UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________________________________

FORM 10-Q

__________________________________________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~JUNE 30, 2017~~MARCH 31, 2018



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 1-4825

__________________________________________________

WEYERHAEUSER COMPANY

__________________________________________________



Washington		91-0470860
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

220 Occidental Avenue South Seattle, Washington		98104-7800
(Address of principal executive offices)		(Zip Code)

(206) 539-3000

(Registrant’s telephone number, including area code)

__________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer o Non-accelerated filer o

Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

As of ~~July 24, 2017, 752,940,643~~April 23, 2018, 757,013,955 shares of the registrant’s common stock ($1.25 par value) were outstanding.

TABLE OF CONTENTS



PART I	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS:
	CONSOLIDATED STATEMENT OF OPERATIONS	1
	CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	2
	CONSOLIDATED BALANCE SHEET	3
	CONSOLIDATED STATEMENT OF CASH FLOWS	4
	INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	5
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)	1917
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3428
ITEM 4.	CONTROLS AND PROCEDURES	3528

PART II	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	3528
ITEM 1A.	RISK FACTORS	3528
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	3528
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	3528
~~ITEM~~ ITEM��4.	MINE SAFETY DISCLOSURES	3528
ITEM 5.	OTHER INFORMATION	3628
ITEM 6.	EXHIBITS	3730
	SIGNATURE	3831

FINANCIAL INFORMATION

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)


	QUARTER ENDED						YEAR-TO-DATE ENDED						QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES	JUNE 2017			JUNE 2016			JUNE 2017			JUNE 2016			MARCH 2018			MARCH 2017
Net sales	$	1,808		$	1,655		$	3,501		$	3,060
Net sales (Note 3)													$	1,865		$	1,693
Costs of products sold	1,336			1,271			2,608			2,374			1,348			1,272
Gross margin	472			384			893			686			517			421
Selling expenses	22			22			44			45			23			22
General and administrative expenses	76			94			163			173			78			87
Research and development expenses	4			4			8			9			2			4
Charges for integration and restructuring, closures and asset impairments (Note 15)	151			14			164			125			2			13
Other operating costs (income), net (Note 16)	62			2			64			(53		)
Charges (recoveries) for product remediation (Note 16)													(20		)	—
Other operating costs, net (Note 17)													28			2
Operating income	157			248			450			387			404			293
Equity earnings from joint ventures (Note 7)	—			7			—			12
Non-operating pension and other postretirement benefit (costs) credits	(8		)	10			(30		)	24
Non-operating pension and other postretirement benefit costs													(24		)	(22		)
Interest income and other	9			10			18			19			12			9
Interest expense, net of capitalized interest	(100		)	(114		)	(199		)	(209		)	(93		)	(99		)
Earnings from continuing operations before income taxes	58			161			239			233
Income taxes (Note 17)	(34		)	(31		)	(58		)	(42		)
Earnings from continuing operations	24			130			181			191
Earnings from discontinued operations, net of income taxes (Note 3)	—			38			—			58
Earnings before income taxes													299			181
Income taxes (Note 18)													(30		)	(24		)
Net earnings	24			168			181			249			$	269		$	157
Dividends on preference shares (Note 5)	—			(11		)	—			(22		)
Net earnings attributable to Weyerhaeuser common shareholders	$	24		$	157		$	181		$	227
Earnings per share attributable to Weyerhaeuser common shareholders, basic and diluted (Note 5):
Continuing operations	$	0.03		$	0.16		$	0.24		$	0.25
Discontinued operations	—			0.05			—			0.08
Net earnings per share	$	0.03		$	0.21		$	0.24		$	0.33
Earnings per share, basic and diluted (Note 5)													$	0.35		$	0.21
Dividends paid per share	$	0.31		$	0.31		$	0.62		$	0.62		$	0.32		$	0.31
Weighted average shares outstanding (in thousands) (Note 5):
Basic	752,630			743,140			751,674			687,572			756,815			750,665
Diluted	756,451			747,701			755,625			691,060			759,462			754,747

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)


	QUARTER ENDED						YEAR-TO-DATE ENDED						QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2017			JUNE 2016			JUNE 2017			JUNE 2016			MARCH 2018			MARCH 2017
Net earnings	$	24		$	168		$	181		$	249		$	269		$	157
Other comprehensive income (loss):
Foreign currency translation adjustments	9			(2		)	11			39			(15		)	2
Actuarial gains, net of tax expense of $24, $17, $50 and $25	43			31			72			41
Prior service costs, net of tax benefit of $1, $1, $1 and $0	(3		)	—			(4		)	(2		)
Amortization of net pension and other postretirement benefits actuarial loss, net of tax expense of $19 and $26													54			29
Amortization of net prior service credit, net of tax benefit of $0 and $0													(1		)	(1		)
Unrealized gains on available-for-sale securities	—			1			1			1			—			1
Total other comprehensive income	49			30			80			79			38			31
Total comprehensive income	$	73		$	198		$	261		$	328		$	307		$	188

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED BALANCE SHEET

(UNAUDITED)


DOLLAR AMOUNTS IN MILLIONS	JUNE 30, 2017			DECEMBER 31, 2016			MARCH 31, 2018			DECEMBER 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	701		$	676		$	598		$	824
Receivables, less discounts and allowances of $1 and $1	442			390			481			396
Receivables for taxes	8			84			24			14
Inventories (Note 6)	349			358			445			383
Prepaid expenses and other current assets	177			114			118			98
Assets held for sale (Note 3)	411			—
Current restricted financial investments held by variable interest entities (Note 7)							253			—
Total current assets	2,088			1,622			1,919			1,715
Property and equipment, less accumulated depreciation of $3,319 and $3,306	1,534			1,562
Property and equipment, less accumulated depreciation of $3,354 and $3,338							1,573			1,618
Construction in progress	190			213			275			225
Timber and timberlands at cost, less depletion charged to disposals	13,669			14,299
Timber and timberlands at cost, less depletion							12,888			12,954
Minerals and mineral rights, less depletion	314			319			306			308
Investments in and advances to joint ventures (Note 7)	33			56
Goodwill	40			40			40			40
Deferred tax assets	261			293			244			268
Other assets	246			224			278			316
Restricted financial investments held by variable interest entities	615			615
Restricted financial investments held by variable interest entities (Note 7)							362			615
Total assets	$	18,990		$	19,243		$	17,885		$	18,059

LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt (Note 10)	$	668		$	281		$	—		$	62
Current debt (nonrecourse to the company) held by variable interest entities (Note 7)							209			209
Accounts payable	252			233			245			249
Accrued liabilities (Note 9)	585			692			457			645
Liabilities held for sale (Note 3)	19			—
Total current liabilities	1,524			1,206			911			1,165
Long-term debt (Note 10)	5,936			6,329			5,928			5,930
Long-term debt (nonrecourse to the company) held by variable interest entities	511			511
Long-term debt (nonrecourse to the company) held by variable interest entities (Note 7)							302			302
Deferred pension and other postretirement benefits (Note 8)	1,230			1,322			1,454			1,487
Deposit from contribution of timberlands to related party (Note 7)	419			426
Other liabilities	280			269			299			276
Total liabilities	9,900			10,063			8,894			9,160
Commitments and contingencies (Note 12)

Equity:
Common shares: $1.25 par value; authorized 1,360,000,000 shares; issued and outstanding: 752,711,155 and 748,528,131 shares	941			936
Common shares: $1.25 par value; authorized 1,360,000,000 shares; issued and outstanding: 756,699,978 and 755,222,727 shares							946			944
Other capital	8,374			8,282			8,466			8,439
Retained earnings	1,154			1,421			1,365			1,078
Cumulative other comprehensive loss (Note 13)	(1,379		)	(1,459		)
Accumulated other comprehensive loss (Note 13)							(1,786		)	(1,562		)
Total equity	9,090			9,180			8,991			8,899
Total liabilities and equity	$	18,990		$	19,243		$	17,885		$	18,059

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


	YEAR-TO-DATE ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2017			JUNE 2016			MARCH 2018			MARCH 2017
Cash flows from operations:
Net earnings	$	181		$	249		$	269		$	157
Noncash charges (credits) to earnings:
Noncash charges to earnings:
Depreciation, depletion and amortization	262			289			120			133
Basis of real estate sold	24			30			12			14
Deferred income taxes, net	6			56			10			3
Gains on sales of non-strategic assets	(9		)	(51		)
Pension and other postretirement benefits (Note 8)	47			5			34			32
Share-based compensation expense	19			40			9			10
Charges for impairment of assets	147			15
Equity (earnings) loss from joint ventures (Note 7)	—			(9		)
Foreign exchange transaction (gains) losses (Note 16)	3			(12		)
Foreign exchange transaction losses (Note 17)							2			3
Change in:
Receivables less allowances	(78		)	(90		)
Receivable/payable for taxes	(53		)	35
Receivables, less allowances							(83		)	(70		)
Receivables and payables for taxes							5			(36		)
Inventories	(7		)	17			(66		)	(28		)
Prepaid expenses	(13		)	(1		)	(5		)	(9		)
Accounts payable and accrued liabilities	55			36			(173		)	(137		)
Pension and postretirement contributions (Note 8)	(37		)	(29		)
Distributions of earnings received from joint ventures	—			5
Pension and postretirement benefit contributions and payments							(16		)	(22		)
Other	(23		)	(46		)	18			(15		)
Net cash from operations	524			539			136			35
Cash flows from investing activities:
Capital expenditures for property and equipment	(126		)	(140		)	(61		)	(52		)
Capital expenditures for timberlands reforestation	(36		)	(34		)	(20		)	(23		)
Acquisition of timberlands	—			(8		)
Proceeds from sale of non-strategic assets	12			83
Proceeds from contribution of timberlands to related party	—			440
Distributions of investment received from joint ventures (Note 7)	23			27
Cash and cash equivalents acquired in Plum Creek merger (Note 4)	—			9
Proceeds from sale of nonstrategic assets							2			8
Other	21			(3		)	3			(1		)
Cash from (used in) investing activities	(106		)	374
Net cash used in investing activities							(76		)	(68		)
Cash flows from financing activities:
Cash dividends on common shares	(466		)	(469		)	(242		)	(233		)
Cash dividends on preference shares	—			(11		)
Proceeds from issuance of long-term debt	—			1,398
Payments of debt	—			(723		)
Repurchase of common stock	—			(1,629		)
Payments of long-term debt (Note 10)							(62		)	—
Proceeds from exercise of stock options	81			12			25			55
Other	(8		)	(11		)	(7		)	(10		)
Cash used in financing activities	(393		)	(1,433		)
Net cash used in financing activities							(286		)	(188		)

Net change in cash and cash equivalents	25			(520		)	(226		)	(221		)

Cash and cash equivalents from continuing operations at beginning of period	676			1,011
Cash and cash equivalents from discontinued operations at beginning of period	—			1
Cash and cash equivalents at beginning of period	676			1,012			824			676

Cash and cash equivalents from continuing operations at end of period	701			485
Cash and cash equivalents from discontinued operations at end of period	—			7
Cash and cash equivalents at end of period	$	701		$	492		$	598		$	455

Cash paid (received) during the period for:
Interest, net of amount capitalized of $5 and $3	$	192		$	225
Cash paid during the period for:
Interest, net of amount capitalized of $3 and $3							$	105		$	120
Income taxes	$	106		$	(25	)	$	17		$	59

See accompanying Notes to Consolidated Financial Statements.

INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1:	BASIS OF PRESENTATION	6

NOTE 2:	BUSINESS SEGMENTS	76

NOTE 3:	~~HELD FOR SALE AND DISCONTINUED OPERATIONS~~REVENUE	87

NOTE 4:	~~MERGER WITH PLUM CREEK~~OPERATIONS DIVESTED	109

NOTE 5:	NET EARNINGS PER SHARE	10

NOTE 6:	INVENTORIES	1110

NOTE 7:	~~RELATED PARTIES~~SPECIAL-PURPOSE ENTITIES	11

NOTE 8:	PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS	1211

NOTE 9:	ACCRUED LIABILITIES	1312

NOTE 10:	LONG-TERM DEBT AND LINES OF CREDIT	1312

NOTE 11:	FAIR VALUE OF FINANCIAL INSTRUMENTS	1312

NOTE 12:	LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES	1413

NOTE 13:	~~CUMULATIVE~~ACCUMULATED OTHER COMPREHENSIVE ~~INCOME (LOSS)~~LOSS	1514

NOTE 14:	SHARE-BASED COMPENSATION	1514

NOTE 15:	CHARGES FOR INTEGRATION AND RESTRUCTURING, CLOSURES AND ASSET IMPAIRMENTS	1615

NOTE 16:	~~OTHER OPERATING COSTS (INCOME), NET~~CHARGES (RECOVERIES) FOR PRODUCT REMEDIATION	1715

NOTE 17:	OTHER OPERATING COSTS, NET	16

NOTE 18:	INCOME TAXES	1816

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE ~~QUARTERS~~QUARTER ENDED MARCH 31, 2018 AND ~~YEARS-TO-DATE ENDED JUNE 30,~~ 2017 ~~AND 2016~~

NOTE 1: BASIS OF PRESENTATION

We are a corporation that has elected to be taxed as a real estate investment trust (REIT). We expect to derive most of our REIT income from investments in timberlands, including the sale of standing timber. As a REIT, we generally are not subject to federal corporate level income taxes on REIT taxable income that is distributed to shareholders. We are required to pay corporate income taxes on earnings of our taxable REIT subsidiaries (TRSs), which includes our Wood Products segment and portions of our Timberlands and Real Estate, Energy and Natural Resources (Real Estate & ENR) segments.

Our consolidated financial statements provide an overall view of our results of operations and financial condition. They include our accounts and the accounts of entities we control, including:

majority-owned domestic and foreign subsidiaries and

variable interest entities in which we are the primary beneficiary.

They do not include our intercompany transactions and accounts, which are eliminated.

We account for investments in and advances to unconsolidated equity affiliates using the equity method, with taxes provided on undistributed earnings. This means that we record earnings and accrue taxes in the period earnings are recognized by our unconsolidated equity affiliates.

Throughout these Notes to Consolidated Financial Statements, unless specified otherwise, references to “Weyerhaeuser,” “we,” “the company” and “our” refer to the consolidated company.

The accompanying unaudited Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. Except as otherwise disclosed in these Notes to Consolidated Financial Statements, such adjustments are of a normal, recurring nature. The Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Certain information and footnote disclosures normally included in our annual Consolidated Financial Statements have been condensed or omitted. These quarterly Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. Results of operations for interim periods should not necessarily be regarded as indicative of the results that may be expected for the full year.

~~RECLASSIFICATIONS~~

We have reclassified certain balances and results from the prior year to be consistent with our 2017 reporting. This makes year-to-year comparisons easier. Our reclassifications had no effect on consolidated net earnings or equity. Our reclassifications present the adoption of new accounting pronouncements on our ~~Consolidated Statement of Operations~~ ~~and in the related footnotes. Refer to discussion of new accounting pronouncements below.~~

NEW ACCOUNTING PRONOUNCEMENTS

Leases

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, a comprehensive new revenue recognition model that requires an entity to recognize revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In August 2015, FASB issued ASU 2015-14, which deferred the effective date for an additional year. In March 2016, FASB issued ASU 2016-08, which does not change the core principle of the guidance; however, it does clarify the implementation guidance on principal versus agent considerations. In April 2016, FASB issued ASU 2016-10, which clarifies two aspects of ASU 2014-09: identifying performance obligations and the licensing implementation guidance. In May 2016, FASB issued ASU 2016-12, which amends ASU 2014-09 to provide improvements and practical expedients to the new revenue recognition model. In December 2016, the FASB issued ASU 2016-20, which amends ASU 2014-09 for technical corrections and to correct for unintended application of the guidance. In February 2017, FASB issued ASU 2017-05, which clarifies the scope of ASC 610-20 and impacts accounting for partial sales of nonfinancial assets.

The company expects to adopt and implement the new revenue recognition guidance effective January 1, 2018. The new standard is required to be applied retrospectively to each prior reporting period presented (full retrospective transition method) or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application (cumulative effect method). We expect to adopt using the cumulative effect method. We expect that the adoption of the new revenue recognition guidance will not materially impact our operating results, balance sheet, or cash flows. We expect an impact to our financial reporting from adding expanded disclosures.

In July 2015, FASB issued ASU 2015-11, which simplifies the measurement of inventories valued under most methods, including our inventories valued under FIFO – the first-in, first-out – and moving average cost methods. Inventories valued under LIFO – the last-in, first-out method – are excluded. Under this new guidance, inventories valued under these methods would be valued at the lower of cost or net realizable value, with net realizable value defined as the estimated selling price less reasonable costs to sell the inventory. We adopted on January 1, 2017, and determined this pronouncement does not have a material impact on our consolidated financial statements and related disclosures.

~~In February 2016, FASB issued ASU~~ 2016-02, which requires lessees to recognize assets and liabilities for the rights and obligations created by those leases and requires ~~both capital and operating~~ leases to be recognized on the balance sheet. The new guidance is effective for fiscal years beginning after December 15, 2018, and early adoption is permitted. We expect to adopt on January 1, ~~2019,~~2019. We are still evaluating certain aspects of the revised guidance and ~~are evaluating~~subsequent revisions either made or being contemplated by the ~~impact on our consolidated financial statements and related disclosures.~~

~~In October 2016,~~ FASB, ~~issued ASU 2016-16, which requires immediate~~including application of the available practical expedients. We expect the adoption to result in the recognition of the ~~income tax consequences upon intra-entity transfers~~present value of ~~assets other than inventory. The new guidance is effective for annual periods beginning after December 15, 2017, and early adoption is permitted. We adopted this accounting standard~~the future commitments on January 1, 2017. As a result of this adoption, our opening balance sheet was adjusted through "Retained earnings" to include a deferred tax asset of $22 million for prior period intra-entity transfers. Adoption of this standard did not have a material impactoperating leases on ~~our~~ ~~Consolidated Statement of Cash Flows~~ or ~~Consolidated Statement of Operations~~.

~~In March 2017, FASB issued ASU 2017-07, which requires that an employer report the service cost component of pension and other postretirement benefit costs in the~~ ~~Consolidated Statement of Operations~~ in the same line item or items as other compensation costs arising from services rendered by the pertinent employees. This requirement is consistent with how we have historically presented our pension service costs. The other requirement of this ASU is to present the remaining components of pension and other postretirement benefit costs (i.e., interest, expected return on plan assets, amortization of actuarial gains or losses, and amortization of prior service credits or costs) in the ~~Consolidated Statement of Operations~~ separately from the service cost component and outside a subtotal of income from operations. The new guidance is effective for annual periods beginning after December 15, 2017, and early adoption is permitted. We adopted this accounting standard as of January 1, 2017. As a result, we reclassified amounts related to other components of pension and other post retirement benefit costs from their prior financial statements captions ("Costs of products sold," "General and administrative expenses," and "Other operating costs (income), net") into a new financial statement caption titled "Non-operating pension and other postretirement benefit (costs) credits" in our ~~Consolidated Statement of Operations. The adoption of this ASU did not impact "Net earnings," nor did it impact~~ our Consolidated Balance Sheet.

Reclassification of Certain Amounts from Accumulated Other Comprehensive Loss

In February 2018, the FASB issued ASU 2018-02, which allows for the reclassification of certain income tax effects related to the Tax Cuts and Jobs Act (the "Tax Act") between “Accumulated other comprehensive loss” and “Retained earnings.” This ASU provides that adjustments to deferred tax liabilities and assets related to a change in tax laws be included in “Income from continuing operations”, even in situations where the related items were originally recognized in “Other comprehensive income.” The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. Adoption of this ASU is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the tax laws was recognized. We adopted this ASU during first quarter 2018 using the period of adoption method, which resulted in a reclassification of $253 million from "Accumulated other comprehensive loss" to "Retained earnings" on our Consolidated Balance Sheetdue to changes in federal statutory and effective state rates. In general, tax effects unrelated to the Tax Cuts and Jobs Act are released from accumulated other comprehensive loss using the portfolio approach.

In January 2016, the FASB issued ASU No. 2016-01, which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. We adopted ASU 2016-01 in first quarter 2018, which resulted in a reclassification of accumulated unrealized gains on available-for-sale securities of $9 million from "Accumulated other comprehensive loss" to "Retained earnings" on our Consolidated Balance Sheet.

NOTE 2: BUSINESS SEGMENTS

Reportable business segments are determined based on the company’s ~~management approach. The management~~"management approach," as defined by FASB ASC 280, “Segment ~~Reporting,~~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; 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~~A reconciliation of our business segment information to the respective information in the Consolidated ~~Statements~~Statement of Operations is as follows:


	QUARTER ENDED						YEAR-TO-DATE ENDED						QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2017			JUNE 2016			JUNE 2017			JUNE 2016			MARCH 2018			MARCH 2017
Sales to unaffiliated customers:
Sales to unaffiliated customers (Note 3):
Timberlands	$	469		$	471		$	955		$	858		$	505		$	486
Real Estate & ENR	46			38			99			77			51			53
Wood Products	1,293			1,146			2,447			2,125			1,309			1,154
	1,808			1,655			3,501			3,060			1,865			1,693
Intersegment sales:
Timberlands	163			193			365			415			228			202
Wood Products	—			22			—			44
	163			215			365			459
Total sales	1,971			1,870			3,866			3,519			2,093			1,895
Intersegment eliminations	(163		)	(215		)	(365		)	(459		)	(228		)	(202		)
Total	$	1,808		$	1,655		$	3,501		$	3,060		$	1,865		$	1,693
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
Timberlands													$	189		$	148
Real Estate & ENR⁽¹⁾													25			26
Wood Products													270			172
	188			293			534			524			484			346
Unallocated items⁽⁴⁾	(30		)	(18		)	(96		)	(82		)
Unallocated items⁽²⁾													(92		)	(66		)
Net contribution to earnings	158			275			438			442			392			280
Interest expense, net of capitalized interest	(100		)	(114		)	(199		)	(209		)	(93		)	(99		)
Earnings from continuing operations before income taxes	58			161			239			233
Earnings before income taxes													299			181
Income taxes	(34		)	(31		)	(58		)	(42		)	(30		)	(24		)
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			$	269		$	157
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 Operationsfor 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)~~(2)	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 expenses, pension and postretirement costs, foreign exchange transaction gains and losses ~~associated with financing,~~ and the elimination of intersegment profit in inventory and LIFO.

NOTE 3: REVENUE

A majority of our revenue is derived from sales of delivered logs and manufactured wood products. We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018, using the cumulative effect method. The adoption of the new revenue recognition guidance did not materially impact our Consolidated Statement of Operations, Consolidated Balance Sheet, or Consolidated Statement of Cash Flows.

PERFORMANCE OBLIGATIONS

A performance obligation, as defined in ASC Topic 606, is a promise in a contract to transfer a distinct good or service to a customer. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue at the point in time, or over the period, in which the performance obligation is satisfied.

Performance obligations associated with delivered log sales are typically satisfied when the logs are delivered to our customers’ mills or delivered to an ocean vessel in the case of export sales. Performance obligations associated with the sale of wood products are typically satisfied when the products are shipped. Customers are generally invoiced shortly after logs are delivered or after wood products are shipped, with payment generally due within a month or less of the invoice date. ASC Topic 606 requires entities to consider significant financing components of contracts with customers, though allows for the use of a practical expedient when the period between satisfaction of a

performance obligation and payment receipt is one year or less. Given the nature of our revenue transactions, we have elected to utilize this practical expedient.

Performance obligations associated with real estate sales are generally met when placed into escrow and all conditions of closing have been satisfied.

CONTRACT ESTIMATES

Substantially all of the company’s performance obligations are satisfied as of a point in time. Therefore, there is little judgment in determining when control transfers for our business segments as described above.

The transaction price for log sales generally equals the amount billed to our customer for logs delivered during the accounting period. For the limited number of log sales subject to a long-term supply agreement, the transaction price is variable but is known at the time of billing. For wood products sales, the transaction price is generally the amount billed to the customer for the products shipped but may be reduced slightly for estimated cash discounts and rebates.

There are no significant contract estimates related to the real estate business.

CONTRACT BALANCES

In general, customers are billed and a receivable is recorded as we ship and/or deliver wood products and logs. We generally receive payment shortly after products have been received by our customers. Contract asset and liability balances are immaterial.

For real estate sales, the company receives the entire consideration in cash at closing.

MAJOR PRODUCTS

A reconciliation of revenue recognized by our major products:



	QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	MARCH 2018		MARCH 2017
Net sales:
Timberlands Segment
Delivered logs⁽¹⁾:
West
Domestic sales	$	137	$	119
Export sales	129		106
Subtotal West	266		225
South	157		148
North	25		27
Other	14		20
Subtotal delivered logs sales	462		420
Stumpage and pay-as-cut timber	15		12
Recreational and other lease revenue	14		14
Other⁽²⁾	14		40
Net sales attributable to Timberlands segment	505		486
Real Estate & ENR Segment
Real estate	34		37
Energy and natural resources	17		16
Net sales attributable to Real Estate & ENR segment	51		53
Wood Products Segment
Structural lumber	569		478
Engineered solid section	129		117
Engineered I-joists	78		73
Oriented strand board	232		203
Softwood plywood	50		44
Medium density fiberboard	43		47
Complementary building products	137		122
Other	71		70
Net sales attributable to Wood Products segment	1,309		1,154
Total net sales	$	1,865	$	1,693

(1)

The West region includes Washington and Oregon. The South region includes Virginia, North Carolina, South Carolina, Florida, Georgia, Alabama, Mississippi, Louisiana, Arkansas, Texas and Oklahoma. The North region includes West Virginia, Maine, New Hampshire, Vermont, Michigan, Wisconsin and Montana. Other includes our Canadian operations and managed Twin Creeks Venture. Our management agreement for the ~~LIFO reserve. Additionally, amounts shown for~~Twin Creeks Venture began in April 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.~~terminated in December 2017.

~~(5)~~(2)

~~Discontinued operations~~Other Timberlands sales include sales of seeds and seedlings, chips, as ~~presented herein consist of the operations of~~well as sales from our former ~~Cellulose Fibers segment.~~Uruguayan operations (sold during third quarter 2017). Our former Uruguayan operations included logs, plywood and hardwood lumber harvested or produced. Refer to Note ~~3: Held~~4: Operations Divested for ~~Sale and Discontinued Operationsfor more information regarding our discontinued operations.~~further information.

NOTE 3:~~HELD FOR SALE AND DISCONTINUED~~4: OPERATIONS

~~OPERATIONS HELD FOR SALE~~ DIVESTED

On October 12, 2016, we announced the exploration of strategic alternatives for our Uruguay timberlands and manufacturing operations, which iswas 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 the subsidiaries that collectively ~~own~~owned and ~~operate~~operated 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.operations.

~~The assets~~On September 1, 2017, we completed the sale of our Uruguay timberlands and ~~liabilities~~manufacturing operations for approximately $403 million of cash proceeds. Due to the $147 million impairment 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 wasoperations 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~~no material gain or loss was recorded as a result of ~~certain costs associated with held for sale classification,~~ this ~~classification does not affect the presentation in the~~ ~~Consolidated Statement of Operations~~.sale.

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 iswas not considered a strategic shift that ~~has~~had or will have a major effect on our operations or financial results, and therefore ~~does~~did 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 )

~~NOTE 4:MERGER WITH PLUM CREEK~~

On February 19, 2016, we merged with Plum Creek Timber Company, Inc. (Plum Creek). Plum Creek was a REIT that primarily owned and managed timberlands in the United States. Plum Creek also produced wood products, developed opportunities for mineral and other natural resource extraction, and sold real estate properties.

~~The acquisition of total assets of $10.0 billion was a noncash investing and financing activity comprised of $6.4 billion in equity consideration transferred and $3.6 billion of liabilities assumed.~~

~~Summarized unaudited pro forma information that presents combined amounts as if this merger occurred at the beginning of 2016 is as follows:~~

QUARTER ENDED YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES JUNE 2016 JUNE 2016
Net sales $ 1,655
$ 3,216
Net earnings from continuing operations attributable to Weyerhaeuser common shareholders $ 122
$ 266
Earnings from continuing operations per share attributable to Weyerhaeuser common shareholders, basic and diluted $ 0.16
$ 0.35

Pro forma "Net earnings from continuing operations attributable to Weyerhaeuser common shareholders" excludes $3 million and $134 million non-recurring merger-related costs (net of tax) incurred in the quarter and year-to-date ended June 30, 2016, respectively. Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.

NOTE 5: NET EARNINGS PER SHARE

Our basic and diluted earnings per share ~~attributable to Weyerhaeuser shareholders~~ were:

$~~0.03~~0.35 during ~~second~~first quarter ~~2017 and $0.24 during year-to-date 2017;~~2018 and

$0.21 during ~~second~~first quarter ~~2016 and $0.33 during year-to-date 2016.~~2017.

Basic earnings per share is net earnings ~~available to common shareholders~~ divided by the weighted average number of our outstanding common shares, including stock equivalent units where there is no circumstance under which those shares would not be issued.

Diluted earnings per share is net earnings ~~available to common shareholders~~ divided by the sum of the weighted average number of our outstanding common shares and the effect of our outstanding dilutive potential common shares:


	QUARTER ENDED		YEAR-TO-DATE ENDED		QUARTER ENDED
SHARES IN THOUSANDS	JUNE 2017	JUNE 2016	JUNE 2017	JUNE 2016	MARCH 2018	MARCH 2017
Weighted average number of outstanding common shares – basic	752,630	743,140	751,674	687,572
Weighted average common shares outstanding – basic					756,815	750,665
Dilutive potential common shares:
Stock options	2,845	3,061	2,913	2,398	1,682	2,981
Restricted stock units	488	1,075	518	678	569	547
Performance share units	488	425	520	412	396	554
Total effect of outstanding dilutive potential common shares	3,821	4,561	3,951	3,488	2,647	4,082
Weighted average number of outstanding common shares – dilutive	756,451	747,701	755,625	691,060
Weighted average common shares outstanding – dilutive					759,462	754,747

We use the treasury stock method to calculate the dilutive effect of our outstanding stock options, restricted stock units and performance share units. Share-based payment awards that are contingently issuable upon the achievement of specified performance or market conditions are included in our diluted earnings per share calculation in the period in which the conditions are satisfied.

Potential Shares Not Included in the Computation of Diluted Earnings per Share

The following shares were not included in the computation of diluted earnings per share because they were either antidilutive or the required performance or market conditions were not met. Some or all of these shares may be dilutive potential common shares in future periods.

QUARTER ENDED YEAR-TO-DATE ENDED
SHARES IN THOUSANDS JUNE 2017 JUNE 2016 JUNE 2017 JUNE 2016
Stock options 1,408
1,916
1,408
1,916
Performance share units 450
471
450
471
Preference shares —
25,273
—
25,273

We issued 13.8 million 6.375 percent Mandatory Convertible Preference Shares, Series A on June 24, 2013, the majority of which remained outstanding through June 30, 2016. Preference Shares outstanding during the quarter ended June 30, 2016, were considered antidilutive and were not considered participating. On July 1, 2016, all outstanding 6.375 percent Mandatory Convertible Preference Shares, Series A (Preference Shares) converted into Weyerhaeuser common shares at a rate of 1.6929 Weyerhaeuser common shares per Preference Share. There were no preference shares outstanding as of June 30, 2017.



	QUARTER ENDED
SHARES IN THOUSANDS	MARCH 2018	MARCH 2017
Stock options	1,301	1,432
Performance share units	744	568

NOTE 6: INVENTORIES

Inventories include raw materials, work-in-process, finished goods, and ~~finished goods.~~materials and supplies.


DOLLAR AMOUNTS IN MILLIONS	JUNE 30, 2017		DECEMBER 31, 2016		MARCH 31, 2018		DECEMBER 31, 2017
LIFO Inventories:
LIFO inventories:
Logs	$	5	$	18	$	19	$	17
Lumber, plywood and panels	52		51
Medium density fiberboard	9		10
Lumber, plywood, panels and fiberboard					76		66
Other products	21		10		16		10
FIFO or moving average cost inventories:
Logs	18		21		64		38
Lumber, plywood, panels and engineered wood products	81		71
Lumber, plywood, panels, fiberboard and engineered wood products					109		91
Other products	80		92		77		77
Materials and supplies	83		85		84		84
Total	$	349	$	358	$	445	$	383

LIFO – the last-in, first-out method – applies to major inventory products held at our U.S. ~~domestic~~ locations. The FIFO – the first-in, first-out method – or moving average cost methods apply to the balance of our ~~domestic~~U.S. raw material and product inventories, ~~as well as for~~ all material and supply inventories and all

foreign inventories. If we used FIFO for all LIFO inventories, our stated inventories would have been higher by $70 million as of ~~June 30, 2017,~~March 31, 2018, and ~~$71~~$70 million as of December 31, ~~2016.~~2017.

NOTE 7:~~RELATED PARTIES~~

~~This note provides details about our transactions with related parties. Our related parties consist of:~~

~~our Real Estate Development Ventures, which are accounted for using the equity method and~~

~~our Twin Creeks Venture.~~

~~Real Estate Development Ventures~~

WestRock-Charleston Land Partners, LLC (WR-CLP) is a limited liability company which holds residential and commercial real estate development properties, currently under development (Class A Properties) and higher-value timber and development lands (Class B Properties) (referred to collectively as the Real Estate Development Ventures). Our share of the equity earnings are included in the net contribution to earnings of our Real Estate & ENR segment. SPECIAL-PURPOSE ENTITIES

From 2002 through 2004, we sold certain nonstrategic timberlands in five separate transactions. We are the primary beneficiary and consolidate the assets and liabilities of certain monetization and buyer-sponsored Special-purpose entities (SPEs) involved in these transactions. We have an equity interest in the monetization SPEs, but no ownership interest in the buyer-sponsored SPEs. The ~~carrying amount~~long-term notes of our ~~investment~~monetization SPEs and the financial investments of our buyer-sponsored SPEs include $209 million and $253 million scheduled to mature in ~~WR-CLP is $33 million at June 30, 2017,~~fourth quarter 2018 and ~~$56 million at December 31, 2016. The change~~first quarter 2019, respectively. We have classified the long-term notes scheduled to mature in ~~our investment~~fourth quarter 2018 as current liabilities and the financial investments scheduled to mature in ~~WR-CLP during 2017 is due to a $23 million cash return of investment received during second~~first quarter ~~2017. We record our share of net earnings within "Equity earnings from joint ventures" in~~2019 as current receivables on our Consolidated ~~Statement of Operations~~Balance Sheet~~in the period which earnings are recorded by the affiliates. We did not have any equity earnings from joint ventures during second quarter or year-to-date 2017.~~.

~~Twin Creeks Venture~~

On April 1, 2016, we contributed approximately 260,000 acres of our southern timberlands with an agreed-upon value of approximately $560 million to Twin Creeks Timber, LLC (Twin Creeks Venture), in exchange for cash of approximately $440 million and a 21 percent ownership interest.

In conjunction with contributing to the venture, we entered into a separate agreement to manage the timberlands owned by the Twin Creeks Venture, including harvesting activities, marketing and log sales activities, and replanting and silviculture activities. This management agreement guarantees the Twin Creeks Venture an annual return equal to 3 percent of the contributed value of the managed timberlands in the form of minimum quarterly payments from Weyerhaeuser. We are also required to annually distribute 75 percent of any profits earned by us in excess of the minimum quarterly payments. The management agreement is cancellable at any time by Twin Creeks Timber, LLC, and otherwise will expire on April 1, 2019.

~~Changes in our "Deposit from contribution of timberlands to related party" balance during 2017 were as follows:~~

DOLLAR AMOUNTS IN MILLIONS
Balance at December 31, 2016 $ 426
Lease payments to Twin Creeks Venture (9 )
Distributions from Twin Creeks Venture 2
Balance at June 30, 2017 $ 419

NOTE 8: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The components of net periodic benefit costs ~~(credits)~~ are:


	PENSION												PENSION
	QUARTER ENDED						YEAR-TO-DATE ENDED						QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2017			JUNE 2016			JUNE 2017			JUNE 2016			MARCH 2018			MARCH 2017
Service cost⁽¹⁾	$	7		$	11		$	17		$	24		$	10		$	10
Interest cost	66			69			132			137			60			66
Expected return on plan assets	(103		)	(123		)	(205		)	(246		)	(100		)	(102		)
Amortization of actuarial loss	42			40			97			78			61			55
Amortization of prior service cost	1			1			2			2			1			1
Accelerated pension costs included in Plum Creek merger-related costs (Note 15)	—			—			—			5
Total net periodic benefit cost (credit) - pension	$	13		$	(2	)	$	43		$	—
Total net periodic benefit cost - pension													$	32		$	30


~~(1)~~	Service cost includes $3 million and $7 million for the quarter and year-to-date ended June 30, 2016, respectively, for employees that were part of our Cellulose Fibers divestitures. These charges are included in our results of discontinued operations.


	OTHER POSTRETIREMENT BENEFITS												OTHER POSTRETIREMENT BENEFITS
	QUARTER ENDED						YEAR-TO-DATE ENDED						QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2017			JUNE 2016			JUNE 2017			JUNE 2016			MARCH 2018			MARCH 2017
Interest cost	$	2		$	3		$	4		$	5		$	2		$	2
Amortization of actuarial loss	2			2			4			4			2			2
Amortization of prior service credit	(2		)	(2		)	(4		)	(4		)	(2		)	(2		)
Total net periodic benefit cost - other postretirement benefits	$	2		$	3		$	4		$	5		$	2		$	2

~~On January 1, 2017, we adopted ASU 2017-07, which affects where components~~For the periods presented, Service cost is included in "Cost of products sold," "Selling expenses," and "General and administrative expenses" and the remaining other items are included in "Non-operating pension and other postretirement ~~costs are presented on~~benefit costs." Refer to the Consolidated Statement of Operations. ~~Refer to~~ ~~Note 1: Basis of Presentation~~ ~~for further information.~~

FAIR VALUE OF PENSION PLAN ASSETS AND ~~OBLIGATION~~OBLIGATIONS

We estimate the fair value of pension plan assets based upon the information available during the year-end reporting process. In some cases, primarily private equity funds, the information available consists of net asset values as of an interim date, cash flows between the interim date and the end of the year and market events. We update the year-end estimated fair value of pension plan assets to incorporate year-end net asset values reflected in financial statements received after we have filed our Annual Report on Form 10-K. ~~During~~We expect to complete the valuation of our pension plan assets during the second quarter 2017, we recorded an increase in the fair value of the pension assets of $17 million, or less than 1 percent. We also updated our census data that is used to estimate our projected benefit obligation for our pension plans. As a result of that update, during second quarter 2017, we recorded a

~~decrease to the projected benefit obligation of $10 million, or less than 1 percent. The net effect was a $27 million improvement in the funded status compared to December 31, 2016.~~2018.

EXPECTED CONTRIBUTIONS AND BENEFIT PAYMENTS

In ~~2017~~2018 we expect to:

be required to contribute approximately $23 million for our Canadian registered plan;

be required to contribute or make benefit payments for our Canadian nonregistered plans of $3$4 million;

make benefit payments of ~~$26~~$19 million for our U.S. nonqualified pension plans; and

make benefit payments of ~~$21~~$19 million for our U.S. and Canadian other postretirement plans.

We do not anticipate ~~making~~being required to make a contribution to our U.S. qualified pension plans ~~for 2017.~~in 2018.

NOTE 9: ACCRUED LIABILITIES

Accrued liabilities were comprised of the following:


DOLLAR AMOUNTS IN MILLIONS	JUNE 30, 2017		DECEMBER 31, 2016		MARCH 31, 2018		DECEMBER 31, 2017
Wages, salaries and severance pay	$	118	$	178
Pension and other postretirement benefits	48		49
Vacation pay	35		33
Taxes – Social Security and real and personal property	31		20
Interest	118		120
Accrued income taxes					$	—	$	19
Customer rebates and volume discounts	39		39		32		48
Deferred income	64		40		31		48
Accrued income taxes	12		139
Product remediation accrual⁽¹⁾	50		—
Interest					84		111
Pension and other postretirement benefits					40		40
Product remediation accrual(Note 16)					43		98
Taxes – Social Security and real and personal property					27		24
Vacation pay					35		33
Wages, salaries and severance pay					86		150
Other	70		74		79		74
Total	$	585	$	692	$	457	$	645


~~(1)~~	~~In the second quarter of 2017, we recorded a $50 million accrual 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.~~

NOTE 10: LONG-TERM DEBT AND LINES OF CREDIT

During first quarter 2018, we paid our $62 million 7.00 percent debenture at maturity.

During March 2017, we entered into a new $1.5 billion five-year senior unsecured revolving credit facility that expires in March 2022. This replaced a $1$1.0 billion senior unsecured revolving credit facility that was set to expire September 2018. The entire amount is available to Weyerhaeuser Company. ~~Borrowings~~Interest on borrowings are at LIBOR plus a spread or at other interest rates mutually agreed upon between the borrower and the lending banks. ~~There~~As of March 31, 2018, there were no borrowings ~~or repayments under our revolving credit facility during year-to-date June 30, 2017.~~

Subsequent to our quarter ended June 30, 2017, but prior to the issuance of these financial statements, we prepaid a $550 million variable-rate term loan originally set to mature in 2020 (2020 term loan). The 2020 term loan was prepaid using available cash as well as borrowing proceeds from a new $225 million variable-rate term loan set to mature in 2026 (2026 term loan). Due to the use of available cash to settle a portion of the 2020 term loan, we have reclassified the related portion ($325 million) of the 2020 term loan outstanding at June 30, 2017, from "Long-term debt" to "Current maturities of long-term debt" on our current period ~~Consolidated Balance Sheet~~.outstanding.

NOTE 11: FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values and carrying values of our long-term debt consisted of the following:


	JUNE 30, 2017				DECEMBER 31, 2016				MARCH 31, 2018				DECEMBER 31, 2017
DOLLAR AMOUNTS IN MILLIONS	CARRYING VALUE		FAIR VALUE (LEVEL 2)		CARRYING VALUE		FAIR VALUE (LEVEL 2)		CARRYING VALUE		FAIR VALUE (LEVEL 2)		CARRYING VALUE		FAIR VALUE (LEVEL 2)
Long-term debt (including current maturities):
Long-term debt (including current maturities)⁽¹⁾:
Fixed rate	$	6,054	$	7,142	$	6,061	$	6,925	$	5,704	$	6,568	$	5,768	$	6,823
Variable rate	550		550		549		550		224		225		224		225
Total Debt	$	6,604	$	7,692	$	6,610	$	7,475
Total debt									$	5,928	$	6,793	$	5,992	$	7,048

(1) Excludes nonrecourse debt held by our Variable Interest Entities (VIEs).

To estimate the fair value of fixed rate long-term debt, we used the following valuation approaches:

market approach – based on quoted market prices we received for the same types and issues of our debt; or

income approach – based on the discounted value of the future cash flows using market yields for the same type and comparable issues of debt.

We believe that our variable rate long-term debt instruments have net carrying values that approximate their fair values with only insignificant differences.

The inputs to these valuations are based on market data obtained from independent sources or information derived principally from observable market data. The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at the measurement date.

FAIR VALUE OF OTHER FINANCIAL INSTRUMENTS

We believe that our other financial instruments, including cash and cash equivalents, short-term investments, mutual fund investments held in grantor trusts, receivables, and payables, have net carrying values that approximate their fair values with only insignificant differences. This is primarily due to the short-term nature of these instruments and the allowance for doubtful accounts.

NOTE 12: LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

We are party to various legal proceedings arising in the ordinary course of business. We are not currently a party to any legal proceeding that management believes could have a material adverse effect on our ~~long-term consolidated financial position, results~~Consolidated Balance Sheet, Consolidated Statement of ~~operations~~Operations, or ~~cash flows.~~Consolidated Statement of Cash Flows. See Note ~~17:~~18: Income Taxes for a discussion of a tax proceeding involving Plum ~~Creek REIT's~~Creek's 2008 U.S. federal income tax return.

ENVIRONMENTAL MATTERS

Site Remediation

Under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) – commonly known as the Superfund – and similar state laws, we:

are a party to various proceedings related to the cleanup of hazardous waste sites and

have been notified that we may be a potentially responsible party related to the cleanup of other hazardous waste sites for which proceedings have not yet been initiated.

We have received notification from the Environmental Protection Agency (the EPA) and have acknowledged that we are a potentially responsible party in a portion of the Kalamazoo River Superfund site in southwest Michigan. Our involvement in the remediation site is based on our former ownership of the Plainwell, Michigan mill located within the remediation site. Several other companies also ~~operated upstream pulp mills~~have been deemed potentially responsible parties as past or present owners or operators of facilities within the ~~remediation site.~~ site, or as arrangers under CERCLA.

We are currently cooperating with ~~the~~ other parties to jointly implement an administrative order issued by the EPA on April 14, 2016, with respect to a portion of the site comprising a stretch of the river approximately 1.7 miles long referred to as the Otsego Township Dam Area. We do not expect to incur material losses related to the implementation of this administrative ~~order; however, we may incur additional costs, as yet not specified, in connection with remediation tasks resulting from other areas of~~order.

In 2010, the ~~site. The~~ company, along with others, was named as a defendant by Georgia-Pacific Consumer Products LP, Fort James Corporation and Georgia-Pacific LLC in an action seeking contribution under CERCLA for remediation costs relating to a certain area within the site. ~~The trial has been concluded but a decision on cost contribution~~On March 29, 2018, the U.S. District Court issued an opinion and ~~allocation has not yet been rendered~~order assigning the company responsibility for five percent of approximately $50 million in past costs incurred by the ~~Court.~~plaintiffs. The remaining ninety-five percent of this pool of past costs incurred was allocated to the plaintiffs and other defendants.

The opinion and order does not establish allocation for future remediation costs, and accordingly, we may incur additional costs in connection with future remediation tasks for other areas of the site. In connection with the opinion and order, we have updated our assessment of the company’s reasonably possible estimated liability associated with the site and have recorded a pretax charge of $28 million in the first quarter as "Other operating costs, net" on the Consolidated Statement of Operations.

As of ~~June 30, 2017,~~March 31, 2018, our total accrual for future estimated remediation costs on the active Superfund sites and other sites for which we are potentially responsible was approximately ~~$47~~$72 million. These ~~reserves~~amounts are recorded in "Accrued liabilities" ~~(current)~~ and "Other liabilities" ~~(noncurrent)~~ on our Consolidated Balance Sheet.

Asset Retirement Obligations

We have obligations associated with the future retirement of tangible long-lived assets consisting primarily of reforestation obligations related to forest management licenses in Canada and obligations to close and cap landfills. As of ~~June 30, 2017,~~March 31, 2018, our accrued balance for these obligations was ~~$31~~$34 million. These obligations are recorded in "Accrued liabilities" ~~(current)~~ and "Other liabilities" ~~(noncurrent)~~ on our Consolidated Balance Sheet. The accruals have not changed materially since the end of ~~2016.~~2017.

Some of our sites have materials containing asbestos. We have met our current legal obligation to identify and manage these materials. In situations where we cannot reasonably determine when materials containing asbestos might be removed from the sites, we have not recorded an accrual because the fair value of the obligation cannot be reasonably estimated.

PRODUCT REMEDIATION ~~CONTINGENCY~~

In July 2017, the company announced it iswas implementing a solution to address concerns regarding our TJI® Joists with Flak Jacket® Protection product. The company has determined that an odor in certain newly constructed homes is related to a recent formula change to the Flak Jacket coating that included a formaldehyde-based resin. This issue is isolated to Flak Jacket product manufactured after December 1, 2016, and does not affect any of the company’s other products. ~~The company also announced it will cover the cost to either remediate or replace affected joists. The estimated range~~We recorded pretax charges of ~~costs to remediate or replace is $50~~$290 million to ~~$60 million. As of June 30, 2017, we have recorded a $50 million reserve~~accrue for remediation ~~costs. The charge is attributable~~costs in the year-to-date period ended December 31, 2017. We received insurance recoveries of $20 million during the quarter ended March 31, 2018. Refer to ~~our Wood Products segment and was recorded in "Other operating costs (income), net," on the~~ ~~Consolidated Statement of Operations.~~Note 16: Charges (Recoveries) for Product Remediation ~~The related accrual was recorded in "Accrued liabilities" on the~~ ~~Consolidated Balance Sheet~~.for further information.

NOTE 13: ~~CUMULATIVE~~ACCUMULATED OTHER COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

Changes in amounts included in our ~~cumulative~~accumulated other comprehensive ~~income (loss)~~loss by component are:


			PENSION						OTHER POSTRETIREMENT BENEFITS														PENSION						OTHER POSTRETIREMENT BENEFITS
DOLLAR AMOUNTS IN MILLIONS	Foreign currency translation adjustments		Actuarial losses			Prior service costs			Actuarial losses			Prior service credits			Unrealized gains on available-for-sale securities		Total			Foreign currency translation adjustments			Actuarial loss			Prior service cost			Actuarial loss			Prior service credit			Unrealized gains on available-for-sale securities			Total
Beginning balance as of December 31, 2016	$	232	$	(1,651	)	$	(9	)	$	(67	)	$	29		$	7	$	(1,459	)
Beginning balance as of December 31, 2017																				$	264		$	(1,802	)	$	(8	)	$	(48	)	$	23		$	9		$	(1,562	)
Other comprehensive income (loss) before reclassifications	11		21			(3		)	—			—			1		30			(15		)	10			—			—			—			—			(5		)
Income taxes	—		(15		)	1			—			—			—		(14		)	—			(2		)	—			—			—			—			(2		)
Net other comprehensive income (loss) before reclassifications	11		6			(2		)	—			—			1		16			(15		)	8			—			—			—			—			(7		)
Amounts reclassified from cumulative other comprehensive income (loss)⁽¹⁾	—		97			2			4			(4		)	—		99
Amounts reclassified from accumulated other comprehensive loss⁽¹⁾																				—			61			1			2			(2		)	—			62
Income taxes	—		(33		)	(1		)	(2		)	1			—		(35		)	—			(16		)	—			(1		)	—			—			(17		)
Net amounts reclassified from cumulative other comprehensive income (loss)	—		64			1			2			(3		)	—		64
Net amounts reclassified from accumulated other comprehensive loss to earnings																				—			45			1			1			(2		)	—			45
Total other comprehensive income (loss)	11		70			(1		)	2			(3		)	1		80			(15		)	53			1			1			(2		)	—			38
Ending balance as of June 30, 2017	$	243	$	(1,581	)	$	(10	)	$	(65	)	$	26		$	8	$	(1,379	)
Reclassification of certain tax affects due to tax law changes⁽²⁾																				—			(245		)	(1		)	(12		)	5			—			(253		)
Reclassification of accumulated unrealized gains on available-for-sale securities⁽³⁾																				—			—			—			—			—			(9		)	(9		)
Net amounts reclassified from accumulated other comprehensive loss to retained earnings																				—			(245		)	(1		)	(12		)	5			(9		)	(262		)
Ending balance as of March 31, 2018																				$	249		$	(1,994	)	$	(8	)	$	(59	)	$	26		$	—		$	(1,786	)

~~(1) Actuarial losses and prior service credits (cost) are components of net periodic benefit costs (credits)~~


(1)	Amortization of actuarial loss and prior service (cost) credit are components of net periodic benefit cost (credit). See Note 8: Pension and Other Postretirement Benefit Plans.


(2)	We reclassified certain tax affects from tax law changes of $253 million from "Accumulated other comprehensive loss" to "Retained earnings" on our Consolidated Balance Sheet in accordance with ASU 2018-02. SeeNote 1: Basis of Presentation.


(3)	We reclassified accumulated unrealized gains from available-for-sale securities of $9 million from "Accumulated other comprehensive loss" to "Retained earnings" on our Consolidated Balance Sheet in accordance with ASU 2016-01. SeeNote 1: Basis of Presentation.

NOTE 14: SHARE-BASED COMPENSATION

Share-based compensation activity ~~during year-to-date 2017~~in first quarter 2018 included the following:


SHARES IN THOUSANDS	Granted	Vested	Granted	Vested
Restricted Stock Units (RSUs)	763	710	673	576
Performance Share Units (PSUs)	348	160	344	110

A total of ~~4.2~~1.5 million shares of common stock were issued as a result of RSU ~~vesting,~~vestings, PSU ~~vesting~~vestings and stock option exercises.

RESTRICTED STOCK UNITS

The weighted average fair value of the RSUs granted in ~~2017~~2018 was ~~$32.79.~~$34.14. The vesting provisions for RSUs granted in ~~2017~~2018 were as follows:

vest ratably over four years;

immediately vest in the event of death while employed or disability;

continue to vest upon retirement at an age of at least 62, but a portion of the grant ~~forfeits~~is forfeited if retirement occurs before the ~~one year~~one-year anniversary of the grant;

continue vesting for one year in the event of involuntary termination when the retirement criteria has not been met; and

will ~~forfeit~~be entirely forfeited upon termination of employment in all other situations including early retirement prior to age 62.

PERFORMANCE SHARE UNITS

~~PERFORMANCE SHARE UNITS~~

The weighted average grant date fair value of PSUs granted in ~~2017~~2018 was ~~$37.93.~~$35.49.

The final number of shares granted in ~~2017~~2018 will range from 0 percent to 150 percent of each grant's target, depending upon actual company performance.

The ultimate number of PSUs earned is based on two measures:

our relative total shareholder return (TSR) ranking measured against the S&P 500 over a three year period and

our relative TSR ranking measured against an industry peer group of companies over a three year period.

The vesting provisions for PSUs granted in ~~2017~~2018 were as follows:

vest 100 percent on the third anniversary of the grant date ~~as long as~~if the individual remains employed by the company;

fully vest in the event the participant dies or becomes disabled while employed;

continue to vest upon retirement at an age of at least 62, but a portion of the grant ~~forfeits~~is forfeited if retirement occurs before the one year anniversary of the grant;

continue vesting for one year in the event of involuntary termination when the retirement criteria has not been met and the employee has met the second anniversary of the grant date; and

will ~~forfeit~~be entirely forfeited upon termination of employment in all other situations including early retirement prior to age 62.

Weighted Average Assumptions Used in Estimating the Value of Performance Share Units Granted in ~~2017~~2018


	Performance Share Units						Performance Share Units
Performance period	1/1/2017 - 12/31/2019						1/1/2018		–	12/31/2020
Valuation date average stock price ⁽¹⁾	$	32.79								$34.14
Expected dividends	3.74					%				3.81%
Risk-free rate	0.68		%	–	1.55	%	1.75	%	–	2.34%
Expected volatility	22.71		%	–	24.07	%	17.30	%	–	21.52%

(1) Calculated as an average of the high and low prices on grant date.

~~STOCK OPTIONS AND STOCK APPRECIATION RIGHTS~~

~~We have not granted any stock options or stock appreciation rights during 2017, nor do we expect any grants to occur during the remainder of 2017.~~

VALUE MANAGEMENT AWARDS

Value Management Awards (VMAs) are relative performance equity incentive awards granted to certain former employees of Plum Creek and assumed by the company in connection with the Plum Creek merger. In accordance with the terms of the merger, all VMAs outstanding on December 31, 2017, ~~will vest~~vested at “target” level performance of $100 per unit and ~~will be~~were paid out in ~~the~~full in first quarter of 2018. The VMAs are classified and accounted for as liabilities, as they will be settled in cash upon vesting. The expense recognized over the remaining performance period will equal the cash value of an award as of the last day of the performance period multiplied by the number of awards that are earned. Expense for VMAs will continue to be recognized over the remaining service period unless a qualifying termination occurs. A qualifying termination of any holder of a VMA award before December 31, 2017, will accelerate vesting and expense recognition in the period that the qualifying termination occurs.

NOTE 15: CHARGES FOR INTEGRATION AND RESTRUCTURING, CLOSURES AND ASSET IMPAIRMENTS

QUARTER ENDED YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS JUNE 2017 JUNE 2016 JUNE 2017 JUNE 2016
Integration and restructuring charges related to our merger with Plum Creek:
Termination benefits $ —
$ 3
$ 6
$ 48
Acceleration of share-based compensation and pension related benefits related to qualifying terminations —
2
—
26
Professional services 2
—
5
39
Other integration and restructuring costs —
3
3
5
Total integration and restructuring charges related to our merger with Plum Creek 2
8
14
118
Charges related to closures and other restructuring activities:
Termination benefits 1
3
2
3
Other closures and restructuring costs 1
1
1
2
Total charges related to closures and other restructuring activities 2
4
3
5
Impairments of long-lived assets 147
2
147
2
Total charges for integration and restructuring, closures and impairments $ 151

$ 14

$ 164

$ 125

~~INTEGRATION, RESTRUCTURING AND CLOSURES~~

~~During 2017, we incurred and accrued for termination benefits (primarily severance) and non-recurring professional services costs directly attributable to our merger with Plum Creek.~~

During 2016, we incurred and accrued for termination benefits (primarily severance), accelerated share-based payment costs, and accelerated pension benefits based upon actual and expected qualifying terminations of certain employees as a result of restructuring decisions made subsequent to the merger. We also incurred non-recurring professional services costs for investment banking, legal and consulting, and certain other fees directly attributable to our merger with Plum Creek.

~~Changes in accrued severance related to restructuring during the year-to-date period ended June 30, 2017, were as follows:~~

DOLLAR AMOUNTS IN MILLIONS
Accrued severance as of December 31, 2016 $ 26
Charges 8
Payments (19 )
Accrued severance as of June 30, 2017 $ 15

~~Accrued severance is recorded within the "Wages, salaries and severance pay" component of "Accrued liabilities" on our~~ ~~Consolidated Balance Sheet~~ ~~as detailed in~~ ~~Note 9: Accrued Liabilities. The majority of the accrued severance balance as of June 30, 2017, is expected to be paid within one year.~~

~~IMPAIRMENTS OF LONG-LIVED ASSETS~~

The impairment of long-lived assets charge recognized in second quarter 2017, related to the impairment of our Uruguayan timberlands and manufacturing business. On June 2, 2017, our Board of Directors approved an agreement to sell all of the Company's equity in the Uruguayan business to a consortium led by BTG Pactual's Timberland Investment Group (TIG.) As a result of this agreement, the related assets met the criteria to be classified as held for sale. This designation required us to record the related assets at fair value, less an amount of estimated selling costs, and thus recognize a $147 million noncash pretax impairment charge. This amount was recorded in the Timberlands segment. The fair value of the related assets was primarily based on the agreed upon cash purchase price of $403 million. Refer to ~~Note 3: Held for Sale and Discontinued Operationsfor further details of the related purchase agreement.~~



	QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	MARCH 2018		MARCH 2017
Integration and restructuring charges related to our merger with Plum Creek	$	—	$	12
Charges related to closures and other restructuring activities	1		1
Impairments of long-lived assets	1		—
Total charges for integration and restructuring, closures and asset impairments	$	2	$	13

NOTE 16:CHARGES (RECOVERIES) FOR PRODUCT REMEDIATION

In July 2017, we announced we were implementing a solution to address concerns regarding our TJI® Joists with Flak Jacket® Protection product. This issue was isolated to Flak Jacket product manufactured after December 1, 2016, and does not affect any of our other products. We estimate that approximately 2,400 homes were affected.

We recorded pretax charges of $290 million in the year-to-date period ended December 31, 2017, to accrue for expected costs associated with the remediation. During first quarter 2018, we received and recorded insurance recoveries of $20 million. The charges and recoveries are attributable to our Wood Products segment and were recorded in "Charges (recoveries) for product remediation," on the Consolidated Statement of Operations.

As of March 31, 2018, $247 million has been paid out in relation to our remediation efforts. The remaining accrual of $43 million is recorded in "Accrued liabilities" on the Consolidated Balance Sheet. The company ultimately expects a significant portion of the total expense will be covered by insurance. As of March 31, 2018, $20 million has been received and recorded for insurance recoveries.

NOTE ~~16:~~17: OTHER OPERATING COSTS, ~~(INCOME),~~ NET

Other operating costs, ~~(income),~~ net:

includes both recurring and occasional income and expense items and

can fluctuate from year to year.

ITEMS INCLUDED IN OTHER OPERATING COSTS, ~~(INCOME),~~ NET

QUARTER ENDED YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS JUNE 2017 JUNE 2016 JUNE 2017 JUNE 2016
Gain on disposition of nonstrategic assets⁽¹⁾
$ (2 ) $ (10 ) $ (9 ) $ (46 )
Foreign exchange losses (gains), net ⁽²⁾
—
1
3
(12 )
Litigation expense, net 3
18
6
21
Product remediation⁽³⁾
50
—
50
—
Other, net 11
(7 ) 14
(16 )
Total other operating costs (income), net $ 62
$ 2
$ 64
$ (53 )



	QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	MARCH 2018			MARCH 2017
Gain on disposition of nonstrategic assets	$	(2	)	$	(7	)
Foreign exchange losses, net	2			3
Litigation expense, net	5			3
Other, net⁽¹⁾	23			3
Total other operating costs, net	$	28		$	2


~~(1)~~	Gain on disposition of nonstrategic assets included a $36 million pretax gain recognized in the first quarter of 2016 on the sale of our Federal Way, Washington headquarters campus. The remaining gains on disposition of nonstrategic assets includes sales such as redundant offices and nurseries.


~~(2)~~	~~Foreign exchange losses (gains) result from changes in exchange rates, primarily related to our Canadian operations.~~

~~(3)~~

~~In the second quarter of 2017, we recorded a $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~~

(1) "Other, net" includes environmental remediation charges. See Note 12: Legal Proceedings, Commitments, and Contingencies for more information.~~Note 12: Legal Proceedings, Commitments and Contingencies~~ ~~for additional details.~~

NOTE ~~17:~~18: INCOME TAXES

As a REIT, we generally are not subject to federal corporate level income taxes on REIT taxable income that is distributed to shareholders. We are required to pay corporate income taxes on earnings of our wholly-owned TRSs, which includes our Wood Products segment and portions of our Timberlands and Real Estate & ENR segments' earnings.

The quarterly provision for income taxes is based on the current estimate of the annual effective tax rate. Our ~~2017~~2018 estimated annual effective tax rate for our TRSs is approximately 3324 percent, which is ~~lower~~higher than the U.S. domestic statutory federal tax rate primarily due to ~~lower~~higher foreign tax rates applicable to foreign earnings and state income taxes.

TAX LEGISLATION

On December 22, 2017, H.R. 1, commonly known as the Tax Cuts and Jobs Act (the "Tax Act"), was enacted. The Tax Act contains significant changes to corporate taxation, including the reduction of the corporate tax rate from 35 percent to 21 percent. As a result of the reduction in the corporate tax rate, we revalued our deferred tax assets and liabilities and recorded a tax expense of $74 million during 2017, which reduced our net deferred tax asset. The deemed repatriation on deferred foreign income provisions does not impact our operations due to the fact that we have no foreign undistributed earnings.

The impact of the Tax Act provisions effective in 2018 is a reduction to our overall estimated annual effective tax rate primarily due to the reduced corporate tax rate.

During first quarter 2018, we adopted ASU 2018-02 which allows for the reclassification of certain income tax effects related to the Tax Act between accumulated other comprehensive income and retained earnings. Refer to Note 1: Basis of Presentation for further details on this ASU and the related impact on our financial statements.

ONGOING IRS MATTER

In connection with the merger with Plum Creek, we acquired equity interests in Southern Diversified Timber, LLC, a timberland joint venture (Timberland Venture) with an affiliate of Campbell Global LLC (TCG Member). On August 31, 2016, the Timberland Venture redeemed TCG Member's interest and became a fully consolidated, wholly-owned subsidiary of Weyerhaeuser.

We received a Notice of Final Partnership Administrative Adjustment (FPAA), dated July 20, 2016, from the Internal Revenue Service (IRS) in regard to Plum ~~Creek’s~~Creek's 2008 U.S. federal income tax treatment of the transaction forming the Timberland Venture. The IRS is asserting that the transfer of the timberlands to the Timberland Venture was a taxable transaction to Plum Creek at the time of the transfer rather than a nontaxable capital contribution. We have filed a petition in the U.S. Tax Court and will vigorously contest this adjustment.

In the event that we are unsuccessful in this tax litigation, we could be required to recognize and distribute gain to shareholders of approximately $600 million and pay built-in gains tax of approximately $100 million. We would also be required to pay interest on both of those amounts, which would be substantial. ~~We expect that as~~As much as 80 percent of any such gain distribution could be made with our common stock, and shareholders would be subject to tax on the distribution at the applicable capital gains tax rate. Alternatively, we could elect to retain the gain and pay corporate-level tax to minimize interest costs to the company.

Although the outcome of this process cannot be predicted with certainty, we are confident in our position based on U.S. tax law and believe we will be successful in defending it. Accordingly, no reserve has been recorded related to this matter.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This report contains statements concerning our future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report. These forward-looking statements generally are identified by words such as “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” and expressions such as “will be,” “will continue,” “will likely result,” and similar words and expressions. Forward-looking statements are based on our current expectations and assumptions and are not guarantees of future performance. The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from ~~those described in~~ the content of these forward-looking statements. These risks and uncertainties include, but are not limited to:

the effect of general economic conditions, including employment rates, interest rate levels, housing starts, general availability of financing for home mortgages and the relative strength of the U.S. dollar;

market demand for the company's products, including market demand for our timberland properties with higher and better uses, which is related to, among other factors, the strength of the various U.S. business segments and U.S. and international economic conditions;

changes in currency exchange rates, particularly the relative value of the U.S. dollar to the yen and the Canadian dollar, and the relative value of the euro to the yen;

restrictions on international ~~trade;~~trade, tariffs imposed on imports and the availability and cost of shipping and transportation; economic activity in Asia, especially Japan and China;

performance of our manufacturing operations, including maintenance and capital requirements;

potential disruptions in our manufacturing operations;

the level of competition from domestic and foreign producers;

~~our ability to successfully realize the expected benefits from the merger with Plum Creek;~~

the successful execution of our internal plans and strategic initiatives, including restructuring and cost reduction initiatives;

the successful and timely execution and integration of our strategic acquisitions, including our ability to realize expected benefits and synergies, and the successful and timely execution of our strategic divestitures, each of which is subject to a number of risks and conditions beyond our control including, but not limited to, timing and required regulatory approvals;

raw material availability and prices;

the effect of weather;

the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters;

energy prices;

transportation and labor availability and costs;

federal tax policies;

the effect of forestry, land use, environmental and other governmental regulations;

legal proceedings;

performance of pension fund investments and related derivatives;

the effect of timing of employee retirements and changes in the market price of our common stock on charges for share-based compensation;

the accuracy of our estimates of costs and expenses related to contingent liabilities;

changes in accounting principles; and

other risks and uncertainties identified in our ~~2016~~2017 Annual Report on Form 10-K, which are incorporated herein by reference, as well as those set forth from time to time in our other public statements and other reports and filings with the SEC.

Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.

RESULTS OF OPERATIONS

In reviewing our results of operations, it is important to understand these terms:

Sales realizations for Timberlands and Wood Products refer to net selling prices – this includes selling price plus freight, minus normal sales deductions. Real Estate transactions are presented at the contract sales price before commissions and closing costs, net of any credits.

Net contribution to earnings does not include interest expense and income taxes.

In the following discussion, unless otherwise noted, references to increases or decreases in income and expense items, sales realizations, shipment volumes, and net contributions to earnings are based on the quarter ~~and year-to-date period~~ ended ~~June 30, 2017,~~March 31, 2018, compared to ~~the~~ quarter ~~and year-to-date period~~ ended ~~June 30, 2016.~~March 31, 2017.

ECONOMIC AND MARKET CONDITIONS AFFECTING OUR OPERATIONS

The demand for logs within our Timberlands segment is directly affected by production levels of domestic wood-based building products. The strength of the U.S. housing market strongly affects demand in our Wood Products segment, as does repair and remodeling activity. Our Timberlands segment, specifically the Western region, is also affected by export demand. Japanese housing starts are a key driver of export log demand in Japan.

~~As published by the U.S. Census Bureau, total housing starts for 2016 were 1.17 million units.~~ In ~~the~~ first ~~half of 2017,~~quarter 2018, housing starts averaged ~~1.2~~1.32 million total units on a seasonally adjusted annual basis according to the U.S. Census Bureau. Single family units accounted for 6967 percent of total housing starts in first quarter. Multifamily starts rebounded from the ~~first half of~~decline posted in 2017. Single family starts are 6 percent higher on a year ago basis for the quarter. We continue to expect improving U.S. housing starts and anticipate a level of approximately ~~1.25~~1.30 million units in ~~2017, a 7~~2018, an 8 percent increase compared to ~~2016.~~2017. We attribute this continued improvement primarily to employment growth, improving consumer confidence and ~~historically low~~favorable mortgage ~~rates.~~rates, remain near historic lows.

According to the Joint Center for Housing of Harvard University, the Leading Indicator of Remodeling Activity, ~~(LIRA), has~~ increased by ~~6.9~~6.4 percent in ~~first half of~~ 2017 and is expected to average ~~just under 6.7~~7.5 percent year over year for ~~2017.~~2018.

U.S. wood product markets advanced in the ~~second~~first quarter of ~~2017,~~2018, consistent with growth in homebuilding and remodeling segments, as described above. According to Forest Economic Advisors, LLC, ~~(FEA),~~ North American lumber consumption is expected to grow at a 4 ~~to 5~~ percent rate in ~~2017.~~2018. Consistent with this expectation, demand for logs increased with wood products production within our Western region. This coupled with ~~slightly~~ higher market prices in ~~second~~the first quarter ~~2017~~ drove higher ~~realizations within this region.~~realizations. In the South, log supplies kept pace with increased demand, leaving prices ~~relatively~~ flat ~~year-to-date.~~to slightly increased from fourth quarter 2017.

Log inventories in Chinese ports ~~decreased during second~~increased in the latter part of first quarter ~~2017 but remained in~~as reported by International Wood Markets China Bulletin. The increased inventory level is attributed to a ~~reasonable range for~~slow start to the ~~period. Log demand within these ports has strengthened versus previous year levels~~construction season due to ~~stronger construction activity.~~the later occurrence of the Spring Festival and is expected to normalize over upcoming quarters. In Japan, wooden housing starts for January ~~through May 2017~~and February are ~~up 2.2~~down 1.7 percent from the same period last year.

We expect demand from China and Japan in ~~2017~~2018 to be similar to ~~modestly improved from~~ demand experienced in ~~2016.~~2017.

Our Real Estate, Energy and Natural Resources segment is affected by the health of the U.S. economy and especially the U.S. housing sector of the economy. According to the Realtors Land Institute (RLI) of the National Association of Realtors, ~~prices and volumes~~the dollar volume of rural properties, including timber, ~~properties~~ sold in ~~2016~~2017 grew 54 percent over ~~2015 sales. Additionally,~~2016 sales ~~of these types of properties are expected to grow~~while per acre prices were up 3 percent on average. Additionally, RLI is optimistic that these trends will continue in ~~2017 when compared to 2016.~~2018.

~~SOFTWOOD LUMBER AGREEMENT~~

We operate a total of 19 softwood lumber mills with a total capacity of 4.9 billion board feet. Three of these mills are located in Canada, produce approximately 900 million board feet annually, and sell products in Canada, Asia, and the U.S.

On April 24, 2017, the U.S. Department of Commerce announced a preliminary determination that it would implement countervailing duties on Canadian softwood lumber shipments to the U.S. The rate applicable to Weyerhaeuser is 19.88 percent and became effective as of April 28, 2017. The U.S. Department of Commerce also announced that retroactive deposits at the 19.88 percent rate will be collected from certain Canadian lumber producers, including Weyerhaeuser, for softwood lumber shipments from Canada to the U.S. during the 90-day period prior to April 28, 2017.

The preliminary countervailing duties are expected to be suspended on August 28, four months after they became effective. The suspension of the countervailing duties will last until the US International Trade Commission reaches its final determination of injury, which is expected to be in December of this year.

On June 26, 2017, the U.S. Department of Commerce announced a preliminary determination that it would implement anti-dumping duties on Canadian softwood lumber shipments to the U.S. The rate applicable to Weyerhaeuser is 6.87 percent and became effective as of June 30, 2017. The U.S. Department of Commerce also announced that retroactive deposits at the 6.87 percent rate will be collected from certain Canadian lumber producers, including Weyerhaeuser, for softwood lumber shipments from Canada to the U.S. during the 90-day period prior to June 30, 2017.

In second quarter 2017, we recorded an expense of approximately $8 million in our Wood Products segment related to the retroactive countervailing and antidumping duties. We also began expensing the prospective duties as incurred, which as of June 30, 2017 totaled $3 million.

CONSOLIDATED RESULTS

How We Did ~~Second~~First Quarter ~~2017 and Year-to-Date 2017~~2018


	QUARTER ENDED				AMOUNT OF CHANGE			YEAR-TO-DATE ENDED				AMOUNT OF CHANGE			QUARTER ENDED				AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES	JUNE 2017		JUNE 2016		2017 VS. 2016			JUNE 2017		JUNE 2016		2017 VS. 2016			MARCH 2018		MARCH 2017		2018 VS. 2017
Net sales	$	1,808	$	1,655	$	153		$	3,501	$	3,060	$	441		$	1,865	$	1,693	$	172
Costs of products sold	1,336		1,271		65			2,608		2,374		234			1,348		1,272		76
Operating income	157		248		(91		)	450		387		63			404		293		111
Earnings from discontinued operations, net of tax	—		38		(38		)	—		58		(58		)
Net earnings attributable to Weyerhaeuser common shareholders	24		157		(133		)	181		227		(46		)
Earnings per share attributable to Weyerhaeuser shareholders, basic and diluted	$	0.03	$	0.21	$	(0.18	)	$	0.24	$	0.33	$	(0.09	)
Net earnings															269		157		112
Earnings per share, basic and diluted															$	0.35	$	0.21	$	0.14

Comparing ~~Second~~First Quarter ~~2017~~2018 with ~~Second~~First Quarter ~~2016~~2017

Net sales

Net sales increased ~~$153~~$172 million – 910 percent – primarily attributable to the following factors:

Wood Products sales to unaffiliated customers increased ~~$147~~$155 million – 13 percent – primarily due to increased ~~average~~ sales realizations ~~within our oriented strand board and structural lumber~~across the majority of product ~~lines, as well as, increased sales volumes within our engineered solid section and engineered I-joists product~~ lines. ~~Additionally, upon completion of the sales of our former Cellulose Fibers businesses, chips previously sold to Cellulose Fibers are now~~

Timberlands sales to unaffiliated ~~customers.~~

~~Real Estate & ENR sales to unaffiliated buyers~~customers increased $8$19 million – 214 percent – primarily attributable to ~~a $7 million increase in ENR sales.~~

~~These increases were~~increased Western log sales realizations, partially offset by decreased ~~Timberlands sales to unaffiliated customers, which decreased by $2 million – less than 1 percent – primarily due to a decrease~~international operations revenue from the sale of our Uruguayan operations in delivered log sales volumes and decreases in Southern and Northern average sales realizations for delivered logs. These decreases in Timberlands were partially offset by an increase in Western Timberlands average sales realizations for delivered logs.

third quarter 2017.

Costs of products sold

Costs of products sold increased ~~$65~~$76 million – 56 percent – primarily attributable to the following:

Wood Products segment costs of products sold increased ~~$45~~$79 million – 59 percent – primarily due to increased ~~sales volumes~~log and fiber costs across all product lines in ~~several product lines.~~the West and Canada; and


•	Unallocated costs of product sold increased $18 million – 14 percent – primarily due to a $15 million increase in costs for elimination of intersegment profit in inventory and LIFO. Refer to Unallocated Items for further details.

~~Intercompany eliminations of~~Increased costs of products sold decreased $52 million, therefore increasing consolidated cost of products. This reduction in intercompany costs of products sold is primarily due to the completion of the sales of our former Cellulose Fibers businesses. Chips and logs previously sold to Cellulose Fibers are now sales to unaffiliated customers and therefore have related cost of products sold.

~~These increases to costs of products sold were~~was partially offset by ~~decreased Timberlands segment costs of products sold, which decreased $33~~a $26 million –6increase – 13 percent – ~~primarily due~~in Timberland intersegment sales which are eliminated upon consolidation. Refer to ~~a 3 percent decrease in sales volumes.~~

Timberlands for further details.

Operating income

Operating income ~~decreased $91~~increased $111 million – 3738 percent – primarily attributable to:

increased consolidated gross margin of $96 million as described above;

increased product remediation insurance recoveries of $20 million received in first quarter of 2018; and

decreased general and administrative expenses and integration costs related to the ~~$147~~merger of Plum Creek for $20 million.

Increased operating income was partially offset by $28 million ~~noncash impairment charge recognized~~increased environmental charges in relation to the company agreeing to sell its Uruguayan operations, as well as additional other operating costs associated with product remediation ($50 million) and countervailing/antidumping costs ($11 million).first quarter 2018. Refer to Note ~~15: Charges for Integration and Restructuring, Closures and Asset Impairments~~, ~~Softwood Lumber Agreement, and~~ ~~Note 16:~~17: Other Operating Costs, ~~(Income)~~Net, ~~Net~~"Other, net" for further ~~information on these respective topics. Excluding these charges, operating income increased $117 million which is primarily due to increased gross margin, as explained above.~~details.

Net earnings ~~attributable to Weyerhaeuser common shareholders~~

Our ~~net~~Net earnings increased $112 million – 71 percent. This is attributable to Weyerhaeuser common shareholders decreased $133 million – 85 percent. Excluding 2016 "Earnings from discontinued operations, net of tax," net earnings attributable to Weyerhaeuser common shareholders decreased $95 million, primarily attributable to decreasedincreased operating income, as described above, as well as an increase in "Non-operating pension and other postretirement benefit (costs) credits". These increased costs were partially offset by increased gross margins, as discussed above, as well as reduced "General and administrative expenses."

~~"Earnings from discontinued operations, net of tax," decreased $38 million as all discontinued operations were sold in 2016.~~above.

~~Comparing Year-to-Date 2017 with Year-to-Date 2016~~

~~Net sales~~

~~Net sales increased $441 million – 14 percent – primarily attributable to the following factors:~~

Wood Products sales to unaffiliated customers increased $322 million – 15 percent – primarily due to increased average sales realizations within our oriented strand board and structural lumber product lines. Additionally, upon completion of the sales of our former Cellulose Fibers businesses, chips previously sold to Cellulose Fibers are now sales to unaffiliated customers.

Timberlands sales to unaffiliated customers increased $97 million – 11 percent – primarily due to an increase in delivered log sales volumes in our Southern and Northern regions, as well as an increase in average sales realizations for delivered logs in our Western region. The increased delivered log sales volumes within the Southern and Northern regions is primarily related to the additional production on lands acquired in our merger with Plum Creek. In addition to the increased sales volumes, Timberlands net sales also increased due to increased recreational lease revenue. This was partially offset by a decrease in Southern and Northern region average sales realizations for delivered logs.

Real Estate & ENR sales to unaffiliated buyers increased $22 million – 29 percent – primarily due to increased net energy and natural resources sales attributable to the operations acquired in our merger with Plum Creek. Additionally, our net real estate sales have increased due to higher average price realized per acre.

~~Costs of products sold~~

~~Costs of products sold increased $234 million – 10 percent – primarily attributable to the following:~~

~~Wood Products segment costs of products sold increased $109 million primarily due to increased sales volumes in most product lines.~~

Intercompany eliminations of costs of products sold decreased $93 million, therefore increasing consolidated cost of products. This reduction in intercompany costs of products sold is primarily due to the completion of the sales of our former Cellulose Fibers businesses. Chips and logs previously sold to Cellulose Fibers are now sales to unaffiliated customers and therefore have related cost of products sold.

~~Timberlands segment costs of products sold increased $27 million, primarily due to the increase in sales volumes, as described above.~~

~~Operating income~~

Operating income increased $63 million – 16 percent – primarily attributable to the increased gross margin, as described above. This increase in gross margin was partially offset by the $147 million noncash impairment charge recognized in relation to the company agreeing to sell its Uruguayan operations as well as additional other operating costs associated with product remediation ($50 million) and countervailing/antidumping costs ($11 million). Refer to ~~Note 15: Charges for Integration and Restructuring, Closures and Asset Impairments~~, ~~Softwood Lumber Agreement, and~~ ~~Note 16: Other Operating Costs (Income), Netfor further information on these respective topics.~~

~~Net earnings attributable to Weyerhaeuser common shareholders~~

Our net earnings attributable to Weyerhaeuser common shareholders decreased $46 million – 20 percent. Excluding 2016 "Earnings from discontinued operations, net of tax," net earnings attributable to Weyerhaeuser common shareholders increased $12 million, primarily attributable to increased gross margins, as described above. These increases were partially offset by the non-recurring charges that occurred during second quarter 2017, as described above. Additionally, we have experienced an increase in "Non-operating pension and other postretirement benefit (costs) credits" and a reduction in "Equity earnings from joint ventures."

~~"Earnings from discontinued operations, net of tax," decreased $58 million as all discontinued operations were sold in 2016.~~

TIMBERLANDS

How We Did ~~Second~~First Quarter ~~2017 and Year-to-Date 2017~~2018

QUARTER ENDED
AMOUNT OF
CHANGE
YEAR-TO-DATE ENDED AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS JUNE 2017 JUNE 2016 2017 VS.
2016 JUNE 2017 JUNE 2016 2017 VS.
2016
Net sales to unaffiliated customers:
Delivered logs⁽¹⁾:

West $ 227
$ 232
$ (5 ) $ 452
$ 447
$ 5
South 148
154
(6 ) 296
255
41
North 16
19
(3 ) 43
32
11
Other 11
7
4
31
14
17
Subtotal delivered logs sales 402
412
(10 ) 822
748
74
Stumpage and pay-as-cut timber 17
23
(6 ) 29
38
(9 )
Uruguay operations⁽²⁾
21
21
—
40
37
3
Recreational and other lease revenue 15
8
7
29
14
15
Other 14
7
7
35
21
14
Subtotal net sales to unaffiliated customers 469
471
(2 ) 955
858
97
Intersegment sales:
United States 126
153
(27 ) 256
297
(41 )
Other 37
40
(3 ) 109
118
(9 )
Subtotal intersegment sales 163
193
(30 ) 365

415
(50 )
Total sales $ 632
$ 664
$ (32 ) $ 1,320
$ 1,273
$ 47
Costs of products sold $ 476
$ 509
$ (33 ) $ 995
$ 968
$ 27
Operating income and Net contribution to earnings $ (12 ) $ 125
$ (137 ) $ 136
$ 254
$ (118 )

~~(1)~~

~~(2)~~

Includes logs, plywood and hardwood lumber harvested or produced by our international operations in Uruguay. On June 2, 2017, we agreed to sell all of our equity interest in the subsidiaries that collectively own and operate our Uruguayan timberlands and manufacturing business. The held for sale designation of the assets and liabilities of the Uruguayan business caused us to record a $147 million impairment within the Timberlands business segment during second quarter 2017. Refer to ~~Note 2: Business Segments~~ ~~as well as~~ ~~Note 3: Held for Sale and Discontinued Operations~~ ~~for further information.~~

~~Comparing Second Quarter 2017 with Second Quarter 2016~~

~~Net sales – unaffiliated customers~~

~~Net sales to unaffiliated customers decreased $2 million – less than 1 percent – primarily due to:~~

~~a $6 million decrease in Southern log sales as a result of a 3 percent decrease in average sales realizations for delivered logs and a 1 percent decrease in delivered logs sales volumes.~~

a $5 million decrease in Western log sales, primarily attributable to a 9 percent decrease in delivered logs sales volumes. This decrease was partially offset by a 8 percent increase in average sales realizations for delivered logs. The increase in realizations is primarily due to the mix of delivered logs sold.

~~a $3 million decrease in Northern log sales, primarily attributable to a 13 percent decrease in delivered logs sales volumes and a 3 percent decrease in average sales realizations for delivered logs.~~

~~These decreases were partially offset by:~~

~~a $4 million increase in Other delivered logs, primarily attributable to increases in delivered logs sales volumes offset by decreases in average sales realizations.~~

~~an $8 million increase, primarily attributable to a $14 million increase in recreational lease revenue and other products revenue, offset by a $6 million decrease in stumpage and pay-as-cut revenue.~~

~~Intersegment sales~~

~~Intersegment sales decreased $30 million – 16 percent – due to a decrease in chip and log intersegment sales, which were previously sold to our Cellulose Fibers business segment.~~

~~Costs of products sold~~

~~Costs of products sold decreased $33 million – 6 percent – primarily due to a 3 percent decrease in sales volumes.~~

~~Operating income and Net contribution to earnings~~

Operating income and Net contribution to earnings decreased $137 million – 110 percent – primarily attributable to the $147 million noncash pretax impairment charge recognized in relation to the Uruguayan sale agreement (refer to ~~Note 3: Held for Sale and Discontinued Operations). This was partially offset by a $9 million decrease in "General and administrative expenses."~~

~~Comparing Year-to-Date 2017 with Year-to-Date 2016~~

~~Net sales - unaffiliated customers~~

~~Net sales to unaffiliated customers increased $97 million – 11 percent – primarily due to:~~

a $41 million increase in Southern log sales, attributable to a 20 percent increase in delivered logs sales volumes offset by a 4 percent decrease in average sales realizations. The change in Southern log sales is primarily related to additional production from legacy Plum Creek operations. Results for year-to-date 2016 included only four months of legacy Plum Creek sales, as opposed to a full six months of operations included in year-to-date 2017.

an $11 million increase in Northern log sales, attributable to a 41 percent increase in delivered logs sales volumes offset by a 3 percent decrease in average sales realizations. The change in Northern log sales is primarily due to production in regions in which timberlands were acquired during the Plum Creek merger. Results for year-to-date 2016 included only four months of production from these timberlands, as opposed to a full six months of operations included in year-to-date 2017.

a $5 million increase in Western log sales, attributable to a 6 percent increase in average sales realizations on delivered logs, offset by a 4 percent decrease in delivered logs volumes. The increase in realizations is primarily due to the mix of delivered logs sold.

~~a $17 million increase in Other delivered logs, primarily attributable to increases in delivered logs sales volumes offset by decreases in average sales realizations on delivered logs.~~

a $23 million increase in other net sales, primarily attributable to a $15 million increase in recreational lease revenue and a $14 million increase in other products revenue, offset by a $9 million decrease in stumpage and pay-as-cut revenue.

~~Intersegment sales~~

~~Intersegment sales decreased $50 million – 12 percent – due to a decrease in chip and log intersegment sales, which were previously sold to our Cellulose Fibers business segment.~~

~~Costs of products sold~~

~~Costs of products sold increased $27 million – 3 percent – primarily due to the increase in sales volumes, as described above.~~

~~Operating income and Net contribution to earnings~~

Operating income and Net contribution to earnings decreased $118 million – 46 percent – primarily attributable to the $147 million noncash pretax impairment charge recognized in relation to the Uruguayan sale agreement (refer to ~~Note 3: Held for Sale and Discontinued Operations). The impairment charge was partially offset by the changes in net sales and costs of products sold as explained above.~~

~~THIRD-PARTY LOG SALES VOLUMES AND FEE HARVEST VOLUMES~~


	QUARTER ENDED		AMOUNT OF CHANGE		YEAR-TO-DATE ENDED		AMOUNT OF CHANGE		QUARTER ENDED				AMOUNT OF CHANGE
VOLUMES IN THOUSANDS⁽¹⁾⁽²⁾	JUNE 2017	JUNE 2016	2017 VS. 2016		JUNE 2017	JUNE 2016	2017 VS. 2016
Third party log sales – tons:
DOLLAR AMOUNTS IN MILLIONS									MARCH 2018		MARCH 2017		2018 VS. 2017
Net sales to unaffiliated customers:
Delivered logs⁽¹⁾:
West	2,143	2,363	(220	)	4,300	4,496	(196	)	$	266	$	225	$	41
South	4,285	4,340	(55	)	8,578	7,121	1,457		157		148		9
North	253	292	(39	)	707	502	205		25		27		(2		)
Uruguay	96	89	7		186	235	(49	)
Other	292	169	123		802	338	464		14		20		(6		)
Total	7,069	7,253	(184	)	14,573	12,692	1,881
Fee harvest volumes – tons:
West	2,652	2,980	(328	)	5,309	5,781	(472	)
South	6,473	7,061	(588	)	12,846	12,091	755
North	383	454	(71	)	1,005	714	291
Uruguay	319	248	71		584	547	37
Subtotal delivered logs sales									462		420		42
Stumpage and pay-as-cut timber									15		12		3
Uruguay operations⁽²⁾									—		19		(19		)
Recreational and other lease revenue									14		14		—
Other	444	181	263		815	181	634		14		21		(7		)
Total	10,271	10,924	(653	)	20,559	19,314	1,245
Subtotal net sales to unaffiliated customers									505		486		19
Intersegment sales:
United States									142		130		12
Other									86		72		14
Subtotal intersegment sales									228		202		26
Total sales									$	733	$	688	$	45
Costs of products sold									$	526	$	519	$	7
Operating income and Net contribution to earnings									$	189	$	148	$	41

(1)


(2)	Includes logs, plywood and hardwood lumber harvested or produced by our former international operations in Uruguay. Our Uruguayan operations were divested on September 1, 2017. Refer to Note 4: Operations Divested for further information.

Comparing First Quarter 2018 with First Quarter 2017

Net sales to unaffiliated customers

Net sales to unaffiliated customers increased $19 million – 4 percent – primarily due to a $41 million increase in Western log sales attributable to a 26% increase in Western log prices, partially offset by a 6% decrease in Western delivered logs sales volumes.

This increase was partially offset by a $19 million decrease in sales from our Uruguay operations, which were divested in third quarter 2017.

Intersegment sales

Intersegment sales increased $26 million – 13 percent – primarily due to increases in Western log prices, consistent with third party sales discussed above.

Costs of products sold

Costs of products sold increased $7 million – 1 percent – primarily due to increased external sourcing costs to meet increased demand for export sales. The increase was partially offset by a decrease in our international cost of products sold due to the divestiture of our Uruguayan operations in third quarter 2017.

Operating income and Net contribution to earnings

Operating income and Net contribution to earnings increased $41 million – 28 percent – primarily attributable to increased gross margin discussed above.

THIRD-PARTY LOG SALES VOLUMES AND FEE HARVEST VOLUMES



	QUARTER ENDED		AMOUNT OF CHANGE
VOLUMES IN THOUSANDS⁽¹⁾⁽²⁾	MARCH 2018	MARCH 2017	2018 VS. 2017
Third party log sales – tons:
West	2,019	2,157	(138	)
South	4,510	4,293	217
North	404	454	(50	)
Other	317	510	(193	)
Total⁽³⁾	7,250	7,414	(164	)
Fee harvest volumes – tons:
West	2,443	2,657	(214	)
South	6,751	6,373	378
North	549	622	(73	)
Other	—	371	(371	)
Total ⁽³⁾	9,743	10,023	(280	)

(1)


(2)	Western logs are primarily transacted in thousand board feet (MBF) but are converted to ton equivalents for external reporting purposes.


(3)	Total volumes exclude third party log sales and fee harvest volumes from our former Uruguayan operations, which we sold during third quarter 2017. Refer to Note 4: Operations Divestedfor further information regarding this sale.

REAL ESTATE, ENERGY AND NATURAL RESOURCES

How We Did ~~Second~~First Quarter ~~2017 and Year-to-Date 2017~~2018


	QUARTER ENDED				AMOUNT OF CHANGE			YEAR-TO-DATE ENDED				AMOUNT OF CHANGE			QUARTER ENDED				AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS	JUNE 2017		JUNE 2016		2017 VS. 2016			JUNE 2017		JUNE 2016		2017 VS. 2016			MARCH 2018		MARCH 2017		2018 VS. 2017
Net sales to unaffiliated buyers:
Net sales:
Real estate	$	27	$	26	$	1		64		56		8			$	34	$	37	$	(3	)
Energy and natural resources	19		12		7			35		21		14			17		16		1
Total	$	46	$	38	$	8		$	99	$	77	$	22		$	51	$	53	$	(2	)
Costs of products sold	$	16	$	19	$	(3	)	$	36	$	39	$	(3	)	$	19	$	20	$	(1	)
Operating income and Net contribution to earnings	$	23	$	12	$	11		$	49	$	27	$	22
Operating income and net contribution to earnings															$	25	$	26	$	(1	)

The timing of real estate sales is a function of many factors, including the general state of the economy, demand in local real estate markets, the ability to obtain entitlements, the ability of buyers to obtain financing, the number of competing properties listed for sale, the seasonal nature of sales (particularly in the northern states), the plans of adjacent landowners, our expectation of future price appreciation, the timing of harvesting activities, and the availability of government and not-for-profit ~~funding (especially for conservation sales).~~funding. In any period the average sales price per acre will vary based on the location and physical characteristics of parcels sold.

Comparing ~~Second~~First Quarter ~~2017~~2018 with ~~Second~~First Quarter ~~2016~~2017

Net sales ~~- Unaffiliated buyers~~

Net sales ~~to unaffiliated buyers increased $8~~decreased $2 million – 214 percent – primarily attributable to a $7decrease in average price realized per acre due to mix of properties sold offset by an increase in acres sold.

Costs of products sold

Costs of products sold decreased $1 million – 5 percent – primarily attributable to mix of properties sold in first quarter 2018 as compared to first quarter 2017, as discussed above.

Net contribution to earnings

Net contribution to earnings for the quarter decreased $1 million – 4 percent – primarily attributable to decreased gross margin discussed above.

REAL ESTATE SALES STATISTICS



	QUARTER ENDED				AMOUNT OF CHANGE
	MARCH 2018		MARCH 2017		2018 VS. 2017
Acres sold	21,771		13,257		8,514
Average price per acre	$	1,539	$	2,403	$	(864	)

WOOD PRODUCTS

How We Did First Quarter 2018



	QUARTER ENDED				AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS	MARCH 2018		MARCH 2017		2018 VS. 2017
Net sales:
Structural lumber	$	569	$	478	$	91
Engineered solid section	129		117		12
Engineered I-joists	78		73		5
Oriented strand board	232		203		29
Softwood plywood	50		44		6
Medium density fiberboard	43		47		(4		)
Other products produced	71		70		1
Complementary building products	137		122		15
Total	$	1,309	$	1,154	$	155
Costs of products sold	$	1,005	$	926	$	79
Operating income and Net contribution to earnings	$	270	$	172	$	98

Comparing FirstQuarter 2018 with First Quarter 2017

Net sales

Net sales increased $155 million – 13 percent – primarily due to:

a $91 million increase in ~~net energy~~structural lumber sales, attributable to a 21% percent increase in average sales realizations, partially offset by a 2% percent decrease in sales volumes;

a $29 million increase in oriented strand board sales, attributable to a 19% increase in average sales realizations, partially offset by a 4% decrease in sales volumes;

a $15 million increase in complementary building product sales. These are other products sold by our distribution business and ~~natural resources sales.~~correlated to the general market demand, which was higher in first quarter 2018 as compared to first quarter 2017;

a $12 million increase in engineered solid section sales, primarily attributable to an 11% increase in average sales realizations; and

a $6 million increase in softwood plywood sales, attributable to a 16% increase in average sales realizations, partially offset by a 3% decrease in sales volumes.

Costs of products sold

Costs of products sold ~~decreased $3~~increased $79 million – ~~16 percent – attributable to lower basis of real estate sold, which is attributable to the mix of properties sold.~~

~~Operating income and Net contribution to earnings~~

~~Operating income and Net contribution to earnings for the quarter increased $11 million – 92~~9 percent – primarily ~~attributable~~due to increased ~~gross margin as explained above.~~log and fiber costs across all product lines in the West and Canada.

~~Comparing Year-to-Date 2017 with Year-to-Date 2016~~

~~Net sales - Unaffiliated buyers~~

~~Net sales to unaffiliated buyers increased $22 million – 29 percent – attributable to:~~

~~Net energy and natural resources sales increased $14 million – 67 percent – due primarily to increases in sales volumes attributable to the operations acquired in our merger with Plum Creek.~~

Net real estate sales increased $8 million – 14 percent – attributable to an increase in average price realized per acre due to mix of properties sold. This increase was partially offset by decreases in volume of acres sold.

~~Costs of products sold~~

Costs of products sold decreased $3 million – 8 percent – attributable to lower basis of real estate sold, which is attributable to the mix of properties sold. This decrease was partially offset by increased costs of products sold in Energy and natural resources, attributable to increased ENR sales volumes.

Operating income and Net contribution to earnings

Operating income and Net contribution to earnings increased ~~$22~~$98 million – 8157 percent – primarily attributable to to:

increased gross margin, as ~~explained above.~~

~~REAL ESTATE SALES STATISTICS~~

QUARTER ENDED
AMOUNT OF
CHANGE
YEAR-TO-DATE ENDED AMOUNT OF CHANGE
JUNE 2017 JUNE 2016 2017 VS.
2016 JUNE 2017 JUNE 2016 2017 VS.
2016
Acres sold 10,003
10,020
(17 ) 23,260
25,245
(1,985 )
Average price per acre $ 2,714
$ 2,555
$ 159
$ 2,537
$ 2,210
$ 327
discussed above; and

~~WOOD PRODUCTS~~

~~How We Did Second Quarter 2017 and Year-to-Date~~

•

increased product remediation recoveries of $20 million in first quarter 2018 compared to first quarter 2017 (please see Note 16: Charges (recoveries) for product remediation for further details).

QUARTER ENDED
AMOUNT OF
CHANGE
YEAR-TO-DATE ENDED AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS JUNE 2017 JUNE 2016 2017 VS.
2016 JUNE 2017 JUNE 2016 2017 VS.
2016
Net sales:
Structural lumber $ 538
$ 498
$ 40
$ 1,016
$ 917
$ 99
Engineered solid section 130
115
15
247
224
23
Engineered I-joists 85
73
12
158
139
19
Oriented strand board 225
182
43
428
345
83
Softwood plywood 47
50
(3 ) 91
85
6
Medium density fiberboard 51
47
4
98
64
34
Other products produced 68
42
26
138
91
47
Complementary building products 149
139
10
271
260
11
Total $ 1,293
$ 1,146
$ 147
$ 2,447

$ 2,125
$ 322
Costs of products sold $ 1,002
$ 957
$ 45
$ 1,928
$ 1,819
$ 109
Operating income and Net contribution to earnings $ 177
$ 156
$ 21
$ 349
$ 243
$ 106

~~Comparing SecondQuarter 2017 with Second Quarter 2016~~

~~Net sales~~

~~Net sales increased $147 million – 13 percent – primarily due to:~~

a~~$43 million increase in oriented strand board sales, attributable to a 23 percent increase in average sales realizations.~~

~~a $40 million increase in lumber sales, attributable to a 11 percent increase in average sales realizations, partially offset by a 2 percent decrease in sales volumes.~~

a $26 million increase in other products produced, primarily attributable to increased chip sales, which were previously sold to our former Cellulose Fibers segment and were intersegment sales during second quarter 2016. Upon completion of the sales of our former Cellulose Fibers businesses, chips previously sold to Cellulose Fibers are sales to unaffiliated customers.

~~a $15 million increase in engineered solid section, attributable to a 10 percent increase in sales volumes and a 3 percent increase in average sales realizations.~~

~~a $12 million increase in engineered I-joists, attributable to a 14 percent increase in sales volumes and a 3 percent increase in average sales realizations.~~

~~Costs of products sold~~

~~Costs of products sold increased $45 million – 5 percent – primarily due to increased sales volumes in several product lines, as explained above.~~

~~Operating income and Net contribution to earnings~~

Operating income and Net contribution to earnings increased $21 million – 13 percent – primarily attributable to increased gross margin, as explained above. This increase is partially offset by increased Other operating costs, net related to retroactive and prospective countervailing and antidumping duties and product remediation costs. Refer to ~~Softwood Lumber Agreement~~ ~~and~~ ~~Note 16: Other Operating Costs (Income), Net~~ ~~for further information on these respective topics.~~

~~Comparing Year-to-Date 2017 with Year-to-Date 2016~~

~~Net sales~~

~~Net sales increased $322 million – 15 percent – primarily due to:~~

~~a $99 million increase in lumber sales, attributable to a 12 percent increase in average sales realizations, partially offset by a 1 percent decrease in sales volumes.~~

a~~$83 million increase in oriented strand board sales, attributable to a 23 percent increase in average sales realizations.~~

a $47 million increase in other products produced, primarily attributable to increased chip sales, which were previously sold to our former Cellulose Fibers segment and were intersegment sales during year-to-date 2016. Upon completion of the sales of our former Cellulose Fibers businesses, chips previously sold to Cellulose Fibers are sales to unaffiliated customers.

a $34 million increase in medium density fiberboard sales, attributable to a full year-to-date of legacy Plum Creek operations in 2017 versus a partial year-to-date in 2016 and a 7 percent increase in average sales realizations.

~~Costs of products sold~~

~~Costs of products sold increased $109 million – 6 percent – primarily due to increased sales volumes in most product lines, as explained above.~~

~~Operating income and Net contribution to earnings~~

Operating income and Net contribution to earnings increased $106 million – 44 percent – primarily attributable to increased gross margin, as explained above. This increase is partially offset by increased Other operating costs, attributable to retroactive and prospective countervailing and antidumping duties and product remediation costs. Refer to ~~Softwood Lumber Agreement~~ ~~and~~ ~~Note 16: Other Operating Costs (Income), Net~~ ~~for further information on these respective topics.~~

THIRD-PARTY SALES VOLUMES


	QUARTER ENDED		AMOUNT OF CHANGE		YEAR-TO-DATE ENDED		AMOUNT OF CHANGE		QUARTER ENDED		AMOUNT OF CHANGE
VOLUMES IN MILLIONS⁽¹⁾	JUNE 2017	JUNE 2016	2017 VS. 2016		JUNE 2017	JUNE 2016	2017 VS. 2016		MARCH 2018	MARCH 2017	2018 VS. 2017
Structural lumber – board feet	1,218	1,249	(31	)	2,376	2,401	(25	)	1,140	1,158	(18	)
Engineered solid section – cubic feet	6.6	6.0	0.6		12.8	11.5	1.3		6.2	6.2	—
Engineered I-joists – lineal feet	57	50	7		106	94	12		49	49	—
Oriented strand board – square feet (3/8”)	764	761	3		1,533	1,520	13		739	769	(30	)
Softwood plywood – square feet (3/8”)	123	131	(8	)	241	241	—		115	118	(3	)
Medium density fiberboard – square feet (3/4”)	60	60	—		119	83	36		51	59	(8	)


(1)	Sales volumes include sales of internally produced products and products purchased for resale primarily through our distribution business.

PRODUCTION AND OUTSIDE PURCHASE VOLUMES

Outside purchase volumes are primarily purchased for resale through our distribution business. Production volumes are produced for sale through our own sales organizations and through our distribution business. Production of oriented strand board and engineered solid section are also used to manufacture engineered I-joists.


	QUARTER ENDED		AMOUNT OF CHANGE		YEAR-TO-DATE ENDED		AMOUNT OF CHANGE		QUARTER ENDED		AMOUNT OF CHANGE
VOLUMES IN MILLIONS	JUNE 2017	JUNE 2016	2017 VS. 2016		JUNE 2017	JUNE 2016	2017 VS. 2016		MARCH 2018	MARCH 2017	2018 VS. 2017
Structural lumber – board feet:
Production	1,146	1,205	(59	)	2,298	2,334	(36	)	1,160	1,152	8
Outside purchase	51	72	(21	)	100	128	(28	)	47	49	(2	)
Total	1,197	1,277	(80	)	2,398	2,462	(64	)	1,207	1,201	6
Engineered solid section – cubic feet:
Production	6.6	5.9	0.7		12.9	11.5	1.4		6.3	6.3	—
Outside purchase	1.0	—	1.0		1.0	—	1.0		1.0	—	1.0
Total	7.6	5.9	1.7		13.9	11.5	2.4		7.3	6.3	1.0
Engineered I-joists – lineal feet:
Production	53	46	7		103	92	11		56	50	6
Outside purchase	4	3	1		6	4	2		3	2	1
Total	57	49	8		109	96	13		59	52	7
Oriented strand board – square feet (3/8”):
Production	754	733	21		1,512	1,482	30		734	758	(24	)
Outside purchase	106	102	4		204	159	45		100	98	2
Total	860	835	25		1,716	1,641	75		834	856	(22	)
Softwood plywood – square feet (3/8”):
Production	99	111	(12	)	196	199	(3	)	97	97	—
Outside purchase	22	24	(2	)	41	44	(3	)	20	19	1
Total	121	135	(14	)	237	243	(6	)	117	116	1
Medium density fiberboard – square feet (3/4"):	Medium density fiberboard – square feet (3/4"):								Medium density fiberboard – square feet (3/4"):
Production	63	62	1		119	87	32		50	56	(6	)
Outside purchase	—	—	—		—	—	—		—	—	—
Total	63	62	1		119	87	32		50	56	(6	)

UNALLOCATED ITEMS

Unallocated ~~items~~Items are gains or charges ~~from continuing operations~~ not related to or allocated to an individual operating segment. They include a portion of items such ~~as:~~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. As a result of reclassifying our former Cellulose Fibers segment as discontinued operations, unallocated items also includes retained indirect corporate overhead costs previously allocated to the former segment.LIFO.

NET CONTRIBUTION TO EARNINGS – UNALLOCATED ITEMS

QUARTER ENDED
AMOUNT OF
CHANGE
YEAR-TO-DATE ENDED AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS JUNE 2017 JUNE 2016 2017 VS.
2016 JUNE 2017 JUNE 2016 2017 VS.
2016
Unallocated corporate function expense $ (17 ) $ (24 ) $ 7
$ (36 ) $ (41 ) $ 5
Unallocated share-based compensation —
1
(1 ) (6 ) (1 ) (5 )
Unallocated pension service costs —
—
—
(2 ) (2 ) —
Foreign exchange gain (loss) —
1
(1 ) (3 ) 14
(17 )
Elimination of intersegment profit in inventory and LIFO (3 ) (2 ) (1 ) (9 ) (8 ) (1 )
Gains on sales of non-strategic assets 1
8
(7 ) 4
44
(40 )
Charges for integration and restructuring, closures and asset impairments:
Plum Creek merger- and integration-related costs (2 ) (8 ) 6
(14 ) (118 ) 104
Other restructuring, closures, and asset impairments —
(1 ) 1
—
(1 ) 1
Other (10 ) (20 ) 10
(18 ) (24 ) 6
Operating income (loss) (31 ) (45 ) 14
(84 ) (137 ) 53
Equity earnings from joint venture⁽¹⁾
—
7
(7 ) —
12
(12 )
Non-operating pension and other postretirement benefit (costs) credits⁽²⁾
(8 ) 10
(18 ) (30 ) 24
(54 )
Interest income and other 9
10
(1 ) 18
19
(1 )
Net contribution to earnings $ (30 ) $ (18 ) $ (12 ) $ (96 ) $ (82 ) $ (14 )



	QUARTER ENDED						AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS	MARCH 2018			MARCH 2017			2018 VS. 2017
Unallocated corporate function and variable compensation expense	$	(18	)	$	(19	)	$	1
Liability classified share-based compensation	—			(6		)	6
Foreign exchange losses	(2		)	(3		)	1
Elimination of intersegment profit in inventory and LIFO	(21		)	(6		)	(15		)
Charges for integration and restructuring, closures and asset impairments	—			(12		)	12
Other	(39		)	(7		)	(32		)
Operating income (loss)	(80		)	(53		)	(27		)
Non-operating pension and other postretirement benefit costs	(24		)	(22		)	(2		)
Interest income and other	12			9			3
Net contribution to earnings	$	(92	)	$	(66	)	$	(26	)


~~(1)~~	~~The quarter and year-to-date period ended 2016 includes equity earnings from our Timberland Venture, which effective August 31, 2016, is consolidated as a wholly-owned subsidiary.~~

~~(2)~~

During first quarter 2017 we adopted ASU 2017-07, which requires us to show components of pension and other postretirement benefit costs (interest, expected return on plan assets, amortization of actuarial gains or losses, and amortization of prior service credits or costs) on the ~~Consolidated Statement of Operations~~ ~~as a line item outside of operating income. We reclassified these components for all periods shown above. Refer to~~ ~~Note 1: Basis of Presentation~~ ~~for further details.~~

Comparing ~~Second~~First Quarter ~~2017~~2018 with ~~Second~~First Quarter ~~2016~~2017

Changes in Unallocated Items were primarily related to:


•	a $28 million increase in charges for "Other," due to environmental remediation charges recorded in first quarter 2018 (refer to Note 12: Legal Proceedings, Commitments and Contingencies);

a $15 million increase in charges for "Elimination of intersegment profit in inventory and LIFO" due to an increase in intercompany lumber and log inventories from first quarter 2017 to first quarter 2018; and


•	a $12 million decrease in charges related to our merger with Plum Creek ~~decreased $6 million. Refer~~compared to first quarter 2017 (refer to Note 15: Charges for Integration and Restructuring, Closures, and Asset Impairments.

an $18 million increase in expense related to "Non-operating pension and other postretirement benefit (costs) credits" due to a decrease in the expected return on our plan assets and an increase in the amortization of actuarial losses.

~~Comparing Year-to-Date 2017 with Year-to-Date 2016~~

~~Changes in Unallocated Items were primarily related to:~~


•	~~charges related to our merger with Plum Creek decreased $104 million. Refer to~~ ~~Note 15: Charges for Integration and Restructuring, Closures and Asset Impairments~~.

an increase in expense related to "Non-operating pension and other postretirement benefit (costs) credits" due to a decrease in the expected return on our plan assets and an increase in the amortization of actuarial losses – $54 million.


•	~~a pretax gain recognized in first quarter 2016 related to the sale of our Federal Way, Washington headquarters campus, which is recorded in "Other operating costs (income), net" in our~~ ~~Consolidated Statement of Operations~~ ~~– $36 million.~~

~~a change from a gain year-to-date 2016 to a loss year-to-date 2017 on foreign exchange primarily related to debt held by our Canadian entity – $17 million.~~


•	a decrease in equity earnings from our joint venture – $12 million. 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. Refer to ~~Note 17: Income Taxes~~ for further ~~information.~~details).

INTEREST EXPENSE

Our interest expense, net of capitalized interest incurred was:

$~~100~~93 million for the ~~second~~first quarter ~~2017 and $199 million for year-to-date 2017;~~2018 and

$~~114~~99 million for the ~~second~~first quarter ~~2016 and $209 million for year-to-date 2016.~~2017.

Interest expense decreased ~~$14~~by $6 million ~~compared to second quarter 2016 and $10 million compared to year-to-date 2016~~ primarily due to the decreased average outstanding debt in ~~2017 versus 2016. During~~ first quarter ~~2016, we entered into two term loans totaling $2.5 billion, both of which were paid in full and terminated in fourth~~2018 compared to first quarter ~~2016. As such, only the results for 2016 included interest incurred on these loans.~~2017.

INCOME TAXES

Our provision for income taxes ~~for our continuing operations~~ was:

$3430 million for the ~~second~~first quarter ~~2017 and $58 million year-to-date 2017;~~2018 and

$3124 million for the ~~second~~first quarter ~~2016 and $42 million year-to-date 2016.~~2017.

Our provision for income taxes is primarily driven by earnings generated by our ~~taxable REIT subsidiaries.~~TRSs. Overall performance results for our business segments can be found in Consolidated Results.

The Tax Act, enacted in December 2017, reduced the U.S. corporate tax rate from 35 percent to 21 percent. In first quarter 2018, our provision for income taxes was higher compared to first quarter 2017 due to increased earnings in our TRS. The tax impact of the increased earnings more than offset the benefit of the reduced U.S. corporate tax rate.

Refer to Note ~~17:~~18: Income Taxes for additional information.

LIQUIDITY AND CAPITAL RESOURCES

We are committed to maintaining an appropriate capital structure that enables us ~~to:~~

to protect the interests of our shareholders and ~~lenders;~~lenders and

maintain access to all major financial markets.

CASH FROM OPERATIONS

Consolidated net cash ~~provided by our~~from operations was:

$~~524~~136 million for ~~year-to-date 2017;~~first quarter 2018; and

$~~539~~35 million for ~~year-to-date 2016.~~first quarter 2017.

Comparing ~~Year-to-Date~~first quarter 2018 with first quarter 2017 ~~with Year-to-Date 2016~~

Net cash ~~provided by our~~from operations ~~decreased $15~~increased $101 million, primarily due to:

~~decreased operating~~increased cash flows generated from ~~discontinued operations~~our business segments, excluding working capital changes, of ~~$134 million and~~$103 million;

~~an increase in~~decreased cash paid for income taxes of ~~$131 million.~~$42 million;

product remediation insurance recoveries received of $20 million in first quarter 2018;

decreased working capital used for accrued wages, salaries, and severance pay of $17 million; and

decreased cash paid for interest of $15 million; and

These ~~decreases~~increases were partially offset by ~~increased cash flows~~a net increase in working capital from our business segments of ~~$238~~$126 million. ~~See~~ ~~Performance Measures~~ ~~for our Adjusted EBITDA by segment.~~

CASH FROM INVESTING ACTIVITIES

Consolidated net cash ~~provided by (used in)~~used in investing activities was:

($~~106 million) for year-to-date 2017; and~~

~~$374~~76 million for ~~year-to-date 2016.~~first quarter 2018; and

$68 million for first quarter 2017.

Comparing ~~Year-to-Date~~first quarter 2018 with first quarter 2017 ~~with Year-to-Date 2016~~

Net cash ~~from~~used in investing activities ~~decreased $480~~increased $8 million, primarily due ~~to the following non-recurring cash inflows that occurred in 2016:~~to:

~~$440 million of proceeds from contribution of timberlands to the Twin Creeks Venture; and~~

~~$70 million of proceeds from the sale of our Federal Way, Washington headquarters campus.~~

~~These decreases were partially offset by~~ a ~~$12~~$6 million decrease in proceeds from sale of non-strategic assets; and

a $6 million increase in cash used for capital expenditures.

Summary of Capital Spending by Business Segment


	YEAR-TO-DATE ENDED				QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2017		JUNE 2016		MARCH 2018		MARCH 2017
Timberlands	$	55	$	51	$	28	$	30
Real Estate & ENR	1		1		—		—
Wood Products	105		81		52		44
Unallocated Items	1		7		1		1
Discontinued operations	—		34
Total	$	162	$	174	$	81	$	75

We expect our net capital expenditures for ~~2017~~2018 to be ~~$435~~$420 million, which is comparable to ~~2016~~2017 capital ~~spending for continuing operations.~~spending. The amount we spend on capital expenditures could ~~change due to:~~

~~capital allocation priorities,~~

~~future economic conditions,~~

~~environmental regulations,~~

~~changes in the composition of our business,~~

~~weather and~~

~~timing of equipment purchases.~~change.

CASH FROM FINANCING ACTIVITIES

Consolidated net cash used in financing activities was:

$~~393~~286 million for ~~year-to-date 2017;~~first quarter 2018 and

$~~1,433~~188 million for ~~year-to-date 2016.~~first quarter 2017.

Comparing ~~Year-to-Date~~first quarter 2018 with first quarter 2017 ~~with Year-to-Date 2016~~

Net cash used in financing activities ~~decreased $1,040~~increased $98 million primarily due to the following:

~~a $1.6 billion decrease in cash paid to repurchase common shares;~~

~~repayment of Plum Creek's line of credit and term loan outstanding at the merger date in 2016 in the amount of $720 million; and~~

~~an $11 million decrease in cash dividends paid on preference shares.~~

~~These were offset by $1.4 billion of cash proceeds from term loan credit facility borrowings subsequent to the merger date during first quarter 2016 and~~ an increase of ~~$69~~$62 million in cash used for payments of long-term debt; and

a decrease of $30 million in proceeds from ~~exercise~~exercises of stock options.

Lines of Credit

During March 2017, we entered into a new $1.5 billion five-year senior unsecured revolving credit facility that expires in March 2022. This replaces a $1 billion senior unsecured revolving credit facility that was set to expire September 2018. As of March 31, 2018, there were no borrowings outstanding.

Refer to Note 10: Long-Term Debt and Lines of Credit for further information.

Long-term Debt

During first quarter 2018, we paid our $62 million 7.00 percent debenture at maturity.

Refer to Note 10: Long-Term Debt and Lines of Credit for further information.

Debt Covenants

As of ~~June 30, 2017,~~March 31, 2018, Weyerhaeuser Company was in compliance with its debt covenants. There have been no significant changes during ~~second~~first quarter ~~2017~~2018 to the debt covenants presented in our ~~2016~~2017 Annual Report on Form 10-K for our existing long-term debt instruments.

~~Term Loan Prepayment and Replacement~~

Subsequent to our quarter ended June 30, 2017, but prior to the issuance of these financial statements, we have prepaid a $550 million variable-rate term loan originally set to mature in 2020 (2020 term loan). The 2020 term loan was prepaid using available cash as well as borrowing proceeds from a new $225 million variable-rate term loan set to mature in 2026 (2026 term loan). Due to the use of available cash to settle a portion of the 2020 term loan, we have reclassified the related portion ($325 million) of the 2020 term loan outstanding at June 30, 2017, from "Long-term debt" to "Current maturities of long-term debt" on our current period ~~Consolidated Balance Sheet. For more information about the new term loan, see~~ ~~Other Information~~.

Option Exercises

We received cash proceeds from the exercise of stock options of:

$8125 million in ~~2017;~~first quarter 2018 and

$1255 million in ~~2016.~~first quarter 2017.

Our average stock price was ~~$33.10~~$35.29 and ~~$28.78~~$32.53 for ~~year-to-date~~first quarter 2018 and first quarter 2017, ~~and 2016,~~ respectively.

Paying Dividends and Repurchasing ~~Stock~~Shares

We paid cash dividends on common shares of:

$~~466~~242 million in ~~2017;~~first quarter 2018 and

$~~469~~233 million in ~~2016.~~first quarter 2017.

The ~~decrease~~increase in dividends paid is primarily due to ~~decreased common shares outstanding at the~~an increase in our quarterly dividend ~~record dates.~~from 31 cents per share to 32 cents per share in November 2017.

The 2016 Share Repurchase Authorization was approved in November 2015 by our Board of Directors and authorized management to repurchase up to $2.5 billion of outstanding shares. During ~~second~~first quarter ~~2017,~~2018, we did not repurchase any shares. As of ~~June 30, 2017,~~March 31, 2018, we had remaining authorization of $500 million for future ~~stock~~share repurchases.

WeIf a repurchase were to occur, we would record share repurchases upon the trade date as opposed to the settlement date when cash is disbursed. We would record a liability ~~to account~~ for repurchases that ~~have~~had not yet been ~~cash~~ settled. There were no unsettled repurchases as of ~~June 30, 2017.~~March 31, 2018.

PERFORMANCE MEASURES

We use Adjusted Earnings before Interest, Taxes, Depreciation, Depletion and Amortization (Adjusted EBITDA) as a key performance measure to evaluate the performance of the consolidated company and our business segments. This measure should not be considered in isolation from and is not intended to represent an alternative to our results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP). However, we believe Adjusted EBITDA provides meaningful supplemental information for investors about our operating performance, better facilitates period to period comparisons, and is widely used by analysts, lenders, rating agencies and other interested parties.

Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA, as we define it, is operating income ~~from continuing operations~~ adjusted for depreciation, depletion, amortization, basis of real estate sold, unallocated pension service costs and special items. Adjusted EBITDA excludes results from joint ventures.

ADJUSTED EBITDA BY SEGMENT


	QUARTER ENDED						AMOUNT OF CHANGE			YEAR-TO-DATE ENDED						AMOUNT OF CHANGE			QUARTER ENDED						AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS	JUNE 2017			JUNE 2016			2017 VS. 2016			JUNE 2017			JUNE 2016			2017 VS. 2016			MARCH 2018			MARCH 2017			2018 VS. 2017
Adjusted EBITDA by Segment:
Timberlands	$	222		$	220		$	2		$	464		$	419		$	45		$	268		$	242		$	26
Real Estate & ENR	37			28			9			80			62			18			41			43			(2		)
Wood Products	274			189			85			481			306			175			286			207			79
	533			437			96			1,025			787			238			595			492			103
Unallocated Items	(27		)	(24		)	(3		)	(65		)	(38		)	(27		)	(51		)	(38		)	(13		)
Adjusted EBITDA	$	506		$	413		$	93		$	960		$	749		$	211		$	544		$	454		$	90

We reconcile Adjusted EBITDA by segment to "Net earnings" for the consolidated company and to "Operating income" for the business segments, as those are the most directly comparable U.S. GAAP measures for each. The table below reconciles Adjusted EBITDA for the quarter ended ~~June 30, 2017:~~March 31, 2018:

DOLLAR AMOUNTS IN MILLIONS Timberlands Real Estate & ENR Wood Products Unallocated Items Total
Adjusted EBITDA by Segment:
Net earnings $ 24
Earnings from discontinued operations, net of income taxes —
Interest expense, net of capitalized interest 100
Income taxes 34
Net contribution to earnings $ (12 ) $ 23
$ 177
$ (30 ) $ 158
Equity earnings from joint ventures —
—
—
—
—
Non-operating pension and other postretirement benefit costs (credits) —
—
—
8
8
Interest income and other —
—
—
(9 ) (9 )
Operating income (loss) (12 ) 23
177
(31 ) 157
Depreciation, depletion and amortization 87
4
36
2
129
Basis of real estate sold —
10
—
—
10
Unallocated pension service costs —
—
—
—
—
Special items⁽¹⁾
147
—
61
2
210
Adjusted EBITDA $ 222
$ 37
$ 274
$ (27 ) $ 506


~~(1)~~	Special items include: $147 million of impairment charges related to our Uruguayan operations; $50 million of product remediation; $11 million of retroactive and prospective countervailing and antidumping duties; and $2 million~~of Plum Creek merger-related costs.~~

~~The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2016:~~


DOLLAR AMOUNTS IN MILLIONS	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items			Total			Timberlands		Real Estate & ENR		Wood Products			Unallocated Items			Total
Adjusted EBITDA by Segment:
Net earnings										$	168												$	269
Earnings from discontinued operations, net of income taxes										(38		)
Interest expense, net of capitalized interest										114													93
Income taxes										31													30
Net contribution to earnings	$	125	$	12	$	156	$	(18	)	$	275		$	189	$	25	$	270		$	(92	)	$	392
Equity earnings from joint ventures	—		—		—		(7		)	(7		)
Non-operating pension and other postretirement benefit costs (credits)	—		—		—		(10		)	(10		)
Non-operating pension and other postretirement benefit cost													—		—		—			24			24
Interest income and other	—		—		—		(10		)	(10		)	—		—		—			(12		)	(12		)
Operating income (loss)	125		12		156		(45		)	248			189		25		270			(80		)	404
Depreciation, depletion and amortization	95		3		33		2			133			79		4		36			1			120
Basis of real estate sold	—		13		—		—			13			—		12		—			—			12
Unallocated pension service costs	—		—		—		—			—			—		—		—			—			—
Special items⁽¹⁾	—		—		—		19			19
Special items^{(1) (2)}													—		—		(20		)	28			8
Adjusted EBITDA	$	220	$	28	$	189	$	(24	)	$	413		$	268	$	41	$	286		$	(51	)	$	544


(1)	Special items ~~include: $8~~in Wood Products include $20 million of ~~Plum Creek merger-related costs and $11 million of legal expense.~~product remediation insurance recoveries.

~~The table below reconciles Adjusted EBITDA for the year-to-date period ended June 30, 2017:~~

DOLLAR AMOUNTS IN MILLIONS Timberlands Real Estate & ENR Wood Products Unallocated Items Total
Adjusted EBITDA by Segment:
Net earnings $ 181
Earnings from discontinued operations, net of income taxes —
Interest expense, net of capitalized interest 199
Income taxes 58
Net contribution to earnings $ 136
$ 49
$ 349
$ (96 ) $ 438
Equity earnings from joint ventures —
—
—
—
—
Non-operating pension and other postretirement benefit costs (credits) —
—
—
30
30
Interest income and other —
—
—
(18 ) (18 )
Operating income (loss) 136
49
349
(84 ) 450
Depreciation, depletion and amortization 181
7
71
3
262
Basis of real estate sold —
24
—
—
24
Unallocated pension service costs —
—
—
2
2
Special items⁽¹⁾
147
—
61
14
222
Adjusted EBITDA $ 464
$ 80
$ 481
$ (65 ) $ 960


~~(1)~~(2)	Special items ~~include: $147~~attributable to Unallocated Items include $28 million of impairment charges related to our Uruguayan operations; $50 million of product remediation; $11 million of retroactive and prospective countervailing and antidumping duties; and $14 million of Plum Creek merger-related costs.environmental remediation charges.

The table below reconciles Adjusted EBITDA for the ~~year-to-date period~~quarter ended ~~June 30, 2016:~~March 31, 2017:


DOLLAR AMOUNTS IN MILLIONS	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items			Total			Timberlands		Real Estate & ENR		Wood Products		Unallocated Items			Total
Adjusted EBITDA by Segment:
Net earnings										$	249											$	157
Earnings from discontinued operations, net of income taxes										(58		)
Interest expense, net of capitalized interest										209												99
Income taxes										42												24
Net contribution to earnings	$	254	$	27	$	243	$	(82	)	$	442		$	148	$	26	$	172	$	(66	)	$	280
Equity earnings from joint ventures	—		—		—		(12		)	(12		)
Non-operating pension and other postretirement benefit costs (credits)	—		—		—		(24		)	(24		)
Non-operating pension and other postretirement benefit cost													—		—		—		22			22
Interest income and other	—		—		—		(19		)	(19		)	—		—		—		(9		)	(9		)
Operating income (loss)	254		27		243		(137		)	387			148		26		172		(53		)	293
Depreciation, depletion and amortization	165		5		63		4			237			94		3		35		1			133
Basis of real estate sold	—		30		—		—			30			—		14		—		—			14
Unallocated pension service costs	—		—		—		2			2			—		—		—		2			2
Special items⁽¹⁾	—		—		—		93			93			—		—		—		12			12
Adjusted EBITDA	$	419	$	62	$	306	$	(38	)	$	749		$	242	$	43	$	207	$	(38	)	$	454

~~(1) Special items include: $118 million of Plum Creek merger-related costs, $36 million gain on sale of non-strategic assets, and $11 million of legal expense.~~


(1)	Special items include: $12 million of Plum Creek merger-related costs.

CRITICAL ACCOUNTING POLICIES

There have been no significant changes during ~~second~~first quarter ~~2017~~2018 to our critical accounting policies presented in our ~~2016~~2017 Annual Report on Form 10-K.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

LONG-TERM INDEBTEDNESS OBLIGATIONS

The following summary of our long-term indebtedness obligations includes:

scheduled principal repayments for the next five years and after;

weighted average interest rates for debt maturing in each of the next five years and ~~after;~~after and

estimated fair values of outstanding obligations.

We estimate the fair value of our debt instruments using quoted market prices we received for the same types and issues of our debt or on the discounted value of the future cash flows using market yields for the same type and comparable issues of debt. Changes in market rates of interest affect the fair value of our fixed-rate debt.

SUMMARY OF LONG-TERM INDEBTEDNESS PRINCIPAL OBLIGATIONS AS OF ~~JUNE 30, 2017~~MARCH 31, 2018


DOLLAR AMOUNTS IN MILLIONS	DOLLAR AMOUNTS IN MILLIONS																							DOLLAR AMOUNTS IN MILLIONS
	2017			2018			2019			2020			2021			THEREAFTER			TOTAL			FAIR VALUE		2018			2019			2020			2021			2022			THEREAFTER			TOTAL			FAIR VALUE
Fixed-rate debt ⁽¹⁾⁽²⁾	$	281		$	62		$	500		$	—		$	719		$	4,450		$	6,012		$	7,142	$	—		$	500		$	—		$	719		$	—		$	4,450		$	5,669		$	6,568
Average interest rate	6.95		%	7.00		%	7.38		%	—		%	5.60		%	6.39		%	5.74		%	N/A		—		%	7.38		%	—		%	5.57		%	—		%	6.38		%	6.36		%	N/A
Variable-rate debt ^{(1) (2)}	$	—		$	—		$	—		$	550		$	—		$	—		$	550		$	550
Variable-rate debt ⁽¹⁾⁽²⁾																								$	—		$	—		$	—		$	—		$	—		$	224		$	224		$	225
Average interest rate	—		%	—		%	—		%	2.84		%	—		%	—		%	2.84		%	N/A		—		%	—		%	—		%	—		%	—		%	3.48		%	3.48		%	N/A

~~(1) Excludes $42 million of unamortized discounts, capitalized debt expense and fair value step-up (related to Plum Creek merger).~~

~~(2) Variable-rate debt matures in 2020. However, as noted in~~ ~~Note 10: Long-Term Debt and Lines of Credit, a portion of the $550 million has been reclassified to "Current maturities of long-term debt" as of June 30, 2017 due to prepayment of this term loan in July 2017. Refer to~~ ~~Note 10: Long-term Debt and Lines of Credit~~ ~~for further details of this prepayment.~~


(1)	Excludes $35 million of unamortized discounts, capitalized debt expense and fair value step-up (related to Plum Creek merger).


(2)	Does not include nonrecourse debt held by our Variable Interest Entities (VIEs). See Note 7: Special-Purpose Entities in the Notes to Consolidated Financial Statements for further information on our VIEs and the related nonrecourse debt.

CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls are controls and other procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure. The company’s principal executive officer and principal financial officer have concluded that the company’s disclosure controls and procedures were effective as of ~~June 30, 2017,~~March 31, 2018, based on an evaluation of the company’s disclosure controls and procedures as of that date.

CHANGES IN INTERNAL CONTROLS

~~During 2017, we integrated the acquired Plum Creek operations into our overall internal controls over financial reporting.~~

~~Except as described above, no~~No changes occurred in the company’s internal control over financial reporting during ~~second~~first quarter ~~2017~~2018 that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

LEGAL PROCEEDINGS

Refer to “Notes to Consolidated Financial Statements – Note 12: Legal Proceedings, Commitments and Contingencies.”

RISK FACTORS

There have been no material changes with respect to the risk factors disclosed in our ~~2016~~2017 Annual Report on Form 10-K.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no share repurchases during ~~the second~~first quarter ~~and year-to-date 2017. Refer to~~ ~~“Notes to Consolidated Financial Statements – Note 5: Net Earnings Per Share”~~ ~~for further information regarding our Share Repurchase Authorization.~~2018.

DEFAULTS UPON SENIOR SECURITIES

None.

MINE SAFETY DISCLOSURES

Not applicable.

OTHER INFORMATION

~~The disclosure set forth below is provided pursuant to Items 1.01 and 2.03 of Form 8-K.~~

~~Term Loan Agreement~~

On July 24, 2017, Weyerhaeuser Company (Company or Weyerhaeuser) entered into a Term Loan Agreement (New Term Loan Agreement) with Northwest Farm Credit Services, PCA, as Administrative Agent, and the lenders party thereto, which provides for a $225 million senior unsecured term loan that will mature in July 2026. Along with cash on hand of the Company, the funds borrowed under the New Term Loan Agreement were used to prepay the Company’s existing $550 million term loan under the credit agreement dated as of September 13, 2013, by and among Weyerhaeuser, CoBank, ACB, as Administrative Agent, and the lenders party thereto (2013 Term Credit Agreement). The borrowing under the New Term Loan Agreement will bear interest, at Weyerhaeuser’s option, at a floating rate based on LIBOR or a Base Rate (as defined in the New Term Loan Agreement) plus a spread that will vary depending upon the credit rating assigned to Weyerhaeuser’s long-term senior unsecured debt from time to time.

~~Weyerhaeuser Covenants~~

~~Under the New Term Loan Agreement, key covenants relating to Weyerhaeuser include requirements to maintain:~~

~~a minimum defined total adjusted shareholders' equity of $3.0 billion, and~~

~~a funded debt ratio (defined total funded indebtedness divided by defined total adjusted shareholders' equity plus defined total funded indebtedness) of not more than 65%.~~

The New Term Loan Agreement contains other covenants customary for a borrower with Weyerhaeuser’s credit rating. These include covenants that place limitations on Weyerhaeuser’s ability to incur secured debt, enter into certain sale and leaseback transactions, merge or sell all or substantially all of its assets or fundamentally change its business.

~~Amendment to Installment Note~~

Reference is made to that certain Assumption and Amendment Agreement dated as of April 28, 2016, by and among Plum Creek Timberlands, L.P., Weyerhaeuser and MeadWestvaco Timber Note Holding Company II, L.L.C., including the Amended and Restated Installment Note dated December 16, 2013, as amended as of April 28, 2016, that is attached as Annex A thereto (Installment Note). Pursuant to Sections 2.01 and 3.01 of Appendix A to the Installment Note, the affirmative and negative covenants set forth in the 2013 Term Credit Agreement or, as applicable, any Replacement Credit Agreement (as defined in the Installment Note) are incorporated by reference into the Installment Note. The New Term Loan Agreement is a Replacement Credit Agreement; therefore, effective upon the execution of the New Term Loan Agreement, the affirmative and negative covenants set forth in the New Term Loan Agreement replaced such provisions from the 2013 Term Credit Agreement and became incorporated by reference into the Installment Note.

~~Claim Agreement~~

In connection with the New Term Loan Agreement, Weyerhaeuser NR Company (WNR), a wholly owned subsidiary of Weyerhaeuser, and Weyerhaeuser entered into a claim agreement pursuant to which the lenders under the New Term Loan Agreement will have claims enforceable against WNR for payment of obligations under the New Term Loan Agreement to the same extent that holders of certain debt securities issued by Weyerhaeuser have successfully asserted claims, if any, enforceable against WNR for the payment of such debt securities by reason of any assumption agreement entered into between WNR and Weyerhaeuser pursuant to which WNR assumed the performance of payment obligations of Weyerhaeuser in respect of such debt securities.

The foregoing description of the New Term Loan Agreement and the related matters, including the effect of the New Term Loan Agreement on the Installment Note, is a general description only, does not purport to be complete and is qualified in its entirety by reference to the New Term Loan Agreement and the Installment Note, which are filed with this quarterly report as Exhibit 10.1 and 4.1, respectively and are incorporated into this quarterly report by reference. The New Term Loan Agreement contains representations and warranties that Weyerhaeuser made to the lenders that are party to the New Term Loan Agreement as of a specific date. The assertions embodied in those representations and warranties were made solely for purposes of the contractual agreements between the parties to the New Term Loan Agreement and may be subject to important qualifications and limitations to which the parties agreed in connection with negotiating the New Term Loan Agreement. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to investors, or may have been used for the purpose of allocating risk between the parties rather than establishing matters as fact. For the foregoing reasons, investors should not rely on the representations and warranties contained in the New Term Loan Agreement as statements or representations of factual information.

Certain of the lenders and their respective affiliates have, from time to time, performed, and may in the future perform, various commercial banking and general financing services for the Company for which they received or will receive customary fees and reimbursement for related expenses.

None.

EXHIBITS



~~4.1~~	Assumption and Amendment Agreement and Installment Note dated as of April 28, 2016 by and among Plum Creek Timberlands, L.P., Weyerhaeuser Company and MeadWestvaco Timber Note Holding Company II, L.L.C. (incorporated by reference to ~~Exhibit 4.1~~ ~~to the Current Report on Form 8-K filed on May 4, 2016 - Commission File Number 1-4825)~~

~~10.1~~	~~Term Loan Agreement dated July 24, 2017, by and among Weyerhaeuser Company, Northwest Farm Credit Services, PCA, as administrative agent, and the lenders party thereto~~31.1

~~12.1~~	~~Statements regarding computation of ratios~~

~~31.1~~	Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended

32.1	Certification pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350)

100.INS	XBRL Instance Document

100.SCH	XBRL Taxonomy Extension Schema Document

100.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

100.DEF	XBRL Taxonomy Extension Definition Linkbase Document

100.LAB	XBRL Taxonomy Extension Label Linkbase Document

100.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	WEYERHAEUSER COMPANY
	Date:	~~July 28, 2017~~April 27, 2018

	By:	/s/ Jeanne M. Hillman
		Jeanne M. Hillman
		Vice President and Chief Accounting Officer
		(Principal Accounting Officer)

3831



DOLLAR AMOUNTS IN MILLIONS
Balance at December 31, 2016	$	426
Lease payments to Twin Creeks Venture	(9		)
Distributions from Twin Creeks Venture	2
Balance at June 30, 2017	$	419



DOLLAR AMOUNTS IN MILLIONS
Accrued severance as of December 31, 2016	$	26
Charges	8
Payments	(19		)
Accrued severance as of June 30, 2017	$	15