Good morning. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Weyerhaeuser Q4 2012 Earnings Call. [Operator Instructions] And I'd like to turn the call over to your host, Kathryn McAuley, Vice President of Investor Relations. Ma'am, please go ahead.

Thank you. Good morning. Thank you for joining us on Weyerhaeuser's Fourth Quarter 2012 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 our website or by contacting April Meier at (253) 924-2937. Please review the warning statements 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. As summarized on Chart 1, Weyerhaeuser reported fourth quarter 2012 net earnings of $143 million or $0.26 per diluted share and net sales of $2 billion. For the full year of 2012, Weyerhaeuser reported net earnings of $385 million or $0.71 per diluted share on net sales of $7.1 billion. Turning to our business segments. My comments reviewing the fourth quarter 2012 refer to changes from the third quarter of 2012. Beginning with Timberlands, Charts 2 and 3. Timberlands contributed $95 million to pretax earnings, $15 million more than in Q3. Earnings from nonstrategic land dispositions were $20 million, a decrease of $5 million. In the West, log price realizations increased 8% and volumes rose 5%, driven by strong export in domestic demand. Southern log price realizations increased 3% and volumes rose 9% as log demand began to tighten. Fee harvest volumes were 13% higher in the South and 5% higher in the West. These increases were due to seasonal factors and market demand. Wood Products, Charts 4 and 5. Wood Products contributed $38 million to pretax earnings in Q4, $21 million less than in third quarter. Commodity products benefited from tight inventory channels. Price realizations increased 2%…

Thanks, Kathy. Good morning, everyone. Thanks for joining us today. Over the past several years, we've laid the foundation by implementing initiatives that positioned the company to capture the benefits of an improving U.S. housing market. 2012 marked the clear beginning of that long-term recovery. This market improvement, together with our progress in implementing our own improvement initiatives, is evident in our fourth quarter and annual results. Revenues rose 13% during the fourth quarter and 14% for the full year. Our fourth quarter earnings increased 22% over the third quarter due to strong results from our Timberlands and our Real Estate segments. For the year, our net earnings before special items increased 78%, led by improvements within our Wood Products business. Our performance has improved steadily throughout the year, allowing us to continue to invest in our business, pay down debt and increase our dividend. As a result, our total shareholder return for the year was over 50%. I'm excited about the opportunity to build on the momentum of 2012 as we enter 2013. Before I discuss the performance of our business segments, I'll provide a brief comment on economic conditions that affect our company. First, the U.S. housing market. The housing market certainly turned a corner in 2012. Total starts, both single and multi-family, totaled 781,000, nearly a 30% increase from 2011. We began the year with stronger-than-normal spring selling season. This momentum continued through the fourth quarter, and we were pleased by the surprising strength of new home sales and Wood Products commodity prices. As we've noted in many fourth quarter reviews, both of these typically tail off at year end. On a seasonally adjusted basis, December housing starts jumped to a 954,000 annualized level. This is the highest level of housing starts we've seen since June 2008.…

Thanks, Dan, and good morning, everyone, and happy new year. Well, we are looking forward to 2013, but as Dan said, I will focus my comments primarily on the first quarter of the year. So the outlook for the first quarter of this year is summarized on Chart 11, and I'll begin the discussion with Timberlands. Export markets in the West are expected to continue to improve throughout the quarter. Log demand from our Japanese customers is strong as a result of the improving housing market in Japan and the supportive stance of the new government to implement policies to encourage growth. China log demand is expected to start somewhat slower due to the Chinese New Year holiday period in February but then continue an upward trend later in the quarter as residential and commercial construction picks up. As a result, export prices are anticipated to increase during the quarter. Stronger export demand, as well as an improved domestic lumber market have also contributed to rising prices in the domestic log market. In the South, realizations for logs are expected to be slightly lower due to a smaller diameter log size. Fee volume will be seasonally lower, primarily in the South, and may also be affected by recent wet weather logging restrictions. Before the effect of nonstrategic land sales, we expect that earnings in the Timberland segment for the first quarter will be comparable to the fourth quarter. Earnings from nonstrategic land sales will be lower, likely less than half of the $20 million earned in the fourth quarter. As a result, overall earnings in the Timberland segment will likely be lower in the first quarter compared to the fourth. In Wood Products, market conditions for the first quarter are anticipated to be strong as the housing recovery continues on…

Thanks, Patty. Since 2008, we've had a steady drive to sharpen our focus on our core businesses and improve our competitiveness. We committed to improve profitability despite challenging market conditions and to maintain this discipline when the markets eventually recovered. I commented at the beginning of my remarks that we've laid the foundation that positions us to capture the full benefits of an improving U.S. housing market and an improving global economy. The evidence is now in that we're in the midst of a housing recovery. As the market improves, we'll have the opportunity to grow, increasing timber harvesting, Wood Products manufacturing and community development and homebuilding, and our Cellulose Fibers business will continue to grow with our global customers as we are doing in Poland. With this increased activity, we face challenges such as the availability and cost of skilled labor, inflationary pressure on manufacturing input costs and increasing land and materials costs. We're confident in the ability of our talented teams to meet the opportunities that an improving market brings, and we're absolutely committed to maintain the discipline that has brought us through this unprecedented period. And now we welcome your questions and your comments. Kathy?

Yes. Brent, would you please open the floor to questions?

[Operator Instructions] Your first question comes from the line of Gail Glazerman with UBS.

I guess starting off within WRECO, can you talk a little bit about what sort of mix changes might come with the increase in community count? Because it seemed like 2012 mix was a little bit weak. Would you expect to see that shift a little bit or remain kind of where it was in 2012?

Well, the mix is dynamic, in talking about the fourth quarter mix, Gail. We had, in the fourth quarter, an increased percentage of homes that are affordable dwellings. We had talked about that on our last call that these affordable units come with an overall master plan approval process. That was in the Washington D.C. market. And then we had a shift between third and fourth quarter away from a higher percentage of sales and closings in San Diego to other markets. So we would expect, as we look at the first quarter, as Patty commented, we expect the mix to be about the same. We have adjusted our product in every single market in response to evolving market conditions. We've had significant response in the Inland Empire Area of California in developing a new more affordable product. But in other markets, we've actually moved up market because that's where the demand has been in the last year to 18 months. As the overall market conditions improve, we will continue to find the opportunities where we have the greatest margin potential. With all of these new community openings, we have opportunities to adjust our product mix. And so what we will do throughout the year is try to give you some guidance on how we would expect that mix to be changing from quarter to quarter. But as we look from 2012 to 2013, we should not expect a significant mix shift, other than this resurgent demand from California can have a positive impact on us as we move throughout the year. It takes some time for those sales to convert to closings, but we have good visibility. As we look out, houses that are in our backlog, we know what those margins should be, and I think we'll just continue to update you on a quarterly basis.

Okay. And just -- can I sneak one more in?

Yes, okay.

Log price developments, can you help us understand kind of the developments that you saw in the fourth quarter, and currently how much might have been due to weather and how much you think is due to true underlying kind of slight demand tightness because it does seem like, in both the West and the South, there were weather impacts?

There was a little bit more weather impact in the fourth quarter in the West than there was in the South. In the first quarter, likely that we'll have more weather conditions that would impact us because of wet weather. What we are seeing in the log market is the impact of some recovery in U.S. housing, both in the West and in the South, and in the West, a continued increase in demand for exports. So we expect some upward pressure on log prices. We have weather events every quarter that may impact us a bit, but I think generally, we would expect that the impact is coming from the demand side.

Your next question comes from the line of George Staphos with Bank of America.

Two general areas of questions, one in Wood and one in Real Estate, piggybacking on Gail. I guess in Wood Products, Dan, inflation offset a lot of the pickup in revenue that you saw in the segment. I guess that's to be expected this time in the cycle. If we look out the next year or so, would you anticipate that your realization should be at least able to keep up with inflation? And then taking a different take on it, if we hold raw materials and pricing constant, what kind of incremental margin do you expect you should be able to see out of Wood Products over the next 1 to 2 years?

What we would expect is that as the market recovers, we certainly have different products, so we have our lumber business, we have our OSB business, we have engineered Wood Products. As the market demand picks up, there is pressure on log prices. And so the relative margin between logs and lumber shifts over time or logs and oriented strand board, but more related to logs. The impact in our engineered business comes through, as you noted, OSB input costs. But I can't answer your question specifically because it's a function of what supply is available on the market for logs and what production capacity comes back online in the Wood Products business. So it is the dynamic of supply and demand, and it's a function of production capability across the system. So quite frankly, I can't give you a specific number as I look out a couple of years. So what we believe is with a recovering market in the U.S., we should see increased demand for Wood Products, which will then translate to demand and ultimately pricing on logs, plus in our case, we have a significant export market off the West Coast, and that plays into the pricing dynamic also.

George, the other thing that you saw in those margins in Wood Products in the fourth quarter was we had some downtime for the holidays and downtime for maintenance and implementing some capital projects. So as we see utilization rates improve, that will significantly impact that margin going forward as well.

Okay, I'll leave that general area to the side for now. If we switch to WRECO, it was nice to see the increase in pricing and the backlog. Can you speak to what's been driving that? Is that what you're seeing in California or Las Vegas? And I guess again, just back to Gail's question, you had called out the mix issue in the fourth quarter, and you are more or less where we had expected you. But also, it seemed like Las Vegas, Nevada were stronger than we would've expected in the fourth quarter regionally broadly, not just Weyerhaeuser-specific. I'm curious why you didn't see more of a mix effect in the quarter.

You're talking about sales prices which don't translate into the quarterly closing numbers, and so there's a lag, George, when we write those sales and when they are delivered. We were encouraged and have been encouraged not just by the fourth quarter, but as Patty noted, sales early this year had been very strong, which is atypical. We joke a bit about the Super Bowl being a turning point in the early year selling season, so this year is a bit of an anomaly. We're seeing prices moving up in every single market for similar type products, so that is not even addressing the mix issue as to whether or not it's a first-time product or a move-up product or there may be some additional pricing power. So we think that what's happening is certainly the existing inventory has diminished significantly. Homebuyers are going back into model complexes and making the commitment to buy new homes in part because they have more confidence in the economy, in their jobs, and they can obviously see that the market has bottomed and there is more likelihood of upward pricing movement, as well as perhaps some uncertainty about where mortgage rates are.

So the backlog price increase was broad not region-specific. Is that what you're saying?

Yes.

Your next question comes from the line of Chip Dillon with Vertical Research.

The first question is just to make sure I get this right. On the pension funding status, I believe last year it was about $1.1 billion under. And so you're saying, based on the discount rate changes, should be about $1.5 billion, $1.6 billion?

Yes. As you look at the total underfunded status for the pension plan, as you said, and this would be for the U.S. plan, as well as our nonqualified plan, we were, I think, about $1.150 billion. And at the end of this year, that will increase by about a little over $400 million. That's still for the pension, Chip. That doesn't include the other postretirement benefit plans. But if you're talking just pension, those were the right numbers.

Well, actually on that, I noticed that dropped from about $0.5 billion to $400 million from '10 to '11. Did that change the other things that much in 2012 or they stayed flat?

When you say the other things...

The other postretirement benefits?

Yes, they were fairly flat. The biggest change was in the pension plan.

Okay, that's great. And then one quick one in addition. When you go back in past cycles, you can see, and I know the footprint's different, but you often see a pretty substantial seasonal, or often have increase in the operating income in the Wood Products segment. And as you know, prices today are way above their fourth quarter averages, and notwithstanding the, I guess, last night's report that there might have been a little bit of a backoff in lumber. I mean, could we see a triple-digit operating income number in the Wood Products segment, is that what you mean by significant?

Well, when I say significant, Chip, remember we're talking about the first quarter when you talk about a triple digit, but that's what we're working toward. So it will be a multiple of the fourth quarter and pretty close to that triple digit.

Your next question comes from the line of Mark Connelly with CLSA. Mark W. Connelly - Credit Agricole Securities (USA) Inc., Research Division: Dan, just one question. 2 years ago at Investor Day, you talked about the opportunity from being long land in your homebuilding business and the opportunity to sell land to homebuilders that were short. Has that process met your expectations? And is it reasonable for us to assume that we would see a significant ramp in that kind of activity in 2013?

Our strategy is not changed, Mark, and we have -- we are not long land everywhere but we are long in certain markets, especially where entitlement processes reward a longer land position. Where we have master plans, we have the ability to not only build those lots but sell to others. We took advantage of that more in 2011 than we did in 2012. In '11, there was a resurgence of activity. Builders found themselves to be lot short, and we took advantage of that in certain regional markets. We looked for opportunities in those master plans where we have the excess land to sell to others on a profitable basis. We did some of that earlier this year, or in 2012, when we sold the Cross Creek Ranch property in Houston. And so we have that opportunity in front of us, and we'll look for opportunities where we have pricing and margin potential to take advantage of that as compared to building out those lots ourselves.

Your next question comes from the line of Carly Mattson with Goldman Sachs.

Can you talk about how the company thinks about refinancing the 2013 maturities, and whether we should look for potential new issuance in the public bond market, or whether Weyerhaeuser would prefer to pay a downward cash?

Sure, Carly. It's still early in the year but what we have said in the past is that we think that $4 billion of debt is about the right amount of debt for the size of the company today. We've been working that down. So when we pay off our 2013 maturities, we'll be right at -- maybe just a little below that target. So I think the point will be what other uses we may have for any additional debt in the future. But where we are right now, we have said in the past, and that would still be our view, that around $4 billion in debt is the right amount for the size that we are today.

Great. And then as a follow-up question, have you had discussions with the rating agencies about, particularly Moody's, about your -- the high BB rating that Weyerhaeuser has? And how does Weyerhaeuser think about the difference between being a crossover credit or a full investment grade credit. Has that view changed at all?

Well, Carly, we have ongoing conversations with both rating agencies, as you might well imagine. And we have historically been an investment grade rated company from both rating agencies. And Moody's moved us down years 2 ago when the markets in Wood Products especially were much more challenged than they are today. So we'll look forward to moving back into that investment grade area at Moody's, given the increase in the profitability and cash generation of the company. But I'll have to wait for them to make that move.

Your next question comes from the line of Alex Ovshey with Goldman Sachs.

In the Wood Products business, can you just provide more color around what the impact was from the maintenance downtime during the fourth quarter? And then as we look to 2013, is there any color you can provide on how we should be thinking about the change in the maintenance expense as we work our way through the year? I think in the pulp business in the past, you've been kind enough to provide that type of color to the extent that you can in the Wood Products business, that will be very helpful.

Sure, Alex. As we think about the seasonality in the business in the fourth quarter, we typically plan to be down implementing, that's when we target to do our capital project implementation and we plan maintenance. So it was more a quarterly statement as opposed to an ongoing piece as you think about the first quarter and second and third quarters, so I don't think there's anything big about that, that's different. It's just that the market was very much stronger in lumber and OSB, especially. And we probably didn't take as much downtime -- we didn't take as much downtime as we typically would in a normal year. Most of that would have come as well in engineered wood, where the operating rates have not been as strong. And then did you have a question about Cellulose Fibers?

No. I just -- the question really was if you guys can just put out a number for what the maintenance expense was in the Wood Products business for the fourth quarter relative to the third quarter, how that changed?

Yes, yes. I don't have a number for you in the actual maintenance for the fourth quarter for Wood Products. Let me see if we can pull something together and maybe you can check back with Kathy.

Okay. And then the follow-up question, as you know, Wood Products, what is the current profitability level in that business look like? Is it EBITDA breakeven at this point? And as you guys look at that business over the next couple of years, what U.S. housing starts level would that business really begin to generate meaningful profitability for the company?

Well, that -- the Wood Products segment is generating cash, Alex.

Well, I'm speaking about engineered wood products, not the entire segment. Just the engineered wood products subsegment.

Engineered wood products, in terms of the operating rate for the fourth quarter were still about 40% to 45% in that business. So really what we need to do is to get that operating rate up. And as we look forward in that business, it is a late cycle recovering business in Wood Products. In other words, of the 3 technologies that we have, engineered wood products, because it is more exposed to single-family -- housing or new housing rather as opposed to repair and remodel, it recovers a little bit later in the cycle. I can't tell you that, as you might know, the Builders' Show is going on this week, and the talk at the Builders' Show is concern about being able to get capacity or to get product as the cycle continues to recover. So we look very much forward to getting to that point. And I think as we move forward to increase housing starts, as Dan mentioned in his outlook, that we will see much improved results in that business.

Your next question comes from the line of Anthony Pettinari with Citi.

Just following up on the sale of lots, given San Diego has historically been one of your stronger regions from a margin perspective, I was wondering if you could talk a little bit about the decision to sell that land rather than develop it yourself? And to the extent you can, can you talk about where the sale sort of leaves your land position in San Diego?

Sure. Anthony, the property that we sold is part of a master plan, North County, San Diego called Pacific Highlands Ranch, where we have a significant number of entitled single-family lots that we would build out over time. That's a market that as you commented on, has been very good to us in the past. We have high margins in our single-family business in San Diego. The particular land that we sold is zoned for high-density residential. It was a very high density so multistory product and mixed-use. So it is not our core product that we build. That is the kind of property that we would typically sell to other builders and developers who specialize in it. Some of that will be rental, some of that perhaps could be for sale but likely more rental housing. And so it's consistent with our strategy to sell the property that is zoned for other than single-family to others, and that was the decision. So as we think about our land position in San Diego and our lot count, doesn't affect, really, our lot count at all because it's not a product that we would build. So it's totally consistent with the way we manage that business. The good news is that the multifamily market has been very strong, and so it was an opportune time to sell it. The purchasers of that property, will still have to go through some of their own entitlement process over a 1- to 2-year period before they break ground.

Okay, that's very helpful. And then just maybe one last one, switching to Timberlands. I'm wondering how much your log exports to China were up or up or down year-over-year in 2012? And as you look forward to 2013, from a volume perspective, do you expect kind of a meaningful change in log exports to China?

For the year, our export volume to China was up, but we expect it to increase as we go forward into 2013. The mix that we've talked about in the past is not significantly changed, so about 70% of our exports go to Japan, roughly 20% China and the balance to Korea. And as we look forward to full year 2013, I can't give you specific numbers on what the China volume is because it's not that predictable. But we see covering demand and we expect to be in a position to be delivering logs there as well as into our traditional markets of Japan and Korea. We have seen a pickup in activity in Japan. That's generally a more profitable market for us. They buy higher-quality logs, we have much longer-term relationships. But the relationships that we've built to China are encouraging for us and so we see it as an opportunity.

Your next question comes from the line of Mark Wilde with Deutsche Bank.

Dan, I wondered if you could just talk a little bit about sort of your positioning in the Wood Products business. It seems like over the last few months, we've started not only see a pickup in housing and building products activity, but we've started to see more M&A with the GP deal and then this Interfor deal that was announced the other day. I just wanted to get a sense of how you feel about your footprint in the business?

Well, we've seen that activity, Mark, and I would say it's not surprising. As the market starts to pick up, you'd expect to see some more of that activity. We like the position that we have, so we have good balance in our lumber business between the West and the South. As the market picks up, especially in California, we're excited about the opportunity to see improvement in our Western lumber system. OSB business, we've got 6 mills that are operating. We've increased production in that business over the last year, and we're moving, even as we speak into 2013, to increasing operating posture. I think in the fourth quarter, we are operating at about an 85% level. In OSB, we expect that to increase. So we're well positioned to serve both the Southern and the Western markets. Engineered wood products, Patty talked about it, is a late cycle business. We've got the leading brand in that business with our Trus Joist brand. And if single-family housing picks up, the opportunity there is that we do have a lot of operating leverage because we are operating it well less than capacity today, but we're positioned in the West and in the East to serve the broad needs of a recovering single-family, as well as the multifamily sector. As we look forward, there's still some question about the relative mix between singles and multis, as we move forward wondering whether there's change in patterns and increasing density. But we like the position that we have in every one of those products.

Would you want to expand in any of these businesses?

We look at opportunities. And fundamentally, as we look at opportunities, it's a function of how it would fit with our existing system and in relative financial opportunities. So I think we're active all the time in looking, but we have no immediate plans that we're prepared to discuss.

[indiscernible] is there to say that our focus, really, is on improving the operations that we have, and we aren't operating the operations that we have today at full capacity. So we have room to continue to grow the business with the existing facilities that we have. So that's really the focus.

Okay, that's fine. Just can you just mention where you're at in terms of kind of maximizing with kind of oil and gas and mineral revenue from the land? And you do have a lot of land down in Louisiana, and I just, I wonder where you're at in terms of extracting all of the subsurface value that you might from your holdings?

Our average earnings over the last year or so have been about $10 million a quarter, revenues coming from our minerals operation. There's been a bit of a shift in mix, Mark, between oil and gas. If we were to go back 3 to 4 years ago, when the gas shale activity took off, I think our minerals business at that point was generating about $60 million. Some of that was coming from these upfront lease payments as well as royalty payments. So on a steady-state basis, for the next 12 months or so, I think $10 million a quarter is probably a predictable number. Production levels are down in that business because of prices today for natural gas. Drilling costs for shale oil had been relatively high. We have land that's well positioned both in the Haynesville Shale gas area and the Tuscaloosa oil shale region. So we have active drilling going on in our properties, and I think it's really a function of pricing of the end product for oil and gas that will dictate how much additional activity there'll be in the next 12 months.

Your next question comes from the line of Joshua Barber with Stifel, Nicolaus. Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division: You guys have talked a little bit about the increased staffing, and I'm going to assume most of that has to do with the community count and with lumber production. But would you be able to speak a little bit more specifically on the lumber production side, how much you think you can get both lumber and OSB production up or just overall Wood Products production up throughout the year?

Well when we talk about it, and I mentioned briefly with respect to OSB, we're increasing our operating posture and we have been doing some hiring, bringing people back to work in order to add shifts. As the market expands for lumber, we have the same ability to add hours and in some cases to add shifts. But we respond both to demand, but primarily pricing. And over the past 12 months, most of the hiring that we have done in the company has been production employees that we've been putting back to work in order to be able to ramp up and respond to the increased opportunities for Wood Products. In WRECO, our general staffing level has been relatively stable as we add communities, then we would certainly add production superintendents and sales teams. But in the WRECO business in particular, most of the activity is subcontractor-based, and so it doesn't have a significant impact on our headcount. Did that answer your question or did you have a different focus to your question? Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division: No, no, I think that's helpful. When we look at the Timberlands business, you guys had mentioned also and it seems like the Southern log harvest went up pretty nicely in the fourth quarter. How much below, I guess, sustainable harvest or how much above your sustainable harvest could you harvest in the coming years if there was a very strong recovery? And what could those levels go to from where they are today?

During the recession, we went through a period of a couple of years where we took our harvest levels down, and we have been bringing them back over the last 2 to 3 years. So you've seen a fairly significant ramp-up in harvest activity, 2011, 2012. We are managing our Timberlands on a sustainable basis. Over the next 12 to 24 months, you should not expect to see a significant increase in harvest activity because we are operating today at a sustainable level. In any given market situation, we have the ability to flex a bit, say plus or minus 10%. It's a little bit -- takes a little bit longer to increase in the West because of road requirements and permit requirements. But we have shared projections in the past in our main conference of long-term harvest levels in terms of how that would ramp up over time. That's more of a function of the maturity of the timber rather than responding to specific market conditions. So we have some limited ability to flex short term, as we've done in the last year or so. So we'll respond to market conditions. Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division: Okay, that's helpful. Patty, you touched on the pension obligation and how that went up on a GAAP basis. Could you give us -- I know that may not be finalized yet, but could you give us an idea on where that went on a PBO basis at year end?

I don't know that I have that in front of me. Let me just see if I can help you with anything on that. I think we may have to wait for the K filing, which will come out later here in the next couple of weeks. Let me see if I can find the number for you, Josh, as we're sitting here.

Your next question comes from the line of Steve Chercover with D.A. Davidson. Steven Chercover - D.A. Davidson & Co., Research Division: So your log sales prices were up pretty good, particularly in the West Coast, which wasn't the case for all landowners out here. So I'm just wondering is that due to your exposure to Japan and China? Or is there also some benefit to putting higher logs through your mills at higher prices because you're basically transferring the revenue from a taxable jurisdiction into an untaxable jurisdiction?

The latter is not the case. We sell logs to our lumber business or conversion businesses at market. The difference in pricing is more likely a function of our Japanese trade, Steve. And the quality of the logs and the long-term relationships that we have with customers there, where we are being rewarded for the quality of the logs and the consistency of delivery over a long period of time. And I think we have that same opportunity emerging in China because of the quality of our fiber, the predictability and sustainability on the logistical side. I think we're fairly compensated for the value that we deliver. Steven Chercover - D.A. Davidson & Co., Research Division: Perfect. One other quick one. Across the WRECO footprint, do you feel that you have a need to reload your land position anywhere across that in any of your geographies?

We are always purchasing new land in our WRECO system to replace the lots that we are selling with the houses that we deliver. So that is just an ongoing function of managing a pipeline of future lots. We are very strategic in where we have a land position. The length of that position varies by market depending upon the challenge of entitlements and how we are able to control it. So our focus is on efficient management of our cash, and allocation of resource was in that business to, number one, be sure that we have a pipeline, but also ensure that we are earning maximum possible returns on the use of our capital. So it is a region-by-region decision. But in fact, we are always in the market looking for lot positions for future deliveries.

Your next question comes from the line of Mark Weintraub with Buckingham Research.

You talked about housing starts potentially being up 30% this year, and I want to understand what type of flexibility you have in your lumber business in particular, given that potential? If one were to assume that might mean lumber demand and if you have a differing view on this, please share. But let's say lumber demand might be up about 15% or so, would you expect to have the capability in your system to increase your production by at least 15%? And you talked about having already started that process. Where are you in that process? How much increased production have you already started to achieve?

We've had a steady increase in production as the market has begun to recover. In our lumber business in the fourth quarter, we were operating in about an 80%, in maybe mid-80s production rate so we have room to move beyond that in response to increased market demand. Also in the lumber business, Mark, our typical shift posture is 2 shifts. And so we have the ability to add hours to those shifts on a selective basis, and we have the ability, in some cases, to add an entire shift. We've got one facility in Cottage Grove, Oregon, that operates 24/7. That's not typical in the lumber business. But we do have a fair amount of flexibility in lumber to respond. And the response obviously comes from not just volume but we have to look at who our customers are and what pricing is. And so at the level of starts that we are at today, we've got a fair amount of room. As I pointed out, the level of starts in 2012 is very low by historic standards. We've got a lot of room to move between now and getting back to trend levels, which are sort of 1.5 million to 1.7 million.

Right. I guess what I'm trying to understand is that given your view of the world, presumably you're positioning yourself to be able to produce a good deal more product this year. And what I'm trying to understand, whether or not those actions have already been taken and we are already seeing that production, or whether you are in the process of taking those actions and the increased production will show up in 1 month, 2 months, 3 months?

The increased production should show up as demand increases. So we're not producing excess inventory, and we're not producing inventory at prices that don't give us the margins that we think are appropriate. So we have the ability to respond as the market picks up. There's some delayed response. It's a little bit longer-term response when you -- when we're ramping up, let's say, adding an entire shift to an OSB mill. That takes a little bit longer time. And so we've gone through some of that activity over the last year in our Wood Products business but more likely related to our OSB facilities.

So basically, you feel that you can be very quickly responsive and so you do not necessarily need to be building log decks, getting more work out. You don't have to like plan a month or 2 ahead of time, just so as I can understand?

No, we're always planning ahead of time. So we have, actually, fairly robust staffing plans where we look out a potential demand and we're filling those positions. But I can't give you specifics on a by-mill basis. We are -- the headcount that we've increased over the last year, as I mentioned, has primarily been related to Wood Products production.

Mark, when you think about lumber, we don't have huge log decks. We don't carry huge log decks in our supply chain. So the things that -- and that's just a function of the way that we operate on an efficient basis. So the things that would provide hiccups in that to being able to meet that demand are more things like if we were to have a weather-related event in the West. That would drive out-of-log downtime. So it's not if you go back a few years and you think -- and some competitors still do today, carry a lot of inventory in the yard, we have really worked on our supply chain between our Timberlands business and our lumber business so that we can respond as market conditions do increase.

Your final question comes from the line of Paul Quinn with RBC Capital Markets.

Just an easy question, just on log pricing. It looks like prices are up in the Pacific Northwest, and I can understand the sort of the rally in Japan in advance of tax hikes in '14 and higher Chinese demand. I'm really concerned with the log prices in the South. And if I look at it historically, I mean, it seems to be a correlation of after 6 months of the lumber price hike, you were 6 to 12 months, you've seen log prices come up and we've seen that gap expand out, and lumber prices are up sort of 30% to 40% year-over-year. So the question is, when do you expect the log prices to start to move up significantly or materially in the U.S. South?

Paul, we are starting to see log prices move up in the South, I would say more on a modest basis. Our own sales realizations for logs in the Timberlands segment, as I spoke to, will actually be down just slightly. But that's really more a function of the diameter size of the logs that we're logging this quarter, and that's not atypical for us. We are looking at settings that we can access, especially as it relates to this wet weather. So that's just an isolated instance -- incident. But we would expect saw log prices to start to move more significantly in the South as we go through the year, assuming, that would be our assumption, that housing continues to recover.

Thank you. Dan?

Okay. I'd like to thank everybody for taking the time to join us today. We continue to appreciate your interest. As you can tell from our comments, we're encouraged by the recovery in housing that's underway. We think we're well positioned to take advantage of it, and we look forward to -- we're looking forward to 2013 because I think we have the opportunity to fully participate in this recovery. And we look forward to your continued interest. If you have questions following the call, follow up as you normally do with Kathy. Appreciate it very much. Good day, everybody.

And, Josh, you can get that answer to your question from Kathy, we'll dig that out for you.

Okay, thank you. Have a nice day.

Thank you. This concludes today's conference call. You may now disconnect.