Kathy McAuley - Vice President of Investor Relations Steve Rogel - Chairman, President, and Chief ExecutiveOfficer Rich Hanson - Executive Vice President and Chief OperatingOfficer Patty Bedient, Executive Vice President and Chief FinancialOfficer Dan Fulton - President of Weyerhaeuser Real Estate Company

George Staphos - Banc of America Securities Mark Connelly - Credit Suisse Richard Skidmore - Goldman Sachs Gail Glazerman - UBS Peter Ruschmeier - Lehman Brothers Mark Wilde - Deutsche Bank Mark Weintraub - Buckingham Research Group Chip Dillon - Citigroup Don Roberts - CIBC World Markets Ross Gilardi - Merrill Lynch Steve Chercover - D.A. Davidson Mark Connelly - Credit Suisse Paul Latta - McAdams Wright Ragen Mark Wilde - Deutsche Bank George Staphos - Bank of America Securities

Good morning, and welcome to Weyerhaeuser's third quarter2007 earnings conference call. I'm Kathy McAuley, Vice President of InvestorRelations.

Joining me today are Steve Rogel, Chairman, President, and CEO, RichHanson, Executive Vice President and Chief Operating Officer; Patty Bedient,Executive Vice President and Chief Financial Officer; and Dan Fulton, Presidentof Weyerhaeuser Real Estate Company. This call is being webcast atwww.weyerhaeuser.com.

The earnings release and material for this call can be foundat the website or by contacting April Meier at 253-924-2937. Please review thewarning statement in our press release and on the presentation slidesconcerning the risks associated with forward-looking statements.Forward-looking statements will be made during this conference call.

I will now turn the call over to Steve Rogel. Steve?

Thanks, Kathy, and to all of our callers for joining ustoday. A little later on this call, you'll hear from Kathy, Dan Fulton, RichHanson, and Patty Bedient.

They will provide more detail on the operatingresults we announced this morning and our outlook for the fourth quarter. Butbefore they do, I'd like to give you a brief overview.

Third quarter results were obviously affected by thecontinuing weakness of the housing market. As we noted in our earnings releasetoday, this downturn deepened during the quarter and affected many of ourbusinesses.

The regions in which WRECO operates have certainly felt theimpact of the slowdown, as Dan will discuss. Our real estate companies areperforming better than many of their peers.

This is due in large part to themarkets we're in, the niches we serve, and the steps we've taken to prepare fora downturn. Looking ahead, we remain bullish on the housing market.

Aswe've discussed before, the long-term demographic trends support not only arebound from today's levels but a strong housing market for the long-term. In addition to managing through the current market, our jobis to position ourselves to take full advantage of stronger markets whenconditions improve.

We've done just that in both WRECO and iLevel. It is alsoour belief that over the long-term, the markets in which our real estatebusiness operates will be among the strongest in the country, and that WRECO iswell positioned to benefit from this.

In wood products, the weakness in the housing markets islikely to affect our businesses for sometime. Rich will outline the steps we'vetaken to balance supply with demand through closures, curtailments, restrictedoperating postures at the company's wood products facilities.

Our iLevel approach, which gives us great line of sight toour customers' ultimate needs, helped us develop these responses to marketconditions. We're also better able to anticipate what our customers want fromus in the future.

This allows us to begin product development today fortomorrow, and it positions Weyerhaeuser to be the leading supplier. Ourtimberlands business was affected by softening in the log markets this quarter.But long-term we see opportunities to maximize revenue from our 6 million acresof fee owned timberlands.

In addition to our ongoing timber management, exciting newrevenue opportunities include our biofuel alliance with Chevron, carboncredits, and oil, gas, and mineral extraction. We are committed to ensuring that our shareholders receivethe full benefits from these valuable holdings.

To that end, our work onstructural alternatives continues, and we are actively supporting theindustry's ongoing tax reform efforts. Bipartisan support for the Tree Act of 2007 is growing.Passage of this legislation would provide immediate value to shareholders andis compatible with many different business strategies.

Our strategic decisionto focus on specialty pulp also is paying dividends. Today absorbent and specialty fibers account for virtuallyour entire pulp portfolio, allowing us to leverage our research and developmentexpertise.

Strong market conditions resulted in higher prices in the thirdquarter. But more importantly, the outstanding operating performance of ourcellulose fibers mills positioned us to capitalize on this improvement.

Richwill provide further details in his report. Finally, our containerboard packaging and recycling businessis successfully implementing its new business model while we continue ourstrategic review of the business.

As previously discussed, these alternativesrange from continuing to hold and operate the business to a possible sale,disposition, or combination. The process is ongoing.

But due to confidentialityrequirements, I can't say more at this time. We are confident, however, that weare taking the right steps to create the greatest value for our shareholders.

I'd now like to turn the call over to Kathy McAuley, whowill provide some additional details on the results we reported this morning.Kathy?

Thank you, Steve. This morning Weyerhaeuser reported thirdquarter earnings of $101 million or $0.47 per diluted share, on net sales of$4.1 billion.

The third quarter includes the following after tax items. Acharge of $17 million or $0.08 per diluted share for closures, restructuringand asset impairments in our wood product segment.

A charge of $17 million or $0.08 per diluted share relatedto the restructuring of administrative function, including a regional Canadianoffice and one-time cost associated with the transition to a new IT servicesprovider. A charge of $16 million or $0.07 per diluted share for theimpairment of real estate assets.

A net gain of $26 million or $0.12 perdiluted share related to legal settlements. A net gain of $7 million or $0.03per diluted share on the sale of operation and previously closed plant sites.

Excluding these items, the company earned $118 million or$0.55 per share. A GAAP reconciliation of special items is available at ourwebsite in the earnings information package.

In that package, please turn to chart 12, which is areconciliation of the key changes in earnings per share before special itemsbetween Q2 2007 and Q3 2007. Second quarter 2007 earnings before special itemswere $0.48 per share.

Lower volumes reduced earnings $0.12 per share. The largestvolume decline were in wood products.

Price and mix were a negative $0.12 pershare. This decline was due to lower log and wood products prices and a lessfavorable seasonal mix of businesses in containerboard.

High cellulose fiber prices partially offset this result.Manufacturing cost contributed $0.19 per share, driven by productivityimprovement and lower energy cost in containerboard packaging and recycling andproductivity increases coupled with less maintenance downtime in cellulosefibers. Real estate related assets contributed $0.03 per share.Other contributed $0.09 per share partially due to SG&A reduction.

Thirdquarter 2007 earnings before special items were $0.55 per share. I will now turn the call over to Dan Fulton to discussWeyerhaeuser Real Estate Company results.

Good morning. Trends in earnings and other key operatingmetrics for real estate in the third quarter and year-to-date 2007 reflect thevery difficulty business conditions that we were encountering.

Negativemomentum in the national housing markets discussed in last conference callscontinued in the third quarter and conditions seem poised to deterioratefurther over the balance of the year. Excess inventories of both new and existing homes, declininghome prices, and tightened credit standards have rocked most local markets.Consumers are understandably cautious in this environment.

And many havewithdrawn from an active search pending stabilization in prices and easieraccess to the mortgage market. As stated in this morning's press release, real estateearned $60 million in the third quarter compared to $64 million last quarterand $135 million in the same quarter one year ago.

Earnings in the currentquarter included a $30 million gain on land sales and last quarter's earningsincluded a $42 million gain on sale of an apartment project. Considering the very difficult market conditions across theindustry, we're pleased with the relative performance of our operations.

Thirdquarter earnings included $23 million in impairment charges for lots impactedby unfavorable market conditions. Earnings for the second quarter of the yearand for the third quarter a year ago also included impairment charges of $12million and $14 million respectively.

Single-family operations generated 88% of revenue in thethird quarter. And on a year-to-date basis, single-family operations havegenerated 91% of revenue this year compared to 93% last year.

A 10% decline inaverage sale price in the third quarter compared to the same quarter a year agoreflects the intensely competitive pricing environment for new homes, changesin sales mix to lower priced product, and a slight shift in our geographic mixto the relatively healthier, but lower priced Houston and Puget Sound markets. With the burden of excess inventory, builders across thecountry continue to aggressively discount standing units, effectively rewardingbuyers who withdraw from the market to wait for price stabilization.

Thesemarket forces are driving expectations for lower pricing in order to clearexcess inventory in a period of slack demand. For these reasons, we believe virtually all of the marketsin which we operate have additional downside price risk in the near term.

PugetSound region has been our strongest market this year with year-to-date salessignificantly higher than during 2006. However, traffic and sales were weak inthe third quarter, both trending below the pace set in the prior year andinventories have increased.

Houston has been steady in 2007, although moderated from thevery active levels of a year ago. Market remains reasonably healthy,particularly in our targeted market segment of move-up buyers.

The suburban Washington,D.C. market started the year stronger than expected but weakened in response tothe record level of existing home inventories.

Our own sales have increased year-over-year in 2007, due inpart to increased lot availability in our communities. Las Vegas, Phoenix,Sacramento, and the Inland Empire of Southern California represent our mostchallenging markets, each of which is characterized by significant inventoryoverhang, deep sales price discounting, and high contract cancellation rates.

These markets remain negative despite strong underlyingfundamentals, including continued job growth. The markets in Los Angeles andSan Diego have moderated compared to a year ago, but competitively pricedproduct and good locations will attract buyers.

Housing affordability remains along-term structural issue in these markets. We're fortunate that the recent wave of fires in SouthernCalifornia did not affect our existing communities, though we have sufferedsome wind damage in our inland empire communities.

Although there may beshort-term spike in regional demand, especially for standing inventory, weexpect that our operations will likely experience diminishability ofsubcontractors and local regulatory staff as priorities appropriately shift toremediation efforts. Across the industry, single-family gross margins are underpressure from deep discounting in the market, particularly on standing units.At WRECO, third quarter single-family gross margins were 17.9%, an increasefrom 16.7% in the second quarter due to a shift in mix, but down compared to26.1% in the same quarter a year ago.

On a year-to-date basis, single-family gross margins were18.7% this year compared to 27.5% last year. With the continuing overhang ofinventory in many local markets, we expect our margins to deteriorate furthernext quarter.

We control land representing about seven years of sales, ofwhich approximately 55% is owned. Declining new home prices have increased thelikelihood that land controlled in recent years may have valuation issues,particularly if controlled during periods when land markets were hyperactive in2005 and later.

We monitor our land positions on a quarterly basis. Usingconsistent practices, we recognized impairment charges in the third quarter of$23 million as compared to $12 million last quarter and $14 million in thethird quarter of last year.

Additionally, we recognized charges of $1.3 millionfor abandoned deposits and pre-acquisition costs in the third quarter comparedto $800,000 last quarter and $5.5 million in the third quarter of last year. The bulk of our land acquisitions in 2005, 2006, and 2007have been lot takedowns in existing communities with the exception of ouracquisition of Maracay Homes in Phoenix in February 2006.

On an overall basis,a high percentage of our land position today was controlled via acquisition oroption in 2004 and prior. We're not isolated from the actions of otherhomebuilders, including the public companies, virtually all of which havereported major impairment charges in each successive quarter over the past twoyears.

These charges effectively reduce the cost basis of futurehome deliveries for our competitors and increase the pressure on us incompeting communities. If a competitors' impairment charge results in asignificant disparity in value compared to our community, we may choose to takea compensating sales price reduction.

We're focused on controlling thecontrollable and we have taken the following management actions in order toremain as efficient with our capital as possible. We reduced the number of housing starts in the third quarterby 41% compared to the prior quarter.

Our current completed and unsoldinventory position of 451 units represents approximately 33 days sales.Approximately 50% of our completed and unsold inventory today is in Las Vegas.Virtually all land acquisition obligations under purchase and option agreementshave been renegotiated. In some circumstances, we canceled our option andwritten off deposits and pre-acquisition costs.

Many sellers, however, have recognized the current marketenvironment and our negotiations have resulted in reductions in price, changesin terms, or both. This is an ongoing process, and we'll have more work to doif the market slowdown continues.

Our vendors and subcontractors are also supporting ourefforts to remain competitive by reducing costs in order to help mitigate someof the impact of price discounting. Lastly, we've reduced generaladministrative expense by nearly 12% in the third quarter compared to the samequarter last year.

Additionally, we selectively reduced field staff as wecontinue to balance supply with demand. And now I'll turn the call over toRich.

Thank you, Dan. I will continue by providing an operationaloverview of our other business segments.

As expected, the weak housing marketalso had a significant impact on the results of our wood products andtimberlands businesses in the third quarter. Wood products obviously was most affected, but we alsostarted seeing some negative effect on log prices during the quarter.

I knowthat everyone understands that the plummeting national housing starts arehaving an effect on our wood products markets. But for perspective, on aseasonally adjusted basis, housing starts for the third quarter were down 24%from a same period a year ago and down 11% since the second quarter.

In addition, we are experiencing significant weakness in therepair and remodel market. Because of lower sales volumes in our wood productsbusinesses during the quarter, we have aggressively worked to balance oursupply with customer demand.

We are continuing that effort, as demonstrated byour recent announcements that by year-end we will indefinitely curtailproduction at two oriented strand board mills and a timber strand mill. Taking into account the recently announced mill closures, wewill be operating our oriented strand board and timber strand system at lessthan 60% of capacity.

We expect to take further action in the fourth quarter asnecessary to match our production to demand. The wood products businesscontinues to proactively reduce working capital consistent with this reduceddemand in the business restructuring.

We estimate by year-end, working capital will beapproximately 30% lower than yearend last year. As reported by Random Lengths,the average oriented strand board prices for the third quarter are at theirlowest level since late 2002 and the quarterly average price for lumber is atits lowest since 2000.

Regarding timberlands, last quarter I mentioned that logprices had remained sticky and hadn't necessarily tracked the housing marketslowdown. That changed in the third quarter, especially in the west, whereprices declined for both domestic and export log sales.

Industry log usage declinedas mills in the west began taking downtime to adjust production levels to thedeclining demand. Although southern mills are also adjusting to lower demand,log volume and prices were stronger in that region due to an increased demandfor chips and restricted log and stumping supply.

Meanwhile, a weak Japanese housing market affected our logexport business. I just returned from Japan where I met with Chugoku Mokuzai,our largest log export customer.

I learned that construction delays caused aportion of this weakening building market as new building regulations wererecently implemented. The strength of the Japanese market, however, remainsuncertain as we move into a seasonally slow period.

Sales of non-strategictimberlands, as you can see during the quarter, offset some of the downwardeffect on earnings from lower log sales. In containerboard, the industry containerboard millscontinue at high operating rates, and inventories are low.

In addition,inefficient box plant capacity has been coming out of this industry supplysystem. We've closed 12 plants since January '06.

We've had a smooth implementation of our $40 a toncontainerboard price increase and we anticipate that a majority of that priceincrease will be recovered in box price this year. The lag in the full recoveryis because some of our businesses in long-term agreements that we will berenegotiating during 2008, and that will give us better pricing flexibility.But what is more important is our focus on company margins here.

We continue to implement a demand driven business model incontainerboard packaging. We will achieve our projected $100 million in savingsin 2007 as part of the two-year goal of $230 million and we are continuing tomove aggressively with plant rationalizations and customer selection aligningto our capabilities to improve margins.

And finally, in cellulose fibers, this segment benefitedfrom higher third quarter prices due to strong market conditions. During thequarter, third party realizations for absorbent pulp increased $26 a ton andthis is an $85 a ton increase since third quarter of last year.

More important, due to the significant improvements in theoperating performance in this segment, we are positioned to capture the maximumrevenue and bring this price improvement to the bottom line. Production fromcellulose fiber mills increased by 26,000 tons in the third quarter, in part toone less annual maintenance outage in the quarter compared to the secondquarter.

But four of the cellulose fiber mills set quarterly productionrecords. I'd now like to turn the call over to Patty Bedient, whowill outline our fourth quarter expectations.

Thanks, Rich. And good morning.

Our outlook for the fourthquarter anticipates continued challenging market conditions for all of ourhousing driven businesses. As a result, we expect difficult underlyingfundamentals in timberlands, wood products and home building.

On a positive note, economic drivers for our cellulosefibers and containerboard packaging segments should result in favorableoperating earnings in the fourth quarter compared to the third. I'll start theoutlook with our timberland segment.

The continued weakness in the housing market is expected toresults in lower domestic and export log prices. We estimate the harvest in thewest will decrease while southern harvest will be flat with the third quarter.Sales of non-strategic timberland are anticipated to be lower in the fourthquarter compared to the greater than normal levels in the third.

Overall, timberland segment earnings are expected todecrease in the fourth quarter compared to the third quarter. In wood products,the traditional seasonal slowdown of the fourth quarter will be furthercompounded by the anemic housing market.

Sales realizations are expected to continue to deterioratein the fourth quarter over most of our product line. Shipment volumes are alsoestimated to decline.

The restricted operating postures that Rich outlinedearlier will continue, and we will take further action as necessary to matchproduction with demand and manage working capital. Despite these efforts, we expect that fourth quarteroperating losses will deepen as compared to the third quarter levels.

Containerboard shipments are expected to increase due to thestrong demand in export markets. Rights realization should also improve as theboard price increases announced during the last quarter are in place for thefull quarter.

Box shipments are estimated to decline seasonally in thefourth quarter compared to the third. Prices should move up as increases fromthe third quarter announcements are realized more fully in the fourth quarter.The effect of price increases will be moderated somewhat due to seasonalchanges in mix.

OCC prices are expected to moderate somewhat over the thirdquarter level and will likely remain high given the Asian demand. We anticipateincreased energy cost based on greater seasonal usage and higher natural gasprices.

The non-fiber mill manufacturing cost should increase due tomore scheduled maintenance downtime in the fourth quarter than in the third.Packaging manufacturing costs are also expected to increase, mainly due toseasonally lower volume. Overall, we expect fourth quarter earnings in ourcontainerboard-packaging segment to be comparable to the third quarter.

We believe markets for cellulose fibrous products willremain favorable throughout the fourth quarter. Shipments are anticipated toincrease slightly and sales realization should remain strong.

The mills arerunning well, and with less scheduled maintenance downtime in the fourthquarter, manufacturing costs are expected to decrease compared to the thirdquarter. As a result, we anticipate higher cellulose fiber segmentearnings in the fourth quarter as compared to the third.

We expect businessconditions for our real estate segment to deteriorate further in the fourthquarter. Volume, price, and margins in our single-family home building activitywill be impacted by intensely competitive market conditions.

Homebuilders are aggressively positioning in an environmentwith fewer buyers and higher inventories of new and resale homes. We expect toclose approximately 1,200 single-family homes in the fourth quarter and we areevaluating the prospects of selling certain non-strategic land parcels.

However, the likelihood and timing of closing thesetransactions cannot be estimated. Exclusive of such land sales, we expectoverall segment earnings to decline in the fourth quarter compared to thethird.

Capital expenditures for Weyerhaeuser Company were $454million through September 30. Expenditures for the full year should be closerto $725 million as compared to our earlier budgeted amount of $800 million.

Wehave now completed our share repurchase authorization, and in the third quarterwe purchased nearly 7 million shares for about $440 million, these purchasescontributed to our increased debt level at the end of the quarter. During the fourth quarter we will continue our focus onmanaging capital spending, working capital, and cash flow management in orderto reduce our debt levels.

With that overview, I'll turn the call back to Kathy tobegin our question-and-answer session. Kathy?

Patty. Eric, could we open the floor for questions, please?

Thanks. Hi, everyone.

Good morning. First question aroundcontainerboard and packaging, Rich, I was wondering if you could give us a bitmore color on the things that are going well for you with the business -- thenew business plan, new business model, and things that you're still finding achallenge with.

It would appear that it's still somewhat difficult movingthe pricing ball towards the goal line because of the lag effect that you havewith some of these contracts. If you could add a little color there, that wouldbe great, and then I have a couple of follow ons?

Okay, George. Well, your description is really prettyaccurate.

I think what's going well is the rationalization and the transitionof business to the remaining plants in a more efficient system. It's going welland on schedule.

As I said as we are tracking our own cost and marginimprovements in those initiatives, we are well on schedule against the $230million permanent margin improvement. But as you say, as we go through and wehave some major national contracts that we need to renegotiate to get relief onfactor cost increases and board cost increases, that's where we still have somechallenge in front of us.

We've been very pleased with the price increases that wehave gotten on those contracts that are open, and the percentage of businesswe've been able to transition.

Was there a mix factor at all in the third quarter versusthe second quarter in terms of why we didn't see a bit more of a price lift inboxes?

Absolutely. The E.

coli scare in green vegetables had animpact in the lower volume in the produce segment. As we said in the past,that's an attractive margin segment for us.

And we experienced lower volumethere. And overall the produce market is becoming more competitive as well.

Okay. You may have mentioned this in the past but I justwanted to get a refresher here.

Should we expect more in the way of potentialbox plant closings as you complete the program?

We'll continue to look at how we can serve the highestmargin segments of the business, and we will structure our business includingmore rationalization to improve those margins.

Okay. I'm sorry, Kathy?

Thank you. We'll have our next question.

I'll turn it over. Thanks.

Just one question. Rich talked about the excess capacity inthe engineered board businesses.

I wonder if you could put that in perspectivefor us. Because, when we look at the numbers this quarter, it looks like yousaw a pretty big drop year-over-year relative to the drop you saw in lumber.

Is that just, am I just looking at that too superficially?It looks like engineered wood is getting hit a lot harder than lumber. Is thatnot correct in the big picture?

I'll try to respond to what you're looking at. This capacitycomes out in significant lumps.

And as we have taken this capacity downespecially coming into the second half of this year, I think you see it moreabruptly happening. But there's been real pressure on this with the loweroperating rates as we've come through the whole year.

Okay. That's helpful.

Thank you.

Next question?

Good morning. Just to follow up on the containerboardquestion, how much of the business is tied to long-term contracts and how muchof the business is currently open for pricing to get better?

Well, I can't be specific about that but more than we wouldlike. As I said, we will realize the majority of that price increase as we comeout through yearend.

But I really can't be specific about exact percentagesthere.

Thank you.

Next question?

Hi. Thank you.

Sticking on containerboard, part of yourwhole restructuring has been to analyze the markets a bit more carefully andget hopefully more insight into the demand side. I'm just wondering, lookingpast the fourth quarter into '08, what you're hearing from your customers interms of box demand?

I'm sorry, the very last part of your question, you broke upa bit. Could you repeat?

I'm sorry. I'm just wondering, I guess, what sense you'regetting from your customers about their outlook for box demand in 2008.

I think reasonably positive. Overall, the economy is stillin pretty good shape but there's a lot of concerns about the general economiclevel of activity, but in general positive.

As I've said, the price increaseshave been going very smoothly.

Okay. Just a separate question.

Kathy, can you break outsome of the maintenance cost that you had both in cellulose and containerboardin the quarter and maybe a sense of the magnitude of the shift in the fourthquarter?

Gail, we don't break out specific maintenance cost items inthe quarter. We did have significant productivity improvements in bothcontainerboard and in the cellulose fiber business.

We had less maintenancedowntime in cellulose fibers, which was also a positive in that quarter. Butboth of them saw significant improvements in productivity.

Okay. Thank you.

Next question.

Thanks. Good morning.

Steve, I was curious if you couldcomment on your view of the timber tax bill both in terms of likelihood, timingof events. The challenges it faces, whether we have funding for the tax cuts.And importantly whether that passage has any impact on potential futurerestructuring plans for Weyerhaeuser.

Thanks, Pete. First of all, with regard to timber tax, I'mconfident of its passage.

You are asking for comment as to when, and that's thedifficult part. So let me tell you the positives about it and it's movingforward.

First is I think you're well aware, it has a tremendous amount ofco-sponsorship. The bill has been introduced.

It's been attached to twovehicles moving along. Removed from them is the prospects for the main bill,look to Dimmer.

But some of those main bills now have higher prospects ofpassage. So our open expectation is that our timber tax vehicle will ride alongwith them.

With regard to how it's viewed, it has been scored, which isCongress speak for they have determined what the costs of the bill are. Andthey actually came out pretty well.

And they have found ways to fund it. Whatwe hear from the floor is that this will pass.

It's a matter of being patientand watch Congress make their sausage.

Okay. And whether it has an impact on your restructuringplans, is it?

Well, whatever our plans are, the Tree Act is good for us.Because it has elements of support for the entire industry regardless of itsform of ownership. So it's well worth pursuing now and into the future.

And just lastly if I could, Steve, does it specifically oncontainerboard, does it have anything to do with the timing on containerboard,the delays we've seen so far on containerboard? Does that have anything to doon timber tax or is it a completely separate issue?

Those are completely separate issues.

Thanks very much. I'll drop back in queue.

Next question.

Good morning. I heard Lynn Michaelis at a big industryconference about two and half weeks ago.

He talked about a housing downturn thatwould be as severe as the early 80s. He was talking about single-family startsgoing down to about 900,000 units with a risk on the downside.

I'm just curious, is this the scenario you're using fordecision making in the different parts of your portfolio? And really, what arethe implications of 900,000 single-family starts or less?

This is Dan. I'll take the first crack at this.

We're usingLynn's forecast to judge overall demand and to look at economics across theentire country. But when it comes to our individual markets, we are atdifferent points in the cycle, and so we are making decisions based upon localdynamics.

However, that kind of a stark forecast does have an impacton policy in the mortgage markets and I think in providing some guidance in Fedactions. So we are taking that forecast into consideration with otherforecasts.

But we are managing defensively because of that, focusing onindividual competitiveness in the markets in which we operate.

This is Rich. Just further comment about that kind of anoutlook.

Of course it's only prudent to plan for some of this downside. I thinkthat the best example of that is the action that we took in oriented strandboard and timber strand.

As we've explained in earlier calls, these closures inCanadian facilities are very costly with regard to severance. And you have tobelieve that there's not relief in the near term in order to do that.

So tosome extent, yes, it is impacting our decisions and we think that's onlyprudent.

Very good. Is it possible to get a number for thosetimberland sales in the third quarter?

The difference between second and third quarter was in therange of $40 million increase and around $50 million, but it was a quarterly, alarger number than normal in quarterly results.

I think we termed these things as lumpy during the year.

Because we negotiate them and we complete the transactionwhen we can realize the best value. So it's going to tend to be lumpy throughthe year.

Yes. I understood.

You might remember that on our call for the second quarter,we did talk about the fact that we anticipated we would have a greater thannormal amount in the third quarter, because some of those that were planned inthe second quarter actually moved into the third.

Okay.

Next question.

Thank you. First, Steve, I just wanted a quick clarificationwhen you were answering Pete's question, he had asked whether or not the TreeAct and delays on containerboard had any linkage, and you said no.

Can you justremind us if you've laid out any timeframes? I wasn't sure, have there beendelays on containerboard?

It wasn't clear to me.

As I indicated, Mark, in my prepared remarks, there's verylittle I can say because of confidentiality requirements about that process. Iwill say that we are looking at a variety of strategic directions for it.

Thosebecause of the wide variety take more time. Some of them require a great dealof time because it's a due diligence effort on two different classes or sets ofassets.

So the kind of process we're following to achieve the maximumshareholder value just takes time.

Mark, to your direct question and to Pete'scharacterization, we have not talked about a delay in the containerboardprocess at all.

Fair enough. And then if you could just also provide alittle bit more color, possibly, on what the timberland sales, I guess about$50 million or $55 million of profits in the quarter.

Were those some largertracts or were you again doing smaller tracts here, there, and everywhere?

Pretty normal. I don't have the list in front of me.

Nomajor tracts, no.

Okay. Thank you.

Next question?

Yes, good morning. Could you just review for us, clarify onething.

You said in the press release it says that land sales in the fourthquarter might offset part of the decline you expect from single-familyclosings? I think, Patty, you said on the call you left open the possibilitythat you could see completely offset or even a higher real estate number.

Secondly, could you define your backlog? You used to talkabout it in terms of months.

Was that 33-day figure that was mentioned thebacklog or was that the inventory of houses? Could you just tell us what thebacklog is?

Chip, this is Dan. I'll take both of those.

We do have saleson an ongoing basis as you know of what we call non-strategic land. That landcould be commercially zoned, apartment zoned land.

We sell it in most of theoperations where we have master planned communities or land that may have thosecharacteristics. And with respect to Q4, we have a number of transactions thatare in process.

Our guidance that Patty provided was that we would expectthat that would help to offset the decline that we do anticipate insingle-family that would come from margins and pricing. With respect tobacklog, our backlog's at about four months.

It's down slightly from lastquarter. When I referred to the number of days of sales, in my remarks that wasreferring to our standing inventory.

Got you. It sounds like it's not likely.

But if a lot ofthese land sales did come together, that would allow you to beat the $83million you had without impairments in the most recent quarter. But if it'ssort of a best guess, maybe it's not quite as high as that.

Can't handicap it to date.

Thank you.

Next question.

Thank you. Steve, two questions.

First of all, just gettingback to the Tree Act, you mentioned it's attached to two vehicles that arelikely to pass. Could you just refresh me on when are sort of generally themilestones we should be looking at for those vehicles in terms of timelines?

Oh, I can't speculate on when any individual bill might gothrough. Politics is everything.

And what I was really referring to is a coupleof bills that appeared dead because of huge differences between the twoparties. Now it seemed to be coming back to life because they are in conferenceand working out differences.

But it would be extremely hard for me as anamateur at that sort of stuff to give you a prediction of when those bills willmake it out.

Okay. And an unrelated question, you had mentioned in youropening remarks about the strategic initiative with Chevron on the cellulosicethanol.

Any kind of updates or How much sort of credence or emphasis we shouldput on that type of initiative.

Well, our work with Chevron has proceeded forward, as weindicated at the outset. That was a letter of intent to be negotiated into ajoint venture and that's proceeded well.

So as two companies, we have somesimilar philosophies and we seem to be getting along well in that area. Andwe're moving right forward with the venture.

Okay. And again, any kind of timeline where we might expectan announcement on when that's finalized, the venture?

I can't give you a forward time.

Thank you.

Next question.

Morning. Thank you.

Just had a couple of questions. On theTree Act.

If you do get some form of tax relief legislation, would youpotentially become a more active acquirer of timberland?

Certainly we've indicated many times that Timber R Us. If wedo get tax relief, that allows us to be more competitive in the acquisition oftracts.

But I couldn't speculate for you which or when. But it does allow us tobe more competitive in the market.

Okay. Thanks.

Just in terms of the wood products business,Weyerhaeuser has really taken a lot of aggressive actions to control supply anddemand internally. What do you think it will take to see more a aggressiverationalization by the industry of Canadian lumber capacity and do you foreseethat occurring?

I can't talk about the strategies of other companies inNorth America, but certainly I think this industry has become more mature inits management of capacity against demand. The actions we've taken I think demonstratethat.

Next question.

Question for Dan Fulton. If we would try to handicap therisk in real estate, should we look at the land that real estate processed forsale and is already being transferred in fair market value and therefore notthat risky, but the land that's held for future development is the risky part?

No, I don't view it that way. We have a longer-term landposition than most.

It's been part of our value proposition in this businessfor a long time. The length of our land position varies by market and it's afunction of the challenge of gaining entitlements and processing land in moreconstrained markets.

What that does for us long-term is it translates intohigher margins. We believe a core competency in processing and managing landdevelopment.

So our longer position is generally reflective of the fact we hadit tied up at lower prices for a longer period of time. We're creating valueand in fact think that that's why we have industry leading margins.

So I maynot be addressing your specific questions, I'm concerned about that. But wedon't view the longer-term position to be more risky.

We, in fact, view it tobe less risky.

Okay. So I guess just to clarify, it appears that you'redoing this differently than publicly traded competitors.

Would you thereforeconclude there's less risk, although certainly you never said there was norisk?

There's always risk. We understand that.

Most of ourcompetitors have a shorter position. I would say the one notable exception tothat is Toll Brothers, which like us maintains a longer position, does moreprocessing, and also generates the kinds of margins we do.

So it's a differentbusiness model. We like ours.

Thank you.

Next question.

Thank you. Just a question on the buybacks.

I wonder if youcould tell us the average price for the quarter. Is the buyback complete?

Doyou have an intention to ask the board for another buyback program?

Hi, Mark. This is Patty.

I'll take that. We'll actually bedetailing all of the detail of the repurchases for the quarter in the Q thatwill be filed next week.

We have now completed the buyback. I will tell youthat over the course of time that 18 million share repurchase authorization wasabout a little over -- a little less than $1.2 billion at a price just north of$64.

We have completed that now and we also have reduced our shares earlierthis year by over $25 million shares in conjunction with the Domtartransaction. So, I think where we might go from here certainly would beup to the board.

I think, as we look at our financial priorities, returningcash to shareholders is an important financial priority for us, both in termsof the stock buyback that we have completed as well as the dividends that wehave increased 50% since 2005. I wouldn't want to speculate what the board might do fromhere.

I think our near-term priorities, as I mentioned in my outlook, iscontrolling our working capital and cash management and to bring our debtlevels down over the course of the quarter.

Very, helpful. Thanks, Patty.

Next question.

Good morning and thanks for taking my call. Just a questionon the non-strategic timberland sales sounds like fewer non-strategictimberland sales for the fourth quarter.

I have two questions. Is thatseasonal?

And then also, how does the New Zealand transaction this morning thatwork through that timberlands? Does that go through the timberlands segment orwhere is that accounted for?

Excuse me. This is Rich.

I'll start with the timberlands.No, they are not necessarily seasonal. And by the way, I looked at the numbersand the increase compared to the second quarter was $34 million.

We tend tohave an ongoing program of divesting of non-strategic timberland. It tends to come in lumps.

It's not seasonal. It's afunction of the negotiation and getting the best value for completing thetransaction.

So, on New Zealand, yes Steve, do you want to comment on NewZealand?

Yes. We just had an announcement about the sale of ourportion of the New Zealand timberlands this morning.

It’s a deal that waspreviously announced and completed today.

Rich, on the $34 million, is that just clarifying, is thatin proceeds or is that in operating profit contribution? What does the $34million mean?

That's an operating profit contribution.

Great. Thank you.

I think that one of the other things that contributes totiming as we always look for some 1031 exchanges.

Well it yes Steve makes it important point that I believewe're in the 90% range on doing a 1031 exchange on those sales. So in otherwords, keeping the transaction tax-free.

Okay. Great.

Thanks for taking my questions.

Next question.

Thanks. Rich just a follow-up on timberlands.

We typicallysee kind of saw log prices lag the wood products market by six to 12 months.You mentioned that log prices came down in the third quarter. Would it be fairto assume that on average your sawtimber prices are likely to be lower for kindof full year '08 versus full year '07?

I'd have to look at that. But they really have hung up along time.

So, and they tend to also be still not follow directly the productprices down so not necessarily.

Do you have any sense, kind of as you do your own planningfor next year, what you're thinking about in terms of kind of performance outof the timberland business both from timber sales as well as some of thesenon-strategic sales?

Well, we do, but we're not going to comment on a forwardlook that far out.

Okay, very good. Thanks.

I think we have time for one more question.

Thanks everyone, two quick question. You mentioned thatconfidentiality agreements understandably restrict what you could say about thestrategic review in containerboard.

Just for the record, last quarter were youunder confidentiality agreements relative to what you could say about thestrategic review? Just checking on that.

And then separately, I was just wondering if you could giveyour thoughts on the board and voting term changes that you put into place.What was behind the moves? We view them positively, just was interested in yourthoughts there.

Thanks, guys. Good luck on the quarter.

All right thanks. Well, two questions, George.

First one isconfidentiality. Since we have entered the process, we have confidentiality inplace.

So you can assume that we did in the previous quarter. With regard toour change on majority election of directors.

Our board continuously reviews or governance practices andthey were proactive in implementing this amendment because they think it's inthe best interest of the company shareholders. The Washington law was changedrecently that allows for majority voting.

In addition, plurality was kept in the law. That freed us upas a Washington chartered company to look at some changes that fit our company.And we think work pretty well for our shareholders.

Thanks for the call, Steve. Again, good luck in the quarter.

Thanks.

Thank you very much for joining us this morning. If you haveadditional questions, I'll be back in my office in a short time.

The telephonenumber is 253-924-2058. Have a good day.