Exhibit 99.1
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096101.gif)
Annual Analyst Conference |
New York June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096102.gif)
Forward-looking Statement |
The following presentations contain statements concerning Weyerhaeuser Company’s future results and performance that are forward -looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these forward -looking statements can be identified by the use of forward -looking terminology such as “expects,” “may,” “will,” “believes,” “should,” “approximately, ” anticipates, ” “estimates, ” and “plans, ” and the negative or other variations of those terms or comparable terminology or by discussions of strategy, plans or intentions. In particular, some of t hese forward -looking statements deal with expectations regarding capital spending, new business models in the company’s businesses such as Containerboard, Packaging and Recycling and Cellulose Fiber, opportunities for growth in the company’s businesses such as Timberlands and iLevel , continued cost reductions in the company ’s businesses, particularly Containerboard Packaging and Recycling and Cellulose Fiber, earnings improvements in the company ’s businesses generally and Containerboard Packaging and Recycling in particular, international expansion, development of new products, a joint venture with Chevron to develop biofuel , business trends such as componentization in home construction, execution of company business strategies, adjustments of operatin g postures to meet current demand, the company’s markets, demand and pricing for the company’s products and related matters. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, includin g, but not limited to:#EThe effect of general economic conditions, including the level of interest rates and housing starts;#EMarket demand for the company’s products, which may be tied to the relative strength of variou s U.S. business segments;#EEnergy prices;#ERaw material prices;#EChemical prices;#EPerformance of the company’s manufacturing operations including unexpected maintenance requ irements;#EThe successful execution of internal performance plans;#EThe level of competition from domestic and foreign producers;#EThe effect of forestry, land use, environmental and other governmental regulations, and changes in accounting regulations;#EThe effect of weather;#EThe risk of loss from fires, floods, pest infestation and other natural disasters;#ETransportation costs;#ELegal proceedings;#EThe effect of timing of retirements and changes in the market price of company stock on charges for stock -based compensation; and#EPerformance of pension fund investments and related derivatives. |
The company is also a large exporter and is affected by changes in economic activity in Europe and Asia, particularly Japan, and 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 inte rnational trade or tariffs imposed on imports. These and other factors could cause or contribute to actual results differing materially from such forward -looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will occur, or if any of them occurs, what ef fect they will have on the company’s results of operations or financial condition. The company expressly declines any obligation to publicly revise any forward -looking statements that have been made to reflect the occurrence of events after the date of these presentations. |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096103.gif)
Agenda |
Welcome Kathryn F. McAuley |
Vice President, Investor Relations Opening Remarks Steven R. Rogel Chairman, President and CEO Strategic Direction Patricia M. Bedient Executive Vice President and CFO Industry Outlook 2007 Lynn O. Michaelis |
Vice President, Markets & Economic Research Timberlands, Cellulose Fibers and Richard E. Hanson Containerboard, Packaging & Recycling Executive Vice President and CFO |
iLevel Lee Alford |
Senior Vice President, Residential Wood Products Weyerhaeuser Real Estate Co. Daniel S. Fulton President and CEO, WRECO |
Closing Remarks Steven R. Rogel |
Chairman, President and CEO Q&A |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096104.gif)
Steve Rogel |
Chairman, President and CEO |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096105.gif)
Strategic Direction |
Patty Bedient |
Executive Vice President, Chief Financial Officer |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096106.gif)
Fundamental Principles |
Timberlands are core to the company Businesses must exceed cost of capital Continue capital spending discipline |
Maintain appropriate capital structure and dividend policy |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096107.gif)
Weyerhaeuser’s Vision |
“Weyerhaeuser releases the potential in trees to solve important problems for people and the planet” |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096108.gif)
Legislative Tax Reform |
Industry sponsorship |
Timber Revitalization and Economic Enhancement (TREE) Act of 2007 introduced in Congress |
Bi-partisan support |
Immediate value and flexibility |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096109.gif)
iLevel Strategy |
To be the undisputed leader in the Residential Structural Frame Market |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096110.gif)
Weyerhaeuser Real Estate Company |
Disciplined growth in targeted markets |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096111.gif)
Fine Paper Transaction: Split / Merge with Domtar |
Market leader created through unique tax-free transaction $1.35 billion in cash for debt reduction Over 25 million shares retired Shareholders given choice |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096112.gif)
Cellulose Fibers |
High-performance fibers Absorbent products Premium towel and tissue |
Proprietary technology |
Technical capability |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096113.gif)
Containerboard Packaging and Recycling |
Accelerating implementation of new business model |
Considering broad range of strategic alternatives Hold and optimize Sell / divest Other combination |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096114.gif)
Financial Priorities |
Capital spending discipline 80% of depreciation Aligned with strategy |
Dividend policy |
Increased dividend 33% in the last 2 years |
Share repurchase |
25 million shares retired through the Domtar transaction Repurchased 11 million shares |
Appropriate capital structure |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096115.gif)
Industry Outlook 2007 |
Lynn Michaelis |
Vice President, |
Markets & Economic Research and Chief Economist |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096116.gif)
Agenda for Industry Outlook |
Macroeconomic setting for forest products Housing Issues: National and regional |
Situation in |
Wood Products Cellulose Fiber (Pulp) |
Containerboard and Packaging |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096117.gif)
Outlook Summary |
Approaching the bottom of the housing cycle — but recovery pattern uncertain Wood product prices at bottom Long-term trend still positive for housing and wood products Very positive environment for softwood pulp Prospects for containerboard and packaging industries are mixed |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096118.gif)
Macroeconomic Outlook |
World growth strong, despite U.S. slowdown |
Interest rates remain near current levels given inflation |
Dollar decline continues — helps U.S. industrial production |
Housing starts approaching bottom, but recovery pattern uncertain |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096119.gif)
Dollar Declines Further: |
Immense Current Account Deficit |
Euro Exchange Rate |
U.S.$/Euro (inverse) |
Forecast* 0.8 |
1.0 1.2 1.4 |
1.6 |
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Quarterly |
QMIEU09ESource: Wall Street Journal, *Weyerhaeuser |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096120.gif)
Stronger Industrial Growth Over 2004–07 Period |
Growth in Weighted** Index for U.S. Manufacturing Production |
Percent Change |
Forecast* 4 |
** 80% non-durable; 20% durable excluding high tech |
2 0 -2 - -4 |
-6 |
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Annual |
AMDIP09ASource: FRB, *Weyerhaeuser |
Annual Analyst Conference — June 1, 2007 |
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Now in Correction Period —Unique Cycle |
U.S. Single-family Housing Starts |
Million Units |
Forecast* 1.8 |
1.6 |
Demographic Trend 1.4 for 2000-10* |
1.2 |
1.0 |
0.8 |
1996 1998 2000 2002 2004 2006 |
Annual Average |
Source: Census, *Weyerhaeuser |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096122.gif)
Surge in Total Housing Inventory Needs to be Worked off; Partial Cause — Investors Exiting |
Inventory of Homes and Condominiums for Sale |
Million Units |
5 |
Condominiums |
4 New SF Homes Existing SF Homes |
+1.6 Million |
3 2 1 |
0 |
2000 2001 2002 2003 2004 2005 2006 2007 2008 Quarterly |
QMDHO79ASource: Nat’l Assn of Realtors, Census |
Annual Analyst Conference — June 1, 2007 |
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Another Problem Needs to be Corrected; Risky Loans |
Mortgage Delinquencies Subprime Loans With Installments Past Due |
Percent |
16 |
15 14 13 12 11 10 |
9 |
20002001 20022003 2004 2005 2006 2007 Quarterly |
QMDIR22ASource: MBA |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096124.gif)
Situation in Wood Products |
Wood products demand fell sharply with decline in single -family housing starts Current product prices are below cash costs for average mills —lumber and oriented strand board — driving production lower U.S. timber prices lag lumber prices and mill production Long-term positive: housing starts return to trend with very little offshore competition in structural wood products |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096125.gif)
Canadian Mills Have Been Running Cash Negative |
Spruce-Pine-Fir 2x4 Lumber Price |
$/MBF |
450 |
Trade 400 Case Begin |
350 300 250 |
200 |
Reported Random 150 Lengths Estimated Mill Net |
Average Mill Cost* |
100 |
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Quarterly |
QWDCLP07DSource: Random Lengths,*RISI Mill Survey |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096126.gif)
Expect C$ Appreciation to Continue |
Canadian Exchange Rate |
U.S.$/C$ (inverse) |
Forecast* 0.60 |
0.70 0.80 0.90 |
1.00 |
2000 2001 2002 2003 2004 2005 2006 2007 2008 Quarterly |
QMICA09GSource: Wall Street Journal, *Weyerhaeuser |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096127.gif)
Now Below Maximum Tariff Trigger Level |
Framing Lumber Composite Price |
$/MBF |
450 400 350 |
Maximum 300 Export Trigger |
YTD |
250 |
1995 1998 2001 2004 2007 Annual |
AWDLOP02A |
Soure: Random Lengths |
Annual Analyst Conference — June 1, 2007 |
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U.S. Product Prices Set by Canadian Imports |
Douglas Fir 2x4 Green vs. Spruce-Pine-Fir 2x4 Mill Lumber Price |
$/MBF |
450 |
Douglas Fir (X=YTD) Spruce-Pine-Fir 400 |
350 300 250 |
200 |
1995 1997 1999 2001 2003 2005 2007 Annual |
AWDWLP03BSource: Random Lengths |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096129.gif)
Log Prices Lag Lumber Prices and Lumber Production |
Douglas Fir Log Prices Export Log vs. Domestic #2 |
$/MBF 1200 |
(X= YTD ) |
1000 |
Export Log |
800 |
600 |
Domestic #2 |
400 |
1995 1997 1999 2001 2003 2005 2007 Annual |
ATLP70D |
Source: Log Lines, Weyerhaeuser |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096130.gif)
Eventually, Prices Rebound to Level that Covers Cash Cost |
North Central Oriented Strand Board 7/16” Price |
$/MSF 400 |
350 |
300 |
250 |
Average 200 Mill Cost in 2006* 150 YTD 100 1995 1998 2001 2004 2007 Annual |
AWDPNLP09F |
Source: Crow’s, *RISI Mill Survey |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096131.gif)
Situation in Cellulose Fibers |
Overall demand growth positive, especially for fluff and absorbent grades (U.S. Southern pine pulp) Capacity growth primarily in hardwood pulp |
Dollar decline supports positive prices for NBSK and fluff pulp — strong position for U.S. Southern mills |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096132.gif)
Weaker Dollar Makes U.S. Mills More Competitive |
Manufacturing Cash Costs for Bleached Softwood Kraft Pulp |
$/Tonne |
600 |
Typical Mill 500 U.S. |
Canada Sweden 400 |
300 200 100 |
0 |
2002 2006 |
Source: WeyerhaeuserAPLOTP84A |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096133.gif)
Pulp Prices Reflect Relative Operating and Exchange Rates |
Fluff vs. Eucalyptus Delivered Northern Europe |
$/Metric Ton |
850 |
750 |
650 |
Fluff |
550 |
450 |
Eucalyptus |
(X = April) 350 2001 2002 2003 2004 2005 2006 2007 2008 Quarterly |
QPLOTP39ASource: RISI Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096134.gif)
Situation in Containerboard and Packaging Industries |
Box demand growth in line with revised industrial production index driver |
Packaging prices did not follow liner prices as expected |
Prospects for containerboard in a global context very positive Global demand growth of 4–5% per year Issue: will need virgin capacity given limit for additional OCC capacity growth |
–Where and at what price? |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096135.gif)
Gap Between Box Shipments Growth and Industrial Production — Higher Prices |
Weighted** Industrial Production and Annual Growth of U.S. Box Shipments |
Percent Change |
4 |
**80% Nondurables, 20% DurablesIndustrial ProductionExcluding High Tech |
Box Shipments |
3 2 1 0 |
-1 |
1993-1997 1998-2003 2004-06 Annual |
ACBBXG103ASource: Fibre Box Association, FRB |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096136.gif)
Relationship Between Linerboard and Box Prices Has Changed |
U.S. Corrugated Box Price vs. Eastern U.S. Linerboard Price |
Box Liner $/MSF $/Short Ton |
70 550 |
Box (left scale) |
500 |
Liner (right scale) |
60 |
450 |
400 50 350 |
300 40 |
250 (X=YTD) |
30200 1995 19971999 2001 2003 2005 2007 Annual |
ACBOTG58FSource: FBA, RISI |
Annual Analyst Conference — June 1, 2007 |
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The Global Industry: All New Capacity Has Been OCC Based |
Fiber for World Containerboard Production |
Million Tons |
150 |
Recycled Fiber 120 Virgin Fiber |
90 60 30 |
0 |
1988 2005 Annual |
XCBOTG13GSource: Pöyry Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096138.gif)
Now at Limit of OCC-based Capacity |
World Recovered Paper Content in Containerboard |
Percent 80 75 |
70 Calculated Limit* 65 60 55 50 45 |
40 |
* For current quality |
35 |
19881992 1996 2000 2004 Annual |
ARCOCCG35D |
Source: Pöyry |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096139.gif)
Putting Upward Pressure on OCC Prices |
Recovered Paper OCC Price (Grade 11) (F.O.B. Packing Plant) |
$/Short Ton |
120 |
100 Current Chip Price Equivalent 80 YTD |
Chicago 60 40 20 |
0 |
1996 1998 2000 2002 2004 2006 2008 Annual |
ARCOCCP02FSource: Official Boards Market, RISI |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096140.gif)
Higher Price Levels may be Needed to Encourage Virgin Capacity Growth |
Fiber for World Containerboard Production |
Million Tons |
Forecast* 180 |
Recycled Fiber 150 Virgin Fiber |
120 |
90 |
60 |
Virgin Softwood |
30 |
Capacity Needed |
0 |
1988 2005 2015 |
Annual |
XCBOTG13ISource: Pöyry (History) *4.5% per year growth, RISI Forecast |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096141.gif)
Outlook Summary |
Approaching the bottom of the housing cycle — but recovery pattern uncertain Wood product prices at bottom Long-term trend still positive for housing and wood products Very positive outlook for softwood pulp Outlook for containerboard and packaging industries is mixed |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096142.gif)
Timberlands, Cellulose Fibers and Containerboard, Packaging & Recycling |
Rich Hanson |
Executive Vice President, Chief Operating Officer |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096143.gif)
Safely Making Money |
Total Company Recordable Incident Rate |
RIR |
2000–2007 March Year-to-Date |
6.0 |
5.0 |
4.03.803.02.61 2.46 2.48 |
2.27 |
2.02.28 |
1.67 |
1.0 |
1.19 |
0.0 |
2000 2001 2002 2003 2004 2005 2006 2007 Mar. |
YTD |
Annual Analyst Conference — June 1, 2007 |
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Timberlands |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096145.gif)
Operational Excellence in Timberlands |
Generating industry-leading returns Superior silviculture strategy Superior execution |
–Forestry efficiency and low operating costs |
–Log allocation to the highest return market |
–Portfolio management Enhancing total return per acre |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096146.gif)
Diverse Timberlands Ownership |
6.4 million acres in U.S. |
0.7 million acres in Southern Hemisphere* |
*includes joint ventures |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096147.gif)
Innovative Silviculture |
Grow bigger sawtimber faster, better, cheaper than competitors |
Invest in silviculture to enhance timberland returns Innovations in bedding and planting stock Precision silviculture — Vision Forestry in the South Optimal harvest scheduling |
Strength & Thinning Stiffness Testing Precision & Pruning 2nd& 3rd Application Weyerhaeuser Selective & Generation Forestry Bedding |
Industry Standard |
Site Prep GeneticsFertilizer Stand Product Management Development |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096148.gif)
Maximizing Harvest Value |
Optimizing log revenue |
Log allocation to markets (export, lumber, veneer and fiber) helps achieve full value potential Internal vs. external customer choices enhance values —“right log to the right mill” |
Minimizing harvest costs |
Scale and concentration provide for efficient harvest Weyerhaeuser’s Southern U.S. harvest costs are 20 –25% lower than benchmark averages |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096149.gif)
Optimizing Timberlands Portfolio |
Returns improved through Portfolio Yield Curve active portfolio management |
Acquisition |
Increased ownership by 1.5 Targets million acres since 2000 MarketMajor strategictoacquisitionsReturnDivestment |
Targets |
Regional dispositions including HBU landAcresGrowing in the U.S. and South America |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096150.gif)
Maximizing the Value per Acre |
2006 Timberland activities other than harvest generated more than $225 million of earnings Current activities include Traditional small timberlands sales and exchanges Sales of lands with enhanced real estate values Mineral and oil and gas extraction Other earnings (hunting leases, cell tower leases, sale of forest plants, etc.) Future growth opportunities include Biofuel opportunity with Chevron Carbon credits |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096151.gif)
Generating Industry-leading Returns |
U.S. Timberlands EBITDA* Per Acre Owned (2006) |
30 0 25 0 20 0 15 0 10 0 50 |
0 |
WY West NCREIF WY South NCREIF |
PNW South |
*Non-GAAP measure; reconciliation on weyerhaeuser.com |
Annual Analyst Conference — June 1, 2007 |
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Cellulose Fibers |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096153.gif)
Cellulose Fibers —Products |
Advanced absorbent fibers used in diapers and other personal care products are chemically modified for superior performance |
Fibers used in premium towel and tissue products, specialty and publication papers |
Specialty fibers used in textiles and non-wovens |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096154.gif)
High-performance Cellulose FibersEnd Use |
Markets Incoming Raw (~65% Export) Material Manufacturing Fiber Tons |
Fiber Treatment MM Towel / Tissue |
Selection Bales Carrier ~0.4 Downstream Specialty Tons |
Textiles |
Specialty MM Chemicals 5 Locations ~0.2 Filter Media ~1.9 MM TonsRolls Absorbents Tons R&D MMDiapers ~1.3 WipesAnnual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096155.gif)
Cellulose Fibers Operations |
Grande Prairie |
NBSK |
SBSK New Bern Port Wentworth |
Columbus |
Flint River |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096156.gif)
Cellulose Fibers — Operational Excellence |
Absorbent Product Mills |
2006 Improvements over 2005 |
Manufacturing Efficiency 4% |
Manufacturing Cost $36/ton |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096157.gif)
Containerboard, Packaging and Recycling |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096158.gif)
Containerboard Packaging and Recycling Operations |
9 Containerboard Mills —6.2 million tons 75 Packaging Plants —98 BSF; 10 Specialty Plants —Bulk, Inks and Plants, Preprint, Retail 4 Bag Plants —160,000 Tons 19 Recycling Plants —6.8 million tons |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096159.gif)
The Business Model |
Market segments as profit centers |
Demand-driven, customer-focused model |
Operating as an integrated supply chain (mills / box plants) Delivering against demand at the lowest cost Leveraging scale |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096160.gif)
Accelerating Implementation |
New leadership |
Achieving more responsive and coordinated sales organization Applying lessons from business model pilot Focusing on margin improvement and profitable volume growth |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096161.gif)
Targeted Earnings Improvements |
Through 2008 |
$230 Million |
·Labor reductions |
Mill |
·More efficient maintenance spending |
Initiatives |
·Lower energy consumption |
$65 MM |
·Lower chemical consumption |
Converting•Rationalization / machine efficiency Initiatives•Decreased fixed costs $65 MM•Reduced transportation and warehousing |
Demand•Customer selection Initiatives•Mix and volume improvements |
$ 100 MM•New product introductions |
On track to deliver $100 million by end of 2007 |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096162.gif)
iLevel |
Lee Alford |
Senior Vice President, Residential Wood Products |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096163.gif)
2006 Wood Products Segment Sales |
International 3% Commercial 2% |
Industrial 7% |
Repair & 17% Remodel |
71% New Residential (iLevel Focus) |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096164.gif)
The Vision for iLevel |
To be the undisputed leader in the To be the in the Residential Structural Frame market |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096165.gif)
Over the Last 3 Years We Have Been Repositioning Wood Products |
Repositioned assets Retooled Reduced costs Improved safety 50% and ... |
Generated over $2.4 billion cash flow |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096166.gif)
The Residential Structural Frame |
Annual Analyst Conference — June 1, 2007 |
Complex Channel to Market is Evolving |
Framers |
Contractor Yards Builders Builders Primary and Pro Dealers Primary Manufacturing Manufacturing Truss and Panel Plants |
Home Buyer |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096167.gif)
Complex Channel to Market is Evolving |
Framers |
Contractor Yards Builders Builders Primary and Pro Dealers Primary Manufacturing Manufacturing Truss and Panel Plants |
Home Buyer |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096168.gif)
Complex Channel to Market is Evolving |
Framers |
Contractor Yards Builders Builders Primary and Pro Dealers Primary Manufacturing Manufacturing Truss and Panel Plants |
Home Buyer |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096169.gif)
Complex Channel to Market is Evolving |
Framers |
Contractor Yards Builders Builders Primary and Pro Dealers Primary Manufacturing Manufacturing Truss and Panel Plants |
Home Buyer |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096170.gif)
Complex Channel to Market is Evolving |
Framers |
Contractor Yards Builders Builders Primary and Pro Dealers Primary Manufacturing Manufacturing Truss and Panel Plants |
Home Buyer |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096171.gif)
Componentization is a Growing Trend |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096172.gif)
iLevel by Weyerhaeuser |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096173.gif)
Executing the iLevel Strategy |
Market to the Builder with unique building solutions |
Framers |
Contractor Yards Builders Builders and Pro Dealers |
Truss and Panel Plants |
Home |
Sell to the channel to Buyer deliver solutions to Builder |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096174.gif)
Positioned to be Undisputed Leader in the Structural Frame Market — Brand and Scale |
A leading producer of solid wood products and panels Largest engineered wood products producer National distribution footprint Most recognized and trusted product brands |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096175.gif)
Positioned to be Undisputed Leader in the Structural Frame Market — Technology / R&D |
Strength of Innovation Software Solutions Site Solutions |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096176.gif)
Dealing with the Here and Now |
Executing the iLevel strategy while managing through the downturn and positioning for the upturn |
Adjusting operating posture |
71% of our facilities are taking downtime Inventory aligned with demand Reducing SG&A |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096177.gif)
iLevel Gaining Traction Across the Channel |
Market to the Builder with unique building solutions |
Framers |
Contractor Yards Builders Builders and Pro Dealers |
Truss and Panel Plants |
Home Buyer |
Sell to the channel to deliver solutions to Builder |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096178.gif)
Positioned to be the Undisputed Leader in the |
Residential Structural Frame Market |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096179.gif)
Weyerhaeuser Real Estate Company |
Dan Fulton |
President and CEO, WRECO |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096180.gif)
WRECO Operations |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096181.gif)
WRECO 2006 Rankings |
15thby Closing Volume 15thby Revenue 6thby Pre-Tax Earnings 2ndby Gross Margin |
Source: SEC filings |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096182.gif)
Homebuilding Operating Indicators |
2005 2006 2007 |
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 |
—— —— —— —— —— —— -— —— — |
Traffic (in 000’s) 64 90 90 63 72 62 53 45 61 New Orders, net 1,378 1,525 1,608 1,174 1,472 1,325 906 838 1,684 Cancellation Rate 15 % 12 % 17 % 22 % 19 % 26 % 36 % 36 % 16 % Single Family Gross Margin 32 % 31 % 33 % 34 % 31 % 26 % 26 % 24 % 22 % Home Closing Price (in 000’s) $450 $468 $461 $506 $ 485 $ 491 $512 $526 $ 480 |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096183.gif)
Key Business Drivers |
Local value propositions |
Geographic distribution of operations |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096184.gif)
Key Business Drivers (cont.) |
Land entitlement:core competencyIndustry leading margins Flexible business model Management tenure ROI alignment |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096185.gif)
Housing Cycle Opportunities |
Grow market share |
Position for the long term People Process |
Leverage land position |
Annual Analyst Conference — June 1, 2007 |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096186.gif)
Steve Rogel |
Chairman, President and CEO |
![](https://capedge.com/proxy/8-K/0000950134-07-012979/v30961v3096187.gif)
Annual Analyst Conference |
New York June 1, 2007 |