BUSINESS SEGMENTS

Reportable business segments are determined based on the company’s "management approach," as defined by FASB ASC 280, “Segment Reporting.” The management approach 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	SEPTEMBER 2017			SEPTEMBER 2016			SEPTEMBER 2017			SEPTEMBER 2016
Sales to unaffiliated customers:
Timberlands	$	491		$	484		$	1,446		$	1,342
Real Estate & ENR	82			48			181			125
Wood Products	1,299			1,177			3,746			3,302
	1,872			1,709			5,373			4,769
Intersegment sales:
Timberlands	179			216			544			631
Wood Products	—			17			—			61
	179			233			544			692
Total sales	2,051			1,942			5,917			5,461
Intersegment eliminations	(179		)	(233		)	(544		)	(692		)
Total	$	1,872		$	1,709		$	5,373		$	4,769
Net contribution to earnings:
Timberlands ⁽¹⁾	$	131		$	122		$	267		$	376
Real Estate & ENR⁽²⁾	47			15			96			42
Wood Products ⁽³⁾	40			170			389			413
	218			307			752			831
Unallocated items⁽⁴⁾	(17		)	(9		)	(113		)	(91		)
Net contribution to earnings	201			298			639			740
Interest expense, net of capitalized interest	(98		)	(114		)	(297		)	(323		)
Earnings from continuing operations before income taxes	103			184			342			417
Income taxes	27			(22		)	(31		)	(64		)
Earnings from continuing operations	130			162			311			353
Earnings from discontinued operations, net of income taxes ⁽⁵⁾	—			65			—			123
Net earnings	130			227			311			476
Dividends on preference shares	—			—			—			(22		)
Net earnings attributable to Weyerhaeuser common shareholders	$	130		$	227		$	311		$	454

(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 was a result of our agreement to sell our Uruguayan operations, which was announced in June 2017 and completed on September 1, 2017. Refer to Note 3: Discontinued Operations and Other Divestitures 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 pretax charges of $190 million and $240 million incurred in the quarter and year-to-date period ended September 30, 2017, respectively, to accrue for estimated costs to remediate an issue with certain I-joists coated with our Flak Jacket® Protection product. Refer to Note 16: Charges for Product Remediation 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: Discontinued Operations and Other Divestitures for more information regarding our discontinued operations.