weyerhaeuser new york analyst meeting presentation

Annual Analyst Conference — June 1, 2007Annual Analyst Conference — June 1, 2007

1

Annual AnalystConference

New YorkJune 1, 2007




2

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 othervariations of those terms or comparable terminology or by discussions of strategy, plans or intentions. In particular, some of these forward-looking statementsdeal with expectations regarding capital spending, new business models in the company’s businesses such as Containerboard, Packaging and Recycling andCellulose Fiber, opportunities for growth in the company’s businesses such as Timberlands and iLevel, continued cost reductions in the company’sbusinesses, particularly Containerboard Packaging and Recycling and Cellulose Fiber, earnings improvements in the company’s businesses generally andContainerboard 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 operating postures to meetcurrent demand, the company’s markets, demand and pricing for the company’s products and related matters. The accuracy of such statements is subject to anumber of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to: The effect of general economic conditions, including the level of interest rates and housing starts; Market demand for the company’s products, which may be tied to the relative strength of various U.S. business segments; Energy prices; Raw material prices; Chemical prices; Performance of the company’s manufacturing operations including unexpected maintenance requirements; The successful execution of internal performance plans; The level of competition from domestic and foreign producers; The effect of forestry, land use, environmental and other governmental regulations, and changes in accounting regulations; The effect of weather; The risk of loss from fires, floods, pest infestation and other natural disasters; Transportation costs; Legal proceedings; The effect of timing of retirements and changes in the market price of company stock on charges for stock-based compensation; and Performance 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 currencyexchange 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 onimports. These and other factors could cause or contribute to actual results differing materially from such forward-looking statements and, accordingly, noassurances can be given that any of the events anticipated by the forward-looking statements will occur, or if any of them occurs, what effect they will have onthe company’s results of operations or financial condition. The company expressly declines any obligation to publicly revise any forward-looking statementsthat have been made to reflect the occurrence of events after the date of these presentations.


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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


4

Steve RogelChairman, President

and CEO


and CEO


5

Strategic Direction

Patty BedientExecutive Vice President,

Chief Financial Officer

Strategic Direction

Patty BedientExecutive Vice President,

Chief Financial Officer


6

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


7

Weyerhaeuser’s VisionWeyerhaeuser’s Vision

“Weyerhaeuser releases the potential intrees to solve important problems for

people and the planet”

““Weyerhaeuser releases the potential inWeyerhaeuser releases the potential intrees to solve important problems fortrees to solve important problems for

people and the planetpeople and the planet””


8

Legislative Tax Reform

Industry sponsorship

Timber Revitalization and Economic Enhancement (TREE) Actof 2007 introduced in Congress

Bi-partisan support

Immediate value and flexibility


9

iLevel Strategy

To be the undisputed leader in theResidential Structural Frame Market


10

Weyerhaeuser Real Estate Company

Disciplined growth in targeted markets


11

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


12

Cellulose Fibers

High-performance fibers

Absorbent products

Premium towel and tissue

Proprietary technology

Technical capability


13

Containerboard Packaging and Recycling

Accelerating implementation of new business model

Considering broad range of strategic alternatives

Hold and optimize

Sell / divest

Other combination


14

Financial Priorities

Capital spending discipline80% of depreciationAligned with strategy

Dividend policyIncreased dividend 33% in the last 2 years

Share repurchase25 million shares retired through the Domtar transactionRepurchased 11 million shares

Appropriate capital structure


15

Industry Outlook 2007

Lynn MichaelisVice President,

Markets & Economic Researchand Chief Economist

Industry Outlook 2007

Lynn MichaelisVice President,

Markets & Economic Researchand Chief Economist


16

Agenda for Industry Outlook

Macroeconomic setting for forest products

Housing Issues: National and regional

Situation in

Wood Products

Cellulose Fiber (Pulp)

Containerboard and Packaging


17

Outlook Summary

Approaching the bottom of the housing cycle — but recoverypattern 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 industriesare mixed


18

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 recoverypattern uncertain


19

Dollar Declines Further:Immense Current Account Deficit

0.8

1.0

1.2

1.4

1.6

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Forecast*

Source: Wall Street Journal, *Weyerhaeuser

Euro Exchange RateU.S.$/Euro(inverse)

QuarterlyQMIEU09E


20

Stronger Industrial Growth Over2004–07 Period

-6

-4

-2

0

2

4

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: FRB, *Weyerhaeuser

Growth in Weighted** Index forU.S. Manufacturing Production

Percent Change

AnnualAMDIP09A

** 80% non-durable; 20% durableexcluding high tech

Forecast*


21

Now in Correction Period —Unique Cycle

0.8

1.0

1.2

1.4

1.6

1.8

1996 1998 2000 2002 2004 2006

Forecast*

U.S. Single-family Housing StartsMillion Units

Demographic Trendfor 2000-10*

Annual AverageSource: Census, *Weyerhaeuser


22

Surge in Total Housing Inventory Needs to beWorked off; Partial Cause — Investors Exiting

0

1

2

3

4

5

2000 2001 2002 2003 2004 2005 2006 2007 2008

CondominiumsNew SF HomesExisting SF Homes

Inventory of Homes and Condominiumsfor Sale

Million Units

QuarterlyQMDHO79A Source: Nat'l Assn of Realtors, Census

+1.6 Million


23

Another Problem Needs to be Corrected;Risky Loans

9

10

11

12

13

14

15

16

2000 2001 2002 2003 2004 2005 2006 2007

Mortgage Delinquencies Subprime LoansWith Installments Past Due

Percent

QuarterlyQMDIR22A Source: MBA


24

Situation in Wood Products

Wood products demand fell sharply with decline in single-familyhousing 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 verylittle offshore competition in structural wood products


25

Canadian Mills Have Been RunningCash Negative

100

150

200

250

300

350

400

450

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Reported RandomLengthsEstimated Mill Net

TradeCaseBegins

Average Mill Cost*

Source: Random Lengths,*RISI Mill Survey

Spruce-Pine-Fir 2x4 Lumber Price$/MBF

QuarterlyQWDCLP07D


26

Expect C$ Appreciation to Continue

0.60

0.70

0.80

0.90

1.002000 2001 2002 2003 2004 2005 2006 2007 2008

Forecast*

Source: Wall Street Journal, *Weyerhaeuser

Canadian Exchange RateU.S.$/C$(inverse)

QuarterlyQMICA09G


27

Now Below Maximum Tariff Trigger Level

250

300

350

400

450

1995 1998 2001 2004 2007

Framing Lumber Composite Price$/MBF

AnnualAWDLOP02A Soure: Random Lengths

MaximumExport TaxTrigger

YTD


28

200

250

300

350

400

450

1995 1997 1999 2001 2003 2005 2007

Douglas FirSpruce-Pine-Fir

Source: Random Lengths

Douglas Fir 2x4 Green vs.Spruce-Pine-Fir 2x4 Mill Lumber Price

$/MBF

AnnualAWDWLP03B

(X=YTD)

U.S. Product Prices Set by Canadian Imports


29

Log Prices Lag Lumber Prices andLumber Production

400

600

800

1000

1200

1995 1997 1999 2001 2003 2005 2007

Export Log

Domestic #2

Douglas Fir Log PricesExport Log vs. Domestic #2

$/MBF

AnnualATLP70D Source: Log Lines, Weyerhaeuser

(X=YTD)


30

Eventually, Prices Rebound to Level thatCovers Cash Cost

100

150

200

250

300

350

400

1995 1998 2001 2004 2007

North Central Oriented Strand Board 7/16" Price$/MSF

AnnualAWDPNLP09F Source: Crow's, *RISI Mill Survey

YTD

AverageMill Costin 2006*


31

Situation in Cellulose Fibers

Overall demand growth positive, especially for fluff andabsorbent 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


32

Weaker Dollar Makes U.S. MillsMore Competitive

0

100

200

300

400

500

600

2002 2006

U.S.

CanadaSweden

Typical Mill

Softwood Kraft Pulp$/Tonne

APLOTP84ASource: Weyerhaeuser

Manufacturing Cash Costs for BleachedSoftwood Kraft Pulp


33

Pulp Prices Reflect Relative Operatingand Exchange Rates

350

450

550

650

750

850

2001 2002 2003 2004 2005 2006 2007 2008

Fluff vs. EucalyptusDelivered Northern Europe

$/Metric Ton

QuarterlyQPLOTP39A

Fluff

Eucalyptus

Source: RISI

(X = April)


34

Situation in Containerboard andPackaging Industries

Box demand growth in line with revised industrial productionindex 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 additionalOCC capacity growth

– Where and at what price?


35

Gap Between Box Shipments Growth andIndustrial Production — Higher Prices

-1

0

1

2

3

4

1993-1997 1998-2003 2004-06

Industrial ProductionBox Shipments

**80% Nondurables, 20% DurablesExcluding High Tech

Source: Fibre Box Association, FRB

Weighted** Industrial Production andAnnual Growth of U.S. Box Shipments

Percent Change

AnnualACBBXG103A


36

Relationship Between Linerboard andBox Prices Has Changed

30

40

50

60

70

1995 1997 1999 2001 2003 2005 2007

200

250

300

350

400

450

500

550

Box (left scale)Liner (right scale)

Source: FBA, RISI

U.S. Corrugated Box Price vs.Eastern U.S. Linerboard PriceBox

$/MSFLiner

$/Short Ton

AnnualACBOTG58F

(X=YTD)


37

The Global Industry: All NewCapacity Has Been OCC Based

0

30

60

90

120

150

1988 2005

Recycled FiberVirgin Fiber

Source: Pöyry

Fiber for World Containerboard ProductionMillion Tons

AnnualXCBOTG13G


38

Now at Limit of OCC-based Capacity

35

40

45

50

55

60

65

70

75

80

1988 1992 1996 2000 2004

Percent

AnnualARCOCCG35D

World Recovered PaperContent in Containerboard

Source: P öyry

Calculated Limit*

* For current quality


39

Putting Upward Pressure on OCC Prices

0

20

40

60

80

100

120

1996 1998 2000 2002 2004 2006 2008

Chicago

Source: Official Boards Market, RISI

Recovered Paper OCC Price (Grade 11)(F.O.B. Packing Plant)

$/Short Ton

AnnualARCOCCP02F

YTD

CurrentChip PriceEquivalent


40

Higher Price Levels may be Needed toEncourage Virgin Capacity Growth

0

30

60

90

120

150

180

1988 2005 2015

Recycled FiberVirgin Fiber

Source: P öyry (History)

VirginSoftwoodCapacityNeeded

*4.5% per year growth, RISI Forecast

Fiber for World Containerboard ProductionMillion Tons

AnnualXCBOTG13I

Forecast*


41

Outlook Summary

Approaching the bottom of the housing cycle — but recoverypattern 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


42

Timberlands, Cellulose Fibers andContainerboard, Packaging

& Recycling

Rich HansonExecutive Vice President,

Chief Operating Officer

Timberlands, Cellulose Fibers andContainerboard, Packaging

& Recycling

Rich HansonExecutive Vice President,

Chief Operating Officer


43

1.19

2.28

1.67

2.272.48

2.612.46

3.80

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2000 2001 2002 2003 2004 2005 2006 2007 Mar.YTD

Total Company Recordable Incident Rate2000–2007 March Year-to-DateRIR

Safely Making Money


44

TimberlandsTimberlands


45

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


46

Diverse Timberlands Ownership

6.4 million acres in U.S.0.7 million acres in Southern Hemisphere**includes joint ventures


47

Innovative Silviculture

Grow bigger sawtimber faster, better, cheaper than competitors

Invest in silviculture to enhance timberland returnsInnovations in bedding and planting stockPrecision silviculture — Vision Forestry in the SouthOptimal harvest scheduling

Industry Standard

WeyerhaeuserForestry

Site Prep Genetics Fertilizer StandManagement

ProductDevelopment

Selective &Bedding

2nd & 3rdGeneration

PrecisionApplication

Thinning& Pruning

Strength &Stiffness Testing


48

Maximizing Harvest Value

Optimizing log revenueLog allocation to markets (export, lumber, veneer and

fiber) helps achieve full value potentialInternal vs. external customer choices enhance values —

“right log to the right mill”

Minimizing harvest costsScale and concentration provide for efficient harvestWeyerhaeuser’s Southern U.S. harvest costs are 20–25%

lower than benchmark averages


49

Optimizing Timberlands Portfolio

Returns improved throughactive portfolio management

Increased ownership by 1.5million acres since 2000Major strategic

acquisitionsRegional dispositions

including HBU land

Growing in the U.S. andSouth America

Portfolio Yield CurvePortfolio Yield Curve

Retu

rnto

Mar

ket

Acres

AcquisitionTargets

DivestmentTargets


50

Current activities includeTraditional small timberlands sales and exchangesSales of lands with enhanced real estate valuesMineral and oil and gas extractionOther earnings (hunting leases, cell tower leases,

sale of forest plants, etc.)

Future growth opportunities includeBiofuel opportunity with ChevronCarbon credits

Maximizing the Value per Acre2006 Timberland activities other than harvest2006 Timberland activities other than harvestgenerated more than $225 million of earningsgenerated more than $225 million of earnings


51

Generating Industry-leading Returns

U.S. Timberlands EBITDA* Per Acre Owned (2006)

0

50

100

150

200

250

300

WY West NCREIFPNW

WY South NCREIFSouth

*Non-GAAP measure; reconciliation on weyerhaeuser.com

Cellulose FibersCellulose Fibers


52


53

Advanced absorbent fibers used indiapers and other personal careproducts are chemically modifiedfor superior performance

Fibers used in premium towel andtissue products, specialty andpublication papers

Specialty fibers used in textiles andnon-wovens

Cellulose Fibers —Products

High-performance Cellulose FibersIncoming Raw

Material

Towel / Tissue

Textiles

Filter Media

Diapers

Wipes

End UseMarkets

(~65% Export)

Dow

nstr

eam

Trea

tmen

t

Car

rierF

iber

Abs

orbe

nts

Spec

ialty

~0.4

MM

Tons

~0.2

MM

Tons

~1.3

MM

Tons

Manufacturing

Bales

Rolls


54

R&D

FiberSelection

SpecialtyChemicals 5 Locations

~1.9 MM Tons


55

Cellulose Fibers Operations

ColumbusFlint River

Port Wentworth

New Bern

Grande PrairieGrande Prairie

NBSK

SBSK


56

Cellulose Fibers — Operational Excellence

Absorbent Product Mills

2006 Improvements over 2005

Manufacturing Efficiency

Manufacturing Cost $36/ton

4%

Containerboard, Packagingand Recycling

Containerboard, Packagingand Recycling


57


58

Containerboard Packaging andRecycling Operations

9 Containerboard Mills —6.2 million tons75 Packaging Plants —98 BSF;10 Specialty Plants —Bulk, Inks and Plants,Preprint, Retail4 Bag Plants —160,000 Tons19 Recycling Plants —6.8 million tons


59

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


60

Accelerating Implementation

New leadership

Achieving more responsive andcoordinated sales organization

Applying lessons from businessmodel pilot

Focusing on margin improvementand profitable volume growth


61

Targeted Earnings ImprovementsThrough 2008

$230 Million

DemandInitiatives$100 MM

DemandInitiatives$100 MM

ConvertingInitiatives$65 MM

ConvertingInitiatives$65 MM

MillInitiatives$65 MM

MillInitiatives$65 MM

• Labor reductions• More efficient maintenance spending• Lower energy consumption• Lower chemical consumption

• Rationalization / machine efficiency• Decreased fixed costs• Reduced transportation and warehousing

• Customer selection• Mix and volume improvements• New product introductions

On track to deliver $100 million by end of 2007


62

iLevelLee Alford

Senior Vice President,Residential Wood Products

iLevelLee Alford

Senior Vice President,Residential Wood Products


62


63

2006 Wood Products Segment Sales

New Residential(iLevel Focus)

Repair &Remodel

Industrial

International 3% Commercial 2%

71%

17%

7%


64

The Vision for iLevel

To be the undisputed leader in theResidential Structural Frame marketTo be the undisputed leader in the

Residential Structural Frame market


65

Over the Last 3 Years We Have BeenRepositioning Wood Products

Repositioned assets

Retooled

Reduced costs

Improved safety 50%

and …

Generated over $2.4 billion cash flow


66

The Residential Structural Frame


67

Complex Channel to Market is Evolving

Contractor Yardsand Pro Dealers

Truss andPanel Plants

Framers

BuildersBuildersPrimary

ManufacturingPrimary

Manufacturing

HomeBuyer


68




Framers



Manufacturing

HomeBuyer


69




Framers



Manufacturing

HomeBuyer


70




Framers



Manufacturing

HomeBuyer


71

Componentization is a Growing Trend


72

iLevel by Weyerhaeuser


73

Executing the iLevel Strategy

Sell to the channel todeliver solutions to

Builder

Market to the Builderwith unique building

solutions



Framers

BuildersBuilders

HomeBuyer


74

Positioned to be Undisputed Leader in theStructural 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


75

Positioned to be Undisputed Leader in theStructural Frame Market — Technology / R&D

Strength of Innovation

Software Solutions

Site Solutions


76

Dealing with the Here and Now

Executing the iLevel strategy while managing through thedownturn and positioning for the upturn

Adjusting operating posture

71% of our facilities are taking downtime

Inventory aligned with demand

Reducing SG&A


77

iLevel Gaining Traction Across the Channel

Sell to the channel todeliver solutions to

Builder

Market to the Builderwith unique building

solutions



Framers

BuildersBuilders

HomeBuyer


78

Positioned to be theUndisputed Leader

in theResidential Structural Frame Market

Positioned to be theUndisputed Leader

in theResidential Structural Frame Market

Weyerhaeuser RealEstate Company

Dan FultonPresident and CEO, WRECO

Weyerhaeuser RealEstate Company

Dan FultonPresident and CEO, WRECO


79


80

WRECO Operations

Maracay

Pardee

Quadrant

Trendmaker

Winchester

WRI


81

WRECO 2006 Rankings

15th by Closing Volume

15th by Revenue

6th by Pre-Tax Earnings

2nd by Gross Margin

Source: SEC filings


82

Homebuilding Operating Indicators

2007Q1 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$

2005 2006


83

Key Business Drivers

Local value propositions

Geographic distribution of operations


84

Key Business Drivers (cont.)

Land entitlement: core competency

Industry leading margins

Flexible business model

Management tenure

ROI alignment


85

Housing Cycle Opportunities

Grow market share

Position for the long termPeopleProcess

Leverage land position


86


and CEO


and CEO


87





weyerhaeuser new york analyst meeting presentation

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