HELD FOR SALE AND DISCONTINUED OPERATIONS

OPERATIONS HELD FOR SALE

On October 12, 2016, we announced the exploration of strategic alternatives for our Uruguay timberlands and manufacturing operations, which is part of our Timberlands business segment. On June 2, 2017, the Weyerhaeuser Board of Directors approved an equity purchase agreement with a consortium led by BTG Pactual's Timberland Investment Group (TIG), including other long-term investors, pursuant to which the Company has agreed to sell, in exchange for $403 million in cash, all of its equity interest in subsidiaries that collectively own and operate its Uruguayan timberlands and manufacturing business. The transaction is subject to customary purchase price adjustments, including adjustments relating to working capital, harvest limitations and timber inventory amounts, as well as standard operating covenants, casualty loss provisions, indemnities and closing conditions, including regulatory review. The sale is expected to close in the second half of 2017.

The assets and liabilities of our Uruguayan timberlands and manufacturing business now meet the criteria under generally accepted accounting principles to be classified as held for sale. This designation causes us to show the related assets and liabilities of the Uruguayan business separately on the current period Consolidated Balance Sheet, but does not affect prior period balance sheet classifications. Additionally, the designation as held for sale requires us to record the related net assets at the lower of their current cost basis or fair value, less an amount of estimated selling costs, and thus we recognized a noncash pretax impairment charge. The related impairment charge of $147 million was recorded during second quarter 2017 (refer to Note 15: Charges for Integration and Restructuring, Closures and Asset Impairments). Other than the impairment charge and the cessation of certain costs associated with held for sale classification, this classification does not affect the presentation in the Consolidated Statement of Operations.

As of June 30, 2017, "Assets held for sale" had a balance of $411 million, which consisted of $41 million related to Inventories and other assets as well as $370 million related to Timberlands and Property and equipment, net, after an impairment of $147 million. The related "Liabilities held for sale" of $19 million consisted of Accounts payable and other liabilities.

The sale of our Uruguayan operations is not considered a strategic shift that has or will have a major effect on our operations or financial results and therefore does not meet the requirements for presentation as discontinued operations.

DISCONTINUED OPERATIONS

During 2016, we entered into three separate transactions to sell our Cellulose Fibers business. As a result of these transactions, the company recognized a pretax gain on disposition of $789 million and total cash proceeds of $2.5 billion in the second half of 2016. These transactions consisted of:


•	sale of our Cellulose Fibers liquid packaging board business to Nippon Paper Industries Co., Ltd, which closed on August 31, 2016;


•	sale of our Cellulose Fibers printing papers joint venture to One Rock Capital Partners, LLC, which closed on November 1, 2016; and


•	sale of our Cellulose Fibers pulp business to International Paper, which closed on December 1, 2016.

The results of operations for our pulp and liquid packaging board businesses, along with our interest in our printing papers joint venture, were reclassified to discontinued operations during our 2016 reporting year. These results have been summarized in "Earnings from discontinued operations, net of income taxes" on our Consolidated Statement of Operations for each period presented. We did not reclassify our Consolidated Statement of Cash Flows to reflect discontinued operations.

The following table presents net earnings from discontinued operations. As all discontinued operations were sold in 2016, no assets or liabilities remain as of June 30, 2017, or December 31, 2016.



	QUARTER ENDED			YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2016			JUNE 2016
Total net sales	$	456		$	886
Costs of products sold	374			760
Gross margin	82			126
Selling expenses	3			7
General and administrative expenses	8			17
Research and development expenses	2			3
Charges for integration and restructuring, closures and asset impairments⁽¹⁾	25			31
Other operating income, net	(10		)	(19		)
Operating income	54			87
Equity loss from joint venture	(1		)	(3		)
Interest expense, net of capitalized interest	(1		)	(3		)
Earnings from discontinued operations before income taxes	52			81
Income taxes	(14		)	(23		)
Net earnings from discontinued operations	$	38		58


(1)	Charges relate to our strategic evaluation of the Cellulose Fibers businesses and transaction-related costs.

Cash flows from discontinued operations for the three and six months ended June 30, 2016, are as follows:



	QUARTER ENDED			YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2016			JUNE 2016
Net cash provided by (used in) operating activities	$	68		$	134
Net cash provided by (used in) investing activities	$	(12	)	$	(34	)