Good morning. My name is Sylvia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Weyerhaeuser Second Quarter Earnings Conference Call. [Operator Instructions] I would now turn the call over to Ms. Kathryn McAuley, Vice President of Investor Relations.

Thank you, Sylvia. Good morning, and thank you for joining us on Weyerhaeuser's Second Quarter 2011 Earnings Conference Call. This call is being webcast at www.weyerhaeuser.com. The earnings release, analyst package and web slides for this call can be found at the website or by contacting April Meier at (253) 924-2937. Please review the warning statement in our press release and on the presentation slides concerning the risks associated with forward-looking statements, as forward-looking statements will be made during this conference call. Joining me this morning are Dan Fulton, President and Chief Executive Officer; and Patty Bedient, Executive Vice President and Chief Financial Officer. This morning, Weyerhaeuser reported Q2 2011 net earnings of $10 million or $0.02 per diluted share on net sales of $1.8 billion. Second quarter earnings include after-tax charges of $22 million for special items, $16 million for loss on the early extinguishment of debt and an impairment charge of $6 million for the expected sale of the Hardwoods business. The company's cash balance decreased $582 million primarily due to debt repayment. At the end of the second quarter, Weyerhaeuser's cash and cash equivalents was $181 million (sic) [$881 million]. Please turn to the earnings information package available on our website. This package includes the GAAP reconciliation of special items. In our discussion of the business segments, we will refer to Charts 4 through 10. Chart 4, changes in contribution to earnings by segment before special items. This chart illustrates the change in contribution by business segments from first quarter 2011 to second quarter 2011. My comments reviewing the second quarter refer to changes from first quarter unless otherwise noted. We begin our business segment discussion of the second quarter with Timberlands, Charts 5 and 6. In the second quarter, Timberlands contributed $112 million to pre-tax earnings,…

Dan, before you start, this is Patty. I just want to make one clarification to Kathy's comments on the cash balance. It sounded like she said $181 million. She meant to say $881 million. The cash decrease of $582 million for the quarter was correct. The cash balance at the end of the quarter is $881 million. Okay, Dan?

Thanks for that correction. Thanks, Kathy. Good morning, everyone, and thanks for joining us today. Despite continued weakness in U.S. housing and the overall U.S. economy, we continue to make progress against our goal of delivering superior sustainable returns for our shareholders. In addition to focusing on improving operating performance, we took steps in the quarter that strengthened our balance sheet and liquidity and announced 2 divestments of nonstrategic assets. Our overall financial performance is not where it needs to be, and we remain focused on those variables we can control to improve performance in today's difficult markets. In my remarks this morning, I want to provide some context related to broader macroeconomic conditions that affect our results, in particular U.S. housing conditions and demand from China. Then I'll discuss highlights of our quarterly progress in each business segment and key strategic goals before turning to Patty, who will cover our outlook for the third quarter plus financial comments. Conditions in the U.S. housing market continue to be weak. Growth in GDP, employment and consumer confidence are all necessary for a housing recovery, and unfortunately, we saw little progress during the quarter on any of those indicators. GDP growth was less than 2% for the quarter, slightly worse than the first quarter and weaker than expected. Employment growth has stalled as evidenced by the recent June figures of over 9% unemployment. Consumer confidence remains weak, affected by high unemployment, increasing gas and food prices and the budget deficit debate. Facing these headwinds, we find ourselves in a housing market that is no better than last year's very weak market. In light of continued sluggish conditions, 2011 estimates for single-family starts have decreased to fewer than 500,000, and forecasters are now pushing the beginning of the housing recovery out to 2012.…

Thanks, Dan, and good morning, everyone. The outlook for the third quarter by business segment is summarized on Chart 11. I'll begin the outlook discussion with Timberlands. Slowing export demand from China is expected to result in lower sales realizations and volumes in our Western operations. In addition, we expect domestic markets will continue to soften as sawmills take increased downtime in response to weakening lumber markets, also contributing to the falloff in volumes and prices. In the South, realizations for logs are expected to moderate only slightly as those markets did not experience the run-up in pricing during the second quarter that we saw in the West. Volumes may increase seasonally. We anticipate seasonal increases in cost for silviculture and road spending in the third quarter compared to the second. Earnings from nonstrategic land sales are anticipated to be much lower in the third quarter. Overall, we expect that earnings in the Timberlands segment will be significantly lower in the third quarter compared to the second. Average sales realizations in Wood Products are expected to be 3% to 4% lower for both lumber and OSB compared to the average for the second quarter as market trends reflect soft demand in most geographies. Realizations in engineered wood products are estimated to increase around 1% to 2%, reflecting a July 1 announced price increase. Sales volumes are expected to decrease across most product lines, although OSB volumes may increase somewhat. Log cost should decrease, especially in the West, and we expect to take more downtime in the third quarter in lumber due to weak market conditions as we continue to focus on matching supply with demand. We've already taken 6 weeks downtime in July compared to 3 weeks in Q2. Excluding the results of the Hardwood business, we expect overall operating…

Thanks, Patty. Before we turn to your questions, I want to make a few comments about the current demand for Timberland, since we often get questions from you about what we are seeing in the market. After several years of relatively quiet market conditions, we have seen increased interest from a wide range of investors in the South as well as the Pacific Northwest. Recent interest has come from what I consider to be traditional timberland investors, including other forest products companies, TIMOs and high net worth family interests. This year, we've also seen interest from a variety of conservation-oriented investment funds. We are routinely engaged in smaller timberland transactions, normally structured as exchanges, through which we are working to improve our overall returns by blocking up land adjacent to existing ownership where we can benefit from management efficiencies. In the case of the Pacific Northwest, we're continuing a long-term strategy of shifting our ownership to land best suited for Douglas fir. Our sales of non-strategic coastal properties over the last few years is a result of our strategy in the Northwest of moving out of land that was primarily hemlock and expanding our Douglas fir ownership. As an example, earlier this month, we completed the acquisition of approximately 6,300 acres of prime Douglas fir timberland in Washington that is adjacent to our own logistically advantaged holdings using exchange proceeds from the sale of nonstrategic acreage in Arkansas that closed in the second quarter. We've described our long-term strategy to target profitable growth in our Timberland holdings, and we'll continue to explore opportunities to leverage our Timberland's management expertise to add shareholder value. And now, we welcome your questions.

Sylvia, would you please open the floor for questions?

[Operator Instructions] Your first question comes from the line of Mark Wilde from Deutsche Bank.

Patty, can you just help us to size the kind of quarter-to-quarter impact from no maintenance in the pulp business?

Sure, Mark. I think as we talked about on the second quarter call, maintenance costs run about $1 million a day, and we had just over 50 days of downtime in the quarter related to maintenance. So -- and we had prepaid some of that maintenance in the first quarter. So the effect is -- of the maintenance cost itself would be somewhere just a little under the $50 million number. And then you have increased productivity, because we will be running those days instead of paying the maintenance cost. And as I said, we also have a little bit less cost in the way of operating supplies and contract services all because of the maintenance. So I think that will give you a delta.

All right. That's -- net-net, that's a number that's going to be north of $50 million, maybe well north of $50 million?

Well, I wouldn't want to put a point on it any finer than what I just gave you.

Okay. All right. That's fine. Dan, just a question about your building products business, especially the distribution business over an eye level. And I'm just curious about how you think about that business, whether it's just a channel market for Weyerhaeuser products or a little bit more. I had heard that you've moved away from selling non-Weyerhaeuser products and have now moved back to selling some of those. So maybe you can just walk us through how you think about that business.

Before we moved into our eye-level strategy, the distribution business had a much broader range of products. And as we set up our eye-level strategy and brought all of the businesses under that brand, we turned it into more of a channel market, as you note. And fundamentally, it's been a channel for our engineered wood products business. As we've evaluated that business over the last 12 to 18 months, especially in this continued downturn in housing, we have decided to take on some additional third-party distribution and sale of the products that are related to new home construction, where we can improve our efficiencies and logistics in selling those products out of those yards, where we can put them on a truck. It's already going to a job site with our engineered wood products, and it will make a contribution against our fixed cost and help to improve the margins in that business. And so what you observed is an evolution where we used to distribute a number of third-party products. And as you observed, we moved away from that, and now we are taking on some strategic third-party products, not at the scale that it used to be but those that are complementary to our own.

Okay. And then my last question. Any thoughts on whether we may see significant further nonstrategic asset sales over the next 12 months?

We have nothing to announce. We had earlier talked about our shipping business and the Hardwoods business. We're pleased that we found good buyers for those businesses. And we'll be closing those transactions, as we said, in the third quarter, but we have nothing else planned at this point in time.

Your next question comes from the line of Mark Connelly from CLSA. Mark Connelly - Credit Agricole Securities (USA) Inc.: Dan, 2 things. I'm trying to get a handle on the difference between the fee harvest volume growth and the price movement in the West versus the South. I mean, obviously, it's not quite apples-to-apples, I realize that. But the prices in the West have moved up nicely. Prices in the South are going absolutely nowhere. Are we really just looking at a Southern market that's super badly oversupplied? Or is there more going on in your price realizations? And understanding there's mix in there too.

The most significant difference between the West and the South is the fact that in the West, we have a strong export market. And so that has driven volumes in the West, but more importantly, it's driven price, Mark. So the demand -- and it's not just China. It is the steady demand from Japan. China has been, on the margin, the most significant factor, but in our export business, we also saw, on a quarter-over-quarter basis, a doubling in the percentage of exports to Korea. So that has caused price movement on the West Coast. In the South, the South is truly more dependent upon U.S. housing. And so... Mark Connelly - Credit Agricole Securities (USA) Inc.: But Dan, when I look at the data more broadly, I mean, I'm seeing -- granted stronger volume growth in the West, but volumes in the South are up pretty good too, and that's what surprises me.

Yes. No, our volume was up, as you see in the charts accompanying our release. Our volume is up in the South, both on a quarter-over-quarter basis but also on a year-over-year basis. So we've had opportunities to expand third-party sales at stable prices, and we've taken advantage of that. Mark Connelly - Credit Agricole Securities (USA) Inc.: Okay. One more question and I'll be done. Just a sort of a theoretical question. How much more fiber do you think you have in your system in aggregate as the result of the reduced harvest since 2008? Dick always used to remind us that if you don't cut the trees down, they grow every year. So I'm just trying to gauge how much more fiber you've been able to accumulate over this period relative to where you might have been otherwise.

I can't give you that number just because I don't have it available to me right now, Mark. I mean, clearly, we had significant deferrals, 9 and 10, because of the slow market. As you observed, our volumes have picked up. And as you note, the trees do continue to grow. And so the fiber volumes, in large part, have increased during the period of deferral. But I don't have a number that I can provide to you.

The next question comes from the line of Chip Dillon from Vertical Research Partners.

Just a quick follow-up to the question about the swing in the Cellulose business. Could you give us, Patty, an idea of what the maintenance costs were last year in the second quarter, 2010?

I don't have that in front of me, Chip, but we also -- quarter-over-quarter, you really have to look at how many maintenance days we had and how many mills were down and then what the nature of the maintenance was. And just by way of illustration, as we talked about in the second quarter last call, we had 4 mills down, but we had an extended maintenance at our New Bern mill because we were actually putting in a capital project. So they're really -- they're not quarter-over-quarter exactly the same and year-over-year. That's why I've tried to give you sort of the amount of maintenance days and to give you some information that would help you with that. But we don't have any maintenance left for the rest of this year.

Got you. Okay. And secondly, you mentioned you had $34 million in strategic land sales in the quarter. What should we -- and I know they're very lumpy, but what should we, at this point, consider to be kind of a normal rate? And you can either give us an annualized number, because it is lumpy or what you think it could be per quarter.

Well, we don't have a set budget for those, because they are nonstrategic land sales. As we look forward to the third quarter, I wouldn't anticipate we would have any significant level of land sales or at least at this point. But as Dan said in his comments, we are in the market all the time to be opportunistic up to -- as we find places where we can upgrade our portfolio. And to the extent that we can transact those, we will act on them. That's why they are lumpy and why they're hard to forecast. But probably, as you look back over time, excluding the large land sales like the 80-some thousand acres we transacted in the first quarter, they're probably in that ballpark of $80 million to $100 million of -- as an annual basis.

Got you. And then just lastly, Patty, on the 2 transactions we -- you all announced for the third quarter, can you give us the magnitude of the lease assumption you're giving, your obligation you're giving up, as well as sort of the maturity date of the note for the Hardwoods business?

Yes. The lease obligations have to do with the ships. They're operating lease obligations, and they go over a number of years, so I don't have that number for you, Chip. Your second question was, I think, the term of the note on the Hardwood business, and that's a 5-year term.

Yes. 5 years?

Yes.

Your next question comes from the line of George Staphos from Merrill Lynch.

Quick question first back to maintenance. As we think to next year within Cellulose Fibers, should there be any material difference between the amount of maintenance and downtime you take next year versus 2011? As we think longer term, obviously, you've got this change in maintenance scheduling that you're planning. But as I recall, that will tend to start helping your earnings in '13 and '14. So any details and confirmation, that will be appreciated.

George, you're correct. When we met in May, we talked about our longer-term initiative of stretching out the normal planned maintenance schedules from 12 months to every 18 months, and it will take several years for us to be implementing that. That will start to show up really late 2012. But in terms of showing up in the P&L, it'd be 2013, 2014. As we take our normal annual shutdowns today, we are making some incremental improvement that help to move us along the path that will allow us to implement that change. But as you know, that's going to be several years before we see the results of that.

Okay. Dan, you mentioned a couple of times that China had slowed in its purchases of your products, whether it's timber or cellulose fiber, towards the end of the quarter. Is there a way to put a figure on what the change or rate of change was at the end of the quarter?

I don't have a specific number that I can give you for that. Let me just talk about how it showed up in each of our businesses. In the case of our export log business, we were able to make most of our shipments during the quarter. And so it's more of a prospective change both in volume and the anticipated price. So we've seen some price drops for logs that are being exported. Most of that will start to be evident in the third quarter. In our Cellulose Fibers business, the most dramatic change occurred with our Pearl product. That is small tonnage for us but has been very high margin. And what happened there, it was really early June that Chinese government fundamentally started to tighten credit for businesses in China. They cut back purchases. We think that's a shorter-term phenomenon, but it's playing out in the third quarter forecast that Kathy provided. So the good news, let me -- just talking about Pearl a little bit. That's a product that we make by swinging production from our normal fluff production. And so it's not a dedicated facility to the extent that prices fall back, there's still an attractive margin, but we can swing that volume back to fluff, which is a big advantage for us. So we are opportunistically taking advantage of pricing opportunities in that product, but we have plenty of demand for our fluff production.

Okay. Last question, I'll turn it over. Your cash flow in the quarter was better than I initially thought. Nonetheless, the markets that you're in, obviously, are not giving you any favors in terms of your ability to improve returns. So if we think about the next 12 to 18 months, Dan, what do you think will be the source of the most meaningful return improvement within your business? Will it be addressing capital structure? Will it be potential return of value? Will it be further portfolio moves? Or do you think it will be on improving your operation to cost? What do you think are the most likely source of return improvement?

So we are focused on improving cash flow generation from our Wood Products business. As we noted, we are in challenging markets. We had targeted that we would be cash breakeven for the year. Our focus is to continue to reach that goal, but in the market that we find ourselves, that will be very challenging. But our Wood Products business, the focus is to generate cash and to improve margins and to improve revenues. In our homebuilding business, our focus has been to generate cash through normal operations of building homes. Plus we are an opportunistic seller of land and lots to other builders. We've had some success in doing so. And we expect that activity to continue as the housing market starts to recover, and many builders will find themselves being land short. And they will need to purchase lots, and we'll have some to sell them. In our Timberlands business, we do generate significant cash there. And what we would be looking at in our Timberlands business is some market recovery, especially in the South. In the West, we benefited in cash flow because of the run-up in prices coming from the export markets. As we mentioned, that's softer now, but we would expect that to recover. China will continue to be a strong buyer of products off the West Coast, and we'll be ready to supply them. And then our Cellulose Fibers business, we have been on a relatively steady capital spend, where we're improving our facilities. Those spending initiatives have been bringing down our cash reduction cost. They have been reducing longer-term or maintenance cost, and so we will be better positioned to generate cash in the future because of those. So to your question, what is our focus, it's all of those.

Your next question comes from the line of Gail Glazerman from UBS.

Dan, can you talk a little bit about, I guess, what you're seeing in WRECO market by market? And also, on your comments about improvement in 2012, can you maybe -- I know it's early, but give a little bit of color how you might see 2012 playing out at this point?

Sure. Let's talk about individual markets within WRECO. Strongest markets within WRECO have been Washington D.C. and Houston, and it's no secret why that is. It's because they have relatively strong employment. Washington D.C. went into the downturn earlier. It's come out ahead of some of the other markets. There's not a significant overbuild of inventory. Volumes are not what they used to be, but prices are recovering, and we're actually seeing some incremental improvement in price. Houston is an energy economy, and so they've come through this market in relatively good shape. We're seeing improved activity on our Trendmaker operation, both from our routine activity with our Trendmaker Homes, plus we have some product enhancements and extensions that have helped us to increase market share and increase volume. Phoenix is a market that's actually showing some growth now. And it -- once again, it's an employment story. Relatively strong employment, our activity is up in Phoenix, and we're starting to see some improvements in margins in that market. In Southern California, we've enjoyed, during the downturn, relatively steady demand in San Diego, and we've had high margins in San Diego because of our historic land position. That continues to be the case. Market's a little bit softer than it was 6 months in -- 6 months ago in San Diego, but that's more of a relative comment. We're seeing some improvement in the Pacific Northwest, which had been soft for a period of time, and that's, once again, related to job growth. So relatively more improved job picture in the Pacific Northwest related to the Boeing airplane company and their ramp up in production plus other new employment. In Las Vegas, we're still struggling. It's a tough market, but the inventory is being worked down, and we are starting to see some improvement in that market. And then the last submarket is the L.A. and the Inland Empire. I think we're doing better than others in the Inland Empire, and we're expecting that market to pick up a bit. So it is a slower recovery than what we had anticipated, Gail, but we're seeing some positive movements. And as we talked and I mentioned in my comments, we had -- 4 of our 5 homebuilders had greater sales in the quarter than they did a year ago, and one year ago, we had the housing tax credit. So that's good news. The market where we did not see improvement was Southern California and Las Vegas. And so that's the one that is our big engine, and we need to see some improvement in order to see a real significant pickup in the WRECO activity. But we've been pleased that WRECO were profitable. Our results, generally, are better than those of our peers, and as Patty mentioned, we're expecting a bit of improvement in the third quarter.

Okay. And just 2 things. One, just any thought -- early thoughts on how 2012 plays out? And then a quick question on fluff pulp.

At this point, we look at a number of housing forecasts. We prepare our own, but we look at others. Just to give you a range, Gail, in 2012, we have outside forecast that ranged from total housing starts of 630,000 to over 1 million. So there is a wide range of uncertainty related to 2012. We are planning conservatively on the low side and sizing our operation for a slower market, but we -- because of our land position, we're able to respond relatively quickly if we have market opportunity. So we're focused on maintaining margin. We're not chasing volume, but all of the forecast that I see, which suggests that we are expecting to see recovery to start in 2012, clearly didn't happen in 2011. When we went into the year, we were expecting 2011 to be somewhat of a mirror image of 2010. 2010 had a strong first half, a very weak second half. We were expecting a weak first half of 2011 with improvement in the second half of the year. At this point, we're not expecting to see significant improvement in the back half. And so we're planning for that, and we're focused on recovery starting to take shape in 2012. We do need to see improved consumer confidence. We need to see improved employment. And longer term, we need to have a resolution of the mortgage securities market, in particular, Fannie Mae and Freddie Mac.

Okay. That's helpful. And just a quick question. You talked about the dissolving pulp and a little bit about NBSK. A competitor yesterday was talking about seeing spot pricing and fluff up pretty significantly, as much as $100 a ton. And I'm just wondering what you're seeing specifically in fluff and kind of what your outlook will be over the next quarter or 2?

The fluff market has been certainly more stable. The reason I talked about dissolving pulp and NBSK is I was trying to focus on the impact of China, because those products were going into China, really as substitutes for cotton. And because of steps that the Chinese government took to tighten credit, prices dropped significantly. In terms of fluff prices, Patty provided our forecast for the third quarter in terms of what we're seeing directionally. There has been some additional supply that's come on with Domtar at Plymouth and the Alabama pine facility. That's had some impact in putting more product on the market. On the other hand, the fluff market continues to grow globally. And all of our large customers are concerned about maintaining supply because they have ambitious growth plans. And so longer term, we're really positive about fluff. And then we have some fluff capacity that's been shipped to dissolving pulp, and so we see the market stabilizing.

Your next question comes from the line of Joshua Barber from Stifel, Nicolaus. Joshua Barber - Stifel, Nicolaus & Co., Inc.: You had your comments about the Cellulose Fiber outlook, especially given the weakening in China, your comments mostly in late June and into the third quarter. Could you remind us how much or what percentage of that division sales actually comes from China?

We have about -- as you think about our Cellulose Fibers business broadly, our pulp business, we had about 1/3 of our production is sold domestically, about 1/3 to Europe and about 1/3 to Asia. Joshua Barber - Stifel, Nicolaus & Co., Inc.: And Asia would be split somewhat evenly between Japan and China? Or there would be a much bigger China focus?

It would be -- there's a significant focus on Japan. And China would also be an important market, but Japan, overall, is a very important market to us. Joshua Barber - Stifel, Nicolaus & Co., Inc.: Okay. So China's just going to be the biggest market for Pearl, basically?

China has been the market for Pearl. When we look -- and Pearl is a very, very small percentage of our production. But on the margin, it has been a significant contributor. Once again, at the margin, our Asian sales, our pulp, both NBSK and fluff. But also Asia is a major market for our liquid packaging board, which comes out of our Longview facility, so -- and that is primarily going into Japan. So Japan's our largest market by far in Asia. We talked about Japan on the last call, because it was right after the earthquake and the tsunami, and we had, had some disruption. For the most part, all of our customers' operations have stabilized. They've shifted production between their own facilities, and Japan remains very stable for us. It's also an important consideration not just in Cellulose Fibers, but as we talk about our export log business. Once again, to make the point, China has been terrific for us as well as the rest of the industry, because it's been new demand from the West Coast. But our large long-term export market has been and will continue to be Japan. Joshua Barber - Stifel, Nicolaus & Co., Inc.: That's helpful. But following up on Japan, have you seen any pick-up there lately just a result of some earthquake rebuilding start? Or do you think that's still going to be pushed out another 6 to 9 months, maybe more?

We have not seen a pick-up yet. Initially, the focus in Japan was on emergency housing. We saw some initial disruption in our log shipments. Those have all recovered. We would be expecting, longer term, to see a pick-up in lumber exports, but lumber would be primarily going into new construction. We think new construction will be delayed another 3 to 6 months before we start to see that impact, because they are still dealing with infrastructure. They're completing their temporary housing initiative, and they will shift now to longer-term production of permanent housing. And that should benefit the West Coast markets for lumber, perhaps some panels for those that are equipped to deal with metric sizes as well as logs. Joshua Barber - Stifel, Nicolaus & Co., Inc.: Okay. And last question regarding WRECO. Have you -- another one of the homebuilding competitors, that's a partner of yours in South edge, had taken a pretty sizable write-down in the second quarter. Do you guys have any remaining exposure that or do you think that the continued settlements there could end up being an issue in the third and fourth quarters of this year?

We are a very small partner in that enterprise. And we believe we're fully reserved, and we took those reserves some time ago. So we're anxiously awaiting the settlement, but we think we're fully reserved now. Once a settlement is finally agreed to, there'll be some cash implication. We built that into our cash forecast for the balance in the year. So we're not expecting any surprises at this point.

Your next question comes from the line of Steve Chercover from D.A. Davidson. Steven Chercover - D.A. Davidson & Co.: Changing gears a little bit. I guess, via your Catchlight joint venture, you've entered into a relationship with KiOR biofuel. But can you elaborate on this relationship? I'm sure you'll be selling the biomass, and Catchlight will funnel the fuel back to Chevron. But what kind of volume is committed? And is it a needle mover? Will we see more of these?

It is too early to tell whether it's a needle mover, Steve, and I think we will be likely to see more of these. So we do have a joint venture with Chevron. It's called Catchlight Energy. That joint venture has been operating for about 3 years. The initial focus in that joint venture was to combine the expertise and intellectual capital of Weyerhaeuser. If you think about the oil analogy, as the upstream provider of biomass and then Chevron is downstream in the refining business. We have, over time, looked at all of the technologies that are out there and have determined at this point that we will form more relationships with those like KiOR that bring in some unique technology. Weyerhaeuser's role in that relationship will be providing biomass. Chevron's role will be to take away the product that would be manufactured or refined by the KiORs. Because ultimately, the challenge in this business is you have to distribute it to get it to an end user. And so the strengths of our partnership are that we, better than anyone, I think, understand the upstream challenges and opportunities. Chevron covers the downstream, and we are likely to be entering into a number of agreements in what we would call a wraparound strategy, where we have the opportunity to work with those that have a variety of technologies. We think there's great long-term potential, but it's too early to tell, and I would not be able speculate at this point timing for those technologies. But we're excited to be working with something that I've been able to get funding, and we're going to try to move the dial here and develop some renewable fuel alternatives for this country. Steven Chercover - D.A. Davidson & Co.: So we should look at KiOR something as the outsourced refinery?

Yes. Not as refining. They are a converter of biomass into a product that then would go into a refinery. Steven Chercover - D.A. Davidson & Co.: Okay. Because I guess at some point...

That is a 3-step process. Steven Chercover - D.A. Davidson & Co.: I naively thought that a pulp mill would be a lot like a refinery as well, not being an engineer or anything. Is that still a possibility? I mean, as you move more of the black liquor perhaps out of your process. Or it's good how it is where it's just your source of energy.

Right now, we're using the black liquor to provide energy for our own facilities, and that is the best use. The advantage of our pulp mills is that we have zoned entitled locations with boilers and equipment that can handle some additional biomass. Plus we are located in areas where we have logistics and sourcing, and the challenge in the biomass business is really logistical. How do you gather it on an economic basis in order to get it to a point where it's competitive with alternative fuels? So pulp mills are great sources of energy. Black liquor, in the near term, is likely to be used by the pulp mill for its own energy. Steven Chercover - D.A. Davidson & Co.: Great. Okay. Well, keep us posted.

The other thing that we are doing is -- where we had the opportunity, Steve -- we have some facilities where we have turbine generators that are installed, where if we have excess black liquor or biomass, we can generate power. And the amount that we don't use, we sell into the grid. So it helps to bring down our overall energy cost as well as create new markets for power. Steven Chercover - D.A. Davidson & Co.: Well, some of your friends in the -- of the timber REITs have signed some pretty significant deals for volume even offshore. So keep us posted as these things materialize.

We'll do so.

Your final question comes from the line of Peter Ruschmeier from Barclays Capital.

I wanted to come back, if I could, to Japan for a minute, Dan. And I was curious if you have the high-level view of how you think about the rebuilding affecting housing starts, seeing pretty modest expectations of 5%, 10% but then it goes up from there. And are you seeing any -- recognizing this could take 3 or 6 months before we get to the front end of this, do you anticipate any different types of demand, in other words, similar order patterns for logs and lumber? Or do you expect a shift one way or the other?

It's too early to tell, Pete. There are a number of initiatives underway in Japan in order to position their homebuilding industry to be able to respond to the needs. And we're -- we have customers that are home builders to whom we sell lumber, engineered wood products. We expect their activity to begin to ramp up. There has been some demand on panels, often to the West Coast, more coming from Canada than the U.S. The issue on panels, historically, has been the metric size versus a 4 by 8 panel. On a temporary basis, they've been taking some 4 by 8 panels. There may be some code changes in Japan that would allow more imported product from the West Coast. Our initiative is really to be working with our existing customers. So we've got long-term relationships with sawmill operators and with homebuilders, and our goal is to provide them products so that they can participate in the rebuild.

One area, Pete, that we might see late in the quarter or fourth quarter would be in the area of the plywood operations in Japan which were hit pretty hard by the earthquake, and some of those are starting to come back online now. So we would see -- it's not a huge market for us, but on the margin, that would be another area of increased activity.

Okay, that's helpful. And then shifting gears back to timber. I think you mentioned previously, I think you said that your harvest plan for the year would be up in the order of 10%. I'm curious if you have any update on that. And maybe against the backdrop of what you're seeing in the South in terms of the dry weather, increased availability of logs and the lower prices, are you thinking about throttling back at all because of the prices to defer? Or what's your outlook?

We evaluate harvest levels on an ongoing basis. We talked about our second quarter harvest levels having been up. As we look out third quarter, Patty had comments in her outlook. We have had dry weather that allows more activity. But one of the problems with that weather is it's been so bad that, in fact, productivity levels are down a little bit, because it's just difficult to work in the woods. So we will continue to match our harvest levels with profitable demand. We'll gauge pricing as we look forward and move our harvest. What we do is, fundamentally, we're always looking to the future, making judgments about future demand and future pricing, and so that's just an ongoing process. And I don't have any more information for you today, Pete, other than we'll continue our normal process. I'd like to just close the call. We've gone a little bit long, and I'm glad that we were able to take the time to answer your questions. We appreciate all of your comments and questions. And as always, if you have further questions or comments, you can follow up directly with Kathy McAuley. I'd like to thank everybody for taking the time to join us today, and we appreciate your ongoing interest. Thanks very much.

Ladies and gentlemen, this does conclude today's Weyerhaeuser Second Quarter Earnings Conference Call. Thank you for participating. You may now disconnect.