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BUSINESS SEGMENTS
 3 Months Ended
Mar. 31, 2018
BUSINESS SEGMENTS
BUSINESS SEGMENTS

Reportable business segments are determined based on the company’s "management approach," as defined by FASB ASC 280, “Segment Reporting.” The management approach 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.

We are principally engaged in growing and harvesting timber; manufacturing, distributing, and selling products made from trees; 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 leased recreational access;
•
Real Estate & ENR – which includes sales of timberlands; rights to explore for and extract hard minerals, oil and gas production and coal; and equity interests in our Real Estate Development Ventures; and
•
Wood Products – which includes softwood lumber, engineered wood products, structural panels, medium density fiberboard and building materials distribution.

A reconciliation of our business segment information to the respective information in the Consolidated Statement of Operations is as follows:
 
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2018
 
MARCH 2017
Sales to unaffiliated customers (Note 3):
 
 
 
Timberlands
$
505

 
$
486

Real Estate & ENR
51

 
53

Wood Products
1,309

 
1,154

 
1,865

 
1,693

Intersegment sales:
 
 
 
Timberlands
228

 
202

 


 


Total sales
2,093

 
1,895

Intersegment eliminations
(228
)
 
(202
)
Total
$
1,865

 
$
1,693

Net contribution to earnings:
 
 
 
Timberlands
$
189

 
$
148

Real Estate & ENR(1)
25

 
26

Wood Products
270

 
172

 
484

 
346

Unallocated items(2)
(92
)
 
(66
)
Net contribution to earnings
392

 
280

Interest expense, net of capitalized interest
(93
)
 
(99
)
Earnings before income taxes
299

 
181

Income taxes
(30
)
 
(24
)
Net earnings
$
269

 
$
157



(1)
The Real Estate & ENR segment includes the equity earnings from investments in and advances to our Real Estate Development Ventures, 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 expenses, pension and postretirement costs, foreign exchange transaction gains and losses and the elimination of intersegment profit in inventory and LIFO.