Operating earnings were $487 million compared with $535 million in 1997. Net sales in 1998 were $636 million compared with $797 million the prior year. Our Timberlands sector is focusing on three strategies to enhance its earnings potential. Capture the maximum value from our increasing harvest level.

Due to our advanced forestry practices, we’ll see a significant increase in the volume of timber we harvest over the next 10 years. At 1997 prices, the pre-tax cash flow generated by these forests will increase by more than 50 percent. In addition, selective pruning will produce knot-free wood for use in high-margin appearance-grade lumber. Invest in Timberlands with low cost and high production.

The Southern Hemisphere—especially New Zealand and South America—represents significant growth opportunities. We own a 51 percent interest in 193,000 acres of managed forestland and related assets in New Zealand. As the majority owner, Weyerhaeuser is responsible for the management and marketing activities of the joint venture.>