WEYERHAEUSER COMPANY UBS Global Paper and Forest Products Conference September 14, 2010 Exhibit 99.1 |
2 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 presentation. 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, including operating values from timberlands, returns from silviculture practices, effects of scale on timberlands operating costs, expected timber harvests and demand for logs, demand for biomass, environmental benefits, growth of land ownership and management, and sources of additional values in our Timberlands segment; demand for saw timber, Canadian timber supplies, cash flows from increased volumes and improved mix, and capacity and costs in the Wood Products segment; demand for fluff pulp, manufacturing capabilities and cost reductions in the Cellulose Fiber segment; increases in housing starts in our single- family homebuilding operations; and the benefits of REIT conversion. 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; performance of the company’s manufacturing operations, including maintenance requirements and operating efficiencies; raw material, transportation and energy prices; changes in the Company’s business support functions and support costs; changes in legislation or tax rules; the level of competition from domestic and foreign producers; the effect of forestry, land use, environmental and other governmental regulations; legal proceedings; the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters; changes in accounting principles; 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, China and Korea. 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. |
Dan Fulton President and Chief Executive Officer |
4 Reasons to Own Weyerhaeuser Valuable timberland holdings Leader in adding and extracting value from timberlands Uniquely positioned to benefit from the recovery Focused on returning value to shareholders Timberland-focused strategy optimized by REIT structure |
5 Timberland Asset Over 6.5 million acres of timberlands Over 7 million acres of mineral rights Does not include 15.2 million acres of forestland under license in Canada Timberlands Acres (000) % US West US South Uruguay China JV Total Core 1,850 3,720 341 45 5,956 90.7% Non-Core 213 394 - - 607 9.3% TOTAL 2,063 4,114 341 45 6,563 100% |
6 Timberland Strategy Generate high returns on sustainably managed forests Timberland focused on saw timber – generates the highest operating values Proprietary silviculture practices generate highest return from timberland Scale operations create cost advantage Capture additional value from timberlands (minerals, oil & gas, environmental benefits) Grow timberland holdings |
7 Positive Outlook for US Timber Values Saw timber demand expected to grow Driven by housing starts returning to trend Shortfall in future Canadian harvest due to pine beetle infestation Canada has historically provided approximately one third of US lumber supply Export market remains strong and likely to expand |
8 Weyerhaeuser Positioned to Capture Benefits Harvest expected to increase 71% (2009 – 2019) US will rise 60%; international to increase 4-fold Cash flow driven by increased harvest volume, mix and price recovery Weyerhaeuser Global Fee Harvest Volume 0 5 10 15 20 25 30 35 0 1 2 3 4 5 6 7 8 9 International North America Fee Acres Owned |
9 Weyerhaeuser Positioned to Capitalize on Attractive Timberland Outlook Attractive outlook US trend log demand exceeds domestic supply International demand for logs increasing Demand is increasing for biomass and environmental solutions from the forest Weyerhaeuser well positioned Saw timber focused Proprietary silviculture practices result in greater productivity and margin Scale and logistics provide cost advantage Export log market capability Additional value from minerals, oil & gas, environmental benefits Recognized for sustainable management |
10 Recognized Leader in Sustainability |
11 2009 Net Sales of $2.2 Billion Wood Products |
12 Cellulose Fibers 42% 20% 19% 14% 5% Fluff Pulp for Disposable Hygiene Products Pulp for Premium Towel & Tissue Liquid Packaging Board Specialty Chemical Cellulose Pulp Other Products 2009 Net Sales of $1.5 Billion |
13 WRECO (Weyerhaeuser Real Estate Co.) 2009 Net Sales of $900 million |
Patty Bedient Executive Vice President and Chief Financial Officer |
15 REIT structure best supports strategic direction Benefit to the Company Qualified earnings distributed to shareholders not taxed at corporate level Benefit to shareholders Most dividends to shareholders taxed at capital gains rate Benefits of REIT Conversion |
16 Changed legal structure Moved non-qualifying business activities to taxable REIT subsidiary (TRS) Met REIT tests Distributed special dividend Final step: Elect REIT status on 2010 tax return Completion of Steps for REIT Conversion |
17 Special Dividend Summary $5.6 billion special dividend paid on September 1 $560 million in cash distributed 324.3 million common shares issued 535.9 million total common shares now outstanding Shareholders who elected cash received over 15% of the dividend in cash |
18 Third Quarter Accounting Impact of Special Dividend Distribution Changes to balance sheet Cash reduced by $560 million Deferred tax liability reduced by approximately $1.0 billion Shareholders’ equity increased by $440 million Changes to income statement Tax benefit of $1.0 billion, as a result of the elimination of deferred taxes 2010 income tax expense recalculated to reflect REIT treatment Stock portion of E&P dividend treated as share issuance, and EPS will be adjusted on a prospective basis |
19 Substantial Near-Term Liquidity Cash Balance After $1.3 billion Special Dividend Bank Revolving Credit Facility $1.0 billion (Expires 12/2011) Total Debt (9/1/2010) $5.1 billion 2010 2011 2012 2013 2014 2017-2033 $40 $30 $ 732 $433 $15 $3,891 Debt Maturity Schedule ($ millions) |
20 Post REIT Conversion Dividend Considerations Macroeconomic climate Earning potential of the company Target capital structure Appropriate debt levels Long term liquidity Maintaining access to capital Affordability Future growth opportunities Guidance to be provided in December 2010 |
Dan Fulton President and Chief Executive Officer |
22 Reasons to Own Weyerhaeuser Valuable timberland holdings Leader in adding and extracting value from timberlands Uniquely positioned to benefit from the recovery Focused on returning value to shareholders Timberland-focused strategy optimized by REIT structure |