weyerhaeuser 	New York Analyst Meeting Presentation
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weyerhaeuser 	New York Analyst Meeting Presentation weyerhaeuser New York Analyst Meeting Presentation Presentation Transcript

  • Annual Investor Conference New York May 30, 2008 Annual Investor Conference — May 2008 1
  • Forward-looking Statement This presentation contains statements concerning the company’s future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements use forward-looking terminology, are based on our assumptions and may not be accurate because of risks and assumptions surrounding the assumptions we make. Factors listed here – as well as other factors not included - may cause our actual results to differ from our forward-looking statements. There is no guarantee that any of the events anticipated by our forward- looking statements will occur. If any of the events occur, there is no guarantee what effect they will have on our operations or financial condition. We will not update our forward-looking statements after this presentation. Some of these forward-looking statements discuss our plans, strategies and intentions. They use words such as expects, may, will, believes, should, approximately, anticipates, estimates, and plans. We may use the positive or negative or a variations of those terms. We make forward-looking statements about our expectations regarding: our markets in the second quarter 2008; homebuilding starts in the second quarter of 2008; demand and pricing for our wood products during the second quarter of 2008; fee timber harvests in the South and West; timing of sales of non-strategic timberlands; land, option or joint venture activity in Real Estate and valuation of this activity during the second quarter of 2008; earnings and performance of our businesses; higher costs for energy and silvaculture; additional expenses for storm salvage operations; increased annual maintenance downtime in company facilities in the second quarter of 2008; increased expenses for annual planned maintenance in the Cellulose Fibers segment during the second quarter of 2008; seasonal increases in OCC and fiber costs; possible further curtailments in the Wood Products segment; increased manufacturing costs in the Containerboard, Packaging and Recycling segment during the second quarter of 2008; box prices and shipments; capital expenditures; and timing of debt repayment. We also base our forward-looking statements on the expected effect of: foreign exchange rates, primarily Canadian and New Zealand; adverse litigation outcomes and the adequacy of reserves; regulations; changes in accounting principles; the effect of implementation or retrospective application of accounting methods; contributions to pension plans; projected benefit payments; projected tax rates; IRS audit outcomes and timing of settlements; and related matters. The major risks, uncertainties and assumptions that we make and that may affect our businesses and actual results include, but are not limited to: performance of our manufacturing operations, including unexpected maintenance requirements; successful execution of internal performance plans, including restructurings and cost reduction initiatives; completion of the sale of the Containerboard, Packaging and Recycling businesses to International Paper; restructuring of our business support functions following the divestiture of the Containerboard, Packaging and Recycling businesses; successful salvage of our storm-damaged timber in the Pacific Northwest; performance of our pension fund investments and derivatives; general economic conditions, including the level of interest rates, strength of the U.S. dollar and housing starts; the effect of timing of retirements and changes in the market price of company stock on charges for stock-based compensation; market demand for our products, which is related to the relative strength of various U.S. business segments; energy prices; raw material prices; chemical prices; transportation costs; level of competition from domestic and foreign producers; forestry, land use, environmental and other governmental regulations; legal proceedings; changes in accounting principles; weather; loss from fires, floods, windstorms, pest infestation and other natural disasters; and factors described under “Risk Factors” in our periodic reports. We are a large exporter and are affected by changes in economic activity in Europe and Asia, particularly Japan; by changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Euro and the Canadian dollar; and restrictions on international trade or tariffs imposed on imports. Annual Investor Conference — May 2008 2
  • Steve Rogel Chairman Annual Investor Conference — May 2008 3
  • Dan Fulton President & CEO Annual Investor Conference — May 2008 4
  • Research & Development Miles Drake Senior Vice President, R&D Chief Technology Officer Annual Investor Conference — May 2008 5
  • There is no other resource that can do as much as the forest Wood Products Ecosystem Benefits Home Building Biomaterials Cellulose Fiber Products Biofuels and do it sustainably! Annual Investor Conference — May 2008 6
  • Global Weyerhaeuser Drivers Competencies Silviculture Biomass logistics / handling Scale processing / conversion Unique Opportunities Annual Investor Conference — May 2008 7
  • Wood Products Scientifically Managed Forests Ecosystem Benefits Home Building Biomaterials Cellulose Fiber Products Biofuels Annual Investor Conference — May 2008 8
  • Wood Products We Are Developing the Ecosystem Benefits Home Building Next Generation of Tools for Biomaterials Cellulose Fiber Forest Operations Products Biofuels Annual Investor Conference — May 2008 9
  • Wood Products Clonal Forestry — Ecosystem Benefits Home Building A Potential Revolution Biomaterials Cellulose Fiber Products Biofuels Patented clonal propagation technology Select the seedling for its wood properties and growth characteristic Increase the rate of improvement of our seed stock Annual Investor Conference — May 2008 10
  • Wood Products Hygiene and Absorbents — Ecosystem Benefits Home Building Creating Value-Added Products Biomaterials Cellulose Fiber Products Biofuels Increasing absorbency Improving product softness Controlling odor Reducing manufacturing costs Annual Investor Conference — May 2008 11
  • Wood Products Cellulose Fibers for Textiles Ecosystem Benefits Home Building Biomaterials Cellulose Fiber Products Biofuels Specialty pulps for textile feedstock and new processes for advanced fibers Annual Investor Conference — May 2008 12
  • Wood Products Cellulose Fibers for Ecosystem Benefits Home Building Building Materials Biomaterials Cellulose Fiber Products Biofuels Advanced fiber cement products — potential for asbestos replacement Annual Investor Conference — May 2008 13
  • Wood Products Looking Ahead — Ecosystem Benefits Home Building Biofuels from the Forest Biomaterials Cellulose Fiber Products Biofuels 50-50 joint venture company Develop and commercialize technology for converting cellulose-based biomass For use in renewable transportation fuels from non-food sources Annual Investor Conference — May 2008 14
  • Wood Products Bringing Safe, Secure Sustainable Ecosystem Benefits Home Building Feedstocks and Materials to Biomaterials Petrochemical and Chemical Industry Cellulose Fiber Products Biofuels Explore important new markets that promise • Large volume • High value Advanced Materials Chemical Feedstocks Annual Investor Conference — May 2008 15
  • Wood Products Looking Ahead — Ecosystem Benefits Home Building Ecosystem Benefits from the Forest Biomaterials Cellulose Fiber Products Biofuels Weyerhaeuser sequesters over 16 million metric tons of CO2 every year! Photosynthesis O2 2 H20 CO2 2 2 Sunlight Water + Carbon Dioxide Cellulose + Oxygen Chlorophyll Annual Investor Conference — May 2008 16
  • There is no other resource that can do as much as the forest Wood Products Ecosystem Benefits Home Building Biomaterials Cellulose Fiber Products Biofuels and there is no other company in North America with the capacity and technology to do as much with forests as Weyerhaeuser Annual Investor Conference — May 2008 17
  • Operations Rich Hanson Executive Vice President, Chief Operating Officer Annual Investor Conference — May 2008 18
  • Safely Making Money Total Company Recordable Incident Rate RIR 2000–2008 March Year-to-Date 5.0 3.8 4.0 3.0 2.61 2.46 2.48 2.28 2.27 2.0 1.67 1.23 Company Goal 0.99 1.0 0.0 2000 01 02 03 04 05 06 2007 2008 Annual Investor Conference — May 2008 19
  • Timberlands Value Creation Annual Investor Conference — May 2008 20
  • Timberlands Value Creation Sustainable forest management Active portfolio management Market and scale efficiencies Increasing non-timber values Global growth Industry-leading returns Annual Investor Conference — May 2008 21
  • Global Footprint Thousands of Acres Fee Long-term License Ownership Lease Arrangements Total Acres U.S. West 2,220 2,220 U.S. South 3,426 728 4,154 Canada 15,054 15,054 Uruguay 272 24 296 China* 52 52 Total 5,918 752 15,106 21,776 * As of July 31, 2008 Annual Investor Conference — May 2008 22
  • Precision Landscape Silviculture Grow bigger sawtimber faster, better, cheaper than competitors Invest in silviculture and sustainability to enhance timberland returns Scale and concentration provide for efficient harvest and transport Genetics & Soil Plant Tend Manage a healthy stand Harvest … Nurseries Management & Maintain (Thin & Fertilize) ... and ready to Site begin again Preparation Annual Investor Conference — May 2008 23
  • Timberlands Portfolio Optimization Improving returns through active portfolio management Timberlands Yield Curve • Better productivity Acquisition and logistics Timber Return Targets • Major strategic acquisitions as well as regional sales Divestment Targets • Exchange activity ongoing Acres Annual Investor Conference — May 2008 24
  • Global Markets Influence Log Values Domestic Logs & Fiber SYP Logs & Fiber Lumber & Fiber Panels Logs Eucalyptus & Pine Logs Douglas-fir Logs Annual Investor Conference — May 2008 25
  • Increasing Non-timber Values Oil, gas and mineral revenue Environmental and carbon credits Energy crops for biofuel Annual Investor Conference — May 2008 26
  • Wood Products Annual Investor Conference — May 2008 27
  • Housing Starts Plummet Single Family U.S. Housing Starts (Thousands) 2000 1800 1600 1400 1200 1000 800 600 400 200 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Annual Investor Conference — May 2008 Source: Weyerhaeuser/JCHS 28
  • Taking Decisive Action Sold, closed or announced since 2004 21 sawmills 10 veneer/plywood mills 10 engineered products mills 5 OSB mills 9 composite mills 2 hardwood sawmills 1 treating plant Total 58 sites Annual Investor Conference — May 2008 29
  • Repositioning Wood Products Reduced costs Rationalization Modernization Annual Investor Conference — May 2008 30
  • Aligning with Timberlands – Southern Example Wright City Dierks Idabel Emerson OSB Taylor Arcadia Lumber Veneer Dodson Veneer Dodson Lumber Timberlands Zwolle Annual Investor Conference — May 2008 31
  • Long-Term Fundamentals Favorable Single Family U.S. Housing Starts (Thousands) 2000 1800 1600 1400 Trend Demand 1200 1000 800 600 400 200 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Annual Investor Conference — May 2008 Source: Weyerhaeuser/JCHS 32
  • Cellulose Fibers Annual Investor Conference — May 2008 33
  • Cellulose Fibers Manufacturing Locations Grande Prairie Longview New Bern Port Wentworth Columbus Flint River Northern Bleached Softwood Kraft Liquid Packaging Board and Newsprint Absorbents Annual Investor Conference — May 2008 34
  • Cellulose Fibers Operational excellence Leverage patented technology and solutions to enhance our unique position with strategic customers Potential of technology to create new revenue streams Annual Investor Conference — May 2008 35
  • Containerboard, Packaging and Recycling $6 billion sale to IP Obtained necessary regulatory approval Transaction on track to close mid-third quarter Annual Investor Conference — May 2008 36
  • Weyerhaeuser Real Estate Company Larry Burrows President and CEO Annual Investor Conference — May 2008 37
  • WRECO Key Leverage Points Geographic diversity Local value propositions Seasoned management Land entitlement and development competency Annual Investor Conference — May 2008 38
  • Geographic Diversity Annual Investor Conference — May 2008 39
  • Local Value Propositions Annual Investor Conference — May 2008 40
  • Seasoned Local Management Stable, deep leadership teams • Presidents’ average tenure is 23 years U.S. Single-family Housing Starts Million Units 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 1978 1983 1988 1993 1998 2003 2008 Annual Source: Census AMDHO55A Annual Investor Conference — May 2008 41
  • Fe as ib ili ty St ud N Con y eg t o t rac ia t tio M Annual Investor Conference — May 2008 ns as te Ar mP en lan dm en t R e- Zo ni ng Pr el im in ar y Pl an Si te Pl an R ec or d Pl at Land Entitlement and Development Pe rm i tt in g 42
  • Key Operating Indicators 2007 2008 Q1 Q2 Q3 Q4 Q1 Sales Traffic (in thousands) 61 49 41 30 33 Single-Family Homes Sold (New Orders) 1,684 1,139 734 595 926 Single-Family Homes Sold But Not 2,207 2,284 1,873 1,224 1,306 Closed (Backlog) Cancellation Rate 16% 25% 33% 40% 26% Single-Family Homes Closed 976 1,062 1,145 1,244 844 Average Closing Price (in thousands) $480 $466 $461 $472 $399 Annual Investor Conference — May 2008 43
  • Managing Through The Cycle Operational Actions Strategic Actions • Repositioning product • Introducing new product • Creating new brands • “Improving our hand in land” Annual Investor Conference — May 2008 44
  • Financial Update Patty Bedient Executive Vice President, Chief Financial Officer Annual Investor Conference — May 2008 45
  • Dan Fulton President & CEO Annual Investor Conference — May 2008 46
  • Summary Challenges Difficult market conditions for balance of 2008 Uncertainty around 2009 – housing recovery not likely until 2010 Good News Containerboard Packaging Sale – on track TREE Act – passed into law Opportunities Well positioned to take advantage of the world’s need for sustainable energy and materials – combine technology with our rich resource base Much more focused company Annual Investor Conference — May 2008 47
  • Business Portfolio – Going Forward Timberlands – world leader in timberland ownership, management and stewardship Our other businesses – Wood Products, homebuilding, Cellulose Fibers – must have competitive advantage, and generate attractive returns and cash flow over the cycle Annual Investor Conference — May 2008 48
  • Next Steps to Position For the Future Complete divestiture of non-core assets Take out costs Structure and strategic portfolio adjustments to optimize returns to shareholders Annual Investor Conference — May 2008 49
  • Annual Investor Conference New York May 30, 2008 Annual Investor Conference — May 2008 50