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BUSINESS SEGMENTS
 6 Months Ended
Jun. 30, 2017
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.

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 (as defined and described in Note 7: Related Parties); and
•
Wood Products – which includes softwood lumber, engineered wood products, structural panels, medium density fiberboard and building materials distribution.


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 2017
 
JUNE 2016
 
JUNE 2017
 
JUNE 2016
Sales to unaffiliated customers:
 
 
 
 
 
 
 
Timberlands
$
469

 
$
471

 
$
955

 
$
858

Real Estate & ENR
46

 
38

 
99

 
77

Wood Products
1,293

 
1,146

 
2,447

 
2,125

 
1,808

 
1,655

 
3,501

 
3,060

Intersegment sales:
 
 
 
 
 
 
 
Timberlands
163

 
193

 
365

 
415

Wood Products
—

 
22

 
—

 
44

 
163

 
215

 
365

 
459

Total sales
1,971

 
1,870

 
3,866

 
3,519

Intersegment eliminations
(163
)
 
(215
)
 
(365
)
 
(459
)
Total
$
1,808

 
$
1,655

 
$
3,501

 
$
3,060

Net contribution to earnings:
 
 
 
 
 
 
 
Timberlands (1)
$
(12
)
 
$
125

 
$
136

 
$
254

Real Estate & ENR(2)
23

 
12

 
49

 
27

Wood Products (3)
177

 
156

 
349

 
243

 
188

 
293

 
534

 
524

Unallocated items(4)
(30
)
 
(18
)
 
(96
)
 
(82
)
Net contribution to earnings
158

 
275

 
438

 
442

Interest expense, net of capitalized interest
(100
)
 
(114
)
 
(199
)
 
(209
)
Earnings from continuing operations before income taxes
58

 
161

 
239

 
233

Income taxes
(34
)
 
(31
)
 
(58
)
 
(42
)
Earnings from continuing operations
24

 
130

 
181

 
191

Earnings from discontinued operations, net of income taxes (5)
—

 
38

 
—

 
58

Net earnings
24

 
168

 
181

 
249

Dividends on preference shares
—

 
(11
)
 
—

 
(22
)
Net earnings attributable to Weyerhaeuser common shareholders
$
24

 
$
157

 
$
181

 
$
227



(1)
Net contribution to earnings for the Timberlands segment includes a noncash pretax impairment charge of $147 million, recorded during second quarter 2017. This impairment is a result of our agreement to sell our Uruguayan operations, as announced during June 2017. Refer to Note 3: Held for Sale and Discontinued Operations for more information regarding this transaction.
(2)
The Real Estate & ENR segment includes the equity earnings from, 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.
(3)
Net contribution to earnings for the Wood Products segment includes a pretax $50 million charge to accrue for estimated costs to remediate an issue with certain I-joists coated with our Flak Jacket® Protection product. Refer to Note 12: Legal Proceedings, Commitments and Contingencies for additional details.
(4)
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, and the elimination of intersegment profit in inventory and the LIFO reserve. Additionally, amounts shown for 2016 include equity earnings from our former Timberland Venture. As of August 31, 2016, the Timberland Venture became a fully consolidated, wholly-owned subsidiary and therefore eliminated our equity method investment at that time.
(5)
Discontinued operations as presented herein consist of the operations of our former Cellulose Fibers segment. Refer to Note 3: Held for Sale and Discontinued Operations for more information regarding our discontinued operations.