BUSINESS SEGMENTS

6 Months Ended

Jun. 30, 2016

BUSINESS SEGMENTS

BUSINESS SEGMENTS

Reportable business segments are determined based on the company’s management approach. The management approach, as defined by FASB ASC 280, “Segment Reporting,” is based on the way the chief operating decision maker organizes the segments within a company for making decisions about resources to be allocated and assessing their performance.

During fiscal year 2016, the company’s chief operating decision maker changed the information regularly reviewed for making decisions to allocate resources and assess performance. As a result, the company will report its financial performance based on three business segments: Timberlands, Real Estate & ENR, and Wood Products. Prior to revising our segment structure, activities related to the Real Estate & ENR business segment were reported as part of the Timberlands business segment.

Amounts for all periods presented have been reclassified throughout the consolidated financial statements and disclosures to conform to the new segment structure.

We are principally engaged in growing and harvesting timber, manufacturing, distributing, and selling products made from trees, as well as maximizing the value of every acre we own through the sale of higher and better use (HBU) properties and monetizing reserves of minerals, oil, gas, coal, and other natural resources on our timberlands. The following is a brief description of each of our reportable business segments and activities:

• Timberlands – which includes logs, timber, and our Uruguay operations;

• Real Estate & ENR – which includes sales of HBU and non-core timberlands, minerals, oil, gas, coal and other natural resources, and equity interests in our Real Estate Development Ventures (as defined and described in Note 7: Related Parties); and

• Wood Products – which includes softwood lumber, engineered wood products, oriented strand board, plywood, medium density fiberboard and building materials distribution.

Discontinued operations as presented herein consist of the operations of our former Cellulose Fibers segment, and relate to assets and liabilities that have been reclassified as discontinued operations on our balance sheet as of June 30, 2016. All periods presented have been revised to separate the results of discontinued operations from the results of our continuing operations. Refer to Note 3: Discontinued Operationsfor more information regarding our discontinued operations.

An analysis and reconciliation of our business segment information to the respective information in the Consolidated Statements of Operations is as follows:

	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2016			JUNE 2015			JUNE 2016			JUNE 2015
Sales to unaffiliated customers:
Timberlands	$	471		$	328		$	858		$	651
Real Estate & ENR	38			13			77			47
Wood Products	1,146			1,004			2,125			1,927
	1,655			1,345			3,060			2,625
Intersegment sales:
Timberlands	193			187			415			415
Wood Products	22			22			44			41
	215			209			459			456
Total sales	1,870			1,554			3,519			3,081
Intersegment eliminations	(215		)	(209		)	(459		)	(456		)
Total	$	1,655		$	1,345		$	3,060		$	2,625
Net contribution to earnings:
Timberlands	$	125		$	117		$	254		$	256
Real Estate & ENR(1)	12			10			27			33
Wood Products	156			71			243			133
	293			198			524			422
Unallocated items(2)(3)	(18		)	11			(82		)	(54		)
Net contribution to earnings	275			209			442			368
Interest expense, net of capitalized interest	(114		)	(85		)	(209		)	(167		)
Earnings from continuing operations before income taxes	161			124			233			201
Income taxes	(31		)	1			(42		)	(8		)
Earnings from continuing operations	130			125			191			193
Earnings from discontinued operations, net of income taxes	38			19			58			52
Net earnings	168			144			249			245
Dividends on preference shares	(11		)	(11		)	(22		)	(22		)
Net earnings attributable to Weyerhaeuser common shareholders	$	157		$	133		$	227		$	223

(1) The Real Estate & ENR segment includes the equity earnings from and investments in and advances to our Real Estate Development Ventures (as defined and described in Note 7: Related Parties), which are accounted for under the equity method.

(2) Unallocated items are gains or charges not related to or allocated to an individual operating segment. They include a portion of items such as: share-based compensation, pension and postretirement costs, foreign exchange transaction gains and losses associated with financing, equity earnings from our Timberland Venture, (as defined and described in Note 7: Related Parties), the elimination of intersegment profit in inventory and the LIFO reserve.

(3) As a result of reclassifying our former Cellulose Fibers segment as discontinued operations, Unallocated items also includes retained indirect corporate overhead costs previously allocated to the former segment.

A reconciliation of our business segment total assets to total assets in the Consolidated Balance Sheet is as follows:

DOLLAR AMOUNTS IN MILLIONS	JUNE 30, 2016		DECEMBER 31, 2015
Total Assets:
Timberlands and Real Estate & ENR(1)	$	15,888	$	7,260
Wood Products	1,840		1,541
Unallocated items	2,353		1,985
Discontinued operations	1,908		1,934
Total	$	21,989	$	12,720

(1) Assets attributable to the Real Estate & ENR business segment are combined with total assets for the Timberlands segment because we do not produce separate balance sheets internally.