DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2011

DISCONTINUED OPERATIONS [Line Items]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

Our discontinued operations for the quarter and year-to-date periods ended September 30, 2011 and 2010 include our hardwoods and Westwood Shipping Lines operations. The following table summarizes the components of net sales and net earnings from discontinued operations.

	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2011			SEPTEMBER 2010			SEPTEMBER 2011			SEPTEMBER 2010
Net sales:
Hardwoods	$	27		$	89		$	222		$	282
Westwood Shipping Lines	56			61			180			168
Total net sales from discontinued operations	$	83		$	150		$	402		$	450
Income (loss) from operations:
Hardwoods	$	(4	)	$	2		$	(3	)	$	13
Westwood Shipping Lines	(4		)	5			—			2
Other discontinued operations	—			—			(13		)	—
Total income (loss) from discontinued operations	(8		)	7			(16		)	15
Income taxes	3			(3		)	5			(6		)
Net earnings (loss) from operations	(5		)	4			(11		)	9
Net gain (loss) on sale (after-tax):
Hardwoods	(8		)	—			(14		)	—
Westwood Shipping Lines	31			—			31			—
Sale of property	6			—			6			—
Net earnings from discontinued operations	$	24		$	4		$	12		$	9

Results of discontinued operations exclude certain general corporate overhead costs that have been allocated to and are included in contribution to earnings for the operating segments.

Other discontinued operations relate to current period gains or losses for businesses we have divested in prior years and are included in the Corporate and Other segment. During second quarter 2011 we increased our reserve for estimated future environmental remediation costs and recognized an $11 million charge associated with discontinued operations. See Note 14: Legal Proceedings, Commitments and Contingencies.

Our Consolidated Balance Sheet includes the following assets and liabilities of our hardwoods and Westwood Shipping Lines operations as of December 31, 2010.

	DECEMBER 31, 2010
ASSETS
Receivables, less allowances	$	36
Inventories	63
Prepaid expenses	7
Total current assets	106
Property and equipment, net	43
Other assets	15
Total assets	$	164
Liabilities
Accounts payable	$	8
Accrued liabilities	24
Total current liabilities	$	32

SALE OF HARDWOODS

On August 1, 2011, we completed the sale of our hardwoods operations to American Industrial Partners for consideration of $109 million, of which $25 million is a note receivable. During second quarter 2011, we reduced our hardwoods assets to their fair value less selling costs which resulted in the recognition of a $9 million charge. An additional $10 million pension curtailment charge was recognized in third quarter 2011 when the transaction closed. Total pre-tax charges on the sale of $22 million were recorded in our Wood Products segment. We recognized a tax benefit on the sale of $8 million resulting in a year-to-date net loss of $14 million.

The following operating assets were included as part of the transaction:

• seven primary hardwood mills with a total capacity of 300 million board feet,

• four concentration yards,

• three remanufacturing plants,

• one log merchandising yard and

• sales offices in the U.S., Canada, Japan, China and Hong Kong.

SALE OF WESTWOOD SHIPPING LINES

On September 30, 2011, we completed the sale of Westwood Shipping Lines to J-WesCo of Japan for $58 million in cash. We recognized a pre-tax gain of $49 million in Corporate and Other and recorded tax expense of $18 million, resulting in a net gain of $31 million. This transaction also reduced our operating lease obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010 by approximately $130 million.