complaint alleged that the purported class may have realized over $100 million in direct damages, and sought direct and treble damages under the antitrust laws in an amount to be determined at trial. The lawsuit also requested injunctive relief to ensure the availability of alder sawlogs for sawmills competing with the company, which could include termination of certain of the company’s contracts to purchase alder logs or the company’s control over certain timberlands. The lawsuit was assigned to the same judge who presided over the other alder cases. In August 2004, the court dismissed the finished alder allegations with leave to refile and reserved ruling on whether the

sawlog allegations should be dismissed. On August 30, 2004, plaintiffs filed a first amended complaint which again asserted monopolization of the alder finished lumber market and expanded the claimed market from the Pacific Northwest to the entire U.S. but deleted the allegations dealing with alder sawlogs. The amended complaint no longer mentions any amount sought, but requests that any actual damages be trebled and that the company be enjoined from certain business practices. In September 2004, the judge denied the company’s motion to dismiss and lifted the stay on discovery. In December, the Judge issued an order certifying the plaintiff as a class representative for all U.S. purchasers of finished alder lumber between April 28, 2000, and March 31, 2004, for purposes of awarding monetary damages. The U.S. Court of Appeals for the Ninth Circuit denied the company’s request that it review the certification of the class. The company disagrees with the allegations in the purported class action lawsuit and plans to vigorously defend this case. The plaintiffs in the Initial Alder Case also claimed that the company had monopolized the finished alder lumber market in the Pacific Northwest, but the jury found in favor of the company on this claim and those plaintiffs have not appealed this finding. The claim of attempted monopolization of the finished alder lumber market was also made in the Washington Alder litigation, but was abandoned by plaintiff during trial. On October 22, 2004, the company filed a mandamus action with the U.S. Court of Appeals for the Ninth Circuit asking that trial of this lawsuit be stayed pending the U.S. Court of Appeals for the Ninth Circuit’s decision on the Initial Alder Case that is currently on appeal. In December 2004, the U.S. Court of Appeals for the Ninth Circuit refused to stay the matter. In January 2005, the trial judge ruled against class plaintiff’s attempt at precluding the company from disputing anticompetitive acts. In January 2005, the company filed a motion for summary judgment, which will be argued sometime in the second quarter. In February 2005, class counsel notified the court that approximately 5 percent of the class members have elected to opt out of the class action lawsuit. The company has no litigation pending with any entity that has opted out of the class, but it is possible that entities who have opted out may file lawsuits against the company in the future. An original trial date in March 2005 was continued to June 21, 2005, to allow the court time to rule on the motion for summary judgment. The company has not recorded a reserve related to this matter and is unable to estimate at this time the amount of charges, if any, that may be required for this matter in the future.

Paragon Trade Brands, Inc., Litigation In May 1999, the Equity Committee (Committee) in the Paragon Trade Brands, Inc. (Paragon), bankruptcy proceeding filed a motion in U.S. Bankruptcy Court for the Northern District of Georgia for authority to prosecute claims against the company in the name of the debtor’s estate. Specifically, the Committee asserted that the company breached certain warranties in agreements entered into between Paragon and the company in connection with Paragon’s public offering of common stock in February 1993. The Committee seeks to recover damages sustained by Paragon as a result of two patent infringement cases, one brought by Procter & Gamble and the other by Kimberly-Clark. In September 1999, the court authorized the Committee to commence an adversary proceeding against the company. The Committee commenced this proceeding in October 1999. Pursuant to a reorganization of Paragon, the litigation claims representative for the bankruptcy estate became the plaintiff in the proceeding. In June 2002, the Bankruptcy Court issued an oral opinion granting the plaintiff’s motion for partial summary judgment, holding the company liable to plaintiff for breaches of warranty and denying the company’s motion for summary judgment. In October 2002, the Bankruptcy Court issued a written order confirming the June oral opinion. The damages phase of the case began on October 30, 2003, and was concluded on December 16, 2003. Proposed findings of fact and conclusions of law were presented to the court on February 9, 2004, by the parties. The court has not yet issued an opinion. The damages requested by the plaintiff have changed. In October 1999, the plaintiff was seeking damages in excess of $420 million. In its proposed findings of fact and conclusions of law, the plaintiff requested damages in the range of $675 million to $832 million, primarily as a result of a new request for prejudgment interest. The company believes the plaintiff is not entitled to prejudgment interest under applicable law. The amount of damages, if any, the company may ultimately be exposed to is dependent on many unknown factors such as how the damages issues remaining to be decided by the Bankruptcy Court are resolved; whether an appeal to the U.S. District Court and/or U.S Court of Appeals for the Eleventh Circuit is successful; the outcome of any retrial ordered by an appellate court; and whether a summary judgment in favor of the company on liability is ordered by an appellate court. The company has not established a reserve for this matter because, based upon the information available to the company on the date hereof, including management’s belief that an adverse result is not probable because the company will prevail on appeal, management does not believe the requirements of Statement of Financial Accounting Standards No. 5, Accounting for Contingencies (Statement 5), for establishing a reserve in this matter have been met. Even if the Bankruptcy Court should award damages against the company, management does not believe that the requirements of Statement 5 will have been met, and accordingly, the company does not intend to recognize a charge at the time of such a damage award. However, there is no guarantee that management will not determine in the future that a charge for all or a portion of any damage award is required. Any such charge could materially and adversely affect the company’s

results of operations or financial condition for the quarter or the year in which such a charge may be recognized. The company intends to appeal the partial summary judgment decision on liability and any damages award on completion of the damages phase of the trial.

Other Litigation The company is a party to other matters generally incidental to its business in addition to the matters described above.

Summary Although the final outcome of any legal proceeding is subject to a great many variables and cannot be predicted with any degree of certainty, management currently believes that adequate reserves have been established for probable losses from litigation when the amount could be reasonably determined. Management further believes that the ultimate outcome of these legal proceedings could materially adversely affect results of operations, cash flows or financial condition in any given quarter or year, but will not have a material adverse effect on the company’s long-term results of operations, cash flows or financial position.

COUNTERVAILING AND ANTI-DUMPING DUTIES

Softwood Lumber Imported into the United States from Canada In April 2001, the Coalition for Fair Lumber Imports (Coalition) filed two petitions with the U.S. Department of Commerce (Department) and the International Trade Commission (ITC), claiming that production of softwood lumber in Canada was being subsidized by Canada and that imports from Canada were being “dumped” into the U.S. market (sold at less than fair value). The Coalition asked that countervailing duty (CVD) and anti-dumping (AD) tariffs be imposed on softwood lumber imported from Canada.

In March 2002, the Department confirmed its preliminary finding that certain Canadian provinces were subsidizing logs by failing to collect full market price for stumpage. The Department established a final CVD rate of 18.79 percent. In the AD proceedings, the Department found that the six Canadian manufacturers examined, including the company, were engaged in sales at less than fair value and set cash deposit rates ranging from 2.18 percent to 12.44 percent. The company’s deposit rate was set at 12.39 percent. Because of statutory limitations that affected timing, the bonds covering duties following the preliminary determinations were released by the United States. The resulting reversal of accrued expenses was included in earnings during 2002.

In May 2002, the ITC confirmed its earlier ruling that U.S. industry is threatened by subsidized and dumped imports. As a result, the company has made cash deposits relating to the CVD and AD actions at the rate of approximately $25 million to $35 million a quarter beginning in May 2002. Through December 2004, the company has paid a cumulative total of $265 million in CVD and AD duties and $17 million in related costs on softwood lumber the company has imported into the United States from Canada.

Following is a summary of the CVD and AD amounts recorded in the company’s consolidated statement of earnings:


Dollar amounts in millions	2004		2003		2002
Charges for CVD and anti-dumping duties	$	118	$	97	$	64
Reversals of 2001 charges for estimated CVD and anti-dumping duties		—		—		(47	)

	$	118	$	97	$	17

The CVD and AD tariffs are currently under review and challenge in several forums. A summary of these proceedings relating to the CVD and AD duties follows.

Administrative Reviews In June 2003, the Department began the process of the annual review for the period May 22, 2002, through March 31, 2003, to determine the final duty rates under both CVD and AD for this time period. On June 2, 2004, the Department issued a preliminary decision for this period setting the company’s AD rate at 8.35 percent and its CVD rate at 9.24 percent. These rates are lower than the initial deposit rates of 12.39 percent for AD and 18.79 percent for CVD. Deposits continue to be made at the higher rates. The decision included comments on potential changes to the calculation methodology, which could effectively increase the rates. On December 14, 2004, the Department, using, in part, a new cross border price comparison methodology, issued its final determination in the first administrative review. It set the company’s CVD rate at 17.18 percent and AD rate at 8.70 percent. On January 14, 2005, the Department amended the AD rate downward to 7.99 percent. On February 17, 2005, the Department amended the final CVD rate downward to 16.37 percent. These are the rates the Department will instruct U.S. Customs to implement on entries of softwood lumber

imported during the period from May 22, 2002, to March 31, 2003, and for duty deposits going forward. The determination is subject to appeal by both sides on February 17, 2005, the company filed an appeal of the AD determination to the Court of International Trade. On the same date the Coalition appealed both the CVD and AD determinations to the CIT. Canada has also requested the formation of a NAFTA Panel to contest the CVD determination by the Department.

The annual review process will be conducted covering successive one-year periods for five years. In 2007, both the CVD duty and AD orders will be automatically reviewed in a “sunset” proceeding to determine whether dumping will continue or a countervailing subsidy is likely to recur if the relevant order were to be revoked. In June 2004, the Department announced that it was commencing the second administrative review of the AD and CVD duties and orders for softwood lumber from Canada for the period from May 1, 2003, to April 30, 2004, and intended to issue the final results of these reviews not later than May 31, 2005. The company has requested that the Department conduct administrative reviews of both the CVD and AD orders in this second administrative review. This action is required to protect the status of current deposits.

NAFTA Appeals The Canadian Government, the company and other Canadian companies appealed the Department’s 2002 AD and CVD determinations, and the ITC’s 2002 injury determination in separate appeals under the North American Free Trade Agreement (NAFTA). Following is a summary of the status of these appeals.

AD Panel The panel convened to review the Department’s AD findings ruled that the Department must change its methodology for computing an anti-dumping margin in an investigation when only some product sales are found to have been dumped and other sales are found to have been made at above a “dumped” price. The Department’s current practice is called zeroing. After receiving further submissions, the NAFTA AD panel is expected to issue a decision in early 2005 on the practice of using zeroing.

CVD Panel There have been a series of NAFTA CVD panel decisions that have resulted in the matter being sent back to the Department for re-determinations.

In June 2004, a second CVD panel decision concluded that the Department’s calculations were seriously flawed and sent the matter back to the Department for recalculation to determine the level of subsidy. On July 30, 2004, the Department issued a second remand determination, which calculated a revised CVD rate of 7.82 percent. On December 1, 2004, the NAFTA panel again ordered the Department to reconsider its CVD computations and asked the Department to finish its work on the recalculations.

Injury Panel On September 1, 2004, the NAFTA Injury Panel ordered the ITC to reverse its earlier decision of injury and on September 11, 2004, the ITC agreed that the U.S. softwood lumber industry is not threatened with material injury by reason of softwood imports from Canada. By decision issued on October 12, 2004, the Panel affirmed the ITC’s decision and the decision became final on October 25, 2004 when it was published by the NAFTA Secretariat.

NAFTA Extraordinary Challenges The final NAFTA decision on injury has been challenged by the U.S. Trade Representative (USTR) before a newly constituted panel called the Extraordinary Challenge Committee (ECC). On November 24, 2004, the UST Asked for the establishment of an ECC to review the NAFTA injury decision. An ECC consisting of 3 members (2 from Canada and 1 from the U.S.) has not been announced. If not delayed, a decision from the ECC would come in the latter part of the first quarter of 2005. A final decision on the CVD rate calculation may also be challenged in an ECC.

WTO Reviews With the support of provincial governments, the federal government of Canada also moved for reviews by dispute settlement panels under the World Trade Organization (WTO) and those reviews are now complete.

AD Review The WTO AD panel upheld the Department’s finding that there was dumping. Also, on August 11, 2004, the WTO Appellate Body held that the practice of using zeroing to calculate export prices to justify its AD duties during the investigation process was improper.

CVD Review In January 2004, the WTO Appellate Body issued a decision in the CVD case, which approved the use of cross-border comparisons as a benchmark in certain limited circumstances. The WTO also found that stumpage fees could be considered a subsidy.

Injury In March 2004, a WTO panel announced its final ruling on injury, faulting a U.S. ITC finding of a threat of injury resulting from dumped and subsidized imports of softwood lumber from Canada.

Byrd Amendment The WTO appeals body has affirmed a panel ruling against the United States that the so-called “Byrd Amendment,” which provides for the distribution of AD and CVD duties to petitioners, is inconsistent with U.S. international obligations. On September 1, 2004, the WTO gave Canada and other countries the right to impose trade sanctions on the United States in retaliation for collecting such duties and making them available for distribution under the Byrd Amendment. On November 26, 2004, Canada commenced a domestic consultative process to determine the list of U.S. exports that will be subject to trade sanctions. The U.S. Administration has signaled that it will introduce legislation to repeal the Byrd Amendment, but the timing and prospects for such legislation are unclear.

USTR Section 129 Process In June 2004, pursuant to U.S. law, the USTR asked the ITC to provide an advisory report as to whether it can implement the WTO’s decision against the ITC on threat of injury. In July 2004, the USTR also asked the ITC to issue a new decision on “threat of injury” to bring the United States into compliance with the WTO decision finding against the ITC on injury. Section 129 of the Uruguay Round Agreements Act provides the basic provisions through which the U.S. implements new AD and CVD determinations to make them consistent with an adverse WTO report. The ITC formally began the Section 129 review process in early August. The company has answered questionnaires received in this new process. After a hearing by the ITC in October 2004, the ITC issued a new determination on November 24, 2004, reaffirming that imports of Canadian softwood lumber pose a threat of injury to U.S. industry.

On November 9, 2004, the USTR also asked the Department to undertake a Section 129 process to comply with the WTO Appellate Body decision of February 14, 2004, that the Department’s countervailing decision was contrary to the WTO Agreement on Subsidies and Countervailing Measures. The Department issued questionnaires and received briefs. On December 10, 2004, the Department issued a decision in which it calculated countervailing duties of 18.62 percent on softwood lumber imports.

On January 31, 2005, the Department issued a new determination under Section 129 for AD rates, increasing the company’s rate to 16.1 percent as its method of complying with the WTO’s determination that it should not use zeroing to determine the AD rates. The company has provided comments on the rates.

The company intends to appeal all of the Section 129 determinations.

Potential Future Litigation Some parties involved in the softwood lumber dispute have indicated if the ruling on the Extraordinary Challenge goes against the United States, the constitutionality of NAFTA itself or of its dispute resolution mechanism may be challenged before a U.S. court.

Assessment of Loss Contingencies The deposits made against the CVD and AD duties have been expensed. It is difficult to predict the net effect final duties will have on the company. In the event that final rates differ from the depository rates, ultimate charges may be higher or lower than those recorded to date. The company is unable to estimate at this time the amount of additional charges or reversals that may be necessary for this matter in the future. The company believes there should be a negotiated settlement to the softwood lumber dispute and supports efforts to reach a long-term solution to resolve this matter. The U.S. and Canadian governments continue to discuss ways to settle the softwood lumber dispute, but there can be no assurance that they will be able to reach an agreement or the terms and conditions of any agreement.

Kraft Liner/Linerboard Exported from the United States into the People’s Republic of China In January 2004, the Ministry of Commerce of the People’s Republic of China (MOC) received a petition requesting an anti-dumping investigation on the importing of unbleached kraft liner/linerboard originating in the United States, Thailand, Korea and Taiwan. On March 31, 2004, the MOC announced it would conduct an investigation of the petition. The period of investigation for dumping is from January 1, 2003, to December 31, 2003, and the period of investigation for industry injury is from January 1, 2001, to December 31, 2003. The announcement included Weyerhaeuser as one of five producers in the United States that are subject to the investigation. The company registered with the MOC in April 2004 and filed its response in June 2004. A preliminary determination from the Chinese government was expected in September 2004, but as of the date hereof has not been issued. Because any tariffs levied would not be retroactive, the earliest effect on the company would be for sales to China in the month of March 2005. The company is unable to determine at this time whether such investigation could result in the imposition of tariffs; however, the company does not currently believe that any such tariffs would have a material adverse effect on its results of operations, cash flows or financial condition.

ENVIRONMENTAL MATTERS

In April 1999, the Johnsonburg, Pennsylvania, pulp and paper mill that the company acquired in its 2002 acquisition of Willamette Industries, Inc. received a notice of violation (NOV) from the U.S. Environmental Protection Agency (EPA) for alleged violations of the Clean Air Act. The matter was settled by entry of a consent decree with the U.S. District Court for the Western District of Pennsylvania in September 2004. The consent decree establishes emission limitations that have been achieved. Pursuant to the decree, the company paid a $900,000 civil penalty in the fourth quarter of 2004.

In late 2002, the EPA issued an NOV for alleged violations of the Clean Air Act at the company’s Hawesville, Kentucky, pulp and paper mill. Management met with federal officials to resolve the matters alleged in the NOV. Management has reached a tentative settlement of the matter, which includes payment of a penalty of approximately $150,000.

In November 2004, the Oklahoma Department of Environmental Quality — Air Quality Division (DEQ) issued a NOV for alleged violations of the Clean Air Act at the company’s Wright City, Oklahoma wood products facility. Management has been discussing the issues with the DEQ to resolve the matters alleged in the NOV and believes that settlement of the matter may include payment of a civil penalty of approximately $100,000.

The company is also a party to various proceedings relating to the cleanup 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. As of the end of 2004, the company has established reserves totaling $38 million for estimated remediation costs on all of the approximately 67 active sites across its operations. Environmental remediation reserves totaled $51 million at the end of 2003. The decrease in environmental remediation reserves reflects the incorporation of new information on all sites concerning remediation alternatives, updates on prior cost estimates and new sites, less the costs incurred to remediate these sites during this period. The company accrued remediation costs of $9 million in 2004 and $14 million in 2003. The company incurred remediation costs of $10 million in 2004 and $8 million in 2003, and charged these costs against the reserve. The company reduced its remediation cost accrual by $12 million in 2004 because the purchaser of a facility assumed responsibility for the remediation activities. Based on currently available information and analysis, the company believes that it is reasonably possible that costs associated with all identified sites may exceed current accruals by up to $60 million, which may be incurred over several years. This estimate of the upper end of the range of reasonably possible additional costs is much less certain than the estimates upon which accruals are currently based, and utilizes assumptions less favorable to the company among the range of reasonably possible outcomes. In estimating both its current accruals for environmental remediation and the possible range of additional future costs, the company has assumed that it will not bear the entire cost of remediation of every site to the exclusion of other known potentially responsible parties who may be jointly and severally liable. The ability of other potentially responsible parties to participate has been taken into account, generally based on each party’s financial condition and probable contribution on a per-site basis. No amounts have been recorded for potential recoveries from insurance carriers.

GUARANTEES

Weyerhaeuser Company has guaranteed approximately $70 million of debt of an unconsolidated entity and another party. This includes the guarantee of $25 million of debt that has been legally defeased. In connection with the defeasance, Weyerhaeuser Company would be required to pay under the guarantee if the U.S. government securities set aside in an escrow account is insufficient to pay off the debt in 2005. The value of the assets in the escrow account as of December 2004 is approximately $27 million. In addition, Weyerhaeuser has guaranteed $45 million of debt that expires in 2005, but is subject to an annual extension.

As of December 26, 2004, the Real Estate and Related Assets segment has guaranteed approximately $22 million of debt of unconsolidated entities and has guaranteed performance under two operating leases with future lease payments of approximately $27 million. The debt guarantees expire as follows: $1 million in 2005, $20 million in 2007, and $1 million in 2011. For each of the operating lease guarantees, which extend through 2041, the Real Estate and Related Assets segment would be required to perform if the obligor were to default. In the third quarter of 2004, the Real Estate and Related Assets segment sold its servicing rights and all obligations related to the servicing of a portfolio of mortgage loans with recourse.

WARRANTIES

WRECO provides warranties on homes closed that vary depending on state and local laws. The reserves for these warranties are determined by applying the provisions of Statement of Financial Accounting Standards No. 5, Accounting for Contingencies . The liability was approximately $14 million and $10 million at December 26, 2004, and December 28, 2003, respectively.

PURCHASE OBLIGATIONS

Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the company and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude arrangements that the company can cancel without penalty. As of December 26, 2004, Weyerhaeuser’s future commitments under non-cancelable purchase obligations were as follows: $540 million in 2005, $135 million in 2006, $80 million in 2007, $65 million in 2008, $60 million in 2009, and $410 million thereafter.

OPERATING LEASES

The company leases various equipment, office and wholesale space, and model homes under operating leases. The equipment leases cover items including aircraft, vessels, rail and logging equipment, lift trucks, automobiles and office equipment. The company recognized rent expense of approximately $181 million, $179 million and $162 million in 2004, 2003 and 2002, respectively.

The company’s future commitments under operating leases are as follows:


Dollar amounts in millions	2005	2006	2007	2008	2009	THEREAFTER
Weyerhaeuser	$126	$84	$60	$46	$39	$275
Real Estate and Related Assets	13	10	7	7	6	18

	$139	$94	$67	$53	$45	$293

NOTE 15. OTHER OPERATING COSTS, NET

Other operating costs, net, is an aggregation of both recurring and occasional income and expense items and, as a result, can fluctuate from year to year. Weyerhaeuser’s other operating costs, net, include the following (income) and expenses:


Dollar amounts in millions	2004		2003		2002
Gain on significant sales of nonstrategic timberlands (Note 18)	$(271	)	$(205	)	$(117	)
Gain on British Columbia tenure reallocation agreement	(25	)	—		—
(Gain) loss on disposition of assets	(61	)	3		8
Asset impairment charges other than for closures	31		16		—
Charge for alder antitrust cases (Note 14)	65		79		—
Charge for linerboard antitrust settlement (Note 14)	—		23		—
Charge for settlement of workers compensation claims	—		7		—
Cemwood insurance settlement recoveries	(7	)	(25	)	—
Reversal of hardboard siding reserve (Note 14)	(20	)	—		—
Foreign exchange gains	(27	)	(108	)	(33	)
Donation of technology	23		—		—
Other, net	34		(34	)	3

	$(258	)	$(244	)	$(139	)

In September 2004, the company reached an agreement with the Province of British Columbia for the reallocation of timber licenses. Under the terms of Bill 28 – Forestry Revitalization Act – the Province will reduce the company’s cutting rights by approximately 1.2 million cubic meters and 8,000 hectares (approximately 20,000 acres) of timber licenses. This represents approximately 20 percent of the company’s overall Crown harvesting rights in British Columbia. Under the agreement, the company received approximately $25 million in compensation for the loss of these rights. The company

recognized a pretax gain of $25 million in the third quarter of 2004. Of this pretax gain, $20 million is included in contribution to earnings of Wood Products and $5 million is included in contribution to earnings of Timberlands. The company may receive additional compensation in future periods for assets that have been constructed on the affected lands.

Included in (gain) loss on disposition of assets for 2004 is a net pretax gain of $73 million recognized in connection with the sale of operating facilities. This includes a pretax gain of $33 million that was recognized in the first quarter on the sale of an oriented strand board mill in Slave Lake, Alberta, and a $30 million pretax gain that was recognized in the fourth quarter from the sale of a mill site on Vancouver Island, British Columbia.

Asset impairment charges other than for closures for 2004 includes a $29 million pretax charge recognized in the fourth quarter of 2004 for the impairment of assets in the company’s European manufacturing operations. Asset impairment charges other than for closures for 2003 includes a pretax impairment charge of $16 million recognized in the second quarter of 2003 in connection with a facility sale that closed in 2003.

In 1999, American Cemwood Corporation (Cemwood), a subsidiary of MacMillan Bloedel Limited, which was acquired by the company in 1999, settled a class action suit involving claims alleging the failure of its cement fiber roofing products. The settlement provided an opportunity for the company to recover a portion of the settlement amount, depending on the outcome of a lawsuit filed by the class against Cemwood’s insurance companies. As a result of settlements with the insurance companies, the company recognized a net pretax benefit of $25 million in the second quarter of 2003 and $7 million in the fourth quarter of 2004. The company has an unresolved claim outstanding against a reinsurer.

Foreign exchange gains and losses result from changes in exchange rates, primarily related to Weyerhaeuser’s Canadian and New Zealand operations.

In the fourth quarter of 2004, Weyerhaeuser donated certain technology to a university. A pretax charge of $23 million, representing the net carrying value of the donated technology, was recognized in the fourth quarter.

NOTE 16. CHARGES FOR INTEGRATION AND RESTRUCTURING

As Weyerhaeuser has acquired businesses and consolidated them into its existing operations, Weyerhaeuser has incurred charges associated with the transition and integration of those activities. Charges for integration and restructuring include costs associated with the integration of Willamette and Weyerhaeuser’s overall cost-reduction efforts.

In connection with the Willamette acquisition, Weyerhaeuser entered into change-in-control agreements with several key Willamette employees. Under these agreements, Weyerhaeuser made payments of approximately $113 million through January 2004. Approximately $23 million of these payments represented severance and other benefits paid to terminated Willamette employees. These costs were included in the total purchase price of the Willamette acquisition (see Note 21: Acquisitions). Approximately $48 million represented other payments to terminated Willamette employees, primarily under consulting and noncompete agreements that extended through the third quarter of 2004. Approximately $42 million represented payments to retained Willamette employees under retention and incentive agreements that extended through the first quarter of 2004 and noncompete agreements that extend through the third quarter of 2005. Costs associated with future services are being recognized over the periods benefited.

Costs incurred consist of the following:


Dollar amounts in millions	2004		2003		2002

Change in control agreements	$	12	$	38	$	37
Severance and outplacement costs		18		49		12
Pension curtailment and benefit enhancements		6		—		—
Relocation costs		1		3		5
Professional services		1		6		10
Other		1		7		8

	$	39	$	103	$	72

As of December 26, 2004, Weyerhaeuser accrued liabilities include approximately $11 million of severance accruals related to integration and restructuring charges recognized from 2002 through 2004. These accruals are associated with approximately 200 employee terminations that have not yet occurred.

NOTE 17. CHARGES FOR CLOSURE OF FACILITIES

Changing market conditions, increasing productivity at many of the company’s operating facilities and increased scale as a result of the Willamette, MacMillan Bloedel and Trus Joist acquisitions have provided the company with opportunities to rationalize its production capacity while retaining its ability to fulfill customer needs. Facilities that do not represent a long-term strategic fit, or that cannot achieve top-quartile performance without significant capital investments, are assessed for closure or sale.

Weyerhaeuser closed a number of facilities during 2004, 2003 and 2002. Closures of acquired facilities identified in the integration planning process were accounted for as exit activities in connection with the acquisitions, and no charges to earnings were recognized. Charges for all other closures have been recognized in the consolidated statement of earnings. The 2004 charges were primarily recognized in connection with the closure of one wood products facility and two packaging plants. The pension charges were recognized in connection with the final settlement of three pension plans associated with facility closures. During 2004, approximately $12 million of estimated charges for severance and other costs associated with several closures that occurred from 2001 through 2003 were reversed as the related closure activities have been finalized. During 2003, Weyerhaeuser recognized closure costs in connection with the announced closures of eight wood products facilities, two fine paper machines, one containerboard mill and one packaging plant. In 2002, Weyerhaeuser recognized charges related to the closure of four wood products facilities; six containerboard, packaging and recycling facilities; a containerboard paper machine; and a decision to outsource certain logging operations in Canada. Activities associated with these closures are expected to continue through December 2006, but Weyerhaeuser does not expect to incur any additional material charges related to these closures.

These charges include:


Dollar amounts in millions	2004			2003			2002
Impairments of long-lived assets	$	3		$	86		$	63
Severance and outplacement costs		3			32			25
Pension settlement		10			—			—
Other closure costs		10			13			15
Reversals of closure charges recorded in prior periods		(12	)		(4	)		(8	)

	$	14		$	127		$	95


Changes in accrued severance during the year ended December 26, 2004, were as follows:
Dollar amounts in millions

Accrued severance as of December 28, 2003							$	23
Cost incurred and charged to expense								3
Payments								(17	)

Accrued severance as of December 26, 2004							$	9

NOTE 18. SIGNIFICANT SALES OF NONSTRATEGIC TIMBERLANDS

During 2004, 2003 and 2002, the company closed the following significant sales of nonstrategic timberlands:


	GEORGIA		TENNESSEE		CAROLINAS		WASHINGTON (SNOQUALMIE)		WASHINGTON (WHITE RIVER)
Dollar amounts in millions	SEPTEMBER 2004		DECEMBER 2003		DECEMBER 2003		MAY 2003		DECEMBER 2002
Acres		270,000		168,000		160,000		104,000		115,000
Pretax gain	$	271	$	1	$	60	$	121	$	140 ⁽¹	⁾
Sale proceeds paid to special purpose entities	$	362	$	84	$	169	$	184	$	110
Sale proceeds paid to Weyerhaeuser	$	22	$	—	$	—	$	—	$	64
Special purpose entity note monetization proceeds	$	302	$	68	$	139	$	151	$	91

(1)	$117 million of the pretax gain on the sale of the White River Tree Farm was recognized in the fourth quarter of 2002. The remaining $23 million was recognized in the second quarter of 2003 when a contingency lapsed on a portion of the timberlands sale.

The company has consolidated the assets and liabilities of the buyer-sponsored special purpose entities and the monetization special purpose entities (collectively “the SPEs”) as of December 26, 2004, and December 28, 2003, in accordance with a more recent interpretation of Interpretation 46R. Because the SPEs are separate and distinct legal entities from the company, the assets of the SPEs are not available to satisfy the liabilities and obligations of the company and the liabilities of the SPEs are not liabilities or obligations of the company. As of December 26, 2004, deferred gains on the sales of nonstrategic timberlands of $59 million are included in “Liabilities (nonrecourse to Weyerhaeuser) held by special purpose entities” on the consolidated balance sheet.

Sales proceeds paid to buyer-sponsored SPEs are invested in restricted bank financial instruments of $909 million and $547 million as of December 26, 2004, and December 28, 2003, respectively. As of December 26, 2004, maturities of the bank financial instruments were as follows: $110 million in 2012, $184 million in 2013, $253 million in 2019, and $362 million in 2020. The weighted average interest rate on the bank financial instruments was 4.50 percent as of December 26, 2004, and 3.17 percent as of December 28, 2003.

The monetization SPEs had long-term debt of $756 million and $451 million as of December 26, 2004, and December 28, 2003, respectively. As of December 26, 2004, maturities of the debt were as follows: $92 million in 2012, $153 million in 2013, $209 million in 2018, and $302 million in 2019. The weighted average interest rate on the debt was 4.85 percent as of December 26, 2004, and 3.67 percent as of December 28, 2003.

The term of each debt instrument may be extended so that the debt matures up to 30 years after the closing date of each respective timberlands sale, as long as the maturity of the related bank financial instrument is extended for a corresponding period. The monetization SPEs are exposed to credit-related losses in the event of nonperformance by the banks, but the company does not expect the banks to fail to meet their obligations.

NOTE 19. SHAREHOLDERS’ INTEREST

Preferred and Preference Shares The company is authorized to issue:

7,000,000 preferred shares having a par value of $1.00 per share, of which none were issued and outstanding at December 26, 2004, and December 28, 2003; and

40,000,000 preference shares having a par value of $1.00 per share, of which none were issued and outstanding at December 26, 2004, and December 28, 2003.

The preferred and preference shares may be issued in one or more series with varying rights and preferences including dividend rates, redemption rights, conversion terms, sinking fund provisions, values in liquidation and voting rights. When issued, the outstanding preferred and preference shares rank senior to outstanding common shares as to dividends and assets available on liquidation.

Common Shares The company issued common shares to holders of exchangeable shares (described below) who exercised their rights to exchange the shares. The number of common shares issued for exchangeable shares during the past three years is detailed in the reconciliation of common share activity below.

A reconciliation of common share activity for the three years ended December 26, 2004, is as follows:


In thousands	2004	2003	2002
Shares outstanding at beginning of year	220,201	218,950	216,574
New shares issued	16,676	—	—
Retraction of exchangeable shares	182	10	986
Stock options exercised	3,302	1,241	1,390

Shares outstanding at end of year	240,361	220,201	218,950

Included in the new shares issued are 16,675,000 shares of common stock issued by the company on May 4, 2004. The company received net proceeds from the offering, after deduction of the underwriting discount and other transaction costs, of $954 million.

Exchangeable Shares In connection with the acquisition of MacMillan Bloedel in 1999, Weyerhaeuser Company Ltd., a wholly-owned Canadian subsidiary of the company, issued 13,565,802 exchangeable shares to common shareholders of MacMillan Bloedel as part of the purchase price of that company. No additional shares have been issued. These exchangeable shares are, as nearly as practicable, the economic equivalent of the company’s common shares; i.e., they have the following rights:

The right to exchange such shares for common shares of the company on a one-to-one basis.

The right to receive dividends, on a per-share basis, in amounts that are the same as, and are payable at the same time as, dividends declared on the company’s common shares.

The right to vote at all shareholder meetings at which the company’s shareholders are entitled to vote on the basis of one vote per exchangeable share.

The right to participate upon a liquidation event on a pro-rata basis with the holders of the company’s common shares in the distribution of assets of the company.

A reconciliation of exchangeable share activity for the three years ended December 26, 2004, is as follows:


In thousands	2004		2003		2002
Shares outstanding at beginning of year	2,293		2,303		3,289
Retraction	(182	)	(10	)	(986	)

Shares outstanding at end of year	2,111		2,293		2,303

Cumulative Other Comprehensive Income The company’s cumulative other comprehensive income includes:


Dollar amounts in millions	DECEMBER 26, 2004			DECEMBER 28, 2003
Foreign currency translation adjustments	$	238		$	164
Additional minimum pension liability adjustments		(81	)		(94	)
Cash flow hedge fair value adjustments		3			4
Unrealized gains on available-for-sale securities		3			2

	$	163		$	76

NOTE 20. STOCK-BASED COMPENSATION PLANS

The company’s Long-Term Incentive Compensation Plan (the Plan) was approved at the 2004 Annual Meeting of Shareholders. The Plan provides for the grant of options to purchase the company’s common stock at its market price on the date of grant by certain key officers and other employees of the company and its subsidiaries who are selected from time to time by the Compensation Committee of the Board of Directors. In addition, the Compensation Committee of the Board of Directors may grant to participants in the Plan restricted stock, stock appreciation rights, performance shares and other equity compensation on terms and conditions set by the Compensation Committee. In each case, equity granted to participants in the Plan must be at market price on the date of grant. As of the effective date of the Plan, shares available for grant under prior plans of the company were canceled. No more than 17 million shares may be issued under the Plan, and participants are eligible to receive in any one calendar year options or stock appreciation rights relating to a maximum of 500,000 shares, or restricted stock, performance shares or other equity grants aggregating a maximum of 200,000 shares. The aggregate number of shares that may be issued as grants other than options or stock appreciation rights may not exceed 20 percent of the authorized number of shares. If all options outstanding at December 26, 2004, including some options that were previously granted under an earlier plan, and all remaining options that could be granted under the Plan were exercised, the company’s common shares would increase by approximately 33 million shares. The term of options granted under the Plan may not exceed 10 years from the grant date. Vesting periods may be set by the Compensation Committee at the time of grant, but options outstanding under the Plan and prior plans are 25 percent vested after one year, 50 percent after two years, 75 percent after three years, and 100 percent after four years.

Stock appreciation rights were issued to former MacMillan Bloedel employees in connection with the company’s acquisition of MacMillan Bloedel in 1999. In addition, stock appreciation rights are granted to certain Canadian employees from time to time. As of December 26, 2004, 975,852 stock appreciation rights were outstanding, with strike prices ranging from $38.81 per right to $65.56 per right. These stock appreciation rights are included in the stock option information presented below.

During 2004, the Weyerhaeuser Company Board of Directors approved a program for a limited number of company employees who had been prohibited for substantial periods of time from exercising options previously granted to them under company plans as a result of prohibitions on trading put in place by the company in connection with material transactions. The program, which is open to the company’s executive officers, allows participants to exercise options granted to them under the company’s incentive plans and sell to the company the shares acquired upon exercise. The company purchases the shares at their market price on the date of exercise. The remaining terms of the options are governed by the plans under which the options were granted. The program will terminate at the end of April 2005. The options that are subject to the company repurchase program are subject to variable stock compensation accounting. As of December 26, 2004, options to purchase 566,314 common shares were eligible to be exercised under the program.

The company accounts for all options under APB Opinion No. 25 and related interpretations. A reconciliation in Note 1: Summary of Significant Accounting Policies illustrates the effect on net earnings and earnings per share had the company applied the fair-value recognition provisions of Statement 123 to stock-based compensation.

The company allows certain employees to defer all or a portion of their bonus into company share equivalents, with a 15 percent premium applied if payment is delayed for at least five years. The deferred account increases or decreases based on the performance of the company’s stock plus dividends.

The compensation benefit (expense) recognized for all of the incentive plans was $9 million in 2004, ($7) million in 2003 and $4 million in 2002.

Changes in the number of options outstanding are summarized as follows:


	2004			2003			2002
Options (in thousands):
Outstanding, beginning of year		15,692			13,853			10,070
Granted		3,447			3,416			3,034
Exercised		(3,516	)		(1,402	)		(1,781	)
Forfeited		(104	)		(172	)		(86	)
Expired		(3	)		(3	)		(1	)
Acquired		—			—			2,617

Outstanding, end of year		15,516			15,692			13,853

Exercisable, end of year		7,676			7,463			7,242

Weighted average exercise price:
Outstanding, beginning of year	$	53.75		$	54.26		$	51.35
Granted		62.81			49.57			60.86
Exercised		52.08			48.61			47.45
Forfeited		57.47			54.70			54.92
Expired		33.39			42.31			36.63
Acquired		—			—			53.20
Outstanding, end of year		56.12			53.75			54.26
Weighted average grant date fair value of options		16.03			12.57			16.43



The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants:
	2004		2003		2002
Risk-free interest rate	3.11	%	2.85	%	4.87	%
Expected life	5.0 years		5.3 years		5.2 years
Expected volatility	32.02	%	34.37	%	29.92	%
Expected dividend yield	2.55	%	3.23	%	2.62	%

The following table summarizes information about stock options outstanding at December 26, 2004 (shares in thousands):


PRICE RANGE	OPTIONS OUTSTANDING	WEIGHTED AVERAGE EXERCISE PRICE OPTIONS OUTSTANDING	OPTIONS EXERCISABLE	WEIGHTED AVERAGE EXERCISE PRICE OPTIONS EXERCISABLE	WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE (YEARS)
$25–$39	118	$34.14	118	$34.14	1.94
$40–$49	3,537	48.90	1,065	47.31	7.53
$50–$69	11,861	58.48	6,493	56.15	6.89

	15,516		7,676

NOTE 21. ACQUISITIONS

APM In the fourth quarter of 2004, the company acquired a 67 percent interest in Aracruz Produtos de Madeira S.A. (APM) for $17 million in cash. APM operates a sawmill in Brazil that produces high-value eucalyptus lumber and related appearance wood products. The sawmill has an annual capacity of 23 million board feet.

Willamette On February 11, 2002, the company acquired 97 percent of the outstanding shares of common stock of Willamette through a tender offer. The results of Willamette’s operations have been included in the consolidated financial statements since that date. Upon the consummation of the merger between Willamette and a wholly-owned subsidiary of

the company on March 14, 2002, all remaining outstanding Willamette shares were converted into the right to receive $55.50 in cash.

Willamette was an integrated forest products company that produced building materials, composite wood panels, fine paper, office paper products, corrugated packaging and grocery bags in over 100 plants located in the United States, Europe and Mexico and owned 1.7 million acres of forestlands in the United States.

The company believes the Willamette assets fit well with the company’s and enhance the company’s capabilities in a number of its core product markets. The acquisition created a larger company that is a leading producer in its major product lines and is better able to meet the needs of its customers. At the time of the acquisition, the company expected to reduce combined general and administrative costs through economies of scale. The company believes the acquisition positioned the company to increase shareholder value. These factors contributed to the $2.0 billion of goodwill that was recognized on the acquisition.

The total purchase price, including assumed debt of $1.8 billion, was $8.1 billion. The following table summarizes the estimated fair value of the assets and liabilities assumed as of February 11, 2002.


Dollar amounts in millions
Current assets	$	1,050
Property and equipment		4,504
Timber and timberlands		2,692
Other assets		125
Goodwill		2,039

Total assets acquired		10,410

Current liabilities		562
Long-term debt		1,826
Deferred taxes		1,664
Other liabilities		97

Total liabilities assumed		4,149

Net assets acquired	$	6,261

Goodwill was assigned to the following reporting units:


Dollar amounts in millions
Containerboard, Packaging and Recycling	$	1,092
Paper		752
Pulp		105
Wood Products		90

Total goodwill	$	2,039

Goodwill is not expected to be deductible for tax purposes.

The following table summarizes unaudited pro forma information assuming this acquisition occurred at the beginning of the year presented.

PRO FORMA INFORMATION (UNAUDITED)


Dollar amounts in millions except per-share figures	2002
Net sales and revenues	$	18,974
Net earnings		201
Earnings per share:
Basic and diluted		.91

NOTE 22: SUBSEQUENT EVENT

On February 18, 2005, the company announced it had reached a definitive agreement to sell its B.C. Coastal Group assets to Coastal Acquisition Ltd., a wholly-owned subsidiary of Brascan Corporation of Toronto, Canada for approximately $1.2 billion (Canadian) plus working capital. The transaction is not conditioned on financing, but is subject to regulatory approvals. The company expects to complete the sale in the second quarter of 2005. The sale includes 635,000 acres (258,000 hectares) of private timberlands and the annual harvesting rights to 3.6 million cubic meters of public land timber. The sale also includes five softwood sawmills, with a combined annual production of 690 million board feet, and two remanufacturing facilities.

The following table summarizes the carrying values in U.S. dollars as of December 26, 2004, of the assets and liabilities (excluding working capital) expected to be included in the sale:


Dollar amounts in millions
Property and equipment	$	171
Timber and timberlands		479
Other assets		23
Goodwill		248

Total assets to be disposed of		921

Deferred taxes		188
Other liabilities		19

Total liabilities to be disposed of		207

Estimated cumulative foreign currency translation gains		66

Net assets to be disposed of, excluding working capital	$	648

NOTE 23. BUSINESS SEGMENTS

The company is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate development and construction. The company’s business segments are:

Timberlands, which includes logs, chips and timber.

Wood Products, which includes softwood lumber, plywood, veneer, composite panels, oriented strand board, hardwood lumber, engineered lumber, raw materials and building materials distribution.

Pulp and Paper, which includes pulp, paper and liquid packaging board.

Containerboard, Packaging and Recycling.

Real Estate and Related Assets.

Corporate and Other

During the fourth quarter of 2003, the company changed the structure of its raw materials sourcing operations in Canada. During the first quarter of 2004, the company also changed the structure of its raw materials sourcing operations in the southern United States. As a result, raw materials that formerly were purchased by the Wood Products and Pulp and Paper segments are now managed by and reported as intersegment sales of the Timberlands segment. Comparative information has been restated to conform to the new presentation.

The timber-based businesses involve a high degree of integration among timber operations; building materials conversion facilities; and pulp, paper, containerboard and liquid packaging board primary manufacturing and secondary conversion facilities. This integration includes extensive transfers of raw materials, semi-finished materials and end products between and among these groups. The company’s accounting policies for segments are the same as those described in Note 1: Summary of Significant Accounting Policies.

Management evaluates segment performance based on the contributions to earnings of the respective segments. Accounting for segment profitability in integrated manufacturing sites involves allocation of joint conversion and common facility costs based upon the extent of usage by the respective product lines at that facility. Transfer of products between segments is accounted for at current market values.

An analysis and reconciliation of the company’s business segment information to the respective information in the consolidated financial statements is as follows:


For the three-year period ended December 26, 2004 (Dollar amounts in millions)	2004			2003			2002
Sales to and revenues from unaffiliated customers:
Timberlands	$	1,102		$	994		$	930
Wood Products		9,843			8,185			7,547
Pulp and Paper		4,115			3,851			3,683
Containerboard, Packaging and Recycling		4,535			4,322			4,212
Real Estate and Related Assets		2,495			2,029			1,750
Corporate and Other		575			492			399

	$	22,665		$	19,873		$	18,521

Intersegment sales:
Timberlands	$	1,622		$	1,605		$	1,545
Wood Products		331			301			220
Pulp and Paper		59			50			52
Containerboard, Packaging and Recycling		63			49			70
Corporate and Other		14			13			10

		2,089			2,018			1,897

Total sales and revenues		24,754			21,891			20,418
Intersegment eliminations		(2,089	)		(2,018	)		(1,897	)

	$	22,665		$	19,873		$	18,521

Contribution (charge) to earnings:
Timberlands	$	1,027		$	777		$	702
Wood Products		1,055			59			(20	)
Pulp and Paper		104			(82	)		82
Containerboard, Packaging and Recycling		249			262			335
Real Estate and Related Assets		610			392			336
Corporate and Other		(271	)		(176	)		(293	)

		2,774			1,232			1,142
Interest expense		(895	)		(868	)		(874	)
Less capitalized interest		66			72			103

Earnings before income taxes and cumulative effect
of a change in accounting principle		1,945			436			371
Income taxes		(662	)		(148	)		(130	)

Earnings before cumulative effect of a change in accounting principle		1,283			288			241
Cumulative effect of a change in accounting principle		—			(11	)		—

	$	1,283		$	277		$	241

Depreciation, depletion and amortization:
Timberlands	$	124		$	123		$	125
Wood Products		334			344			333
Pulp and Paper		459			449			377
Containerboard, Packaging and Recycling		321			326			330
Real Estate and Related Assets		14			11			11
Corporate and Other		70			65			49

	$	1,322		$	1,318		$	1,225

Charges for integration and restructuring:
Timberlands	$	3		$	2		$	—
Wood Products		—			7			4
Pulp and Paper		16			30			2
Containerboard, Packaging and Recycling		—			1			8
Corporate and Other		20			63			58

	$	39		$	103		$	72

Charges for closure of facilities:
Wood Products	$	2		$	78		$	51
Pulp and Paper		—			32			(8	)
Containerboard, Packaging and Recycling		12			17			52

	$	14		$	127		$	95

Equity in income (loss) of equity affiliates and unconsolidated entities:
Wood Products	$	(5	)	$	(3	)	$	(3	)
Pulp and Paper		8			(6	)		(11	)
Containerboard, Packaging and Recycling		—			(1	)		(1	)
Real Estate and Related Assets		52			20			31
Corporate and Other		11			4			2

	$	66		$	14		$	18

Capital expenditures:
Timberlands	$	55		$	58		$	63
Wood Products		147			145			219
Pulp and Paper		154			290			424
Containerboard, Packaging and Recycling		85			86			167
Real Estate and Related Assets		18			16			6
Corporate and Other		63			47			87

	$	522		$	642		$	966

Investments in and advances to equity affiliates and unconsolidated entities:
Wood Products	$	6		$	7		$	7
Pulp and Paper		171			165			167
Containerboard, Packaging and Recycling		—			7			48
Real Estate and Related Assets (less reserves)		59			38			28
Corporate and Other		312			367			344

	$	548		$	584		$	594

Assets:
Timberlands	$	4,967		$	4,994		$	5,069
Wood Products		4,871			4,863			4,988
Pulp and Paper		7,430			7,604			7,525
Containerboard, Packaging and Recycling		5,532			5,834			6,149
Real Estate and Related Assets		2,472			2,004			1,970
Corporate and Other		5,739			4,003			3,236

		31,011			29,302			28,937
Less: Intersegment eliminations		(1,057	)		(703	)		(620	)

	$	29,954		$	28,599		$	28,317

NOTE 24. GEOGRAPHICAL AREAS

The company attributes sales to and revenues from unaffiliated customers in different geographical areas on the basis of the location of the customer.

Export sales from the United States consist principally of pulp, liquid packaging board, logs, lumber and wood chips to Japan; containerboard, pulp, lumber and recycling material to other Pacific Rim countries; and pulp and hardwood lumber to Europe.

Long-lived assets consist of goodwill, timber and timberlands and property and equipment used in the generation of revenues in the different geographical areas.

Selected information related to the company’s operations by geographical area is as follows:


For the three-year period ended December 26, 2004 (Dollar amounts in millions)	2004		2003			2002
Sales to and revenues from unaffiliated customers:
United States	$	18,323	$	16,235		$	15,253
Japan		946		761			753
Canada		1,598		1,388			1,025
Europe		778		665			565
Other foreign countries		1,020		824			925

	$	22,665	$	19,873		$	18,521

Export sales from the United States:
Japan	$	661	$	575		$	548
Other		1,090		983			929

	$	1,751	$	1,558		$	1,477


For the three-year period ended December 26, 2004 (Dollar amounts in millions)	2004		2003			2002
Earnings before income taxes and cumulative effect of a change in accounting principle:
United States	$	1,642	$	514		$	379
Foreign countries		303		(78	)		(8	)

	$	1,945	$	436		$	371

Long-lived assets:
United States	$	15,578	$	16,216		$	17,034
Canada		3,728		3,733			3,258
Other foreign countries		262		221			206

	$	19,568	$	20,170		$	20,498

NOTE 25. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)


Dollar amounts in millions except per-share figures	FIRST QUARTER			SECOND QUARTER		THIRD QUARTER		FOURTH QUARTER		YEAR
Net sales and revenues:
2004	$	5,037		$	5,893	$	5,849	$	5,886	$	22,665
2003		4,614			4,930		5,184		5,145		19,873
Operating income:
2004		352			735		1,060		506		2,653
2003		121			413		304		330		1,168
Earnings before income taxes and a cumulative effect of a change in accounting principle:
2004		183			559		900		303		1,945
2003		(65	)		238		124		139		436
Net earnings:
2004		121			369		594		199		1,283
2003		(54	)		157		82		92		277
Basic net earnings per share:
2004		.54			1.57		2.46		.82		5.45
2003		(.24	)		.71		.37		.41		1.25
Diluted net earnings per share:
2004		.54			1.57		2.45		.82		5.43
2003		(.24	)		.71		.37		.41		1.25
Dividends per share:
2004		.40			.40		.40		.40		1.60
2003		.40			.40		.40		.40		1.60
Market prices — high/low:
2004		66.76-60.00			67.80-56.04		65.19-58.57		67.86-59.94		67.86-56.04
2003		53.58-45.80			53.76-47.83		62.00-52.50		63.01-56.01		63.01-45.80

As a result of the issuance of 16,675,000 shares of common stock that occurred in May 2004 (see Note 19: Shareholders’ Interest), and the effect of the issuance on the basic and diluted weighted average shares outstanding during the individual quarters of 2004, compared to the basic and diluted weighted average shares outstanding for the fifty-two weeks ended December 26, 2004, earnings per share for the full year 2004 does not equal the sum of the respective earnings per share for the four quarters of 2004.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The company’s principal executive officer and principal financial officer have evaluated the effectiveness of the company’s disclosure controls and procedures as of the end of the period covered by this annual report on Form 10-K. Disclosure controls are controls and other procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s (SEC) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on their evaluation, the company’s principal executive officer and principal financial officer believe the controls and procedures in place are effective to ensure that information required to be disclosed complies with the SEC’s rules and forms. See “Management’s Report on Internal Control Over Financial Reporting” above.

Changes In Internal Controls

There were no changes in the company’s internal control over financial reporting that occurred during the company’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to Directors of the company included under the headings “Nominees for Election — Terms Expire in 2005,” “Continuing Directors — Terms to Expire in 2006” and “Continuing Directors — Terms to Expire in 2007” in the Notice of Annual Meeting of Shareholders and Proxy Statement for the company’s Annual Meeting of Shareholders to be held April 21, 2005, is incorporated herein by reference. Information with regard to executive officers of the company contained in the Notice of Annual Meeting of Shareholders and Proxy Statement for the company’s Annual Meeting of Shareholders to be held April 21, 2005, under headings “Section 16(a) Beneficial Ownership Reporting Compliance,” “Certain Relationships and Related Party Transactions” and “Change in Control and Severance Agreements” is incorporated herein by reference.

The executive officers of the company are as follows:


Name	Title	Age
Lee T. Alford	Senior Vice President	57
Ernesta Ballard	Senior Vice President	59
Marvin D. Cooper	Senior Vice President	61
William R. Corbin	Executive Vice President	64
Robert A. Dowdy	Senior Vice President	63
Daniel S. Fulton	President & CEO, Weyerhaeuser Real Estate Company	56
Richard E. Hanson	Executive Vice President	61
Michael A. Jackson	Senior Vice President	56
James R. Keller	Senior Vice President	54
Sandy D. McDade	Senior Vice President	53
Susan M. Mersereau	Senior Vice President	58
Edward P. Rogel	Senior Vice President	58
Steven R. Rogel	President	62
Richard J. Taggart	Executive Vice President	62
Jack P. Taylor	Senior Vice President	62
George H. Weyerhaeuser, Jr.	Senior Vice President	51

Lee T. Alford has been senior vice president, Residential Wood Products since June 2004. He was vice president, Softwood Lumber from 2002 to 2004; vice president, Southern Timberlands from 1999 to 2002; and vice president, Mississippi/Louisiana Operations from 1996, when he joined the company, to 1999. Prior to joining the company, he held various management positions with several forest products companies, including Cavenham Forest Industries; Duke City Lumber Company, Inc.; and Crown Zellerbach.

Ernesta Ballard joined Weyerhaeuser in November 2004 as senior vice president, Corporate Affairs. Prior to joining the company, she served as commissioner, Department of Environmental Conservation for the State of Alaska from 2002 to 2004; president, Ballard & Associates (consulting firm) from 1994 to 2002; chief executive officer, Cape Fox Corp. (Alaska Native Village corporation) from 1989 to 1994; and regional administrator, Region 10, U.S. Environmental Protection Agency from 1983 to 1986. In 1997 she was appointed to serve on the board of governors of the U.S. Postal Service.

Marvin D. Cooper has been senior vice president, Pulp, Paper and Containerboard Manufacturing and Engineering, since 2002. Prior to joining the company, he was executive vice president, Pulp and Paper Mills, for Willamette Industries, Inc. from 1998 until 2002 when Willamette was acquired by the company. He was senior vice president, Pulp and Paper Mills for Willamette from 1997 to 1998. Prior to 1997, he held a number of management positions at Willamette in its pulp and fine paper businesses. He joined Willamette in 1980.

William R. Corbin has been executive vice president, Industrial Wood Products and International Business Groups since June 2004. He was executive vice president, Wood Products from 1999 to 2004; executive vice president, Timberlands and Distribution, from 1995 to 1999; and executive vice president, Wood Products from 1992, when he joined the company, to 1995.

Robert A. Dowdy has been senior vice president and general counsel since April 2004 and was vice president, general counsel from 1997 to 2004. He joined Weyerhaeuser in 1972 and held various legal positions with the company prior to 1997.

Daniel S. Fulton has been president and chief executive of Weyerhaeuser Real Estate Company, a subsidiary of the company, since 2001. He was president and chief executive officer of Weyerhaeuser Realty Investors, Inc. a subsidiary of the company, from 1998 to 2000; its chief operating officer from 1996 through 1997; and its chief investment officer from 1994 through 1995. He joined Weyerhaeuser in 1975 and has held various management and investment positions with the company and its subsidiaries.

Richard E. Hanson has been executive vice president and chief operating officer since February 2003. He was executive vice president, Timberlands from 2002 to 2003 and was senior vice president, Timberlands, from 1999 to 2002. He was vice president, Western Timberlands, from 1996 to 1998. He joined Weyerhaeuser in 1969 and has held numerous management positions in timberlands, wood products and paper businesses.

Michael A. Jackson has been senior vice president, Pulp and Paper since December 2004. He was vice president, Fine Paper from 2002 to 2004; vice president, Business Papers from 2000 to 2002; vice president, Recycling from 1998 to 2000; and vice president quality/human resources for Containerboard Packaging from 1993 to 1998. He joined the company in 1977 and held a number of sales and management roles.

James R. Keller has been senior vice president, Containerboard, Packaging and Recycling, since February 2002. From 1997 to 2002, he was vice president and general manager, Containerboard, Packaging and Recycling. He joined Weyerhaeuser in 1974 and has held numerous management positions in containerboard, newsprint and liquid packaging board, shipping containers and timberlands.

Sandy D. McDade has been senior vice president, Canada, since 2003. He was vice president, Strategic Planning from 2000 to 2003 and corporate secretary from 1993 to 2000. He joined Weyerhaeuser in 1980 and worked as a corporate and transaction lawyer until 2000.

Susan M. Mersereau has been senior vice president, Information Technology and Chief Information Officer since 2003. She was vice president, Organizational Effectiveness for Containerboard, Packaging and Recycling from 1998 to 2003, vice president, Business Services and Aviation from 1992 to 1998, and vice president, Weyerhaeuser Information Systems from 1988 to 1992. She joined Weyerhaeuser in 1980 as a program manager and has held various information system management positions.

Edward P. Rogel has been senior vice president, Human Resources since 2003. He was vice president, Human Resources Operations from 2000 to 2003. He joined Weyerhaeuser in 1969 and has held numerous human resources positions with Weyerhaeuser in timberlands, wood products and pulp businesses, in addition to holding corporate-wide responsibilities.

Steven R. Rogel has been the company’s president and chief executive officer since 1997. He has been a director of the company since 1997 and has been chairman of the board since 1999. Prior to joining the company, he served as the president and chief executive officer of Willamette Industries, Inc. from 1995 to 1997 and as its president and chief operating officer from 1991 to 1995. He is a director of the Kroger Company and Union Pacific Corporation, and serves on the National Executive Board Boy Scouts of America. He is the former Chairman of the American Forest & Paper Association, and the National Council for Air and Stream Improvement, Inc.

Richard J. Taggart has been executive vice president and chief financial officer since 2003. He started his career with Weyerhaeuser in 1974 as a project manager in Wood Products. After leaving Weyerhaeuser in 1985, he became the head of finance for the U.S. subsidiary of CANFOR, a Canadian forest products company. Since rejoining Weyerhaeuser in 1990, he has served as finance and planning director for Engineered Fiber Products; vice president, Investor Relations; vice president and treasurer; and vice president, Finance.

Jack P. Taylor has been senior vice president, Timberlands since 2003. He was vice president, Western Timberlands from 1999 to 2003. He joined Weyerhaeuser in 1969 and has worked in a variety of forestry, timberlands operations and raw materials management positions.

George H. Weyerhaeuser, Jr. has been senior vice president, Technology, since 1998 and was president and chief executive officer of Weyerhaeuser Canada Ltd., a subsidiary of the company, from 1993 to 1998. From 1990 to 1993, he was vice president, Manufacturing, Pulp, Paper and Packaging. He joined Weyerhaeuser in 1978 and has held various positions, including sawmill supervisor, vice president and mill manager for Containerboard, Pulp, Paper and Packaging.

Audit Committee Financial Expert

As of December 26, 2004, the Audit Committee of the Board of Directors consisted of William D. Ruckelshaus, Robert J. Herbold, Martha R. Ingram and Donald F. Mazankowski. Mr. Ruckelshaus will retire as a director as of the annual shareholders’ meeting in April 2005. Each member is independent as defined under the New York Stock Exchange rules. The Board of Directors has determined that each Audit Committee member has sufficient knowledge in financial and accounting matters to serve on the Committee and that Robert J. Herbold is an “audit committee financial expert” as defined by SEC rules.

EXECUTIVE COMPENSATION

Information with respect to executive compensation contained in the Notice of Annual Meeting of Shareholders and Proxy Statement for the company’s Annual Meeting of Shareholders to be held April 21, 2005, under the headings “Directors’ Compensation,” “Compensation Committee Report on Executive Management Compensation,” “Compensation Committee Interlocks and Insider Participation” is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information with respect to security ownership of certain beneficial owners and management contained in the Notice of Annual Meeting of Shareholders and Proxy Statement for the company’s Annual Meeting of Shareholders to be held April 21, 2005, under the heading “Beneficial Ownership of Common Shares” is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with regard to certain relationships and related transactions contained in the Notice of Annual Meeting of Shareholders and Proxy Statement for the company’s Annual Meeting of Shareholders to be held April 21, 2005, under the headings “Certain Relationships and Related Party Transactions” is incorporated herein by reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Information with respect to principal accounting fees and services in the Notice of Annual Meeting of Shareholders and Proxy Statement for the company’s Annual Meeting of Shareholders to be held April 21, 2005, under the heading “Relationships with Independent Registered Public Accounting Firm” is incorporated herein by reference.

CORPORATE GOVERNANCE MATTERS

Code of Ethics

The company has adopted a code of ethics that applies to all employees, including the principal executive officer, principal financial officer and principal accounting officer. The code of ethics has previously been filed as an exhibit to Form 10-K and is available on the company’s website at www.weyerhaeuser.com. A copy of the code of ethics is available upon request.

Corporate Governance Guidelines

The company has adopted corporate governance guidelines. The company’s corporate governance guidelines are available on the company’s website at www.weyerhaeuser.com. A copy of the corporate governance guidelines is available upon request.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


Financial Statement Schedule		Page Number(s) in Form 10-K

Report of Independent Registered Public Accounting Firm on Financial Statement Schedule		97

Schedule II - Valuation and Qualifying Accounts		98

All other financial statement schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements, or the notes thereto, in “Financial Statements and Supplementary Data” above.

EXHIBITS


3	-	(i) Articles of Incorporation (incorporated by reference to 1999 Form 10-K filed with the Securities and Exchange Commission on March 10, 2000 — Commission File Number 1-4825) (ii) Bylaws (incorporated by reference to 2000 Form 10-K filed with the Securities and Exchange Commission on March 16, 2001 — Commission File Number 1-4825)
10	-	Material Contracts
		(a) Agreement with W. R. Corbin (incorporated by reference to 1998 Form 10-K filed with the Securities and Exchange Commission on March 12, 1999 — Commission File Number 1-4825) (b) Agreement with S. R. Rogel (incorporated by reference to 1997 Form 10-K filed with the Securities and Exchange Commission on March 13, 1998 — Commission File Number 1-4825) (c) Arrangement with Michael R. Onustock (incorporated by reference to 2002 Form 10-K filed with the Securities and Exchange Commission on March 5, 2003 – Commission File Number 1-4825) (d) Arrangement with Marvin D. Cooper (incorporated by reference to 2002 Form 10-K filed with the Securities and Exchange Commission on March 5, 2003 – Commission File Number 1-4825) (e) Form of Amended Executive Severance Agreement (incorporated by reference to 2002 Form 10-K filed with the Securities and Exchange Commission on March 5, 2003 – Commission File Number 1-4825) (f) Description of the Weyerhaeuser Company Option Exercise/Share Purchase Program (incorporated by reference to 2001 Form 10-K filed with the Securities and Exchange Commission on February 28, 2002 — Commission File Number 1-4825) (g) Description of the Weyerhaeuser Company Option Exercise/Share Purchase Program (h) Third Amended and Restated 364-Day Revolving Credit Facility Agreement, dated as of March 23, 2004, among Weyerhaeuser Company, Weyerhaeuser Real Estate Company, the Lenders named therein, JPMorgan Chase Bank, as administrative agent, Morgan Stanley Senior Funding, Inc., as syndication agent, and The Bank of Tokyo-Mitsubishi, Ltd. and Deutsche Bank Securities Inc., as co-documentation agents. (i) Weyerhaeuser Company Long-Term Incentive Compensation Plan approved by shareholders on April 13, 2004 (incorporated by reference to Form 8-K filed with the Securities and Exchange Commission on February 14, 2005 – Commission File Number 1-4825) (j) Weyerhaeuser Company Management Incentive Plan (incorporated by reference to Form 8-K filed with the Securities and Exchange Commission on February 14, 2005 – Commission File Number 1-4825) (k) Compensation for Directors (l) Fee Deferral Plan for Directors of Weyerhaeuser Company (m) Fee Deferral Plan for Canadian Directors of Weyerhaeuser Company (n) Asset Purchase Agreement dated as of February 17, 2005, between Coastal Acquisition LTD and Weyerhaeuser Company Limited (incorporated by reference to Form 8-K filed with the Securities and Exchange Commission on February 23, 2005 – Commission File Number 1-4825) (o) Weyerhaeuser Company Comprehensive Incentive Compensation Plan (p) Weyerhaeuser Company Salaried Employees Supplemental Retirement Plan

12	-	Statements regarding computation of ratios

14	-	Code of Business Conduct and Ethics (incorporated by reference to 2003 Form 10-K filed with the Securities and Exchange Commission on March 5, 2004 – Commission File Number 1-4825)

21	-	Subsidiaries of the Registrant

23	-	Consent of Independent Registered Public Accounting Firm

31	-	Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended

32	-	Certification pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350)

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 3, 2005.

WEYERHAEUSER COMPANY

/s/ S TEVEN R. R OGEL

Steven R. Rogel

Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on March 3, 2005.



/s/ S TEVEN R. R OGEL				/s/ A RNOLD G. L ANGBO
Steven R. Rogel Principal Executive Officer, Director and Chairman of the Board				Arnold G. Langbo Director

/s/ R ICHARD J. T AGGART
Richard J. Taggart Principal Financial Officer				Donald F. Mazankowski Director

/s/ S TEVEN J. H ILLYARD				/s/ N. W. P IASECKI
Steven J. Hillyard Principal Accounting Officer				Nicole W. Piasecki Director

				/s/ W ILLIAM R UCKELSHAUS
Richard F. Haskayne Director				William D. Ruckelshaus Director

/s/ R OBERT J. H ERBOLD				/s/ R ICHARD H. S INKFIELD
Robert J. Herbold Director				Richard H. Sinkfield Director

/s/ M ARTHA R. I NGRAM				/s/ D. M ICHAEL S TEUERT
Martha R. Ingram Director				D. Michael Steuert Director

/s/ J OHN I. K IECKHEFER				/s/ J AMES N. S ULLIVAN
John I. Kieckhefer Director				James N. Sullivan Director

				/s/ C HARLES R. W ILLIAMSON
				Charles R. Williamson Director

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Weyerhaeuser Company:

Under date of March 2, 2005, we reported on the consolidated balance sheet of Weyerhaeuser Company and subsidiaries as of December 26, 2004, and December 28, 2003, and the related consolidated statements of earnings, cash flows and shareholders’ interest and comprehensive income for each of the years in the three-year period ended December 26, 2004, which report is included in this annual report on Form 10-K. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule in this annual report on Form 10-K. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ KPMG LLP

Seattle, Washington

March 2, 2005

FINANCIAL STATEMENT SCHEDULE

Schedule II – Valuation And Qualifying Accounts

For the three years ended December 26, 2004

Dollar amounts in millions


DESCRIPTION	BALANCE AT BEGINNING OF PERIOD		CHARGED TO INCOME		DEDUCTIONS FROM/ (ADDITIONS TO) RESERVE		BALANCE AT END OF PERIOD

Weyerhaeuser
Reserve deducted from related asset accounts:
Doubtful accounts — Accounts receivable
2004	$	16	$	11	$	10	$	17

2003	$	13	$	14	$	11	$	16

2002	$	8	$	15	$	10	$	13


Real Estate and Related Assets
Reserves and allowances deducted from related asset accounts:

Receivables
2004	$	6	$	—	$	2	$	4

2003	$	6	$	3	$	3	$	6

2002	$	5	$	1	$	—	$	6


Mortgage-related financial instruments
2004	$	—	$	—	$	—	$	—

2003	$	1	$	—	$	1	$	—

2002	$	2	$	1	$	2	$	1


Investments in unconsolidated entities held as assets
2004	$	3	$	—	$	—	$	3

2003	$	3	$	1	$	1	$	3

2002	$	2	$	1	$	—	$	3

EXHIBIT INDEX

Exhibits:


3	-	(iii) Articles of Incorporation (incorporated by reference to 1999 Form 10-K filed with the Securities and Exchange Commission on March 10, 2000 — Commission File Number 1-4825) (iv) Bylaws (incorporated by reference to 2000 Form 10-K filed with the Securities and Exchange Commission on March 16, 2001 — Commission File Number 1-4825)
10	-	Material Contracts
		(a) Agreement with W. R. Corbin (incorporated by reference to 1998 Form 10-K filed with the Securities and Exchange Commission on March 12, 1999 — Commission File Number 1-4825) (b) Agreement with S. R. Rogel (incorporated by reference to 1997 Form 10-K filed with the Securities and Exchange Commission on March 13, 1998 — Commission File Number 1-4825) (c) Arrangement with Michael R. Onustock (incorporated by reference to 2002 Form 10-K filed with the Securities and Exchange Commission on March 5, 2003 – Commission File Number 1-4825) (d) Arrangement with Marvin D. Cooper (incorporated by reference to 2002 Form 10-K filed with the Securities and Exchange Commission on March 5, 2003 – Commission File Number 1-4825) (e) Form of Amended Executive Severance Agreement (incorporated by reference to 2002 Form 10-K filed with the Securities and Exchange Commission on March 5, 2003 – Commission File Number 1-4825) (f) Description of the Weyerhaeuser Company Option Exercise/Share Purchase Program (incorporated by reference to 2001 Form 10-K filed with the Securities and Exchange Commission on February 28, 2002 — Commission File Number 1-4825) (g) Description of the Weyerhaeuser Company Option Exercise/Share Purchase Program (h) Third Amended and Restated 364-Day Revolving Credit Facility Agreement, dated as of March 23, 2004, among Weyerhaeuser Company, Weyerhaeuser Real Estate Company, the Lenders named therein, JPMorgan Chase Bank, as administrative agent, Morgan Stanley Senior Funding, Inc., as syndication agent, and The Bank of Tokyo-Mitsubishi, Ltd. and Deutsche Bank Securities, Inc., as co-documentation agents (i) Weyerhaeuser Company Long-Term Incentive Compensation Plan approved by shareholders on April 13, 2004 (incorporated by reference to Form 8-K filed with the Securities and Exchange Commission on February 14, 2005 – Commission File Number 1-4825) (j) Weyerhaeuser Company Management Incentive Plan (incorporated by reference to Form 8-K filed with the Securities and Exchange Commission on February 14, 2005 – Commission File Number 1-4825) (k) Compensation for Directors (l) Fee Deferral Plan for Directors of Weyerhaeuser Company (m) Fee Deferral Plan for Canadian Directors of Weyerhaeuser Company (n) Asset Purchase Agreement dated as of February 17, 2005, between Coastal Acquisition LTD and Weyerhaeuser Company Limited (incorporated by reference to Form 8-K filed with the Securities and Exchange Commission on February 23, 2005 – Commission File Number 1-4825) (o) Weyerhaeuser Company Comprehensive Incentive Compensation Plan (p) Weyerhaeuser Company Salaried Employees Supplemental Retirement Plan

12	-	Statements regarding computation of ratios

14	-	Code of Business Conduct and Ethics (incorporated by reference to 2003 Form 10-K filed with the Securities and Exchange Commission on March 5, 2004 – Commission File 1-4825)

21	-	Subsidiaries of the Registrant

23	-	Consent of Independent Registered Public Accounting Firm

31	-	Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended

32	-	Certification pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350)

Exhibit 10.G

Weyerhaeuser Company and Subsidiaries

EXHIBIT 10 (g) — Description of the Weyerhaeuser Company Option Exercise/Share Purchase Program

Option Exercise/Share Purchase Program

In April 2004, the Weyerhaeuser Company Board of Directors approved a program for a limited number of company employees who had been prohibited for extended periods from exercising options previously granted to them under company option plans as a result of prohibitions on trading put in place by the company in connection with material transactions. The company’s executive officers are all participants in the program. Under the program, participants are allowed to exercise options granted to them under the company’s 1998 Long-Term Incentive Plan and prior company option plans and simultaneously sell to the company the shares acquired upon exercise. Participants who exercise options under this program receive the difference between the exercise price of the options and the fair market value of the shares. The fair market value of such shares is the average of the high and low price for the company’s common stock (as reported in the New York Stock Exchange Consolidation Tape) on the day of exercise. The remaining terms of the options are governed by the plans under which the options were granted.

Exhibit 10.H

EXECUTION COPY

$1,200,000,000

THIRD AMENDED AND RESTATED 364-DAY

REVOLVING CREDIT FACILITY AGREEMENT

Dated as of March 23, 2004

among

WEYERHAEUSER COMPANY, and

WEYERHAEUSER REAL ESTATE COMPANY, as Borrowers,

THE LENDERS AND INITIAL FRONTING BANK NAMED HEREIN,

JPMORGAN CHASE BANK, as Administrative Agent,

MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agent,

and

THE BANK OF TOKYO-MITSUBISHI, LTD., and

DEUTSCHE BANK SECURITIES INC.,

as Co-Documentation Agents

J.P. MORGAN SECURITIES INC. and MORGAN STANLEY SENIOR FUNDING, INC.,

as Lead Arrangers and Joint Book Runners

TABLE OF CONTENTS


		Page
ARTICLE I DEFINITIONS
Section 1.01	Defined Terms	2
Section 1.02	Terms Generally	15
Section 1.03	Accounting Terms; GAAP	15
ARTICLE II THE CREDITS
Section 2.01	Commitments	15
Section 2.02	Loans	16
Section 2.03	Conversion and Continuation of Loans	18
Section 2.04	Fees	19
Section 2.05	Repayment of Loans; Evidence of Debt	21
Section 2.06	Interest on Loans	22
Section 2.07	Default Interest	23
Section 2.08	Alternate Rate of Interest	23
Section 2.09	Termination and Reduction of Commitments	24
Section 2.10	Prepayment	24
Section 2.11	Reserve Requirements; Change in Circumstances	25
Section 2.12	Change in Legality	27
Section 2.13	Indemnity	28
Section 2.14	Pro Rata Treatment	29
Section 2.15	Sharing of Setoffs	29
Section 2.16	Payments	29
Section 2.17	Taxes	30
Section 2.18	Mitigation Obligations; Replacement of Lenders	33
Section 2.19	Term Loan Conversion	34
Section 2.20	Letters of Credit	34
ARTICLE III REPRESENTATIONS AND WARRANTIES
Section 3.01	Organization; Powers	38
Section 3.02	Authorization	38
Section 3.03	Enforceability	39
Section 3.04	Consents and Approvals	39
Section 3.05	Financial Statements	39
Section 3.06	No Material Adverse Change	40
Section 3.07	Title to Properties; Possession Under Leases	40


Section 3.08	Subsidiaries	40
Section 3.09	Litigation; Compliance with Laws	40
Section 3.10	Agreements	40
Section 3.11	Federal Reserve Regulations	41
Section 3.12	Investment Company Act; Public Utility Holding Company Act	41
Section 3.13	Tax Returns	41
Section 3.14	No Material Misstatements	41
Section 3.15	Compliance with ERISA	41
Section 3.16	Environmental Matters	42
Section 3.17	Maintenance of Insurance	42
ARTICLE IV CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
Section 4.01	All Borrowings and Issuances	42
Section 4.02	Closing Date	43
Section 4.03	Term Loan Conversion Conditions	44
ARTICLE V AFFIRMATIVE COVENANTS
Section 5.01	Existence; Businesses and Properties	45
Section 5.02	Insurance	45
Section 5.03	Obligations and Taxes	46
Section 5.04	Financial Statements, Reports, etc	46
Section 5.05	Litigation and Other Notices	47
Section 5.06	ERISA	48
Section 5.07	Maintaining Records; Access to Properties and Inspections	49
Section 5.08	Use of Proceeds	49
Section 5.09	Environmental Matters	49
Section 5.10	OCBM Agreement	51
Section 5.11	Further Assurances	51
ARTICLE VI NEGATIVE COVENANTS
Section 6.01	Covenants of Weyerhaeuser	51
Section 6.02	Covenants with respect to WRECO	54
ARTICLE VII EVENTS OF DEFAULT
Section 7.01	Events of Default	57

ARTICLE VIII

THE ADMINISTRATIVE AGENT


Section 8.01	The Administrative Agent	59
Section 8.02	Other Agents	62
ARTICLE IX MISCELLANEOUS
Section 9.01	Notices	62
Section 9.02	Survival of Agreement	63
Section 9.03	Binding Effect	63
Section 9.04	Successors and Assigns	63
Section 9.05	Expenses; Indemnity	66
Section 9.06	Right of Setoff	67
Section 9.07	Applicable Law	67
Section 9.08	Waivers; Amendment	67
Section 9.09	Interest Rate Limitation	68
Section 9.10	Entire Agreement	68
Section 9.11	WAIVER OF JURY TRIAL	68
Section 9.12	Severability	69
Section 9.13	Counterparts	69
Section 9.14	Headings	69
Section 9.15	Jurisdiction; Consent to Service of Process	69
Section 9.16	Domicile of Loans	70
Section 9.17	Restricted and Unrestricted Subsidiaries	70
Section 9.18	USA PATRIOT Act	71

EXHIBITS


Exhibit A		Form of Revolving Borrowing Request
Exhibit B		Form of Administrative Questionnaire
Exhibit C		Form of Assignment and Acceptance
Exhibit D-1		Form of Certification of Financial Statements for Weyerhaeuser
Exhibit D-2		Form of Certification of Financial Statements for WRECO
Exhibit D-3		Form of Compliance Certificate for Weyerhaeuser
Exhibit D-4		Form of Compliance Certificate for WRECO
Exhibit E		Form of Subordinated Debt
Exhibit F		Form of Promissory Note

iii

SCHEDULES

Schedule 2.01 Commitments

Schedule 3.08 Subsidiaries of Weyerhaeuser and WRECO

Schedule 9.01 Notices

THIRD AMENDED AND RESTATED 364-DAY REVOLVING CREDIT FACILITY AGREEMENT dated as of March 23, 2004 among WEYERHAEUSER COMPANY, a Washington corporation (“ Weyerhaeuser ”), WEYERHAEUSER REAL ESTATE COMPANY, a Washington corporation (“ WRECO ,” together with Weyerhaeuser, the “ Borrowers ” and each, individually, a “ Borrower ”), the lenders listed in Schedule 2.01 (together with each assignee that becomes a party hereto pursuant to Section 9.04, a “ Lender ,” and collectively, the “ Lenders ”), JPMORGAN CHASE BANK, a New York banking corporation, as initial fronting bank (in such capacity, the “ Initial Fronting Bank ”), JPMORGAN CHASE BANK, as administrative agent for the Lenders (in such capacity, and its successors in such capacity, the “ Administrative Agent ”), MORGAN STANLEY SENIOR FUNDING, INC., as syndication agent (in such capacity, the “ Syndication Agent ”), and THE BANK OF TOKYO-MITSUBISHI, LTD. and DEUTSCHE BANK SECURITIES INC., as co-documentation agents (each, individually, a “ Co-Documentation Agent ,” and collectively, the “ Co-Documentation Agents ”).

W I T N E S S E T H :

WHEREAS, the Borrowers have entered into that certain Second Amended and Restated 364-Day Revolving Credit Facility Agreement, dated as of March 25, 2003 (the “ Existing 364-Day Revolving Credit Agreement ”) with JPMorgan Chase Bank, as administrative agent, Morgan Stanley Senior Funding, Inc., as syndication agent, The Bank of Tokyo-Mitsubishi, Ltd. and Deutsche Bank Securities Inc. as co-documentation agents, and the lenders party thereto from time to time.

WHEREAS, the Borrowers have requested that the Lenders amend and restate the Existing 364-Day Revolving Credit Agreement (a) to refinance the Existing 364-Day Revolving Credit Agreement, (b) to pay costs and expenses related to such re-financing, (c) to provide the Borrowers and their Subsidiaries with financing for general corporate purposes and to back-stop commercial paper issuances, (d) to make $600,000,000 of the Commitments of the Lenders available for the issuance of Letters of Credit and (e) to provide for the issuance of Letters of Credit for the account of Weyerhaeuser which are to be utilized for general corporate purposes.

WHEREAS, the Lenders have indicated their willingness to amend and restate the Existing 364-Day Revolving Credit Agreement on the terms and conditions of this Agreement.

WHEREAS, Weyerhaeuser Real Estate Company, a Washington corporation and a wholly owned subsidiary of Weyerhaeuser, will derive a substantial benefit from the credit extended to Weyerhaeuser.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree to amend and restate the Existing 364-Day Revolving Credit Agreement as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Defined Terms . As used in this Agreement, the following terms shall have the meanings specified below:

“ Adjusted Net Worth ” shall mean, as of the date of any computation thereof, the aggregate amount of capital stock (less treasury stock), surplus and retained earnings of WRECO and its Restricted Subsidiaries, after deducting (i) goodwill, patents, trade names, trademarks, unamortized debt discount and expense, deferred assets (other than prepaid taxes and insurance), experimental or organizational expense, any reappraisal, revaluation or write-up assets, and such other assets as are properly classified as “intangible assets” of WRECO and its Restricted Subsidiaries in accordance with GAAP, (ii) all minority interests in the capital stock and surplus of the Restricted Subsidiaries of WRECO, (iii) all Investments in Unrestricted Subsidiaries of WRECO, and (iv) all Investments of WRECO and its Restricted Subsidiaries in any joint venture, partnership or similar entity (not including any Investments in any Restricted Subsidiary of WRECO) entered into for the purpose of acquiring, developing, constructing, owning, operating, selling or leasing any Real Estate Assets.

“ Administrative Agent Fees ” shall have the meaning given such term in Section 2.04(b).

“ Administrative Questionnaire ” shall mean an Administrative Questionnaire in the form of Exhibit B hereto.

“ Affiliate ” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified.

“ Aggregate Credit Exposure ” shall mean the aggregate amounts of the Lenders’ Credit Exposures.

“ Agreement ” shall mean this Third Amended and Restated 364-Day Revolving Credit Facility Agreement, together with all amendments, supplements and modifications hereof.

“ Applicable Margin ” shall have the meaning given such term in Section 2.06(d).

“ Applicable Percentage ” of any Lender at any time shall mean the percentage of the Total Commitment represented by such Lender’s Commitment. In the event the Commitments shall have expired or been terminated, the Applicable Percentage shall be determined on the basis of the Commitments most recently in effect, but giving effect to assignments pursuant to Section 9.04.

“ Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, which acceptance shall be governed by the terms of Section 9.04, substantially in the form of Exhibit C.

“ Base Rate ” shall mean, for any day, a rate per annum equal to the higher of (i) the Prime Rate and (ii) 1/2 of 1% plus the Federal Funds Rate, each as in effect from time to time. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Rate, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms thereof, the Base Rate shall be determined without regard to clause (ii) of the first sentence of this definition, until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Rate, respectively.

“ Base Rate Borrowing ” shall mean a Borrowing comprised of Base Rate Loans.

“ Base Rate Loan ” shall mean any Loan bearing interest at a rate determined by reference to the Base Rate in accordance with the provisions of Article II.

“ Board ” shall mean the Board of Governors of the Federal Reserve System of the United States.

“ Borrower ” and “ Borrowers ” shall have the respective meanings given such terms in the introductory paragraph hereto.

“ Borrowing ” shall mean a group of Loans of a single Type made by the Lenders on a single date and as to which a single Interest Period is in effect.

“ Business Day ” shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City; provided , however , that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

“ Capital Base ” shall mean, as of the date of any computation thereof, the sum of (i) Adjusted Net Worth plus (ii) the amount of WRECO/Weyerhaeuser Subordinated Debt then outstanding not to exceed Adjusted Net Worth.

“ Capital Lease Obligations ” of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP and, for purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

A “ Change in Control ” shall be deemed to have occurred with respect to (a) Weyerhaeuser if, (i) any person or group (within the meaning of Rule 13d-5 of the SEC as in effect on the date hereof) shall own directly or indirectly, beneficially or of record, shares representing more than 20% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of Weyerhaeuser; (ii) a majority of the seats (other than vacant seats) on the board of directors of Weyerhaeuser shall at any time have been occupied by persons

who were neither (A) nominated by the management of Weyerhaeuser in accordance with its charter and by-laws, nor (B) appointed by directors so nominated; or (iii) any person or group shall otherwise directly or indirectly Control Weyerhaeuser, and (b) WRECO if Weyerhaeuser shall fail to own directly or indirectly, beneficially or of record, shares representing at least 79% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of WRECO.

“ Closing Date ” shall mean the first date on which the conditions precedent set forth in Section 4.02 shall have been satisfied.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to the Code are to the Code, as in effect at the date of this Agreement and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor.

“ Commitment ” shall mean, with respect to each Lender, the commitment of such Lender hereunder as set forth in Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable, as such Lender’s Commitment may be permanently reduced, increased or terminated from time to time pursuant to Section 2.09, Section 2.18, Article VII or Section 9.04. Each Lender’s unused Commitment shall automatically and permanently terminate on the Revolver Termination Date, and, if the Term Loan Conversion is elected, each Lender’s remaining Commitment shall automatically and permanently terminate on the Termination Date.

“ Control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities or by contract, and “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.

“ Credit Exposure ” shall mean, with respect to each Lender, at any time, the aggregate principal amount at such time of all outstanding Loans of such Lender to the Borrowers, plus such Lender’s L/C Exposure at such time.

“ Default ” shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default.

“ Dollars ,” “ dollars ” or “ $ ” shall mean lawful money of the United States of America.

“ Domestic Subsidiary ” shall mean any subsidiary organized under the laws of any State of the United States of America, substantially all the assets of which are located, and substantially all the business of which is conducted, in the United States of America.

“ Environmental Claims ” shall mean any and all administrative, regulatory, or judicial actions, suits, demand letters, claims, liens, notices of noncompliance or violation, investigations, or proceedings relating in any way to any Environmental Law (hereinafter referred to as “claims”) or any permit issued under any such Environmental Law, including without limitation (a) any and all claims by Governmental Authorities for enforcement, cleanup,

removal, response, remedial, or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation, or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety, or the environment.

“ Environmental Laws ” shall mean any and all Federal, state, local and foreign statutes, laws, regulations, ordinances, codes, rules (including rules of common law), judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions now or hereafter in effect relating to the environment, health, safety, Hazardous Materials (including, without limitation, the manufacture, processing, distribution, use, treatment, storage, Release, and transportation thereof) or to industrial hygiene or the environmental conditions on, under or about real property, including, without limitation, soil, groundwater, and indoor and outdoor ambient air conditions.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

“ ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that, together with Weyerhaeuser or WRECO, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

“ Eurodollar Borrowing ” shall mean a Borrowing comprised of Eurodollar Loans.

“ Eurodollar Loan ” shall mean any Loan bearing interest at a rate determined by reference to the Eurodollar Rate in accordance with the provisions of Article II.

“ Eurodollar Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for the purpose of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “ Eurodollar Rate ” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

“ Event of Default ” shall have the meaning given such term in Article VII.

“ Excluded Sales ” shall mean (a) the sale by Weyerhaeuser or any of its Subsidiaries in the ordinary course of its business of inventory and timberlands, (b) sales of accounts, receivables or other payment intangibles as part of a securitization transaction and (c) sales to Weyerhaeuser or any of its subsidiaries.

“ Existing 364-Day Revolving Credit Agreement ” shall have the meaning given such term in the preliminary statements hereto.

“ Facility Fees ” shall have the meaning given such term in Section 2.04(a).

“ Federal Funds Rate ” shall mean, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for the day of such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“ Fees ” shall mean the Facility Fees, the Fronting Fee, the L/C Participation Fee and the Administrative Agent Fees.

“ Financial Officer ” of any corporation shall mean the chief financial officer, principal accounting officer, treasurer or controller of such corporation.

“ Five-Year Revolving Credit Facility Agreement ” shall mean the Amended and Restated Competitive Advance and Revolving Credit Facility Agreement dated as of March 26, 2002, entered into by and among Weyerhaeuser, the lenders party thereto from time to time, the Syndication Agent, the Administrative Agent and the Co-Documentation Agents, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

“ Fronting Bank ” shall mean the Initial Fronting Bank and any other Lender designated by Weyerhaeuser to the extent such Lender has expressly agreed to perform all of the obligations that, by the terms of this Agreement, are required to be performed as a Fronting Bank, as such consent by such Lender may be evidenced from time to time by documentation reasonably acceptable to Weyerhaeuser, such Lender and the Administrative Agent.

“ Fronting Fee ” shall have the meaning given such term in Section 2.04(c).

“ GAAP ” shall mean generally accepted accounting principles, applied on a consistent basis.

“ Governmental Authority ” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“ Guarantee ” of or by any person shall mean any obligation, contingent or otherwise, of such person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness, (c) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided , however , that the term Guarantee shall not include endorsements for collection or deposit, in either case in the ordinary course of business.

“ Hazardous Materials ” shall mean (a) any petroleum or petroleum products, flammable substances, explosives, radioactive materials, hazardous wastes, substances or contaminants, toxic wastes, substances or contaminants, or any other wastes, substances, contaminants or pollutants prohibited, limited or regulated by any Governmental Authority; (b) asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contains dielectric fluid containing levels of polychlorinated biphenyls or radon gas; (c) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants,” or “pollutants,” or words of similar import, under any applicable Environmental Law; and (d) any other chemical, material, or substance, exposure to which is prohibited, limited, or regulated by any Governmental Authority.

“ Indebtedness ” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person upon which interest charges are customarily paid, (d) all obligations of such person under conditional sale or other title retention agreements relating to property or assets purchased by such person, (e) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such person, whether or not the obligations secured thereby have been assumed, (g) all Guarantees by such person of Indebtedness of others, (h) all Capital Lease Obligations of such person, and (i) all obligations of such person as an account party in respect of letters of credit, letters of guaranty and bankers’ acceptances. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner.

“ Initial Fronting Bank ” shall have the meaning given such term in the introductory paragraph hereto.

“ Interest Period ” shall mean, as to any Eurodollar Borrowing, the period commencing on the date of such Borrowing or on the date of conversion of a Borrowing of a different Type to a Eurodollar Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing or conversion thereof, as the case may be, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the applicable Borrower may elect; provided , however , that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of Eurodollar Loans, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day; provided further that no Interest Period for any Loan shall extend beyond the Termination Date. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.

“ Investments ” shall mean all investments in any Person, computed in accordance with GAAP, made by stock purchase, capital contribution, loan, advance, extension of credit, or creation or assumption of any other contingent liability or Guarantee in respect of any obligation of such Person, or otherwise; provided , however , that in computing any investment in any Person (i) all expenditures for such investment shall be taken into account at the actual amounts thereof in the case of expenditures of cash and at the fair value thereof (as determined in good faith by the Board of Directors of WRECO) or depreciated cost thereof (in accordance with GAAP), whichever is greater, in the case of expenditures of property, (ii) there shall not be included any Real Estate Assets, or any account or note receivable from such other Person arising from transactions in the ordinary course of business, and (iii) a Guarantee or other contingent liability of any kind in respect of any Indebtedness or other obligation of such Person shall be deemed an Investment equal to the amount of such Indebtedness or obligation.

“ L/C Disbursement ” shall mean a payment or disbursement made by any Fronting Bank pursuant to a Letter of Credit.

“ L/C Exposure ” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time (assuming compliance at such time with all conditions to drawing) plus (b) the aggregate principal amount of all L/C Disbursements that have not yet been converted to Loans in accordance with Section 2.02(f) or reimbursed by Weyerhaeuser at such time. The L/C Exposure of any Lender at any time shall mean its Applicable Percentage of the aggregate L/C Exposure at such time.

“ L/C Participation Fee ” shall have the meaning given such term in Section 2.04(c).

“ Lead Arrangers ” shall mean, collectively, J.P. Morgan Securities Inc., and Morgan Stanley Senior Funding, Inc.

“ Lender ” and “ Lenders ” shall have the respective meanings given such terms in the introductory paragraph hereto.

“ Lender Affiliate ” shall mean, (a) with respect to any Lender, (i) an Affiliate of such Lender or (ii) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an Affiliate of such Lender and (b) with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“ Letter of Credit ” shall mean any letter of credit issued pursuant to Section 2.20.

“ Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

“ Loan ” shall mean a Revolving Loan made by a Lender to a Borrower pursuant to Section 2.01 and a Term Loan made by a Lender to a Borrower pursuant to Section 2.19. Each Loan shall be a Eurodollar Loan or a Base Rate Loan.

“ Loan Documents ” shall mean this Agreement, the OCBM Agreement, any Letter of Credit and any application therefor and any notes issued in accordance with Section 2.05.

“ Mandatory Convertible Debt Securities ” with respect to Weyerhaeuser, shall mean all obligations of Weyerhaeuser evidenced by bonds, notes, debentures, or other similar instruments, which by their terms convert mandatorily into equity interests of Weyerhaeuser no later than three years from the date of issuance of such bonds, notes, debentures, or other similar instruments; provided that at no time shall the aggregate outstanding principal amount of such obligations included in the definition of “Mandatory Convertible Debt Securities,” prior to their conversion, exceed $1,500,000,000.

“ Margin Stock ” shall have the meaning given such term under Regulation U.

“ Material Adverse Effect ” shall mean (a) a materially adverse effect on the business, financial condition, operations or properties of Weyerhaeuser and its Subsidiaries, taken as a whole, (b) a materially adverse effect on the ability of Weyerhaeuser or any of its Subsidiaries to perform its obligations under any Loan Documents to which it is or will be a party, or (c) a materially adverse effect on the rights and remedies available to the Administrative Agent and the Lenders under the Loan Documents.

“ Moody’s ” shall mean Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, and its successors and assigns, and if such corporation shall for any reason no longer perform the functions of a securities rating agency, “ Moody’s ” shall be deemed to refer to any other nationally recognized rating agency designated by Weyerhaeuser and the Required Lenders.

“ Net Cash Proceeds ” shall mean, with respect to any sale, lease, transfer or other disposition of any asset by any Person, the aggregate amount of cash received from time to time (whether as initial consideration or through payment or disposition of deferred consideration) by or on behalf of such Person in connection with such transaction after deducting therefrom only (without duplication) (a) the costs associated with such transaction (including reasonable and customary brokerage fees and commissions, legal fees and other similar fees and commissions), (b) the amount of taxes payable in connection with or as a result of such transaction, (c) the amount of any Indebtedness secured by a Lien on such asset that, by the terms of the agreement or instrument governing such Indebtedness, is required to be repaid upon disposition and (d) reserves for purchase price adjustments and retained fixed liabilities that are payable by such Person in cash to the extent required under GAAP in connection with such sale, lease, transfer or disposition (it being understood that immediately upon expiration of the retention period for such reserves, amounts held as reserves must be paid as a mandatory prepayment pursuant to Section 2.10(b)), in each case to the extent, but only to the extent, that the amounts so deducted are, (in the cases of (a) and (c) above, at the time of receipt of such cash), actually paid to a Person that is not an Affiliate of such Person or Weyerhaeuser or any of its Subsidiaries or any Affiliate of Weyerhaeuser or any of its Subsidiaries and are properly attributable to such transaction or to the asset that is the subject thereof; provided , however , that Net Cash Proceeds shall not include, (i) with respect to any sale, lease, transfer or other disposition of any asset by any Person, any cash receipts received from the sale of worn, damaged, or obsolete equipment, (ii) any cash receipts received from proceeds of insurance, condemnation awards (or payments in lieu thereof) or indemnity payments to the extent that such proceeds, awards or payments in respect of loss or damage to the assets are applied (or in respect of which expenditures were previously incurred) to replace or repair the assets in respect of which such proceeds were received, so long as such application is made within 180 days after the occurrence of such damage or loss and (iii) any rental payments received in connection with the lease of an asset in the ordinary course of business. In addition, no proceeds realized in a single transaction or series of related transactions shall constitute Net Cash Proceeds except for the portion (if any) of such proceeds in excess of $25,000,000.

“ OCBM Agreement ” shall mean the Ownership and Capital Base Maintenance Agreement, dated as of March 23, 2004, and entered into by Weyerhaeuser.

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

“ Person ” shall mean any natural person, corporation, business trust, joint venture, joint stock company, trust, unincorporated organization, association, company, partnership or government, or any agency or political subdivision thereof.

“ Plan ” shall mean any multiemployer or single-employer plan as defined in Section 4001 of ERISA covered by Title IV of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of), or at any time during the five calendar years preceding the date of this Agreement was maintained or contributed to by (or to which there was an obligation to contribute of), Weyerhaeuser or an ERISA Affiliate.

“ Prime Rate ” shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced as effective. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.

“ Rating ” shall mean, as of any date, the rating by Moody’s and S&P in effect on such date, of the Senior Unsecured Long-Term Debt of Weyerhaeuser.

“ Real Estate Assets ” shall mean all assets of WRECO and its Restricted Subsidiaries (determined, unless the context otherwise requires, on a consolidated basis for WRECO and its Restricted Subsidiaries) of the types described below, acquired and held for the purpose of, and arising out of, the development and/or sale or rental thereof in the ordinary course of business: (i) improved and unimproved land, buildings and other structures and improvements and fixtures located thereon, and (ii) contracts, mortgages, notes receivables and other choses in action.

“ Reduction Amount ” shall have the meaning given such term in Section 2.09(c).

“ Register ” shall have the meaning given such term in Section 9.04(c).

“ Regulation D ” shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ Regulation T ” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ Regulation U ” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ Regulation X ” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ Reinvestment Proceeds ” shall have the meaning given such term in Section 2.10(b).

“ Related Parties ” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“ Release ” shall mean disposing, discharging, injecting, spilling, leaking, dumping, emitting, escaping, emptying, seeping, placing, and the like, into or upon any land or water or air, or otherwise entering into the environment.

“ Reportable Event ” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan as to which the 30-day notice requirement has not been waived by statute, regulation or otherwise.

“ Required Lenders ” shall mean, at any time, Lenders having Credit Exposures and unused Commitments representing more than 50% of the sum of the Aggregate Credit Exposure and unused Commitments at such time; provided that if either Borrower elects the Term Loan Conversion, then on or after the Revolver Termination Date, “Required Lenders” shall mean those Lenders having Term Loans and L/C Exposures representing more than 50% of the aggregate principal amount of all Term Loans and all L/C Exposures outstanding at such time.

“ Restricted Subsidiary ” shall mean, (i) with respect to Weyerhaeuser, each Subsidiary that has not been designated as an Unrestricted Subsidiary on Schedule 3.08 Part I and thereafter not designated by a Financial Officer of Weyerhaeuser as an Unrestricted Subsidiary after the Closing Date pursuant to Section 9.17 and (ii) with respect to WRECO, each Subsidiary that has not been designated as an Unrestricted Subsidiary on Schedule 3.08 Part II or thereafter designated by a Financial Officer of WRECO as an Unrestricted Subsidiary after the Closing Date pursuant to Section 9.17. On the Closing Date, the Company and its subsidiaries shall be deemed Restricted Subsidiaries unless a Financial Officer of Weyerhaeuser shall have designated any of such entities as an Unrestricted Subsidiary after the Closing Date.

“ Revolver Termination Date ” shall mean March 22, 2005.

“ Revolving Borrowing ” shall mean a Borrowing consisting of Revolving Loans.

“ Revolving Borrowing Request ” shall mean a request made pursuant to Section 2.02(e) in the form of Exhibit A.

“ Revolving Loan ” shall mean a Loan made by the Lenders to a Borrower pursuant to Section 2.01.

“ S&P ” shall mean Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, and its successors and assigns, and if such corporation shall for any reason no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized rating agency designated by Weyerhaeuser and the Required Lenders.

“ SEC ” shall mean the Securities and Exchange Commission or any successor.

“ Senior Bank Financing ” shall mean the credit facilities contemplated by (a) this Agreement, and (b) the Five-Year Revolving Credit Facility Agreement.

“ Senior Debt ” shall mean all Indebtedness of any Person (other than WRECO) which is not expressed to be subordinate and junior in right of payment to any other Indebtedness of such Person, and, with respect to WRECO, shall mean all Indebtedness of WRECO other than Subordinated Debt.

“ Senior Unsecured Long-Term Debt ” shall mean the unsecured bonds, debentures, notes or other Indebtedness of Weyerhaeuser, designated on its financial statements as senior long-term indebtedness. In the event more than one issue of Senior Unsecured Long-

Term Debt shall be outstanding at any relevant time and different credit ratings shall have been issued by S&P or Moody’s for such issues, Senior Unsecured Long-Term Debt shall be deemed to refer to the lowest rated issue.

“ Statutory Reserves ” shall mean a fraction (expressed as a decimal), the numerator of which is the number one, and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority to which the Administrative Agent is subject with respect to the Eurodollar Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“ Subordinated Debt ” shall mean and include (i) Subordinated Promissory Notes of WRECO, in substantially the form annexed as Exhibit E hereto, and (ii) any other Indebtedness of WRECO now or hereafter created, issued or assumed which at all times is evidenced by a written instrument or instruments containing or having applicable thereto subordination provisions substantially the same as those in said Exhibit E hereto, providing for the subordination of such Indebtedness to such other Indebtedness of WRECO as shall be specified or characterized in such subordination provisions.

“ subsidiary ” shall mean, with respect to any Person (herein referred to as the “parent”), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power to elect a majority of the board of directors or more than 50% of the general partnership interests are, at the time any determination is being made, owned, controlled or held, or (b) which is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“ Subsidiary ” shall mean any subsidiary of Weyerhaeuser or WRECO, provided that there shall be excluded from this definition (i) Nelson Forests Joint Venture, a joint venture formed under the laws of New Zealand, (ii) Wapawekka Lumber Ltd., a limited partnership formed under the laws of Saskatchewan, and (iii) Monterra Lumber Mills Limited, a limited partnership formed under the laws of Ontario, for so long as such business entities shall not be Controlled by Weyerhaeuser or any of its subsidiaries.

“ Termination Date ” shall mean the later to occur of (a) the Revolver Termination Date or (b) if the Term Loan Conversion has been effected pursuant to Section 2.19, the first anniversary of the Revolver Termination Date.

“ Term Borrowing ” shall mean a Borrowing consisting of Term Loans.

“ Term Loan ” shall have the meaning given such term in Section 2.19.

“ Term Loan Conversion ” shall have the meaning given such term in Section 2.19.

“ Term-Out Premium ” shall have the meaning giving such term in Section 2.06.

“ Total Adjusted Shareholders’ Interest ” shall mean, at any time, the amount of the preferred, preference and common shares accounts plus (or minus in the case of a deficit) the amount of other capital and retained earnings, in accordance with GAAP, of Weyerhaeuser and its consolidated Subsidiaries, less treasury common shares and the aggregate net book value (after deducting any reserves applicable thereto) of all items of the following character which are included in the consolidated assets of Weyerhaeuser and its consolidated Subsidiaries:

(a) investments in Unrestricted Subsidiaries; and

(b) without duplication, investments by Weyerhaeuser and its consolidated Subsidiaries in WRECO and its consolidated Subsidiaries.

No effect shall be given for any increases or decreases attributable to unrealized foreign exchange gains or losses resulting from the application of FASB Statement 52.

“ Total Commitment ” shall mean at any time the aggregate amount of the Commitments as in effect at such time, and on the date hereof shall mean $1,200,000,000.

“ Total Funded Indebtedness ” with respect to Weyerhaeuser shall mean, at any time, the aggregate principal amount of all Indebtedness (other than Guarantees by such Person of Indebtedness of others) for borrowed money or for the deferred purchase price of property and Capital Lease Obligations of Weyerhaeuser and its consolidated Subsidiaries, excluding (a) the Indebtedness of Unrestricted Subsidiaries, (b) without duplication, the Indebtedness of WRECO and its consolidated Subsidiaries, and (c) 80% of the aggregate principal amount of the Mandatory Convertible Debt Securities outstanding at such time.

“ Transactions ” shall have the meaning given such term in Section 3.02.

“ Transferee ” shall have the meaning given such term in Section 2.17.

“ Type ,” when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, “Rate” shall include the Eurodollar Rate and the Base Rate.

“ Unfunded Current Liability ” of any Plan shall mean the amount, if any, by which the present value of the accrued benefits under the Plan as of the close of its most recent plan year, determined in accordance with Statement of Financial Accounting Standards No. 35, based upon the actuarial assumptions used by the Plan’s actuary in the most recent annual valuation of the Plan, exceeds the fair market value of the assets allocable thereto, determined in accordance with Section 412 of the Code.

“ Unrestricted Subsidiary ” shall mean, (i) with respect to Weyerhaeuser, each Subsidiary that has been designated as an Unrestricted Subsidiary on Schedule 3.08 Part I and any Subsidiary which has been designated by a Financial Officer of Weyerhaeuser as an Unrestricted Subsidiary after the Closing Date pursuant to Section 9.17, and (ii) with respect to WRECO, each Subsidiary that has been designated as an Unrestricted Subsidiary on Schedule 3.08 Part II and any Subsidiary which has been designated by a Financial Officer of WRECO as an Unrestricted Subsidiary after the Closing Date pursuant to Section 9.17.

“ Utilization Fee ” shall have the meaning given such term in Section 2.06(e).

“ Weyerhaeuser ” shall have the meaning given such term in the introductory paragraph hereto.

“ WRECO ” shall have the meaning given such term in the introductory paragraph hereto.

“ WRECO/Weyerhaeuser Subordinated Debt ” shall mean the Subordinated Promissory Notes issued by WRECO to Weyerhaeuser described in clause (i) of the definition of “Subordinated Debt.”

Section 1.02 Terms Generally . The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require.

Section 1.03 Accounting Terms; GAAP . Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if either Borrower notifies the Administrative Agent that such Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies either Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

ARTICLE II

THE CREDITS

Section 2.01 Commitments . Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, to make Loans to each Borrower requesting a Borrowing, at any time and from time to

time on and after the date hereof and until the earlier of the Revolver Termination Date and the termination of the Commitment of such Lender, in an aggregate principal amount at any time outstanding not to exceed such Lender’s Commitment at such time, subject , however , to the conditions that:

(a) at no time shall the outstanding aggregate principal amount of all Loans (including, if the Term Loan Conversion has been elected, Term Loans) made by all Lenders plus the aggregate L/C Exposure of such Lenders at such time exceed the Total Commitment;

(b) at no time shall the outstanding aggregate principal amount of all Loans (including, if the Term Loan Conversion has been elected, Term Loans) made by all Lenders to WRECO exceed $400,000,000; and

(c) at all times the outstanding aggregate principal amount of all Loans made by each Lender shall equal the product of (i) the Applicable Percentage times (ii) the outstanding aggregate principal amount of all Loans made pursuant to Section 2.02 or 2.19.

Each Lender’s Commitment is set forth opposite its name in Schedule 2.01, or in the case of each assignee that becomes a party hereto pursuant to Section 9.04 or any subsequent assignments pursuant to Section 9.04, on the Register maintained by the Administrative Agent pursuant to Section 9.04(c).

Within the foregoing limits, each Borrower may borrow, pay or prepay and reborrow hereunder, on and after the Closing Date and prior to the Revolver Termination Date, subject to the terms, conditions and limitations set forth herein, on a several and not joint basis.

Section 2.02 Loans . (a) Each Revolving Loan and each Term Loan shall be made as part of a Borrowing consisting of Revolving Loans and Term Loans, respectively, made by the Lenders ratably in accordance with their respective Commitments; provided , however , that the failure of any Lender to make any Loan shall not in and of itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). The Loans comprising any Borrowing shall be in an aggregate principal amount which is an integral multiple of $1,000,000 and not less than $25,000,000 (or an aggregate principal amount equal to the remaining balance of the available Commitments).

(b) Each Revolving Borrowing and each Term Borrowing shall be comprised entirely of Eurodollar Loans or Base Rate Loans, as the applicable Borrower may request pursuant to paragraph (e) hereof. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not (i) affect the obligation of the applicable Borrower to repay such Loan in accordance with the terms of this Agreement and (ii) entitle such Lender to any amounts pursuant to Sections 2.11 or 2.12 to which amounts such Lender would not be entitled if such Lender had made such Loan itself through its domestic branch. Borrowings of more than one Type may be outstanding at the same time; provided , however , that neither

Borrower shall be entitled to request any Borrowing which, if made, would result in an aggregate of more than twenty (20) separate Loans from any Lender being outstanding hereunder at any one time. For purposes of the foregoing, Loans (other than Base Rate Loans) having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Loans.

(c) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to the Administrative Agent in New York, New York, not later than 12:00 noon (or in the case of Base Rate Loans, 2:00 p.m.), New York City time, and the Administrative Agent shall by 3:00 p.m., New York City time, credit the amounts so received to the general deposit account of the applicable Borrower maintained with the Administrative Agent or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. Unless the Administrative Agent shall have received notice from a Lender prior to the date and time of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with this paragraph (c) and the Administrative Agent may, in reliance upon such assumption, make available to the applicable Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender and the applicable Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the applicable Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of the applicable Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.

(d) Notwithstanding any other provision of this Agreement, no Borrower shall be entitled to request any Borrowing with an Interest Period ending after the Termination Date; provided that no Revolving Borrowing shall have an Interest Period ending after the Revolver Termination Date.

(e) In order to request a Revolving Borrowing, the Borrower requesting such Borrowing shall hand deliver or telecopy to the Administrative Agent a Revolving Borrowing Request in the form of Exhibit A (a) in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three Business Days before a proposed borrowing and (b) in the case of a Base Rate Borrowing, not later than 12:00 noon, New York City time, on the day of a proposed borrowing. Such notice shall be irrevocable and shall in each case specify (i) whether the Revolving Borrowing then being requested is to be a Eurodollar Borrowing or a Base Rate Borrowing; (ii) the date of such Revolving Borrowing (which shall be a Business Day) and the amount thereof; and (iii) if such Revolving Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto. If no election as to the Type of Revolving Borrowing is

specified in any such notice, then the requested Revolving Borrowing shall be a Base Rate Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the applicable Borrower shall be deemed to have selected an Interest Period of one month’s duration. The Administrative Agent shall promptly advise the Lenders of any notice given pursuant to this Section 2.02(e) and of each Lender’s portion of the requested Borrowing.

(f) If, prior to the Revolver Termination Date, a Fronting Bank shall not have received the payment required to be made by Weyerhaeuser pursuant to Section 2.20(e) within the time specified in such Section, such Fronting Bank will promptly notify the Administrative Agent of the L/C Disbursement and the Administrative Agent will promptly notify each Lender of such L/C Disbursement and its Applicable Percentage thereof. Not later than 2:00 p.m., New York City time, on such date (or, if such Lender shall have received such notice later than 12:00 noon, New York City time, on any day, no later than 10:00 a.m., New York City time, on the immediately following Business Day), each Lender will make available the amount of its Applicable Percentage of such L/C Disbursement (it being understood that such amount shall be deemed to constitute a Base Rate Loan of such Lender and such payment shall be deemed to have reduced the L/C Exposure) in immediately available funds, to the Administrative Agent in New York, New York, and the Administrative Agent will promptly pay to the applicable Fronting Bank amounts so received by it from the Lenders. The Administrative Agent will promptly pay to the applicable Fronting Bank any amounts received by it from such Borrower pursuant to Section 2.20(e) prior to the time that any Lender makes any payment pursuant to this paragraph (f), and any such amounts received by the Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the Lenders that shall have made such payments and to the applicable Fronting Bank, as their interests may appear. If any Lender shall not have made its Applicable Percentage of such L/C Disbursement available to the Administrative Agent as provided above, such Lender agrees to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with this paragraph to but excluding the date such amount is paid, to the Administrative Agent for the account of the applicable Fronting Bank at, for the first such day, the Federal Funds Rate, and for each day thereafter, the Base Rate.

Section 2.03 Conversion and Continuation of Loans . (a) Each Borrower shall, with respect to its respective Borrowings, have the right at any time, upon prior irrevocable written notice to the Administrative Agent given in the manner and at the times specified in Section 2.02(d) and 2.19, respectively, with respect to the Type of Borrowing into which conversion or continuation is to be made, to convert any of its Borrowings into a Borrowing of a different Type and to continue any of its Eurodollar Borrowings into a subsequent Interest Period of any permissible duration, subject to the terms and conditions of this Agreement and to the following:

(i) each conversion or continuation shall be made pro rata among the Lenders in accordance with the respective principal amounts of Loans comprising the converted or continued Borrowing;

(ii) if less than all the outstanding principal amount of any Borrowing shall be converted or continued, the aggregate principal amount of such Borrowing converted and/or continued shall in each case not be less than the minimum amount set forth in Section 2.02;

(iii) if a Eurodollar Borrowing is converted at any time other than on the last day of the Interest Period applicable thereto, the applicable Borrower shall pay any amount due pursuant to Section 2.13;

(iv) with respect to a Revolving Borrowing, if such Revolving Borrowing is to be converted into a Eurodollar Borrowing or if a Eurodollar Borrowing is to be continued, no Interest Period selected shall extend beyond the Revolver Termination Date;

(v) with respect to a Term Borrowing, if such Term Borrowing is to be converted into a Eurodollar Borrowing or if a Eurodollar Borrowing is to be continued, no Interest Period selected shall extend beyond the Termination Date; and

(vi) interest accrued to the day immediately preceding each date of conversion or continuation shall be payable on each Borrowing (or part thereof) that is converted or continued concurrently with such conversion or continuation.

(b) Each notice given pursuant to Section 2.03(a) shall be irrevocable and shall refer to this Agreement and specify (i) the identity and the amount of the Borrowing that the applicable Borrower requests to be converted or continued; (ii) whether such Borrowing (or any part thereof) is to be converted or continued as a Base Rate Borrowing or a Eurodollar Borrowing; (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day); and (iv) if such Borrowing (or any part thereof) is to be converted into or continued as a Eurodollar Borrowing, the Interest Period with respect thereto. If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Eurodollar Borrowing, then the applicable Borrower shall be deemed to have selected an Interest Period of one month’s duration, in the case of a Eurodollar Borrowing. The Administrative Agent shall advise the Lenders of any notice given pursuant to Section 2.03(a) and of each Lender’s portion of any converted or continued Borrowing.

(c) If the applicable Borrower shall not have given notice in accordance with this Section 2.03 to continue any Eurodollar Borrowing into a subsequent Interest Period (and shall not otherwise have given notice in accordance with this Section 2.03 to convert such Eurodollar Borrowing), such Eurodollar Borrowing shall automatically be converted into a Base Rate Borrowing. In the event of the occurrence and continuation of a Default or an Event of Default (i) all Eurodollar Borrowings of each Borrower shall be converted into Base Rate Borrowings on the last day of the Interest Period then in effect, and (ii) no Base Rate Borrowing may be converted into a Borrowing of another Type so long as a Default or Event of Default continues to exist.

Section 2.04 Fees . (a) The Borrowers jointly and severally agree to pay to each Lender, through the Administrative Agent, on each March 31, June 30, September 30 and December 31 and on the date on which the Commitment of such Lender shall be terminated as provided herein, a facility fee (each, a “ Facility Fee ,” and collectively, the “ Facility Fees ”), calculated as specified below, on the amount of the Commitment of such Lender, whether used or unused, during the preceding quarter (or shorter period commencing with the Closing Date or ending with the Termination Date applicable to such Lender or any date on which the

Commitment of such Lender shall be terminated). All Facility Fees shall be computed on the basis of a year of 365 or 366 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The Facility Fee due to each Lender shall commence to accrue on the Closing Date and shall cease to accrue on the earlier of the Termination Date applicable to such Lender and the termination of the Commitment of such Lender as provided herein.

The Facility Fee for each Lender shall be calculated as a per annum rate in an amount equal to the product of such Lender’s Commitment hereunder and the applicable percentage specified in the table below, to be determined based upon the Ratings received from S&P and Moody’s by Weyerhaeuser:


	Level 1	Level 2	Level 3	Level 4	Level 5
S&P: Moody’s:	A - or better A3 or better	BBB+ Baa1	BBB Baa2	BBB- Baa3	Below BBB- Below Baa3
Facility Fee	0.075%	0.100%	0.125%	0.150%	0.175%

The Facility Fees shall change effective as of the date on which the applicable rating agency announces any change in its Ratings. In the event either S&P or Moody’s shall withdraw or suspend its Ratings, the remaining Rating announced by either S&P or Moody’s, as the case may be, shall apply. In the event neither agency shall provide a Rating, the Facility Fees shall be based on the lowest rating provided above. If the Ratings by S&P and Moody’s are split so that two consecutive Levels (as defined in the table above) apply, the higher of those Ratings shall determine the applicable percentage to calculate the Facility Fee. If the Ratings by S&P and Moody’s are split so that the applicable Levels in the table above are separated by only one intermediate Level, then such intermediate Level shall determine the applicable percentage to calculate the Facility Fee. If the Ratings by S&P and Moody’s are split so that the applicable Levels in the table above are separated by two intermediate Levels, then the intermediate Level representing the lowest Rating shall determine the applicable percentage to calculate the Facility Fee. The Facility Fees shall be calculated by the Administrative Agent, which calculation absent manifest error shall be final and binding on all parties.

(b) Weyerhaeuser agrees to pay the Administrative Agent, for its own account, the administration fees (the “ Administrative Agent Fees ”) at the times and in the amounts agreed upon in the letter agreement dated as of February 26, 2004, among Weyerhaeuser, WRECO, J.P. Morgan Securities Inc. and the Administrative Agent.

(c) Weyerhaeuser agrees to pay (i) to the Administrative Agent for pro rata distribution to each Lender (an “ L/C Participation Fee ”), for the period from the Closing Date until the Termination Date (or such earlier date as all Letters of Credit shall be canceled or expire and the Total Commitment shall be terminated), on that portion of the average daily L/C Exposure attributable to Letters of Credit issued for the account of Weyerhaeuser (excluding the portion thereof attributable to unreimbursed L/C Disbursements), at the rate per annum equal to the Applicable Margin for Eurodollar Loans from time to time in effect for the Borrower and (ii) to each Fronting Bank for its own account a fronting fee (a “ Fronting Fee ”), which shall accrue at such rate as is mutually agreed between the applicable Fronting Bank and Weyerhaeuser on

the average daily amount of the L/C Exposure attributable to Letters of Credit issued by such Fronting Bank for the account of Weyerhaeuser (excluding any portion thereof attributable to unreimbursed L/C Disbursements) during the period from and including the Closing Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any L/C Exposure attributable to Letters of Credit issued by such Fronting Bank for the account of Weyerhaeuser, as well as such Fronting Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. L/C Participation Fees and Fronting Fees accrued under this paragraph are payable quarterly in arrears on the last day of each calendar quarter and on the date on which the Total Commitment shall be terminated as provided herein. All L/C Participation Fees and Fronting Fees payable under this paragraph shall be computed on the basis of the number of days actually elapsed over a year of 365 or 366 days.

(d) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for prompt distribution, if and as appropriate, among the Lenders. Once paid, none of the Fees shall be refundable under any circumstances.

Section 2.05 Repayment of Loans; Evidence of Debt . (a) The outstanding principal balance of (i) each Revolving Loan shall, unless the Borrowers elect the Term Loan Conversion, be payable on the Revolver Termination Date and (ii) each Term Loan shall be payable on the Termination Date. Each Loan shall bear interest from the date thereof on the outstanding principal balance thereof as set forth in Section 2.06.

(b) Each Lender shall, and is hereby authorized by the Borrowers to, maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of each Borrower to repay its Loans in accordance with the terms of this Agreement.

(e) Any Lender may request that Loans made by it be evidenced by a promissory note, substantially in the form of Exhibit F attached hereto. In such event, the applicable Borrower shall promptly, and in no event more than ten (10) Business Days after a request therefor, prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns). Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times

(including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

Section 2.06 Interest on Loans . (a) Subject to the provisions of Section 2.07, the Loans comprising each Eurodollar Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the Eurodollar Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin, determined pursuant to paragraph (d) below.

(b) Subject to the provisions of Section 2.07 the Loans comprising each Base Rate Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be) at a rate per annum equal to the Base Rate plus the Applicable Margin.

(c) Interest on each Eurodollar Loan shall, except as otherwise provided in this Agreement, be payable on the last day of the Interest Period applicable thereto and, in case of a Eurodollar Loan with an Interest Period of more than three months’ duration, each day that would have been an interest payment date for such Loan had successive Interest Periods of three months’ duration been applicable to such Loan, and on the Termination Date or any earlier date on which this Agreement is, pursuant to its terms and conditions, terminated. Interest on each Base Rate Loan shall be payable quarterly in arrears on the last Business Day of each March, June, September and December, except as otherwise provided in this Agreement and on the Termination Date or any earlier date on which this Agreement is, pursuant to its terms and conditions, terminated. The applicable Eurodollar Rate or Base Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

(d) As used herein, “ Applicable Margin ” shall mean the sum of (i) the applicable percentage per annum specified in the table below, to be determined based upon the Ratings received by Weyerhaeuser from S&P and Moody’s, (ii) the Utilization Fee, and (iii) if applicable, the Term-Out Premium. The applicable percentage referred to in Clause (i) of the immediately preceding sentence shall be determined based upon the Ratings, as follows:


	Level 1	Level 2	Level 3	Level 4	Level 5
S&P: Moody’s:	A- or better A3 or better	BBB+ Baa1	BBB Baa2	BBB- Baa3	Below BBB- Below Baa3
Eurodollar Loan:	0.4250%	0.5250%	0.6250%	0.8500%	1.3250%
Base Rate Loan:	0.0000%	0.0000%	0.0000%	0.0000%	0.3250%

The Applicable Margin shall change effective as of the date on which the applicable rating agency announces any change in its Ratings. In the event either S&P or Moody’s shall withdraw or suspend its Ratings, the remaining Rating announced by either S&P or Moody’s, as the case may be, shall apply. In the event neither agency shall provide a Rating, the Applicable Margin shall be based on the lowest rating provided above. If the Ratings by

S&P and Moody’s are split so that two consecutive Levels (as defined in the table above) apply, the higher of those Ratings shall determine the Applicable Margin. If the Ratings by S&P and Moody’s are split so that the applicable Levels in the table above are separated by only one intermediate Level, then such intermediate Level shall determine the Applicable Margin. If the Ratings by S&P and Moody’s are split so that the applicable Levels in the table above are separated by two intermediate Levels, then the intermediate Level representing the lowest Rating shall determine the Applicable Margin. The Applicable Margin shall be calculated by the Administrative Agent, which calculation absent manifest error shall be final and binding on all parties.

(e) As used herein, “ Utilization Fee ” shall mean (i) a percentage per annum equal to 0.125% for any date on which the sum of (A) the Aggregate Credit Exposure plus (B) the “Aggregate Credit Exposure,” as defined under the Five-Year Revolving Credit Facility Agreement, plus (C) the aggregate principal amount of outstanding Competitive Loans under the Five-Year Revolving Credit Facility Agreement, is equal to or exceeds 33% of the sum of (X) the Total Commitment and (Y) the “Total Commitment” as defined under the Five-Year Revolving Credit Facility Agreement, and (ii) a percentage per annum equal to 0.000% for any other date.

(f) As used herein, “ Term-Out Premium ” shall mean, upon an election by a Borrower of a Term Loan Conversion pursuant to Section 2.19, a percentage per annum equal to 0.250%.

Section 2.07 Default Interest . If a Borrower shall default in the payment of the principal of or interest on any of its Loans or any other amount becoming due hereunder, whether by scheduled maturity, notice of prepayment, acceleration or otherwise, such Borrower shall on demand from time to time by the Administrative Agent pay interest, to the extent permitted by law, on such defaulted amount up to (but not including) the date of actual payment (after as well as before judgment) at a rate per annum equal to the rate of interest applicable thereto at maturity or due date plus 2%.

Section 2.08 Alternate Rate of Interest . In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing the Administrative Agent shall have determined in good faith that dollar deposits in the principal amounts of the Eurodollar Loans comprising such Borrowing are not generally available in the London interbank market, or that the rates at which such dollar deposits are being offered will not adequately and fairly reflect the cost to the Required Lenders of making or maintaining their Eurodollar Loans during such Interest Period, or that reasonable means do not exist for ascertaining the Eurodollar Rate, the Administrative Agent shall, as soon as practicable thereafter, give written notice of such determination to the Borrowers and the Lenders. In the event of any such determination, until the Administrative Agent shall have advised the Borrowers and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any request by the Borrowers for a Eurodollar Borrowing pursuant to Section 2.02 shall be deemed to be a request for a Base Rate Borrowing, and (ii) any request by the Borrowers for a conversion to, or a continuation of, a Eurodollar Borrowing pursuant to Section 2.03 shall be deemed to be a request for, respectively, a continuation as, or a conversion to, a Base Rate Borrowing. Each determination by the Administrative Agent hereunder shall be conclusive absent manifest error.

Section 2.09 Termination and Reduction of Commitments . (a) The unused Commitments of each Lender shall be automatically terminated on the Revolver Termination Date, and, if the Term Loan Conversion is elected, the remaining Commitments of each Lender shall be automatically terminated on the Termination Date.

(b) Subject to Section 2.10(b), upon at least three Business Days’ prior irrevocable written notice to the Administrative Agent, the Borrowers may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Total Commitment; provided , however , that (i) each partial reduction shall be in an integral multiple of $1,000,000 and in a minimum principal amount of $25,000,000 and (ii) no such termination or reduction shall be made which would reduce the Total Commitment to an amount less than the sum of the aggregate outstanding principal amount of Loans and the aggregate L/C Exposure.

(c) The Total Commitment shall be automatically and permanently reduced on each date on which prepayment thereof is required to be made pursuant to Section 2.10(b)(i) in the amount of such prepayment. In addition, the Total Commitment shall be automatically and permanently reduced on each date on which prepayment thereof is required to be made pursuant to Section 2.10(b)(i) in an amount equal to the applicable Reduction Amount. “ Reduction Amount ” shall mean, with respect to any sale, lease, transfer or other disposition of any assets of Weyerhaeuser or any of its Subsidiaries (other than Excluded Sales), on any date, the Net Cash Proceeds received with respect thereto on such date less (i) any amounts applied with respect thereto to prepay any outstanding amounts under the Senior Bank Financing pursuant to Section 2.10(b) (including the amounts required to be cash collateralized pursuant to Section 2.20(i) hereof and Section 2.04(i) of the Five-Year Revolving Credit Facility Agreement), (ii) any amounts applied to reduce Commitments under the Five-Year Revolving Credit Facility Agreement, and (iii) the portion of such Net Cash Proceeds that constitutes Reinvestment Proceeds.

(d) Subject to Section 2.18, each reduction in the Total Commitment hereunder shall be made ratably among the Lenders in accordance with their respective Commitments. The Borrowers jointly and severally agree to pay to the Administrative Agent for the account of the Lenders, on the date of each termination or reduction, the Facility Fees on the amount of the Commitments so terminated or reduced accrued through the date of such termination or reduction.

Section 2.10 Prepayment . (a) Voluntary Prepayments . Each of the Borrowers shall have the right at any time and from time to time to prepay any of its respective Revolving Borrowings or Term Borrowings, in whole or in part, upon giving written notice (or telephone notice promptly confirmed by written notice) to the Administrative Agent: (i) before 12:00 noon, New York City time, three Business Days prior to prepayment, in the case of Eurodollar Loans and (ii) before 12:00 noon, New York City time, one Business Day prior to prepayment, in the case of Base Rate Loans; provided , however , that each partial prepayment shall be in an amount which is an integral multiple of $1,000,000 and not less than $25,000,000.

(b) Mandatory Prepayments . (i) The Borrowers shall, within three Business Days of the date of receipt of the Net Cash Proceeds by Weyerhaeuser or any of its Domestic Subsidiaries from the sale, lease, transfer or other disposition of any assets of Weyerhaeuser or any of its Subsidiaries (other than any Excluded Sales), prepay any amounts outstanding under the Senior Bank Financing in an amount equal to the lesser of the amount of such Net Cash Proceeds and the amount so outstanding (including the amounts required to be cash collateralized pursuant to (x) Section 2.20(i) hereof and (y) Section 2.04(i) of the Five-Year Revolving Credit Facility Agreement). Each such prepayment shall be applied first to any amounts outstanding or to be cash collateralized pursuant to the Five-Year Revolving Credit Facility Agreement in accordance with the terms and conditions set forth therein, and second to any Loans, L/C Disbursements or cash collateralizations under this Agreement as set forth in clause (iii) below; provided that neither Borrower shall be required to make any prepayments pursuant to this Section 2.10(b)(i) if Weyerhaeuser or any of its Subsidiaries shall apply any of the Net Cash Proceeds it received from the sale, lease, transfer or other disposition of its assets for reinvestment in its business within 180 days after receipt thereof by Weyerhaeuser or any of its Subsidiaries (any such Net Cash Proceeds so reinvested, the “ Reinvestment Proceeds ”); provided further that Weyerhaeuser shall have notified the Administrative Agent of its intent to so reinvest such Net Cash Proceeds.

(ii) On the date of any termination or reduction of the Commitments pursuant to Section 2.09, the Borrowers shall pay or prepay so much of their respective Borrowings as shall be necessary in order that the aggregate principal amount of Loans outstanding and the aggregate L/C Exposure does not exceed the Total Commitment, after giving effect to such termination or reduction.

(iii) Prepayments required to be made pursuant to clause (i) above to amounts due hereunder shall be first applied to prepay L/C Disbursements then outstanding until such L/C Disbursements are paid in full and second , to the extent required, applied to cash collateralize any outstanding Letters of Credit in accordance with Section 2.20(i). The amount remaining (if any) after the prepayment in full of the L/C Disbursements and Loans, and the 100% cash collateralization of the Letters of Credit then outstanding pursuant to Section 2.20(i), may be retained by the Borrowers to the extent not required to be applied in accordance with clause (i) above, and the Commitments shall be permanently reduced in accordance with Section 2.09(c).

(c) Each notice of prepayment under paragraph (a) above shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the applicable Borrower to prepay such Borrowing (or portion thereof) by the amount stated therein on the date stated therein. All prepayments under this Section 2.10 shall be subject to Section 2.13 but otherwise without premium or penalty. All prepayments under this Section 2.10 shall be accompanied by accrued interest on the principal amount being prepaid to the date of payment.

Section 2.11 Reserve Requirements; Change in Circumstances . (a) It is understood that the cost to each Lender (including the Administrative Agent and any Fronting Bank) of making or maintaining any of the Eurodollar Loans or Letters of Credit may fluctuate as a result of the applicability of reserve requirements imposed by the Board at the ratios provided for in Regulation D. Each Borrower agrees to pay to each of such Lenders from time to

time, as provided in paragraph (d) below, such amounts as shall be necessary to compensate such Lender for the portion of the cost of making or maintaining Eurodollar Loans to such Borrower (or issuing Letters of Credit for the account of Weyerhaeuser) resulting from any such reserve requirements provided for in Regulation D as in effect on the date thereof, it being understood that the rates of interest applicable to Eurodollar Loans have been determined on the assumption that no such reserve requirements exist or will exist and that such rates do not reflect costs imposed on the Lenders in connection with such reserve requirements. It is agreed that for purposes of this paragraph (a) the Eurodollar Loans made hereunder shall be deemed to constitute Eurocurrency Liabilities as defined in Regulation D and to be subject to the reserve requirements of Regulation D without the benefit of or credit for proration, exemptions or offsets which might otherwise be available to the Lenders from time to time under Regulation D.

(b) Notwithstanding any other provision herein, if after the date of this Agreement any change in applicable law or regulation or in the interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) shall change the basis of taxation of any payments to any Lender (including the Administrative Agent and any Fronting Bank) of the principal of or interest on any Eurodollar Loan made by such Lender, of any payments related to the Letters of Credit or any Fees or other amounts payable hereunder (other than changes in respect of taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office or by any political subdivision or taxing authority therein), or shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of or credit extended by such Lender, or shall impose on such Lender or the London interbank market any other condition affecting this Agreement, any Eurodollar Loan made by such Lender or any Letter of Credit issued by any Fronting Bank hereunder, and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or issuing any Letter of Credit) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise) in respect thereof by an amount deemed by such Lender to be material, then the applicable Borrower will pay to such Lender upon demand such additional amount or amounts as will compensate such Lender for such additional costs actually incurred or reduction actually suffered.

(c) If after the date hereof any Lender (including the Administrative Agent and any Fronting Bank) shall have determined that the general applicability of any law, rule, regulation or guideline adopted pursuant to or arising out of the July 1988 report of the Basle Committee on Banking Regulations and Supervisory Practices entitled “International Convergence of Capital Measurement and Capital Standards,” or the adoption after the date hereof of any other generally applicable law, rule, regulation or guideline regarding capital adequacy, or any change in any of the foregoing or in the interpretation or administration of any of the foregoing by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any lending office of such Lender) or any Lender’s holding company with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Loans made by such Lender pursuant hereto (or the Letters of Credit issued

hereunder) to a level below that which such Lender or such Lender’s holding company could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, the applicable Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

(d) A certificate of a Lender (including the Administrative Agent and any Fronting Bank) setting forth a reasonably detailed explanation of such amount or amounts as shall be necessary to compensate such Lender (or participating banks or other entities pursuant to Section 9.04) as specified in paragraph (a), (b) or (c) above, as the case may be, shall be delivered to the Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay each Lender the amount shown as due on any such certificate delivered by it within 10 days after the receipt of the same.

(e) Failure on the part of any Lender to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to any period shall not constitute a waiver of such Lender’s right to demand compensation with respect to such period or any other period; provided that the Borrowers shall not be required to compensate a Lender pursuant to this Section 2.11 for any increased costs or reductions incurred more than 180 days prior to the date that such Lender notifies the Borrowers of such increased costs or reductions in accordance with paragraph (d) above and of such Lender’s intention to claim compensation thereof; provided further that, if the circumstances giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

Notwithstanding any other provision of this Section 2.11, no Lender shall demand compensation for any increased costs or reduction referred to above if it shall not be the general policy or practice of such Lender to demand such compensation in similar circumstances under comparable provisions of other credit agreements, if any (it being understood that this sentence shall not in any way limit the discretion of any Lender to waive the right to demand such compensation in any given case).

Section 2.12 Change in Legality . (a) Notwithstanding any other provision herein contained, if any change in any law or regulation or in the interpretation thereof by any governmental authority charged with the administration or interpretation thereof shall make it unlawful for any Lender (including the Administrative Agent and any Fronting Bank) to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Borrowers and to the Administrative Agent, such Lender may:

(i) declare that Eurodollar Loans will not thereafter be made by such Lender hereunder and any request by either Borrower for a Eurodollar Borrowing or a conversion to or continuation of a Eurodollar Borrowing shall, as to such Lender only, be deemed a request for a Base Rate Loan unless such declaration shall be subsequently withdrawn; and

(ii) require that all outstanding Eurodollar Loans made by it be converted into Base Rate Loans, in which event all such Eurodollar Loans shall be automatically converted into Base Rate Loans as of the effective date of such notice as provided in paragraph (b) below.

In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal which would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the Base Rate Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans.

(b) For purposes of this Section 2.12, a notice to a Borrower by any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day of the Interest Period currently applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by such Borrower.

Section 2.13 Indemnity . Each Borrower shall indemnify each Lender against any loss or expense which such Lender sustains or incurs as a consequence of (a) any failure by such Borrower to fulfill on the date of any borrowing or any issuance of Letters of Credit hereunder the applicable conditions set forth in Article IV, (b) any failure by such Borrower to borrow or continue any Loan hereunder or to proceed with the issuance of a Letter of Credit hereunder after irrevocable notice of such borrowing, continuation or issuance has been given pursuant to Section 2.02, 2.03 or 2.20, as applicable, (c) any payment, prepayment or conversion of a Eurodollar Loan required by any other provision of this Agreement or otherwise made or deemed made to or by such Borrower on a date other than the last day of the Interest Period applicable thereto; provided that such Borrower shall not be required to indemnify a Lender pursuant to this clause (c) for any loss or expense to the extent any such loss or expense shall have been incurred pursuant to (i) Section 2.11, 2.12 or 2.17 or (ii) Section 2.10(a) more than six months prior to the date that the applicable Lender shall have notified such Borrower of its intention to claim compensation therefor, (d) any default in payment or prepayment of the principal amount of any Loan to such Borrower or any part thereof or interest accrued thereon, as and when due and payable (at the due date thereof, whether by scheduled maturity, acceleration, irrevocable notice of prepayment or otherwise), or (e) the occurrence of any Event of Default including, in each such case, any loss or reasonable expense sustained or incurred or to be sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain such Loan or any part thereof as a Eurodollar Loan. Such loss or reasonable expense shall include an amount equal to the excess, if any, as reasonably determined by such Lender, of (i) its cost of obtaining the funds for the Loan being paid, prepaid, converted or not borrowed (based on the Eurodollar Rate) for the period from the date of such payment, prepayment or conversion or failure to borrow to the last day of the Interest Period for such Loan (or, in the case of a failure to borrow, the Interest Period for such Loan which would have commenced on the date of such failure) over (ii) the amount of interest (as reasonably determined by such Lender) that would be realized by such Lender in reemploying the funds so paid, prepaid or converted or not borrowed for such period or Interest Period, as the case may be. A certificate of any Lender setting forth a reasonably detailed explanation of any amount or amounts which such Lender is entitled to receive pursuant to this Section shall be delivered to such Borrower and shall be conclusive absent manifest error.

Section 2.14 Pro Rata Treatment . Except as required under Sections 2.12 or 2.18, each Revolving Borrowing, each payment or prepayment of principal of any Revolving Borrowing, each payment of interest on the Revolving Loans, each payment of the Facility Fees, each reduction of the Commitments and each conversion of any Revolving Borrowing to a Borrowing of any Type, shall be allocated pro rata among the Lenders in accordance with their respective Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Revolving Loans). Each payment of principal of any Term Borrowing shall be allocated pro rata among the Lenders participating in such Borrowing in accordance with the respective principal amounts of their outstanding Term Loans comprising such Borrowing. Each payment of interest on any Term Borrowing shall be allocated pro rata among the Lenders participating in such Borrowing in accordance with the respective amounts of accrued and unpaid interest on their outstanding Term Loans comprising such Borrowing. Each Lender agrees that in computing such Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Borrowing to the next higher or lower whole dollar amount.

Section 2.15 Sharing of Setoffs . Each Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against a Borrower, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loans (other than pursuant to Sections 2.09, 2.11 and 2.12) as a result of which the unpaid principal portion of its Loans shall be proportionately less than the unpaid principal portion of the Loans of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Loans of such other Lender, so that the aggregate unpaid principal amount of the Loans and participations in the Loans held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Loans then outstanding as the principal amount of its Loans prior to such exercise of banker’s lien, setoff or counterclaim or other event was to the principal amount of all Loans outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided , however , that, if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.15 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. Each Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in a Loan deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by such Borrower to such Lender by reason thereof as fully as if such Lender had made a Loan directly to such Borrower in the amount of such participation.

Section 2.16 Payments . (a) The Borrowers shall make each payment (including principal of or interest on any Borrowing or any Fees or other amounts payable with respect to the Letters of Credit or otherwise) hereunder and under any other Loan Document without setoff, counterclaim or deduction of any kind not later than 12:00 (noon), New York City time, on the date when due in dollars to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, in immediately available funds.

(b) Whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts payable with respect to the Letters of Credit or otherwise) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable.

Section 2.17 Taxes . (a) Any and all payments by a Borrower hereunder shall be made, in accordance with Section 2.16, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding any income, franchise, branch profits or similar tax imposed on or measured by the net income or net profits of the Administrative Agent, any Fronting Bank or any Lender (or any transferee or assignee that acquires a Loan (any such entity a “ Transferee ”)) by the United States or any jurisdiction under the laws of which it is organized or doing business or any political subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “ Taxes ”). If either Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to the Lenders (or any Transferee), any Fronting Bank or the Administrative Agent, (i) the sum payable shall be increased by the amount necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.17) such Lender (or Transferee), any Fronting Bank or the Administrative Agent (as the case may be) shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxing authority or other Governmental Authority in accordance with applicable law.

(b) In addition, each Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made by such Borrower hereunder or under any other Loan Document or from the execution, delivery or registration of or performance under this Agreement or any other Loan Document, or otherwise with respect to such Borrower’s role in this Agreement or any other Loan Document (hereinafter referred to as “ Other Taxes ”).

(c) Each Borrower will indemnify each Lender (or Transferee), each Fronting Bank and the Administrative Agent for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable by such Borrower under this Section 2.17) paid by such Lender (or Transferee), such Fronting Bank or the Administrative Agent, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted by the relevant taxing authority or other Governmental Authority. Each Borrower shall also indemnify each Lender (or any Transferee), each Fronting Bank and the Administrative Agent for the full amount of taxes imposed on or measured by the net income or receipts of such Lender (or any Transferee), such Fronting Bank or the Administrative Agent, as the case may be, as such Lender (or Transferee), such Fronting Bank or the Administrative Agent shall determine are payable in respect of amounts paid by such Borrower to or on behalf of such Lender (or any Transferee), such Fronting Bank or the Administrative Agent, as the case may be, pursuant to this Section 2.17. Such indemnification shall be made within 30 days after

the date any Lender (or Transferee), any Fronting Bank or the Administrative Agent, as the case may be, makes written demand therefor. If any Lender (or Transferee), any Fronting Bank or the Administrative Agent becomes entitled to a refund of Taxes or Other Taxes for which such Lender (or Transferee), such Fronting Bank or the Administrative Agent has received payment from a Borrower hereunder, such Lender (or Transferee), such Fronting Bank or Administrative Agent, as the case may be, shall, at the expense of such Borrower, use its reasonable efforts (consistent with internal policy, and legal and regulatory restrictions) to obtain such refund. If a Lender (or Transferee), a Fronting Bank or the Administrative Agent receives a refund or is entitled to claim a tax credit in respect of any Taxes or Other Taxes for which such Lender (or Transferee), such Fronting Bank or the Administrative Agent has received payment from a Borrower hereunder it shall promptly notify such Borrower of such refund or credit and shall, within 30 days after receipt of a request by such Borrower (or promptly upon receipt, if such Borrower has requested application for such refund or credit pursuant hereto), repay such refund or amount of credit to such Borrower, net of all out-of-pocket expenses of such Lender (or Transferee), such Fronting Bank or the Administrative Agent, as applicable, and without interest; provided that each Borrower, upon the request of such Lender (or Transferee), such Fronting Bank or the Administrative Agent, agrees to return such refund or amount of credit (plus penalties, interest or other charges) to such Lender (or Transferee), such Fronting Bank or the Administrative Agent in the event such Lender (or Transferee), such Fronting Bank or the Administrative Agent is required to repay such refund or such credit is denied or subsequently determined to be unavailable.

(d) Within 30 days after the date of any payment of Taxes or Other Taxes withheld by either Borrower in respect of any payment to any Lender (or Transferee), any Fronting Bank or the Administrative Agent, such Borrower will furnish to the Administrative Agent, at its address referred to in Section 9.01, the original or a certified copy of a receipt evidencing payment thereof to the proper Governmental Authority.

(e) Without prejudice to the survival of any other agreement contained herein, the agreements and obligations contained in this Section 2.17 shall survive the payment in full of the principal of and interest on all Loans made hereunder.

(f) Each Lender (or Transferee) or each Fronting Bank, which is organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of this Agreement or, in the case of a Transferee, on the date on which it becomes a Lender and in the case of any Lender or any Fronting Bank, on or prior to the date such Lender or such Fronting Bank changes its funding office, and from time to time thereafter as requested in writing by either Borrower (but only so long thereafter as such Lender or such Fronting Bank remains lawfully able to do so), shall deliver to the Borrowers and the Administrative Agent such certificates, documents or other evidence, as required by the Code or Treasury Regulations issued pursuant thereto, including Internal Revenue Service Form W-8BEN or Form W-8ECI and any other certificate or statement of exemption required by Treasury Regulation Section 1.1441-4(a) or 1.1441-6(c) or any subsequent version thereof, properly completed and duly executed by such Lender (or Transferee) or such Fronting Bank establishing that any payment under the Loan Documents is (i) not subject to withholding under the Code because such payment is effectively connected with the conduct by such Lender (or Transferee) or such Fronting Bank of a trade or business in the United States, or (ii) fully or

partially exempt from United States tax under a provision of an applicable tax treaty, or (iii) not subject to withholding under the portfolio interest exception under Section 881(c) of the Code (and, if such Lender (or Transferee) or such Fronting Bank delivers a Form W-8BEN claiming the benefits of exemption from United States withholding tax under Section 881(c), a certificate representing that such Lender (or Transferee) or such Fronting Bank is not a “bank” for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of either Borrower and is not a controlled foreign corporation related to either Borrower (within the meaning of Section 864(d)(4) of the Code). Unless the Borrowers and the Administrative Agent have received forms or other documents reasonably satisfactory to them indicating that payments hereunder are not subject to United States withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, each applicable Borrower or the Administrative Agent shall withhold taxes from such payments at the applicable statutory rate in the case of payments to or for any Lender (or Transferee) or any Fronting Bank organized under the laws of a jurisdiction outside the United States. If a Lender (or Transferee) or a Fronting Bank is unable to deliver one of these forms or if the forms provided by a Lender (or Transferee) or a Fronting Bank, at the time such Lender (or Transferee) or such Fronting Bank, first becomes a party to this Agreement or at the time a Lender (or Transferee) or a Fronting Bank, changes its funding office (other than at the request of a Borrower) indicate a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender (or Transferee) or such Fronting Bank, provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such appropriate forms; provided , however , that if at the effective date of a transfer pursuant to which a Lender (or Transferee) or a Fronting Bank becomes a party to this Agreement, the Lender (or Transferee) or Fronting Bank assignor was entitled to payments under Section 2.17(a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender (or Transferee) or Fronting Bank, assignee on such date.

(g) The Borrowers shall not be required to pay any additional amounts to any Lender (or Transferee) or any Fronting Bank in respect of United States withholding tax pursuant to paragraph (a) above for any period in respect of which the obligation to pay such additional amounts would not have arisen but for a failure by such Lender (or Transferee) or such Fronting Bank, to comply with the provisions of paragraph (f) above unless such failure results from (i) a change in applicable law, regulation or official interpretation thereof or (ii) an amendment, modification or revocation of any applicable tax treaty or a change in official position regarding the application or interpretation thereof, in each case after the Closing Date (and, in the case of a Transferee, after the date of assignment or transfer).

(h) Any Lender (or Transferee) or any Fronting Bank claiming any additional amounts payable pursuant to this Section 2.17 shall use reasonable efforts (consistent with internal policy, and legal and regulatory restrictions) to file any certificate or document requested by the Borrowers or to change the jurisdiction of its applicable lending office if the making of such a filing or change would avoid the need for or reduce the amount of any such additional amounts which may thereafter accrue and would not, in the reasonable determination of such

Lender (or Transferee) or such Fronting Bank be materially disadvantageous to such Lender (or Transferee) or such Fronting Bank or require the disclosure of information that such Lender (or Transferee) or such Fronting Bank reasonably considers to be confidential.

Section 2.18 Mitigation Obligations; Replacement of Lenders . (a) If any Lender (including the Administrative Agent or any Fronting Bank) requests compensation under Section 2.11, or if it becomes unlawful for any Lender (including the Administrative Agent or any Fronting Bank) to make or maintain Eurodollar Loans under Section 2.12, or if a Borrower is required to pay any additional amount to any Lender, the Administrative Agent, any Fronting Bank or any Governmental Authority for the account of any Lender, the Administrative Agent or any Fronting Bank pursuant to Section 2.17, then such Lender, the Administrative Agent or such Fronting Bank shall, at the request of such Borrower, use reasonable efforts to designate a different lending office for funding or booking its Loans or for the issuance of Letters of Credit hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, the Administrative Agent or such Fronting Bank, as the case may be, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.11 or 2.17 or no longer make it unlawful for such Lender, the Administrative Agent or such Fronting Bank, to make or maintain Eurodollar Loans under Section 2.12, as the case may be, in the future and (ii) would not subject such Lender, the Administrative Agent or such Fronting Bank, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender, the Administrative Agent or such Fronting Bank, as the case may be. The Borrowers hereby agree, jointly and severally, to pay all reasonable costs and expenses incurred by any Lender, the Administrative Agent or any Fronting Bank in connection with any such designation or assignment.

(b) If any Lender or any Fronting Bank requests compensation under Section 2.11, or if it becomes unlawful for any Lender or any Fronting Bank to make or maintain Eurodollar Loans under Section 2.12, or if a Borrower is required to pay any additional amount to any Lender, any Fronting Bank or any Governmental Authority for the account of any Lender or any Fronting Bank pursuant to Section 2.17, or if any Lender or any Fronting Bank defaults in its obligation to fund Loans or issue Letters of Credit hereunder, then the Borrowers may, at their sole expense and effort, upon notice to such Lender or such Fronting Bank and the Administrative Agent, (i) require such Lender or such Fronting Bank to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (x) the Borrowers shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (y) such assigning Lender or Fronting Bank shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts) and (z) in the case of any such assignment resulting from a claim for compensation under Section 2.11 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments or (ii) terminate the Commitment of such Lender upon notice given to such Lender within forty-five (45) days of receipt of the notice given by the Lender; provided that such notice shall be accompanied by prepayment in full of all Loans from such Lender,

including accrued interest thereon and any breakage costs, accrued fees and all other amounts payable to such Lender, without extension, conversion or continuation. A Lender or a Fronting Bank shall not be required to make any such assignment and delegation under clause (i) above or terminate its Commitment under clause (ii) above if, prior thereto, as a result of a waiver by such Lender or such Fronting Bank or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation or termination of Commitment cease to apply.

Section 2.19 Term Loan Conversion . (a) Not less than five days and not more than thirty days prior to the Revolver Termination Date, and subject to the conditions set forth in Section 4.03, each Borrower may elect to convert all or a portion of its respective Revolving Borrowings outstanding as of the Revolver Termination Date into Term Borrowings (the “ Term Loan Conversion ”) by delivery of a written notice to that effect to the Administrative Agent, who shall forward a copy of such notice to each of the Lenders. If such notice is given, each Lender severally agrees, on the terms and conditions hereinafter set forth, that each of its outstanding Revolving Loans that are part of the Borrowings subject to the election to convert will be converted into a term loan (each, a “ Term Loan ” and collectively, the “ Term Loans ”) having the same terms as the converted loan on the Revolver Termination Date. Any amount of any Lender’s Term Loans repaid may not be reborrowed, and the Term Loans so elected shall commence on the Revolver Termination Date and shall be payable on the Termination Date.

(b) In order to elect the Term Loan Conversion, and in addition to the notice set forth in Section 2.19(a) above, the Borrower electing the Term Loan Conversion shall hand deliver or telecopy to the Administrative Agent a request (i) in the case of a Term Borrowing consisting of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the Revolver Termination Date, (ii) in the case of a Term Borrowing consisting of a Base Rate Borrowing, not later than 12:00 noon, New York City time, on the day of the Revolver Termination Date, which request shall be irrevocable and shall in each case specify (x) whether the Term Borrowing then being requested is to consist of a Eurodollar Borrowing or a Base Rate Borrowing; (y) the date of such Borrowing (which shall be the Revolver Termination Date) and the amount thereof (which shall be the amount of Revolving Borrowings of such Borrower outstanding on the Revolver Termination Date); and (z) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto. If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be a Base Rate Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then such Borrower shall be deemed to have selected an Interest Period of one month’s duration. The Administrative Agent shall promptly advise the Lenders of any notice given pursuant to this Section 2.19 and of each Lender’s portion of the requested Borrowing.

(c) To the extent Weyerhaeuser shall have failed to elect to convert all or a portion of its Revolving Borrowings in accordance with Section 2.19(a) above, Weyerhaeuser shall, by no later than three days prior to the Revolver Termination Date, cause to be terminated and/or cause to be replaced any and all Letters of Credit then outstanding under this Agreement in a manner reasonably satisfactory to the applicable Fronting Banks.

Section 2.20 Letters of Credit . (a) General . Weyerhaeuser may from time to time request the issuance of Letters of Credit for its own account (for obligations of

Weyerhaeuser or any of its Subsidiaries), denominated in dollars, in form reasonably acceptable to the Administrative Agent and the applicable Fronting Bank, at any time and from time to time until the earlier of (i) the date that is five Business Days prior to the Revolver Termination Date and (ii) the termination of the Commitments hereunder. This Section shall not be construed to impose an obligation upon any Fronting Bank to issue any Letter of Credit that is inconsistent with the terms and conditions of this Agreement.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . In order to request the issuance of a Letter of Credit (or to amend, renew or extend an existing Letter of Credit), Weyerhaeuser shall hand deliver or telecopy to the applicable Fronting Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or extension, the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) below), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare such Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if, and upon issuance, amendment, renewal or extension of each Letter of Credit Weyerhaeuser shall be deemed to represent and warrant that, after giving effect to such issuance, amendment, renewal or extension, (A) the L/C Exposure shall not exceed $600,000,000 and (B) the Aggregate Credit Exposure shall not exceed the Total Commitment. The Administrative Agent shall, from time to time at the request of any Lender and in any case once during each fiscal quarter of Weyerhaeuser and based on the information provided to it by the Fronting Banks, provide the Lenders with the amount of the L/C Exposure. Each of the Fronting Banks hereby agrees to provide the Administrative Agent on demand with all the information necessary in the computation thereof.

(c) Expiration Date . Each Letter of Credit shall expire no later than the earlier of (i) one year from the date of its issuance and (ii) the date that is five Business Days prior to the first anniversary of the Revolver Termination Date.

(d) Participations . By the issuance of a Letter of Credit and without any further action on the part of the applicable Fronting Bank or the Lenders, each Fronting Bank hereby grants to each Lender, and each such Lender hereby acquires from such Fronting Bank, a participation in each Letter of Credit issued by such Fronting Bank equal to such Lender’s Applicable Percentage from time to time of the aggregate amount available to be drawn under such Letter of Credit, effective upon the issuance of such Letter of Credit. In consideration and in furtherance of the foregoing and for so long as any Letters of Credit shall remain outstanding hereunder, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Fronting Bank, such Lender’s proportionate share of each L/C Disbursement made by such Fronting Bank and not reimbursed by Weyerhaeuser forthwith on the date due as provided in Section 2.02(e). Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute, unconditional and irrevocable and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default or the termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement . If a Fronting Bank shall make any L/C Disbursement in respect of a Letter of Credit, Weyerhaeuser shall pay to the Administrative Agent an amount equal to such L/C Disbursement not later than the Business Day after Weyerhaeuser shall have received notice from such Fronting Bank that payment of such draft has been made.

(f) Obligations Absolute . Weyerhaeuser’s obligations to reimburse L/C Disbursements as provided in paragraph (e) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under any and all circumstances whatsoever, and irrespective of:

(i) any lack of validity or enforceability of any Letter of Credit or any Loan Document, or any term or provision therein;

(ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit or any Loan Document;

(iii) the existence of any claim, setoff, defense or other right that Weyerhaeuser, any other party guaranteeing, or otherwise obligated with, Weyerhaeuser or any subsidiary or other affiliate thereof or any other person may at any time have against the beneficiary under any Letter of Credit, any Fronting Bank, the Administrative Agent or any Lender or any other person, whether in connection with this Agreement, any other Loan Document or any other related or unrelated agreement or transaction;

(iv) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(v) payment by any Fronting Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit; and

(vi) any other act or omission to act or delay of any kind of any Fronting Bank, the Lenders, the Administrative Agent or any other person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of Weyerhaeuser’s obligations hereunder;

provided , however , that the foregoing shall not be construed to excuse any Fronting Bank from liability to Weyerhaeuser to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by Weyerhaeuser to the extent permitted by applicable law) suffered by Weyerhaeuser that are caused by such Fronting Bank’s gross negligence or willful misconduct in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.

It is understood that any Fronting Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary and, in making any payment under any Letter of Credit (i) the applicable Fronting Bank’s exclusive reliance on the documents presented to it under such Letter

of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, be deemed not to constitute willful misconduct or gross negligence of such Fronting Bank.

(g) Disbursement Procedures . Each Fronting Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The applicable Fronting Bank shall as promptly as possible give telephonic notification, confirmed by telecopy, to the Administrative Agent and the Borrower of such demand for payment and whether such Fronting Bank has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve Weyerhaeuser of its obligation to reimburse such Fronting Bank and the Lenders with respect to any such L/C Disbursement. The Administrative Agent shall promptly give each Lender notice thereof.

(h) Interim Interest . When (x) a Fronting Bank shall make any L/C Disbursement in respect of a Letter of Credit or (y) any Lender shall have acquired a participation in a Letter of Credit pursuant to Section 2.20(d), then, unless Weyerhaeuser shall reimburse such L/C Disbursement or pay for such participation in full on the date thereof, the unpaid amount thereof shall bear interest for the account of such Fronting Bank or such Lender, as applicable, for each day from and including the date of such L/C Disbursement or the acquisition of such participation, as applicable, to but excluding the earlier of, to the extent applicable, the date of payment by Weyerhaeuser or the date on which interest shall commence to accrue on the Base Rate Loans resulting from such L/C Disbursement as provided in Section 2.02(f), at the rate per annum that would apply to such amount if such amount were a Base Rate Loan.

(i) Cash Collateralization . (w) If any Event of Default shall occur and be continuing, Weyerhaeuser shall, on the Business Day it receives notice from the Administrative Agent or the Required Lenders thereof and of the amount to be deposited, deposit in an account with the Administrative Agent, for the benefit of the Fronting Banks and the Lenders, as applicable, an amount in cash equal to the portion of the L/C Exposure attributable to Letters of Credit issued for the account of Weyerhaeuser and outstanding as of such date.

(x) If on or after the Revolver Termination Date Weyerhaeuser shall have failed to make any payment required to be made by it pursuant to Section 2.20(e), Weyerhaeuser shall, on the Business Day it receives notice from the Administrative Agent or any Fronting Bank thereof and of the amount to be deposited, deposit in an account with the Administrative Agent, for the benefit of the Fronting Banks and the Lenders, as applicable, an amount in cash equal to the portion of the L/C Exposure attributable to Letters of Credit issued for the account of Weyerhaeuser and outstanding as of such date.

(y) If, by no later than three days prior to the Revolver Termination Date, Weyerhaeuser shall not have caused to be terminated and/or replaced any and all Letters of Credit then outstanding in accordance with Section 2.19(c), Weyerhaeuser shall deposit in an account with the Administrative Agent, for the benefit of the Fronting Banks and the Lenders, as applicable, an amount in cash equal to the portion of the L/C Exposure attributable to Letters of Credit issued for the account of Weyerhaeuser and outstanding as of such date.

(z) Each deposit of cash pursuant to this Section 2.20(i) shall be held by the Administrative Agent as collateral for the payment and performance of the obligations under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Such deposits shall not bear interest. Moneys in such account shall automatically be applied by the Administrative Agent to reimburse the applicable Fronting Bank and Lenders participating pursuant to Section 2.20(d) for L/C Disbursements attributable to Letters of Credit issued for the account of Weyerhaeuser for which such Fronting Bank and such participating Lenders have not been reimbursed, and any remaining amounts will either (i) be held for the satisfaction of the reimbursement obligations of Weyerhaeuser for the L/C Exposure at such time or (ii) if the maturity of the Loans has been accelerated, be applied to satisfy the obligations of the Borrowers under this Agreement. If Weyerhaeuser is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to Weyerhaeuser within three Business Days after all Events of Default have been cured or waived.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each of the Borrowers represents and warrants to each of the Lenders and each of the Fronting Banks that:

Section 3.01 Organization; Powers . Such Borrower and each of its Restricted Subsidiaries (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, (c) is qualified to do business in every jurisdiction where such qualification is required, except where the failure so to qualify would not result in a Material Adverse Effect, and (d) in the case of such Borrower, has the corporate power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated thereby to which it is or will be a party and to borrow hereunder.

Section 3.02 Authorization . The execution, delivery and performance by such Borrower of each of the Loan Documents and the borrowings and issuances of Letters of Credit hereunder, and the consummation of the other transactions contemplated hereby (collectively, the “ Transactions ”) (a) have been duly authorized by all requisite corporate and, if required, stockholder action and (b) (i) will not violate (A) any provision of law, statute, rule or regulation, (B) of the certificate or articles of incorporation or other constitutive documents or by-laws of

such Borrower or any of its Restricted Subsidiaries, (C) any order of any Governmental Authority or (D) any provision of any indenture, agreement or other instrument to which such Borrower or any of its Restricted Subsidiaries is a party or by which any of them or any of their property is or may be bound, (ii) will not be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under any such indenture, agreement or other instrument or (iii) will not result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by such Borrower or any of its Restricted Subsidiaries except, in each case other than (a) and (b)(i)(B), as could not reasonably be expected to have a Material Adverse Effect.

Section 3.03 Enforceability . This Agreement has been duly executed and delivered by such Borrower and constitutes, and each other Loan Document when executed and delivered by such Borrower will constitute, a legal, valid and binding obligation of such Borrower enforceable against such Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

Section 3.04 Consents and Approvals . No action, consent or approval of, registration or filing with, or any other action by any Governmental Authority or any other third party is or will be required in connection with the Transactions, except as have been made or obtained (without the imposition of any conditions that are not acceptable to the Lenders) and are in full force and effect (other than any action, consent, approval, registration or filing the absence of which could not reasonably be expected, either individually or in the aggregate with any such other consents, approvals, registrations or filings, to result in a Material Adverse Effect). No law or regulation shall be applicable, restraining, preventing or imposing materially adverse conditions upon the Transactions or the rights of the Borrowers and their respective subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them except, in each case, as could not reasonably be expected to have a Material Adverse Effect.

Section 3.05 Financial Statements . (a) Weyerhaeuser has heretofore furnished to the Lenders its consolidated balance sheets and statements of earnings and statements of cash flows, together with the notes thereto, as of and for the fiscal year ended December 28, 2003, audited by and accompanied by the opinion of KPMG LLP, independent public accountants.

(b) WRECO has heretofore furnished to the Lenders its consolidated balance sheets and statements of earnings and statements of cash flows, together with the notes thereto, as of and for the fiscal year ended December 28, 2003, audited by and accompanied by the opinion of KPMG LLP, independent public accountants.

(c) Such financial statements referred to in Section 3.05(a) and (b) present fairly in all material respects the financial position and results of operations of Weyerhaeuser, WRECO and their respective consolidated subsidiaries as of such dates and for such periods. Such balance sheets and the notes thereto disclose all material liabilities, direct or contingent, of Weyerhaeuser, WRECO and their respective consolidated subsidiaries as of the dates thereof. Such financial statements were prepared in accordance with GAAP applied on a consistent basis.

Section 3.06 No Material Adverse Change . Other than changes in operating results arising in the ordinary course of business and except as otherwise disclosed publicly or to the Lenders prior to the date hereof, there has been no material adverse change in the business, financial condition, operations or properties of Weyerhaeuser and its subsidiaries, taken as a whole, since December 28, 2003.

Section 3.07 Title to Properties; Possession Under Leases . (a) Each of such Borrowers and its Restricted Subsidiaries has good and marketable title to, or valid leasehold interests in, all of its material properties and assets, except for defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes.

(b) Each of such Borrowers and its Restricted Subsidiaries (i) has complied with all obligations under all leases to which it is a party, and (ii) enjoys peaceful and undisturbed possession under all such leases, except where such non-compliance or lack of peaceful and undisturbed possession would not result in a Material Adverse Effect. All leases to which the Borrowers and their respective Restricted Subsidiaries are a party are in full force and effect, except where such lack of force and effect would not result in a Material Adverse Effect.

Section 3.08 Subsidiaries . Schedule 3.08 Part I for Weyerhaeuser and Schedule 3.08 Part II for WRECO (i) set forth as of the Closing Date a list of all subsidiaries of Weyerhaeuser and WRECO and the percentage ownership interest of Weyerhaeuser and WRECO therein, as applicable, and (ii) for Weyerhaeuser and WRECO, designate those Subsidiaries which are Unrestricted Subsidiaries.

Section 3.09 Litigation; Compliance with Laws . (a) Except as disclosed in Weyerhaeuser’s Report on Form 10-K for the fiscal year ended December 28, 2003, there are no actions, suits, investigations, litigations or proceedings pending or, to the knowledge of the Borrowers, threatened against or affecting the Borrowers or any of their Restricted Subsidiaries in any court or before any arbitrator or Governmental Authority that could reasonably be expected to have a Material Adverse Effect.

(b) Except as disclosed in Weyerhaeuser’s Report on Form 10-K for the fiscal year ended December 28, 2003, neither such Borrower nor any of its Restricted Subsidiaries is in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect.

Section 3.10 Agreements . (a) Neither such Borrower nor any of its Restricted Subsidiaries is a party to any agreement or instrument or subject to any corporate restriction that has resulted in a Material Adverse Effect.

(b) Neither such Borrower nor any of its Restricted Subsidiaries is in default in any manner under any material agreement or instrument (except for any indenture or other agreement or instrument evidencing Indebtedness) to which it is a party or by which it or any of its properties or assets are or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect.

Section 3.11 Federal Reserve Regulations . (a) Neither such Borrower nor any of its Restricted Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock.

(b) No part of the proceeds of any Loan will be used, whether directly or indirectly, whether immediately, incidentally or ultimately, for any purpose which entails a violation of, or which is inconsistent with, the provisions of the Regulations of the Board, including Regulation T, U or X.

Section 3.12 Investment Company Act; Public Utility Holding Company Act . Neither such Borrower nor any of its Restricted Subsidiaries is (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.

Section 3.13 Tax Returns . Each of such Borrower and its Subsidiaries has filed or caused to be filed all material Federal, state and local tax returns required to have been filed by it and has paid or caused to be paid all material taxes shown to be due and payable on such returns or on any assessments received by it, except taxes that are being contested in good faith by appropriate proceedings and for which such Borrower or Subsidiary, as the case may be, shall have set aside on its books appropriate reserves.

Section 3.14 No Material Misstatements . No information, report, financial statement, exhibit or schedule furnished by or on behalf of such Borrower to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto, when taken together with the reports and other filings with the SEC, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Section 3.15 Compliance with ERISA . Except as would not have a Material Adverse Effect, subject to the following sentences of this Section 3.15, each Plan subject to ERISA or the Code, as applicable, is in compliance with ERISA and the Code; no Reportable Event has occurred with respect to a Plan, no Plan is insolvent or in reorganization; no Plan has an Unfunded Current Liability in excess of $40,000,000, and all Plans collectively do not have Unfunded Current Liabilities in excess of $91,000,000 in the aggregate, and no Plan subject to ERISA or the Code, as applicable, has an accumulated or waived funding deficiency, has permitted decreases in its funding standard account or has applied for an extension of any amortization period within the meaning of Section 412 of the Code; neither such Borrower nor any ERISA Affiliate has incurred any liability to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4975 of the Code or expects to incur any material liability under any of the foregoing Sections with respect to any such Plan; no condition exists which presents a risk to such Borrower or any ERISA Affiliate of incurring a liability to or on account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no proceedings have been instituted to terminate any Plan; no lien imposed under the Code or ERISA on the assets of such Borrower or any ERISA Affiliate exists or is likely to arise on account of any Plan; such Borrower and its Subsidiaries do not maintain or contribute to any

“welfare plan” (within the meaning of Section 3(1) of ERISA) which provides life insurance or health benefits to retirees (other than as required by Section 601 of ERISA) the obligations with respect to which could reasonably be expected to have a Material Adverse Effect.

Section 3.16 Environmental Matters . Except as disclosed in Weyerhaeuser’s Report on Form 10-K for the fiscal year ended December 28, 2003, filed with the SEC, (a) neither Borrower nor any of its Subsidiaries has failed to comply with any Federal, state, local and other statutes, ordinances, orders, judgments, rulings and regulations relating to environmental pollution or to environmental regulation or control, where any such failure to comply, alone or together with any other such noncompliance, could result in a Material Adverse Effect; (b) neither Borrower nor any of its Subsidiaries has received notice of any failure so to comply which alone or together with any other such failure could result in a Material Adverse Effect; and (c) the Borrowers’ and their respective Subsidiaries’ plants have not managed any hazardous wastes, hazardous substances, hazardous materials, toxic substances or toxic pollutants, as those terms are used in the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Compensation and Liability Act, the Hazardous Materials Transportation Act, the Toxic Substance Control Act, the Clean Air Act, the Clean Water Act or any other Environmental Law, in violation of any regulations promulgated pursuant thereto or in any other applicable law where such violation could reasonably result, individually or together with other violations, in a Material Adverse Effect.

Section 3.17 Maintenance of Insurance . Such Borrower and each of its Restricted Subsidiaries maintains insurance (which may be self insurance) for all of its insurable properties: (a) by financially sound and reputable insurers to the extent of insurance obtained from third party insurers; (b) to such extent and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies in the same or similar businesses, including public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by such Borrower or such Restricted Subsidiaries; and (c) as may be required by law.

ARTICLE IV

CONDITIONS OF LENDING AND

ISSUANCE OF LETTERS OF CREDIT

The obligations of the Lenders to make Loans hereunder and the obligation of each Fronting Bank to issue Letters of Credit hereunder (or to amend, renew or extend an existing Letter of Credit) are subject to the satisfaction of the following conditions:

Section 4.01 All Borrowings and Issuances . On the date of each Borrowing and on the date of each issuance of a Letter of Credit (and each amendment, renewal or extension thereof):

(a) Notice . The Administrative Agent or any Fronting Bank, as applicable, shall have received from the applicable Borrower a notice of such Borrowing or a notice of such issuance, amendment, renewal or extension as required by Section 2.02, 2.03 or 2.20, as applicable.

(b) Representations . The representations and warranties of the Borrowers set forth in Sections 3.01, 3.02, 3.03, 3.04, 3.07, 3.10(b), 3.11 and 3.12 shall be true and correct in all material respects on and as of such date with the same effect as though made on and as of such date at the time of and immediately after such Borrowing or at the time of and immediately after the issuance, amendment, renewal or extension of a Letter of Credit hereunder.

(c) Compliance, etc . The Borrowers shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on their part to be observed or performed, and, as applicable, at the time of and immediately after such Borrowing or at the time of and immediately after the issuance, amendment, renewal or extension of a Letter of Credit hereunder, no Event of Default or Default shall have occurred and be continuing.

Each Borrowing and each issuance of a Letter of Credit hereunder (or an amendment, renewal or extension thereof) shall be deemed to constitute a representation and warranty by the Borrowers on the date of such Borrowing, issuance, amendment, renewal or extension, as the case may be, as to the matters specified in paragraphs (b) and (c) of this Section 4.01.

Section 4.02 Closing Date . In addition to all the conditions set forth in Section 4.01, on or before the Closing Date:

(a) Opinions . The Administrative Agent shall have received a favorable written opinion of (i) Perkins Coie, special counsel for the Borrowers, dated the Closing Date and addressed to the Lenders, in form and substance reasonably satisfactory to the Administrative Agent and (ii) Lorrie Scott, Esq., Senior Legal Counsel to Weyerhaeuser, as counsel for Weyerhaeuser, dated the Closing Date and addressed to the Lenders, in form and substance reasonably satisfactory to the Administrative Agent.

(b) Legal Matters . All legal matters (including any documentation) related to this Agreement and the Transactions shall be satisfactory to the Lenders and to Shearman & Sterling LLP, special counsel for the Administrative Agent.

(c) Articles, etc . The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation, including all amendments thereto, of each of the Borrowers, certified as of a recent date by the Secretary of State of their respective States of incorporation, and certificates as to the good standing of each of the Borrowers, as of a recent date, from each such Secretary of State; (ii) a certificate from each of the Borrowers of their respective Secretary or Assistant Secretary dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws of such Borrower as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Borrower

authorizing the execution, delivery and performance of such Borrower of any and all documents and agreements to be entered into with respect to the Loan Documents and the borrowings to be made thereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation of such Borrower have not been amended since the date of the last amendment thereto shown on the certificates of good standing furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document or agreement delivered in connection with the Transactions on behalf of such Borrower; (iii) a certification of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to (ii) above; and (iv) such other documents as the Lenders or Shearman & Sterling LLP, special counsel for the Administrative Agent, may reasonably request.

(d) Officers’ Certificates . The Administrative Agent shall have received a certificate from each Borrower, dated the Closing Date and signed by a Financial Officer of such Borrower, confirming (i) compliance with the condition precedent set forth in paragraph (c) of Section 4.01, and (ii) that the representations and warranties of such Borrower set forth herein are true and correct in all material respects on and as of the Closing Date (except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties are true and correct in all material respects as of such earlier date), immediately prior to, and after giving effect to, the initial Borrowing and/or the initial issuance of a Letter of Credit hereunder.

(e) Fees . The Administrative Agent and the Lenders shall have received all Fees and other amounts due and payable on or prior to the Closing Date.

(f) Loan Documents . The Administrative Agent shall have received a fully executed counterpart of this Agreement, and an executed copy of each Loan Document (other than this Agreement).

Section 4.03 Term Loan Conversion Conditions . On the date any Term Loan Conversion is effective:

(a) Representations . The representations and warranties of the Borrower electing such Term Loan Conversion shall be true and correct in all material respects on and as of such date with the same effect as though made on and as of such date (except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).

(b) Compliance, etc. The Borrower electing such Term Loan Conversion shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and at the time of and immediately after the Term Loan Conversion, no Event of Default or Default shall have occurred and be continuing.

ARTICLE V

AFFIRMATIVE COVENANTS

Each Borrower covenants and agrees with each Lender, each Fronting Bank and the Administrative Agent that, so long as this Agreement shall remain in effect or the principal of or interest on any Loan, any Fees or any other expenses or amounts payable under any Loan Document shall be unpaid, or any Letter of Credit shall remain outstanding, or any amounts drawn thereunder shall remain unpaid, unless the Required Lenders (or, where indicated, the Lenders) shall otherwise consent in writing, each Borrower will, and will cause each of its Restricted Subsidiaries (except in the case of Sections 5.03 (which applies to Weyerhaeuser), 5.06 (which applies to Weyerhaeuser, WRECO and their respective ERISA Affiliates) and 5.09 (which applies to Weyerhaeuser, WRECO and all of their respective Subsidiaries)) to:

Section 5.01 Existence; Businesses and Properties . (a) Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.01(c) (with respect to Weyerhaeuser) and Section 6.02(d) (with respect to WRECO) and, with respect to Restricted Subsidiaries, where the failure to do so could not reasonably be expected to have a Material Adverse Effect, provided , however , that such Borrower may liquidate or dissolve any of its Subsidiaries to the extent the assets of such Subsidiary are transferred to Weyerhaeuser or any of its Restricted Subsidiaries.

(b) Except in each case where the failure to do so could not reasonably be expected to result in a Material Adverse Effect, (i) do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises, authorizations, patents, copyrights, trademarks and trade names necessary in the conduct of its business; (ii) maintain and operate such business in substantially the manner in which it is presently conducted and operated; (iii) comply with all applicable laws, rules, regulations and orders of any Governmental Authority, whether now in effect or hereafter enacted; and (iv) at all times maintain and preserve all property necessary in the conduct of such business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all necessary and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times.

(c) Maintain compliance with each of its loans, contracts, leases and other obligations (other than Indebtedness) except such as are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established, and except for such noncompliance as could not reasonably be expected to have, in any case or in the aggregate, a Material Adverse Effect.

Section 5.02 Insurance . (a) Keep such of its insurable properties as are insured with third-party insurers insured at all times by financially sound and reputable insurers; and (b) maintain (i) insurance (which may include self insurance), to such extent and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies in the same or similar businesses, including public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it; and (ii) such insurance as may be required by law.

Section 5.03 Obligations and Taxes . Pay its obligations (other than Indebtedness) promptly and in accordance with their terms and pay and discharge promptly when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise which, if unpaid, might give rise to a Lien upon such properties or any part thereof; provided , however , that such payment and discharge shall not be required (i) with respect to any such tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by appropriate proceedings and such Borrower or such Subsidiary shall have set aside on its books appropriate reserves with respect thereto or (ii) if the failure to make such payments or to discharge such Liens is not, in any case or in the aggregate, reasonably likely to have a Material Adverse Effect.

Section 5.04 Financial Statements, Reports, etc . In the case of each Borrower, furnish to the Administrative Agent (which shall promptly furnish to each Lender):

(a) within 95 days after the end of each fiscal year, its consolidated balance sheets and related statements of earnings and statements of cash flows, together with the notes thereto, showing the financial position of such Borrower and its consolidated Subsidiaries as of the close of such fiscal year and the results of their operations and the operations of such subsidiaries during such year, all audited by KPMG LLP or other independent public accountants of recognized national standing acceptable to the Required Lenders and accompanied by an opinion of such accountants (which shall not be qualified in any material respect) to the effect that such consolidated financial statements fairly present the financial position and results of operations of each such Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, except as therein noted;

(b) within 50 days after the end of each of the first three fiscal quarters of each fiscal year, its consolidated balance sheets and related statements of earnings and, with respect to Weyerhaeuser, statements of cash flows, showing the financial position of Weyerhaeuser and its consolidated Subsidiaries as of the close of such fiscal quarter and the results of its operations and the operations of such consolidated Subsidiaries during such fiscal quarter and the then elapsed portion of the fiscal year, all certified (in the form of Exhibits D-1 and D-2, with respect to Weyerhaeuser and WRECO, respectively) by one of its Financial Officers as fairly presenting the financial position and results of operations of each such Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, except as therein noted, subject to appropriate year-end audit adjustments;

(c) concurrently with any delivery of financial statements under (a) or (b) above, a certificate (in the form of Exhibits D-3 and D-4, with respect to Weyerhaeuser and WRECO, respectively) of the accounting firm or Financial Officer of such Borrower opining on or certifying such statements (which certificate, when furnished by an

accounting firm, may be limited to accounting matters and disclaim responsibility for legal interpretations) (i) certifying that no Event of Default or Default has occurred or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto, (ii) in the case of Weyerhaeuser setting forth computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the covenants contained in Sections 6.01(d) and 6.01(e) and (iii) including a reconciliation setting forth adjustments made to such financial statements in order to make the calculations set forth in clause (ii) above;

(d) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by it or any of its Subsidiaries with the SEC, or with any national securities exchange, or distributed to its shareholders, as the case may be;

(e) as soon as practicable, copies of such further financial statements and reports as such Borrower shall send to banks with which it has lines of credit, and all such financial statements and reports as such Borrower shall send to its shareholders (unless all of the outstanding shares of capital stock of such Borrower are held by one Person);

(f) promptly, from time to time, such other information regarding the operations, business affairs and financial condition of such Borrower or any of its Subsidiaries, or compliance with the terms of any Loan Document, as the Administrative Agent, any Fronting Bank or any Lender may reasonably request (it being understood that neither Borrower shall be required to provide any information or documents which are subject to confidentiality provisions the nature of which prohibit such disclosure);

(g) promptly, and in any event within 2 days, upon becoming aware thereof, notice of any proposed or actual down-grade, suspension or withdrawal of the rating provided by S&P or Moody’s to Weyerhaeuser in respect of its Senior Unsecured Long-Term Debt; and

(h) information required to be delivered pursuant to paragraphs (a), (b), (d) and (e) shall be deemed to have been delivered on the date on which Weyerhaeuser provides notice to the Administrative Agent that such information has been posted on Weyerhaeuser’s website on the internet at the website address listed on the signature pages thereof, at www.sec.gov or at another website identified in such notice and accessible by the Lenders without charge; provided that Weyerhaeuser shall deliver paper copies of the reports and financial statements referred to in paragraphs (a), (b), (d) and (e) of this Section 5.04 to the Administrative Agent, any Fronting Bank or any Lender who requests Weyerhaeuser to deliver such paper copies until written notice to cease delivering paper copies is given by such Administrative Agent, Fronting Bank or Lender to Weyerhaeuser.

Section 5.05 Litigation and Other Notices . Furnish to the Administrative Agent (which shall promptly furnish to each Lender) prompt written notice of the following:

(a) any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) proposed to be taken with respect thereto;

(b) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against Weyerhaeuser, WRECO or any of their respective Affiliates which, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;

(d) the issuance by any Governmental Authority of any injunction, order, decision or other restraint prohibiting, or having the effect of prohibiting, the making of the Loans or the initiation of any litigation or similar proceeding seeking any such injunction, order or other restraint;

provided that in each case (other than Subsection 5.05 (a)) no Borrower shall be required to provide separate notice of any event disclosed in any report promptly filed with the SEC.

Section 5.06 ERISA . As soon as possible and, in any event, within 10 Business Days after Weyerhaeuser knows of the occurrence of any of the following events which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect, Weyerhaeuser will deliver to the Administrative Agent a certificate of the Financial Officer of Weyerhaeuser setting forth details as to such occurrence and such action, if any, which Weyerhaeuser or an ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by Weyerhaeuser or such ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with respect thereto: (a) that a Reportable Event has occurred, (b) that an accumulated funding deficiency has been incurred or an application has been made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code with respect to a Plan, (c) that a Plan has been or is in the process of being terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA, (d) that a Plan has an Unfunded Current Liability, (e) that proceedings have been instituted to terminate a Plan, (f) that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan, or (g) that Weyerhaeuser or any ERISA Affiliate will or is reasonably likely to incur any liability (including any contingent or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or with respect to a Plan under Section 4975 of the Code or Section 409, 502(i) or 502(l) of ERISA. Weyerhaeuser will, upon written request, deliver to the Administrative Agent a complete copy of the annual report (Form 5500) of each Plan required to be filed with the Internal Revenue Service. In addition to any certificates or notices delivered to the Administrative Agent pursuant to the first sentence hereof, copies of annual reports and any other notices received by Weyerhaeuser or any ERISA Affiliate required to be delivered to the Administrative Agent hereunder shall be delivered to the Administrative Agent no later than 10 Business Days after the later of the date such report or notice has been filed with the Internal Revenue Service or the PBGC, given to Plan participants, received by Weyerhaeuser or such ERISA Affiliate or requested in writing by the Administrative Agent.

Section 5.07 Maintaining Records; Access to Properties and Inspections . Maintain appropriate, accurate and complete financial records and permit any representatives designated by the Administrative Agent or any Lender to visit and inspect the financial records and the properties of each such Borrower or any of its Restricted Subsidiaries at reasonable times and, with reasonable prior notice given to Weyerhaeuser, as often as requested and until a Default has occurred at the expense of the Administrative Agent or such Lender, and to make extracts from and copies of such financial records, and permit any representatives designated by any Lender, any Fronting Bank or the Administrative Agent to discuss the affairs, finances and condition of Weyerhaeuser, WRECO or any such Restricted Subsidiary with the officers thereof and independent accountants (so long as a representative of Weyerhaeuser is present, or Weyerhaeuser has consented to the absence of such a representative) therefor (in each case subject to such Borrower’s obligations under applicable confidentiality provisions).

Section 5.08 Use of Proceeds . Use the credit extended pursuant to this Agreement only for the purposes set forth in the recitals to this Agreement.

Section 5.09 Environmental Matters . (a) (i) Comply in all material respects with all Environmental Laws applicable to the ownership or use of any real property owned or leased by such Borrower or any of its Subsidiaries, except where such noncompliance is not, in any case or in the aggregate, reasonably likely to have a Material Adverse Effect, (ii) include in all material contracts with tenants and other persons occupying such real property provisions to ensure such tenants’ compliance in all material respects with all such Environmental Laws, and diligently enforce and prosecute its rights with respect to such provisions, (iii) pay or cause to be paid in the case of sole liability, or, in the case of joint liability, to seek contribution or compensation in respect of, all costs and expenses incurred in connection with such compliance, except in respect to costs and expenses that are being contested in good faith and for which such Borrower or such Subsidiary, as the case may be, shall have set aside on its books appropriate reserves, and except where failures to make such payments are not, in any case or in the aggregate, reasonably likely to have a Material Adverse Effect, and (iv) use its best efforts to keep or cause to be kept all such real property free and clear of any liens imposed pursuant to any Environmental Laws, except in respect to liens that are being contested in good faith, and except in respect to liens the existence of which is not, in any case or in the aggregate, reasonably likely to have a Material Adverse Effect.

(b) Neither such Borrower, nor any of its Subsidiaries will generate, use, treat, store, Release, or permit the generation, use, treatment, storage or Release of Hazardous Materials on any real property owned or leased by such Borrower or any of its Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any such real property, except for quantities generated, used, treated, stored, or Released on, or transported to or from, such real property in the ordinary course of business in material compliance with all applicable Environmental Laws and, except for such generation, use, treatment or storage on, or transportation to or from, any such real property of Hazardous Materials as is not, in any case or in the aggregate, reasonably likely to have a Material Adverse Effect.

(c) If the Administrative Agent receives any notice from such Borrower pursuant to subsection (d) of this Section 5.09 or if the Administrative Agent otherwise acquires knowledge of any Environmental Claim which in the sole determination of the Required Lenders would have a Material Adverse Effect with respect to such Borrower then upon the written request of the Required Lenders, such Borrower will provide, at its sole cost and expense, an environmental site assessment report concerning any real property owned or leased by such Borrower or an affected Subsidiary prepared by an environmental consulting firm approved by the Required Lenders, indicating the presence or absence of Hazardous Materials and the potential costs of any removal or remedial action in connection with any Hazardous Materials on any real property owned or leased by such Borrower or any of its Subsidiaries.

(d) Such Borrower will immediately advise the Administrative Agent in writing of any of the following:

(i) Any pending or threatened Environmental Claim against such Borrower or any of its Subsidiaries or any real property owned or leased by such Borrower or any of its Subsidiaries which if determined adversely to such Borrower or any of its Subsidiaries would be reasonably likely to have a Material Adverse Effect;

(ii) Any condition or occurrence on any real property owned or leased by such Borrower or any of its Subsidiaries that (A) results in noncompliance by such Borrower or any of its Subsidiaries with any applicable Environmental Law which noncompliance is reasonably likely to have a Material Adverse Effect, or (B) could reasonably be anticipated to form the basis of an Environmental Claim against such Borrower or any of its Subsidiaries or any real property owned or leased by such Borrower or any of its Subsidiaries and which if determined adversely to such Borrower or any of its Subsidiaries would be reasonably likely to have a Material Adverse Effect;

(iii) Any condition or occurrence on any real property owned or leased by such Borrower or any of its Subsidiaries or, to the actual knowledge of such Borrower or any of its Subsidiaries, any property adjoining or in the vicinity thereof that could reasonably be anticipated to cause such real property to be subject to any restrictions on the ownership, occupancy, use, or transferability thereof under any Environmental Law which restrictions, in any case or in the aggregate, are reasonably likely to have a Material Adverse Effect; and

(iv) The taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Materials on any real property owned or leased by such Borrower or any of its Subsidiaries the taking of which, in any case or in the aggregate, is reasonably likely to have a Material Adverse Effect.

All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence, or removal or remedial action and the action which such Borrower or any of its Subsidiaries proposes to take in response thereto.

Section 5.10 OCBM Agreement . With respect to Weyerhaeuser, perform, observe and comply with each of its covenants and agreements in the OCBM Agreement, and do or cause to be done all things necessary to keep the OCBM Agreement in full force and effect.

Section 5.11 Further Assurances . Promptly cause to be taken, executed, acknowledged or delivered, at the sole expense of such Borrower, all such further acts, documents and assurances as the Required Lenders may from time to time reasonably request in order for such Borrower to carry out its obligations hereunder and under the other Loan Documents.

ARTICLE VI

NEGATIVE COVENANTS

Section 6.01 Covenants of Weyerhaeuser . Weyerhaeuser covenants and agrees with each Lender, each Fronting Bank and the Administrative Agent that, so long as this Agreement shall remain in effect or the principal of or interest on any Loan, any Fees or any other expenses or amounts payable under any Loan Document shall be unpaid or any Letter of Credit shall remain outstanding or any amounts drawn thereunder shall remain unpaid, unless the Required Lenders shall otherwise consent in writing, it will not, either directly or indirectly:

(a) Secured Indebtedness . (i) Issue, assume or guarantee, or permit any of its Restricted Subsidiaries to issue, assume or guarantee, any indebtedness for money borrowed (hereinafter in this Section 6.01(a) referred to as “ debt ”), if such debt is secured by a deed of trust, mortgage, pledge, security interest or other lien or encumbrance (any deed of trust, mortgage, pledge, security interest or other lien or encumbrance being hereinafter in this Section 6.01(a) referred to as a “ mortgage ” or collectively “ mortgages ”) upon or with respect to any timber or timberlands of Weyerhaeuser or such Restricted Subsidiary located in the States of Washington, Oregon, Arkansas, Oklahoma, Mississippi or North Carolina, or upon or with respect to any principal manufacturing plant of Weyerhaeuser or such Restricted Subsidiary located anywhere in the United States of America, in either case now owned or hereafter acquired, without in any such case effectively providing, concurrently with the issuance, assumption or guarantee of any such debt, that the Loans and Letters of Credit (together with, if Weyerhaeuser shall so determine, any other indebtedness of or guarantee by Weyerhaeuser or such Restricted Subsidiary ranking equally with the Loans or Letters of Credit and then existing or thereafter created) shall be secured equally and ratably with (or prior to) such debt; provided , however , that the foregoing restrictions shall not be applicable to:

(1) mortgages upon or with respect to any property of any of its Restricted Subsidiaries securing debt of such Restricted Subsidiary to Weyerhaeuser or another Restricted Subsidiary of Weyerhaeuser;

(2) mortgages upon or with respect to any property acquired, constructed or improved by Weyerhaeuser or any of its Restricted Subsidiaries after the date of this Agreement which are created, incurred or assumed

contemporaneously with, or within 90 days after, such acquisition, construction or improvement, to secure or provide for the payment of any part of the purchase price of such property or the cost of such construction or improvement, or mortgages upon or with respect to any property existing at the time of acquisition thereof; provided , however , that in the case of any such construction or improvement the mortgage shall not apply to any property theretofore owned by Weyerhaeuser or any of its Restricted Subsidiaries other than any theretofore unimproved real property on which the property so constructed, or the improvement, is located;

(3) any extension, renewal or replacement of any mortgage referred to in clause (2) above or clause (4) below; provided , however , that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or part of the same property which secured the mortgage so extended, renewed or replaced; and

(4) any mortgage existing on any timber or timberlands of any Person or upon or with respect to any principal manufacturing plant of any Person at the time of acquisition by the Borrower or any of its Restricted Subsidiaries of such Person.

(ii) Notwithstanding the provisions of paragraph (a)(i) of this Section 6.01, Weyerhaeuser or any of its Restricted Subsidiaries may issue, assume or guarantee secured debt which would otherwise be subject to the foregoing restrictions in an aggregate amount which, together with all other such debt of Weyerhaeuser and its Restricted Subsidiaries and the Attributable Debt in respect of Sale and Lease-Back Transactions (as defined in Section 6.01(b)) existing at such time (other than Sale and Lease-Back Transactions permitted because Weyerhaeuser would be entitled to incur debt secured by a mortgage on the property to be leased without equally and ratably securing the Loans pursuant to paragraph (a)(i) of this Section 6.01, and other than Sale and Lease-Back Transactions the proceeds of which have been applied in accordance with clause (ii) of Section 6.01(b)), does not at the time exceed five percent (5%) of Shareholders’ Interest in Weyerhaeuser and its Restricted Subsidiaries (as hereinafter defined). The term “ Attributable Debt ” as used in this paragraph shall mean, as of any particular time, the present value of the obligation of the lessee for rental payments during the remaining term of any lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended).

(iii) For purposes of this Section 6.01(a), (A) the term “ principal manufacturing plant ” shall not include any manufacturing plant which, in the reasonable opinion of the Board of Directors of Weyerhaeuser, is not a principal manufacturing plant of Weyerhaeuser and its Restricted Subsidiaries; (B) the following types of transactions shall not be deemed to create debt secured by a mortgage: (1) the sale, mortgage or other transfer of timber in connection with an arrangement under which Weyerhaeuser or any of its Restricted Subsidiaries is obligated to cut such timber or a portion thereof in order

to provide the transferee with a specified amount of money however determined; (2) the mortgage of any property of Weyerhaeuser or any of its Restricted Subsidiaries in favor of the United States, or any State, or any department, agency or instrumentality of either, to secure partial, progress, advance or other payments to Weyerhaeuser or any of its Restricted Subsidiaries pursuant to the provisions of any contract or statute and (3) liens existing on property at the time of acquisition of such property; and (C) the term “ Shareholders’ Interest in Weyerhaeuser and its Restricted Subsidiaries ” shall mean the aggregate of capital and surplus, including surplus resulting from the March 1, 1913 revaluation of timber and timberlands, of Weyerhaeuser and its Restricted Subsidiaries, after deducting the cost of shares of Weyerhaeuser held in treasury.

(b) Sale and Lease-Back . Enter into any arrangement, or permit any Restricted Subsidiary to enter into any arrangement, with any Person providing for the leasing by Weyerhaeuser or any of its Restricted Subsidiaries of any real property in the United States (except for temporary leases for a term of not more than three years), which property has been or is to be sold or transferred by Weyerhaeuser or such Restricted Subsidiary to such Person (herein referred to as a “ Sale and Lease-Back Transaction ”), unless (i) Weyerhaeuser or such Restricted Subsidiary would be entitled to incur debt secured by a mortgage on the property to be leased without equally or ratably securing the Loans pursuant to Section 6.01(a), or (ii) Weyerhaeuser applies an amount equal to the fair value (as determined by the Board of Directors of Weyerhaeuser) of the property so leased to the retirement (other than any mandatory retirement), within 90 days of the effective date of any such Sale and Lease-Back Transaction, of indebtedness for borrowed money incurred or assumed by Weyerhaeuser which by its terms matures at, or is extendible or renewable at the option of the obligor to, a date more than 12 months after the date of the creation of such debt.

(c) Merger, Consolidation, etc . Be a party to a merger or consolidation or sell, transfer or otherwise dispose of all or substantially all of its properties or assets in a single transaction or in a series of related transactions unless (i) such merger, consolidation, sale, transfer or disposition is made with respect to another corporation incorporated and doing business primarily within the United States of America which shall expressly assume, in form and substance reasonably satisfactory to the Required Lenders, the obligations of Weyerhaeuser under the Loan Documents and Weyerhaeuser’s Loans and Letters of Credit, and (ii) immediately after giving effect to such merger, consolidation, sale, transfer or disposition, no Default or Event of Default hereunder shall have occurred and be continuing.

(d) Debt Ratio . Permit Total Funded Indebtedness to exceed (i) on or after the Closing Date, 69% of the sum of Weyerhaeuser’s Total Adjusted Shareholders’ Interest and Total Funded Indebtedness and (ii) on or after June 30, 2005, 65% of such sum.

(e) Net Worth . At any time permit Weyerhaeuser’s Total Adjusted Shareholders’ Interest to be less than $4,955,000,000.

(f) Change in Business . Engage in, or permit any Restricted Subsidiary to engage in, any material business activities or operations substantially different from, or unrelated to, the business activities and operations conducted by it as of the date hereof, except for reasonable extensions, developments and modifications thereof.

Section 6.02 Covenants with respect to WRECO . WRECO covenants and agrees with each Lender, each Fronting Bank and the Administrative Agent that, so long as this Agreement shall remain in effect or the principal of or interest on any Loan, any Fees or any other expenses or amounts payable under any Loan Document shall be unpaid, or any Letter of Credit shall remain outstanding or any amounts drawn thereunder shall remain unpaid, unless the Required Lenders shall otherwise consent in writing, it will not, either directly or indirectly:

(a) Capital Base . Have a Capital Base less than $100,000,000.

(b) Limitation on Indebtedness . Create, issue, guarantee, assume or otherwise become liable, directly or indirectly, or permit any of its Restricted Subsidiaries to create, issue, guarantee, assume or otherwise become liable, directly or indirectly, in respect of any (i) Senior Debt of WRECO or Indebtedness of any of its Restricted Subsidiaries if, immediately after giving effect to the incurrence thereof and to the application of the proceeds thereof, the aggregate principal amount of all consolidated Senior Debt of WRECO and its Restricted Subsidiaries then outstanding would exceed 80% of the sum of (x) the Capital Base plus (y) the aggregate principal amount of Senior Debt of WRECO and its Restricted Subsidiaries then outstanding; or (ii) Subordinated Debt of WRECO if, immediately after giving effect to the incurrence thereof and to the application of the proceeds thereof, the aggregate principal amount of Subordinated Debt of WRECO then outstanding would exceed 100% of Adjusted Net Worth. For purposes of this Section and Section 6.02(c), Indebtedness of a Person which becomes a Restricted Subsidiary on any date shall be deemed to have been issued or incurred as of such date.

(c) Limitation on Mortgages and Liens . Create, incur or permit to exist any mortgage, pledge, encumbrance, lien, security interest or charge of any kind (including liens or charges upon properties acquired or to be acquired under conditional sales agreements or other title retention devices) on its property or assets, whether now owned or hereafter acquired, or upon any income or profits thereof, or permit any of its Restricted Subsidiaries to do any of the foregoing, except:

(i) liens, charges, encumbrances and priority claims incidental to the conduct of the business or the ownership of properties and assets (including warehousemen’s, attorneys’ and statutory landlords’ liens) and liens, pledges or deposits in connection with workmen’s compensation, unemployment insurance, old age benefit or social security obligations, taxes, assessments, statutory obligations or other similar charges, liens of contractors, mechanics and materialmen, good faith deposits in connection with tenders, contracts or leases to which WRECO or any of its Restricted Subsidiaries is a party or other deposits required to be made in the ordinary course of business and not in connection with the borrowing of money, easements, rights of way, restrictions and other similar encumbrances that, in the aggregate, are not substantial in amount and that do not in any case materially detract from the value of the property subject thereto or substantially interfere with the ordinary conduct of WRECO’s business; provided in each case the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate proceedings;

(ii) provided that no Default or Event of Default has occurred and is continuing, the pledge of assets for the purpose of securing any appeal or stay or discharge in the course of any legal proceeding and liens on or resulting from judgments or awards in respect of which WRECO or any of its Restricted Subsidiaries shall in good faith be prosecuting an appeal or proceeding for review;

(iii) mortgages, liens or security interests existing as of the date of this Agreement securing obligations of WRECO or any of its Restricted Subsidiaries outstanding on such date and all renewals, extensions or refundings thereof (without increase in the principal amount remaining unpaid at the time of any such renewal, extension or refunding);

(iv) mortgages, liens or security interests securing Indebtedness of a Restricted Subsidiary of WRECO to another Restricted Subsidiary of WRECO or to WRECO;

(v) mortgages, conditional sale contracts, security interests or other arrangements for the retention of title (including financing leases), in addition to those permitted under subparagraphs (iii), (iv), (vi) and (vii) hereof, given to secure the payment of the purchase price incurred in connection with the acquisition of property useful and intended to be used in carrying on the business of WRECO or any of its Restricted Subsidiaries, and liens existing on such property at the time of acquisition thereof or at the time of acquisition by WRECO or a Restricted Subsidiary of any Person then owning such property whether or not such existing liens were given to secure the payment of the purchase price of the property to which they attach; provided that the lien or charge shall attach solely to the property acquired or purchased and any improvements then or thereafter placed thereon;

(vi) mortgages, security interests and other encumbrances or liens on Real Estate Assets, incurred or created in the ordinary course of the business of WRECO and its Restricted Subsidiaries; provided that the aggregate principal amount of all Indebtedness so secured and at any one time outstanding shall not exceed 10% of the Capital Base at such time; and

(vii) mortgages, conditional sale contracts, security interests or other arrangements for the retention of title (including financing leases), in addition to those specifically permitted by foregoing subparagraphs (i) through (vi) hereof, given to secure the payment of Senior Debt of WRECO or any of its Restricted Subsidiaries, and any renewal, extension or refunding of any such Senior Debt; provided that the aggregate principal amount of all Senior Debt of WRECO and its Restricted Subsidiaries so secured and at any one time outstanding shall not exceed 10% of the Capital Base at such time.

In the event that any property is subjected to a lien or other encumbrance in violation of this Section 6.02(c), WRECO will make or cause to be made effective provision whereby the Loans shall be secured equally and ratably with all other obligations secured thereby (provided, however, that such violation shall constitute a default under this Agreement whether or not such provision is made) and, if such provision is not made, an equitable lien, so equally and ratably securing the Loans, shall (to the extent permitted by law) exist on such property.

(d) Limitation on Mergers and Consolidations . Be a party to any merger or consolidation unless (i) WRECO or a Weyerhaeuser Subsidiary (as defined below) having substantially all of its assets and doing business primarily in the United States of America shall be the surviving or resulting corporation of any such merger or consolidation and immediately after giving effect to any such merger or consolidation such successor corporation, whether or not WRECO, shall be entitled to incur at least $1 of additional Senior Debt under Section 6.02(b); (ii) if the surviving or resulting corporation is not WRECO, the surviving or resulting corporation shall be a Weyerhaeuser Subsidiary incorporated within the United States of America and shall expressly assume the obligations of WRECO under this Agreement and the other Loan Documents to which it is a party by supplemental agreement reasonably satisfactory to the Administrative Agent; (iii) immediately after giving effect to any such merger or consolidation, no Default or Event of Default shall have occurred and be continuing; and (d) WRECO shall have delivered to the Administrative Agent a certificate signed by two of WRECO’s officers stating that such merger or consolidation and, if a supplemental agreement is required in connection therewith as aforesaid, such supplemental agreement comply with the provisions described in this paragraph. Upon the consummation of any merger or consolidation in which the surviving or resulting corporation is not WRECO in accordance with the foregoing provisions, the surviving or resulting corporation shall succeed to and be substituted for, and may exercise every right and power of and shall be subject to all of the obligations of, WRECO under this Agreement and the other Loan Documents to which it is a party, with the same effect as if it had been named as WRECO therein. As used in this paragraph, the term “ Weyerhaeuser Subsidiary ” means a corporation at least 79% of whose issued and outstanding shares of capital stock at the time outstanding and having ordinary voting power for the election of a majority of the directors of such corporation shall be owned and controlled by Weyerhaeuser or a wholly owned Subsidiary of Weyerhaeuser.

(e) Limitation on Sale of Assets . Sell, transfer or otherwise dispose of all or substantially all of its properties and assets in a single transaction or in a series of related transactions unless (i) the consideration received therefor shall consist of cash, securities or other properties having an aggregate fair value (as determined in good faith by the Board of Directors of WRECO) equal to not less than the aggregate fair value (as determined in good faith by the Board of Directors of WRECO) of the properties and assets so sold, transferred or otherwise disposed of; (ii) immediately after giving effect thereto WRECO shall be entitled to incur at least $1 of additional Senior Debt under Section 6.02(b); (iii) immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing; and (iv) WRECO shall have delivered to the Administrative Agent a certificate signed by two of WRECO’s officers stating that such transaction complies with the provisions described in this paragraph.

ARTICLE VII

EVENTS OF DEFAULT

Section 7.01 Events of Default. In case of the happening of any of the events under Sections 7.01(a) through 7.01(l) below (an “ Event of Default ”):

(a) default shall be made in the payment by a Borrower of any principal of any Loan or any reimbursement of any L/C Disbursement, when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;

(b) default shall be made in the payment by a Borrower of any interest on any Loan or any Fee or any other amount (other than an amount referred to in Section 7.01(a) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five days;

(c) any representation or warranty made or deemed made by a Borrower in or in connection with any Loan Document or the Borrowings or Letters of Credit hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished;

(d) default shall be made in the due observance or performance by a Borrower or any of its Subsidiaries (or its respective Restricted Subsidiaries, if such covenant, condition or agreement applies only to Restricted Subsidiaries) of any covenant, condition or agreement contained in Section 5.01(a), 5.05(a), 5.08 or in Article VI;

(e) default shall be made in the due observance or performance by a Borrower or any of its Subsidiaries (or its Restricted Subsidiaries, if such covenant, condition or agreement applies only to Restricted Subsidiaries) of any covenant, condition or agreement contained in any Loan Document (other than those specified in Section 7.01(a), 7.01(b), 7.01(c) or 7.01(d)) and such default shall continue unremedied for a period of thirty days after notice thereof from the Administrative Agent, any Fronting Bank or any Lender to such Borrower;

(f) a Borrower or any of its Restricted Subsidiaries shall (i) fail to pay, when and as the same shall become due and payable (and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument related to such Indebtedness) any principal or interest, regardless of amount, due in respect of Indebtedness in an aggregate principal amount in excess of $100,000,000, or (ii) fail to observe or perform any other terms, covenants, conditions or agreements contained in any agreements or instruments evidencing or governing Indebtedness in an aggregate

principal amount in excess of $100,000,000 (and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument related to such Indebtedness), if the effect of any failure or failures referred to in this Section 7.01(f)(ii) is to cause or permit the holder or holders of such Indebtedness or a trustee on its or their behalf (with or without the giving of notice) to cause, such Indebtedness to become due prior to its stated maturity;

(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of a Borrower or any of its Restricted Subsidiaries, or of a substantial part of the property or assets of such Borrower or any of its Restricted Subsidiaries, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Borrower or any of its Restricted Subsidiaries or for a substantial part of the property or assets of such Borrower or any of its Restricted Subsidiaries or (iii) the winding-up or liquidation of such Borrower or any of its Restricted Subsidiaries; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(h) a Borrower or any of its Restricted Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in Section 7.01(g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Borrower or any of its Restricted Subsidiaries or for a substantial part of the property or assets of such Borrower or any of its Restricted Subsidiaries, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any action for the purpose of effecting any of the foregoing;

(i) one or more judgments for the payment of money in an aggregate amount in excess of $100,000,000 shall be rendered against a Borrower or any of its Restricted Subsidiaries or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of such Borrower or any of its Restricted Subsidiaries to enforce any such judgment;

(j) any Plan shall fail to satisfy the minimum funding standard required for any plan year or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code, any Plan is, shall have been or is likely to be terminated or the subject of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, or Weyerhaeuser has incurred or is likely to incur a liability to or on account of a Plan under Sections 409, 502(i), 502(l), or 515 of ERISA or

Section 4975 of the Code, or Weyerhaeuser or any ERISA Affiliate has incurred or is likely to incur a liability to or on account of a Plan under Sections 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA; and there shall result from any such event or events referred to in this Section 7.01(j) the imposition of a lien upon the assets of Weyerhaeuser or any ERISA Affiliate, the granting of a security interest, a liability or a material risk of incurring a liability to the PBGC or the Internal Revenue Service or a Plan or a trustee appointed under ERISA or a liability or a material risk of incurring a liability under Sections 409, 502(i) or 502(l) of ERISA or under Sections 4971 or 4975 of the Code; which, in the good faith determination of the Required Lenders, will have a Material Adverse Effect;

(k) there shall have occurred a Change in Control of a Borrower; or

(l) the OCBM Agreement shall cease, for any reason, to be in full force and effect, or Weyerhaeuser shall contest the validity or enforceability thereof or otherwise fail to comply with its obligations thereunder;

then, and in every such event (other than an event with respect to a Borrower described in Section 7.01(g) or 7.01(h) above), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders, shall, by notice to the Borrowers, take any or all of the following actions, at the same or different times: (i) terminate forthwith the Commitments of the Lenders and terminate forthwith the obligation of any Fronting Bank to issue Letters of Credit (and require any outstanding Letters of Credit to be cash collateralized in accordance with Section 2.20(i)) and/or (ii) declare the Loans then outstanding to the Borrowers to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event with respect to a Borrower described in Sections 7.01(g) or 7.01(h) above, the Commitments of the Lenders and the obligation of any Fronting Bank to issue Letters of Credit shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

Section 8.01 The Administrative Agent . In order to expedite the transactions contemplated by this Agreement, JPMorgan Chase Bank is hereby appointed to act as Administrative Agent on behalf of the Lenders and the Fronting Banks. Each of the Lenders and

the Fronting Banks, and each assignee thereof, hereby irrevocably authorizes the Administrative Agent to take such actions on behalf of such Lender and such Fronting Bank and to exercise such powers as are specifically delegated to the Administrative Agent by the terms and provisions hereof, together with such actions and powers as are reasonably incidental thereto.

The Administrative Agent is hereby expressly authorized by the Lenders and the Fronting Banks, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders and the Fronting Banks all payments of principal of and interest on the Loans, all reimbursements made with respect to L/C Disbursements and all other amounts due to the Lenders and the Fronting Banks hereunder, and promptly to distribute to each Lender and each Fronting Bank its proper share of each payment so received; (b) to give prompt notice on behalf of the Lenders and the Fronting Banks to the Borrowers of any Event of Default specified in this Agreement of which the Administrative Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute promptly to each Lender and each Fronting Bank copies of all notices, financial statements and other materials delivered by the Borrowers pursuant to this Agreement as received by the Administrative Agent.

Neither the Administrative Agent nor any of its directors, officers, employees or agents shall be liable as such to any Lender or any Fronting Bank for any action taken or omitted by any of them except for its or his own gross negligence or willful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by the Borrowers of any of the terms, conditions, covenants or agreements contained in any Loan Document. The Administrative Agent shall not be responsible to the Lenders and the Fronting Banks for (i) the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or any other Loan Documents or other instruments or agreements or (ii) the satisfaction of any condition set forth in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. The duties of the Administrative Agent shall be mechanical and administrative in nature; the Administrative Agent shall not have by reason of this Agreement or any other Loan Document a fiduciary relationship in respect of any Lender or any Fronting Bank. The Administrative Agent shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Lenders, the Lenders or any Fronting Bank, as the case may be, and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all of the Lenders and all of the Fronting Banks. The Administrative Agent shall, in the absence of knowledge to the contrary, be entitled to rely on any instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. The Administrative Agent may also rely upon any statement made to it orally or by telephone and believed to be made by the proper Person, and shall not incur any liability for relying thereon.

Neither the Administrative Agent nor any of its directors, officers, employees or agents shall have any responsibility to the Borrowers on account of the failure of or delay in performance or breach by any Lender or any Fronting Bank of any of its obligations hereunder or to any Lender or any Fronting Bank on account of the failure of or delay in performance or breach by any other Lender, any Fronting Bank or the Borrowers of any of their respective obligations hereunder or under any other Loan Document or in connection herewith or therewith.

The foregoing shall not limit the obligations of JPMorgan Chase Bank (or its successors and assigns) in its capacity as Lender hereunder. The Administrative Agent may execute any and all duties hereunder by or through agents or employees and shall be entitled to rely upon the advice of legal counsel (who may be counsel for a Borrower), independent accountants and other experts selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. The exculpatory provisions of this Article VIII shall apply to any such agent or employee, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

The Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, the Lenders and the Fronting Banks hereby acknowledge that (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing, (b) the Administrative Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement unless it shall be requested in writing to do so by the Required Lenders, the Lenders or any Fronting Bank, as the case may be, and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrowers or any of their respective Subsidiaries that is communicated to or obtained by the Administrative Agent or any of its Affiliates in any capacity.

Subject to the appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign at any time by notifying the Lenders, the Fronting Banks and the Borrowers. Upon any such resignation, the Required Lenders shall have the right to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Fronting Banks, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor bank, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent.

With respect to the Loans made by it hereunder, the Administrative Agent in its individual capacity and not as Administrative Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not the Administrative Agent, and the Administrative Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrowers or any of their respective Subsidiaries or other Affiliate thereof as if it were not the Administrative Agent.

Each of the Lenders and each of the Fronting Banks agrees (i) to reimburse the Administrative Agent, on demand, in the amount of its pro rata share (based on its Commitment

hereunder) of any expenses incurred for the benefit of the Lenders and the Fronting Banks by the Administrative Agent, including counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders and the Fronting Banks, which shall not have been reimbursed by the Borrowers and (ii) to indemnify and hold harmless the Administrative Agent and any of its directors, officers, employees or agents, on demand, in the amount of such pro rata share, from and against any and all losses, claims, damages, liabilities and related expenses of any kind or nature whatsoever which may be imposed on, incurred by or asserted against it in its capacity as the Administrative Agent or any of them in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by it or any of them under this Agreement or any other Loan Document, to the extent the same shall not have been reimbursed by the Borrowers; provided that no Lender nor any Fronting Bank shall be liable to the Administrative Agent for any portion of such losses, claims, damages, liabilities and related expenses resulting from the gross negligence or willful misconduct of the Administrative Agent or any of its directors, officers, employees, or agents.

Each of the Lenders and each of the Fronting Banks acknowledges that it has, independently and without reliance upon the Administrative Agent, any other Lender or any Fronting Bank and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each of the Lenders and each Fronting Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent, any other Lender or any Fronting Bank and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder.

Section 8.02 Other Agents . Each of the Lenders, each of the Fronting Banks and each of the Borrowers acknowledges (A) that each of the Lead Arrangers, the Joint Book Runners, the Syndication Agent and the Co-Documentation Agents, in their capacity as, respectively, Lead Arranger, Joint Book Runner, Syndication Agent and the Co-Documentation Agent, do not have any responsibility or liability hereunder, and (B) that the titles “Lead Arranger,” “Joint Book Runner,” “Syndication Agent” and “Co-Documentation Agent” are purely honorary in nature.

ARTICLE IX

MISCELLANEOUS

Section 9.01 Notices . Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed or sent by telecopy to the address specified below, or such other address as such party shall hereafter have specified by written notice to the Administrative Agent and the Borrowers:

(a) if to a Borrower by hand or courier service, to such Borrower at 33663 Weyerhaeuser Way South, Federal Way, Washington, or by facsimile to (253) 924-3543, in each case to the Attention of Vice President and Treasurer with a copy to Secretary;

(b) if to the Administrative Agent or a Lender, to it at its address (or telecopy number) set forth in Schedule 9.01 or in the Assignment and Acceptance pursuant to which such Lender became a party hereto.

All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or other telegraphic communications equipment of the sender, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01.

Section 9.02 Survival of Agreement . All covenants, agreements, representations and warranties made by the Borrowers herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and the Fronting Banks and shall survive the making of the Loans and the issuance of the Letters of Credit, regardless of any investigation made by the Lenders or the Fronting Banks or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any L/C Disbursement or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid and so long as the Commitments and all Letters of Credit hereunder have not been terminated.

Section 9.03 Binding Effect . This Agreement shall become effective when it shall have been executed by the Borrowers and the Administrative Agent and when the Administrative Agent shall have received copies hereof which, when taken together, bear the signatures of each Lender and the Initial Fronting Bank and thereafter shall be binding upon and inure to the benefit of the Borrowers, the Administrative Agent, each Lender, each Fronting Bank and their respective successors and assigns, except that, other than as provided in Section 6.01(c) and Section 6.02(d), neither Borrower shall have the right to assign or delegate its rights or obligations hereunder or any interest herein without the prior consent of all the Lenders and the Fronting Banks.

Section 9.04 Successors and Assigns . (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that, other than as provided in Section 6.01(c) and Section 6.02(d), neither Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by a Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it and its interests in, rights to payment under and obligations with respect to the Letters of Credit issued at such time); provided that (i) except in the case of an

assignment to a Lender or a Lender Affiliate, each of the Borrowers must give their prior written consent to such assignment (which consents shall not be unreasonably withheld or delayed), (ii) each of the Fronting Banks and the Administrative Agent must give their prior written consent to such assignment (which consents shall not be unreasonably withheld or delayed), (iii) except in the case of an assignment to a Lender or a Lender Affiliate or an assignment of the entire remaining amount of the assigning Lender’s Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrowers and the Administrative Agent otherwise consent, (iv) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, (v) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500, and (vi) the assignee, if it shall not be a Lender prior to such assignment, shall deliver to the Administrative Agent an Administrative Questionnaire; and provided further that any consent of a Borrower otherwise required under this paragraph shall not be required if a Default or Event of Default has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.11, 2.13, 2.17 and 9.05). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section.

(c) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive (absent manifest error), and the Borrowers, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, if any, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(e) Any Lender may, without the consent of the Borrowers, sell participations to one or more banks or other entities (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment, the Loans owing to it and its interests in, rights to payment under and obligations with respect to the Letters of Credit issued hereunder); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.08(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of Sections 2.11, 2.13 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.06 as though it were a Lender, provided such Participant agrees to be subject to Section 2.15 as though it were a Lender.

(f) A Participant shall not be entitled to receive any greater payment under Section 2.11 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers’ prior written consent.

(g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement and the other Loan Documents (including, without limitation, any notes held by it pursuant to Section 2.05(e)) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, without notice to, or consent of the Borrower or the Administrative Agent, and this Section 9.04 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(h) Weyerhaeuser authorizes each Lender to disclose to any Participant or assignee and any prospective Participant or assignee any and all financial information in such Lender’s possession concerning Weyerhaeuser or any Subsidiary of Weyerhaeuser which has been delivered to such Lender by a Borrower pursuant to this Agreement or which has been delivered to such Lender by a Borrower in connection with such Lender’s credit evaluation of a Borrower prior to entering into this Agreement; provided that such Participant or assignee or prospective Participant or assignee agrees to treat any such information which is not public as confidential in accordance with the terms of the Agreement.

Section 9.05 Expenses; Indemnity . (a) The Borrowers jointly and severally agree to pay all reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation of this Agreement and the other Loan Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby contemplated shall be consummated) or incurred by the Administrative Agent, any Lender or any Fronting Bank in connection with the enforcement or protection of their rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made and the Letters of Credit issued, including the fees and disbursements of Shearman & Sterling LLP, special counsel for the Administrative Agent, and, in connection with any such amendment, modification or waiver made in connection with any such enforcement or protection, the fees and disbursements of any other counsel for the Administrative Agent, any Lender or any Fronting Bank. The Borrowers further agree jointly and severally that they shall indemnify the Lenders and the Fronting Banks from and hold them harmless against any documentary taxes, assessments or charges made by any Governmental Authority by reason of the execution and delivery of this Agreement, any of the other Loan Documents or any Letters of Credit.

(b) Each Borrower will indemnify the Administrative Agent, each Lender, each Fronting Bank and the directors, officers, employees and agents of each of the foregoing (each such person being called an “ Indemnitee ”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees and expenses, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery by such Borrower of this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated hereby and thereby, (ii) the use of the proceeds of the Loans by such Borrower or of the Letters of Credit issued on behalf of Weyerhaeuser or (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses have resulted from the gross negligence or willful misconduct of such Indemnitee.

(c) It is understood and agreed that, to the extent not precluded by a conflict of interest, each Indemnitee shall endeavor to work cooperatively with Weyerhaeuser with a view toward minimizing the legal and other expenses associated with any defense and any potential settlement or judgment. To the extent reasonably practicable and not disadvantageous to any Indemnitee, it is anticipated that a single counsel selected by Weyerhaeuser may be used. Settlement of any claim or litigation involving any material indemnified amount will require the approval of Weyerhaeuser (not to be unreasonably withheld).

(d) The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans or L/C Disbursements, the termination of any Letters of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, any Lender or any Fronting Bank. All amounts due under this Section 9.05 shall be payable on written demand therefor.

Section 9.06 Right of Setoff . If any Event of Default shall have occurred and be continuing, each Lender and each Fronting Bank is hereby authorized at any time and from time to time, without notice to such Borrower (any such notice being expressly waived by such Borrower), to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Fronting Bank or any of their respective Affiliates to or for the credit or the account of such Borrower against any of and all the obligations of such Borrower now or hereafter existing under this Agreement and any other Loan Documents held by such Lender or such Fronting Bank, irrespective of whether or not such Lender or such Fronting Bank shall have made any demand under this Agreement or such other Loan Document and although such obligations may be unmatured. The rights of each Lender and each Fronting Bank under this Section 9.06 are in addition to other rights and remedies (including other rights of setoff) which such Lender or such Fronting Bank may have.

Section 9.07 Applicable Law . THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS HEREUNDER AND THEREUNDER OF THE PARTIES HERETO AND THERETO (OTHER THAN AS RELATED TO LETTERS OF CREDIT) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT OR, IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE “ UNIFORM CUSTOMS ”) AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.

Section 9.08 Waivers; Amendment . (a) No failure or delay of the Administrative Agent, any Lender or any Fronting Bank in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Lenders and the Fronting Banks hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies which they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrowers therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Borrowers in any case shall entitle the Borrowers to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required Lenders; provided , however , that no such agreement shall (i) change

the principal amount of, or extend or advance the maturity of or any date for the scheduled payment of any principal of or interest on, any Loan, or extend the stated maturity of any Letter of Credit beyond the date that is five Business Days prior to the first anniversary of the Revolver Termination Date or waive or excuse any such scheduled payment or any part thereof, or decrease the rate of interest on any Loan, without the prior written consent of each Lender affected thereby, (ii) change the Commitment or decrease or extend any date for the payment of the Facility Fees, Utilization Fees, Term-Out Premium or L/C Participation Fees of any Lender without the prior written consent of such Lender, or (iii) amend or modify the provisions of Section 2.14, the provisions of Section 2.19, the provisions of this Section 9.08 or the definition of “Termination Date” or “Required Lenders,” without prior written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder without the prior written consent of the Administrative Agent. Each Lender shall be bound by any waiver, amendment or modification authorized by this Section 9.08, and any consent by any Lender pursuant to this Section 9.08 shall bind any person subsequently acquiring a Loan from it.

Section 9.09 Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the applicable interest rate, together with all fees and charges which are treated as interest under applicable law (collectively the “ Charges ”), as provided for herein or in any other Loan Document, or otherwise contracted for, charged, received, taken or reserved by any Lender, shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or reserved by such Lender in accordance with applicable law, the rate of interest payable with respect to each Loan owing to each Lender, together with all Charges payable to such Lender, shall be limited to the Maximum Rate.

Section 9.10 Entire Agreement . This Agreement and the other Loan Documents and the letter agreements referred to in Section 2.04(b) (with respect to the payment of fees only) constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

Section 9.11 WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.

Section 9.12 Severability . In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 9.13 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 9.03.

Section 9.14 Headings . The cover page, the Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

Section 9.15 Jurisdiction; Consent to Service of Process . (a) Each of the Borrowers hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any Lender, the Administrative Agent or any Fronting Bank may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against either Borrower or its properties in the courts of any jurisdiction.

(b) Each of the Borrowers hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court located in New York City. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each of the Borrowers hereby irrevocably designates, appoints and empowers CT Corporation System, Inc. presently located at 111 Eighth Avenue, New York, New York 10011, as its designee, appointee and attorney-in-fact to receive, accept and acknowledge for and on its behalf, and in respect of its property, service of any and all legal process, summons, notices and documents which may be served in any such action or proceeding. If for any reason such designee, appointee and attorney-in-fact shall cease to be available to act as such, each Borrower agrees to designate a new designee, appointee and

attorney-in-fact in New York City on the terms and for purposes of this provision satisfactory to the Administrative Agent. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

Section 9.16 Domicile of Loans . Each Lender may transfer and carry its Loans at, to or for the account of any office, subsidiary or Affiliate of such Lender.

Section 9.17 Restricted and Unrestricted Subsidiaries . (a) Set forth on Schedule 3.08 Part I is a list of all of the Restricted Subsidiaries and Unrestricted Subsidiaries of Weyerhaeuser as of the Closing Date.

(b) Set forth on Schedule 3.08 Part II is a list of all of the Restricted Subsidiaries and Unrestricted Subsidiaries of WRECO as of the Closing Date.

(c) After the Closing Date, a Financial Officer of Weyerhaeuser may, provided that no Default or Event of Default has occurred and is continuing, designate a Restricted Subsidiary as an Unrestricted Subsidiary by notice sent to all of the Lenders, provided that (i) no such designation shall be effective unless immediately after giving effect thereto there would exist no Default or Event of Default; (ii) any such designation shall be effective not less than five Business Days after written notice thereof shall have been provided to each Lender; and (iii) upon such designation, Schedule 3.08 Part I shall be deemed to be amended to reflect such designation. Any Person that becomes a Subsidiary (by formation, acquisition, merger or otherwise) after the Closing Date shall automatically be deemed to be a Restricted Subsidiary of Weyerhaeuser as of the date it becomes a Subsidiary unless designated as an Unrestricted Subsidiary pursuant to the terms hereof.

(d) After the Closing Date, a Financial Officer of Weyerhaeuser may, provided that no Default or Event of Default has occurred and is continuing, designate an Unrestricted Subsidiary as a Restricted Subsidiary by notice sent to all of the Lenders, provided that (w) no such designation shall be effective unless immediately after giving effect thereto there would exist no Default or Event of Default; (x) no such designation shall be effective unless immediately after giving effect thereto Weyerhaeuser is in compliance with Sections 6.01(d) and 6.01(e); (y) any such designation shall be effective not less than five Business Days after written notice thereof shall have been provided to each Lender; and (z) upon such designation, Schedule 3.08 Part I shall be deemed to be amended to reflect such designation.

(e) After the Closing Date, any Subsidiary of WRECO (i) which is organized and existing under the laws of the United States or any state of the United States, Puerto Rico or the Dominion of Canada or any province thereof and (ii) of which substantially all of the physical properties are located, and substantially all of the business is carried on, in the United States of America, Puerto Rico or Canada may, provided that no Default or Event of Default has occurred and is continuing, be designated as a Restricted Subsidiary by WRECO, subject to the limitations described in Subsection 9.17(f) below. Any Person that becomes a Subsidiary of WRECO (by formation, acquisition, merger or otherwise) after the Closing Date shall automatically be deemed to be an Unrestricted Subsidiary of WRECO as of the date it becomes a Subsidiary unless designated as a Restricted Subsidiary pursuant to the terms hereof.

(f) After the Closing Date, Weyerhaeuser may, provided that no Default or Event of Default has occurred and is continuing, cause a Financial Officer of WRECO to designate an Unrestricted Subsidiary as a Restricted Subsidiary by notice sent to all of the Lenders, provided that (v) such Subsidiary satisfies the requirements of Subsection 9.17(e) above; (w) no such designation shall be effective unless immediately after giving effect thereto there would exist no Default or Event of Default; (x) WRECO could incur at least $1 of additional Senior Debt under Subsection 6.02(b); (y) any such designation shall be effective not less than five Business Days after written notice thereof shall have been provided to each Lender; and (z) upon such designation, Schedule 3.08 Part II shall be deemed to be amended to reflect such designation.

(g) After the Closing Date, Weyerhaeuser may, provided that no Default or Event of Default has occurred and is continuing, cause a Financial Officer of WRECO to designate a Restricted Subsidiary as an Unrestricted Subsidiary by notice sent to all of the Lenders, provided that (v) no such designation shall be effective unless immediately after giving effect thereto there would exist no Default or Event of Default; (w) WRECO could incur at least $1 of additional Senior Debt under Subsection 6.02(b); (x) the aggregate amount of Real Estate Assets owned by all Subsidiaries of WRECO, determined on a consolidated basis, which have been or are to be, as the case may be, designated as Unrestricted Subsidiaries during the 365 consecutive days ending on and including the effective date of such proposed designation, shall not exceed 15% of the aggregate amount of Real Estate Assets owned by WRECO and its Restricted Subsidiaries as of the beginning of such 365 day period; (y) any such designation shall be effective not less than five Business Days after written notice thereof shall have been provided to each Lender; and (z) upon such designation, Schedule 3.08 Part II shall be deemed to be amended to reflect such designation.

Section 9.18 USA PATRIOT Act . Each Lender hereby notifies each Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies each Borrower, which information includes the name and address of such Borrower and other information that will allow such Lender to identify such Borrower in accordance with the Act.

[Signatures follow.]

IN WITNESS WHEREOF, the Borrowers, the Administrative Agent, the Initial Fronting Bank, the Syndication Agent, the Co-Documentation Agents and the Lenders have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.


WEYERHAEUSER COMPANY, as Borrower

By:
Name:
Title:

WEYERHAEUSER REAL ESTATE COMPANY, as Borrower

By:
Name:
Title:


JPMORGAN CHASE BANK,
individually and as Initial Fronting Bank and Administrative Agent

By:
Name:
Title:


MORGAN STANLEY SENIOR FUNDING, INC., individually and as Syndication Agent

By:
Name:
Title:


THE BANK OF TOKYO-MITSUBISHI, LTD., SEATTLE BRANCH, individually and as Co-Documentation Agent

By:
Name:
Title:


DEUTSCHE BANC SECURITIES INC., as Co-Documentation Agent

By:
Name:
Title:

By:
Name:
Title:

LENDERS


DEUTSCHE BANK AG NEW YORK BRANCH, as Lender

By:
Name:
Title:

By:
Name:
Title:

EXHIBIT A

FORM OF REVOLVING BORROWING REQUEST

JPMorgan Chase Bank, as Administrative Agent for

the Lenders referred to below,

270 Park Avenue

New York, New York 10017

[Date]

Attention: [ ]

Ladies and Gentlemen:

The undersigned, [Weyerhaeuser Company][Weyerhaeuser Real Estate Company] (the “Borrower”), refers to the Third Amended and Restated 364-Day Revolving Credit Facility Agreement dated as of March 23, 2004 (as it may hereafter be amended, modified, extended or restated from time to time, the “Credit Agreement”), among the Borrowers, the lenders party thereto from time to time, JPMorgan Chase Bank, as Administrative Agent and Initial Fronting Bank, Morgan Stanley Senior Funding, Inc., as Syndication Agent, and The Bank of Tokyo-Mitsubishi, Ltd. and Deutsche Bank Securities Inc., as Co-Documentation Agents. Capitalized terms used herein and not otherwise defined herein shall have the meanings given such terms in the Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.02(e) of the Credit Agreement that it requests a Revolving Borrowing under the Credit Agreement, and in that connection sets forth below the terms on which such Borrowing is requested to be made:


(A)		Date of Borrowing
		(which is a Business Day)

(B)		Principal Amount of Borrowing ¹

(C)		Interest rate basis ²

(D)		Interest Period and the last day thereof ³

¹	Not less than $25,000,000 and in integral multiples of $1,000,000 in excess thereof (or an aggregate principal amount equal to the remaining balance of the available Commitments) or greater than the Total Commitment then available.

²	Eurodollar Loan or Base Rate Loan.

³	Which shall be subject to the definition of “Interest Period” and end not later than the then existing Termination Date

A-1

Upon acceptance of any or all of the Revolving Loans offered by the Lenders in response to this request, the Borrower shall be deemed to have represented and warranted that the conditions to lending specified in Sections 4.01(b) and (c) of the Credit Agreement have been satisfied.


Very truly yours,

[WEYERHAEUSER COMPANY],
as Borrower,

[WEYERHAEUSER REAL ESTATE COMPANY],
as Borrower

By
Name:
Title:		[Responsible Officer]

A-1

EXHIBIT B

FORM OF ADMINISTRATIVE QUESTIONNAIRE

JPMorgan Chase Bank

Loan and Agency Services

1111 Fanin, Floor 10

Houston, TX 77002

Tel: 713-750-3550

Fax: 713-750-2932

WEYERHAEUSER COMPANY

Please accurately complete the following information and return via FAX or e-mail to the attention of Vaughan Nguyen at JPMorgan Chase Bank as soon as possible.

TEL Number: 713-750-3550 FAX Number: 713-750-2932 E-mail: vaughan,d,nguyen@jpmorgan.com

LEGAL NAME OF YOUR INSTITUTION TO APPEAR IN DOCUMENTATION:

____________________________________________________________________________________________________________

NUMBER OF LINES NEEDED FOR SIGNATURE PAGE: __________________________________________________________

GENERAL INFORMATION - DOMESTIC LENDING OFFICE:


Institution Name:

Street Address:

City, State, Zip Code:

GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:


Institution Name:

Street Address:

City, State, Zip Code:

CONTACTS/NOTIFICATION METHOD:

CREDIT CONTACTS:


Primary Contact:

Street Address:

City, State, Zip Code:

Phone Number:

FAX Number:

E-mail Address:


Backup Contact:

Street Address:

City, State, Zip Code:

Phone Number:

FAX Number:

E-mail Address:

B-1

TAX WITHHOLDING:

Non Resident Alien Y N

If yes:

•

What is the country of incorporation or organization?

•

Tax Form W-8BEN or W-8ECI should be enclosed as per the Tax Section of the referenced Credit Agreement. Failure to properly complete and return the applicable form will subject your institution to withholding tax.

If no:

•

Please submit Tax Form W-9

Lender’s Tax Identification Number:

CONTACTS/NOTIFICATION METHOD:

ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST, FEES, ETC.


Contact Name:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
E-mail Address:

BID LOAN NOTIFICATION: (if applicable)


Contact Name:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
E-mail Address:

PAYMENT INSTRUCTIONS:


Name of Bank where funds are to be transferred:


Routing Transit/ABA number of Bank where funds are to be transferred:


Name of Account: (if applicable)
Account Number:
Additional Information:

MAILINGS

Please specify who should receive financial information:


Contact Name:
Street Address:
City, State, Zip Code:

It is very important that all of the above information is accurately filled in and returned promptly. If you have any questions, please call Vaughan Nguyen at Loan & Agency Services at 713-750-3550.

B-2

EXHIBIT C

[FORM OF]

ASSIGNMENT AND ACCEPTANCE

Reference is made to the Third Amended and Restated 364-Day Revolving Credit Facility Agreement dated as of March 23, 2004 (the “Credit Agreement”), among Weyerhaeuser Company, a Washington corporation (“Weyerhaeuser”), Weyerhaeuser Real Estate Company (“WRECO,” together with Weyerhaeuser, the “Borrowers” and each, individually, a “Borrower”), the lenders party thereto from time to time (the “Lenders”), JPMorgan Chase Bank, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”) and as initial fronting bank, Morgan Stanley Senior Funding, Inc., as syndication agent, and The Bank of Tokyo-Mitsubishi, Ltd. and Deutsche Bank Securities Inc., as co-documentation agents. Terms defined in the Credit Agreement are used herein with the same meanings.

1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Effective Date set forth on the Schedule attached hereto, the interests set forth on the Schedule attached hereto (the “Assigned Interest”) in the Assignor’s rights and obligations under the Credit Agreement, including, without limitation, the interests set forth on the Schedule attached hereto in the Commitment of the Assignor on the Effective Date and the Loans owing to the Assignor which are outstanding on the Effective Date, together with unpaid interest accrued on the assigned Loans to the Effective Date and the amount, if any, set forth on the Schedule attached hereto of the Fees accrued to the Effective Date for the account of the Assignor. Each of the Assignor and the Assignee hereby agrees to be bound by Section 9.04 of the Credit Agreement, a copy of which has been received by each such party and the Assignor represents and warrants that it is the legal and beneficial owner of the interest being assigned and that such interest is free and clear of any lien or adverse claim. From and after the Effective Date, (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the interest assigned by this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement.

2. This Assignment and Acceptance is being delivered to the Administrative Agent together with (i) if the Assignee is organized under the laws of a jurisdiction outside the United States, the forms specified in Section 2.17(f) of the Credit Agreement, duly completed and executed by such Assignee, (ii) if the Assignee is not already a Lender under the Credit Agreement, an Administrative Questionnaire in the form of Exhibit B to the Credit Agreement and (iii) a processing and recordation fee of $3,500.

3. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of New York.


Date of Assignment:

C-1

EXHIBIT C


The terms set forth above and on the Schedule attached hereto are hereby agreed to:				Accepted:

, as Assignor,				JPMORGAN CHASE BANK, as Administrative Agent and Initial Fronting Bank

By:				By:
Name:				Name:
Title:				Title:

, as Assignee,				[ADDITIONAL FRONTING BANKS]

By:				By:
Name:				Name:
Title:				Title:

				[WEYERHAEUSER COMPANY], as Borrower ¹

				By:
				Name:
				Title:

				[WEYERHAEUSER REAL ESTATE COMPANY], as Borrower ¹

				By:
				Name:
				Title:

¹	To be completed only if consents are required under Section 9.04.

C-2

EXHIBIT C

Schedule to Assignment and Acceptance


Legal Name of Assignor:

Legal Name of Assignee:

Assignee’s Address for Notices:

Effective Date of Assignment (may not be fewer than 5 Business Days after the Date of Assignment, unless waived by the Administrative Agent):


Facility	Principal Amount Assigned	Percentage Assigned of Commitment thereunder (set forth, to at least 8 decimals) as a percentage of the aggregate Commitments of all Lenders thereunder
Loans:	$	%

Commitments:	$	%

Fees Assigned (if any):	$	%

C-3

EXHIBIT D-1

FORM OF CERTIFICATION OF FINANCIAL STATEMENTS FOR WEYERHAEUSER

This is to certify that the consolidated statements attached hereto required by Section 5.04 of the Third Amended and Restated 364-Day Revolving Credit Facility Agreement dated as of March 23, 2004 by and among Weyerhaeuser Company, Weyerhaeuser Real Estate Company, the Lenders party thereto from time to time, JPMorgan Chase Bank, as administrative agent for the Lenders and as initial fronting bank, Morgan Stanley Senior Funding, Inc., as syndication agent, and The Bank of Tokyo-Mitsubishi, Ltd. and Deutsche Bank Securities Inc., as co-documentation agents (the “Credit Agreement”; capitalized terms used herein without definition shall have the meanings given them in the Credit Agreement), fairly present the financial position and results of operations of Weyerhaeuser Company and its consolidated Subsidiaries as of , 200 and for the period then ended on a consolidated basis in accordance with GAAP consistently applied except as noted therein.

Dated: , 200


WEYERHAEUSER COMPANY

By
Name:
Title:

D-1-1

EXHIBIT D-2

FORM OF CERTIFICATION OF FINANCIAL STATEMENTS FOR WRECO

This is to certify that the consolidated statements attached hereto required by Section 5.04 of the Third Amended and Restated 364-Day Revolving Credit Facility Agreement dated as of March 23, 2004 by and among Weyerhaeuser Company, Weyerhaeuser Real Estate Company, the Lenders party thereto from time to time, JPMorgan Chase Bank, as administrative agent for the Lenders and as initial fronting bank, Morgan Stanley Senior Funding, Inc., as syndication agent, and The Bank of Tokyo-Mitsubishi, Ltd. and Deutsche Bank Securities Inc., as co-documentation agents (the “Credit Agreement”; capitalized terms used herein without definition shall have the meanings given them in the Credit Agreement), fairly present the financial position and results of operations of Weyerhaeuser Real Estate Company and its consolidated Subsidiaries as of , 200 and for the period then ended on a consolidated basis in accordance with GAAP consistently applied except as noted therein.

Dated: , 200


WEYERHAEUSER REAL ESTATE COMPANY

By
Name:
Title:

D-2-1

EXHIBIT D-3

FORM OF COMPLIANCE CERTIFICATE FOR WEYERHAEUSER

THE UNDERSIGNED HEREBY CERTIFY THAT:

(i) We are the duly elected and of Weyerhaeuser Company, a Washington corporation (“Weyerhaeuser”);

(ii) We have reviewed the terms of the Third Amended and Restated 364-Day Revolving Credit Facility Agreement dated as of March 23, 2004, by and among Weyerhaeuser, WRECO, the Lenders party thereto from time to time, JPMorgan Chase Bank, as administrative agent for the Lenders and as initial fronting bank, Morgan Stanley Senior Funding, Inc., as syndication agent, and The Bank of Tokyo-Mitsubishi, Ltd. and Deutsche Bank Securities Inc., as co-documentation agents (the “Credit Agreement”; capitalized terms used herein without definition shall have the meanings given them in the Credit Agreement), and we have made, or have caused to be made under our supervision, a detailed review of the transactions and conditions of Weyerhaeuser and its Subsidiaries during the accounting period covered by the attached financial statements; and

(iii) [No Event of Default or Default has occurred.] [An Event of Default or Default has occurred. [If so, specify the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto.]]

Describe below (or in a separate attachment to this Officers’ Certificate) the exceptions, if any, to paragraph (iii) by listing, in detail, the nature of the condition or event and the period during which it has existed:

___________________________________________________________________________________________________________

The foregoing certifications, together with the computations set forth in Attachment No. 1 hereto and the financial statements delivered with this Officers’ Certificate in support hereof, are made and delivered this day of , 200 pursuant to Subsection 5.04(c) of the Credit Agreement.


Dated: , 200		WEYERHAEUSER COMPANY

		By
		Name:
		Title:

		By
		Name:
		Title:

D-3-1

ATTACHMENT NO. 1 TO

COMPLIANCE CERTIFICATE FOR WEYERHAEUSER

WEYERHAEUSER COMPANY AND RESTRICTED SUBSIDIARIES

COMPLIANCE WITH COVENANTS

AS OF , 200

($000’s Omitted Except Ratio Amounts)

Section 6.01(d) - Debt Ratio as of , 200

1.	Total Funded Indebtedness:

Short Term Indebtedness (inclusive of Notes Payable and Commercial Paper)

Current Maturities of Long Term Indebtedness and Capital Lease Obligations

Long Term Indebtedness:

(1)

Senior Long Term Indebtedness

(2)

Capital Lease Obligations

(3)

Subordinated Indebtedness

Total Long Term Indebtedness (1+2+3)

Indebtedness of Unrestricted Subsidiaries

Indebtedness of WRECO and its consolidated Subsidiaries

Total Funded Indebtedness (a+b+c-d-e)

2.	Total Adjusted Shareholders’ Interest:

Preferred, Preference and Common Shares

Other Capital and Retained Earnings

(plus or minus)

Treasury Stock

Investments in Unrestricted Subsidiaries

Investments by Weyerhaeuser and its consolidated Subsidiaries in WRECO and its consolidated Subsidiaries

Total Adjusted Shareholders’ Interest (f+g-h-i-j)

3.	Total Capitalization (1+2)

4.	Actual Debt Ratio (1/3)


Required Debt Ratio		[69% if on or after the Closing Date.]
		[65% if on or after June 30, 2005.]

Section 6.01(e) – Net Worth as of , 200

Total

Adjusted Shareholders’ Interest (See item 2 above)

Required

Total Adjusted Shareholders’ Interest $[ ]

D-3-2

EXHIBIT D-4

FORM OF COMPLIANCE CERTIFICATE FOR WRECO

THE UNDERSIGNED HEREBY CERTIFY THAT:

(i) We are the duly elected and of Weyerhaeuser Real Estate Company, a Washington corporation (“WRECO”);

(i) We have reviewed the terms of the Third Amended and Restated 364-Day Revolving Credit Facility Agreement dated as of March 23, 2004, by and among Weyerhaeuser, WRECO, the Lenders party thereto from time to time, JPMorgan Chase Bank, as administrative agent for the Lenders and as initial fronting bank, Morgan Stanley Senior Funding, Inc., as syndication agent, and The Bank of Tokyo-Mitsubishi, Ltd. and Deutsche Bank Securities Inc., as co-documentation agents (the “Credit Agreement”; capitalized terms used herein without definition shall have the meanings given them in the Credit Agreement), and we have made, or have caused to be made under our supervision, a detailed review of the transactions and conditions of WRECO and its Subsidiaries during the accounting period covered by the attached financial statements; and

(ii) [No Event of Default or Default has occurred.] [An Event of Default or Default has occurred. [If so, specify the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto.]]

D-4-1


Dated: , 200		WEYERHAEUSER REAL ESTATE COMPANY

		By
		Name:
		Title:

		By
		Name:
		Title:

D-4-2

ATTACHMENT NO. 1 TO

COMPLIANCE CERTIFICATE FOR WEYERHAEUSER REAL ESTATE COMPANY

WEYERHAEUSER REAL ESTATE COMPANY AND RESTRICTED SUBSIDIARIES

COMPLIANCE WITH COVENANTS

AS OF , 200

($000’s Omitted)

Section 6.02(a) - Capital Base as of


1. Adjusted Net Worth:

a. Capital Stock (less treasury stock)	___________

b. Surplus and Retained Earnings	___________

c. Intangible Assets	___________

d. Minority Interests	___________

e. Investments in Unrestricted Subsidiaries	___________

f. Investments in joint ventures, partnerships, etc. Adjusted Net Worth (a+b-c-d-e-f)	___________

2. WRECO/Weyerhaeuser Subordinated Debt:

a. Subordinated Promissory Notes issued to Weyerhaeuser Company		________

3. Capital Base (1 + the lesser of 1 and 2)

Required Capital Base		$100,000

D-4-3

EXHIBIT E

FORM OF SUBORDINATED DEBT

WEYERHAEUSER REAL ESTATE COMPANY

Subordinated Promissory Note

$ ,

FOR VALUE RECEIVED, the undersigned, WEYERHAEUSER REAL ESTATE COMPANY, a Washington corporation (the “Company”), promises to pay to WEYERHAEUSER COMPANY, on , , at the office of the Company in Federal Way, Washington, the principal sum of ($ ) and to pay interest on the unpaid balance of such principal sum at said office at the rate of percent ( %) per annum from the date hereof, payable monthly on the last day of each month in each year, until said principal sum is fully paid.

This Note is one of a series of Subordinated Promissory Notes of the Company, all of which are identical except as to date, amount and maturity date, from time to time issued and sold by the Company to Weyerhaeuser Company; this Note and said subordinated Promissory Notes are hereinafter sometimes collectively referred to as “Subordinated Notes”.

Subject to the following provisions hereof, this Note may be prepaid at any time by the Company without premium.

Anything in this Note to the contrary notwithstanding, the indebtedness evidenced by this Note and all other Subordinated Notes shall be subordinate and junior in right of payment, to the extent and in the manner hereinafter set forth, to all other indebtedness of the Company for money borrowed (including, without limiting the generality of the foregoing, (i) its Medium-Term Notes, Series A (the “Series A Medium-Term Notes”), issued and to be issued from time to time under the Agency Agreement dated as of May 29, 1992 between the Company, Weyerhaeuser Company and Morgan Guaranty Trust Company of New York, (ii) its Medium-Term Notes, Series B (the “Series B Medium-Term Notes”), issued and to be issued from time to time under the Agency Agreement dated as of October 29, 1992 between the Company, Weyerhaeuser Company and Morgan Guaranty Trust Company of New York, (iii) its Medium-Term Notes, Series C (the “Series C Medium-Term Notes”), issued and to be issued from time to time under the Agency Agreement dated as of October 13, 1993 between the Company, Weyerhaeuser Company and Morgan Guaranty Trust Company of New York), (iv) its Medium-Term Notes, Series D (the Series D Medium-Term Notes) issued and to be issued from time to time under the Agency Agreement dated as of April 24, 2001, between the Company, Weyerhaeuser Company, and the Chase Manhattan Bank, (v) its Loan Agreement dated November 1, 1996 among the Company, the Banks named therein and the Sumitomo Bank, New York Branch as Agent (the “Loan Agreement”), and (vi) all indebtedness and other amounts owing pursuant to the Third Amended and Restated 364-Day Revolving Credit Facility Agreement dated as of March 23, 2004 (as it may be amended, modified, extended or restated

E-1

from time to time, the “364-Day Credit Agreement”), among the Company, Weyerhaeuser Company, JPMorgan Chase Bank and the lenders referred to therein, all such indebtedness to which this Note is subordinate and junior being hereinafter referred to as “Prior Debt” and the governing loan documents being hereinafter referred to as the “Prior Debt Instruments”), as follows:

(i) In the event of any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of the Company, or the proceeds thereof, to creditors of the Company or upon any indebtedness of the Company occurring by reason of liquidation, dissolution or other winding up of the Company or by reason of any execution, sale, receivership, insolvency or bankruptcy proceedings or other proceedings for the reorganization or readjustment of the Company or its debts or properties, then in any such event such Prior Debt shall be preferred in payment over the Subordinated Notes and such Prior Debt shall be first paid and satisfied in full, in accordance with the order of priority of payment established by any applicable provisions thereof and by any instruments whereunder any Prior Debt is issued, before any payment or distribution of any kind or character, whether in cash, property or securities (other than in securities the payment of which is subordinated to said Prior Debt to the same extent as herein provided), shall be made on or in respect of principal or interest of the Subordinated Notes; and in any such event any such payment, dividend or distribution (other than in securities the payment of which is also subordinated as aforesaid) which shall be made upon or in respect thereof shall be paid over to the holders of such Prior Debt, pro rata, for application on such Prior Debt in accordance with the order of priority of payment established by any applicable provisions thereof and by any instrument whereunder any Prior Debt is issued, until said Prior Debt has been fully paid.

(ii) Without limiting the foregoing, during the continuance of any default in payment of principal, sinking fund, interest or premium, if any, on any Prior Debt, no payment of principal or interest shall be made on or with respect to the indebtedness evidenced by any Subordinated Note, or any renewals or extensions thereof, and the holder or holders of any Subordinated Notes shall not be entitled to receive or retain any such payment made during the continuance of any such default.

(iii) Also without limiting the foregoing, the Company shall not make, and the holder or holders of any Subordinated Notes shall not be entitled to receive or retain, any payment of principal or interest on the Subordinated Notes (whether such payment is made directly or indirectly through the redemption, purchase or other acquisition of Subordinated Notes by or for the benefit of the Company), if at the time of any such payment and after giving effect thereto, an Event of Default (as that term is defined in any of the Prior Debt Instruments), is then continuing, or if any event has occurred which, with the lapse of time or the giving of notice, or both, will become such an Event of Default under any of the Prior Debt Instruments.

(iv) No right of any present or future holder of any Prior Debt to enforce subordination as herein provided for shall at any time be breached or impaired by any failure to act on the part of the Company or by any noncompliance by the Company with the terms, provisions and covenants hereof or of said Prior Debt, regardless of any knowledge thereof that any holder of Prior Debt may have or be otherwise charged with.

E-2

Without limiting the foregoing the holder or holders of said Prior Debt may receive and hold collateral for the payment of such Prior Debt, may make substitutions and releases of collateral or any part thereof, whether or not such holder or holders receive any consideration therefor; may grant renewals or extensions of time for the payment of installments of said Prior Debt or any part thereof, and take renewal notes or other instruments to evidence the same; and no action or non-action taken or omitted to be taken in respect of the foregoing matters or any of them by any holder or holders of Prior Debt at any time or from time to time shall invalidate or impair the subordination herein provided for.


WEYERHAEUSER REAL ESTATE COMPANY

By
		Its Treasurer

E-3

EXHIBIT F

FORM OF PROMISSORY NOTE

New York, New York

[ , ]

FOR VALUE RECEIVED, [WEYERHAEUSER COMPANY, a Washington corporation] [WEYERHAEUSER REAL ESTATE COMPANY, a Washington corporation] (the “Borrower”), hereby promises to pay to the order of [ ] (the “Lender”), at the office of JPMorgan Chase Bank (the “Agent”), at 270 Park Avenue, New York, New York 10017 on the Termination Date as defined in the Third Amended and Restated 364-Day Revolving Credit Facility Agreement dated as of March 23, 2004 (as it may hereafter be amended, modified, extended or restated from time to time, the “Credit Agreement”), among the Borrower, [Weyerhaeuser Company, a Washington corporation] [Weyerhaeuser Real Estate Company, a Washington corporation], the Lenders, the Swing Line Bank and the Fronting Banks named therein, JPMorgan Chase Bank, as Administrative Agent, Morgan Stanley Senior Funding, Inc., as syndication agent and The Bank of Tokyo-Mitsubishi, Ltd. and Deutsche Bank Securities Inc., as co-documentation agents, the aggregate unpaid principal amount of all Loans made by the Lender to the Borrower pursuant to the Credit Agreement, in lawful money of the United States of America in same day funds, and to pay interest from the date hereof on the principal amount hereof from time to time outstanding, in like funds, at said office, at a rate or rates per annum and payable on such dates as determined pursuant to the Credit Agreement.

The Borrower promises to pay interest, on demand, on any overdue principal of its borrowings and, to the extent permitted by law, overdue interest from their due dates at a rate or rates determined as set forth in the Credit Agreement.

The Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance.

All borrowings evidenced by this Note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof, or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided , however , that any failure of the holder hereof to make such a notation or any error in such notation shall not in any manner affect the obligation of the Borrower to make payments of principal and interest with respect to the Borrower’s borrowings in accordance with the terms of this Note and the Credit Agreement.

This Note is one of the promissory notes referred to in the Credit Agreement which, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for mandatory and, in certain

F-1

circumstances, optional prepayment of the principal hereof prior to the maturity thereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified.

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.


[WEYERHAEUSER COMPANY]
[WEYERHAEUSER REAL ESTATE COMPANY]

By
Name:
Title:

F-2

Loans and Payments

Amount

and Type

of Loan

Interest

Period

Principal

Unpaid

Interest

Name of

Principal

Balance

of Note

Person

Making

Notation

F-3

Schedule 2.01

COMMITMENTS OF THE LENDERS


Institution	Commitment
JPMorgan Chase Bank	$	[	]
Morgan Stanley Senior Funding, Inc.	$	[	]
The Bank of Tokyo-Mitsubishi, Ltd., Seattle Branch	$	[	]
Deutsche Bank AG New York Branch	$	[	]

Total Commitments	$	1,200,000,000

Schedule 3.08 Part I

WEYERHAEUSER COMPANY AND SUBSIDIARIES


Name	State or Country of Incorporation	Percentage Ownership of Immediate Parent
Columbia & Cowlitz Railway Company	Washington	100
DeQueen & Eastern Railroad Company	Arkansas	100
Fisher Lumber Company	California	100
Golden Triangle Railroad	Mississippi	100
Gryphon Asset Management, Inc.	Delaware	100
Gryphon Investments of Nevada, Inc.	Nevada	100
Jasmine Forests, LLC	Delaware	100
Jewel Forests, LLC
Mississippi & Skuna Valley Railroad Company	Mississippi	100
Norpac ResourcesLLC	Delaware	100
Oregon Timber Company	Oregon	100
Weyerhaeuser Global Finance Company	Oregon	100
Texas, Oklahoma & Eastern Railroad Company	Oklahoma	100
ver Bes’ Insurance Company	Vermont	100
Westwood Shipping Lines, Inc.	Washington	100
Weyerhaeuser de Mexico, S.A. de C.V.	Mexico	100
Weyerhaeuser
Forestlands International, Inc.	Washington	100
Weyerhaeuser International, Inc.	Washington	100
Southern Cone Timber Investors Holding Company, LLC	Delaware	100
Trus Joist SPRL	Belgium	100
Weyerhaeuser Europe Holdings	Ireland	100
Weyerhaeuser Europe Limited	Ireland	100
Weyerhaeuser Sarasate Limited	Ireland	100


Weyerhaueser Holdings France SAS	France	100
Weyerhaeuser Mediland SAS	France	100
Weyerhaeuser Darbo SAS	France	100
Weyerhaeuser Holdings Limited	British Columbia	100
Weyerhaeuser Company Limited	Canada	100
317298 Saskatchewan Ltd.	Saskatchewan	100
Forest License A49782 Holdings Ltd.	British Columbia	99
MacMillan Bloedel K.K.	Japan	100
MacMillan Bloedel Pembroke Limited Partnership	Ontario	100
MacMillan Guadiana, S.A. de C.V.	Mexico	100
Mid-Island Reman Inc.	British Columbia	100
Weyerhaeuser (Annacis) Limited	British Columbia	100
Weyerhaeuser Australia Pty Ltd.	Australia	100
Pine Solutions Australia Pty Limited	Australia	100
K1 Holdings Pty Limited	Australia	100
CCA Timbers (Vic) Pty Ltd.	Australia	100
Hanaki Pty Ltd.	Australia	100
Kaiyou Pty Ltd.	Australia	100
Weyerhaeuser (Barbados) SRL	Barbados	100
Marlborough Capital Corp. SRL	Barbados	100
Weyerhaeuser (BVI) Ltd.	British Virgin Islands	100
Weyerhaeuser New Zealand Holdings Inc.	New Zealand	100
Nelson Forest Products Company	New Zealand	100
Weyerhaeuser New Zealand Inc.	New Zealand	100
Weyerhaeuser (Carlisle) Ltd.	Barbados	100
Camarin Limited	Barbados	100
Weyerhaeuser (Delta) Limited	British Columbia	100
Weyerhaeuser (Imports) Pty Limited	Australia	100
Weyerhaeuser (Ottawa) Limited	British Columbia	100


Weyerhaeuser Saskatchewan Ltd.	Saskatchewan	100
Weyerhaeuser Services Limited	British Columbia	100
Weyerhaeuser China, Ltd.	Washington	100
Weyerhaeuser (Asia) Limited	Hong Kong	100
Weyerhaeuser Japan Ltd.	Japan	100
Weyerhaeuser Japan Ltd.	Delaware	100
Weyerhaeuser Korea Ltd.	Korea	100
Weyerhaeuser, Products Limited	United Kingdom	100
Weyerhaeuser Taiwan Ltd.	Delaware	100
Weyerhaeuser (Mexico) Inc.	Washington	100
Weyerhaeuser Raw Materials, Inc.	Delaware	100
Weyerhaeuser Real Estate Company*	Washington	100
Midway Properties, Inc.*	North Carolina	100
Pardee Homes *	California	100
Marmont Realty Company*	California	100
Pardee Homes of Nevada*	Nevada	100
The Quadrant Corporation *	Washington	100
South Jersey Assets, Inc.*	New Jersey	100
Scarborough Constructors, Inc. *	Florida	100
TMI, Inc. *	Texas	100
Weyerhaeuser Real Estate Company of Nevada *	Nevada	100
Weyerhaeuser Realty Investors, Inc. *	Washington	100
Winchester Homes, Inc.*	Delaware	100
Weyerhaeuser Real Estate Development Company	Washington	100
Weyerhaeuser Sales Company	Nevada	100
Weyerhaeuser USA LLC	Delaware	100
American Cemwood Corporation	Oregon	100
MB Administrative Services Inc.	Delaware	100
WFS II LLC	Delaware	100
Weyerhaeuser Financial Investments, Inc.	Nevada	100
WFI Serving Company	Nevada	100


Weyerhaeuser Venture Company	Nevada	100
Las Positas Land Co.	California	100
WAMCO, Inc.	Nevada	100
Willamette Mexican Holding Company	Oregon	100
Wilton Connor LLC	North Carolina	100
Wilton Connor Packaging International Limited	Hong Kong	100
WY Carolina Holdings, LLC	Delaware	100
WY Tennessee Holdings, LLC	Delaware	100

*	Unrestricted Subsidiary

Schedule 3.08 Part II

WEYERHAEUSER REAL ESTATE COMPANY AND SUBSIDIARIES


Name	State or Country of Incorporation	Percentage Ownership of Immediate Parent
Weyerhaeuser Real Estate Company	Washington	100
Midway Properties, Inc.	North Carolina	100
Pardee Homes	California	100
Marmont Realty Company	California	100
Pardee Homes of Nevada	Nevada	100
The Quadrant Corporation	Washington	100
South Jersey Assets, Inc.	New Jersey	100
Scarborough Constructors, Inc.	Florida	100
TMI, Inc.	Texas	100
Weyerhaeuser Real Estate Company of Nevada	Nevada	100
Weyerhaeuser Realty Investors, Inc.	Washington	100
Winchester Homes, Inc.	Delaware	100

Schedule 9.01

ADDRESSES FOR NOTICES TO THE BANK


Name of Bank		Domestic and Eurodollar Lending Offices
JPMorgan Chase Bank		JPMorgan Chase Bank Loan and Agency Services 1111 Fannin, Floor 10, Houston TX 77002 Attn: Mr. Vaughan Nguyen, Loan and Agency Services T: (713) 750-3550 F: (713) 750-2932 With copy to: JPMorgan Chase Bank 560 Mission Street San Francisco, CA 94105 Attn: Mr. William Rindfuss T: (415) 315-8232 F: (415) 315-8586

Morgan Stanley Senior Funding, Inc.		Morgan Stanley Senior Funding, Inc. 1633 Broadway New York, NY 10019 Attn: James Morgan T: (212) 537-1470 F: (212) 537-1867/1866 With copy to: Morgan Stanley Senior Funding, Inc. 750 7 ^th Avenue New York, NY 10019 Attn: David Morin T: (212) 762-2621 F: (212) 507-3138

The Bank of Tokyo-Mitsubishi, Ltd., Seattle Branch		The Bank of Tokyo-Mitsubishi, Ltd., Seattle Branch 777 South Figueroa Street, Suite 600 Los Angeles, CA 90017 Attn: Nina Jeon/Ellen Yuson T: (213) 488-3794/3796 F: (213) 613-1136


Deutsche Bank Securities Inc.		Deutsche Bank Securities Inc. 31 West 52 ^nd Street New York, NY 10019 Attn: Mr. Oliver Schwarz T: (212) 469-8610 F: (212) 469-2930

Deutsche Bank AG New York Branch		Deutsche Bank AG New York Branch 31 West 52 ^nd Street New York, NY 10019 Attn: Mr. Oliver Schwarz T: (212) 469-8610 F: (212) 469-2930

Exhibit 10.K

Compensation for Directors

As of 2004, each non-employee director receives for service as a director an annual fee of $110,000. Members of the Audit Committee receive an additional annual fee of $5,000. The chairmen of each of the Audit, Corporate Governance and Compensation Committees receive an additional annual fee of $10,000. The chairmen of each of the Executive and International Committees receive an additional annual fee of $5,000. Directors also are reimbursed for travel expenses in connection with meetings. Compensation is available for extended travel on Board business at the request of the Board or a Committee of the Board at the rate of $2,000 per day, including travel days and work days.

The Board of Directors has designated that $55,000 of the $110,000 annual fee paid to non-employee directors automatically will be placed into a common share equivalents account under the Fee Deferral Plan for Directors. The value of the common share equivalents account is measured from time to time by the value of the Company’s common shares and is payable to a director in cash at a time selected in advance by the director, which must be on or after the director’s termination of service as a director. The share equivalents account is credited on each dividend payment date for common shares with the number of share equivalents that are equal in value to the amount of the quarterly dividend on common shares. The Fee Deferral Plan for Directors provides that non-employee directors may defer receipt of all or a portion of the remaining fees for services as a director and elect between interest bearing and common share equivalent accounts as the investment vehicle for the deferred fees. The Fee Deferral Plan for Directors is administered by the Compensation Committee.

Exhibit 10.L

Fee Deferral Plan for Directors

Weyerhaeuser Company

Restated to Include All Amendments Adopted by

the Board of Directors Through October 6, 2004

Name and Purpose . The name of this plan is the “Fee Deferral Plan for Directors of Weyerhaeuser Company” (the “Plan”). Its purpose is to provide non-employee Directors of the Company with increased flexibility in timing the receipt of Fees earned as a Director and to assist the Company in attracting and retaining qualified individuals to serve as Directors.

2.	Definitions. Whenever used in the Plan, the following terms shall have the meaning set forth below:

(a)

“Board” means the Board of Directors of the Company, provided that no member of the Board shall participate in or cast a vote with respect to any matter which specifically relates to that individual, as opposed to relating to the Directors as a group. The Compensation Committee of the Board (“Committee”) makes recommendations to the Board, when appropriate, with respect to matters arising under this Plan.

(b)

“Common Shares” means the common shares, $1.25 par value, of the Company.

(c)

“Company” means Weyerhaeuser Company.

(d)

“Deferral Period” means that period of time from the end of the date on which Fees would have been paid but for deferral under this Plan until the time when said Fees are paid.

(e)

“Deferred Fees” means that part of any Fees which have been deferred pursuant to this Plan, together with any earnings or other appreciation thereon. All Deferred Fees (including Designated Share Equivalent(s) are subject to the restrictions on transfer which are set out in Paragraph 7(d).

(f)

“Director” means any individual serving on the Board who is not an Employee of the Company or any of its subsidiaries.

(g)

“Employee” means any person who is employed full time on a salaried basis by the Company or any of its subsidiaries.

(h)

“Event” as used in Subparagraphs 4(b) and 4(c) means an occurrence the date of which is definitely determinable and can be verified including, but not limited to a particular birthday of the Director or an identified date.

(i)

“Fees” mean the fees payable to a Director by the Company as an annual “retainer” upon his or her election or reelection to the Board, but shall not include amounts paid per day in cash for extended travel at the request of and on behalf of the Board of

Directors of one of the committees of the Board of Directors or any reimbursement for expenses.

(j)

“Share Equivalents” means deferred units of account each of which is equivalent in value to one Common Share of the Company.

(k)

“Trading Day” means a day that the New York Stock Exchange is open for business.

(l)

“Plan Year” means the 52–53 week year ending on the last Sunday in December in which the Fees are earned and which will either be paid or deferred and paid at a later date.

(m)

“Year” means the 52- or 53-week period used by the Company as its fiscal year.

3.	Participation in the Plan . Any individual who is a Director may participate in the Plan.

4.	Payment or Deferral of Fees . Payment of a Director’s Fees shall be made as follows:

(a)

Immediate Payment . Except as otherwise provided in the following Subparagraphs (b) and (d), payment of Fees to Directors shall be made in cash and in full as soon as practicable following the time when the Fees are earned; provided that a Director’s annual “retainer” is deemed earned immediately following the Company’s annual meeting of shareholders or other shareholder meeting at which Directors are elected, or in the case of newly appointed Directors immediately following such appointment.

(b)

Deferred Fees . Except as provided in Subparagraph (d) for Designated Share Equivalents, any Director may elect to defer receipt of a percentage of all of his or her Fees earned in any Plan Year. The procedure for election is set forth in Subparagraph 4(c). Two forms of Fee Deferral are provided for.

(i)

“Open Deferral” - This form of deferral provides for the payment of the amount to be deferred with interest over a number of years selected by the Director, commencing with the year or an Event selected by the Director, provided that the last payment must be made not later than the earlier of the 20th Year following the Year of the Director’s termination of Director status or the year during which the Director’s 80th birthday occurs. Details as to the amount and timing of payments are set forth in Paragraph 5.

(ii)

“Share Equivalents Deferral” - This form of deferral provides for the payment of the amount to be deferred, increased or decreased by reference to the market price and dividend history of Company Common Shares, over a number of years selected by the Director, commencing with the year or Event selected by the Director, provided that such year or Event must not be any earlier than the death of the Director or the second calendar year after the year in which the election’ is made, and further provided that the last payment must be made not later than the earlier of the 20th Year following the Year of the Director’s termination of Director status or the year during which the Director’s 80th birthday occurs. Details as to the amount and timing of payments are set forth in Paragraph 6.

(c)

commence; provided, however that any Director appointed to the Board after the commencement of a Plan Year must notify the Committee of such election before being appointed. Such election shall state the percentage or percentages to be received as Deferred Fees under Subparagraph 4(b)(i) and/or (ii). Any Fees or part thereof which a Director has not elected to defer shall be paid as provided in Subparagraph 4(a). Each notice to defer shall:

(i)

State the percentage of the Fees to be deferred.

(ii)

Designate the percentage of the total amount to be deferred which will be deferred as an Open Deferral and/or as a Share Equivalents Deferral.

(iii)

State the year or Event during which payments will commence and the number of years elected for payment.

An election to defer Fees is irrevocable.

(d)

Fees Designated as Share Equivalents . In the event that the Board designates that any Fee to be paid to the Directors shall be paid in Share Equivalents, then such fees (referred to herein as “Designated Share Equivalents “) shall be treated as Share Equivalents under this Plan. With respect to Designated Share Equivalents:

(i)

the Directors shall not make the elections provided for in Section 4(c) of this Plan, but, except for the 1994 Plan Year, shall elect a Year or Event (which must not be any earlier than the Year of the Director’s termination of Director status) in which payments shall commence and the number of Years elected for payment, and for the 1994 Plan Year, any Designated Share Equivalents shall be payable in a single payment following the Director’s termination of Director status;

(ii)

the election provided for in (d)(i) above shall be made in writing on or prior to December 15 preceding each Plan Year with respect to Designated Share Equivalents to be earned during the following Plan Year, if any; provided, however that any Director appointed to the Board after the commencement of a Plan Year must notify the Committee of such election immediately before being appointed. Such election shall be irrevocable, and should a Director fail to make such election for any Plan Year, any Designated Share Equivalents for such Plan Year shall be payable in a single payment following the Director’s termination of Director status;

(iii)

the Directors shall be entitled to receive payments as provided in Section 6(c)(i) of this plan, but shall not be entitled to the election provided in Section 6(c)(ii) of this plan;

(iv)

to determine the number of deferred units or fractions thereof credited to the Director’s account for Designated Share Equivalents, the amount of the Fees designated to be paid in Share Equivalents shall be divided by the median price per share of Company stock for the last eleven (11) Trading Days of January of the Plan Year in which the fees are earned, except that with respect to the 1994 Plan Year, the amount of the Fees designated to be paid in Share

Equivalents shall be divided by the price per share on the day that the Fees, if any, are designated by the Board to be paid in Share Equivalents;

(v)

the provisions of this Plan, including those relating to Deferred Fees and Fees Deferrals, shall apply to Designated Share Equivalents to the extent they are not inconsistent with this Subparagraph 4(d).

5.	Open Deferral .

(a)

Accounts . Any amount deferred under the Open Deferral option shall be credited to the Director’s account as of day it would otherwise have been paid in cash and shall thereafter accrue interest at a rate to be designated from time to time by the Board, interest to be compounded monthly.

(b)

Payments . Each Director shall be entitled to receive cash payments with respect to Compensation deferred under the Open Deferral option together with interest accrued to the date of payment in each Year of the applicable period as elected under Subparagraph 4(c). The amount of cash to be paid each Year with respect to the amount of Fee Deferral from any Plan Year shall be computed by multiplying a fraction, the numerator of which is one and the denominator of which is the number of years remaining in the applicable payment period for such Fee Deferral, by the remaining portion of such Fee Deferral plus accrued interest on such Fee Deferral (e.g., 1/10th is paid in the first year of a ten-year payment period; 1/9th of the remaining balance in the second year, 1/8th of the remaining balance in the third year, etc., over the ten years).

6.	Share Equivalents .

(a)

Number of Deferred Units . The amount of Fees designated to be deferred in the form of Share Equivalents shall be divided by the median price per share of Company stock for the last eleven (11) Trading Days of January in the Plan Year during which it would otherwise have been paid in cash to determine the number of deferred units or fractions thereof credited to the Director’s account.

(b)

Dividend Equivalents . Each such deferred unit shall be credited with an amount equivalent to each dividend declared on common shares of the Company. The amount of such dividend equivalents shall be divided by the price per share of common stock on the payable date for such dividend to determine the number of additional deferred units or fractions thereof credited to the Director’s account.

(c)

Payments .

(i)

Each Director shall be entitled to receive cash payments with respect to Fee Deferral under the Share Equivalents Deferral Option represented by Share Equivalents credited to his or her account. A payment shall be made in each Year of the period previously elected under Subparagraph 4(c) with respect to such Fee Deferral. The amount to be paid each Year shall be computed by multiplying a fraction, the numerator of which is one and the denominator of which is the number of years remaining in the elected payment period, by the remaining portion of units credited to the Director’s account, to determine the number of

units for which payment is to be made. The number of units shall be multiplied by the median price per share of Company stock for the last eleven (11) Trading Days of January of the Year of payment.

The following applies only to deferrals made under the Plan prior to 1997 Each Director shall be entitled to receive cash payments with respect to Fee Deferral under the Phantom Stock Deferral Option represented by Phantom Stock credited to his or her account. A payment shall be made in each Year of the period previously elected under Subparagraph 4(c) with respect to such Fee Deferral. The amount to be paid each Year shall be computed by multiplying a fraction, the numerator of which is one and the denominator of which is the number of years remaining the elected payment period, by the remaining portion of units credited to the Director’s account, to determine the number of units for which payment is to be made. The number of units shall be multiplied by the median price per share of Company stock for the first Trading Day of February of the Year of payment.

(ii)

As to Share Equivalents credited to a Director’s account deferred from any Plan Year (including increments thereto), notwithstanding any provision in this Paragraph 6(c) to the contrary, at any time after the later of (i) the Director’s 52 ^nd birthday or (ii) six months after the Share Equivalents were credited to the Director’s account, a Director (or the Director’s beneficiary in the event of the death of the Director) may irrevocably elect to establish and fix a firm price for Share Equivalents currently credited to such portion of his or her account. The firm price shall then be the price per share of the common stock of the Company as of any Trading Day concurrent with the delivery of such election to the plan record-keeper. The Vanguard Group, if delivered before the close of the market, or at price per share of the common stock of the Company on the next following Trading Day, if delivered after the close of the market. Interest shall be earned from the date the last dividend equivalent was credited under Subparagraph 6(b) at the rate applicable from time to time under Subparagraph 5(a). Such interest shall be compounded monthly. Such election shall not accelerate actual payment under the Share Equivalents Deferral Option.

The following applies only to deferrals made under the Plan prior to 1997 As to Phantom Stock credited to a Director’s account deferred from any Plan Year (including increments thereto), notwithstanding any provision in this Paragraph 6(c) to the contrary, at any time after the Director’s 52 ^nd birthday, a Director may irrevocably elect, or in the event of the death of a Director, the Director’s beneficiary may irrevocably elect, to establish and fix a firm price for Phantom Stock currently credited to such portion of his or her account. The firm price shall then be the price per share of the common stock of the Company as of any Trading Day concurrent with the delivery of such election to the Committee or its designee, if delivered before the close of the market, or at price per share of the common stock of the Company on the next following Trading Day, if delivered after the close of the market. Interest shall be earned from the date the

last dividend equivalent was credited under Subparagraph 6(b) at the rate applicable from time to time under Subparagraph 5(a). Such interest shall be compounded monthly. Such election shall not accelerate actual payment under the Phantom Stock Deferral Option.

(d)

Change in Common Shares of the Company . Any change in the Common Shares of the Company, whether through merger, consolidation, recapitalization, stock split, stock dividend, or other change in the Company’s structure, shall be similarly reflected in the number of deferred Share Equivalents Units.

(e)

Price Per Share . The term “price per share” shall refer to the closing price of the common stock of the Company on the New York Stock Exchange on the Trading Day in question.

7.	General Provisions Related to Open and Share Equivalents .

(a)

Date of Payments . Payments of deferred amounts will be made annually prior to March 15 based on the election made by the Director. All payments with respect to Open Deferrals will be made in January of each Year. All payments with respect to Share Equivalents will be made in February of each Year. If payment is triggered by an Event and the Event occurs during the Year, payments will begin in January or February of the following Year.

(b)

Segregation of Funds . The Company shall be under no obligation to segregate any Fees deferred during the Deferral Period and each Director should realize that such unsegregated funds are subject to the claims of the Company’s general creditors during the Deferral Period.

(c)

Beneficiaries . Each Director may appoint a beneficiary or beneficiaries to receive payments to be made with respect to Fee Deferrals, if any, after his or her death. In the absence of such appointment, all such amounts shall be paid to his or her personal representative. The appointment shall be made on a form to be supplied by the Committee and may be revoked or superseded at any time.

(d)

Restrictions on Fee Deferrals . No Director’s interest in any Fee Deferral account is assignable, either by voluntary or involuntary assignment or by operation of law. No part of any Fee Deferral, regardless of the form thereof, may be paid over, loaned, sold, assigned, transferred, discounted, pledged as collateral for a loan, or in any other way encumbered until the end of the Deferral Period with respect to such Fee Deferral.

8.	Administration and Amendment of the Plan .

(a)

Powers of the Compensation Committee . Full power and authority to construe and interpret this Plan shall be vested in the Committee as from time to time constituted by the Board. Decisions hereunder by the Committee shall be final, conclusive and binding upon all parties, including Directors and the Company.

(b)

Expense of the Plan . The expenses of administering the Plan shall be borne by the Company.

(c)

Amendment . The Board in its sole discretion may (i) amend, suspend or termination this Plan, and (ii) supplement or replace this Plan with or by other Fee Deferral plans; provided that no amendment, supplement or replacement providing for the payment of Fees in the form of stock of the Company shall be effective unless approved by the shareholders of the Company.

(d)

Participants’ Rights . No amendment, suspension or termination of this Plan shall affect any deferral already made, and in the event of any such change, any Fee Deferral credited to a Director’s account shall be paid as provided herein. No Director shall have any right or interest in the Plan or its continuance or in his or her continued participation in the Plan, other than in the Fee Deferrals credited to his or her account. The existence of this Plan does not extend to any Director a right to continued Director status with the Company, and all Directors are deemed to have agreed to the terms hereof.

Notice to Vanguard . Any notice required to be furnished by a Participant to the Plan record-keeper, The Vanguard Group, Inc., shall be deemed to be provided if sent via fax or first class mail, in accordance with information and instructions communicated by Vanguard to the Participants from time to time.

10.

Effective Date . This Plan was originally effective December 8, 1981 permitting deferrals with respect to Fees to be earned in the Plan Year 1982 and was amended and restated as of December 7, 1994 and as of April 16, 1996. The Plan as further amended and restated herein is effective October 6, 2004.

Exhibit 10.M

Fee Deferral Plan for Canadian Directors

Weyerhaeuser Company

Restated to Include All Amendments Adopted by

the Board of Directors Through October 6, 2004

Name and Purpose . The name of this plan is the “Fee Deferral Plan for Canadian Directors of Weyerhaeuser Company” (the “Plan”). Its purpose is to provide non-employee Directors of the Company who are Canadian residents with increased flexibility in timing the receipt of Fees earned as a Director, to allow for the payment of fees directly to the Share Equivalent account of each Director, and to assist the Company in attracting and retaining qualified individuals from Canada to serve as Directors.

2.	Definitions . Whenever used in the Plan, the following terms shall have the meaning set forth below:

(a)

(b)

“Common Shares” means the common shares, $1.25 par value, of the Company.

(c)

“Company” means Weyerhaeuser Company.

(d)

“Deferral Period” means that period of time from the end of the date on which Fees would have been paid but for deferral under this Plan until the time when said Fees are paid.

(e)

“Deferred Fees” means that part of any Fees which have been deferred pursuant to this Plan, together with any earnings or other appreciation thereon. All Deferred Fees (including Designated Share Equivalents) are subject to the restrictions on transfer which are set out in Paragraph 7(d).

(f)

“Director” means any individual serving on the Board who is not an Employee of the Company or any of its subsidiaries and is a Canadian resident.

(g)

“Employee” means any person who is employed full time on a salaried basis by the Company or any of its subsidiaries.

(h)

(i)

“Share Equivalents” means deferred units of account each of which is equivalent in value to one Common Share of the Company.

(j)

“Trading Day” means a day that the New York Stock Exchange is open for business.

(k)

“Plan Year” means the 52–53 week year ending on the last Sunday in December in which the Fees are earned and which will either be paid or deferred and paid at a later date.

(l)

“Year” means the 52- or 53-week period used by the Company as its fiscal year.

3.	Participation in the Plan . Any individual who is a Director may participate in the Plan.

4.	Payment or Deferral of Fees . Payment of a Director’s Fees shall be made as follows:

(a)

(b)

Deferred Fees . Except as provided in Subparagraph (d) for Designated Share Equivalents, any Director may elect to defer receipt of a percentage of his or her Fees earned in any Plan Year. The procedure for election is set forth in Subparagraph 4(c). The only form of deferral permitted under this plan is a “Share Equivalent Deferral.” This deferral provides for the payment of the amount to be deferred, increased or decreased by reference to the market price and dividend history of Company Common Shares;

(c)

Election Procedure . Each Director shall notify the Committee in writing on or prior to the December 15th preceding each Plan Year of his or her election to defer the receipt of a percentage or all of any Fees to be earned during the Plan Year about to commence; provided, however that any Director appointed to the Board after the commencement of a Plan Year must notify the Committee of such election before being appointed. Such election shall state the percentage or percentages to be received as Deferred Fees under Subparagraph 4(b). Except as provided in the following Subparagraph (d), any Fees or part thereof which a Director has not elected to defer shall be paid as provided in Subparagraph 4(a). Each notice to defer shall state the percentage of the Fees to be deferred. An election to defer Fees is irrevocable.

(d)

Fees Designated as Share Equivalents . In the event that the Board designates that any Fee to be paid to the Directors shall be paid in Share Equivalents, then such Fees (referred to herein as “Designated Share Equivalents”) shall be treated as Share Equivalents under this Plan. With respect to Designated Share Equivalents:

(i)

the Director shall not make the elections provided for in Section 4(c) of this Plan and payments with respect to Designated Share Equivalents shall be made within the calendar year after the Director dies or terminates Board service;

(ii)

the Director shall be entitled to receive payments as provided in Section 5(c) of this plan;

(iii)

(iv)

the provisions of this Plan, including those relating to Deferred Fees shall apply to Designated Share Equivalents to the extent they are not inconsistent with this Subparagraph 4(d).

5.	Share Equivalents .

(a)

Number of Deferred Units . The amount of Fees designated to be deferred in the form of Share Equivalents shall be divided by the median price per share of Company stock for the last eleven (11) Trading Days of January of the Plan Year during which it would otherwise have been paid in cash to determine the number of deferred units or fractions thereof credited to the Director’s account.

(b)

(c)

Payments . Each Director shall be entitled to receive cash payments with respect to fees deferred under the Share Equivalents Deferral Option and with respect to Designated Share Equivalents credited to his or her account. A single cash payment shall be made in the calendar year after the Director terminates service on the Board. The number of units shall be multiplied by the median price per share of Company stock for the last eleven (11) Trading Days of January of the Year of payment to determine the amount of the cash payment.

(d)

(e)

Price Per Share . The term “price per share” shall refer to the closing price of the common stock of the Company on the New York Stock Exchange on the Trading Day in question.

6.	General Provisions Related to Share Equivalents Deferrals .

(a)

Date of Pats . All payments with respect to Share Equivalents will be made in February of each Year.

(b)

(c)

Beneficiaries . Each Director may appoint a beneficiary or beneficiaries to receive payments to be made with respect to Fee Deferrals, if any, after his or her death. A beneficiary must be a dependant or relation of the Director under Canadian tax law. In the absence of such appointment, all such amounts shall be paid to his or her personal representative. The appointment shall be made on a form to be supplied by the Committee and may be revoked or superseded at any time.

(d)

Restrictions on Fee Deferrals . No Director’s interest in any Fee Deferral account is assignable, either by voluntary or involuntary assignment or by operation of law. No part of any Fee Deferral, regardless of the form thereof may be paid over, loaned, sold, assigned, transferred, discounted, pledged as collateral for a loan, or in any other way encumbered until the end of the Deferral Period with respect to such Fee Deferral.

7.	Administration and Amendment of the Plan .

(a)

(b)

Expense of the Plan . The expenses of administering the Plan shall be borne by the Company.

(c)

Amendment . The Compensation Committee in its sole discretion may (i) amend, suspend or terminate this Plan, and (ii) supplement or replace this Plan with or by other Fee Deferral plans; provided that no amendment, supplement or replacement providing for the payment of Fees in the form of stock of the Company shall be effective unless approved by the shareholders of the Company.

(d)

9.	Effective Date . This plan was originally effective April 15, 1997 permitting deferrals with respect to Fees to be earned in the Plan Year 1997. The Plan as further amended and restated herein is effective October 6, 2004.

Exhibit 10.O

WEYERHAEUSER COMPANY

COMPREHENSIVE INCENTIVE COMPENSATION PLAN

Restated to include all

amendments adopted by

the Board of Directors

through June 12, 2003

WEYERHAEUSER COMPANY

COMPREHENSIVE INCENTIVE COMPENSATION PLAN

(As Amended Effective December 14, 2001)

1.	Purpose . This Comprehensive Plan “Plan” is designed to accomplish the following objectives:

(a)

To give recognition, in addition to salaries, to employees (“Participants”) that contribute significantly to the business success of the Company, thereby further assuring that the Company will continue to benefit from a strong and able management.

(b)

To permit Deferral Eligible Participants to defer receipt of any part or all of certain Incentive Awards (“Award”) made hereunder.

(c)

To permit and encourage Stock Equivalent Deferral Eligible Participants to receive deferred Awards in Stock Equivalents, the growth in value of which should reflect better performance by the Company during the Deferral Period.

(d)

To encourage Participants to remain in the service of the Company until Retirement.

(e)

To provide certain uniform terms and administration of the Participating Plans incorporated into this Plan.

Effective Dates and Other Bonus Plans . This Plan, which was approved by Shareholders of the Company, was effective as of May 1, 1969, and was amended effective December 11, 1969, December 10, 1970, December 28, 1970, December 27, 1971, March 1, 1974, April 19, 1974, December 30, 1974, January 1, 1976, December 26, 1977, February 13, 1979, December 31, 1979, August 12, 1980, December 8, 1980, October 13, 1981, December 29, 1980, December 27, 1982, December 26, 1983, December 18, 1986, January 1, 1986, October 11, 1988, December 9, 1992, October 11, 1994, October 11, 1995, April 16, 1996, October 5, 1998, December 8, 1999, December 14, 2001 and June 12, 2003. The Amendment effective December 31, 1979 changed the name of the Plan from the Weyerhaeuser Company 1969 Incentive Compensation Plan to the Weyerhaeuser Company Target Award Plan. The

Amendment effective January 1, 1986 changed the name of the plan to its present name. The Plan as in effect on December 30, 1979 shall govern all Awards made for the Award Year 1979. The amendment adopted February 9, 1982 effective December 29, 1980, shall govern all Awards for the Award Year 1981. Those portions of the Amendment adopted October 14, 1986 effective January 1, 1986 shall govern all Awards for the Award Year 1986. Those portions of the Amendment adopted October 14, 1986 and effective for Award Years commencing after December 18, 1986 shall govern all Awards for Award Year 1987. The Amendment adopted October 11, 1994 shall govern all Awards for Award Year 1994 and subsequent Award Years. The Amendment adopted October 11, 1995, shall govern all Awards for Award Year 1995 and subsequent Award Years. The Amendment adopted October 5, 1998 shall govern all Awards for Award Year 1998 and subsequent Award Years. All Awards made and deferred pursuant to the provisions of prior Incentive Compensation Award plans shall be paid in accordance with the provisions of such plans.

3.	Definitions .

(a)

“Award” means the amount of bonus granted to a Participant for an Award Year as determined under the terms of a Participating Plan.

(b)

“Award Year” means the fiscal year in which the service is performed for which the Participant earns an Award.

(c)

“Committee” means the Compensation Committee of the Board of Directors (“Board”), all of whose members shall be disinterested persons. A Committee member shall be deemed to be a disinterested person only if, at the time any discretion is required to be exercised under this Plan, such a person is not, and has not been at any time within one year prior thereto, eligible to receive an Award pursuant to this Plan.

(d)

“Company” means Weyerhaeuser Company and includes, where indicated by the context, its majority-owned subsidiaries.

(e)

“Deferral Eligible Participant” means a Participant who is designated by the Senior Vice President - Human Resources of the Company as eligible to defer an Award for the following Award Year.

(f)

“Deferral Period” means that period of time from January 1 following the Award Year for which deferral has been elected until the time when each portion of the Award is paid.

(g)

“Deferred Compensation” means that part of any Award or base salary which has been deferred pursuant to this Plan, together with any earning or other appreciation thereon. All Deferred Compensation is subject to the restrictions on transfer which are set out in Paragraph 10.

(h)

“Employee” means any person who is employed on a salaried basis by the Company, including any director of the Company who is an employee.

(i)

“Event” as used in Subparagraphs 9(b) and 9(c) means an occurrence the date of which is definitely determinable and can be verified including, but not limited to, the Participant’s retirement, a particular birthday of the Participant and an identified date.

(j)

“Participant” means any Employee who is eligible under the terms of any Participating Plan to earn an Award and who is employed by Weyerhaeuser at the end of the Award Year; provided, however, that a Participating Plan may provide that an Employee who:

(i)

dies during an Award Year,

(ii)

terminates his or her employment as a result of disability,

(iii)

retires from Weyerhaeuser during an Award Year under any of the retirement provisions of the Weyerhaeuser Company Retirement Plan for Salaried Employees,

(iv)

leaves the employ of Weyerhaeuser during an Award Year for reasons other than substandard performance, a breach of ethics or conviction of a crime against Weyerhaeuser,

may be eligible for an incentive payment as to that Award Year; provided that the President of Weyerhaeuser Company shall be a Participant in the Plan, but notwithstanding anything in the Plan to the contrary, his final Award, if any, for each Award Year shall be determined by the Committee in its sole discretion. Where appropriate in the context, “Participant” also means any former Participant.

(k)

“Participating Plan” means an incentive compensation plan adopted by a unit of the Company and designated by the President of Weyerhaeuser Company as participating in the Plan. Participating Plans are listed in Schedule A attached.

(l)

“Payment Period” means the period over which Awards deferred under Paragraph 9 or base salary deferred under Paragraph 14 are paid.

(m)

“Payment Year” means the fiscal year in which the Award is paid.

(n)

“President” shall mean the individual designated from time to time as the President of the Company.

(o)

“Retirement” means termination of service with the Company constituting early or normal retirement as provided in the “Weyerhaeuser Company Retirement Plan for Salaried Employees,” as amended from time to time.

(p)

“Stock Equivalent” means a deferred unit of account which is equivalent in value to one common share of the Company.

(q)

“Stock Equivalent Deferral Eligible Participant” means a Deferral Eligible Participant who is designated by the Senior Vice President – Human Resources of the Company as eligible for Stock Equivalent deferral.

(r)

“Trading Day” means a day that the New York Stock Exchange is open for business.

(s)

“Year” means the 52- or 53-week period used by the Company as its fiscal year.

3.1

Except when otherwise indicated by the context, any masculine terminology herein shall also include the feminine.

4.	Administration and Amendment of the Plan .

(a)

Powers of the Compensation Committee . Full power and authority to construe and interpret this Plan and the Participating Plans shall be vested in the Committee as from time to time constituted by the Board. The Committee will annually review the provisions, including payouts, of the Participating Plans. Decisions hereunder by the Committee, or by the President (where he has been given appropriate authority to make any such decision), shall be final, conclusive, and binding upon all parties, including Employees, Participants and the Company. No act of the Committee may render any of its members eligible for an award from this Plan and any Participating Plan.

(b)

Expense of the Plan . The expenses of administering the Plan shall be borne by the Company.

(c)

Amendment . The Board in its sole discretion may (i) amend, suspend or terminate this Plan and (ii) supplement or replace this Plan with or by other incentive compensation plans; provided that no amendment, supplement or replacement providing for the payment of compensation in the form of stock of the Company shall be effective unless approved by the shareholders of the Company.

(d)

Participants’ Rights . No amendment, suspension or termination of this Plan shall affect any Award already granted or any deferral already made, and in the event of any such change, any Deferred Compensation credited to a Participant’s account shall be paid as provided herein. No Participant shall have any right or interest in the Plan or its

continuance or in his continued participation in the Plan, other than in the Deferred Compensation credited to his account. The existence of this Plan and any Participating Plan does not extend to any Participant a right to continued employment with the Company, and all Participants are deemed to have agreed to the terms thereof.

5.	Eligibility . Participants as defined in Section 3(k) are eligible to receive Awards.

6.	Funds Available for Awards . Funds available for awards under each Participating Plan will be determined in accordance with general guidelines established by the Committee and performance targets approved annually by the President.

7.	Determination of Awards . The amounts of Awards, if any, for each Participant for each Award Year are determined in accordance with the provisions of the Participating Plans. Awards, if any, for each Award Year must be determined after the end of such Award Year.

8.	Transfers Between Participating Plans . A Participant who transfers employment and is a Participant in more than one Participating Plan during an Award Year shall be eligible for an Award from such Plans on a pro rata basis determined by the number of days worked as a Participant in each Plan.

9.	Payment or Deferral of Awards . Payment of Awards shall be made as follows:

(a)

Immediate Payment . Except as otherwise provided in the following Subparagraph (b), payment of Awards to Participants shall be made in cash and in full not later than March 15 following the Award Year.

(b)

Deferred Awards . Any Employee who is a Deferral Eligible Participant may elect to defer receipt of a percentage or all of such Award. The procedure for election is set forth in Subparagraph 9(c). Two forms of Award deferrals are provided. All Deferral Eligible Participants may elect an Open Deferral form of deferral as described in Paragraphs 9(b)(i) and 11. An Employee who is a Stock Equivalent Deferral Eligible Participant at the time of the election provided for in Paragraph 9(c) also has the option to elect a Stock Equivalent Deferral as described in Paragraphs 9(b)ii and 9(c).

(i)

“Open Deferral” - This form of deferral provides for the payment of the amount to be deferred with interest over a number of years selected by the Eligible Participant, commencing with the year or an Event selected by the Eligible Participant; provided that the last payment must be made not later than (a) the earlier of the 20th year following the Eligible Participant’s retirement or the year during which the Eligible Participant’s 80th birthday occurs or (b) the fifth year following the Eligible Participant’s termination of employment for reasons other than death, disability or Retirement.

Details as to the amount and timing of payments are set forth in Paragraph 11.

(ii)

“Stock Equivalent Deferral” – This form of deferral provides for the payment of the amount to be deferred, increased or decreased by a reference to the market price and dividend history of Company common shares, over a number of years selected by the Stock Equivalent Deferral Eligible Participant commencing with the year or an Event selected by the Stock Equivalent Deferral Eligible Participant; provided that the mandatory deferral period as set forth in Subparagraph 12 (b) has been met, and the last payment must be made not later than (a) the earlier of the 20th year following the Stock Equivalent Deferral Eligible Participant’s retirement or the year during which the Stock Equivalent Deferral Eligible Participant’s 80th birthday occurs; or (b) the fifth year following the Stock Equivalent Deferral Eligible Participant’s termination of employment for reasons other than death, disability or Retirement.

Details as to the amount and timing of payments are set forth in Paragraph 12.

(c)

Election Procedure . Each Deferral Eligible Participant shall notify the Committee in writing during the November of each Award Year of his election to defer the receipt of a percentage or all of any Award to be made for the Award Year about to conclude.

Such election shall state the percentage or percentages to be received as a deferred Award under Subparagraph 9(b). Any Award or part thereof which a Participant has not elected to defer shall be paid as provided in Subparagraph 9(a). Each notice to defer shall:

(i)

state the percentage of the Award to be deferred.

(ii)

designate the percentage of the total amount to be deferred which will be deferred as an Open Deferral and/or as a Stock Equivalent Deferral, if eligible.

(iii)

state the year or Event during which payments will commence and the number of years elected for payment .

An election to defer an Award is irrevocable. Payments of deferred balances of Awards may, however, in the discretion of the Committee be accelerated generally or in individual cases. Details as to such acceleration are set forth in Paragraph 13.

10.

Restrictions on Deferred Compensation . No Participant’s interest in any Deferred Compensation account is assignable, either by voluntary or involuntary assignment or by operation of law. No part of any Deferred Compensation, regardless of the form thereof, may be paid over, loaned, sold, assigned, transferred, discounted, pledged as collateral for a loan, or in any other way encumbered until the end of the Deferral Period with respect to such Deferred Compensation.

11.	Open Deferral .

(a)

Accounts . All amounts deferred under the Open Deferral shall be credited to the Participant’s account as of the end of the Award Year with respect to which the deferred Award was made. With respect to deferrals from the Award Years 1980 and 1981, interest at the Chemical Bank “prime rate” of interest as in effect on the first business day of each fiscal year shall accrue commencing with the first day of the year following the Award Year. With respect to deferrals from all other Award Years,

interest at a rate to be designated from time to time by the Committee shall accrue commencing with the first day of the year following the Award Year. Interest shall be compounded monthly.

(b)

Payments . Each Participant shall be entitled to receive cash payments with respect to Awards deferred under Open Deferral together with interest accrued to the date of payment in each year of the applicable period as elected under Subparagraph 9(c) provided that, in the case of a Participant whose employment terminates prior to death, disability or Retirement, the applicable Payment Period shall end as of the fifth year following the year in which occurs the Participant’s termination of employment for reasons other than death, disability or Retirement. The amount of cash to be paid each year with respect to each Award shall be computed by multiplying a fraction, the numerator of which is one and the denominator of which is the number of years remaining in the applicable Payment Period for such Award, by the remaining portion of such Award plus accrued interest on such Award (e.g., 1/10th is paid in the first year of a ten-year payment period; 1/9th of the remaining balance in the second year; 1/8th of the remaining balance in the third year, etc., over the ten years).

12.	Stock Equivalents

(a)

Premium

Subject to the restrictions in 12(b), Stock Equivalent Deferral Eligible Participants’ accounts shall be credited with a premium based on an Award deferred in the form of Stock Equivalents. This premium will be calculated by multiplying the amount of an Award deferred in the form of Stock Equivalents by a multiple to be determined by the Committee on an annual basis. The Award and premium will be credited to each Participant’s account as Share Equivalents as outlined in 12(d).

(b)

Mandatory Deferral Period

The minimum Deferral Period for stock equivalents deferrals is five years. The mandatory deferral period shall begin January 1 of the year following the Award year. If a Participant elects an Event for commencement of payments under Paragraph

9(c)(iii), such election must also provide a minimum Deferral Period of five years. Stock Equivalents attributable to the premium shall be subject to forfeiture as described in Subparagraph 12(c).

(c)

Premium Forfeiture

Amounts attributable to Stock Equivalents representing premiums, including any appreciation and dividend equivalents, shall be forfeited if the Stock Equivalents Deferral Eligible Participant’s employment with the Company terminates for any reason other than death, disability or Retirement during the mandatory five year Deferral Period described in Subparagraph 12 (b).

(d)

Number of Deferred Units

The amount designated to be deferred in the form of Stock Equivalents and any Premium shall be divided by the median price per share of Company stock for the last eleven (11) Trading Days of January in the year following the Award Year to determine the number of deferred units or fractions thereof credited to the Stock Equivalent Deferral Eligible Participant’s account. Any change in the common shares of the Company whether through merger, consolidation, stock split, or other change in the Company’s structure shall be similarly reflected in the number of Stock Equivalent units credited to Participants’ accounts.

(e)

Dividend Equivalents

Each such deferred unit shall be credited with an amount equivalent to each divided declared on common shares of the Company. The amount of such dividend equivalents shall be divided by the price per share of common stock on the payable date for such dividend to determine the number of additional deferred units or fractions thereof credited to the Stock Equivalent Deferral Eligible Participant’s account, which shall be credited to the Participant’s account as of the payable date.

(f)

Payments

(i)

Termination of Employment Due to Death, Disability or Retirement :

Each Stock Equivalent Deferral Eligible Participant whose employment terminates because of death, disability or Retirement shall be entitled to receive cash payments with respect to Awards deferred under the Stock Equivalent Deferral option represented by Stock Equivalents and premiums credited to accounts. If a Stock Equivalent Deferral eligible Participant’s employment terminates due to Retirement before the minimum five year Deferral Period has been satisfied, and the Participant’s deferral election specified Retirement as the Event for commencement of payments, payments shall commence after the minimum Deferral Period specified in such election. The amount to be paid each year shall be computed by multiplying a fraction, the numerator of which is one and the denominator of which is the number of years remaining in the elected payment period, by the remaining portion of units credited to the Stock Equivalent Deferral Eligible Participant’s account to determine the number of units for which payment is to be made. The number of units shall be multiplied by the median price per share of Company stock for the last eleven (11) Trading Days of January of the payment year to determine the amount of cash to be paid.

The following applies only to deferrals made under the plan prior to the year 1997

by the remaining portion of units credited to the Stock Equivalent Deferral Eligible Participant’s account to determine the number of units for which payment is to be made. The number of units shall be multiplied by the price per share for the first Trading Day of February of the payment year to determine the amount of cash to be paid.

(ii)

Termination for Reasons Other Than Death, Disability or Retirement

Each Stock Equivalent Deferral Eligible Participant whose employment terminates for reasons other than death, disability or Retirement shall be entitled to receive cash payments with respect to Awards deferred under the Stock Equivalent Deferral Option represented by Stock Equivalents and premiums credited to such Participant’s account provided that the applicable period as elected under Subparagraph 9(c) shall end as of the fifth year following the year in which occurs the Stock Equivalent Deferral Eligible Participant’s termination of employment, provided that should the Stock Equivalent Deferral Eligible Participant’s termination of employment occur before the minimum Deferral Period has passed, forfeiture of any applicable Stock Equivalents representing premiums, including any appreciation and dividend equivalents thereon credited, shall occur as provided in Subparagraph 12(c). Further, no dividend equivalents will accrue after termination, and the price per share for all payments shall be the median price per share for the last eleven (11) Trading Days prior to the date of termination to determine the amount of cash to be paid to the Participant. In lieu of dividend equivalents, interest at the rate in effect from time to time as described in Subparagraph 11(a), Open Deferral, shall accrue from the date the last dividend equivalent was credited under Subparagraph 12(e). Interest shall be compounded monthly. The amount of each annual payment shall be computed in the manner described in Subparagraph 11(b).

The following applies only to deferrals made under the plan during the year 1996

Each Stock Equivalent Deferral Eligible Participant whose employment is terminated for reasons other than death, disability or retirement shall be entitled to receive cash payments with respect to Awards deferred under the Stock Equivalent Deferral Option represented by Stock Equivalents and premiums credited to such Participant’s account provided that the applicable period as elected under Subparagraph 9(c) shall end as of the fifth year following the year in which occurs the Stock Equivalent Deferral Eligible Participant’s termination of employment, provided that should the Stock Equivalent Deferral Eligible Participant’s termination of employment occur before the minimum Deferral Period has passed, forfeiture of any applicable Stock Equivalents representing premiums, including any appreciation and dividend equivalents thereon credited, shall occur as provided in Subparagraph 12(c). Further, no dividend equivalents will accrue after termination, and the price per share for all payments shall be the price per share on the Trading Day prior to the date of termination (or the first Trading Day thereafter, if the date prior to the date of termination is not a Trading Day). In lieu of dividend equivalents, interest at the rate in effect from time to time as described in Subparagraph 11(a) shall accrue from the date that the last dividend equivalent was credited under Subparagraph 12(e). Interest shall be compounded monthly. The amount of each annual payment shall be computed in the manner described in Subparagraph 11(b).

The following applies only to deferrals made under the Plan during the years 1982 through 1995

Each Participant whose employment is terminated for reasons other than death, disability or retirement shall be entitled to receive cash payments with respect to Awards deferred under the Stock Equivalents Deferral Option represented by Stock Equivalents credited to his account provided that the applicable period as elected under Subparagraph 9(c) shall end as of the fifth year following the year in which occurs the Participant’s termination of employment. No dividend equivalents will accrue after termination, and the

price per share for all installments shall be the price per share on the Trading Day prior to the date of termination (or the first Trading Day thereafter, if the date prior to the date of termination is not a Trading Day). In lieu of dividend equivalents, interest at the rate in effect from time to time as described in Subparagraph 11(a) shall accrue from the date of the last dividend equivalent. Interest shall be compounded monthly. The amount of each annual payment shall be computed in the manner described in Subparagraph 11(b).

The following applies only to deferrals made under the Plan prior to 1982 and under the Weyerhaeuser Real Estate Company 1975 Incentive Compensation Plan, which became part of the Plan effective 1992

Each Participant whose employment is terminated for reasons other than death or retirement shall be entitled to receive cash payments with respect to awards deferred under the Stock Equivalents Deferral option represented by Stock Equivalents credited to his account in five annual installments commencing with the year following his year of termination. No dividend equivalents will accrue after termination, and the price per share for all installments shall be the price per share on the Trading Day prior to the date of termination (or the first Trading Day thereafter, if the date prior to the date of termination is not a Trading Day). In lieu of dividend equivalents, interest at the rate in effect from time to time as described in Subparagraph 11(a) shall accrue from the date of the last dividend equivalent. Interest shall be compounded monthly. The amount of each annual payment shall be computed in the manner described in Subparagraph 11(b).

(g)

Election at Participant’s 60th Birthday

As to Stock Equivalents credited to a Participant’s account for any Award Year and notwithstanding any provision in this Paragraph 12 to the contrary, at any time after the later of the Participant’s (or former Participant’s) 60 ^th birthday or six months after the Stock Equivalents are credited to the Stock Equivalent Deferral Eligible Participant’s

account, a Participant (or the Participant’s beneficiary in the event of the death of the Participant) may irrevocably elect, to establish and fix a firm price for some or all Stock Equivalents currently credited to such portion of his account to the extent such Stock Equivalents have satisfied the five year Deferral Period. The firm price shall then be the price per share of the common stock of the Company as of any Trading Day concurrent with the delivery of such election to the plan record-keeper, The Vanguard Group, if delivered before the close of the market, or at price per share of the common stock of the Company on the next following Trading Day, if delivered after the close of the market. Interest shall be earned from the date the last dividend equivalent was credited under Subparagraph 12(e) at the rate applicable from time to time under Subparagraph 11(a). Such interest shall be compounded monthly. Such election shall not accelerate actual payment under the Stock Equivalent Deferral option.

The following applies only to deferrals made under the Plan for the years 1986 through 1995

As to Stock Equivalents credited to a Participant’s account for any Award Year (including Stock Equivalents relating to a Salary Deferral under paragraph 14 and increments thereto), and notwithstanding any provision in this Subparagraph 12 (f) to the contrary, at any time after the Participant’s 52 ^nd birthday the Participant (or the Participant’s beneficiary in the event of the death of the Participant) may irrevocably elect to establish and fix a firm price for Stock Equivalents currently credited to such portion of his account. The firm price shall then be the price per share of the common stock of the Company as of any Trading Day concurrent with the delivery of such election to the plan record-keeper, The Vanguard Group, if delivered before the close of the market, or at the price per share of the common stock of the Company on the next following Trading Day, if delivered after the close of the market. Interest shall be earned from the date that the last dividend equivalent was credited under Subparagraph 12(e) at the rate applicable from time to time under Subparagraph 11(a). Such interest shall be compounded monthly. Such election shall not accelerate actual payment under the Stock Equivalents Deferral Option.

The following applies only to deferrals made under the Plan for the years 1983 through 1985.

As to Stock Equivalents credited to a Participant’s account for any Award Year (including Stock Equivalents relating to a Salary Deferral under Paragraph 14 and increments thereto), and notwithstanding any provision in this Subparagraph 12(f) to the contrary, at any time after the Participant’s 52 ^nd birthday the Participant (or the Participant’s beneficiary in the event of the death of the Participant) may irrevocably elect to establish and fix a firm price for Stock Equivalents currently credited to such portion of his account. The firm price shall then be the price per share of the common stock of the Company as of any Trading Day concurrent with the delivery of such election to the plan record-keeper, The Vanguard Group, if delivered before the close of the market, or at the price per share of the common stock of the Company on the next following Trading Day, if delivered after the close of the market. Interest shall be earned from the date that the last dividend equivalent was credited under Subparagraph 12(e) at the rate applicable from time to time under Subparagraph 11(a). Such interest shall be compounded monthly. Such election shall not accelerate actual payment under the Stock Equivalents Deferral Option.

The following applies only to deferrals made under the Plan for the year 1982

As to Stock Equivalents credited to a Participant’s account for any Award Year (including increments thereto), notwithstanding any provision in this Subparagraph 12(f) to the contrary, at any time after the Participant’s 52 ^nd birthday the Participant (or the Participant’s beneficiary in the event of the death of the Participant) may irrevocably elect, to establish and fix a firm price for Stock Equivalents currently credited to such portion of his account. The firm price shall then be the price per share of the common stock of the Company as of any Trading Day concurrent with the delivery of such election to the plan record-keeper, The Vanguard Group, if delivered before the close of the market, or at the price per share of the common stock of the Company on the next following Trading Day, if delivered after the close of the market. Interest shall be earned from the date that the last dividend equivalent was credited under Subparagraph 12(e) at the rate applicable from time

to time under Subparagraph 11(a). Such interest shall be compounded monthly. Such election shall not accelerate actual payment under the Stock Equivalents Deferral Option.

The following applies only to deferrals made under the Plan for the years prior to 1982 and under the Weyerhaeuser Real Estate Company 1975 Incentive Compensation Plan, which became part of the Plan effective 1992

As to Stock Equivalents credited to a Participant’s account for any Award Year (including increments thereto), notwithstanding any provision in this paragraph 12(f) to the contrary, at any time during the period commencing three years prior to the date a Participant is eligible to retire and ending on the Participant’s retirement date, the Participant (or the Participant’s beneficiary in the event of the death of the Participant) may irrevocably elect to establish and fix a firm price for Stock Equivalents currently credited to such portion of his account. The firm price shall then be the price per share of the common stock of the Company as of any Trading Day concurrent with the delivery of such election to the plan record-keeper, The Vanguard Group, if delivered before the close of the market, or at the price per share of the common stock of the Company on the next following Trading Day, if delivered after the close of the market. Interest shall be earned from the date that the last dividend equivalent was credited under Subparagraph 12(e) at the rate applicable from time to time under Subparagraph 11(a). Such interest shall be compounded monthly. Such election shall not accelerate actual payment under the Stock Equivalents Deferral Option.

(h)

Price Per Share. The term “price per share” shall refer to the closing price of the common stock of the Company on the New York Stock Exchange on the Trading Day in question.

13.	General Provisions Related to Deferrals .

(a)

Hardship and Change of Circumstances Cases . Notwithstanding other provisions hereof, in the case of permanent and total disability, other hardship or unanticipated and

significant change of circumstances beyond the control of the Deferral Eligible Participant (or such Participant’s beneficiary), as determined in the sole discretion of the Committee, the Committee, upon application by the Deferral Eligible Participant (or such Participant’s beneficiary) or his or her legal representative, may:

(i)

shorten the Deferral Period so as to modify the time deferred payments are to commence,

(ii)

shorten the period over which such payments are to be made.

(b)

Date of Payments . All payments due in a year shall be made prior to March 15 of the year in question.

(c)

Segregation of Funds . The Company shall be under no obligation to segregate any deferred funds during the Deferral Period and each Deferral Eligible Participant should realize that such unsegregated funds are subject to the claims of the Company’s general creditors during the Deferral Period.

(d)

Beneficiaries . Each Deferral Eligible Participant may appoint a beneficiary or beneficiaries to receive payments to be made with respect to deferred Awards, if any, after his or her death. In the absence of such appointment, all such amounts shall be paid to his or her personal representative. The appointment shall be made on a form to be supplied by the Committee and may be revoked or superseded at any time.

14.

Salary Deferral . Each Deferral Eligible Participant shall have the right to elect for any Award Year to defer payment of a percentage (which is no less than 10% and no more than 50%) of his or her base salary which would otherwise be paid during the succeeding Award Year under the following terms and conditions:

(a)

Irrevocable Election; Timing . The election shall be made during the November preceding the Award Year and shall be irrevocable.

(b)

Method and Timing of Deferral . Each such election to defer salary shall include an election as to the method and timing of the deferral as if said amount deferred was a deferral of an Award as described in Subparagraphs 8 through 11 and 13 of the Plan except that

(i)

Subparagraphs 9(a), 9(b)(ii) and 9(c)(i) shall not apply;

(ii)

The percentage of salary to be deferred shall be applied against and shall thus reduce each paycheck of the Participant during the Award Year;

(iii)

For purposes of any portion of the deferred salary treated as an “Open Deferral,” the deferred amount shall be credited to the Participant’s account as of the day it would otherwise have been paid in cash, shall thereafter accrue interest at the rate described in Subparagraph 11(a), and shall be paid out as described in Subparagraphs 9(b)(i) and 11(b).

15.

Schedule A

Management Incentive Plans

Comprehensive Incentive Compensation Plan

Weyerhaeuser Company Management Incentive Plan

WBM Area/General Managers’ Incentive Plan

NORPAC Management Incentive Plan

Pulp, Paper & Packaging Project Managers’ Plan

WRECO Incentive Plan

Exhibit 10.P

W EYERHAEUSER C OMPANY

S ALARIED E MPLOYEES

S UPPLEMENTAL R ETIREMENT P LAN

Restatement Effective as of January 1, 2003

Incorporating the 12/31/2002 Merger of the

Willamette Industries, Inc. Supplemental Accrued Benefits Plan

With and Into this Plan

T ABLE OF C ONTENTS


*Topic*			*Page*

P URPOSE			1

A RTICLE I : D EFINITIONS			2

	1.1	Adjusted Earnings	2
	1.2	Adoption Date	2
	1.3	Appeals Administrator	2
	1.4	Code	2
	1.5	Compensation Committee	2
	1.6	Effective Date	2
	1.7	Eligible Bonus	3
		(a) Definition – In General	3
		(b) Amount of Eligible Bonus May Not Exceed Adjusted Earnings	3
	1.8	Eligible Key Management Member	3
	1.9	Former Member of the Willamette SBP	3
	1.10	Former Participant in the Supplemental MB Plan	3
	1.11	Management Incentive Plan	3
	1.12	Mirror Salaried Plan	4
	1.13	Plan	4
	1.14	Qualified MB Plan	4
	1.15	Qualified Salaried Plan	4
	1.16	SRP Administrator	4
	1.17	SRP Benefit Commencement Date	4
	1.18	SRP Participant	4
	1.19	Supplemental Accrued Benefit	5
	1.20	Supplemental Benefit in the Normal Form	5
	1.21	Supplemental MB Plan	5
	1.22	Target Accrued Benefit	5
	1.23	Total Adjusted Final Average Earnings	5
		(a) General Rule	5
		(b) Prior Members of Willamette SBP	6
	1.24	Unforeseeable Emergency	6
	1.25	Unreduced At 60	6
	1.26	Willamette SBP	6

A RTICLE II : S ERVICE			6

	2.1	Years of Credited Service	6
		(a) As Defined in Qualified Salaried Plan	6
		(b) Willamette Benefit Credits	6



		P AGE i

T ABLE OF C ONTENTS


		(c) MacMillan Bloedel Years of Benefit Credits	7
	2.2	Years of Vesting Service	7
		(a) As Defined in Qualified Salaried Plan	7
		(b) Additional Vesting Provisions for Former Members of the Willamette Plans	7

A RTICLE III : E LIGIBILITY AND P ARTICIPATION			7

	3.1	Conditions to Becoming an SRP Participant	7
		(a) First Condition	8
		(b) Second Condition	8
	3.2	Prior Participants in MB Supplemental Plan	8
	3.3	Continuation of SRP Participant Status	8
	3.4	No Active Participation Prior to Adoption Date	8

	A RTICLE IV : P ENSION B ENEFITS		9

	4.1	Earnings Based Pension Benefits	9
		(a) Target Accrued Benefit	9
		(b) Supplemental Accrued Benefit and Supplemental Benefit in the Normal Form	9
	4.2	Special Rules for Certain Merged Plans	11
		(a) SRP Participants with Prior Willamette Accrued Benefits	11
		(b) Willamette Minimum Target Accrued Benefit	14
		(c) Former Participants in the Supplemental MB Plan	15
	4.3	Allocation of Bonus to a Calendar Year	15
	4.4	Benefit Calculations Not Involving Offset of Prior Accrued Benefits	16
	4.5	Rules Against Cutback of Benefit Amounts	16
	4.6	Normal Retirement Benefit	16
	4.7	Early Retirement Benefit	17
		(a) Incorporating the Provisions of the Qualified Salaried Plan	17
		(b) Benefit Unreduced at 60	17
	4.8	Disability Retirement Benefit	17
	4.9	Vested Retirement Benefit	18
	4.10	Enhanced Vested Retirement Benefit	18
		(a) Rule of 65 Involuntary Termination Prior to Early Retirement	18
		(b) Amount of Supplemental Accrued Benefit	18

A RTICLE V : V ESTING			18

	5.1	Vesting Determined by Qualified Salaried Plan	18
	5.2	Special Vesting Events Under Willamette SBP During 2002	19
		(a) Terminations Between February 11 and December 31, 2002	19
		(b) Active Willamette Employees as of December 31, 2002	19



		P AGE ii

T ABLE OF C ONTENTS


A RTICLE VI : F ORMS OF B ENEFIT AND T IMING OF P AYMENTS			19

	6.1	Incorporation of Terms of Qualified Salaried Plan	19
	6.2	Irrevocable Election of Immediate or Deferred Benefit	19
	6.3	If Form or Timing of Supplemental and Qualified Benefits Differ	20
	6.4	Applicable Interest Rate used in calculation of outstanding interest on Installment Option	20

A RTICLE VII : D EATH B ENEFITS			21

	7.1	Incorporation of Terms of Qualified Salaried Plan	21

A RTICLE VIII : L IMITATIONS ON B ENEFITS			21

	8.1	Code Limitations Do Not Apply	21

A RTICLE IX : M ISCELLANEOUS P ROVISIONS			21

	9.1	No Right to Continued Employment	21
	9.2	No Assignment of Benefits	21
	9.3	Governing Law	21
	9.4	Former Willamette SBP Provision Not Applicable After February 11, 2002	22

A RTICLE X : A DMINISTRATION OF THE P LAN			22

	10.1	Plan Administrator	22
		(a) Role of Compensation Committee	22
		(b) Avoidance of Conflict of Interest	22
	10.2	Benefit Administrator	22
	10.3	Claims and Appeal Procedure	22
		(a) Procedures as Stated in Qualified Salaried Plan	22
		(b) Claims Administrator	23
		(c) Appeals Administrator	23
		(d) Delegation of Discretion to Claims and Appeals Administrators	23

A RTICLE XI : U NFUNDED P LAN			23

	11.1	Unfunded Status of Plan	23

A RTICLE XII : A MENDMENT AND T ERMINATION			24

	12.1	Authority to Amend and Terminate Plan	24

T ABLE 1: M ANAGEMENT I NCENTIVE P LANS			25

S IGNATURE P AGE			27



		P AGE iii

W EYERHAEUSER C OMPANY

S ALARIED E MPLOYEES S UPPLEMENTAL R ETIREMENT P LAN

As Restated Effective January 1, 2003

P URPOSE

This Plan is established as an unfunded pension plan primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201, 301 and 401 of ERISA (and Section 2520.104-23 of regulations under ERISA). In particular, the Plan provides non-qualified retirement pension benefits which are in addition to retirement benefits provided by Weyerhaeuser plans that are qualified under Code Section 401(a).

An SRP Participant shall be eligible under this Plan for any Target Accrued Benefit that is Vested as of the date of his or her Termination ; provided, however, that, for an SRP Participant (or a beneficiary of a pre-retirement death benefit) with an SRP Benefit Commencement Date on or after January 1, 2003, the optional forms of benefit, and the Actuarial Equivalencies applicable to any Supplemental Benefit in the Normal Form under this Plan, shall be in accordance with the terms of the Qualified Salaried Plan which are in effect on the SRP Benefit Commencement Date.

Effective May 1, 2001, the MacMillan Bloedel Companies Supplemental Retirement Income Plan (“Supplemental MB Plan”) was merged with and into this Plan. Benefit accruals under the Supplemental MB Plan were frozen as of December 31, 2000, and any and all rights and obligations to any such frozen benefits under that plan through that date were transferred to this Plan as of the May 1, 2001 merger date. There shall be no automatic right to accrue additional benefits under this Plan on or after the merger date merely because an individual had been a participant in the Supplemental MB Plan prior to the merger date.

Effective December 31, 2002, the Willamette Industries, Inc. Supplemental Accrued Benefits Plan (“Willamette SBP”) was merged with and into this Plan. Benefit accruals under the Willamette SBP were frozen as of the merger date, and any and all rights and obligations to any such frozen benefits under that plan through that date were transferred into this Plan as of the merger date. There shall be no automatic right to accrue additional benefits under this Plan after the merger date merely because an individual had been a participant in the Willamette SBP on or before the merger date.

The Plan is hereby restated effective January 1, 2003. Unless otherwise stated, the provisions included in this restatement are effective for Terminations and SRP Benefit Commencement Dates on or after January 1, 2003.



		P AGE 1

A RTICLE I: D EFINITIONS

Article I: D EFINITIONS

Capitalized terms in this Plan document which are not in italics shall have the respective meaning stated in this Article I. Capitalized terms in italics shall have the meaning stated in Article I of the Qualified Salaried Plan, except that any reference to the “Plan” which is contained in any such definition shall be deemed to refer to this Plan, where the context so requires.

1.1 Adjusted Earnings

For any calendar year, an SRP Participant’s “Adjusted Earnings” shall be equal to the annualized amount of his or her compensation that would have been recognized as Earnings under the terms of the Qualified Salaried Plan if such Earnings were not subject to the Code Section 401(a)(17) limitations on includible compensation.

1.2 Adoption Date

“Adoption Date” shall mean February 10, 1987, which is the date as of which this Plan was originally adopted by Weyerhaeuser .

1.3 Appeals Administrator

“Appeals Administrator” means the committee charged with the duty of acting on behalf of the Plan as the administrator of appeals of denied claims. As of the restatement date of this Plan, the Appeals Administrator is the Compensation Committee.

1.4 Code

“Code” shall mean the Internal Revenue Code of 1986 as it may be amended from time to time.

1.5 Compensation Committee

“Compensation Committee” means the Compensation Committee of the Board of Directors of Weyerhaeuser .

1.6 Effective Date

The “Effective Date” of this restated Plan document shall be January 1, 2003, that being the date as of which the terms and conditions of this Plan document are effective, except to the extent that a different effective date is expressly stated herein.



		P AGE 2

A RTICLE I: D EFINITIONS

1.7 Eligible Bonus

(a)

Definition – In General

Subject to the rules of subsection (b), and Sections 3.4 and 4.3, the “Eligible Bonus” for a calendar year means the sum of 1) the gross amount paid under a Management Incentive Plan that is recognized under Table 1 of this Plan to the SRP Participant during that year (prior to any payroll withholding) and 2) the gross amount which would have been paid under such plan during the same year had it not been deferred by the SRP Participant under a nonqualified deferred compensation plan or agreement. The Eligible Bonus amount described in the previous sentence shall not be annualized for purposes of this Plan.

(b) Amount of Eligible Bonus May Not Exceed Adjusted Earnings

Notwithstanding subsection (a), the amount of any Eligible Bonus which may be taken into account under this Plan for a year shall not be greater than the amount of the SRP Participant’s Adjusted Earnings for that year.

1.8 Eligible Key Management Member

“Eligible Key Management Member” means an individual who is designated as a member of the key management group by the Chief Executive Officer of Weyerhaeuser , and whose letter of designation specifically outlines that he or she is eligible for benefits under the Unreduced At 60 provision of this Plan.

1.9 Former Member of the Willamette SBP

“Former Member of the Willamette SBP” means an individual who, on December 31, 2002, was an “Active Member”, “Inactive Member” or “Retired Member” of the Willamette SBP.

1.10 Former Participant in the Supplemental MB Plan

“Former Participant in the Supplemental MB Plan” means an individual who, on December 31, 2000, was an active participant in – or a terminated Participant entitled to receive benefits from – the Supplemental MB Plan.

1.11 Management Incentive Plan

“Management Incentive Plan” means those programs which are listed in Table 1. A program may be added to or deleted from Table 1 by authority of the Chief Executive Officer of Weyerhaeuser Company; provided, however, that no incentive program of Weyerhaeuser Real Estate Company and/or its subsidiaries is a Management Incentive Plan unless approved for inclusion by the Compensation Committee. If a program is deleted from Table 1, Eligible Bonuses paid under such program prior to deletion shall continue to be Eligible Bonuses.



		P AGE 3

A RTICLE I: D EFINITIONS

1.12 Mirror Salaried Plan

A “Mirror Salaried Plan” means an individual employment contract between an SRP Participant and the Employer which will pay post-termination benefits based upon and supplemental to the Qualified Salaried Plan as in effect on the date of the SRP Participant’s Termination . For an individual covered under a Mirror Salaried Plan, any provision of this Plan which provides for offsetting the Qualified Salaried Plan benefit from the Target Accrued Benefit shall be interpreted to provide for offsetting the combined benefits payable under both the Qualified Salaried Plan and any such Mirror Salaried Plan applicable to the SRP Participant.

1.13 Plan

“Plan” means this Weyerhaeuser Company Salaried Employees Supplemental Retirement Plan, as originally adopted as of February 10, 1987, and as it may be amended from time to time. It is NOT intended that this Plan be qualified under Section 401 of the Code.

1.14 Qualified MB Plan

“Qualified MB Plan” means the Retirement Plan for Salaried Employees of MacMillan Bloedel of America Inc. and Subsidiary, Associated and Affiliated Companies. If and when there is a termination of the Qualified MB Plan, any reference to a benefit under the Qualified MB Plan shall mean the benefit earned under that plan prior to its termination, whether paid from the plan or from an annuity contract resulting from the plan termination.

1.15 Qualified Salaried Plan

“Qualified Salaried Plan” means the Weyerhaeuser Company Retirement Plan for Salaried Employees, restated as of January 1, 2003, and as it may be amended from time to time.

1.16 SRP Administrator

“SRP Administrator” means the Compensation Committee.

1.17 SRP Benefit Commencement Date

“SRP Benefit Commencement Date” means the first day of the first calendar month for which a benefit under this Plan is payable to an SRP Participant as an annuity or another form of benefit. The SRP Benefit Commencement Date shall be a date elected in accordance with Section 6.2 of this Plan by the SRP Participant (or his or her beneficiary, in a case of the pre-retirement death of the SRP Participant) which is on or after the earliest date as of which he or she is entitled to commence his or her Accrued Benefit under the terms of the Qualified Salaried Plan and not later than the latest date to which the start of a benefit under that plan could be deferred.

1.18 SRP Participant

“SRP Participant” means an individual who satisfies the eligibility requirements stated in Section 3.1.



		P AGE 4

A RTICLE I: D EFINITIONS

1.19 Supplemental Accrued Benefit

Subject to certain further rules and exceptions stated in Section 4.1 and 4.2 of this Plan, “Supplemental Accrued Benefit” means, in general, the difference of (a) an SRP Participant’s Target Accrued Benefit under this Plan, minus (b) his or her Accrued Benefit under the Qualified Salaried Plan, to the extent that an SRP Participant has a Vested benefit under this Plan. The Supplemental Accrued Benefit is expressed as the monthly amount of a Single Life Annuity commencing as of the Normal Retirement Date.

1.20 Supplemental Benefit in the Normal Form

An SRP Participant’s “Supplemental Benefit in the Normal Form” means the dollar amount of the monthly benefit that is payable in the Normal Form (a Single Life Annuity) to an SRP Participant from this Plan, commencing as of his or her SRP Benefit Commencement Date. The amount of the Supplemental Benefit in the Normal Form shall take account of all applicable rules stated in Article IV of this Plan, and in Article IV (or any Attachment) of the Qualified Salaried Plan, for determining any applicable adjustment based on an SRP Benefit Commencement Date that is either (a) prior to the Normal Retirement Date, or (b) later than April 1 following the year of attaining age 70 ¹ / 2 .

1.21 Supplemental MB Plan

“Supplemental MB Plan” means the MacMillan Bloedel Companies Supplemental Retirement Income Plan.

1.22 Target Accrued Benefit

“Target Accrued Benefit” means an SRP Participant’s target level of overall monthly pension benefit described by the terms of Section 4.1 of this Plan. The amount of the Target Accrued Benefit is expressed as the monthly amount of a Single Life Annuity commencing as of the Normal Retirement Date .

1.23 Total Adjusted Final Average Earnings

(a) General Rule

“Total Adjusted Final Average Earnings” means the amount of the Final Average Monthly Earnings that would have been determined for the SRP Participant under the Qualified Salaried Plan as of his or her date of Termination , had the definition of Earnings for each calendar year that is taken into account for averaging purposes been modified to be equal to the sum of the Adjusted Earnings and the Eligible Bonus (if any) allocable to that calendar year. The five highest consecutive years of combined Adjusted Earnings and Eligible Bonuses that are taken into account for purposes of Total Adjusted Final Average Earnings under this Plan may be a different set of years than the five highest consecutive years taken into account for purposes of Final Average Monthly Earnings under the Qualified Salaried Plan.



		P AGE 5

A RTICLE II: S ERVICE

(b) Prior Members of Willamette SBP

For an SRP Participant who, prior to January 1, 2003, was a member of the Willamette SBP, Total Adjusted Final Average Earnings shall be based solely on any Adjusted Earnings and any Eligible Bonus payable to him or her on or after January 1, 2003.

1.24 Unforeseeable Emergency

“Unforeseeable Emergency” means an unanticipated emergency that is caused by an event beyond the control of the SRP Participant or beneficiary that would result in severe financial hardship to the individual if early payment of a benefit under this Plan were not permitted.

1.25	Unreduced At 60

The term “Unreduced At 60” means the provision of this Plan which provides that should the benefit under the Qualified Salaried Plan be reduced because of early commencement of benefits after age 60, then an additional benefit equal to the amount that the benefit was reduced because of early commencement will be paid from this Plan. Only those individuals specifically identified by the Chief Executive Officer of Weyerhaeuser are eligible for benefits under the Unreduced At 60 provision of this Plan.

1.26	Willamette SBP

“Willamette SBP” means the Willamette Industries, Inc. Supplemental Accrued Benefits Plan, as it existed on an applicable date on or before its December 31, 2002 merger with and into this Plan.

Article II: S ERVICE

2.1 Years of Credited Service

(a) As Defined in Qualified Salaried Plan

For purposes of determining the Target Accrued Benefit under this Plan, an SRP Participant shall be deemed to have accrued, as of a given date, the number of whole and fractional Years of Credited Service which are credited to him or her as of the same date under the Qualified Salaried Plan.

(b) Willamette Benefit Credits

For an SRP Participant who, prior to January 1, 2003, was a member of the Willamette Salaried Plan and who, on or after January 1, 2003, has at least an Hour of Service as an SRP Participant, his or her whole and fractional Willamette Bridgeable Benefit Credits shall be credited as an equal number of whole and fractional Years of Credited Service for



		P AGE 6

A RTICLE III: E LIGIBILITY AND P ARTICIPATION

purposes of determining a Target Accrued Benefit under Article IV of this Plan. However, any Willamette Frozen Benefit Credits shall not be treated as Years of Credited Service hereunder; instead, the Target Accrued Benefit for such an SRP Participant with Willamette Frozen Benefit Credits shall be determined as described in Section 4.2(a)(i)(D) of this Plan.

For an SRP Participant who, prior to January 1, 2001, had earned service for benefit accrual purposes under the Qualified MB Plan and who, on or after January 1, 2001, has at least an Hour of Service as a Participant in the Qualified Salaried Plan, his or her whole and fractional Years of Credited Service for purposes of this Plan shall be as stated in Section 4.3(b) of the Qualified Salaried Plan, and shall therefore be equal to the sum of such benefit accrual service earned under the Qualified MB Plan prior to January 1, 2001, plus Years of Credited Service earned on and after January 1, 2001 under the Qualified Salaried Plan.

2.2 Years of Vesting Service

(a) As Defined in Qualified Salaried Plan

Under this Plan, for purposes of (a) becoming 100% Vested , (b) eligibility for Early Retirement and Disability Retirement benefits, and (c) eligibility to commence a Vested Retirement benefit prior to the Normal Retirement Date , an SRP Participant shall be deemed to have, as of a given date, the number of whole and fractional Years of Vesting Service which are credited to him or her as of the same date under the Qualified Salaried Plan.

(b) Additional Vesting Provisions for Former Members of the Willamette Plans

The provisions of Section 2.2(d)(ii) of the Qualified Salaried Plan, which provide for reciprocal vesting credit and other rules pertaining to vesting and forfeiture of service for any individual who was formerly a member of a qualified pension plan sponsored by Willamette Industries, Inc. shall likewise apply for purposes of determining Years of Vesting Service under this Plan.

Article III: E LIGIBILITY AND P ARTICIPATION

3.1 Conditions to Becoming an SRP Participant

Subject to Section 3.4 below, an individual who satisfies both the first condition under subsection (a) below and either of the two alternative second conditions under subsection (b) below shall be an SRP Participant under this Plan.



		P AGE 7

A RTICLE III: E LIGIBILITY AND P ARTICIPATION

(a) First Condition

An individual must be either (i) a Participant in the Qualified Salaried Plan, (ii) a Former Member of the Willamette SBP, or (iii) a Former Participant in the Supplemental MB Plan.

(b) Second Condition

An individual must meet the requirements of either subsection (i) or (ii) below.

(i) Individuals Designated by Nomination and Approval Process

An individual satisfies this subsection (i), if (A) such individual is a high policy making employee, and (B) such individual has been nominated by the Chief Executive Officer of Weyerhaeuser and approved for inclusion in this Plan by the Compensation Committee.

(ii) Individuals Affected by Qualified Plan Limitations

An individual satisfies this subsection (ii) if his or her Accrued Benefit under the Qualified Salaried Plan is limited by either the maximum benefit restrictions of Code Section 415 or the maximum includible Earnings restrictions of Code Section 401(a)(17).

3.2 Prior Participants in MB Supplemental Plan

If an individual had accrued a retirement income benefit under the Supplemental MB Plan on December 31, 2000, but did not become eligible to participate in this Plan under Section 3.1 above, the individual shall have a vested right under this Plan to receive a Target Accrued Benefit equal to the benefit accrued under the Supplemental MB Plan through December 31, 2000.

3.3 Continuation of SRP Participant Status

An individual who once becomes an SRP Participant under the terms of this Article III shall remain an SRP Participant until Termination from the Employer .

3.4 No Active Participation Prior to Adoption Date

No individual who Terminated e mployment with Weyerhaeuser or any Affiliated Company prior to the Adoption Date shall be an SRP Participant under this Plan unless such individual is rehired on or after the Adoption Date and thereafter satisfies the eligibility requirements of Section 3.1 of the Plan. For such an individual, no bonus (whether paid, or awarded but deferred) which is allocable to a date prior to the Adoption Date (according to the Bonus Allocation Rules in Section 4.3) shall be considered an Eligible Bonus.



		P AGE 8

A RTICLE IV : P ENSION B ENEFITS

Article IV: P ENSION B ENEFITS

4.1 Earnings Based Pension Benefits

(a) Target Accrued Benefit

Subject to other applicable terms of Article IV of this Plan, for an individual with one or more Hours of Service on or after January 1, 2003 as an SRP Participant, the amount of his or her Target Accrued Benefit under this Plan shall be equal to the Accrued Benefit that would be determined under the provisions of Section 4.1 to 4.5 of the Qualified Salaried Plan if the following modifications were made:

(i)

Eligible Bonuses were added to Earnings that are otherwise taken into account under the Qualified Salaried Plan;

(ii)

The maximum benefit limitations under Code Section 415 were eliminated; and

(iii)

The limit on includible Earnings under Code Section 401(a)(17) was eliminated.

The combined effect of clauses “(i)” through “(iii)”above, as applied, for example, to the pension formula of Section 4.1(a) of the Qualified Salaried Plan, is to calculate the Target Accrued Benefit under this Plan by substituting an SRP Participant’s Total Adjusted Final Average Earnings instead of his or her Final Average Monthly Earnings wherever the Final Average Monthly Earnings would otherwise be taken into account under Sections 4.1 through 4.5 of the Qualified Salaried Plan.

(b) Supplemental Accrued Benefit and Supplemental Benefit in the Normal Form

(i) Definition of Supplemental Accrued Benefit — In General

Subject to the subsections below, the Supplemental Accrued Benefit shall be expressed as a benefit payable in the Normal Form (a Single Life Annuity), and commencing as of the Normal Retirement Date, in an amount equal to the Target Accrued Benefit reduced by the Accrued Benefit that is determined under Sections 4.1 to 4.4 of the Qualified Salaried Plan, prior to any adjustments for the timing or form of the benefit.

(ii) Definition of Supplemental Benefit in the Normal Form

Subject to the subsections below, the Supplemental Benefit in the Normal Form shall be a benefit expressed in the form of a Single Life Annuity, in a monthly amount based on the Supplemental Accrued Benefit, but after taking account of any and all adjustments applicable to the timing of the commencement of the benefit as of the SRP Benefit Commencement Date (as further provided in Article



		P AGE 9

A RTICLE IV : P ENSION B ENEFITS

IV of this Plan and the Qualified Salaried Plan), but not any Actuarial adjustments based on any optional form in which the benefit is paid (as further provided in Article VI of this Plan).

(iii) Special Rule for Past Service Benefits Added to Accrued Benefit

For an SRP Participant who has a right under the Qualified Salaried Plan to receive any Past Service Benefit (as described in Notes F, G or H of Attachment 3 of that plan) which are payable as an additional benefit over and above the benefit determined under the Accrued Benefit pension formulas of Sections 4.1 to 4.5 of that plan, then the Supplemental Accrued Benefit under this Plan shall be equal to (a) the Target Accrued Benefit without taking into account any such Past Service Benefit that is additive in character, minus (b) the Accrued Benefit under Sections 4.1 to 4.5 of the Qualified Salaried Plan without taking into account any such Past Service Benefit which is additive in character.

For example, for an SRP Participant who is entitled to receive a Past Service Benefit consisting of either a Bohemia or Penntech Frozen Accrued Benefit (as described in Notes H-1 and H-3 of the Qualified Salaried Plan), the Supplemental Accrued Benefit under this Plan shall be equal to (a) the Target Accrued Benefit without taking into account any such Bohemia or Penntech Frozen Accrued Benefit , minus (b) the Accrued Benefit under Sections 4.1 to 4.5 of the Qualified Salaried Plan without taking into account any such Bohemia or Penntech Frozen Accrued Benefit.

For an SRP Participant who is entitled to receive a Past Service Benefit consisting of a Cavenham Frozen Accrued Benefit (as described in Note H-2 of the Qualified Salaried Plan), the Supplemental Accrued Benefit under this Plan shall be equal to (a) the Target Accrued Benefit taking into account any such Cavenham Frozen Accrued Benefit , minus (b) the Accrued Benefit under Sections 4.1 to 4.5 of the Qualified Salaried Plan taking into account any such Cavenham Frozen Accrued Benefit.

(iv) Special Rule for Past Service Benefits Offset from Accrued Benefit

The terms and conditions of this subsection 0 shall determine the Supplemental Accrued Benefit for an SRP Participant who is entitled to receive a Past Service Benefit under Section 4.3 of the Qualified Salaried Plan, which involves (A) imputed Years of Credited Service (for the period of service with a prior employer or prior plan), and (B) an offset from the Accrued Benefit under the Qualified Salaried Plan to take account of the benefit earned under the prior qualified plan.



		P AGE 10

In such a case, the Supplemental Accrued Benefit under this Plan shall be the difference of (A) and (B), as follows:

A RTICLE IV: P ENSION B ENEFITS

(A)

the Target Accrued Benefit under this Plan, which shall be based on all Years of Credited Service taken into account for calculation of the “Wrap-Around” benefit (as defined in Section 4.3(b)(ii)(A) of that plan), minus

(B)

the sum of (1) the Accrued Benefit under the Qualified Salaried Plan and (2) the “Benefit Under Prior Plan” (as defined in Section 4.3(b)(ii)(B) of the Qualified Salaried Plan).

Provided, however, in the case of an SRP Participant with a prior benefit under the Qualified MB Plan, the terms of subsections (A) and (B) above shall not apply and, instead, the Supplemental Benefit in the Normal Form under this Plan shall be determined in two steps:

First: The interim amount of the Supplemental Benefit in the Normal Form shall be calculated by: (a) determining the difference of the Target Accrued Benefit for all “Wrap Around” years (as defined above), minus the Qualified Salaried Plan benefit for all such “Wrap Around” years, and then (b) adjusting that difference to reflect any applicable early commencement factor under the terms of this Plan, and

Second: That interim amount shall be reduced, dollar for dollar, by the monthly benefit payable from the Qualified MB Plan (expressed as a Single Life Annuity, after applying any applicable adjustment for early commencement under the terms of the Qualified MB Plan).

Notwithstanding all of the above provisions of this subsection (iv), the following comparison calculation shall apply instead in the event that it results in a greater benefit than the above provisions. The comparison calculation is as follows: the Supplemental Accrued Benefit under this Plan shall be the difference between (A) the Target Accrued Benefit based solely on Years of Credited Service with the Employer (without reference to any imputed service with the prior employer), minus (B) the Accrued Benefit based solely on those same Years of Credited Service with the Employer. In that event, any applicable adjustment for benefit commencement prior to age 65 shall be based solely on the terms of this Plan.

4.2	Special Rules for Certain Merged Plans

(a)

SRP Participants with Prior Willamette Accrued Benefits

This subsection (a) shall not apply to any individual who was not an active, inactive or retired member of the Willamette SBP as of December 31, 2002, which is the date the Willamette SBP was merged with and into this Plan.



		P AGE 11

A RTICLE IV: P ENSION B ENEFITS

(i)

Transition Rules for Willamette SBP Benefits

(A)

Willamette SBP Retirees with Pre-2003 Commencement Dates

The provisions of this subsection “(A)” shall be applied under this Plan in like manner as stated in Section 4.1(c)(i) of the Qualified Salaried Plan. For a retiree of the Willamette SBP (or his or her beneficiary) who, as of December 31, 2002, is receiving benefits from the Willamette SBP, he or she shall be entitled to continue receiving benefits from this Plan in like amount, subject to the terms of the form of benefit elected by the retiree as of the date of his or her commencement of benefits.

(B)

Terminated Willamette SBP Members With No Post-1/1/2003 Service

The provisions of this subsection “(B)” shall be applied under this Plan in like manner as stated in Section 4.1(c)(ii) of the Qualified Salaried Plan. For an SRP Participant with a Willamette Frozen or Bridgeable Accrued Benefit who has an SRP Benefit Commencement Date on or after January 1, 2003, but who has no Hours of Service as an Employee on or after that date, none of his or her Willamette Benefit Credits shall be considered Years of Credited Service under the post-1/1/2003 benefit formulas of Section 4.1(a) and 4.2 of the Qualified Salaried Plan (or the corresponding benefit calculation under this Plan). Such an SRP Participant’s Target Accrued Benefit shall be based on his or her “Unrestricted Benefit” under the Willamette SBP, offset by the accrued benefit under the Willamette Salaried Plan. The Supplemental Benefit in the Normal Form that is payable under this Plan shall take into account the applicable adjustment for early commencement, if commencing prior to age 65, according to the terms of the Willamette Salaried Plan . The SRP Participant may elect, subject to the terms of Section 6.2 of this Plan, to have the Supplemental Benefit in the Normal Form paid in any of the optional forms described in Article VI of this Plan, subject to Actuarial adjustments for the form of benefit as stated in this Plan, which incorporates by reference the terms of Attachment 1 of the Qualified Salaried Plan.

(C)

Willamette Bridgeable Accrued Benefits

For an SRP Participant with Willamette Bridgeable Benefit Credits and at least one Hour of Service as an Employee on or after January 1, 2003, the Supplemental Benefit in the Normal Form under this Plan shall be the difference between (i) the largest of the three adjusted Target Accrued Benefit amounts stated in subsections (1) through (3) below, minus (ii) the largest of the three adjusted benefit amounts determined under Section 4.1(c)(iii)(A) through (C) of the Qualified Salaried Plan. For purposes of clause (i) of the preceding sentence, the three alternatives are as follows:

(1)

A Target Accrued Benefit equal to the SRP Participant’s Willamette Minimum Target Accrued Benefit, with any applicable adjustment for an SRP Benefit Commencement Date prior to age 65 being determined according to the Early Retirement factors (or, if applicable, early Vested Benefit adjustment factors) of the Willamette Salaried Plan ;



		P AGE 12

A RTICLE IV: P ENSION B ENEFITS

(2)

A Target Accrued Benefit equal to the SRP Participant’s Willamette Minimum Target Accrued Benefit, with any applicable adjustment for an SRP Benefit Commencement Date prior to age 65 being determined according to the Early Retirement factors (or, if applicable, early Vested Benefit adjustment factors) of the Qualified Salaried Plan; or

(3)

A Target Accrued Benefit equal to the SRP Participant’s Target Accrued Benefit accrued through the date of SRP Participant’s Termination , under Section 4.1(a) of this Plan and the pension formula of Section 4.1(a) of the Qualified Salaried Plan, with any applicable adjustment for an SRP Benefit Commencement Date prior to age 65 being determined according to the Early Retirement factors (or, if applicable, early Vested Benefit adjustment factors) of the Qualified Salaried Plan.

The SRP Participant may elect to have the Supplemental Benefit in the Normal Form paid in any of the optional forms described in Article VI of this Plan, subject to Actuarial adjustments for the form of benefit as stated in that Article, which incorporates by reference the terms of Attachment 1 of the Qualified Salaried Plan.

(D)

Willamette Frozen Accrued Benefits

The provisions of this subsection “(D)” shall be applied under this Plan in like manner as stated in Section 4.1(c)(iv) of the Qualified Salaried Plan. For an SRP Participant with Willamette Frozen Benefit Credits and at least one Hour of Service as an Employee on or after January 1, 2003, the Supplemental Accrued Benefit shall be equal to the sum of “(1)” and “(2)” as follows:

(1)

the difference of (a) the “Unrestricted Benefit” under the Willamette SBP that is based on his or her Willamette Frozen Benefit Credits , minus (b) the Willamette Frozen Accrued Benefit (ignoring any Past Service Benefits ); plus



		P AGE 13

A RTICLE IV: P ENSION B ENEFITS

(2)

the difference of (a) the Target Accrued Benefit based on the formula of Section 4.1(a) of the Qualified Salaried Plan for any Years of Credited Service accrued on or after January 1, 2003, minus (b) the Accrued Benefit under the Qualified Salaried Plan for Years of Credited Service on or after January 1, 2003.

In such a case, the Supplemental Benefit in the Normal Form shall be determined in two parts, as follows. The portion of the Supplemental Accrued Benefit described in clause “(1)” above shall be adjusted for any applicable early commencement (as of the SRP Benefit Commencement Date), in accordance with the more favorable of the early commencement reduction factors under the Willamette Salaried Plan or the Qualified Salaried Plan, and the portion described in clause “(2)” shall be adjusted in accordance with the factors under the Qualified Salaried Plan.

The SRP Participant may elect, subject to the terms of Section 6.2, to receive payment of the entire Supplemental Benefit in the Normal Form in any of the optional forms described in Article VI of this Plan, subject to Actuarial adjustments for the form of benefit as stated in that Article, which incorporates by reference the terms of Attachment 1 of the Qualified Salaried Plan.

(b) Willamette Minimum Target Accrued Benefit

For a Former Member of the Willamette SBP who was an active Employee on December 31, 2002, the Target Accrued Benefit under this Plan on or after January 1, 2003, shall not be less than the “Willamette Minimum Target Accrued Benefit”, which means:

(i)

his or her “Unrestricted Benefit” as defined under Section 3.2 of the Willamette SBP as of December 31, 2002; or

(ii)

for a Former Member of the Willamette SBP who, as of December 31, 2002, was potentially eligible for the “Change-in-Control Benefit” under Section 7.4(e) of the Willamette SBP (after taking into account the terms of any written agreement that may be in force as of that date between the Participant and his or her employer), the Willamette Minimum Target Accrued Benefit shall be the amount of such Participant’s Unrestricted Benefit determined according to the terms of said Section 7.4(e) as accrued through December 31, 2002 (but with additional imputed months of service and age in accordance with the terms of said Section 7.4(e)), but only if the Participant Terminates employment on or after January 1, 2003



		P AGE 14

A RTICLE IV: P ENSION B ENEFITS

and prior to the applicable 24 or 36 months described in Section 7.4 of the Willamette SBP, other than for “Cause” (as defined in Section 7.4(e) of the Willamette SBP) as of a date that satisfies the conditions for such Change-In-Control Benefit.

No benefit that accrues under this Plan on or after January 1, 2003 shall be eligible to be taken into account when determining the Willamette Minimum Target Accrued Benefit under subsection “(ii)” above. Furthermore, where “(ii)” applies, in the case of an SRP Benefit Commencement Date prior to age 65, the additional 24 or 36 months of age (whichever is applicable) that are imputed under the said Section 7.4(e) shall be taken into account under Sections 4.2(a)(i)(C) and (D) of this Plan when determining the more favorable early reduction factor to apply to the Willamette Minimum Target Accrued Benefit as determined under either the Willamette Salaried Plan or the Qualified Salaried Plan.

(c)

Former Participants in the Supplemental MB Plan

Notwithstanding any other Plan provision, the Supplemental Accrued Benefit for a Former Participant in the Supplemental MB Plan or any Participant who had an accrued benefit in the Qualified MB Plan shall be equal to:

(i)

the sum of the Target Accrued Benefit and the accrued benefit under the Qualified MB Plan, reduced by

(ii)

the sum of the Accrued Benefit under the Qualified Salaried Plan plus the accrued benefit as defined in the Qualified MB Plan.

Provided, however, in no case shall the Supplemental Accrued Benefit for a Former Participant in the Supplemental MB Plan be less than the SRP Participant’s accrued benefit (expressed as a Single Life Annuity commencing at age 65) under the Supplemental MB Plan on December 31, 2000.

Notwithstanding any other Plan provision, the Supplemental Accrued Benefit for a Former Participant in the Supplemental MB Plan who terminated employment on or before December 31, 2000, shall equal his or her accrued benefit (expressed as a Single Life Annuity commencing at age 65) under the terms of the version of the MB Supplemental Plan that was in effect on December 31, 2000.

4.3 Allocation of Bonus to a Calendar Year

Eligible Bonuses shall be allocated to a specific calendar year in accordance with the following rules:

(a)

An Eligible Bonus shall be allocated to the calendar year in which paid if it is not deferred.



		P AGE 15

A RTICLE IV: P ENSION B ENEFITS

(b)

An Eligible Bonus which has been deferred before payment shall be allocated to the calendar year in which it would have been paid had it not first been deferred.

(c)

No bonus which was paid (or which would have been paid in accordance with the preceding rules) in 1981 or prior years shall be considered an Eligible Bonus.

(d)

For any individual who is first approved for participation under Section 3.1(c) as of May 1, 1988 or later, no bonus which was paid (or which would have been paid in accordance with the preceding rules) in a calendar year prior to the calendar year of approval shall be considered an Eligible Bonus. Bonuses paid in the calendar year of approval shall be included if they otherwise meet the definition of Eligible Bonus.

4.4 Benefit Calculations Not Involving Offset of Prior Accrued Benefits

In a case in which the circumstances described in Section 4.4 of the Qualified Salaried Plan apply to an SRP Participant, then the methods for benefit calculation, as described in that Section of the Qualified Salaried Plan, will likewise be applied to the calculation of the SRP Participant’s Target Accrued Benefit under this Plan.

4.5 Rules Against Cutback of Benefit Amounts

To safeguard against a reduction in an SRP Participant’s Target Accrued Benefit which may be caused by certain amendments of this Plan which became effective on January 1 of 2001, 2002 and 2003, the rules stated in the following table shall apply.


For an SRP Participant with an Hour of Service on or after:		The Target Accrued Benefit at Termination shall not be less than the Target Accrued Benefit under this Plan as of:

January 1, 2001		December 31, 2000

January 1, 2002		December 31, 2001

January 1, 2003		December 31, 2002

Provided, however, that the anti-cutback rules for Hours of Service after January 1 of 2001 and 2002 shall only apply to an individual who was then an active SRP Participant, and not to an individual who was then a Member of the Willamette SBP.

4.6 Normal Retirement Benefit

The terms of Section 4.6 of the Qualified Salaried Plan, which describe a Normal Retirement benefit under that plan, shall likewise apply to the Target Accrued Benefit under this Plan for an SRP Participant who meets the eligibility conditions for Normal Retirement as stated in the Qualified Salaried Plan.



		P AGE 16

A RTICLE IV: P ENSION B ENEFITS

4.7 Early Retirement Benefit

(a)

Incorporating the Provisions of the Qualified Salaried Plan

The terms and conditions of Section 4.7 (“Early Retirement Benefit”) of the Qualified Salaried Plan are incorporated by reference, and shall apply to the adjustment for early commencement, and to the timing of the payment, of the Supplemental Retirement Benefit, in the case of an Early Retirement of an SRP Participant under this Plan. Furthermore, the terms and conditions of Section 6.3 (“Early Retirement”) of the Willamette Salaried Plan (as amended through December 31, 2002) are incorporated by reference for purposes of performing the comparisons stated in Section 4.2(a)(i)(C) and (D) of this Plan.

(b)

Benefit Unreduced at 60

(i)

Amount of Supplemental Accrued Benefit

If the Participant satisfies the requirements stated in subsection “(ii)” below for an Unreduced at 60 benefit, and if the Supplemental Accrued Benefit commences prior to the Normal Retirement Date as defined in the Qualified Salaried Plan, the Supplemental Accrued Benefit payable under this Plan shall be equal to the excess of (A) the Target Accrued Benefit (without reduction for early commencement), over (B) the benefit payable from the Qualified Salaried Plan after such benefit under the Qualified Salaried Plan has been reduced for early commencement.

(ii)

Eligibility for Unreduced at 60

An SRP Participant shall be eligible for an Unreduced at 60 benefit under subsection (i) above if he or she meets all of the following conditions:

(A)

The individual is an Eligible Key Management Member, and

(B)

The Benefit Commencement Date under the Qualified Salaried Plan occurs on or after the date he or she attains age 60, and

(C)

The individual is eligible for an Early Retirement benefit (as defined under the Qualified Salaried Plan).

4.8 Disability Retirement Benefit

The terms of Section 4.8 of the Qualified Salaried Plan, which describe a Disability Retirement benefit under that plan, shall likewise apply to the Target Accrued Benefit under this Plan for an SRP Participant who meets the eligibility conditions for Disability Retirement as stated in the Qualified Salaried Plan.



		P AGE 17

A RTICLE V: V ESTING

4.9 Vested Retirement Benefit

The terms of Section 4.9 of the Qualified Salaried Plan, which describe a Vested Retirement benefit under that plan, shall likewise apply to the Target Accrued Benefit under this Plan for an SRP Participant who meets the eligibility conditions for Vested Retirement as stated in the Qualified Salaried Plan.

4.10 Enhanced Vested Retirement Benefit

(a)

Rule of 65 Involuntary Termination Prior to Early Retirement

This Section 4.10 applies to an SRP Participant who, as of the date of his or her involuntary Termination Without Cause prior to becoming eligible for Early Retirement (i) has at least 10 Years of Vesting Service , and (ii) the sum of his or her attained age and Years of Vesting Service is at least 65. If such an SRP Participant elects, subject to the terms of Section 6.2 of this Plan, to commence the payment of the benefit at or after attaining age 55 but prior to attaining age 65, then, in place of the Actuarial reduction factors applicable to the early commencement of a Vested Retirement benefit, the Early Retirement Benefit Commencement Percentages stated in Section 4.8(c) (except 4.8(c)(ii)) of the Qualified Salaried Plan shall apply.

(b)

Amount of Supplemental Accrued Benefit

In the case of a Termination as described in subsection (a), the Supplemental Accrued Benefit payable under this Plan shall be equal to the difference between (i) the Target Accrued Benefit reduced for early commencement using the Early Retirement Benefit Commencement Percentages specified in subsection (a) above, minus (ii) the benefit payable from the Qualified Salaried Plan after such benefit has been Actuarially reduced for early commencement in accordance with provisions of that plan.

Article V: V ESTING

5.1 Vesting Determined by Qualified Salaried Plan

No benefit shall be payable under this Plan unless the SRP Participant is vested in his or her Target Accrued Benefit under this Plan at the time of, or as a result of, his or her Termination . The vested status of an SRP Participant’s Target Accrued Benefit and the Supplemental Accrued Benefit under this Plan shall be determined by the vesting status of his or her Accrued Benefit under the Qualified Salaried Plan.



		P AGE 18

A RTICLE VI: F ORMS OF B ENEFIT AND T IMING O F P AYMENTS

5.2 Special Vesting Events Under Willamette SBP During 2002

(a)

Terminations Between February 11 and December 31, 2002

Each Former Member of the Willamette SBP who Terminated employment for any reason between February 11 and December 31, 2002, was entitled to 100% Vesting of their Willamette SBP benefit at the time of such Termination .

(b)

Active Willamette Employees as of December 31, 2002

Each Member of the Willamette SBP who was an active Employee as of December 31, 2002 was entitled to 100% Vesting of his or her benefit under the Willamette SBP as of that date, and shall furthermore be 100% Vested in any benefit he or she may subsequently accrue under this Plan.

Article VI: F ORMS OF B ENEFIT AND T IMING OF P AYMENTS

6.1 Incorporation of Terms of Qualified Salaried Plan

Except as provided in Sections 6.2, 6.3 and 6.4 of this Plan, the terms and conditions of Sections 6.1 through 6.3, and Sections 6.5 through 6.6 of the Qualified Salaried Plan, which describe optional forms of benefit, and other terms pertaining to the forms and timing of benefit payment under that plan, shall likewise apply to benefits payable under this Plan, and therefore the provisions of such Sections are incorporated herein by reference. For SRP Benefit Commencement Dates on and after January 1, 2003, both for active SRP Participants and vested former participants of either the Weyerhaeuser SRP or the Willamette SBP, the features of the Willamette SBP that relate to optional forms of benefit, procedures for electing among optional forms, and adjustments to determine the amount of an optional form, shall all cease to apply.

6.2 Irrevocable Election of Immediate or Deferred Benefit

Prior to Termination of employment, an SRP Participant shall elect the form of benefit and the SRP Benefit Commencement Date for payment of his or her Supplemental Accrued Benefit under this Plan. The SRP Benefit Commencement Date may not be earlier than the first day of the first month following the Termination date and, except as provided in Section 6.2(a) below, may not be earlier than the earliest date as of which the SRP Participant’s benefit under the Qualified Salaried Plan is eligible to commence. The elections must be in writing and delivered to and accepted by the Plan Administrator to become effective. Upon an SRP Participant’s Termination date, his or her elections shall be irrevocable, except as stated in the following two subsections.

(a)

In the event that an SRP Participant experiences an Unforeseeable Emergency, as determined in the sole discretion of Compensation Committee, benefits not otherwise payable until a later date may be accelerated at the discretion of the Compensation Committee, but not in an amount greater than the amount necessary to meet the emergency.



		P AGE 19

A RTICLE VI: F ORMS OF B ENEFIT AND T IMING OF P AYMENTS

(b)

An SRP Participant who elects a Joint and Survivor Annuity or a Term Certain and Life Annuity may change his/her Beneficiary election prior to commencement of payments, including eliminating the election of a Beneficiary . The benefit will be recalculated to reflect any change in the age of the designated beneficiary. A designation by a married SRP Participant of a Beneficiary other than the SRP Participant’s spouse, or elimination of an SRP Participant’s spouse as a Beneficiary , shall require Spousal Consent .

In the event the SRP Participant has not delivered elections in writing to the Plan Administrator on or before the Termination date, the SRP Benefit Commencement Date shall be the first day of the month following Termination if the SRP Participant is eligible for Early Retirement; otherwise the SRP Benefit Commencement Date shall be the first date of the month following Normal Retirement Age, and the default form of benefit shall be (i) a Single Life Annuity in the case of an SRP Participant who is unmarried on the SRP Benefit Commencement Date, or (ii) a 100% Joint and Survivor Annuity (with the spouse as Beneficiary ) in the case of an SRP Participant who is married on that date.

6.3 If Form or Timing of Supplemental and Qualified Benefits Differ

Subject to the terms of Sections 6.1 and 6.2, an SRP Participant may elect prior to Termination of employment to commence payment of the benefit under this Plan as of a different date, and in a different optional form, than the benefit payable under the Qualified Salaried Plan. If the Supplemental Accrued Benefit and the benefits payable from the Qualified Salaried Plan are not paid in the same form, or do not commence payment as of the same date, the Supplemental Accrued Benefit shall be Actuarially adjusted to reflect the differences in the form or timing of payment. Unless otherwise stated in this Plan, such Actuarial adjustments shall be made on a basis consistent with the Specifications for Actuarial Equivalencies in Attachment 1 of the Qualified Salaried Plan.

6.4 Applicable Interest Rate used in calculation of outstanding interest on Installment Option

The Applicable Interest Rate referred to in Article 6.2(e)(ii)(B) and 6.2(e)(ii)(D) of the Qualified Salaried Plan shall be defined as an interest rate as determined by the Compensation Committee during the first quarter of each year. On and after January 1, 2004, such Compensation Committee rate shall be used for calculating payments payable as of April of the Plan Year through March of the following year. Prior to January 1, 2004, such rate was used for calculating payments payable February of the current year through January of the following year. Payments calculated for February 2004 and March 2004 will be determined using the Compensation Committee interest rate in effect for payments calculated in January 2004.



		P AGE 20

A RTICLE VII: D EATH B ENEFITS

Article VII: D EATH B ENEFITS

7.1 Incorporation of Terms of Qualified Salaried Plan

The terms and conditions of Article VII of the Qualified Salaried Plan, which describe certain survivor benefits which may be available in the event of the pre-retirement death of a Participant under that Plan, shall likewise apply to benefits payable under this Plan, and therefore the provisions of such Article VII are incorporated herein by reference. The terms of Article VII, as incorporated herein, shall provide for a pre-retirement death benefit under this Plan if a pre-retirement death benefit is payable according to Article VII, and in such a case, the terms of Article VII shall govern the calculation, adjustment, beneficiary, form and timing of the Supplemental Accrued Benefit under this Plan.

Article VIII: L IMITATIONS ON B ENEFITS

8.1 Code Limitations Do Not Apply

The limitations on benefits which are stated in Article VIII of the Qualified Salaried Plan shall not be applicable to the Target Accrued Benefit under this Plan.

Article IX: M ISCELLANEOUS P ROVISIONS

9.1 No Right to Continued Employment

The existence of this Plan does not confer a right of continued employment on any person.

9.2 No Assignment of Benefits

No Participant or surviving spouse shall have the power to transfer, assign, anticipate, modify, or otherwise encumber in advance any of the payments that may become due hereunder; nor shall any such payments be subject to attachment, garnishment, or execution, or be transferable by operation of law in the event of bankruptcy, insolvency, or otherwise. This Plan does not provide for or allow any transfer, assignment, attachment, garnishment, execution, or the like, either pursuant to or in connection with a domestic relations order.

9.3 Governing Law

This Plan and any amendments shall be construed, administered, and governed in all respects in accordance with applicable federal law and, to the extent not preempted, by the laws of the state of Washington.



		P AGE 21

A RTICLE X: A DMINISTRATION OF THE P LAN

9.4 Former Willamette SBP Provision Not Applicable After February 11, 2002

This Plan, as restated January 1, 2003, contains no special provision pertaining to any change in control which may occur on or after that date. The provisions of Section 4.3 of the Willamette SBP that applied to the February 11, 2002 change in control are hereby amended to state that they shall not apply to any potential change in control which may occur on or after that date.

Article X: A DMINISTRATION OF THE P LAN

10.1 Plan Administrator

(a)

Role of Compensation Committee

The Plan shall be administered by the Compensation Committee. The Compensation Committee shall have all of the duties, authority, powers and responsibilities with respect to this Plan as are recited in Section 10.1(a) of the Qualified Salaried Plan for the Retirement Committee under that Plan.

(b)

Avoidance of Conflict of Interest

If any SRP Participant is a voting member of the Claims Administrator or the Appeals Administrator, or has any role in the administration of benefits under this Plan , he or she shall be disqualified from voting on, or exercising control over, any decision or action of any such committees or administrators that is specifically directed to the calculation of, or a decision pertaining to a claim or dispute involving, that individual SRP Participant’s benefit (or his or her Beneficiary’s benefit) under this Plan.

10.2 Benefit Administrator

The administrator of the day-to-day benefit application and calculation process under this Plan shall be The Vanguard Group, Inc., or any entity or person which may subsequently be appointed to perform that function by Director – Employee Benefits with the concurrence of the Compensation Committee.

10.3 Claims and Appeal Procedure

(a)

Procedures as Stated in Qualified Salaried Plan

Subject to subsections (b), (c) and (d) below, this Plan incorporates by reference the terms of Section 10.4 (“Claims and Appeal Procedure”) of the Qualified Salaried Plan; provided, however, that references in that Section 10.4 to the “Plan” shall be deemed to be references to this Plan.



		P AGE 22

A RTICLE XI: U NFUNDED P LAN

(b)

Claims Administrator

Notwithstanding the terms of the Qualified Salaried Plan, any reference to “Claims Administrator” in the text of Section 10.6 of that Plan shall be deemed to mean the Weyerhaeuser Employee Benefits Appeals Committee or any entity or person which may subsequently be appointed to perform that function for this Plan by the Compensation Committee.

(c)

Appeals Administrator

Notwithstanding the terms of the Qualified Salaried Plan, the Appeals Administrator under this Plan shall be the Compensation Committee, or any committee or entity to which the Compensation Committee may delegate that responsibility.

(d)

Delegation of Discretion to Claims and Appeals Administrators

The Plan hereby delegates full and complete discretion to the Claims Administrator and the Appeals Administrator (as those terms are defined in subsections (b) and (c) above):

(i)

to make findings of fact pertaining to a claim or appeal;

(ii)

to interpret the terms of this Plan and apply such interpretations to the facts; and

(iii)

to decide all issues which the said Claims and/or Appeals Administrators determine are presented by the claim or appeal, whether any such issue is expressly raised by the claimant or not.

Article XI: U NFUNDED P LAN

11.1 Unfunded Status of Plan

This Plan is unfunded within the meaning of Title I of ERISA. Benefits are payable only from the general assets of the Employer or from a rabbi trust which may be maintained by Weyerhaeuser as grantor, the assets of which are available to the general creditors of the Employer . The Employer makes no representation that any other assets will be set aside to provide benefits under this Plan. SRP Participants and Beneficiaries have no interest in any assets of the Employer . Participants have no rights other than the unsecured promise of the Employer to pay benefits in the future. A Participant’s rights are no greater than the rights of any unsecured general creditor of the Employer . Nothing contained herein shall be deemed to create a trust of any type that would be considered a “funded” trust for the “exclusive benefit” of SRP Participants and Beneficiaries within the meaning of Title I of ERISA.



		P AGE 23

A RTICLE XII: A MENDMENT AND T ERMINATION

Article XII: A MENDMENT AND T ERMINATION

12.1 Authority to Amend and Terminate Plan

The Chief Executive Officer of Weyerhaeuser shall have the right to amend the Plan at any time, to the extent that any such amendment would not cause an increase in the cost of the Plan to Weyerhaeuser . The Board of Directors and the Compensation Committee of Weyerhaeuser shall each have the right to amend or terminate the Plan at any time.



		P AGE 24

T ABLE 1: M ANAGEMENT I NCENTIVE P LANS

Weyerhaeuser Company Management Incentive Plan:

•

Wood Products

•

Western Lumber

•

Southern Lumber

•

Plywood

•

Oriented Strand Board

•

Trus Joist

•

Appearance Wood Business Group

•

Wood Products Staff

•

Weyerhaeuser Building Materials

•

WBM – CSC Management Incentive Plan

•

Timberlands

•

Western

•

Southern

•

Timberlands Staff

•

Weyerhaeuser Forestlands International

•

Pulp, Paper and Packaging

•

Bleached Paperboard

•

Containerboard Packaging/Recycling

•

Pulp

•

Newsprint Staff

•

Fine Paper

•

PPP Manufacturing

•

PPP Staff

•

Corporate

•

Senior and Top Management Team

•

Corporate Staff

•

Transportation/Westwood Shipping Lines

•

NORPAC – Management Incentive Plan

•

Weyerhaeuser Engineering Services – Project Managers Incentive Plan



		P AGE 25

S IGNATURE P AGE

This Weyerhaeuser Company Salaried Employees Supplemental Retirement Plan, as amended and restated herein, effective as of January 1, 2003, is hereby adopted by Weyerhaeuser.

IN WITNESS WHEREOF, Weyerhaeuser Company has caused this Plan to be duly executed on this day of December, 2003.


WEYERHAEUSER COMPANY

By:
		Steven R. Rogel
Title:
		Chairman, President and CEO

By:
		Kathy D. Currie
Title:
		Director of Compensation



		P AGE 26

Exhibit 12

Weyerhaeuser Company and Subsidiaries

Computation of Ratios of Earnings to Fixed Charges

(Dollar amounts in thousands)


	2004			2003		2002			2001			2000
Available earnings:
Earnings before interest expense, amortization of debt expense, income taxes and cumulative effect of a change in an accounting principle	$	2,866,113		$	1,313,199	$	1,216,174		$	925,886		$	1,748,044
Add interest portion of rental expense		60,244			59,455		54,218			45,655			42,063
Deduct undistributed earnings of equity affiliates		(38,039	)		9,356		(20,689	)		81,083			(70,467	)

Available earnings before cumulative effect of a change in accounting principle		2,888,318			1,382,010		1,249,703			1,052,624			1,719,640

Fixed charges:
Interest expense incurred:
Weyerhaeuser Company and subsidiaries excluding Weyerhaeuser Real Estate Company other related subsidiaries	$	822,667		$	800,751	$	797,071		$	353,365		$	352,341
Weyerhaeuser Real Estate Company and other related subsidiaries		56,841			53,215		52,926			68,887			83,556

Subtotal		879,508			853,966		849,997			422,252			435,897
Less intercompany interest		(47	)		103		(800	)		(924	)		(568	)

Total interest expense incurred		879,461			854,069		849,197			421,328			435,329
Amortization of debt expense		15,269			14,488		24,124			4,642			3,331
Interest portion of rental expense		60,244			59,455		54,218			45,655			42,063

Total fixed charges		954,974			928,012		927,539			471,625			480,723

Ratio of earnings to fixed charges		3.02x			1.49x		1.35x			2.23x			3.58x

Weyerhaeuser Company with its Weyerhaeuser Real Estate Company and Other Related Subsidiaries

Accounted for on the Equity Method, but Excluding the Undistributed Earnings of Those Subsidiaries

Computation of Ratios of Earnings to Fixed Charges

(Dollar amounts in thousands)


	2004			2003			2002			2001			2000
Available earnings:
Earnings before interest expense, amortization of debt expense, income taxes and cumulative effect of a change in an accounting principle	$	2,773,714		$	1,232,651		$	1,141,706		$	854,436		$	1,658,343
Add interest portion of rental expense		54,873			55,209			50,748			42,694			39,102
Deduct undistributed earnings of equity affiliates		(7,880	)		2,340			(4,517	)		(29,781	)		(24,021	)
Deduct undistributed earnings before income taxes of Weyerhaeuser Real Estate Company and other related subsidiaries		(609,758	)		(276,665	)		(165,911	)		(234,648	)		(259,449	)

Available earnings before cumulative effect of a change in an accounting principle	$	2,210,949		$	1,013,535		$	1,022,026		$	632,701		$	1,413,975

Fixed charges:

Interest expense incurred	$	822,667		$	800,751		$	797,071		$	353,365		$	352,341
Amortization of debt expense		15,269			14,488			24,124			4,642			3,331
Interest portion of rental expense		54,873			55,209			50,748			42,694			39,102

Total fixed charges	$	892,809		$	870,448		$	871,943		$	400,701		$	394,774

Ratio of earnings to fixed charges		2.48x			1.16x			1.17x			1.58x			3.58x

EXHIBIT 21 – Subsidiaries of the Registrant


Name	State or Country of Incorporation	Percentage Ownership of Immediate Parent
Columbia & Cowlitz Railway Company	Washington	100

DeQueen & Eastern Railroad Company	Arkansas	100

Fisher Lumber Company	California	100

Golden Triangle Railroad	Mississippi	100

Gryphon Asset Management, Inc.	Delaware	100

Gryphon Holdings, LLC	Delaware	100

Gryphon Executives, LLC	Delaware	100

Gryphon Investments of Nevada, Inc.	Nevada	100

Jasmine Forests, LLC	Delaware	100

Jewell Forests, LLC	Delaware	100

Mississippi & Skuna Valley Railroad Company	Mississippi	100

Mountain Tree Farm Company	Washington	50

North Pacific Paper Corporation	Delaware	50

Norpac Resources LLC	Delaware	100

Texas, Oklahoma & Eastern Railroad Company	Oklahoma	100

ver Bes’ Insurance Company	Vermont	100

Westwood Shipping Lines, Inc.	Washington	100

Weyerhaeuser de Mexico, S.A. de C.V.	Mexico	100

Weyerhaeuser Asset Management LLC	Delaware	100

Weyerhaeuser Forestlands International, Inc.	Washington	100

RII Weyerhaeuser World Timber Fund, LP	Delaware	50

World Timberfund Holdings Limited	British Virgin Islands	100

Green Triangle Forest Products Limited	British Virgin Islands	100


Weyerhaeuser Global Finance Company	Oregon	100

Weyerhaeuser International, Inc.	Washington	100

Southern Cone Timber Investors Holding Company, LLC	Delaware	100

Southern Cone Timber Investors Limited	Cayman Islands	50

Los Piques S.A.	Uruguay	100

Vandora S.A.	Uruguay	100

Trus Joist SPRL	Belgium	100

Weyerhaeuser Products Limited	United Kingdom	100

Weyerhaeuser (Asia) Limited	Hong Kong	100

Weyerhaeuser Brasil Participações Ltda.	Brazil	100

Aracruz Produtos de Madeira S.A.	Brazil	66-2/3

Weyerhaeuser China, Ltd.	Washington	100

Weyerhaeuser Europe Holdings	Ireland	100

Weyerhaeuser Europe Limited	Ireland	100

Weyerhaeuser Sarasate Limited	Ireland	100

Weyerhaeuser Holdings France SAS	France	100

Weyerhaeuser Mediland SAS	France	100

Weyerhaeuser Darbo SAS	France	100

Weyerhaeuser Holdings Limited	British Columbia	100

Weyerhaeuser Company Limited	Canada	100

317298 Saskatchewan Ltd.	Saskatchewan	100

486286 British Columbia Ltd	British Columbia	75

Boom Chain Transportation Company Limited	British Columbia	40

Forest License A49782 Holdings Ltd.	British Columbia	99

Iisaak Forest Resource Ltd.	British Columbia	49

MacMillan Bloedel K.K.	Japan	100

MacMillan Bloedel Pembroke Limited Partnership	Ontario	100

Mid-Island Reman Inc.	British Columbia	100

Sturgeon Falls Repulping Limited	Ontario	100

Sturgeon Falls Limited Partnership	Ontario	100


Wapawekka Lumber Ltd.	Saskatchewan	51

Weyerhaeuser (Annacis) Limited	British Columbia	100

Weyerhaeuser Australia Pty Ltd.	Australia	100

Pine Solutions Australia Pty Limited	Australia	70

K1 Holdings Pty Limited	Australia	100

CCA Timbers (Vic) Pty Ltd.	Australia	100

Hanaki Pty Ltd.	Australia	100

Kaiyou Pty Ltd.	Australia	100

Weyerhaeuser (Barbados) SRL	Barbados	100

Marlborough Capital Corp. SRL	Barbados	100

Weyerhaeuser (BVI) Ltd.	British Virgin Islands	100

Weyerhaeuser New Zealand Holdings Inc.	New Zealand	100

Nelson Forest Products Company	New Zealand	100

Nelson Forest Joint Venture	New Zealand	51

Weyerhaeuser New Zealand Inc.	New Zealand	100

Weyerhaeuser (Carlisle) Ltd.	Barbados	100

Camarin Limited	Barbados	100

Weyerhaeuser (Delta) Limited	British Columbia	100

Weyerhaeuser (Imports) Pty Limited	Australia	100

Weyerhaeuser (Ottawa) Limited	British Columbia	100

Weyerhaeuser Saskatchewan Ltd.	Saskatchewan	100

Wapawekka Lumber Limited Partnership	Saskatchewan	51

Weyerhaeuser Services Limited	British Columbia	100

Weyerhaeuser (Hong Kong) Limited ³	Hong Kong	100

Weyerhaeuser Japan Ltd.	Japan	100

Weyerhaeuser Japan Ltd.	Delaware	100

Weyerhaeuser Korea Ltd.	Korea	100

Weyerhaeuser Taiwan Ltd.	Delaware	100

Weyerhaeuser Uruguay S.A.	Uruguay	100

Weyerhaeuser (Mexico) Inc.	Washington	100


Weyerhaeuser Raw Materials, Inc.	Delaware	100

Weyerhaeuser Real Estate Company	Washington	100

Midway Properties, Inc.	North Carolina	100

Pardee Homes	California	100

Marmont Realty Company	California	100

Pardee Homes of Nevada	Nevada	100

The Quadrant Corporation	Washington	100

South Jersey Assets, Inc.	New Jersey	100

Scarborough Constructors, Inc.	Florida	100

TMI, Inc.	Texas	100

Weyerhaeuser Real Estate Company of Nevada	Nevada	100

Weyerhaeuser Realty Investors, Inc.	Washington	100

Winchester Homes, Inc.	Delaware	100

Weyerhaeuser Real Estate Development Company	Washington	100

Weyerhaeuser Sales Company	Nevada	100

Weyerhaeuser USA LLC	Delaware	100

American Cemwood Corporation	Oregon	100

MB Administrative Services Inc.	Delaware	100

WFS II LLC	Delaware	100

Weyerhaeuser Financial Investments, Inc.	Nevada	100

Weyerhaeuser Venture Company	Nevada	100

Las Positas Land Co.	California	100

WAMCO, Inc.	Nevada	100

Willamette Mexican Holding Company	Oregon	100

Wilton Connor LLC	North Carolina	100

Wilton Connor Packaging International Limited	Hong Kong	100

WY Carolina Holdings, LLC	Delaware	100

WY Georgia Holdings 2004 LLC	Delaware	100

WY Tennessee Holdings, LLC	Delaware	100

Exhibit 23.0

Consent of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Weyerhaeuser Company:

We consent to the incorporation by reference in the registration statements (Nos. 333-84127, 333-66412, 333-72356, and 333-104752 on Form S-3; Nos. 333-82376 and 333-86232 on Form S-4 and Nos. 333-74311, 333-89925, 333-53010, and 333-86114 on Form S-8) of Weyerhaeuser Company and subsidiaries of our reports dated March 2, 2005, with respect to the consolidated balance sheet of Weyerhaeuser Company and subsidiaries as of December 26, 2004 and December 28, 2003, and the related consolidated statements of earnings, cash flows and shareholders’ interest and comprehensive income for each of the years in the three-year period ended December 26, 2004, and the related financial statement schedule, management’s assessment of the effectiveness of internal control over financial reporting as of December 26, 2004 and the effectiveness of internal control over financial reporting as of December 26, 2004, which reports appear in the December 26, 2004 annual report on Form 10-K of Weyerhaeuser Company and subsidiaries.

Our reports refer to the adoption by Weyerhaeuser Company and subsidiaries of the provisions of Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations , in 2003 and the adoption of Financial Accounting Standards Board Interpretation No. 46(R) Consolidation of Variable Interest Entities an interpretation of ARB No. 51 , in 2004.

/s/ KPMG LLP

Seattle, Washington

March 2, 2005

EXHIBIT 31

Certification Pursuant to Rule 13a-14(a)

Under the Securities Exchange Act of 1934

I, Steven R. Rogel, certify that:

1.	I have reviewed this annual report on Form 10-K of Weyerhaeuser Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 3, 2005

/s/ Steven R. Rogel

Steven R. Rogel

Chairman, President and Chief Executive Officer

I, Richard J. Taggart, certify that:

1.	I have reviewed this annual report on Form 10-K of Weyerhaeuser Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 3, 2005

/s/ Richard J. Taggart

Richard J. Taggart

Executive Vice President and Chief Financial Officer

EXHIBIT 32

Certification Pursuant to Rule 13a-14(b)

Under the Securities Exchange Act of 1934 and

Section 1350, Chapter 63 of Title 18, United States Code

Pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and section 1350, chapter 63 of title 18, United States Code, each of the undersigned officers of Weyerhaeuser Company, a Washington corporation (the “Company”), hereby certifies that:

The Company’s Annual Report on Form 10-K dated March 3, 2005 (the “Form 10-K”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Steven R. Rogel

Steven R. Rogel

Chairman, President and Chief Executive Officer

Dated: March 3, 2005

/s/ Richard J. Taggart

Richard J. Taggart

Executive Vice President and Chief Financial Officer

Dated: March 3, 2005

The foregoing certification is being furnished solely pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and section 1350, chapter 63 of title 18, United States Code and is not being filed as part of the Form 10-K or as a separate disclosure document.