We have made certain reclassifications in our consolidated financial statements to reflect discontinued operations related to our former Cellulose Fibers businesses and WRECO. These results have been summarized in "Earnings from discontinued operations, net of income taxes" on our Consolidated Statement of Operations for each period presented. The related assets and liabilities of these operations have been reclassified as discontinued operations on our Consolidated Balance Sheet for each date presented. We did not reclassify our Consolidated Statement of Cash Flows to reflect discontinued operations.

Cellulose Fibers was previously disclosed as a separate reportable business segment, and WRECO and its subsidiaries were previously reported as the Real Estate segment. Retained indirect corporate overhead costs previously allocated to Cellulose Fibers and WRECO are now reported as part of Unallocated Items.

On October 12, 2016, we announced the exploration of strategic alternatives for our timberlands and manufacturing operations in Uruguay. We intend to consider a broad range of alternatives, including continuing to hold and operate the business, or a sale. The related assets and liabilities of our Uruguay operations have not met the criteria for classification as "held for sale" and are not included in our results of discontinued operations for the year ended December 31, 2016.

OPERATIONS INCLUDED IN DISCONTINUED OPERATIONS

Cellulose Fibers Divestitures

On November 8, 2015, Weyerhaeuser announced that the board authorized the exploration of strategic alternatives for its Cellulose Fibers business segment.

On May 1, 2016, we entered into an agreement to sell our Cellulose Fibers pulp business to International Paper for $2.2 billion in cash. The pulp business consists of five pulp mills located in Columbus, Mississippi; Flint River, Georgia; New Bern, North Carolina; Port Wentworth, Georgia and Grand Prairie, Alberta, and two modified fiber mills located in Columbus, Mississippi and Gdansk, Poland. On December 1, 2016, we completed the sale and recognized a pretax gain of $735 million, which is included in "Earnings from discontinued operations, net of income taxes" on the Consolidated Statement of Operations.

On June 15, 2016, we entered into an agreement to sell our Cellulose Fibers liquid packaging board business to Nippon Paper Industries Co., Ltd., for $285 million in cash. Our liquid packaging board business consisted of one mill located in Longview, Washington. On August 31, 2016, we completed the sale. We recognized a pretax gain of $53 million, which is included in "Earnings from discontinued operations, net of income taxes" on the Consolidated Statement of Operations.

On October 4, 2016, we entered into an agreement to sell our interest in our printing papers joint venture to One Rock Capital Partners, LLC, for $42 million of cash proceeds. The transaction included the printing papers mill located in Longview, Washington. On November 1, 2016, we completed the sale.

We used $1.7 billion of the after-tax proceeds from the sale of our Cellulose Fibers business segment for repayment of debt.

The following table presents the components of the net gain on the divestiture of Cellulose Fibers:



DOLLAR AMOUNTS IN MILLIONS
	2016
Proceeds, net of cash and cash equivalents disposed of	$	2,486

Less:
Net book value of assets and liabilities disposed of	(1,678		)
Transaction costs, net of reimbursement	(19		)
	(1,697		)

Pretax gain on Cellulose Fibers divestitures	789
Income taxes	(243		)
Net gain on Cellulose Fibers divestitures	$	546

WRECO Divestiture

On July 7, 2014, we completed the following set of transactions resulting in our homebuilding and real estate development business becoming wholly-owned by TRI Pointe Homes, Inc. (TRI Pointe):


•	the distribution of shares of WRECO to our shareholders in exchange for 59 million shares of our common stock; and


•	the merger of WRECO into a special purpose subsidiary of TRI Pointe, with WRECO surviving the merger and becoming a wholly-owned subsidiary of TRI Pointe.

Collectively, these transactions are referred to as the “WRECO Divestiture”.

During June 2014, our wholly-owned subsidiary, WRECO, issued $900 million of unsecured and unsubordinated senior debt obligations. The net proceeds after deducting the discount, underwriting fees and issuance costs were $870 million. At the close of the WRECO Divestiture in July 2014, WRECO used $744 million of the debt proceeds to repay intercompany debt and interest to Weyerhaeuser Company. The newly issued debt, remaining proceeds and other WRECO assets and liabilities, including $5 million cash on hand, were acquired by TRI Pointe when WRECO became a wholly-owned subsidiary of TRI Pointe at the closing of the transaction. Additionally, $32 million related to the adjustment amount payable pursuant to the terms of the transaction agreement was paid to TRI Pointe. Our net cash proceeds in connection with the WRECO Divestiture totaled $707 million.

Prior to the distribution of WRECO shares to our shareholders, WRECO was a wholly-owned subsidiary. Concurrent with the distribution to shareholders, WRECO ceased being a subsidiary.

The following table presents the components of the net gain on the divestiture of WRECO:



DOLLAR AMOUNTS IN MILLIONS
	2014
Proceeds:
Common shares tendered (58,813,151 shares at $33.22 per share)	$	1,954
Cash	707
	2,661
Less:
Net book value of contributed assets	(1,671		)
Transaction costs, net of reimbursement	(18		)
	(1,689		)
Gain on WRECO divestiture	$	972

The net gain on the WRECO Divestiture of $972 million is not taxable and was recognized in 2014 in discontinued operations.

NET EARNINGS FROM DISCONTINUED OPERATIONS

Sales and Net Earnings from Discontinued Operations



DOLLAR AMOUNTS IN MILLIONS
	2016⁽¹⁾			2015⁽²⁾			2014⁽³⁾
Total net sales	$	1,537		$	1,860		$	2,509
Costs of products sold	1,283			1,573			2,030
Gross margin	254			287			479
Selling expenses	12			14			61
General and administrative expenses	29			30			57
Research and development expenses	5			6			7
Charges for integration and restructuring, closures and asset impairments⁽⁴⁾	63			2			3
Other operating income, net	(27		)	(26		)	(27		)
Operating income	172			261			378
Equity loss from joint venture	(4		)	(105		)	(1		)
Interest expense, net of capitalized interest	(5		)	(6		)	(9		)
Earnings from discontinued operations before income taxes	163			150			368
Income taxes	(97		)	(55		)	(130		)
Net earnings from operations	66			95			238
Net gain on divestiture of Cellulose Fibers	546			—			—
Net gain on divestiture of WRECO	—			—			972
Net earnings from discontinued operations	$	612		$	95		$	1,210
(1) Discontinued operations in 2016 includes 335 days of the pulp business, 305 days of our printing papers joint venture operations, and 244 days of the liquid packaging board business. (2) Discontinued operations in 2015 includes a full year of the Cellulose Fibers business segment operations. (3) Discontinued operations in 2014 includes a full year of the Cellulose Fibers business segment operations and 188 days of WRECO operations. (4) Charges for integration and restructuring, closures and asset impairments consist of costs related to our strategic evaluation of the Cellulose Fibers businesses and transaction-related costs.

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.

CARRYING VALUE OF ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

The following table shows carrying values for assets and liabilities classified as discontinued operations as of December 31, 2015.

Carrying Value of Assets and Liabilities of Discontinued Operations



DOLLAR AMOUNTS IN MILLIONS
	DECEMBER 31, 2015
Assets
Cash and cash equivalents	$	1
Receivables, less discounts and allowances	211
Inventories	243
Prepaid expenses	14
Property and equipment, net	1,339
Construction in progress	51
Timber and timberlands at cost, less depletion charged to disposals	1
Investments in and advances to equity affiliates	74
Total assets of discontinued operations	$	1,934
Liabilities
Accounts payable	$	122
Accrued liabilities	118
Long-term debt	88
Deferred income taxes	336
Other liabilities	26
Total liabilities of discontinued operations	$	690

CASH FLOWS FROM DISCONTINUED OPERATIONS

The following table shows cash flows from discontinued operations for the three-year period ended December 31, 2016.

Cash Flows from Discontinued Operations



DOLLAR AMOUNTS IN MILLIONS
	2016⁽¹⁾		2015⁽²⁾			2014⁽³⁾
Net cash provided by (used in) operating activities	$	196	$	429		$	399
Net cash provided by (used in) investing activities	$	2,356	$	(118	)	$	581
(1) Discontinued operations in 2016 includes 335 days of the pulp business, 305 days of our printing papers joint venture operations, and 244 days of the liquid packaging board business, and the cash flows associated with the CF divestitures. (2) Discontinued operations in 2015 includes a full year of the Cellulose Fibers business segment operations. (3) Discontinued operations in 2014 includes a full year of the Cellulose Fibers business segment operations, 188 days of WRECO operations and the cash flows associated with the WRECO divestiture.

RELATED PARTY TRANSACTIONS WITH PRINTING PAPERS JOINT VENTURE

Prior to November 1, 2016, we held a 50 percent ownership interest in North Pacific Paper Corporation (NORPAC), our printing papers joint venture, which we considered a related party. We provided goods and services to NORPAC, including raw materials and support services. The amount paid to Weyerhaeuser by this joint venture for goods and services were:


•	$126 million in 2016,


•	$197 million in 2015 and


•	$195 million in 2014.

Prior to the divestiture, we managed cash for NORPAC under a services agreement. Weyerhaeuser held the cash and recorded a payable balance to NORPAC, which is included in "Accounts payable" in the accompanying Consolidated Balance Sheet. We had $46 million payable to NORPAC at December 31, 2015.