New York
September 2009
Patty Bedient, Executive Vice President – Chief Financial Officer
Investor Conference
Weyerhaeuser Company
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 are based on various assumptions and may not be accurate because of risks and uncertainties
surrounding these assumptions. Factors listed below, as well as other factors, may cause actual results to differ significantly from these forward-looking
statements. There is no guarantee that any of the events anticipated by these forward-looking statements will occur. If any of the events occur, there is no
guarantee what effect they will have on company operations or financial condition. The company will not update these forward-looking statements after the date of this news release.
Some forward-looking statements discuss the company’s plans, strategies and intentions. They use words such as “expects,” “may,” “will,” “believes,” “should,”
“approximately,” “anticipates,” “estimates,” and “plans.” In addition, these words may use the positive or negative or other variations of those terms.
This presentation contains forward-looking statements regarding the company’s expectations during the third quarter of 2009, including fee timber harvest levels
and lower earnings in the Timberlands segment and sales of non-strategic timberlands; the effect of operating efficiencies and cost control measures on operating
losses in the Wood Products and demand and pricing for our wood products; average pulp price realizations, decreased expenses for maintenance and operations
and levels of alternative fuel blending and earnings for the Cellulose Fibers segment; home sales, closings, cancellations and earnings for our real estate
businesses; and earnings and performance of our business segments. The major risks, uncertainties and assumptions that affect the company’s businesses and
may cause actual results to differ from these forward-looking statements, include, but are not limited to:
the effect of general economic conditions, including the level of interest rates, availability of financing for home mortgages, strength of the U.S. dollar, employment rates and housing
starts;
market demand for the company’s products, which is related to the strength of the various U.S. business segments and economic conditions;
the successful execution of internal performance plans, including restructurings and cost reduction initiatives;
changes in the Company’s business support functions and support costs;
performance of the company’s manufacturing operations, including maintenance requirements and operating efficiencies;
changes in legislation or tax rules
raw material prices;
energy prices;
transportation costs;
the level of competition from domestic and foreign producers;
the effect of forestry, land use, environmental and other governmental regulations;
legal proceedings;
the effect of weather;
the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters; and
changes in accounting principles;
performance of pension fund investments and related derivatives;
the effect of timing of retirements and changes in the market price of company stock on charges for stock-based compensation; and
other factors described under “Risk Factors” in the Company’s annual report on Form 10-K.
The company also is a large exporter and is affected by changes in economic activity in Europe and Asia, particularly Japan and China. It also is affected by changes in currency exchange
rates, particularly the relative value of the U.S. dollar to the euro and the Canadian dollar. Restrictions on international trade or tariffs imposed on imports also may affect the company.
Global footprint
Thousands of Acres
Fee
Ownership
Long-term
Lease
Total Fee and
Lease
License
Arrangements
U.S. West
2,063
2,063
U.S. South
3,429
696
4,125
Canada
15,177
Uruguay
321
26
347
China
52
Total
5,813
774
6,587
15,177
Timberlands: Managed forestry creates value
Loblolly Pine
Douglas Fir
Weyerhaeuser grows high-value softwood
sawtimber using intensive forestry practices
Loblolly pine in the South
Fast early growth, resulting in younger
harvest ages (compared to Douglas fir)
Responsive to management to influence
growth and reduce risk of insect loss
Douglas fir in the West
Manageable to increase yields
Taller / older at normal harvest ages compared to pine
Products generally command higher market values
Timberlands: Managed forestry creates value
Deferring harvest to preserve value in response to lower log
demand and realizations
Upgrading portfolio through exchanges and occasional sales of
non-strategic timberlands
Additional revenue streams from land and timber
Minerals, oil and gas, and geothermal
Pursuing potential of biomass, carbon credits, wind power and
conservation easements
A leading producer of solid wood products and panels
Largest engineered wood products producer
National distribution footprint
Most recognized and trusted product brands
Wood Products
Wood Products: Managing through the downturn
Re-scaling operations to balance production against demand
Closed or curtailed almost half of wood products facilities since market peak
Comparable reduction in staffing
Maintaining pricing discipline across all product lines
Managing working capital and controlling cost
Cellulose Fibers
End Uses
Operations
6 Manufacturing Facilities
~1.9MM Tons
5
“
Primary
”
Mills
Bales
Rolls
Bales
Grande Prairie, AB
Flint River, GA
Pt Wentworth, GA
Columbus, MS
New Bern, NC
6 Manufacturing Facilities
~1.9MM Tons
5
“
Primary
”
Mills
1
“Converting”
Plant
Columbus, MS (
“CMF”)
Bales
Rolls
Bales
Grande Prairie, AB
Flint River, GA
Pt Wentworth, GA
Columbus, MS
New Bern, NC
Towel/Tissue
Paper
Textiles
Filter Media
Diapers
Wipes
Towel/Tissue
Paper
Textiles
Filter Media
Diapers
Wipes
Towel/Tissue
Towel/Tissue
Paper
Paper
Textiles
Filter Media
Textiles
Filter Media
Diapers
Wipes
Diapers
Wipes
35% - Europe
35% - North America
30% - Asia, South
America
End Product
Flows
Cellulose Fibers: Value through differentiation
Focus on absorbents and specialty fibers provides competitive advantage
Continuing leadership position with key customers
Selectively pursuing opportunities that support business strategy
Pursuing potential opportunities in green energy and new uses for
cellulose fibers
Real Estate: Unique brands and value propositions
Real Estate: Focused on cash generation
Despite current market weakness, our homebuilding businesses are well positioned in
markets with strong long-term fundamentals
Managing through the cycle
Repositioning product for current market conditions and emerging trends
Curtailing spending on land acquisitions and development
Opportunistically selling land inventory
Adjusting staffing and reducing costs
2009 Q3 Outlook
Increased activity at lower price points.
Increased number of closings in Q3 2009, lower margins than Q2 2009 due to mix.
Cancellation rate improved vs. prior year.
Loss in single family homebuilding similar to loss in Q2 2009.
Real Estate
Pulp pricing gaining momentum.
Focused cost control and manufacturing efficiency.
Lower maintenance expense and slight increase in alternative fuel blending.
Significant increase in Q3 2009 earnings vs. Q2 2009.
Cellulose
Fibers
Further curtailments to match supply with demand.
Continued weak pricing, especially in lumber.
Focused on working capital management and cash generation.
Loss in Q3 2009 should be less than in Q2 2009.
Wood
Products
Continued harvest deferral.
Export markets stabilizing.
$160 million pre-tax gain on non-strategic timber sale.
Exclusive of timber sale gain, earnings expected lower in Q3 2009 vs. Q2 2009.
Timberlands
Comments
Segment
Financial Update
$2.1 billion cash at the end of August 2009
Significant September cash outflows
$347 million debt maturities
$120 million interest payments
$20 million litigation settlement payment
$11 million dividends
Only minor debt maturities for next two years
$37 million 4Q 2009
$43 million 2010
$30 million 2011
Bank Credit Lines Amended
Committed Bank Facilities
March 2010
December 2011
Total
Minimum Defined Net Worth Covenant
$3.0 billion
$3.75 billion
$0.4 billion
1.0
$1.4
$1.2 billion
1.0
$2.2
Amended
Original
REIT update
Unlikely that 2009 conversion would be value creating for shareholders
Limitations on NOL carryback
Low level of timber income reduces 2009 benefit
Maintaining flexibility to elect REIT conversion
Minimizing earnings and profit distribution
Current portfolio likely meets REIT qualifications
Monitoring potential tax law changes
Questions
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