CHARGES FOR RESTRUCTURING, CLOSURES AND ASSET IMPAIRMENTS

Items Included in Our Restructuring, Closure and Asset Impairment Charges



DOLLAR AMOUNTS IN MILLIONS
	2011		2010		2009
Restructuring and closure charges:
Termination benefits	$	4	$	22	$	101
Pension and postretirement charges	6		7		116
Other restructuring and closure costs	17		5		21
Charges for restructuring and closures	$	27	$	34	$	238
Impairments of long-lived assets and other related charges:
Charges attributable to Weyerhaeuser shareholders:
Long-lived asset impairments	$	42	$	92	$	157
Real estate impairments and charges	10		13		206
Write-off of pre-acquisition costs and abandoned community costs	1		5		52
Other assets	3		4		17
Charges attributable to non-controlling interests	—		—		16
Impairment of long-lived assets and other related charges	$	56	$	114	$	448
Total charges for restructuring and impairment of long-lived assets	$	83	$	148	$	686

Impairments of investments and other related charges:
Charges attributable to Weyerhaeuser shareholders	$	—	$	3	$	3
Charges attributable to non-controlling interests	—		—		4
Total impairments of investments and other related charges	$	—	$	3	$	7

RESTRUCTURING AND CLOSURES

Our restructuring and closure charges were primarily related to various Wood Products operations we closed or curtailed and restructuring our corporate staff functions to support achieving our competitive performance goals.

Pension and postretirement charges include a $76 million noncash pension charge during 2009 triggered by the amount of lump-sum distributions paid in 2009 to former employees — see Note 8: Pension and Other Postretirement Benefit Plans for more information.

Other restructuring and closure costs include lease termination charges, dismantling and demolition of plant and equipment, gain or loss on disposition of assets, environmental cleanup costs and incremental costs to wind down operating facilities.

ACCRUED TERMINATION BENEFITS

Changes in accrued severance related to restructuring and facility closures during 2011 were as follows:



DOLLAR AMOUNTS IN MILLIONS
Accrued severance as of December 31, 2010	$	20
Charges	4
Payments	(20		)
Accrued severance as of December 31, 2011	$	4

ASSET IMPAIRMENTS

The Impairment of Long-Lived Assets and Goodwill sections of Note 1: Summary of Significant Accounting Policies provide details about how we account for these impairments.

Long-Lived Assets

Our long-lived asset impairments were primarily related to the following:

•

2011 — charges include $29 million related to the decision to permanently close four engineered lumber facilities in our Wood Products segment that were previously indefinitely closed. These facilities are located in Albany, Oregon; Dodson, Louisiana; Pine Hill, Alabama; and Simsboro, Louisiana. The fair values of the facilities were determined using significant unobservable inputs (Level 3) based on liquidation values.

•

2010 — charges are primarily related to the decision to permanently close three Wood Products facilities that were previously indefinitely closed. These include an engineered wood products facility in Deerwood, Minnesota, a sawmill in Pine Hill, Alabama and an oriented strand board mill in Wawa, Ontario. The fair values of the assets were determined using significant other observable inputs (Level 2) based on market quotes and significant unobservable inputs (Level 3) based on discounted cash flow models.

•

2009 — charges for Wood Products facilities included $74 million related to engineered wood products facilities in Hazard, Kentucky and Valdosta, Georgia. In addition, charges included $30 million related to corporate-region buildings and $11 million related to a lumber mill in Brazil. The fair values of the assets were determined using significant other observable inputs (Level 2) based on market quotes and significant unobservable inputs (Level 3) based on discounted cash flow models.

Real Estate Impairments and Charges

We review homebuilding long-lived assets and investments within our Real Estate segment for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets are stated at cost unless events or circumstances trigger an impairment review. If a triggering event occurs and the asset’s carrying amount is not recoverable, we record an impairment loss, which is the difference between the asset’s book value and fair value. The determination of fair value is based on appraisals and market pricing of comparable assets when that information is available, or the discounted value of estimated future net cash flows from these assets.

In recent years, unfavorable market conditions caused us to re-evaluate our strategy to develop certain projects, reduce sales prices, and increase customer incentives. Because of such changes, we reassessed the recoverability of several of our investments, which triggered impairment charges. Asset impairments are recorded as adjustments to the cost basis of inventory and investments.

The number of real estate projects owned or operated by us ranged from approximately 100 to 125 during the 3-year period presented. This includes communities where we were actively building homes or developing land and land positions held for future development. The table below provides, for each period indicated:


•	the number of projects that were tested for recoverability as a result of triggering events that occurred during the period,


•	the number of projects for which impairment charges were recognized in the period,


•	the amount of real estate impairment charges attributable to Weyerhaeuser shareholders that were recognized in the period and


•	additional information about the fair value of assets impaired in the period.

Real estate impairments relate primarily to projects or communities held for development. Within a community that is held for development, there may be individual homes or parcels of land that are currently held for sale. Impairment charges recognized as a result of adjusting individual held-for-sale assets within a community to estimated fair value less cost to sell are also included in the total impairment charges below. Impairment charges also include impairments of certain assets that were disposed of during the year. Impaired book values at December 31 only include assets that were impaired during the year and that remain on our balance sheet as of the end of each year.



DOLLAR AMOUNTS IN MILLIONS							Fair Value Measurements Using
	Number of Projects Tested for Recoverability	Number of Projects Impaired	Impairment Charges Recognized		Impaired Book Values at end of year		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Real estate communities:
2011	24	5	$	10	$	19	$	5	$	14
2010	28	3	$	13	$	17	$	6	$	11
2009	87	34	$	206	$	109	$	17	$	92

The significant unobservable inputs used in amounts reported above are discounted future cash flows of the projects. We use present value techniques based on discounting the estimated cash flows using a rate commensurate with the inherent risk associated with the assets and related estimated cash flow streams. Discount rates applied to the estimated future cash flows of our homebuilding assets for 2011 and 2010 ranged from 15 percent to 18 percent. Discount rates applied to the estimated future cash flows of our homebuilding assets for 2009 ranged from 12 percent to 25 percent.

Write-off of Pre-Acquisition Costs and Abandoned Community Costs

In addition to owning land and residential lots, we also have option agreements to purchase land and lots at a future date. As of December 31, 2011, we have option agreements on approximately 63,000 residential lots. Non-refundable option deposits and capitalized pre-acquisition costs associated with these lots were $37 million as of December 31, 2011. When the economics of a project no longer support acquisition of the land or lots under option, we may elect not to move forward with the acquisition. Option deposits and capitalized engineering and related costs associated with the assets under option may be forfeited at that time. Charges for such forfeitures are reported as write-off of pre-acquisition costs.

Also included in 2009 are charges for abandoned community costs, which include the write-off of unamortized costs related to projects that have been closed prior to full build-out or related to model complex costs written off due to decisions to sell active communities in their current condition or to change home styles offered within a community.

Impairments of Investments and Other Related Charges

Impairments of investments and other related charges relate to loans and investments in unconsolidated entities.