Before I begin my prepared remarks today, I'd like to add my own personal thoughts on what Jim Sullivan has meant to this company during his 12 years of service as a Director.
It's been our good fortune to have Jim as a colleague for these past 12 years. Our shareholders and our employees have been well-served, by the skill, experience, wisdom and care that Jim has brought to us in meeting his responsibilities as a director.
The measure of Jim's influence on the company is embedded in Chuck's reflections about him, as well as comments from other leaders and directors with whom Jim served.
When we think of Jim, we think of safety.
Jim brought a passion to his role as director. He's been a tough, unrelenting taskmaster, challenging our management to improve safety across the company. It's clear that he made us better, and I have no doubt that families of our employees have Jim to thank for the fact that their spouses, parents and children work today in an environment that is safer than when Jim joined our board.
On behalf of all of our employees and their families, I salute you.
Last year when I spoke to you, I reflected upon the experiences of Americans who lived through the Dust Bowl in Oklahoma and Texas during the mid-1930s. I was drawing an analogy to the market conditions we were then experiencing.
This year, I'd like once again to go back in history, but, though it may seem like a long time ago, my reference point this year is only two months ago.
I'm referring to the forty-first Winter Olympics, that were held just up the road in Vancouver, British Columbia.
If you're like me, you spent at least some of those 17 days watching athletes from around the world compete in marquee events like the U.S./Canada gold medal hockey game, and less well-known sports, such as Team Pursuit Speed Skating.
Although literally thousands of stories emerged from the competition, what stood out to me were the performances of athletes whose focus on success was so great, that literally nothing stood in their way.
Stories like the one of Joannie Rochette, the Canadian figure skater, who won a Bronze Medal only days after her mother died of a heart attack.
Or Federal Way's own J.R. Celeski, who suffered what could have been a career-ending injury when his leg was severely sliced by a competitor's skate during the U.S. Olympic trials. After months of rehabilitation, Celeski was back on the ice in Vancouver, where he won two Bronze Medals in Short-Track Speed Skating.
Finally, there's the story of Lindsey Vonn, who became the first American woman to win the Downhill, despite a painful shin injury.
Like these athletes, our challenge is to focus on success, and not allow the toughest markets our industry has seen stand in our way. Like Rochette, Celeski and Vonn, during the crisis conditions our businesses have faced over the past couple of years, we've demonstrated our commitment to doing what is necessary to succeed.
Since the collapse of the financial markets in September 2008, we made the tough decision to cut our dividend - not just once, but twice.
We reduced our capital-spending plan, implemented a wage freeze, suspended 401(k) contributions, and redesigned compensation and benefits for both active and retired employees.
To improve our competitiveness, we cut our annual SG&A costs by over $300 million, reduced overall headcount by 29 percent, while reducing G&A headcount in our staff groups by nearly 50 percent.
Our businesses took other actions critical to our success - in this market, and in the long-term.
In our Timberland Business, we deferred our harvest, and sold non-strategic land.
Our Wood Products Business closed less-efficient facilities, eliminated shifts, and reduced staffing to match production to dramatically-reduced levels of demand.
WRECO adjusted its product line, restructured its operations, and sold non-strategic land and commercial properties.
Cellulose Fibers continued to improve machine efficiency while reducing its manufacturing cost per ton.
Because of these changes, we're still in the game - and we've created a more competitive Weyerhaeuser.
Efficiency and cost reduction, however, are only half the story. The other half lies ahead of us, as we fulfill our long-term strategy, and position our company to grow again.
We've committed to build a converting facility in Poland, as part of our Cellulose Fibers' strategy to grow by serving a strategic customer's international requirements.
Our work in developing new revenue sources from our lands continues with Chevron as we explore opportunities to develop liquid fuel alternatives, and it begins with Mitsubishi in a project to use biomass as a solid fuel.
And last year, we continued our commitment to innovation, as our scientists were awarded 30 patents that will enable us to develop new products from wood fibers for tomorrow's markets.
Like Olympic athletes, our focus is on success.
Just as these athletes envisioned themselves on the winner's podium, we envision "Generating superior returns with sustainable land and forest solutions for the world."
I'm confident that we'll achieve this goal.
To keep us focused on our goal and the steps necessary to achieve it, we are now displaying our Vision Statement and our Strategy Wheel on the wall behind me. "Releasing the potential in trees" is still a core concept, but the path ahead is now richer and broader.
A key element in delivering on our strategy is the decision we reached in December, that - subject to necessary shareholder approvals that we seek today - we will convert to a Real Estate Investment Trust, or "REIT."
This decision was reached with thoughtful consideration of what we believe is the best path forward for the long-term health of the company. We've thoroughly reviewed and discussed the implications of a conversion, and the effect this decision will have on our long-term direction.
In the end, we've determined that a REIT structure best supports our strategic direction. It's a structure that allows us to maintain ownership and management of our core land and timber assets, and operate our other businesses within the overall structure of a Timber REIT, and its taxable subsidiaries.
Strategic planning and a vision for the future are necessary, but not sufficient to achieve results. A REIT structure enhances our options, but does not affect the day-to-day realities of our business operations. Tax efficiency in our Timberlands ownership is essential, but product quality, cost control, superior logistics, and outstanding customer satisfaction are equally essential to achieving success.
It is now up to us to execute against our strategy and to perform.
After he won the Olympic gold medal in the Men's Super Combined event, American skier Bode Miller said it well, and I quote: "The way I executed, the way I skied, is something I'll be proud of the rest of my life...I didn't hold anything back."
We can't hold anything back either.
As we begin to emerge from the bleak market conditions that we've been living through over the past few years, we will need housing for a growing population - and we're delivering quality wood products and homebuilding solutions that provide and improve homes to meet those needs.
The demand for absorbent products continues to grow, especially in emerging markets - and we're developing innovative and sustainable cellulose fibers solutions for our growing customers.
We're using our hard-earned reputation - advocating for public policy that will capture value from the carbon that is sequestered in our sustainable forests and products.
We look to additional opportunities to generate revenues from our vast land-holdings, in the form of profitable biomass, wind and geothermal energy solutions.
And as global demand grows for sustainable forest management, we will create value by expanding our forestry management beyond the borders of the land that we own.
Like Bode Miller, we will execute. Like Miller, we won't hold back when it comes to delivering shareholder performance and customer satisfaction.
And like Miller, we'll be proud of our performance.
Our challenge is to operate like Olympic medalists in meeting customer needs for quality products - sustainably and profitably. The market doesn't control our destiny - we control our destiny.
Rochette, Celeski and Vonn controlled their own destiny. They rose to their individual challenges and performed despite personal tragedy and untimely accidents. They were determined that these setbacks would not become an excuse or roadblock to achieving their goals.
Like them, we need to recognize that our future success lies within us.
Yes -- the markets will continue to be tough.
Just last week, Federal Reserve Chairman Ben Bernanke stated that, "We are far from being out of the woods," adding that, "We have yet to see evidence of a sustained recovery in the housing market."
But conditions will be tough for our competitors as well.
By improving our performance, we will realize the potential of our natural resources and our human resources. In the process, we will grow this company again, and achieve our vision.
Today, before our board and shareholders, I give you my commitment to release the potential - of our people, our assets, and our reputation. And while I'm the one ultimately responsible for our performance, I alone can't get us to the top step of the podium.
Every leader, every business, every employee must do what they can to improve our performance.
At the beginning of my speech, I referenced a relatively obscure Olympic sport - Team Pursuit Speed Skating. It's a sport that I've come to believe is the perfect analogy for how we'll create the performance from Weyerhaeuser that we envision. I want to thank Ernesta Ballard, our Senior Vice President for Corporate Affairs, for introducing me to this sport, and for pointing out why it is such a great example for today's Weyerhaeuser.
For those of you, who perhaps like me, are unfamiliar with this event, let me provide a brief description.
At the beginning of the race, two teams of three skaters start opposite each other on the rink, and then chase each other for 16 laps. The objective is to cover the distance in the fastest time, or to catch and overtake the other team.
What makes team pursuit unique is that the last skater to cross the finish line determines the team's time. This means that winning requires strategy and teamwork to make sure the performance of the slowest skater is close to the fastest skater on the team.
I see two parallels to this sport in our world.
First, while we may have some businesses that perform better than others at certain times in the business cycle, we can't have any that fall way behind the others. It is the job of all of our businesses to keep up. I expect nothing less, and it will be our financial statements, not a timer, that will measure our performance.
A second parallel is that success is a team sport in the broadest sense. Our team includes our employees. It also includes our shareholders, lenders, contractors and suppliers, customers, retirees, communities, government - even the planet itself. And let us not forget that our team includes the families of our employees, and the support they provide - day in, and day out.
For us to win, every member of this team must cross the finish line with us. We cannot win if we achieve success in one area at the expense of another.
In closing, I pledge that we will put to use the lessons learned from Olympic champions. We will focus on success. We will see opportunities where others see obstacles. Like a Pursuit Speed Skating Team, we will work together, because we're committed to achieving the best - for every member of our team. Our leaders are accountable, and all of us understand our vision and the role we play in achieving it.
With this spirit, we're committed to achieve our goal to "generate superior returns with sustainable land and forest solutions for the world."
In closing, I thank you as fellow team members, for your commitment to our success, and I ask for your continued support.
