
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 and the manufacture, distribution and
sale of forest products, real estate development and
construction, and financial services.

The company has 39,400 employees, of whom 37,500 are
employed in its timber-based businesses, and of this number,
approximately 17,000 are covered by collective bargaining
agreements, which generally are negotiated on a multi-year
basis.

Approximately 1,900 of the company's employees are involved
in the activities of its real estate and financial services
subsidiaries.

The major markets, both domestic and foreign, in which the
company sells its products are highly competitive, with
numerous strong sellers competing in each. Many of the
company's products also compete with substitutes for wood
and wood fiber products. The real estate and financial ser-
vices subsidiaries also operate in highly competitive mar-
kets, competing with numerous regional and national firms in
real estate development and construction and in financial
services.

In 1995, the company's sales to customers outside the United
States totaled $2.9 billion (including exports of $1.9 bil-
lion from the United States and $1 billion of Canadian
export and domestic sales), or 25 percent of total
consolidated sales and revenues. The company believes these
sales contributed a higher proportion of aggregate operating
profits (see Note 2 of Notes to Financial Statements). 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.

Principal Business Segments

Timberlands and Wood Products

The company owns approximately 5.3 million acres of com-
mercial forestland in the United States (49 percent in the
South and 51 percent in the Pacific Northwest), most of it
highly productive and located extremely well to serve both
domestic and international markets. The company has, addi-
tionally, long-term license arrangements in Canada covering
approximately 18.9 million acres (of which 14 million acres
are considered to be productive forestland). The combined
total timber inventory on these U.S. and Canadian lands is
approximately 244 million cunits (a cunit is 100 cubic feet
of solid wood), of which approximately 75 percent is soft-
wood species. 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. To sustain the timber supply from its fee
timberlands, the company 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.

The company's wood products businesses produce and sell
softwood lumber, plywood and veneer; composite panels;
oriented strand board; hardboard; hardwood lumber and
plywood; doors; treated products; logs; chips and timber.
These products are sold primarily through the company's own
sales organizations. Building materials are sold to whole-
salers, retailers and industrial users.

<TABLE>
<CAPTION>
Dollar amounts in millions    1995     1994     1993     1992     1991
--------------------------   ------   ------   ------   ------   ------
Net sales:
<S>                         <C>      <C>      <C>      <C>      <C>
Raw materials (logs, chips
 and timber)                 $1,102   $1,091   $1,021   $  872   $  843
Softwood lumber               1,648    1,880    1,704    1,138      978
Softwood plywood and veneer     591      636      567      498      412
Oriented strand board,
 composite and other panels     752      750      623      495      383
Hardwood lumber                 193      175      154      127      118
Engineered wood products        207      157      100       -        -
Miscellaneous products          438      303      299      287      214
                             ------   ------   ------   ------   ------
                             $4,931   $4,992   $4,468   $3,417   $2,948
                             ======   ======   ======   ======   ======
Approximate contributions
 to earnings (1)             $  808   $1,034   $  891   $  515   $  155
                             ======   ======   ======   ======   ======
</TABLE>
(1) After net restructuring charges of $152 million in 1991.

                             35
<PAGE>

Pulp, Paper and Packaging

The company's pulp, paper and packaging businesses include:
Pulp, which manufactures chemical wood pulp for world
markets; Newsprint, which manufactures newsprint at the
company's North Pacific Paper Corporation mill and markets
it to West Coast and Japanese newspaper publishers; Paper,
which manufactures and markets a range of both coated and
uncoated fine papers through paper merchants and printers;
Containerboard Packaging, which manufactures linerboard and
corrugating medium, which is primarily used in the
production of corrugated packaging, and manufactures and
markets industrial and agricultural packaging; Paperboard,
which manufactures and markets bleached paperboard, used for
production of liquid containers, to West Coast and Pacific
Rim customers; Recycling, which operates an extensive
wastepaper collection system and markets it to company mills
and worldwide customers; and Chemicals, which produces
chlorine, caustic and tall oil, which are used principally
by the company's pulp, paper and packaging operations.

In 1993, the Personal Care Products business, which manufac-
tured disposable diapers sold under the private-label brands
of many of North America's largest retailers, was sold
through an initial public offering of stock.

<TABLE>
<CAPTION>
Dollar amounts in millions     1995     1994     1993     1992     1991
--------------------------    ------   ------   ------   ------   ------
Net sales:
<S>                          <C>      <C>      <C>      <C>      <C>
Pulp                          $1,616   $1,012   $  823   $  711   $  803
Newsprint                        508      356      322      326      288
Paper                          1,001      664      648      673      655
Paperboard and containerboard    325      240      255      321      361
Packaging                      1,863    1,495    1,302    1,323    1,175
Recycling                        266      121       77       93       90
Chemicals                         63       45       32       31       34
Personal care products            -        -        -       514      450
Miscellaneous products            40      133      120      117      147
                              ------   ------   ------   ------   ------
                              $5,682   $4,066   $3,579   $4,109   $4,003
                              ======   ======   ======   ======   ======
Approximate contributions
 to earnings (1)              $1,181   $  211   $   61   $  251   $  108
                              ======   ======   ======   ======   ======  
</TABLE>
(1) After net restructuring charges of $129 million in 1991.

Real Estate

The company, through its real estate subsidiary,
Weyerhaeuser Real Estate Company, is engaged in developing
single-family housing and residential lots for sale,
including the development of master-planned communities.
Operations are mainly concentrated in selected metropolitan
areas in Southern California, Nevada, Washington, Texas,
Maryland and Virginia.

<TABLE>
<CAPTION>
Dollar amounts in millions      1995    1994     1993     1992     1991
--------------------------    -------  -------  -------  -------  -------
Net sales and revenues:
<S>                          <C>      <C>      <C>      <C>      <C>
Single-family units           $  563   $  686   $  615   $  569   $  591
Multi-family units                -        26       30        4       16
Residential lots                  60       65       43       39       25
Commercial lots                   29        7       41        6       17
Commercial buildings               4       35        3        5       30
Acreage                           36       20       27       20       16
Other                             31       72       70       47       49
                              -------  -------  -------  -------  -------
                              $  723   $  911   $  829   $  690   $  744
                              =======  =======  =======  =======  =======
Approximate contributions
 to earnings (1)              $ (231)  $    7   $   18   $   13   $ (175)
                              =======  =======  =======  =======  ======= 
</TABLE>
(1) After a special charge of $232 million to dispose of
certain real estate assets in 1995 and restructuring charges
of $155 million in 1991.

                              36
<PAGE>

Financial Services

The company, through its financial services subsidiary,
Weyerhaeuser Financial Services, Inc., is involved in a
range of financial services. The principal operating unit is
Weyerhaeuser Mortgage Company, which has origination offices
in 14 states, with a servicing portfolio of $11 billion
covering approximately 136,000 loans throughout the country.
Mortgages are resold in the secondary market through
mortgage-backed securities to financial institutions and
investors. Through its insurance services organization, it
also offers a broad line of property, life and disability
insurances.

GNA Corporation, a subsidiary that specialized in the sale
of life insurance annuities and mutual funds to the cus-
tomers of financial institutions, was sold in April 1993.
Republic Federal Savings & Loan Association, a subsidiary
that operated in Southern California through 1991, was
dissolved in 1992.

<TABLE>
<CAPTION>
Dollar amounts in millions            1995    1994    1993    1992    1991
--------------------------          ------- ------- ------- ------- -------
Net sales and revenues:
<S>                                <C>     <C>     <C>     <C>     <C>
Interest                            $   76  $   84  $  110  $  144  $  209
Investment income                        3       2     116     452     454
Loan origination and servicing fees     84      88     127     103      98
Premiums                                 9      10      14      21      19
Other revenues                          24      22      34     112      82
                                    ------- ------- ------- ------- -------
                                    $  196  $  206  $  401  $  832  $  862
                                    ======= ======= ======= ======= =======
Approximate contributions
 to earnings (1)                    $  (46) $   11  $   76  $   68  $   60
                                    ======= ======= ======= ======= =======
</TABLE>
(1) After a special charge of $58 million to dispose of
certain real estate assets in 1995 and a $42 million gain on
sale of GNA Corporation in 1993.

Corporate and Other

Corporate and other includes nursery and garden supply prod-
ucts, which are sold primarily to retailers and landscapers
by the company's sales force; marine transportation; and
miscellaneous corporate activities.

<TABLE>
<CAPTION>
Dollar amounts in millions    1995     1994     1993     1992     1991
--------------------------  -------  -------  -------  -------  -------  
<S>                        <C>      <C>      <C>      <C>      <C>
Net sales                   $  256   $  223   $  269   $  220   $  216
                            =======  =======  =======  =======  =======
Approximate contributions
 to earnings (1)            $ (217)  $ (142)  $  (46)  $ (107)  $ (148)
                            =======  =======  =======  =======  =======
</TABLE>
(1) After net restructuring charges of $9 million in 1991 and a $70 million
gain on disposal of infant diaper business in 1993.

Environmental Matters

In 1990 the northern spotted owl was listed as a
threatened species under the Endangered Species Act (ESA).
In 1992 the marbled murrelet was listed as a threatened
species under the ESA. Certain Snake River salmon runs
have been listed as threatened or endangered under the
ESA. The National Marine Fisheries Service has proposed
listing coho salmon that spawn in Oregon coastal rivers
and some cutthroat trout as a threatened species.
Petitions have been filed to list certain Pacific
Northwest salmon runs and other fish populations as
threatened or endangered under the ESA. A consequence of
these listings has been, and a possible consequence of
future listings may be, reductions in the sale and harvest
of timber on federal timberlands in the Pacific Northwest.
Requirements to protect habitat for threatened and
endangered species on non-federal timberlands has
resulted, and may in the future result, in restrictions on
timber harvest on some non-federal timberlands in the
Pacific Northwest, including some timberlands of the
company. The listing of the red-cockaded woodpecker as an
endangered species under the ESA has had some impact on
the harvest of public and private timber in the
southeastern United States, but has had little impact on
the company's timberlands. Forest practice acts in some of
the states in which the company has timber increasingly
impact present or future harvests and forest management
activities. In addition, the statutory requirements with
respect to the protection of wetlands and threatened or
endangered species may affect future harvest and forest
management practices on some of the company's southern
timberlands.

In April 1994, the Clinton administration adopted its plan
with respect to management of federal timberlands in the
Pacific Northwest. This plan has reduced timber sales from
certain federal lands in western Washington, western
Oregon and northern California by more than 75 percent

                              37
<PAGE>

from harvest levels in the 1980s. This reduction in
federal timber sales will seriously reduce log supplies to
many independent sawmills that have been important
suppliers of wood chips to the company's pulp and paper
mills in Washington and Oregon. The company anticipates
that there will be alternate sources of wood chips or
other fiber.

The administration also has stated that reduced timber
harvest on federal lands will provide the opportunity to
clarify the uncertainty surrounding federal policies for
protection of northern spotted owls on some private
lands. On February 7, 1995, the administration proposed a
special rule to clarify federal harvest restrictions on
some private lands in Washington and California. The
company believes that the regulatory changes might
ultimately allow it to harvest fee timber in some areas
where it has not been operating because of uncertainties
regarding regulations intended to protect the northern
spotted owl. Whether those regulatory changes will be
implemented is uncertain.  If those regulatory changes are
not implemented, the company may not harvest some timber
that it otherwise might harvest in late 1996 and 1997.

Because those regulatory changes may not be implemented,
and in order to avoid existing uncertainty under the ESA,
the company, in February 1995, developed a Habitat
Conservation Plan (HCP) and obtained from the United
States Fish and Wildlife Service an Incidental Take Permit
with respect to northern spotted owls on most of its
Oregon coastal timber lands. That HCP establishes a
protocol for the harvest of timber and the protection of
the northern spotted owl on those timberlands and is
expected to remain in effect for at least 50 years. The
company believes the most effective way to manage its
timberlands for the growth and harvest of timber and the
protection of wildlife and fish habitat is to develop
comprehensive plans for the management of all the
resources on those timberlands. Accordingly, the company
is seeking to develop HCPs or other arrangements with
federal and state fish and wildlife agencies for some
other parts of its Pacific Northwest timberlands that
would address the protection of wildlife and fish habitat
for both listed and non-listed species.

The combination of the forest management and harvest
restrictions and impacts described in the preceding four
paragraphs has increased operating costs, resulted in in-
creases in the value of timber and logs from the company's
Pacific Northwest timberlands, and contributed to
increases in the prices paid for wood products and wood
chips. The company does not know whether these effects
will continue. One additional effect may be the
continuation of some reduced usage of, and some
substitution of other products for, lumber and plywood.

The company does not believe that the restrictions and
impacts described in the above paragraphs have had, or in
1996 or 1997 will have, a significant effect on the com-
pany's total harvest of timber, although they may have
such an effect in the future.

In addition to the foregoing, the company is subject to
federal, state or provincial and local air, water and land
pollution control, solid and hazardous waste management,
disposal and remediation laws and regulations in all areas
in which it has operations, and to market demands with
respect to chemical content of some products and use of re-
cycled fiber. Compliance with these laws, regulations and
demands usually involves capital expenditures as well as
operating costs. The company cannot easily quantify future
amounts of capital expenditures required to comply with
these laws, regulations and demands, or the impact 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 5 percent
of total capital expenditures in 1995. Based on its understanding
of current regulatory requirements, the company expects
that this percentage will range from 10 to 11 percent of
total capital expenditures in 1996 and 1997.

The company is involved in the environmental remediation
of numerous sites, including 41 superfund sites where the
company has been named as a potentially responsible party.
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, and others are third-party sites
involving several parties who have a joint and several
obligation to remediate the site. 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 $39 million in 1995 and expects to spend
$29 million in 1996 on environmental remediation of these
sites. It is the company's policy to accrue for environ-
mental remediation costs when it is determined that it is
probable that such an obligation exists and the amount of

                             38
<PAGE>

the obligation can be reasonably estimated. 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 amounts that may prove insignificant or that
could range, in the aggregate, up to approximately $120
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.

An Environmental Protection Agency (EPA) regulation under
Title 5 of the Clean Air Act requires additional operating
permits at many of the company's manufacturing operations.
Although significant work is required to prepare the
permit applications in 1996 and 1997, the company
anticipates that it will be able to obtain the necessary
permits.

The company has continued to make substantial progress in
reducing the minute amount of dioxin that had previously
been detected in wastewater effluent, sludge and pulp from
the company's bleached kraft pulp mills. Using EPA
quantitation limits, the company's analysis of its
effluent discharge reveals no detectable levels of dioxin
at any of the company's pulp mills.

The EPA published proposed regulations on December 17,
1993, known as the "cluster rules," which would establish
maximum achievable control technology standards for non-
combustion sources under the Clean Air Act, and the
development of revised wastewater effluent limitations
under the Clean Water Act. The company's operations are
well positioned to meet the proposed limits for dioxin.
However, if the cluster rules are adopted as proposed,
they will require the company to commit additional capital
to further reduce air emissions and wastewater discharges
by 1999. Preliminary estimates of that additional capital
range as high as $400 million, which may further increase
the annual percentage of the company's total capital
expenditures devoted to environmental compliance.  The EPA
has indicated that it is considering reproposing the cluster
rules. If the cluster rules are reproposed, the company's
understanding of the potential effect is that it will significantly
reduce the amount and timing of capital expenditures to comply with
the rules.

                              39
<PAGE>

Financial Review

Results of Operations

1995 Compared With 1994

The company's consolidated net sales and revenues
increased 13 percent to a record $11.8 billion in 1995
compared with $10.4 billion in 1994. The pulp, paper and
packaging segment accounted for $5.7 billion of this
record performance, 40 percent over its sales of $4.1
billion in 1994, with strong year-to-year improvement in
all product lines. These markets have weakened in the
fourth quarter, and this weakness may persist in 1996 as
customers continue to reduce inventories. The timberlands
and wood products segment sales of $4.9 billion
approximated last year's. The real estate and financial
services segments had combined sales of $919 million, down
from last year's $1.1 billion, largely attributable to
declines in single-family home sales.

The company also achieved record earnings of $799 million,
or $3.93 per common share, in 1995, which was 36 percent
over the $589 million, or $2.86 per common share, recorded
in 1994. The 1995 earnings were net of an after-tax charge
of $184 million ($290 million pretax), or 90 cents per
common share, within the real estate and financial
services segments. The 1994 earnings included a net
contribution of $.03 per common share for the return of
countervailing duty by the U.S. government against
Canadian lumber imports and the expected cost of
postretirement benefits for Canadian employees.

Operating earnings in the timberlands and wood products
segment were $808 million, down from the record $1 billion
for the previous year. This was attributable to price
declines primarily in softwood lumber, caused by a drop in
domestic housing starts.

The pulp, paper and packaging segment posted record operat-
ing earnings of $1.2 billion in 1995 compared with $211
million earned in 1994. Significant price improvement over
the prior year and ongoing improvements in operations were
the key factors in recovery in this segment.

The company's real estate and financial services segments
recorded a combined operating loss of $277 million for the
year after reflecting the $290 million special charge that
came from two related actions: (1) the implementation of
Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," which
required the company to change its method of valuing long-
lived assets, and (2) the company's decision to accelerate
the disposition of some of the affected assets. Before
these actions, the combined segments earned $13 million
compared with $18 million in 1994.

Weyerhaeuser's cost of products sold as a percentage of
net sales decreased to 69 percent in 1995 compared with 73
percent in 1994. The company continued to benefit from its
mill modernization program and implementation of its
business improvement plans, offset in part by the costs
associated with higher sales activity, principally in the
pulp, paper and packaging segment. Depreciation expense
increased over the prior year as a result of the
completion and start-up of several mill modernization
projects in late 1994 in the pulp, paper and packaging
segment. The expansion of the company's Performance Share
Plan to include all employees was the major contributor to
the $109 million increase in selling, general and
administrative expenses. Contributions made by the company
into this plan are invested in company stock on behalf of
each employee. The size of the contribution, if any, is
decided by the board of directors each year on the basis
of that year's profits and the company's performance
relative to its competition.

Excluding the revaluation charge, the decrease in costs
and operating expenses of the real estate and financial
services segments are in line with the reduced sales
activity.

Other income (expense) is an aggregation of both recurring
and occasional income and expense items and, as a result,
fluctuates from period to period. No individual income
(expense) item in 1995 was significant in relation to net
earnings.

Weyerhaeuser's interest expense incurred was up $34
million over the prior year as a result of prefunding 1995
debt maturities that were due late in the year as well as
an increase in the company's combined long- and short-term
debt levels. Capitalized interest was $16 million less
than the prior year as mill modernization projects at
Longview, Washington, and Plymouth, North Carolina, were
completed.


1994 Compared With 1993

The company's 1994 consolidated sales and revenues were
$10.4 billion, a 9 percent increase over the $9.5 billion
reported last year. Net earnings were $589 million, or
$2.86 per common share, compared with 1993 net earnings of
$579 million, or $2.83 per common share. 1994 earnings
included the return of countervailing duty by the U.S.
government against Canadian lumber imports and the
expected cost of postretirement benefits for Canadian
employees. The net effect of these two items contributed
$.03 per common share. 1993 earnings included gains of

                              40
<PAGE>

$132 million, or $.65 per common share, from the sale of
assets and extinguishment of debt, and a $15 million, or
$.08 per common share, charge to earnings to reflect the
revised 1993 federal corporate tax rate in the company's
deferred tax accounts.

The continuation in 1994 of the company's major mod-
ernization projects, started in 1993, accounted for the
significant increase in capitalized interest from year to
year.

The significant changes from 1993 in other income were
attributable to the $70 million pretax gain on the
disposal of the company's investment in the infant diaper
business and the real estate and financial services pretax
gain of $42 million on the sale of GNA Corporation, both
in 1993.

The timberlands and wood products segment posted record
operating earnings of $1 billion in 1994, which was a 16
percent increase over the $891 million reported in 1993.
Sales for this segment were $5 billion, up 12 percent over
the $4.5 billion reported in 1993. This segment posted
record performances during 1994 as the businesses continued to
accomplish their business improvement plans, timber
supplies remained tight and markets remained strong
throughout the year.

The pulp, paper and packaging segment's 1994 operating
earnings were $211 million, up substantially from 1993's
$61 million. This segment reported sales of $4.1 billion
for the year, an increase of 14 percent over the $3.6
billion in 1993. Strong demand coupled with continued
price improvement over the prior year in both the domestic
and export pulp, paper and packaging markets were the key
factors in this recovery.

The combined real estate and financial services segments
earned $18 million in 1994 compared with 1993 earnings of
$94 million, which included a pretax gain of $42 million
on the sale of GNA Corporation as well as one quarter of
GNA operating results.


1993 Compared With 1992

Consolidated sales and revenues in 1993 were $9.5 billion,
an increase of 3 percent over 1992. Net earnings were $579
million, or $2.83 per common share, up from 1992 net
earnings of $372 million, or $1.83 per common share.
Included in 1993 net earnings were after-tax gains of:

 . $52 million, or $.25 per common share, from the
extinguishment of debt, which was reported as an
extraordinary item.

 . $44 million, or $.22 per common share, from the sale of
the infant diaper business.

 . $36 million, or $.18 per common share, from the sale of
GNA Corporation, a wholly owned subsidiary.

And a charge of $20 million, or $.10 per common share,
which reflected the revised 1993 federal corporate tax rate
in the company's deferred and current tax accounts. This
charge consisted of $.08 per common share due to the effect
of the higher rate on the accumulated temporary differences
at December 27, 1992, and $.02 per common share related to
1993.

The net sales and revenues and related costs and expenses
of real estate and financial services were substantially
less in 1993 when compared with 1992 as a result of the
sale of GNA Corporation.

During 1993 the company refinanced a significant amount of
debt, which resulted in a short-term increase in interest
expense. The increase in capitalized interest over the
prior year coincided with expanded activity in the
company's major capital projects.

The significant decrease in financial services interest
expense was due to the liquidation of Republic Federal
Savings & Loan Association during 1992 and the sale of GNA
Corporation in early 1993. In addition, accelerated prepay-
ments caused by mortgage refinancings significantly reduced
collateralized mortgage obligation bonds.

Significant items in relation to net earnings included in
other income for 1993 were a $70 million pretax gain on the
disposal of the company's investment in the infant diaper
business through a public offering in a new company,
Paragon Trade Brands, Inc., and the real estate and
financial services pretax gain of $42 million on the sale
of GNA Corporation.

The timberlands and wood products operating earnings for
1993 were $891 million, an increase of 73 percent over the
$515 million recorded in 1992. Prices for logs and lumber
exceeded 1992 levels due to increasing demand for housing
construction materials and raw material supply shortages
resulting from reduced harvests in the Western public forests.

The pulp, paper and packaging segment had a $61 million
operating profit in 1993, significantly below the $251
million posted in 1992. Prices for most of the products in
this segment were at levels well below the previous year.
The personal care products business included in this
segment was divested in the first quarter of 1993.

The real estate and financial services segments had oper-
ating earnings of $94 million in 1993 compared with $81
million in 1992.

As a part of the GNA Corporation sales transaction, the
company assumed $225 million of GNA debt.

                              41
<PAGE>

Liquidity and Capital Resources

General

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

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

 . To view separately the capital structures of Weyerhaeuser
Company, Weyerhaeuser Real Estate Company and Weyerhaeuser
Financial Services, Inc., 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. Long-term debt maturities are
shown in Note 14 of Notes to Financial Statements.

Operations

The company's consolidated financial position was very
strong in 1995 as it generated $1.9 billion of cash flow
from operations before working capital changes compared
with $1.3 billion in 1994.

Cash flow from operations before changes in working
capital by business segment was as follows:

<TABLE>
<CAPTION>
Dollar amounts in millions         1995        1994        1993
-----------------------------    ---------   ---------   ---------
<S>                             <C>         <C>         <C>
Timberlands and wood products    $ 1,026     $ 1,226     $ 1,052
Pulp, paper and packaging          1,567         530         326
Real estate                           23          16          29
Financial services                    46          33          12
Corporate and other                 (806)       (545)       (437)
                                 ---------   ---------   ---------
                                 $ 1,856     $ 1,260     $   982
                                 =========   =========   =========
</TABLE>

Weyerhaeuser's net working capital at December 31, 1995,
increased $321 million from the previous year-end. Signifi-
cant factors were an increase of $148 million in
inventories and prepaid expenses, excluding acquisitions,
and a net reduction of $196 million in current portion of
long-term debt, as the 9 1/4 percent and 9.36 percent notes
totaling $300 million, due in 1995, were paid.

Real estate and financial services segments cash flow from
operations was down in 1995. Loan origination activity
exceeded loan sales in the mortgage banking operations
compared with the previous year when sales exceeded
origination activity, creating a net change of $378
million from year to year.

Significant non-recurring items that impacted the cash
flow from operations in 1993 were the $52 million gain on
extinguishment of debt, net of income tax, which was re-
corded as an extraordinary item; the pretax gain of $70
million from the sale of the company's infant diaper
business; and the pretax gain of $42 million from the sale
of GNA Corporation.


Investing

Capital expenditures amounted to $1.1 billion in 1995,
including acquisitions, and $1.1 billion in 1994. They are
currently expected to approximate $900 million in 1996;
however, the expenditures could be increased or decreased
as a consequence of future economic conditions. The
company had approximately $269 million in capital
expenditures committed on major projects at year-end 1995
including construction of its new oriented strand board
mill in West Virginia as well as environmental and
productivity improvement projects at the New Bern, North
Carolina, and Kamloops, British Columbia, pulp and paper
complexes. In addition, near year-end, the company
announced that it had signed an agreement to acquire
241,000 acres of southern private commercial forestland.
The ultimate purchase price could range up to $275 million.

                              42
<PAGE>

Recent capital spending, including acquisitions, has been
in the following areas:

<TABLE>
<CAPTION>
Dollar amounts in millions           1995      1994      1993
-----------------------------       -------   -------   -------
<S>                                <C>       <C>       <C>
Timberlands and wood products       $  508    $  257    $  241
Pulp, paper and packaging              562       794       652
Corporate and other                     49        51        74
                                    -------   -------   -------
                                    $1,119    $1,102    $  967
                                    =======   =======   =======
</TABLE>

Capital assets acquired in 1995, using $77 million of cash
and $46 million of the company's treasury shares, were
three hardwood lumber mills, timber and timberlands, nine
corrugated packaging plants and five recycling collection
facilities.

The change from 1994 to 1995 in the financial services
segment was the result of the sale of adjustable-rate mort-
gages and partnership distributions in 1995 compared with
partnership investments made and the sale of mortgage-
backed certificates in 1994.


Financing

The increases in sales of debentures and industrial
revenue bonds and related payments on debentures,
commercial paper and other debt by Weyerhaeuser in 1995
compared with the prior year are a result of replacing
maturing and higher cost debt with lower-priced
instruments.

Real estate and financial services segments used the
proceeds from the sale of adjustable-rate mortgages and
mortgage loans to reduce total debt from the 1994 ending
balance.

Cash dividends paid on common shares amounted to $306
million in 1995 and $247 million in 1994. The increase in
1995, compared with 1994, is a result of increasing the
quarterly dividend on common shares from 30 cents to 40
cents in the second quarter. Although common share
dividends have exceeded the company's target payout ratio
in recent years, it is our intent, over time, to pay
dividends to our common shareholders in a range of 35 to
45 percent of common share earnings.

As a part of its 10 million share repurchase program an-
nounced in the second quarter of 1995, the company had ac-
quired 8.5 million common shares by year-end at a cost of
$379 million.

To ensure its ability to meet future commitments,
Weyerhaeuser Company, Weyerhaeuser Real Estate Company and
Weyerhaeuser Mortgage Company, a subsidiary of
Weyerhaeuser Financial Services, Inc., have established at
year-end 1995 unused bank lines of credit in the maximum
aggregate sum of approximately $2.5 billion. None of the
entities is a guarantor of the borrowings of the others
under any of these credit facilities.


Contingencies

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


Accounting Matters

Pronouncements

During the year, the company implemented the following
pronouncements of the Financial Accounting Standards Board
(FASB):

 . Statement of Financial Accounting Standards (SFAS) No.
114, "Accounting by Creditors for Impairment of a Loan."

 . SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan -- Income Recognition and Disclosures," which amended
SFAS No. 114.

 . SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of."

 . SFAS No. 122, "Accounting for Mortgage Servicing Rights --
an Amendment of FASB Statement No. 65."

These statements are described in Note 1, Summary of
Significant Accounting Policies, of Notes to Financial
Statements.

                             43
<PAGE>

In October 1995, the FASB issued SFAS No. 123, "Accounting
for Stock-Based Compensation," which requires companies to
change what they disclose about their employee stock-based
compensation plans, recommends that they change the
accounting for these plans to a fair-value based method and
requires those companies that do not change their
accounting to disclose what their earnings and earnings per
share would have been if they had changed. This disclosure
is applicable for financial statements for fiscal years
beginning after December 15, 1995. The company will
continue to account for these plans using the method of
accounting prescribed by Accounting Principles Board
Opinion No. 25 and will conform to the disclosure
requirements of SFAS No. 123 for the fiscal year 1996.


Accounting and Reporting Standards Committee

During the year, the Accounting and Reporting Standards
Committee, comprised of four outside directors, reviewed
with the company's management and with its independent
public accountants the scope and results of the company's
internal and external audit activities and the adequacy of
the company's internal accounting controls. The committee
also reviewed current and emerging accounting and reporting
requirements and practices affecting the company.

Other

The company has embarked on a new series of business
improvement plans which targets $600 million in pretax
operating improvements measured in 1994 prices and costs by
year-end 1997.

In 1995, the company announced that it is in private
discussions with potential financial investors about the
possibility of forming a joint-venture partnership that
would make investments in timberlands and related assets
around the world. The size of the venture, of which the
company would be a 50 percent owner, would depend upon the
specific investments made, but could ultimately reach
$1.5 billion over time. The company's contribution to the
joint venture would be U.S. timberlands (with a market
value of approximately $260 million) and cash, while the
investors' group would provide cash contributions of an
equal amount.


Report of Independent Public Accountants

To the shareholders of Weyerhaeuser Company:

We have audited the accompanying consolidated balance
sheets of Weyerhaeuser Company (a Washington corporation)
and subsidiaries as of December 31, 1995, and December 25,
1994, and the related consolidated statements of earnings,
cash flows and shareholders' interest for each of the
three years in the period ended December 31, 1995. These
financial statements are the responsibility of the
company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally
accepted auditing standards. 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 financial statements referred to above
present fairly, in all material respects, the financial
position of Weyerhaeuser Company and subsidiaries as of
December 31, 1995, and December 25, 1994, and the results
of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.


Seattle, Washington,
February 12, 1996                ARTHUR ANDERSEN LLP

                               44
<PAGE>

Consolidated Statement of Earnings

<TABLE>
<CAPTION>
For the three-year period ended December 31, 1995
Dollar amounts in millions except per-share figures  1995     1994     1993
--------------------------------------------------- -------  -------  -------
<S>                                                <C>      <C>      <C>
Net sales and revenues:
 Weyerhaeuser                                       $10,869  $ 9,281  $ 8,315
 Real estate and financial services                     919    1,117    1,230
                                                    -------  -------  -------
Net sales and revenues                               11,788   10,398    9,545
                                                    -------  -------  -------
Costs and expenses:
 Weyerhaeuser:
  Costs of products sold                              7,516    6,819    6,252
  Depreciation, amortization and fee stumpage           580      504      444
  Selling, general and administrative expenses          724      615      592
  Research and development expenses                      51       47       44
  Taxes other than payroll and income taxes             155      151      137
                                                    -------  -------  ------- 
                                                      9,026    8,136    7,469
                                                    -------  -------  -------
 Real estate and financial services:
  Costs and operating expenses                          681      851      836
  Depreciation and amortization                          41       30       43
  Selling, general and administrative expenses          139      152      206
  Taxes other than payroll and income taxes               8        9        9
  Charge for impairment of long-lived assets (Note 1)   290       -        -
                                                    -------  -------  ------- 
                                                      1,159    1,042    1,094
                                                    -------  -------  -------
Total costs and expenses                             10,185    9,178    8,563
                                                    -------  -------  -------
Operating income                                      1,603    1,220      982
Interest expense and other:
 Weyerhaeuser:
  Interest expense incurred                             271      237      215
  Less interest capitalized                              20       36       23
  Other income (expense), net (Note 3)                  (71)     (42)      60
 Real estate and financial services:
  Interest expense incurred                             140      154      173
  Less interest capitalized                              76       78       77
  Other income (expense), net (Note 3)                   27       19       54
                                                    -------  -------  -------   
Earnings before income taxes and extraordinary item   1,244      920      808
Income taxes (Note 4)                                   445      331      281
                                                    -------  -------  ------- 
Earnings before extraordinary item                      799      589      527
Extraordinary item, net of applicable
 taxes of $34 (Note 5)                                   -        -        52
                                                    -------  -------  -------
Net earnings                                        $   799  $   589  $   579
                                                    =======  =======  =======
Per common share (Note 1):
 Earnings before extraordinary item                 $  3.93  $  2.86  $  2.58
 Extraordinary item                                      -        -       .25
                                                    -------  -------  -------
 Net earnings                                       $  3.93  $  2.86  $  2.83
                                                    =======  =======  =======
 Dividends paid                                     $  1.50  $  1.20  $  1.20
                                                    =======  =======  =======
</TABLE>
See notes on pages 51 through 69.
                             45
<PAGE>

Consolidated Balance Sheet

<TABLE>
<CAPTION>
Dollar amounts in millions                December 31, 1995  December 25, 1994
--------------------------                -----------------  -----------------
<S>                                            <C>               <C> 
Assets
Weyerhaeuser
 Current assets:
  Cash and short-term investments (Note 1)      $       34        $       190
  Receivables, less allowances
   of $9 and $10                                       976                909
  Inventories (Note 8)                                 960                746
  Prepaid expenses                                     265                284
                                                -----------       ------------
   Total current assets                              2,235              2,129
  Property and equipment (Note 9)                    6,717              6,196
  Construction in progress                             509                603
  Timber and timberlands at cost, less fee
   stumpage charged to disposals                       666                610
  Other assets and deferred charges                    232                212
                                                -----------       ------------
                                                    10,359              9,750
                                                -----------       ------------
Real estate and financial services
 Cash and short-term investments, including
  restricted deposits of $22 and $28                    50                 73
 Receivables, less discounts and allowances
  of $7 and $4                                          92                116
 Mortgage notes held for sale (Note 15)                332                209
 Mortgage loans receivable (Note 15)                   155                263
 Investments (Note 15)                                  70                247
 Mortgage-backed certificates and other pledged
  financial instruments (Notes 10 and 15)              185                211
 Real estate in process of development and for
  sale, less reserves of $21 and $54 (Note 11)         776                989
 Land being processed for development, less
  reserves of $18 and $19                              688                738
 Deferred acquisition costs                             84                 92
 Investments in and advances to joint ventures
  and limited partnerships, less reserves
  of $38 and $49                                       113                237
 Other assets                                          349                233
                                                -----------       ------------
                                                     2,894              3,408
                                                -----------       ------------ 
  Total assets                                  $   13,253        $     13,158
                                                ===========       ============
</TABLE>
See notes on pages 51 through 69.

                             46
<PAGE>

<TABLE>
<CAPTION>
Dollar amounts in millions                 December 31, 1995 December 25, 1994
--------------------------                 ----------------- -----------------
<S>                                            <C>                <C>
Liabilities and shareholders' interest
Weyerhaeuser
  Current liabilities:
   Notes payable                                $       24         $        6
   Current maturities of long-term debt                125                321
   Accounts payable (Note 1)                           747                796
   Accrued liabilities (Note 12)                       707                695
                                                -----------        -----------
    Total current liabilities                        1,603              1,818
  Long-term debt (Notes 14 and 15)                   2,983              2,713
  Deferred income taxes (Note 4)                     1,196                986
  Deferred pension and other liabilities
   (Notes 6 and 7)                                     509                525
  Minority interest in subsidiaries                    111                103
  Commitments and contingencies (Note 16)
                                                -----------        -----------
                                                     6,402              6,145
                                                -----------        -----------
Real estate and financial services
 Notes payable and commercial paper (Note 13)          338                416
 Collateralized mortgage obligation bonds
  (Notes 10 and 15)                                    159                183
 Long-term debt (Note 14)                            1,594              1,770
 Other liabilities                                     274                354
 Commitments and contingencies (Note 16)            
                                                -----------        -----------
                                                     2,365              2,723
                                                -----------        -----------
   Total liabilities                                 8,767              8,868
                                                -----------        -----------
Shareholders' interest (Note 18):
 Common shares: authorized 400,000,000 shares,
  issued 206,072,890 shares, $1.25 par value           258                258
 Other capital                                         415                416
 Cumulative translation adjustment                     (90)              (107)
 Retained earnings                                   4,226              3,733
 Treasury common shares, at cost: 7,302,878 and
  455,387                                             (323)               (10)
                                                -----------        -----------
   Total shareholders' interest                      4,486              4,290
                                                -----------        -----------
   Total liabilities and shareholders' interest $   13,253         $   13,158
                                                ===========        ===========
</TABLE>
                             47
<PAGE>

Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
                                                         Consolidated
For the three-year period ended December 31, 1995   -----------------------
Dollar amounts in millions                           1995    1994    1993
---------------------------------                   ------- ------- -------
<S>                                                <C>     <C>     <C>
Cash flows provided by operations:
 Net earnings (loss)                                $  799  $  589  $  579
Non-cash charges to income:
 Depreciation, amortization and fee stumpage           621     534     487
 Deferred income taxes, net                            103     127      94
 Contributions to employee benefit plans                -       -        2
 Extraordinary item, including current tax benefit      -       -      (90)
 Deferred income taxes on extraordinary item            -       -       38
 Charge for impairment of long-lived assets            290      -       -
Changes in working capital:
 Accounts receivable                                   (33)   (125)    (93)
 Inventories, prepaid expenses, real estate and land  (159)     (6)   (272)
 Mortgage notes held for sale and mortgage loans
  receivable                                           (18)    360      23
 Other liabilities                                    (102)    198     168
(Gain) loss on disposition of assets                    43      10     (16)
(Gain) on sales of businesses                           -       -     (112)
Other                                                   12      (7)     44
                                                    ------- ------- -------
Net cash provided by operations                      1,556   1,680     852
                                                    ------- ------- -------
Cash flows from investing in the business:
 Property and equipment                               (928) (1,061)   (927)
 Timber and timberlands                                (68)    (41)    (40)
 Property and equipment and timber and timberlands
  from acquisitions                                    (77)     -       -
 Mortgage and investment securities acquired           (28)   (260)   (776)
 Proceeds from sale of:
  Property, equipment, timber and timberlands           19      44      54
  Businesses                                            -       14     616
  Mortgage and investment securities                   214     140     510
 Other                                                  30    (102)    (26)
                                                    ------- ------- -------
Net cash flows from investing in the business         (838) (1,266)   (589)
                                                    ------- ------- -------
Cash flows from financing activities:
 Sale of debentures, notes and CMO bonds               723     174   1,291
 Sale of industrial revenue bonds                      150     134     135
 Notes and commercial paper borrowings, net           (439)   (143)   (660)
 Proceeds from issuance of investment contracts         -       -       60   
 Cash dividends on common shares                      (306)   (247)   (246)
 Intercompany cash dividends on common shares           -       -       -
 Payments on debentures, notes, bank credit
  agreements, income debenture, capital leases
  and CMO bonds                                       (661)   (362) (1,243)
 Purchase of treasury common shares                   (379)     -       -
 Exercise of stock options                              19      16      21
 Other                                                  (4)     (2)      5
                                                    ------- ------- -------
Net cash flows from financing activities              (897)   (430)   (637)
                                                    ------- ------- -------
Net increase (decrease) in cash and short-term
 investments                                          (179)    (16)   (374)
Cash and short-term investments at beginning of year   263     279     653
                                                    ------- ------- -------
Cash and short-term investments at end of year      $   84  $  263  $  279
                                                    ======= ======= =======
Cash paid during the year for:
 Interest, net of amount capitalized                $  302  $  279  $  305
                                                    ======= ======= =======
 Income taxes                                       $  332  $  141  $  158
                                                    ======= ======= =======
</TABLE>
See notes on pages 51 through 69.

                             48
<PAGE>

<TABLE>
<CAPTION>
  Weyerhaeuser Company     Real Estate and Financial Services
 -----------------------   ----------------------------------
  1995    1994    1993            1995    1994    1993
 ------- ------- -------         ------- ------- -------
<C>     <C>     <C>             <C>     <C>     <C>

 $  981  $  576  $  511          $ (182) $   13  $   68

    580     504     444              41      30      43
    183     115     108             (80)     12     (14)
     -       -        2              -       -       -
     -       -      (90)             -       -       -
     -       -       38              -       -       -
     -       -       -              290      -       -

    (60)   (126)    (55)             27       1     (38)
   (148)    (12)   (164)            (11)      6    (108)

     -       -       -              (18)    360      23
    (82)    272      53             (20)    (74)    115
     43      15      (3)             -       (5)    (13)
     -       -      (70)             -       -      (42)
     14     (20)     34              (2)     13      10
 ------- ------- -------         ------- ------- -------
  1,511   1,324     808              45     356      44
 ------- ------- -------         ------- ------- -------
                        
   (915) (1,047)   (907)            (13)    (14)    (20)
    (68)    (41)    (40)             -       -       -
                         
    (77)     -       -               -       -       -
     -       -       -              (28)   (260)   (776)
                        
     19      20      27              -       24      27
     -       -      204              -       14     412
     -       -       -              214     140     510
    (50)    (49)     (6)             80     (53)    (20)
 ------- ------- -------         ------- ------- -------
 (1,091) (1,117)   (722)            253    (149)    133
 ------- ------- -------         ------- ------- -------

    583      22     931             140     152     360
    150     134     135              -       -       -
   (159)    (83)   (520)           (280)    (60)   (140)
     -       -       -               -       -       60
   (306)   (247)   (246)             -       -       -
     -       -      435              -       -     (435)


   (480)    (49)   (824)           (181)   (313)   (419)
   (379)     -       -               -       -       -
     19      16      21              -       -       -
     (4)     (2)      5              -       -       -
 ------- ------- -------         ------- ------- -------
   (576)   (209)    (63)           (321)   (221)   (574)
 ------- ------- -------         ------- ------- -------

   (156)     (2)     23             (23)    (14)   (397)
    190     192     169              73      87     484
 ------- ------- -------         ------- ------- -------
 $   34  $  190  $  192          $   50  $   73  $   87
 ======= ======= =======         ======= ======= =======

 $  236  $  201  $  203          $   66  $   78  $  102
 ======= ======= =======         ======= ======= =======
 $  346  $   92  $  161          $  (14) $   49  $   (3)
 ======= ======= =======         ======= ======= =======
</TABLE>
                             49
<PAGE>

Consolidated Statement of Shareholders' Interest

<TABLE>
<CAPTION>
For the three-year period ended December 31, 1995
Dollar amounts in millions                          1995     1994      1993
------------------------------------------------- -------   -------   -------
<S>                                              <C>       <C>       <C>
Common stock issued:
 Balance at end of year                           $  258    $  258    $  258
                                                  -------   -------   -------
Other capital:
 Balance at beginning of year                        416       411       404
 Stock options exercised                              (3)        5         5
 Contributions to employee investment plans           -         -          1
 Other transactions (net)                              2        -          1
                                                  -------   -------   -------
 Balance at end of year                              415       416       411
                                                  -------   -------   -------
Cumulative translation adjustment:
 Balance at beginning of year                       (107)      (73)      (36)
 Translation adjustment                               17       (34)      (37)
                                                  -------   -------   -------
 Balance at end of year                              (90)     (107)      (73)
                                                  -------   -------   -------
Retained earnings:
 Balance at beginning of year                      3,733     3,391     3,058
 Net earnings                                        799       589       579
 Cash dividends on common shares                    (306)     (247)     (246)
                                                  -------   -------   -------
 Balance at end of year                            4,226     3,733     3,391
                                                  -------   -------   -------
Common stock held in treasury:
 Balance at beginning of year                        (10)      (21)      (38)
 Purchases of treasury common shares                (379)       -         -
 Stock options exercised                              22        11        16
 Contributions to employee investment plans           -         -          1
 Used in acquisition of capital assets                44        -         -
                                                  -------   -------   -------
 Balance at end of year                             (323)      (10)      (21)
                                                  -------   -------   -------
Total shareholders' interest:
 Balance at end of year                           $4,486    $4,290    $3,966
                                                  =======   =======   =======
Shares of common stock (in thousands):
 Issued at end of year                            206,073   206,073   206,073
                                                  -------   -------   -------
 In treasury:
  Balance at beginning of year                        455       984     1,796
  Purchases of treasury common shares               8,494        -         -
  Stock options exercised                            (648)     (529)     (744)
  Contributions to employee investment plans           -         -        (60)
  Used in acquisition of capital assets              (998)       -         -
  Other transactions                                   -         -         (8)
                                                  -------   -------   -------
  Balance at end of year                            7,303       455       984
                                                  -------   -------   -------
  Outstanding at end of year                      198,770   205,618   205,089
                                                  =======   =======   =======
</TABLE>
See notes on pages 51 through 69.

                              50
<PAGE>

Notes to Financial Statements

For the three-year period ended December 31, 1995

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. Significant
intercompany transactions and accounts are eliminated.

Certain of the consolidated financial statements and notes
to financial statements are presented in two groupings:
(1) Weyerhaeuser Company (Weyerhaeuser, or the company),
which is principally engaged in the growing and harvesting
of timber and the manufacture, distribution and sale of
forest products, and (2) real estate and financial
services, which includes Weyerhaeuser Real Estate Company
(WRECO), which is involved in real estate development and
construction, and Weyerhaeuser Financial Services, Inc.
(WFS), whose principal subsidiary is Weyerhaeuser Mortgage
Company (WMC). GNA Corporation, a subsidiary of WFS, was
sold in April 1993.


Nature of Operations

The company's principal business segments, which account
for the majority of sales and earnings and 70 percent of
the asset base, are:

 . Timberlands and wood products, which is engaged in the
management of 5.3 million acres of company-owned
forestland in the United States and 18.9 million acres of
forestland in Canada under long-term licensing
arrangements and the production of a full line of solid
wood products that are sold primarily through the
company's own sales organizations to wholesalers,
retailers and industrial users in North America, the
Pacific Rim and Europe.

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


Fiscal Year-End

The company's fiscal year ends on the last Sunday of the
year. Fiscal year 1995 had 53 weeks, and fiscal years 1994
and 1993 had 52 weeks.


Changes in Accounting Principles

In 1994, the company implemented the following pronounce-
ments by the Financial Accounting Standards Board (FASB):

 . Statement of Financial Accounting Standards (SFAS) No.
106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," for its wholly owned subsidiary,
Weyerhaeuser Canada Ltd. The adoption of this pronouncement
did not have a significant impact on the company's results
of operations or its financial position.

 . SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," which requires accrual accounting to be used for
the cost of benefits provided to former or inactive
employees who have not yet retired. The adoption of this
pronouncement, which required a cumulative catch-up charge
to earnings, did not have a significant impact on the
company's results of operations or its financial position.

 . SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," which addresses accounting and
reporting for investments in equity securities that have
readily determinable fair values, and for all investments
in debt securities. The adoption of this pronouncement did
not have a significant impact on the company's results of
operations or its financial position.

In 1995, the company also implemented:

 . SFAS No. 114, "Accounting by Creditors for Impairment of a
Loan," which requires creditors to measure impairment based
on the present value of expected future cash flows
discounted at the loan's effective interest rate, and SFAS
No. 118, "Accounting by Creditors for Impairment of a Loan
- Income Recognition and Disclosures," which amended SFAS
No. 114 to allow creditors to use existing methods for
recognizing interest on impaired loans and also requires
creditors to disclose certain information about how
interest income was recognized on impaired loans. The
adoption of these pronouncements did not have a significant
impact on results of operations or financial position.

 . SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," which
requires companies to change their method of valuing long-
lived assets. The implementation of this pronouncement,
along with the company's decision to accelerate the dispo-
sition of some of those real estate assets, resulted in a
charge of $290 million to operations. The company currently
plans to dispose of most of the impaired assets over the
next two years. The carrying value of the affected assets
at December 31, 1995, is approximately $291 million.

 . SFAS No. 122, "Accounting for Mortgage Servicing Rights --
an Amendment of FASB Statement No. 65," which modifies the
treatment of the capitalization of servicing rights by
mortgage banking enterprises. The change constitutes a
simplification in procedures, eliminating the separate
treatment of servicing rights acquired through loan origina-
tion and those acquired through purchasing transactions, as
previously required under SFAS No. 65. The change also
requires that the enterprise periodically evaluate
servicing rights for impairment. The adoption of this
pronouncement by WMC did not have a significant impact on
results of operations or financial position.

                              51
<PAGE>

Prospective Accounting Changes

In October 1995, the FASB issued SFAS No. 123, "Accounting
for Stock-Based Compensation," which requires companies to
change what they disclose about their employee stock-based
compensation plans, recommends that they change the
accounting for these plans to a fair-value based method
and requires those companies that do not change their
accounting to disclose what their earnings and earnings
per share would have been if they had changed. This
disclosure is applicable for financial statements for
fiscal years beginning after December 15, 1995. The
company will continue to account for these plans using the
method of accounting prescribed by Accounting Principles
Board Opinion No. 25 and will conform to the disclosure
requirements of SFAS No. 123 for the fiscal year 1996.


Net Earnings Per Common Share

Net earnings per common share are based on the weighted
average number of common shares outstanding during the
respective periods. Average common equivalent shares
(stock options) outstanding have not been included, as the
computation would not be dilutive. Weighted average common
shares outstanding were 203,525,000, 205,543,000 and
204,866,000 for the years ended December 31, 1995,
December 25, 1994, and December 26, 1993, respectively.


Estimates

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


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

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

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

 . Hedging transactions entered into by the company's
mortgage banking subsidiary to protect both the completed
loan inventory and loans in process against changes in
interest rates. The financial instruments used to manage
interest rate risk are forward sales commitments, interest
rate futures and options. Hedging gains and losses realized
during the commitment and warehousing period are deferred
to the extent of unrealized gains on the related mortgage
loans held for sale.

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

The notional amount of these derivative financial in-
struments is $891 million at December 31, 1995. The
company's use of derivatives does not have a significant
effect on the company's results of operations or its
financial position.


Cash and Short-Term Investments

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


Inventories

Inventories are stated at the lower of cost or market. Cost
includes labor, materials and production overhead. The last-
in, first-out (LIFO) method is used to cost the majority of
domestic raw materials, in process and finished goods inven-
tories; either the first-in, first-out (FIFO) or average
cost method is used to cost all other inventories. Had the
FIFO method been used to cost all inventories, the amounts
at which product inventories are stated would have been
$267 million and $237 million greater at December 31, 1995,
and December 25, 1994, respectively.


Property and Equipment

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

                              52
<PAGE>

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


Timber and Timberlands

Timber and timberlands are carried at cost less fee
stumpage charged to disposals. Fee stumpage is the cost of
standing timber and is charged to fee timber disposals as
fee timber is harvested, lost as the result of casualty or
sold. Stumpage rates are determined with reference to the
cost of timber and the related volume of timber estimated
to be recoverable. Timber carrying costs are expensed as
incurred.


Accounts Payable

The company's banking system provides for the daily
replenishment of major bank accounts as checks are
presented. Accordingly, there were negative book cash
balances of $149 million and $151 million at December 31,
1995, and December 25, 1994, respectively. Such balances
result from outstanding checks that had not yet been paid
by the bank and are reflected in accounts payable in the
consolidated balance sheets.


Income Taxes

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


Pension Plans

The company has pension plans covering most of its em-
ployees. The U.S. plan covering salaried employees
provides pension benefits based on the employee's highest
monthly earnings for five consecutive years during the
final 10 years before retirement. Plans covering hourly
employees generally provide benefits of stated amounts for
each year of service. Contributions to U.S. plans are
based on funding standards established by the Employee
Retirement Income Security Act of 1974 (ERISA).


Postretirement Benefits Other Than Pensions

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


Reclassifications

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


Weyerhaeuser Real Estate Company

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


Weyerhaeuser Financial Services

The company's financial services businesses are engaged in
the mortgage banking industry, hold mortgage-backed
certificates and other financial instruments pledged as
collateral for collateralized mortgage obligation (CMO)
bonds, and also offer insurance services.

Mortgage notes held for sale are stated at the lower of
cost or market, which is computed by the aggregate method
(unrealized losses are offset by unrealized gains).

Mortgage-backed certificates are carried at par value
adjusted for any unamortized discount or premium.

CMO bonds are carried at unamortized cost. Discounts and
premiums are amortized using a method that approximates
the effective interest method over their estimated lives.

                              53
<PAGE>

Note 2. Foreign Operations and Export Sales

The following net assets, net sales and net earnings,
related to operations outside the United States,
principally Canada, are included in the company's
consolidated financial statements:

<TABLE>
<CAPTION>
                                 December 31,   December 25,   December 26,   
Dollar amounts in millions          1995            1994            1993
--------------------------       ------------   ------------   ------------
<S>                              <C>            <C>            <C>
Net assets:
 Working capital                  $     72       $     29        $    100
 Timber-cutting rights                   2              2               2
 Property and equipment, net           894            826             853
 Other assets                           40             42              36
                                 ------------   ------------   ------------
                                     1,008            899             991
Other liabilities                     (253)          (235)           (232)
                                 ------------   ------------   ------------
Net assets                        $    755       $    664        $    759
                                 ============   ============   ============
</TABLE>

<TABLE>
<CAPTION>
Dollar amounts in millions            1995           1994          1993
--------------------------         ---------      ---------      --------
<S>                               <C>            <C>            <C>
Net sales                          $  1,582       $  1,390       $   972
Net earnings                            282            186           116
</TABLE>

The company is engaged in the sale of products for export
from the United States. These sales consist principally of
pulp, newsprint, paperboard, containerboard, logs, lumber
and wood chips to Japan; pulp, containerboard, lumber and
plywood to Europe; and logs to China and Korea. The
following table compares the company's export sales from
the United States to customers in Japan and elsewhere with
its total net sales and revenues.

<TABLE>
<CAPTION>
Dollar amounts in millions                1995         1994         1993
--------------------------             ---------    ---------    ---------
<S>                                   <C>          <C>          <C>
Export sales from the United States:
 Customers in Japan                    $  1,173     $  1,034     $    952
 Customers outside Japan                    763          506          493
                                       ---------    ---------    ---------
  Total export sales                      1,936        1,540        1,445
                                       ---------    ---------    ---------
Total net sales and revenues           $ 11,788     $ 10,398     $  9,545
                                       =========    =========    =========
</TABLE>

Note 3. Other Income (Expense), Net

Other income (expense), net, is an aggregation of both
recurring and occasional non-operating income and expense
items and, as a result, fluctuates from period to period.
No individual income or (expense) item is significant
other than the $70 million gain on the disposal of the
company's investment in the infant diaper business in 1993
and the real estate and financial services gain of $42
million on the sale of GNA Corporation in 1993.

                            54
<PAGE>

Note 4. Income Taxes

Earnings before income taxes and extraordinary item are
comprised of the following:

<TABLE>
<CAPTION>
Dollar amounts in millions      1995       1994       1993
--------------------------    --------   --------   --------
<S>                          <C>        <C>        <C>
Domestic earnings             $   845    $   650    $   738
Foreign earnings                  399        270         70
                              --------   --------   --------
                              $ 1,244    $   920    $   808
                              ========   ========   ========   
</TABLE>

Provisions for income taxes include the following:

<TABLE>
<CAPTION>
Dollar amounts in millions                          1995      1994       1993
---------------------------                      ---------  ---------  ---------
<S>                                             <C>        <C>        <C>
Federal:
 Current                                         $   177    $    84    $   145
 Deferred                                             92        114         82
                                                 ---------  ---------  ---------
                                                     269        198        227
                                                 ---------  ---------  ---------
State:
 Current                                              31         17         16
 Deferred                                              4          7         11
                                                 ---------  ---------  ---------
                                                      35         24         27
                                                 ---------  ---------  ---------
Foreign:
 Current                                             134        103         26
 Deferred                                              7          6          1
                                                 ---------  ---------  ---------
                                                     141        109         27
                                                 ---------  ---------  ---------
Income taxes before extraordinary item               445        331        281
                                                 ---------  ---------  ---------
Income taxes apportionable to extraordinary item:
 Current                                              -          -          (4)
 Deferred                                             -          -          38
                                                 ---------  ---------  ---------
                                                      -          -          34
                                                 ---------  ---------  ---------
                                                 $   445    $   331    $   315
                                                 =========  =========  =========
</TABLE>

The corporate income tax rate was increased from 34
percent to 35 percent, retroactive to January 1, 1993, by
legislation enacted during the third quarter of 1993.
This change in tax law increased income taxes in 1993 by
$15 million due to the effect of the higher tax rate on
the accumulated temporary differences at December 27,
1992, and $5 million due to the effect of adjusting the
annual effective tax rate used in prior quarters.

A reconciliation between the federal statutory tax rate
and the company's effective tax rate before the
extraordinary item follows:

<TABLE>
<CAPTION>
                                                    1995    1994    1993
                                                   ------  ------  ------
<S>                                                 <C>     <C>     <C> 
Statutory tax on income before extraordinary item    35%     35%     35%
State income taxes, net of federal tax benefit        2       2       3
Foreign sales corporations                           (1)     (1)     (2)
Effect of tax rate change                             -       -       2
All other, net                                        -       -      (3)
                                                   ------  ------  ------
Effective income tax rate                            36%     36%     35%
                                                   ======  ======  ======
</TABLE>

                           55
<PAGE>

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

<TABLE>
<CAPTION>
Dollar amounts in millions            December 31, 1995   December 25, 1994
--------------------------            -----------------   -----------------
<S>                                        <C>                 <C>
Current (included in prepaid expenses)      $     75            $    68
Noncurrent                                    (1,196)              (986)
Real estate and financial services                72                 (8)
                                      -----------------   -----------------
Total                                       $ (1,049)           $  (926)
                                      =================   =================
</TABLE>

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

<TABLE>
<CAPTION>
Dollar amounts in millions              December 31, 1995   December 25, 1994
--------------------------              -----------------   -----------------
<S>                                        <C>                 <C>
Depreciation                                $   (1,220)         $   (1,093)
Depletion                                         (115)                (99)
Capitalized interest and taxes -
 real estate development                           (77)                (79)
Other                                             (140)               (138)
                                            -------------       -------------
Total deferred tax (liabilities)                (1,552)             (1,409)
                                            -------------       -------------
Pension and retiree health care                    121                 121
Charges for impairment of long-lived assets         93                  -
Environmental, obsolescence and
 restructure reserves                               78                  85
Alternative minimum tax credit carryforward         20                  64
Other                                              191                 213
                                            -------------       -------------
Total deferred tax assets                          503                 483
                                            -------------       -------------
                                            $   (1,049)         $     (926)
                                            =============       =============
</TABLE>

As of December 31, 1995, the company has available
approximately $20 million of alternative minimum tax
credit carryforward, which does not expire, and foreign
tax credit carryforwards of $1 million, $4 million and $1
million expiring in 1998, 1999 and 2000, respectively.

The company intends to reinvest undistributed earnings of
certain foreign subsidiaries; therefore, no U.S. taxes
have been provided. These earnings totaled approximately
$734 million at the end of 1995. While it is not
practicable to determine the income tax liability that
would result from repatriation, it is estimated that
withholding taxes payable upon repatriation would
approximate $73 million.


Note 5. Extraordinary Item

In 1993 the company realized a net gain of $52 million
($86 million less related tax effect of $34 million) as a
result of extinguishing certain debt obligations.

       
Note 6. Pension Plans

Net annual pension cost (income) includes the following
components:

<TABLE>
<CAPTION>
Dollar amounts in millions                          1995      1994      1993
--------------------------                        --------  --------  --------
<S>                                              <C>       <C>       <C>
Service cost-benefits earned during the period    $    37   $    43   $    39
Interest cost on projected benefit obligation         104        96        93
Actual return on plan assets                         (466)       (9)     (280)
Net amortization and deferrals                        323      (121)      165
Pension expense due to sales, closures and other       -         -         (1)
                                                  --------  --------  --------
                                                  $    (2)  $     9   $    16
                                                  ========  ========  ========  
</TABLE>

The assumptions used were as follows:

<TABLE>
<CAPTION>
                                                    1995     1994     1993
                                                  -------- -------- --------
<S>                                              <C>      <C>      <C>
Discount rate                                       7.75%    8.75%     7.5%
Rate of increase in compensation levels              4.5%     4.5%     4.5%
Expected long-term rate of return on plan assets    11.5%    11.5%    11.5%
</TABLE>
                              56
<PAGE>

The following table sets forth the plans' funded status
and amounts recognized in the company's consolidated
balance sheet for its U.S. and Canadian pension plans:

<TABLE>
<CAPTION>
                               December 31, 1995        December 25, 1994
                            ------------------------ -----------------------
                              Assets  Accumu-          Assets  Accumu-
                              Exceed    lated          Exceed    lated
                             Accumu- Benefits         Accumu- Benefits
                               lated   Exceed           lated   Exceed 
Dollar amounts in millions  Benefits   Assets  Total Benefits   Assets Total
------------------------------------------------------------------------------
<S>                         <C>     <C>      <C>     <C>     <C>     <C>
Accumulated benefit
 obligation:
 Vested                      $ 1,254 $   28   $ 1,282 $ 1,044 $    15 $ 1,059
 Non-vested                       27     -         27      23      -       23
                             ------- -------  ------- ------- ------- -------- 
                             $ 1,281 $   28   $ 1,309 $ 1,067 $    15 $ 1,082
                             ======= =======  ======= ======= ======= ========
Projected benefit obligation $ 1,413 $   34   $ 1,447 $ 1,172 $    15 $ 1,187
Fair value of plan assets     (1,627)   (24)   (1,651) (1,238)    (12) (1,250)
Unrecognized prior service
 cost                            (57)   (12)      (69)    (49)     (3)    (52)
Unrecognized net gain            316      5       321     168       2     170
Unrecognized net transition
 asset                            32     (2)       30      37      (1)     36
                             ------- -------  ------- ------- ------- --------
Accrued pension cost         $    77 $    1   $    78 $    90 $     1 $    91
                             ======= =======  ======= ======= ======= ========
</TABLE>

The assets of the U.S. and Canadian pension plans, as of
December 31, 1995, and December 25, 1994, consist of a
highly diversified mix of equity, fixed income and real
estate securities.

Approximately 1,750 employees are covered by union-
administered multi-employer pension plans to which the com-
pany makes negotiated contributions based generally on
fixed amounts per hour per employee. Contributions to
these plans were $7 million in 1995, $7 million in 1994
and $6 million in 1993.


Note 7. Postretirement Benefits Other Than Pensions

The company sponsors defined benefit postretirement plans
for its U.S. employees that provide medical and life insur-
ance coverage as follows:
 . Two salaried retiree medical plans that cover
substantially all salaried employees who retire under the
company's retirement plan and their spouses. Plan I covers
those retired or eligible to retire as of January 1, 1990,
and provides full health coverage. Plan II includes those
salaried employees not eligible for Plan I, under which the
company provides a fixed dollar amount per year of service
toward the premium, with the retiree paying the remainder.
The company reserves the right to revise the fixed dollar
amount.
 . An hourly retiree medical plan that covers approximately
3,700 active hourly employees and their spouses. For some,
the coverage stops at age 65, while others have lifetime
coverage. In some units the retiree must pay a portion of
the premium, while in others the company pays the full
cost. There are approximately 1,800 retired hourly
employees and their spouses currently covered under these
programs.
 . A salaried retiree life insurance plan that starts at 80
percent of salary at retirement and reduces to six thousand
dollars in 20 percent increments. Approximately 4,700
persons who are retired or were eligible to retire as of
December 31, 1991, are subject to a different schedule.
 . An hourly retiree life insurance plan in which approxi-
mately 11,000 active hourly employees are eligible and
approximately 2,000 hourly retirees have coverage. Most of
these are covered by fixed dollar amount coverage that is
graded down after retirement. Some units have pay-related
insurance on which the company pays the full cost.

The company sponsors three defined benefit and two defined
contribution postretirement plans for its Canadian
employees that provide medical and life insurance.
Collectively, 320 retired employees are covered and 510
active employees are eligible for coverage in these five
plans as of year-end 1995.

                              57
<PAGE>

The following table sets forth the U.S. and Canadian plans'
combined accrued postretirement benefit obligation as of
December 31, 1995, and December 25, 1994:

<TABLE>
<CAPTION>
                                                 December 31,    December 25,
Dollar amounts in millions                           1995            1994
--------------------------                       ------------    ------------
<S>                                              <C>             <C>
Accumulated postretirement benefit obligation:
 Retirees:
  Health                                           $    119        $    120
  Life                                                   22              22
 Fully eligible and other active plan
  participants:
  Health                                                 87              77
  Life                                                   12              11
                                                 ------------    ------------
                                                        240             230
Unrecognized actuarial gain/(loss)                        9              13
                                                 ------------    ------------
Accrued postretirement benefit obligation          $    249        $    243
                                                 ============    ============
</TABLE>

Net annual postretirement benefit costs included the
following components:

<TABLE>
<CAPTION>
Dollar amounts in millions                   1995      1994      1993
--------------------------                 -------   -------   -------
<S>                                       <C>       <C>       <C>
Service cost benefits attributed to
 service during the period:
 Health                                    $    3    $    4    $    3
 Life                                           -         1         1
Interest cost on accumulated postretirement
 benefit obligation:
 Health                                        16        16        16
 Life                                           3         2         3
Amortization of loss - health                  (1)       -         -
                                           -------   -------   -------
Net postretirement benefit cost            $   21    $   23    $   23
                                           =======   =======   =======
</TABLE>
 
For measurement purposes, an 11.0, 10.5 and 8.5 percent
annual rate of increase in the per capita cost of covered
health care benefits was assumed for 1993, 1994 and 1995,
respectively. Beginning in 1996, the rate is assumed to
decrease by 0.5 percent annually to a level of 5.5 percent
for the year 2001 and all years thereafter. The effect of
a one percent increase in the assumed health care cost
trend rates would increase the accumulated postretirement
benefit obligation as of December 31, 1995, by 10.3
percent, and the aggregate of the service and interest
cost components of net annual postretirement benefit cost
for 1995 by 11.9 percent.

Other assumptions used were as follows:

<TABLE>
<CAPTION>
                                           1995     1994     1993
                                          ------   ------   ------
<S>                                      <C>      <C>      <C>
Discount rate                              7.75%    8.5%     7.5%
Rate of increase in compensation levels:
 Salaried                                  4.5%     4.5%     4.5%
 Hourly                                    3.0%     3.0%     3.0%
</TABLE>
                               58
<PAGE>

Note 8. Inventories

<TABLE>
<CAPTION>
Dollar amounts in millions              December 31, 1995  December 25, 1994
--------------------------              -----------------  -----------------
<S>                                         <C>                <C>
Logs and chips                               $    173           $    108
Lumber, plywood and panels                        135                115
Pulp, newsprint and paper                         158                 88
Containerboard, paperboard and packaging          107                 56
Other products                                    117                112
Materials and supplies                            270                267
                                        -----------------  -----------------
                                             $    960           $    746
                                        =================  =================
</TABLE>

Note 9. Property and Equipment

<TABLE>
<CAPTION>
Dollar amounts in millions              December 31, 1995  December 25, 1994
--------------------------              -----------------  -----------------
<S>                                         <C>                <C>
Property and equipment, at cost:
 Land                                        $    167           $    159
 Buildings and improvements                     1,582              1,509
 Machinery and equipment                        9,253              8,557
 Rail and truck roads and other                   615                628
                                        -----------------  -----------------
                                               11,617             10,853
Less allowance for depreciation
 and amortization                               4,900              4,657
                                        -----------------  -----------------
                                            $   6,717          $   6,196
                                        =================  =================
</TABLE>

Note 10. Mortgage-Backed Certificates and Other Pledged
Financial Instruments, and Collateralized Mortgage
Obligation Bonds

The company's financial services businesses hold mortgage-
backed certificates and other financial instruments
pledged as collateral for the collateralized mortgage
obligation (CMO) bonds. These assets are held by banks as
trustees. Principal and interest collections on the
certificates are used to meet the interest payments and
reduce the outstanding principal balance of the bonds.

The CMO bonds are the obligation of the issuer, and
neither the company nor any affiliated company has
guaranteed or is otherwise obligated with respect to the
bonds.


Note 11. Real Estate in Process of Development and for
Sale

Properties held by the company's real estate and financial
services businesses include:

<TABLE>
<CAPTION>
Dollar amounts in millions    December 31, 1995   December 25, 1994
--------------------------    -----------------   -----------------
<S>                               <C>                 <C>
Dwelling units                     $    236            $    282
Residential lots                        222                 265
Commercial lots                         136                 131
Commercial projects                     125                 281
Acreage                                  77                  83
Other inventories                         1                   1
                              -----------------   -----------------
                                        797               1,043
Less reserves                            21                  54
                              -----------------   -----------------
                                   $    776           $     989
                              =================   =================
</TABLE>
                              59
<PAGE>

Note 12. Accrued Liabilities
<TABLE>
<CAPTION>
                                                 December 31,  December 25,
Dollar amounts in millions                           1995          1994
--------------------------                       ------------  ------------
<S>                                              <C>           <C>
Payroll -- wages and salaries, incentive awards,
 retirement and vacation pay                      $    265      $    217
Taxes -- Social Security and real and
 personal property                                      50            63
Interest                                                82            67
Accrued income taxes                                   117           105
Other                                                  193           243
                                                 ------------  ------------
                                                  $    707      $    695
                                                 ============  ============
</TABLE>

Note 13. Short-Term Debt


Borrowings

Real estate and financial services short-term borrowings
were $338 million with a weighted average interest rate of
4.3 percent at December 31, 1995, and $416 million with a
weighted average interest rate of 6 percent at December
25, 1994.


Lines of Credit

The company has short-term bank credit lines that provide
for borrowings of up to the total amount of $725 million,
all of which was available to the company, WRECO and WMC
at December 31, 1995, and December 25, 1994. No portion of
these lines has been availed of by the company, WRECO or
WMC at December 31, 1995, or December 25, 1994. None of
the entities referred to herein is a guarantor of the
borrowings of the others.

WMC has short-term special credit lines that provide for
borrowings of up to $230 million and $235 million at
December 31, 1995, and December 25, 1994, respectively.
Borrowings against these lines were $115 million and $85
million as of December 31, 1995, and December 25, 1994, re-
spectively.


Note 14. Long-Term Debt


Debt

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

<TABLE>
<CAPTION>
                                                  December 31,   December 25, 
Dollar amounts in millions                            1995           1994
--------------------------                        ------------   ------------
<S>                                                <C>            <C>
8 3/8% debentures due 2007                          $  150         $  150
7.50% debentures due 2013                              250            250
7.25% debentures due 2013                              250            250
7 1/8% debentures due 2023                             250            250
9 3/8% notes                                            -             150
9 1/4% notes                                            -             200
9.05% notes due 2003                                   200            200
9.36% notes                                             -             100
7.28% note due 1996                                     40             40
8 1/2% debentures due 2025                             300             -
7.95% debentures due 2025                              250             -
Industrial revenue bonds, rates from 2.8% (variable)
 to 10.0% (fixed), due 1996-2028                       717            571
Medium-term notes, rates from 6.43% to 8.98%,
 due 1996-2005                                         428            428
Commercial paper/credit agreements                     252            411
Other                                                   21             34
                                                 ------------   ------------
                                                  $  3,108       $  3,034
                                                 ============   ============
</TABLE>

<TABLE>
<S>                                              <C>            <C>
Portion due within one year                       $    125       $    321
                                                  =========      =========
</TABLE>

                              60
<PAGE>

Long-term debt maturities during the next five years are (millions):

<TABLE>
 <S>                                          <C>
  1996                                         $    125 
  1997                                               74
  1998                                               47
  1999                                              335
  2000                                               98
</TABLE>

Real estate and financial services long-term debt,
including the current portion, is as follows:

<TABLE>
<CAPTION>
                                                   December 31,   December 25,
Dollar amounts in millions                             1995           1994
--------------------------                         ------------   ------------
<S>                                                <C>            <C>
Notes payable, unsecured; weighted average 
 interest rates are approximately 7.3% and 7.4%     $    780       $    835
Bank and other borrowings, unsecured; weighted
 average interest rates are approximately 5.7%
 and 5.5%                                                505            460
Notes payable, secured; weighted average interest
 rates are approximately 8.5% and 9.4%                    46             46
Commercial paper/credit agreements                       263            429
                                                   ------------   ------------
                                                    $  1,594       $  1,770
                                                   ============   ============
</TABLE>

<TABLE>
<S>                                                <C>            <C>
Portion due within one year                         $    125       $     58
                                                    =========      =========
</TABLE>

Long-term debt maturities during the next five years are (millions):
 
<TABLE>
<S>                                               <C>
 1996                                              $    125
 1997                                                   585
 1998                                                   156
 1999                                                   375
 2000                                                   128
</TABLE>


Lines of Credit

At December 31, 1995, the company's lines of credit
include a five-year competitive advance and revolving
credit facility agreement entered into in July 1994 with a
group of banks that provides for borrowings of up to the
total amount of $1.55 billion, all of which can be availed
of by the company, and $1 billion, which can be availed
of by WMC. Borrowings are at LIBOR or other such interest
rates as mutually agreed to between the borrower and
lending banks.

At December 31, 1995, and December 25, 1994, WMC had $35
million outstanding against a one-year evergreen credit
commitment entered into in 1990.

WMC has a revolving credit agreement with a bank to
provide for: (1) borrowings of up to $35 million for two
years at prime rate, LIBOR or such other rate as may be
agreed upon by WMC and the banks, (2) a commitment fee
based on the unused credit, and (3) conversion of the note
as of July 1, 1998, to a five-year term loan payable in
equal quarterly installments. At December 31, 1995, and
December 25, 1994, $20 million was outstanding under this
revolving credit agreement.

During 1992 WFS entered into a credit facility agreement,
which was subsequently amended in May 1994 and provides
for: (1) borrowings of up to $525 million at December 31,
1995, and $405 million at December 25, 1994, at LIBOR or
other such rates as may be agreed upon by WFS and the
banks, and (2) a commitment fee on the unused portion of
the credit. $450 million and $405 million were outstanding
under this facility at December 31, 1995, and December 25,
1994, respectively.

To the extent that these credit commitments expire more
than one year after the balance sheet date and are unused,
an equal amount of commercial paper is classifiable as
long-term debt. Amounts so classified are shown in the
tables in this note.

No portion of these lines has been availed of by the
company, WRECO, WMC or WFS at December 31, 1995, or
December 25, 1994, except as noted.

The company's compensating balance agreements were not
significant.

                              61
<PAGE>

Note 15. Fair Value of Financial Instruments

<TABLE>
<CAPTION>
                                       December 31, 1995   December 25, 1994
                                       -----------------   -----------------
                                       Carrying     Fair   Carrying     Fair
Dollar amounts in millions                Value    Value      Value    Value
--------------------------             --------  -------   --------  -------
<S>                                   <C>       <C>       <C>       <C> 
Weyerhaeuser:
 Financial liabilities:
  Long-term debt (including
     current maturities)               $  3,108  $ 3,469   $  3,034  $ 3,015
                                       --------  -------   --------  -------  
Real estate and financial services:
 Financial assets:
  Mortgage notes held for sale              332      332        209      207
  Mortgage loans receivable                 155      138        263      210
  Investments                                70       68        247      238
  Mortgage-backed certificates and
   other pledged financial
   instruments                              185      193        211      208
 Financial liabilities:
  Collateralized mortgage
   obligation bonds                         159      169        183      189
  Long-term debt (including
   current maturities)                    1,594    1,623      1,770    1,722
</TABLE>

The methods and assumptions used to estimate fair value of
each class of financial instruments for which it is
practicable to estimate that value are as follows:

 . Long-term debt, including real estate and financial
services, 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.
 
 . Mortgage notes held for sale are estimated using the
quoted market prices for securities backed by similar loans
adjusted for differences in loan characteristics. The esti-
mated fair value is net of related hedge instruments, which
were estimated based upon quoted market prices for
securities.

 . Mortgage loans receivable are estimated based on the
discounted value of estimated future cash flows using cur-
rent rates for loans with similar terms and risks.

 . Investments are estimated using quoted market prices for
similar securities. Fair value for mortgage loans held as
investments is based on the discounted value of estimated
future cash flows using current rates.

 . Mortgage-backed certificates and other pledged financial
instruments are estimated using the quoted market prices
for securities backed by similar loans and restricted
deposits held at cost, which is a reasonable estimate.

 . Collateralized mortgage obligation bonds are estimated
using analysis of projected cash flows discounted at
market yields.


Note 16. Legal Proceedings, Commitments and Contingencies


Legal Proceedings

On November 2, 1992, an action was filed against the
company in the Circuit Court for the First Judicial
District of Hinds County, Mississippi, on behalf of a
purported class of riparian property owners in Mississippi
and Alabama whose properties are located on the Tennessee
Tombigbee Waterway, Aliceville Lake, Cedar Creek and the
Magoway Creek. The complaint seeks $1 billion in
compensatory and punitive damages for diminution in
property value, personal injuries and mental anguish
allegedly resulting from the discharge of purported
hazardous substances, including dioxins and furans, by the
company's pulp and paper mill in Columbus, Mississippi,
and the alleged fraudulent concealments of such discharge.
The complaint also seeks an injunction prohibiting future
releases and the removal of hazardous substances allegedly
released in the past. On August 20, 1993, a companion
action was filed in Greene County, Alabama, on behalf of a
similar purported class of riparian owners with
essentially the same claims as the Mississippi case. By
order dated April 5, 1995, venue of the Alabama action was
transferred to Sumter County, Alabama. On January 20,
1995, the court in the Alabama action certified a class of
all persons who, as of the date the action commenced, were
riparian owners, lessees and licensees of properties
located on the Tennessee Tombigbee Waterway in Greene,
Sumter, Pickens and Marengo counties, Alabama, and Lowndes
and Noxubee counties, Mississippi, to determine whether
the company is liable to the members of the class for
compensatory and/or punitive damages and to determine the
amount of punitive damages, if any, to be awarded to the
class as a whole. By order dated April 12, 1995, as orally
amended on February 1, 1996, the geographical boundaries
of the class were amended to run from below the Columbus
mill's wastewater discharge pipe to just above the
confluence of the Black Warrior River and the Tennessee
Tombigbee Waterway. The class is estimated to range from
approximately 1,000 to 1,500 members. Neither the
Mississippi action nor the Alabama action is presently
scheduled for trial.

                              62
<PAGE>

Environmental

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 and analysis, the company
believes that it is reasonably possible that costs
associated with all identified sites may exceed current
accruals by amounts that may prove insignificant or that
could range, in the aggregate, up to approximately $120
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. 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, based
generally 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.

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


Other Items

The company's capital expenditures, excluding
acquisitions, have averaged about $869 million in recent
years but are expected to approximate $900 million in
1996; however, the 1996 expenditure level could be
increased or decreased as a consequence of future economic
conditions. The company had approximately $269 million in
capital expenditures committed on major projects at year-
end 1995. In addition, near year-end, the company announced
that it had signed an agreement to acquire 241,000 acres
of southern private commercial forestland. The ultimate
purchase price could range up to $275 million.

During the normal course of business, the company's real
estate and financial services subsidiaries have entered
into certain financial commitments comprised primarily of
agreements to fund up to $146 million in mortgage loans at
fixed and floating prices, guarantees made on $69 million
of partnership borrowings, and limited recourse
obligations associated with $1.6 billion of sold mortgage
loans. The fair value of the recourse on these loans is
estimated to be $9 million, which is based upon market
spreads for sales of similar loans without recourse or
estimates of the credit risk of the associated recourse
obligation.

                              63
<PAGE>

Note 17. Financial Instruments With Credit or Off-Balance
Sheet Risk


Receivables

WFS originates and holds loans in a number of states. The
remaining gross principal balance of mortgage notes held
for sale or investment and mortgage loans receivable by
geographic region are as follows:

<TABLE>
<CAPTION>
Dollar amounts in millions                 1995         1994
--------------------------               --------     --------
<S>                                     <C>          <C>
West                                     $    457     $    550
South                                          45           63
East                                           45           86
Other                                          21           23
                                         --------     --------
                                         $    568     $    722
                                         ========     ========
</TABLE>

Note 18. 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 31, 1995, and December 25, 1994; and

 . 40,000,000 preference shares having a par value of $1.00
per share, of which none were issued and outstanding at
December 31, 1995, and December 25, 1994.

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.

The company has reserved but not issued 2,000,000 shares
of cumulative preference shares, fourth series, for the
exercise of the rights described under Common Shares.


Common Shares

Common shares reserved for stock option plans were
5,972,195 shares at December 31, 1995, and 5,687,934
shares at December 25, 1994. As to the company's various
stock option plans, the following information is provided:

<TABLE>
<CAPTION>
                             1995        1994        1993
                          ---------   ---------   ---------
<S>                      <C>         <C>         <C>
At end of year:
 Options outstanding      5,972,195   5,687,934   5,177,401
 Options exercisable      4,817,145   4,375,234   3,981,751
During the year:
 Options granted          1,155,050   1,312,700   1,195,650
 Options exercised          859,373     623,258     878,755
 Options forfeited           11,416     178,909     139,368
Average prices per share:
 Options outstanding         $38.17      $36.27      $32.32
 Options granted             $39.47      $47.53      $42.31
 Options exercised           $27.34      $28.06      $26.72
</TABLE>

In December 1986, the company adopted, and in February
1989 amended, a Shareholder Rights Plan (the "Plan") and
declared a dividend distribution of 0.6667 right on each
outstanding common share. Each right entitles its holder
to purchase after the distribution date and until December
1996 one one-hundredth of a share of the company's
cumulative preference shares, fourth series, at a price of
$70, subject to adjustment. The distribution date is the earlier of 20
business days after the announcement that a person or
group has acquired 20 percent or more of Weyerhaeuser's
outstanding common shares or 20 business days after a
person or group commences a tender or exchange offer that
could result in the person or group owning 20 percent or
more of the company's outstanding common shares.
Following the distribution date, if anyone owning 20
percent or more of the company's outstanding common shares
merges with the company, with the company as the survivor,
and the company's common shares are not changed or
exchanged, or engages in certain self-dealing transactions
with the company, or if an event occurs that results in
such 20 percent owner's interest being increased by more
than one percent (e.g., a reverse stock split), or if
anyone acquires 30 percent or more of the company's out-
standing common shares, each right holder, other than such
person or group, will be able, upon payment of the right's
exercise price, to acquire shares of the company's common
stock or other securities or assets having an aggregate
market value equal to twice the right's purchase price.
If, after the company announces that someone owns 20
percent or more of the company's outstanding common
shares, the company is acquired in a merger or other
business combination, and the company is not the survivor,
or the company engages in a merger or other business
combination transaction in which the company is the
surviving corporation but the company's common shares are
changed or exchanged, or if 50 percent of the company's
earning power or assets is sold in one or several related
transactions, each right holder, other than any 20 percent
shareholder, will receive shares of the acquiring
company's common stock having a market value equal to
twice the right's exercise price. Subject to certain time
periods and conditions, the Plan may be amended and the
rights may be redeemed at a price of $.05 per right,
subject to adjustment.

                              64
<PAGE>

Note 19. Business Segments

The company is principally engaged in the growing and
harvesting of timber and the manufacture, distribution and
sale of forest products. The four principal business seg-
ments are timberlands and wood products (including
softwood lumber, plywood and veneer; composite panels;
oriented strand board; hardboard; logs; chips; timber;
doors; hardwood lumber and plywood; and treated products);
pulp, paper and packaging (including pulp, newsprint,
paper, containerboard, paperboard, packaging, recycling
and chemicals); real estate development and construction;
and financial services.

The timber-based businesses involve a high degree of
integration among timber operations; building materials
conversion facilities; and pulp, newsprint, paper,
container board and paperboard primary manufacturing and
secondary conversion facilities, including extensive
transfers of raw materials, semi-finished materials and
end products between and among these groups. Accounting
for segment profitability involves allocations of joint
raw materials and conversion costs and the use of transfer
prices that attempt to approximate current market values.

                            65
<PAGE>

The following table sets forth an analysis of the
company's operations by the four principal business
segments:

<TABLE>
<CAPTION>
Dollar amounts in millions                          1995      1994      1993
--------------------------                        --------  --------  --------
<S>                                              <C>       <C>       <C>
Sales to and revenues from unaffiliated customers:
 Timberlands and wood products                    $  4,931  $  4,992  $  4,468
 Pulp, paper and packaging                           5,682     4,066     3,579
 Real estate                                           723       911       829
 Financial services                                    196       206       401
 Corporate and other                                   256       223       269
                                                  --------  --------  -------- 
                                                    11,788    10,398     9,546
                                                  --------  --------  --------
Intersegment sales and revenues:
 Timberlands and wood products                         558       357       352
 Pulp, paper and packaging                             168        82         6
 Corporate and other                                    33        31        29
                                                  --------  --------  --------
                                                       759       470       387
                                                  --------  --------  --------
Total sales and revenues                            12,547    10,868     9,933
Eliminations                                          (759)     (470)     (388)
                                                  --------  --------  --------
                                                  $ 11,788  $ 10,398  $  9,545
                                                  ========  ========  ========
Approximate contribution (charge)
  to earnings (1)(2):
 Timberlands and wood products                    $    808  $  1,034  $    891
 Pulp, paper and packaging                           1,181       211        61
 Real estate                                          (231)        7        18
 Financial services                                    (46)       11        76
 Corporate and other                                  (217)     (142)      (46)
                                                  --------  --------  --------
                                                     1,495     1,121     1,000
Interest expense                                      (347)     (315)     (292)
Less capitalized interest                               96       114       100
                                                  --------  --------  --------
Income before taxes and extraordinary item           1,244       920       808
Income taxes                                          (445)     (331)     (281)
Extraordinary item                                      -         -         52
                                                  --------  --------  --------
                                                  $    799  $    589  $    579
                                                  ========  ========  ========
Depreciation, amortization and fee stumpage:
 Timberlands and wood products                    $    211  $    189  $    162
 Pulp, paper and packaging                             350       302       264
 Real estate                                             5         7         9
 Financial services                                     36        23        34
 Corporate and other                                    19        13        18
                                                  --------  --------  --------
                                                  $    621  $    534  $    487
                                                  ========  ========  ========
Capital expenditures:
 Timberlands and wood products                    $    508  $    257  $    241
 Pulp, paper and packaging                             562       794       652
 Real estate                                            10        10        15
 Financial services                                      3         4         5
 Corporate and other                                    36        37        54
                                                  --------  --------  --------
                                                  $  1,119  $  1,102  $    967
                                                  ========  ========  ========
Assets:
 Timberlands and wood products                    $  2,940  $  2,713  $  2,585
 Pulp, paper and packaging                           6,797     6,283     5,730
 Real estate                                         1,543     1,716     1,863
 Financial services                                  1,362     1,730     1,892
 Corporate and other                                 1,151     1,439     1,393
                                                  --------  --------  --------
                                                    13,793    13,881    13,463
Eliminations                                          (540)     (723)     (706)
                                                  --------  --------  --------
                                                  $ 13,253  $ 13,158  $ 12,757
                                                  ========  ========  ========
</TABLE>

(1) 1995 "approximate contribution to earnings" includes
special charges of $232 million and $58 million for real
estate and financial services, respectively, to dispose of
certain real estate assets.

(2) Interest expense of $64 million, $76 million and $96
million in 1995, 1994 and 1993, respectively, is included
in the determination of "approximate contribution to
earnings" for financial services.

                              66
<PAGE>

Note 20. Selected Quarterly Financial Information (unaudited)

<TABLE>
<CAPTION>
Dollar amounts
in millions       
except
per-share     First        Second         Third        Fourth     
figures      Quarter       Quarter       Quarter       Quarter         Year
---------  ------------- ------------- ------------- ------------- -------------
<S>       <C>           <C>           <C>           <C>           <C>
Net sales:               
 1995 (1)    $ 2,686       $ 3,009       $ 3,037       $ 3,056       $11,788
 1994          2,386         2,598         2,681         2,733        10,398
Operating income:        
 1995 (2)        419           472           243           469         1,603
 1994            281           282           294           363         1,220
Earnings before income taxes:
 1995 (2)        328           386           149           381         1,244
 1994            204           202           224           290           920
Net earnings:            
 1995 (2)        207           246            95           251           799
 1994            127           129           144           189           589
Net earnings per common share:
 1995 (2)       1.00          1.21           .47          1.25          3.93
 1994            .62           .62           .71           .91          2.86
Dividends per common share:                                                  
 1995            .30           .40           .40           .40          1.50
 1994            .30           .30           .30           .30          1.20
Market prices -- high/low:
 1995      42 5/8-36 7/8 47 3/8-37 1/2 50 3/8-44 3/4 48-40 7/8     50 3/8-36 7/8
 1994      50 1/4-42 1/8 45-39 1/2     46 1/8-39 7/8 39 1/8-35 7/8 50 1/4-35 7/8
</TABLE>

(1) 1995 net sales of $2,745, $3,074 and $3,112 as
previously reported in Form 10-Q for the first, second and
third quarters, respectively, have been revised to
properly reflect the recording of intercompany sales and
related cost of sales.

(2) 1995 third quarter results include a special pretax
charge of $290 million, or $184 million after-tax ($.90
per common share), to dispose of certain real estate
assets.

                              67
<PAGE>

Note 21. Historical Summary

<TABLE>
<CAPTION>
Dollar amounts in millions
 except per-share figures              1995     1994    1993    1992    1991
-------------------------            -------- ------- ------- ------- --------
<S>                                 <C>    <C>     <C>     <C>     <C>
Per common share:
 Net earnings (loss) from continuing
  operations, before extraordinary
  item and effect of accounting
  changes:                           $  3.93    2.86    2.58    1.83    (.50)
 Extraordinary item (2)              $   -       -       .25     -       -
 Effect of accounting changes        $   -       -       -       -      (.30)
                                     -------- -------- ------- ------- -------
 Net earnings (loss)                 $  3.93    2.86    2.83    1.83    (.80)
                                     ======== ======== ======= ======= =======
 Dividends paid                      $  1.50    1.20    1.20    1.20    1.20
 Shareholders' interest (end of year)$ 22.57   20.86   19.34   17.85   17.25

Financial position:
 Total assets:
  Weyerhaeuser                       $10,359   9,750   9,087   8,566   7,551
  Real estate and financial services $ 2,894   3,408   3,670   9,720   9,435
                                     -------- ------- -------- ------- ------- 
                                     $13,253  13,158  12,757  18,286  16,986
                                     ======== ======= ======== ======= =======
 Long-term debt (net of
  current portion):
  Weyerhaeuser:
   Long-term debt                    $ 2,983   2,713   2,998   2,659   2,195
   Capital lease obligations         $     2      -       -       -       -
   Convertible subordinated
    debentures                       $    -       -       -      193     193
   Limited recourse income debenture $    -       -       -      188     204
                                     -------- -------- ------- ------- -------
                                     $ 2,985   2,713   2,998   3,040   2,592
                                     ======== ======== ======= ======= =======
  Real estate and financial services:
   Collateralized mortgage
    obligation bonds                 $   139     161     241     440     702
   Long-term debt                    $ 1,469   1,712   1,845   1,971   1,719
                                     -------- -------- ------- ------- -------
                                     $ 1,608   1,873   2,086   2,411   2,421
                                     ======== ======== ======= ======= =======
 Redeemable preferred and preference
  shares (thousands):
  Weyerhaeuser                       $    -       -       -       -       -
  Real estate and financial services $    -       -       -       -       -
 Shareholders' interest              $ 4,486   4,290   3,966   3,646   3,489
 Percent earned on shareholders'
  interest                              18.2%   14.3%   15.2%   10.4%   (4.4)%

Operating results:

 Net sales and revenues:
  Weyerhaeuser                       $10,869   9,281   8,315   7,744   7,167
  Real estate and financial services $   919   1,117   1,230   1,522   1,606
                                     --------- ------- ------- ------- -------
                                     $11,788  10,398   9,545   9,266   8,773
                                     ========= ======= ======= ======= =======
 Net earnings (loss) from continuing
  operations before extraordinary item
  and effect of accounting changes:
  Weyerhaeuser                       $   981     576     459     332     (25)
  Real estate and financial services $  (182)(1)  13      68      40     (76)
 Less subsidiaries preferred
  share dividends                    $    -       -       -       -       -
                                     --------- ------- ------- ------- ------- 
                                     $   799     589     527     372    (101)(3)
 Extraordinary item (2)              $    -       -       52      -       -
 Effect of accounting changes        $    -       -       -       -      (61)
                                     --------- ------- ------- ------- -------
 Net earnings (loss)                 $   799     589     579     372    (162)
                                     ========= ======= ======= ======= ======= 
Statistics (unaudited):

 Number of employees                  39,431  36,665  36,748  39,022  38,669
 Salaries and wages                  $ 1,779   1,610   1,585   1,580   1,476
 Employee benefits                   $   408     357     347     323     321
 Total taxes                         $   736     618     577     443     173
 Timberlands (thousands of acres):     
  Fee ownership                        5,337   5,599   5,524   5,604   5,517
  Long-term license arrangements      18,875  17,849  17,845  18,828  13,491
 Number of shareholder accounts        
  at year-end:                        
  Common                              23,446  24,131  25,282  26,334  26,937
  Preferred                               -       -       -       -       -
  Preference                              -       -       -       -       -
 Average common and common equivalent 
  shares outstanding (thousands)     203,525 205,543 204,866 203,373 201,578
</TABLE>

(1) 1995 results reflect a special charge for disposal of
certain real estate assets of $290 million less related
tax effect of $106 million, or $184 million.

(2) 1993 results reflect an extraordinary net gain as a
result of extinguishing certain debt obligations of $86
million less related tax effect of $34 million, or $52
million.

(3) 1991 results reflect restructuring and other charges
of $445 million less related tax effect of $162 million,
or $283 million.

(4)1989 results reflect net special items charges of
$401 million less related tax effect of $141 million,
or $260 million.

                              68
<PAGE>

<TABLE>
<CAPTION>
     1990    1989    1988    1987    1986    1985
   ------- ------- ------- ------- ------- -------
  <C>     <C>     <C>     <C>     <C>     <C>




      1.87    1.56    2.68    2.12    1.27     .88
        -       -       -       -       -       -
        -       -       -       -       -       -
   ------- ------- ------- ------- ------- -------
      1.87    1.56    2.68    2.12    1.27     .88
   ======= ======= ======= ======= ======= =======
      1.20    1.20    1.15     .90     .87     .87
     19.21   18.55   18.14   16.54   14.82   14.42



     7,556   7,371   6,983   6,418   5,889   5,496
     8,800   8,605   8,401   6,499   5,083   3,869
   ------- ------- ------- ------- ------- -------
    16,356  15,976  15,384  12,917  10,972   9,365
   ======= ======= ======= ======= ======= =======



     2,168   1,502   1,644   1,540   1,412   1,157
         7      23      37      51      63      77

       193      -       -       -       -       -
       204     204     198     181     172      -
   ------- ------- ------- ------- ------- -------
     2,572   1,729   1,879   1,772   1,647   1,234
   ======= ======= ======= ======= ======= =======


       838     931   1,046     840     598     292
     1,799   1,075   1,272   1,290   1,101     711
   ------- ------- ------- ------- ------- -------
     2,637   2,006   2,318   2,130   1,699   1,003
   ======= ======= ======= ======= ======= =======


        -       -       -       -   14,700  14,700
        -       -       -       -       -   72,000
     3,864   4,148   4,044   3,714   3,251   3,324

       9.8%    8.3%   14.6%   12.8%    8.4%    6.1%




     7,447   8,355   7,861   6,988   5,650   5,206
     1,619   1,826   1,467   1,397   1,241   1,070
   ------- ------- ------- ------- ------- -------
     9,066  10,181   9,328   8,385   6,891   6,276
   ======= ======= ======= ======= ======= =======



       340     377     516     379     180     132
        54     (36)     50      68      97      81

        -       -       -       -       -       13
   ------- ------- ------- ------- ------- -------
       394     341(4)  566     447     277     200

        -       -       -       -       -       -
        -       -       -       -       -       -
   ------- ------- ------- ------- ------- -------
       394     341     566     447     277     200
   ======= ======= ======= ======= ======= =======


    40,621  45,214  46,976  45,123  41,757  38,922
     1,531   1,563   1,423   1,277   1,143   1,134
       318     325     292     250     225     259
       446     403     511     467     310     266

     5,621   5,693   5,833   5,871   5,962   5,979
    13,491  13,324  13,324  12,064  12,064   3,590


    28,187  29,847  30,379  32,535  31,682  37,135
        -       12      25      26   1,825   2,192
        -      443     351     106       7   2,242

   203,673 204,331 207,785 202,544 195,456 194,828
</TABLE>
                              69
<PAGE>


