LEE T. ALFORD
Senior Vice President, Residential Wood Products

SITUATION SNAPSHOT

• The cyclical downturn in the housing market continued through 2007.
• To adjust, we divested or closed numerous manufacturing and sales centers. This is in addition to the significant curtailments and shift adjustments taken across almost every unit.
• We took aggressive actions to reduce selling, general and administrative costs in 2007.
• We continue to position the business to take advantage of the inevitable upturn in the housing economy, through capital investments, new product development and other strategic actions.

OPERATING STRATEGY

• Deliver innovative homebuilding solutions to dealers so they can efficiently meet the needs of their builder customers.
• Leverage technology to provide our customers with performance-based proprietary products, processes and systems.
• Achieve operating excellence throughout the delivery chain.
• Adjust production levels to balance with demand.
• Take advantage of our size, scale, expertise and breadth of products that make us unique in serving the residential structural frame market.
• Continue to improve or remove underperforming and non-strategic assets from our system and focus investments on strategic goals.

CRAIG D. NEESER
Senior Vice President, Industrial Wood Products and International

SITUATION SNAPSHOT

• The North American cyclical housing downturn is affecting the cabinet, millwork and furniture industries. However, the global market for wood products continues to grow, driven by China and other international markets.
• In 2007, we continued to strengthen the international* and industrial wood products businesses by aligning them to realize gains in sales coverage and logistics costs, and by continuing to demand efficiency gains in our manufacturing operations.
• We manufacture plywood and solid lumber products in South America with broad acceptance from our selected customer base for these product lines.

*Financial results for our international operations are reported as part of the “Corporate and Other” segment. See pages 18 and 48 in our 2007 Annual Report and Form 10-K.

OPERATING STRATEGY

• Establish a position as one of the largest, lowest-cost, global softwood and hardwood timber growers through both wholly owned and joint venture operations.
• Meet the growing global demand for appearance and structural woods using our softwood and hardwood materials grown in sustainably managed plantations in North and South America and Australia.
• Continue to improve or remove underperforming and nonstrategic assets from our system and focus investments on strategic goals.