REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors and Stockholder of
The Pacific Lumber Company:

          We have audited the accompanying consolidated balance sheets of
The Pacific Lumber Company (a Delaware corporation) and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, cash flows and stockholder's equity (deficit) 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
The Pacific Lumber Company and subsidiaries as of December 31, 1995 and
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.

     As explained in Notes 5 and 6 to the financial statements, effective
January 1, 1993, the Company changed its method of accounting for income
taxes and postretirement benefits other than pensions.


                                   ARTHUR ANDERSEN LLP


San Francisco, California
January 19, 1996

                         CONSOLIDATED BALANCE SHEET

<TABLE>

<CAPTION>

                                                                                     December 31,        
                                                                             ----------------------------
                                                                                 1995            1994    
                                                                             ------------    ------------
                                                                               (In thousands of dollars)
<S>                                                                          <C>             <C>
                                  ASSETS

Current assets:
     Cash and cash equivalents                                               $     26,480    $     24,330 
     Receivables:
          Trade                                                                    19,688          23,258 
          Other                                                                     1,565           4,035 
     Inventories                                                                   75,580          68,168 
     Prepaid expenses and other current assets                                      6,933           3,660 
                                                                             ------------    ------------
               Total current assets                                               130,246         123,451 
Timber and timberlands, net of depletion of $204,856 and $188,003 at
     December 31, 1995 and 1994, respectively                                     337,390         350,871 
Property, plant and equipment, net                                                 93,726          96,960 
Deferred financing costs, net                                                      22,397          24,516 
Deferred income taxes                                                              41,958          50,142 
Restricted cash                                                                    31,367          32,402 
Other assets                                                                        5,502           5,925 
                                                                             ------------    ------------
                                                                             $    662,586    $    684,267 
                                                                             ============    ============

              LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)

Current liabilities:
     Accounts payable                                                        $      3,898    $      3,309 
     Accrued compensation and related benefits                                      9,241          10,285 
     Accrued interest                                                              20,666          21,109 
     Deferred income taxes                                                         10,244          12,986 
     Other accrued liabilities                                                      3,077           2,105 
     Long-term debt, current maturities                                            14,195          13,670 
                                                                             ------------    ------------
               Total current liabilities                                           61,321          63,464 
Long-term debt, less current maturities                                           571,812         586,007 
Other noncurrent liabilities                                                       33,613          23,517 
                                                                             ------------    ------------
               Total liabilities                                                  666,746         672,988 
                                                                             ------------    ------------

Contingencies

Stockholder's equity (deficit):
     Common stock, $.01 par value, 100 shares authorized and issued                     -               - 
     Additional capital                                                           157,520         157,520 
     Accumulated deficit                                                         (161,680)       (146,241)
                                                                             ------------    ------------
               Total stockholder's equity (deficit)                                (4,160)         11,279 
                                                                             ------------    ------------
                                                                             $    662,586    $    684,267 
                                                                             ============    ============


</TABLE>


The accompanying notes are an integral part of these financial statements.

                       CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>

<CAPTION>

                                                                                Years Ended December 31,      
                                                                          ------------------------------------
                                                                             1995         1994         1993   
                                                                          ----------   ----------   ----------
                                                                                (In thousands of dollars)
<S>                                                                       <C>          <C>          <C>
Net sales:
     Lumber and logs                                                      $ 197,320    $ 205,504    $ 193,227 
     Other                                                                   24,619       21,875       17,407 
                                                                          ----------   ----------   ----------
                                                                            221,939      227,379      210,634 
                                                                          ----------   ----------   ----------

Operating expenses:
     Cost of goods sold (exclusive of depletion and depreciation)           116,445      116,316      115,175 
     Selling, general and administrative                                     14,992       15,190       18,869 
     Depletion and depreciation                                              25,927       25,485       25,374 
                                                                          ----------   ----------   ----------
                                                                            157,364      156,991      159,418 
                                                                          ----------   ----------   ----------

Operating income                                                             64,575       70,388       51,216 

Other income (expense):
     Investment, interest and other income                                    3,928       12,022        3,884 
     Interest expense                                                       (55,462)     (56,067)     (59,145)
                                                                          ----------   ----------   ----------
Income (loss) before income taxes, extraordinary items and cumulative
     effect of changes in accounting principles                              13,041       26,343       (4,045)
Credit (provision) in lieu of income taxes                                   (6,480)      (1,429)       1,683 
                                                                          ----------   ----------   ----------
Income (loss) before extraordinary items and cumulative effect of
     changes in accounting principles                                         6,561       24,914       (2,362)
Extraordinary items:
     Loss on litigation settlement, net of related credit in lieu of
          income taxes of $6,312                                                   -     (14,866)           - 
     Loss on early extinguishment of debt, net of related credit in
          lieu of income taxes of $5,566                                           -           -      (10,802)
Cumulative effect of changes in accounting principles:<PAGE>
     Postretirement benefits other than pensions, net of related
          credit in lieu of income taxes of $1,566                                 -           -       (2,348)
     Accounting for income taxes                                                   -           -        4,973 
                                                                          ----------   ----------   ----------
Net income (loss)                                                         $   6,561    $  10,048    $ (10,539)
                                                                          ==========   ==========   ==========


</TABLE>

The accompanying notes are an integral part of these financial statements.

                       CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>

<CAPTION>

                                                                      Years Ended December 31,      
                                                                ------------------------------------
                                                                   1995         1994         1993   
                                                                ----------   ----------   ----------
                                                                      (In thousands of dollars)
<S>                                                             <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                          $   6,561    $  10,048    $ (10,539)
     Adjustments to reconcile net income (loss) to net cash
          provided by operating activities:
          Depletion and depreciation                               25,927       25,485       25,374 
          Net sales of marketable securities                          478        6,619        6,025 
          Amortization of deferred financing costs                  2,269        2,197        2,580 
          Net gains on marketable securities                         (478)        (984)      (1,310)
          Net loss (gain) on asset dispositions                       419         (830)         134 
          Extraordinary loss on early extinguishment of
               debt, net                                                -            -       10,802 
          Cumulative effect of changes in accounting
               principles, net                                          -            -       (2,625)
          Decrease (increase) in accrued and deferred income
               taxes                                                7,572        1,627       (1,697)
          Increase in accounts payable                                589          949           53 
          Decrease (increase) in receivables                        5,913       (8,742)       9,991 
          Increase (decrease) in other liabilities                  7,406       (2,027)        (394)
          Decrease (increase) in inventories, net of
               depletion                                           (7,301)      (1,608)         987 
          Decrease (increase) in prepaid expenses and other
               current assets                                      (3,273)        (721)         237 
          Decrease in accrued interest                               (443)        (518)      (9,398)
          Other                                                       423          706          (74)
                                                                ----------   ----------   ----------
               Net cash provided by operating activities           46,062       32,201       30,146 
                                                                ----------   ----------   ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Net proceeds from sale of assets                                  13        1,119          229 
     Capital expenditures                                          (9,140)     (10,962)     (10,472)
                                                                ----------   ----------   ----------
               Net cash used for investing activities              (9,127)      (9,843)     (10,243)
                                                                ----------   ----------   ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Dividends paid                                               (22,000)     (24,500)     (25,000)
     Redemptions, repurchase of and principal payments on
          long-term debt                                          (13,670)     (13,235)    (557,883)
     Incurrence of financing costs                                   (150)        (213)     (28,235)
     Proceeds from issuance of long-term debt                           -            -      620,000 
     Restricted cash deposits, net                                  1,035        1,160      (33,562)
                                                                ----------   ----------   ----------
               Net cash used for financing activities             (34,785)     (36,788)     (24,680)
                                                                ----------   ----------   ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                2,150      (14,430)      (4,777)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                     24,330       38,760       43,537 
                                                                ----------   ----------   ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR                        $  26,480    $  24,330    $  38,760 
                                                                ==========   ==========   ==========

SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING
     ACTIVITIES:
     Timber and timberlands acquired subject to loans from
          seller                                                $     615    $     910    $       - 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Interest paid, net of capitalized interest                 $  53,636    $  54,388    $  65,963 
     Income taxes paid (refunded)                                  (5,190)       1,170           14 


</TABLE>

The accompanying notes are an integral part of these financial statements.

           CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)

<TABLE>

<CAPTION>

                                            Common
                                             Stock       Additional      Accumulated
                                          ($.01 Par)       Capital         Deficit          Total    
                                         ------------   ------------    ------------    ------------
                                                          (In thousands of dollars)
<S>                                      <C>            <C>             <C>             <C>
Balance, January 1, 1993                 $           -  $     157,520   $    (96,250)   $     61,270 

     Net loss                                        -              -        (10,539)        (10,539)

     Dividends                                       -              -        (25,000)        (25,000)
                                         ------------   ------------    ------------    ------------

Balance, December 31, 1993                           -        157,520       (131,789)         25,731 

     Net income                                      -              -         10,048          10,048 

     Dividends                                       -              -        (24,500)        (24,500)
                                         ------------   ------------    ------------    ------------

Balance, December 31, 1994                           -        157,520       (146,241)         11,279 

     Net income                                      -              -          6,561           6,561 

     Dividends                                       -              -        (22,000)        (22,000)
                                         ------------   ------------    ------------    ------------

Balance, December 31, 1995               $           -  $     157,520   $   (161,680)   $     (4,160)
                                         ============   ============    ============    ============

</TABLE>

The accompanying notes are an integral part of these financial statements.


                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (IN THOUSANDS OF DOLLARS)


1.        BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

     BASIS OF PRESENTATION

          The consolidated financial statements include the accounts of The
Pacific Lumber Company and its wholly owned subsidiaries, collectively
referred to herein as the "Company."  The Company is an indirect wholly
owned subsidiary of MAXXAM Group Inc. ("MGI").  MGI is a wholly owned
subsidiary of MAXXAM Inc. ("MAXXAM").  Intercompany balances and
transactions have been eliminated.  Certain reclassifications have been
made to prior years' financial statements to be consistent with the current
year's presentation.

          The Company operates in several principal aspects of the lumber
industry - the growing and harvesting of redwood and Douglas-fir timber,
the milling of logs in lumber and the manufacture of lumber into a variety
of finished products.  Housing, construction and remodeling are the
principal markets for the Company's lumber products.  Export sales
generally constitute approximately 4% of the Company's sales.  A
significant portion of the Company's sales are made to third parties
located west of the Mississippi river.

          The preparation of financial statements in accordance with
generally accepted accounting principles requires the use of estimates and
assumptions that affect (i) the reported amounts of assets and liabilities,
(ii) disclosure of contingent assets and liabilities known to exist as of
the date the financial statements are published, and (iii) the reported
amount of revenues and expenses recognized during each period presented.
The Company reviews all significant estimates affecting its consolidated
financial statements on a recurring basis and records the effect of any
necessary adjustments prior to their publication.  Adjustments made with
respect to the use of estimates often relate to improved information not
previously available.  Uncertainties with respect to such estimates and
assumptions are inherent in the preparation of the Company's consolidated
financial statements; accordingly, it is possible that the subsequent
resolution of any one of the contingent matters described in Note 8 could
differ materially from current estimates.  The results of an adverse
resolution of such uncertainties could have a material effect on the
reported amounts of the Company's consolidated assets and liabilities.

     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Cash Equivalents
          Cash equivalents consist of highly liquid money market
instruments with original maturities of three months or less.

          Marketable Securities
          On December 31, 1993, the Company adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt
and Equity Securities ("SFAS 115").  In accordance with the provisions of
SFAS 115, marketable securities are carried at fair value beginning on
December 31, 1993.  Prior to that date, marketable securities portfolios
were carried at the lower of cost or market at the balance sheet date.  The
cost of the securities sold is determined using the first-in, first-out
method.  Included in investment, interest and other income for each of the
three years ended December 31, 1995 were: 1995 - net realized gains of
$478; 1994 - a decrease in net unrealized gains of $264 and net realized
gains of $1,248; and 1993 - net realized gains of $1,046 and net unrealized
gains of $264.

          Inventories
          Inventories are stated at the lower of cost or market value. 
Cost is determined using the last-in, first-out ("LIFO") method.

          Timber and Timberlands
          Timber and timberlands are stated at cost, net of accumulated
depletion.  Depletion is computed utilizing the unit-of-production method
based upon estimates of timber values and quantities. 

          Property, Plant and Equipment
          Property, plant and equipment, including capitalized interest, is
stated at cost, net of accumulated depreciation.  Depreciation is computed
utilizing the straight-line method at rates based upon the estimated useful
lives of the various classes of assets.

          Deferred Financing Costs
          Costs incurred to obtain financing are deferred and amortized
over the term of the related borrowing.

          Restricted Cash and Concentrations of Credit Risk  
          Restricted cash represents the amount initially deposited into an
account (the "Liquidity Account") held by the trustee under the indenture
governing the 7.95% Timber Collateralized Notes due 2015 (the "Timber
Notes") of Scotia Pacific Holding Company ("Scotia Pacific"), a wholly
owned subsidiary of the Company.  See Note 4.  The Liquidity Account is not
available, except under certain limited circumstances, for Scotia Pacific's
working capital purposes; however, it is available to pay the Rated
Amortization (as defined in Note 4) and interest on the Timber Notes if and
to the extent that cash flows are insufficient to make such payments.  The
required Liquidity Account balance will generally decline as principal
payments are made on the Timber Notes.  Investment, interest and other
income for the years ended December 31, 1995, 1994 and 1993 includes
interest of approximately $2,560, $2,638 and $2,101, respectively,
attributable to an investment rate agreement (at 7.95% per annum) with the
financial institution which holds the Liquidity Account.

          At December 31, 1995 and 1994, cash and cash equivalents include
$19,742 and $19,439, respectively, (the "Payment Account") which is
reserved for debt service payments on the Timber Notes (see Note 4).  The
Payment Account and the Liquidity Account are each held by a different
financial institution.  In the event of nonperformance by such financial
institutions, the Company's exposure to credit loss is represented by the
amounts deposited plus any unpaid accrued interest thereon.  The Company
mitigates its concentrations of credit risk with respect to these
restricted cash deposits by maintaining them at high credit quality
financial institutions and monitoring the credit ratings of these
institutions.

          Fair Value of Financial Instruments
          The carrying amounts of cash and cash equivalents and restricted
cash approximate fair value.  The fair value of marketable securities is
determined based on quoted market prices.  The estimated fair value of
long-term debt is determined based on the quoted market prices for the
Timber Notes and the 10-1/2% Senior Notes due 2003 (the "Senior Notes"),
and on the current rates offered for borrowings similar to the other debt. 
The Timber Notes and the Senior Notes are thinly traded financial
instruments; accordingly, their market prices at any balance sheet date may
not be representative of the prices which would be derived from a more
active market.

          The estimated fair values of the Company's financial instruments,
along with the carrying amounts of the related assets (liabilities), are as
follows:

<TABLE>

<CAPTION>

                                                                December 31, 1995         December 31, 1994   
                                                             -----------------------   -----------------------
                                                              Carrying       Fair       Carrying       Fair
                                                               Amount        Value       Amount        Value   
                                                             ----------   ----------   ----------   ----------
<S>                                                          <C>          <C>          <C>          <C>
Cash and cash equivalents                                    $  26,480    $  26,480    $  24,330    $  24,330 
Restricted cash                                                 31,367       31,367       32,402       32,402 
Long-term debt                                                (586,007)    (590,594)    (599,677)    (558,801)

</TABLE>

2.        INVENTORIES

          Inventories consist of the following:


<TABLE>

<CAPTION>

                                                                                   December 31,      
                                                                             -----------------------
                                                                                1995         1994   
                                                                             ----------   ----------
<S>                                                                          <C>          <C>
Lumber                                                                       $   57,905   $   53,393
Logs                                                                             17,675       14,775
                                                                             ----------   ----------
                                                                             $   75,580   $   68,168
                                                                             ==========   ==========

</TABLE>

          During 1993, inventory quantities were reduced.  This reduction
resulted in the liquidation of LIFO inventory quantities carried at
prevailing costs from prior years which were higher than the current cost
of inventory.  The effect of this inventory liquidation increased cost of
goods sold by approximately $222 for the year ended December 31, 1993.

3.        PROPERTY, PLANT AND EQUIPMENT

          The major classes of property, plant and equipment are as
follows:

<TABLE>

<CAPTION>

                                                                                             December 31,      
                                                                                       -----------------------
                                                                         Estimated
                                                                           Useful
                                                                           Lives          1995         1994   
                                                                       -------------   ----------   ----------
<S>                                                                    <C>             <C>          <C>
Machinery and equipment                                                 5 - 15 years   $ 122,437    $ 119,280 
Buildings                                                                   33 years      29,079       27,666 
Logging roads                                                               15 years       7,486        7,102 
                                                                                       ----------   ----------
                                                                                         159,002      154,048 
Less: accumulated depreciation                                                           (65,276)     (57,088)
                                                                                       ----------   ----------
                                                                                       $  93,726    $  96,960 
                                                                                       ==========   ==========

</TABLE>


Depreciation expense for the years ended December 31, 1995, 1994 and 
1993 was $9,185, $8,808 and $8,233, respectively.

4.        LONG-TERM DEBT

          Long-term debt consists of the following:


<TABLE>

<CAPTION>

                                                                                   December 31,      
                                                                             -----------------------
                                                                                1995         1994   
                                                                             ----------   ----------
<S>                                                                          <C>          <C>
7.95% Scotia Pacific Timber Collateralized Notes due July 20, 2015           $ 350,233    $ 363,811 
10-1/2% Pacific Lumber Senior Notes due March 1, 2003                          235,000      235,000 
Other                                                                              774          866 
                                                                             ----------   ----------
                                                                               586,007      599,677 
Less: current maturities                                                       (14,195)     (13,670)
                                                                             ----------   ----------
                                                                             $ 571,812    $ 586,007 
                                                                             ==========   ==========

</TABLE>

          On March 23, 1993, the Company issued $235,000 of the Senior
Notes and Scotia Pacific, its newly-formed wholly owned subsidiary, issued
$385,000 of the Timber Notes.  The Company and Scotia Pacific used the net
proceeds from the sale of the Senior Notes and the Timber Notes, together
with the Company's cash and marketable securities, to (i) retire (a)
$163,784 aggregate principal amount of the Company's 12% Series A Senior
Notes due July 1, 1996 (the "Series A Notes"), (b) $299,725 aggregate
principal amount of the Company's 12.2% Series B Senior Notes due July 1,
1996 (the "Series B Notes"), and (c) $41,750 aggregate principal amount of
the Company's 12-1/2% Senior Subordinated Debentures due July 1, 1998 (the
"Debentures;" the Series A Notes, the Series B Notes and the Debentures are
referred to collectively as the "Old Pacific Lumber Securities"); (ii) pay
accrued interest on the Old Pacific Lumber Securities through the date of
redemption; (iii) pay the applicable redemption premiums on the Old Pacific
Lumber Securities; (iv) repay the Company's $28,867 cogeneration facility
loan; (v) fund the initial deposit of $35,000 to the Liquidity Account; and
(vi) pay a $25,000 dividend to a subsidiary of MGI.  These transactions
resulted in a pre-tax extraordinary loss of $16,368, consisting primarily
of the payment of premiums and the write-off of unamortized deferred
financing costs on the Old Pacific Lumber Securities.

          The indenture governing the Timber Notes (the "Timber Note
Indenture") prohibits Scotia Pacific from incurring any additional
indebtedness for borrowed money and limits the business activities of
Scotia Pacific to the ownership and operation of its timber and
timberlands.  The Timber Notes are senior secured obligations of Scotia
Pacific and are not obligations of, or guaranteed by, the Company or any
other person.  The Timber Notes are secured by a lien on (i) Scotia
Pacific's timber and timberlands (representing $179,364 of the Company's
consolidated balance at December 31, 1995), (ii) Scotia Pacific's contract
rights and certain other assets, (iii) the funds deposited in the Payment
Account and the Liquidity Account, and (iv) substantially all of Scotia
Pacific's other property and equipment.

          The Timber Notes are structured to link, to the extent of
available cash, the deemed depletion of Scotia Pacific's timber (through
the harvest and sale of logs) to required amortization of the Timber Notes. 
The required amount of amortization due on any Timber Note payment date is
determined by various mathematical formulas set forth in the Timber Note
Indenture.  The minimum amount of principal which Scotia Pacific must pay
(on a cumulative basis) through any Timber Note payment date in order to
avoid an Event of Default (as defined in the Timber Note Indenture) is
referred to as rated amortization ("Rated Amortization").  If all payments
of principal are made in accordance with Rated Amortization, the payment
date on which Scotia Pacific will pay the final installment of principal is
July 20, 2015.  The amount of principal which Scotia Pacific must pay
through each Timber Note payment date in order to avoid prepayment or
deficiency premiums is referred to as scheduled amortization ("Scheduled
Amortization").  If all payments of principal are made in accordance with
Scheduled Amortization, the payment date on which Scotia Pacific will pay
the final installment of principal is July 20, 2009.  Scheduled
Amortization on the Timber Notes is as follows: years ending December 31,
1996 - $14,103; 1997 - $16,165; 1998 - $19,335; 1999 - $21,651; 2000 -
$23,970; thereafter - $255,009.

          Principal and interest on the Timber Notes are payable semi-
annually on January 20 and July 20.  The Timber Notes are redeemable at the
option of Scotia Pacific, in whole but not in part, at any time.  The
redemption price of the Timber Notes is equal to the sum of the principal
amount, accrued interest and a prepayment premium calculated based upon the
yield of like-term Treasury securities plus 50 basis points.

          Interest on the Senior Notes is payable semi-annually on March 1
and September 1.  The Senior Notes are redeemable at the option of the
Company, in whole or in part, on or after March 1, 1998 at a price of 103%
of the principal amount plus accrued interest.  The redemption price is
reduced annually until March 1, 2000, after which time the Senior Notes are
redeemable at par.

          The Company has a revolving credit agreement with a bank (as
amended and restated, the "Revolving Credit Agreement") which expires on
May 31, 1998.  Borrowings under the Revolving Credit Agreement are secured
by the Company's trade receivables and inventories, with interest computed
at the bank's reference rate plus 1-1/4% or the bank's offshore rate plus
2-1/4%.  The Revolving Credit Agreement provides for borrowings of up to
$60,000, of which $15,000 may be used for standby letters of credit and
$30,000 is restricted to timberland acquisitions.  Borrowings made pursuant
to the portion of the credit facility restricted to timberland acquisitions
would also be secured by the purchased timberlands.  As of December 31,
1995, $48,090 of borrowings was available under the Revolving Credit
Agreement, of which $3,090 was available for letters of credit and $30,000
was restricted to timberland acquisitions.  No borrowings were outstanding
as of December 31, 1995, and letters of credit outstanding amounted to
$11,910.

          The indentures governing the Senior Notes and the Timber Notes
and the Revolving Credit Agreement contain various covenants which, among
other things, limit the payment of dividends and restrict transactions
between the Company and its affiliates.  As of December 31, 1995, under the
most restrictive of these covenants, approximately $15,663 of dividends
could be paid by the Company.

          Scheduled maturities of long-term debt outstanding at December
31, 1995 are as follows:  years ending December 31, 1996 - $14,195; 1997 -
$16,258; 1998 - $19,429; 1999 - $21,745; 2000 - $24,065; thereafter -
$490,315.

5.        CREDIT (PROVISION) IN LIEU OF INCOME TAXES

          The Company and its subsidiaries are members of MAXXAM's
consolidated return group for federal income tax purposes.  The Company's
tax allocation agreement with MAXXAM (as amended on March 23, 1993, the
"Tax Allocation Agreement"), provides that The Pacific Lumber Company,
excluding its wholly owned subsidiaries  ("Pacific Lumber"), is liable to
MAXXAM for the federal consolidated income tax liability of Pacific Lumber,
Scotia Pacific and certain other subsidiaries of Pacific Lumber (but
excluding Salmon Creek Corporation) (collectively, the "PL Subgroup")
computed as if the PL Subgroup was a separate affiliated group of
corporations which was never affiliated with MAXXAM.  The Tax Allocation
Agreement further provides that Salmon Creek Corporation is liable to
MAXXAM for its federal income tax liability computed as if Salmon Creek
Corporation was a separate corporation which was never affiliated with
MAXXAM.  Under the tax allocation agreement with MAXXAM, prior to the
effective date of its amendment on March 23, 1993, Pacific Lumber recorded
tax liabilities or benefits computed as if it filed separate tax returns.

          The credit (provision) in lieu of income taxes on income (loss)
before income taxes, extraordinary items and cumulative effect of changes
in accounting principles consists of the following:

<TABLE>

<CAPTION>

                                                                      Years Ended December 31,      
                                                                ------------------------------------
                                                                   1995         1994         1993   
                                                                ----------   ----------   ----------
<S>                                                             <C>          <C>          <C>
Current:
     Federal credit (provision) in lieu of income taxes         $    (239)   $       -    $       - 
     State and local                                                  (61)         (50)           - 
                                                                ----------   ----------   ----------
                                                                     (300)         (50)           - 
                                                                ----------   ----------   ----------
Deferred:
     Federal credit (provision) in lieu of income taxes            (4,755)      (1,748)       1,913 
     State and local                                               (1,425)         369         (230)
                                                                ----------   ----------   ----------
                                                                   (6,180)      (1,379)       1,683 
                                                                ----------   ----------   ----------
                                                                $  (6,480)   $  (1,429)   $   1,683 
                                                                ==========   ==========   ==========

</TABLE>

          The 1994 deferred federal provision in lieu of income taxes of
$1,748 includes a credit relating to reserves the Company no longer
believes are necessary.  The 1993 deferred federal credit in lieu of income
taxes of $1,913 includes an $850 benefit for increasing net deferred income
tax assets (liabilities) as of the date of enactment (August 10, 1993) of
the Omnibus Budget Reconciliation Act of 1993 which retroactively increased
the federal statutory income tax rate from 34% to 35% for periods beginning
on or after January 1, 1993.

          A reconciliation between the credit (provision) in lieu of income
taxes and the amount computed by applying the federal statutory income tax
rate to income (loss) before income taxes, extraordinary items and
cumulative effect of changes in accounting principles is as follows:

<TABLE>

<CAPTION>

                                                                                Years Ended December 31,      
                                                                          ------------------------------------
                                                                             1995         1994         1993   
                                                                          ----------   ----------   ----------
<S>                                                                       <C>          <C>          <C>
Income (loss) before income taxes, extraordinary items and cumulative
     effect of changes in accounting principles                           $  13,041    $  26,343    $  (4,045)
                                                                          ==========   ==========   ==========
Amount of federal income tax based upon the statutory
     rate                                                                 $  (4,564)   $  (9,220)   $   1,416 
State and local taxes, net of federal tax benefit                              (966)         207         (150)
Revision of prior years' tax estimates and other changes in valuation
     allowances                                                                (651)       7,148         (566)
     Increase in net deferred income tax assets due to tax rate change                 -            -          850 
Other                                                                          (299)         436          133 
                                                                          ----------   ----------   ----------
                                                                          $  (6,480)   $  (1,429)   $   1,683 
                                                                          ==========   ==========   ==========

</TABLE>

          As shown in the Consolidated Statement of Operations for the year
ended December 31, 1994, the Company recorded an extraordinary loss related
to the settlement of litigation in connection with MGI's acquisition of the
Company (see Note 8).  The Company reported the loss net of related
deferred income taxes of $6,312 which is less than the federal and state
statutory income tax rates due to expenses for which no tax benefit was
recognized.

          As shown in the Consolidated Statement of Operations for the year
ended December 31, 1993, the Company reported an extraordinary loss related
to the early extinguishment of debt.  The Company reported the loss net of
related deferred income taxes of $5,566 which approximated the federal
statutory income tax rate in effect on the date the transaction occurred.

          Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS
109").  The adoption of SFAS 109 changed the Company's method of accounting
for income taxes to an asset and liability approach from the deferral
method prescribed by APB 11.  The asset and liability approach requires the
recognition of deferred income tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the
Company's financial statements or tax returns.  Under this method, deferred
income tax assets and liabilities are determined based on the temporary
differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates.  The cumulative effect of the change
in accounting principle, as of January 1, 1993, increased the Company's
results of operations by $4,973.  The implementation of SFAS 109 required
the Company to restate certain assets and liabilities to their pre-tax
amounts from their net-of-tax amounts originally recorded in connection
with the acquisition of the Company in 1986.  As a result of restating
these assets and liabilities, the loss before income taxes, extraordinary
item and cumulative effect of changes in accounting principles for the year
ended December 31, 1993 was decreased by $875.

          The components of the Company's net deferred income tax assets
(liabilities) are as follows:

<TABLE>

<CAPTION>

                                                                                   December 31,      
                                                                             -----------------------
                                                                                1995         1994   
                                                                             ----------   ----------
<S>                                                                          <C>          <C>
Deferred income tax assets:
     Timber and timberlands                                                  $  32,528    $  37,209 
     Loss and credit carryforwards                                              25,408       29,301 
     Other liabilities                                                           7,806        4,840 
     Postretirement benefits other than pensions                                 2,316        2,145 
     Other                                                                         222          892 
     Valuation allowances                                                       (2,825)      (2,664)
                                                                             ----------   ----------
          Total deferred income tax assets, net                                 65,455       71,723 
                                                                             ----------   ----------
Deferred income tax liabilities:
     Inventories                                                               (16,056)     (16,339)
     Property, plant and equipment                                             (15,023)     (14,848)
     Other                                                                      (2,662)      (3,380)
                                                                             ----------   ----------
          Total deferred income tax liabilities                                (33,741)     (34,567)
                                                                             ----------   ----------

Net deferred income tax assets                                               $  31,714    $  37,156 
                                                                             ==========   ==========

</TABLE>

          A principal component of the net deferred income tax assets
listed above relates to the excess of the tax basis over financial
statement basis with respect to timber and timberlands.  The Company
believes that it is more likely than not that this net deferred income tax
asset will be realized, based primarily upon the estimated value of its
timber and timberlands which is well in excess of its tax basis.  The
valuation allowances listed above relate primarily to loss and credit
carryforwards.  The Company evaluated all appropriate factors to determine
the proper valuation allowances for loss and credit carryforwards.  These
factors included any limitations concerning use of the carryforwards, the
year the carryforwards expire and the levels of taxable income necessary
for utilization.  The Company has concluded that it will more likely than
not generate sufficient taxable income to realize the benefit attributable
to the loss and credit carryforwards for which valuation allowances were
not provided.

          Included in the net deferred income tax assets listed above are
$28,199 and $33,540 at December 31, 1995 and 1994, respectively, which are
recorded pursuant to the Tax Allocation Agreement with MAXXAM.

          The following table presents the Company's estimated tax
attributes, for federal income tax purposes, under the terms of the Tax
Allocation Agreement at December 31, 1995.

<TABLE>

<CAPTION>

                                                                                           Expiring
                                                                                            Through  
                                                                                          ----------
             <S>                                                             <C>          <C>
             Regular Tax Attribute Carryforwards:
                  Net operating losses                                       $   60,718      2010
                  Net capital losses                                              3,121      1997
                  Minimum tax credit                                                239        -

             Alternative Minimum Tax Attribute Carryforwards:
                  Net operating losses                                       $   23,618      2010

</TABLE>

6.        EMPLOYEE BENEFIT PLANS

          The Company has a defined benefit plan which covers all employees
of the Company.  Under the plan, employees are eligible for benefits at age
65 or earlier, if certain provisions are met.  The benefits are determined
under a career average formula based on each year of service with the
Company and the employee's compensation for that year.  The Company's
funding policy is to contribute annually an amount at least equal to the
minimum cash contribution required by The Employee Retirement Income
Security Act of 1974, as amended.

          A summary of the components of net periodic pension cost is as
follows:

<TABLE>

<CAPTION>

                                                                                Years Ended December 31,      
                                                                          ------------------------------------
                                                                             1995         1994         1993   
                                                                          ----------   ----------   ----------
             <S>                                                          <C>          <C>          <C>
             Service cost - benefits earned during the year               $   1,483    $   1,643    $   1,600 
             Interest cost on projected benefit obligation                    1,693        1,263          918 
             Actual loss (gain) on plan assets                               (3,900)          10       (2,128)
             Net amortization and deferral                                    2,460         (859)       1,359 
                                                                          ----------   ----------   ----------
             Net periodic pension cost                                    $   1,736    $   2,057    $   1,749 

</TABLE>

The following table sets forth the funded status and amounts recognized 
in the Consolidated Balance Sheet:


<TABLE>

<CAPTION>

                                                                                   December 31,      
                                                                             -----------------------
                                                                                1995         1994   
                                                                             ----------   ----------
<S>                                                                          <C>          <C>
Actuarial present value of accumulated plan benefits:
     Vested benefit obligation                                               $  16,910    $  11,809 
     Non-vested benefit obligation                                               1,214          779 
                                                                             ----------   ----------
          Total accumulated benefit obligation                               $  18,124    $  12,588 
                                                                             ==========   ==========

Projected benefit obligation                                                 $  21,841    $  15,047 
Plan assets at fair value, primarily equity and debt securities                (18,363)     (13,184)
                                                                             ----------   ----------
Projected benefit obligation in excess of plan assets                            3,478        1,863 
Unrecognized net transition asset                                                   24           29 
Unrecognized net gain (loss)                                                       (27)       1,475 
Unrecognized prior service cost                                                    (45)         (50)
                                                                             ----------   ----------
          Accrued pension liability                                          $   3,430    $   3,317 
                                                                             ==========   ==========

</TABLE>

The assumptions used in accounting for the defined benefit plan were 
as follows:


<TABLE>

<CAPTION>

                                                                             1995         1994         1993   
                                                                          ----------   ----------   ----------
<S>                                                                       <C>          <C>          <C>
Rate of increase in compensation levels                                      5.0%         5.0%         5.0%
Discount rate                                                                7.25%        8.5%         7.5%
Expected long-term rate of return on assets                                  8.0%         8.0%         8.0%

</TABLE>

          The Company has an unfunded defined benefit plan for certain
postretirement and other benefits which covers substantially all employees
of the Company.  Participants of the plan are eligible for certain health
care benefits upon termination of employment and retirement and
commencement of pension benefits.  Participants make contributions for a
portion of the cost of their health care benefits.

          The Company adopted Statement of Financial Accounting Standards
No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions ("SFAS 106") as of January 1, 1993.  The costs of postretirement
benefits other than pensions are accrued over the period the employees
provide services to the date of their full eligibility for such benefits. 
Previously, such costs were expensed as actual claims were incurred.  The
cumulative effect of the change in accounting principle for the adoption of
SFAS 106 was recorded as a charge to results of operations of $2,348, net
of related income taxes of $1,566.  The deferred income tax benefit related
to the adoption of SFAS 106 was recorded at the federal and state statutory
rates in effect on the date SFAS 106 was adopted.

          A summary of the components of net periodic postretirement
benefit cost is as follows:

<TABLE>

<CAPTION>

                                                                                Years Ended December 31,      
                                                                          ------------------------------------
                                                                             1995         1994         1993   
                                                                          ----------   ----------   ----------
<S>                                                                       <C>          <C>          <C>
Service cost - benefits earned during the year                            $     228    $     216    $      153
Interest cost on accumulated postretirement benefit obligation                  317          294           315
Net amortization and deferral                                                   (53)          (7)            -
                                                                          ----------   ----------   ----------
Net periodic postretirement benefit cost                                  $     492    $     503    $      468
                                                                          ==========   ==========   ==========

</TABLE>

          The adoption of SFAS 106 increased the Company's loss before
extraordinary item and cumulative effect of changes in accounting
principles by $212 ($360 before tax) for the year ended December 31, 1993.

          The postretirement benefit liability recognized in the Company's
Consolidated Balance Sheet is as follows:

<TABLE>

<CAPTION>

                                                                                   December 31,      
                                                                             -----------------------
                                                                                1995         1994   
                                                                             ----------   ----------
<S>                                                                          <C>          <C>
Retirees                                                                     $      634   $      860
Actives eligible for benefits                                                       726          656
Actives not eligible for benefits                                                 3,317        2,355
                                                                             ----------   ----------
     Accumulated postretirement benefit obligation                                4,677        3,871
Unrecognized net gain                                                               553          972
                                                                             ----------   ----------
     Postretirement benefit liability                                        $    5,230   $    4,843
                                                                             ==========   ==========

</TABLE>

          The annual assumed rate of increase in the per capita cost of
covered benefits (i.e., health care cost trend rate) is 11.0% for 1996 and
is assumed to decrease gradually to 5.5% in 2008 and remain at that level
thereafter.  Each one percentage point increase in the assumed health care
cost trend rate would increase the accumulated postretirement benefit
obligation as of December 31, 1995 by approximately $674 and the aggregate
of the service and interest cost components of net periodic postretirement
benefit cost by approximately $90.

          The discount rates used in determining the accumulated
postretirement benefit obligation were 7.25% and 8.5% at December 31, 1995
and 1994, respectively.

          Subsequent to December 31, 1993, the Company's employees were
eligible to participate in a defined contribution savings plan sponsored by
MAXXAM.  This plan is designed to enhance the existing retirement programs
of participating employees.  Employees may elect to contribute up to 16% of
their compensation to the plan.  For those participants who have elected to
make voluntary contributions to the plan, the Company's contributions
consist of a matching contribution of up to 4% of the compensation of
participants for each calendar quarter.  The cost to the Company of this
plan was $1,281 and $1,215 for the years ended December 31, 1995 and 1994,
respectively.

          The Company is self-insured for workers' compensation benefits. 
Included in accrued compensation and related benefits and other noncurrent
liabilities are accruals for workers' compensation claims amounting to
$8,900 and $9,233 at December 31, 1995 and 1994, respectively.  Workers'
compensation expenses amounted to $3,302, $3,698 and $3,317 for the years
ended December 31, 1995, 1994 and 1993, respectively.

7.        RELATED PARTY TRANSACTIONS

          MAXXAM provides the Company with personnel, insurance, legal,
accounting, financial, and certain other services.  MAXXAM is compensated
by the Company through the payment of a fee representing the reimbursement
of actual out-of-pocket expenses incurred by MAXXAM, including, but not
limited to, labor costs of personnel of MAXXAM rendering services to the
Company.  Charges by MAXXAM for such services were $1,694, $1,744 and
$2,598 for the years ended December 31, 1995, 1994 and 1993, respectively.

          An agreement with Britt Lumber Co., Inc., an indirect wholly
owned subsidiary of MGI ("Britt"), governs, among other things, the sale of
logs and lumber by the Company and Britt to each other and the sale of hog
fuel (wood residue) by Britt to the Company.  The logs which the Company
sells to Britt are sold at approximately 75% of the applicable price for
such species and category as established by the California State Board of
Equalization, which reflects the lower quality of these logs.  Logs which
either the Company or Britt purchases from third parties and which are then
sold to each other are transferred at the actual cost of such logs.  Hog
fuel is sold to the Company by Britt at applicable market prices.  Net
sales for the years ended December 31, 1995, 1994 and 1993 include revenues
of $13,627, $10,326 and $9,198, respectively, from Britt.  The Company
recognized operating income of $5,527, $5,571 and $1,972 on these revenues
for the years ended December 31, 1995, 1994 and 1993, respectively.  At
December 31, 1995 and 1994, receivables include $813 and $1,283,
respectively, related to these affiliate sales.

          On August 4, 1993, all of the Company's issued and outstanding
common stock was pledged as collateral for MGI's $100.0 million 11-1/4%
Senior Secured Notes due 2003 and $126.7 million 12-1/4% Senior Secured
Discount Notes due 2003 (collectively, the "MGI Notes").  MGI conducts its
operations primarily through subsidiary companies.  The Company represents
the substantial portion of MGI's assets and operations.  The indenture
governing the MGI Notes requires the Company's board of directors to
declare and pay dividends on the Company's common stock to the maximum
extent permitted by any consensual restriction or encumbrance on the
Company's ability to declare and pay dividends, unless the Board determines
in good faith that such declaration and payment would be detrimental to the
capital or other operating needs of the Company.

          In 1994, in connection with the litigation settlement described
in Note 8, the Company paid approximately $3,185 to a law firm in which a
director of the Company is also a partner.  In 1993, the Company paid
approximately $1,931 in connection with the offering of the Senior Notes
and the Timber Notes to this same law firm.

8.        LOSS ON LITIGATION SETTLEMENT AND CONTINGENCIES

          During 1994, MAXXAM, the Company and others agreed to a
settlement, subsequently approved by the court, of class and related
individual claims brought by former stockholders of the Company against
MAXXAM, MGI, the Company, former directors of the Company and others
concerning MGI's acquisition of the Company.  Of the $52,000 settlement,
$33,000 was paid by insurance carriers of MAXXAM and the Company, $14,800
was paid by the Company, and the balance was paid by other defendants and
through the assignment of certain claims.  In 1994, the Company recorded an
extraordinary loss of $14,866 related to the settlement and associated
costs, including a $2,000 accrual for certain contingent claims and $4,400
of related legal fees, net of benefits for federal and state income taxes
of $6,312.

          The Company's operations are subject to a variety of California
and federal laws and regulations dealing with timber harvesting, endangered
species and critical habitat, and air and water quality.  The Company does
not expect that compliance with such existing laws and regulations will
have a material adverse effect on its future consolidated financial
position, results of operations or liquidity; however, these laws are
modified from time to time and there can be no assurance that certain
pending or future legislation, governmental regulations or judicial or
administrative decisions would not materially adversely affect the Company
or its ability to sell lumber, logs or timber.

          In 1995, the U.S. Fish and Wildlife Service (the "USFWS")
published its proposed final designation of critical habitat for the
marbled murrelet (the "Proposed Designation"), seeking to  designate over
four million acres as critical habitat for the marbled murrelet, including
approximately 33,000 acres of the Company's timberlands.  The Proposed
Designation was subject to a 60-day comment period and the Company filed
comments vigorously opposing the Proposed Designation.  The USFWS has not
yet published its final designation of critical habitat for the marbled
murrelet.  The Company is unable to predict when or if it would be able to
harvest on any acreage finally designated as critical habitat. 
Furthermore, it is impossible to determine the future adverse impact of
such designation on the Company's consolidated financial position, results
of operations or liquidity until such time as the Proposed Designation and
related regulatory and legal issues are fully resolved.  However, if the
Company is unable to harvest, or is severely limited in harvesting, on
timberlands designated as marbled murrelet critical habitat, such
restrictions could have a material adverse effect on the Company's
consolidated financial position, results of operations and liquidity.  If
the Company is unable to harvest or is severely limited in harvesting, the
Company intends to seek full compensation from the appropriate governmental
agencies on the grounds that such restrictions constitute a taking.

          There continue to be other regulatory actions and lawsuits
seeking to have various other species listed as threatened or endangered
under the federal Endangered Species Act and/or the California Endangered
Species Act and to designate critical habitat for such species.  It is
uncertain what impact, if any, such listings and/or designations of
critical habitat will have on the Company's consolidated financial
position, results of operations or liquidity.

          In 1994, the California Board of Forestry (the "BOF") adopted
certain regulations regarding compliance with long-term sustained yield
objectives.  These regulations require timber companies to project the
average annual growth they will have on their timberlands during the last
decade of a 100-year planning period ("Projected Annual Growth").  During
any rolling ten-year period, the average annual harvest over such ten-year
period may not exceed Projected Annual Growth.  The first ten-year period
began in May 1994.  The Company is required to submit, by October 1996, a
plan setting forth, among other things, its Projected Annual Growth.  The
Company has not completed its analysis of the projected productivity of its
timberlands and is therefore unable to predict the impact that these
regulations will have on its future timber harvesting practices; however,
the final results of this analysis could require the Company to reduce (or
permit it to increase) its timber harvest in future years from the average
annual harvest that it has experienced in recent years.  The Company
believes that it would be able to mitigate the effect of any required
reduction in harvest level by acquisitions of additional timberlands and by
increasing the productivity of its timberlands.  The Company is unable to
predict the ultimate impact the sustained yield regulations will have on
its future consolidated financial position, results of operations or
liquidity.

          Various groups and individuals have filed objections with the
California Department of Forestry ("CDF") and the BOF regarding the CDF's
and the BOF's actions and rulings with respect to certain of the Company's
timber harvesting plans ("THPs"), and the Company expects that such groups
and individuals will continue to file objections to certain of the
Company's THPs.  In addition, lawsuits are pending which seek to prevent
the Company from implementing certain of its approved THPs and other timber
operations.  These challenges have severely restricted the Company's
ability to harvest virgin old growth redwood timber on its property (and,
to a lesser extent, its residual old growth timber).  To date, challenges
with respect to the Company's THPs relating to young growth and residual
old growth have been limited; however, no assurance can be given as to the
extent of such challenges in the future.  The Company believes that
environmentally focused challenges to its THPs are likely to occur in the
future, particularly with respect to virgin and residual old growth timber.
Although such challenges have delayed or prevented the Company from
conducting a portion of its operations, to date such challenges have not
had a material adverse effect on the Company's consolidated financial
position, results of operations or liquidity.  It is, however, impossible
to predict the future nature or degree of such challenges or their ultimate
impact on the consolidated financial position, results of operations or
liquidity of the Company.

          The Company is also involved in various claims, lawsuits and
proceedings relating to a wide variety of other matters.  While there are
uncertainties inherent in the ultimate outcome of such matters and it is
impossible to presently determine the ultimate costs that may be incurred,
management believes that the resolution of such uncertainties and the
incurrence of such costs should not have a material adverse effect on the
Company's consolidated financial position, results of operations or
liquidity.

9.        OTHER ITEMS

          Investment, Interest and Other Income
          In February 1994, the Company received a franchise tax refund of
$7,243, the substantial portion of which represents interest, from the
State of California relating to tax years 1972 through 1985.  This amount
is included in investment, interest and other income for the year ended
December 31, 1994.

          Items Related to 1992 Earthquake
          In 1995 and 1993, the Company recorded reductions in cost of
sales of $1,527 and $1,200, respectively, resulting from business
interruption insurance reimbursements for higher operating costs and the
related loss of revenues resulting from the April 1992 earthquake.  Other
receivables at December 31, 1994 included $1,684 related to earthquake
related insurance claims.

10.       QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

          Summary quarterly financial information for the years ended
December 31, 1995 and 1994 is as follows:

<TABLE>

<CAPTION>

                                                                                       Three Months Ended                     
                                                                  -----------------------------------------------------------
                                                                   March 31      June 30      September 30      December 31  
                                                                  ----------   ----------   ---------------   ---------------
<S>                                                               <C>          <C>          <C>               <C>
1995:
     Net sales                                                    $  47,309    $  58,408    $        58,807   $        57,415
     Operating income                                                 9,991       18,785             17,115            18,684
     Net income (loss)                                               (2,013)       3,861              2,669             2,044

1994:
     Net sales                                                    $  50,816    $  55,120    $        55,001   $       66,442 
     Operating income                                                12,148       19,527             17,092           21,621 
     Income before extraordinary item                                 3,381        4,380              9,555            7,598 
     Extraordinary item, net                                              -      (14,866)                 -                - 
     Net income (loss)                                                3,381      (10,486)             9,555            7,598 


</TABLE>