WY-12.31.11-10K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011
or
[    ] 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
A WASHINGTON CORPORATION
91-0470860
(IRS EMPLOYER IDENTIFICATION NO.)
FEDERAL WAY, WASHINGTON 98063-9777 TELEPHONE (253) 924-2345
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS
 
NAME OF EACH EXCHANGE ON WHICH REGISTERED:
Common Shares ($1.25 par value)
 
Chicago Stock Exchange
 
 
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  [X] Yes  [   ] No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  [   ] Yes  [X] No
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.  [ ] Yes  [X] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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  [   ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  [X]    Accelerated filer  [   ]    Non-accelerated filer  [   ]    Smaller reporting company  [   ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  [   ] Yes  [X] No
As of June 30, 2011, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $11,586,262,405 based on the closing sale price as reported on the New York Stock Exchange Composite Price Transactions.
As of February 3, 2012, 536,500,796 shares of the registrant’s common stock ($1.25 par value) were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Notice of 2012 Annual Meeting of Shareholders and Proxy Statement for the company’s Annual Meeting of Shareholders to be held April 12, 2012, are incorporated by reference into Part II and III.


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TABLE OF CONTENTS
PART I
 
 
ITEM 1.
 
 
 
 
 
 
 
 
   OUR EMPLOYEES
 
 
 
   TIMBERLANDS
 
   WOOD PRODUCTS
 
 
   REAL ESTATE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ITEM 1A.
 
 
 
 
 
 
 
 
   SUBSTITUTION
 
 
 
 
 
 
 
 
 
   REIT STATUS
 
 
   EXPORT TAXES
 
 
 
 
ITEM 1B.
ITEM 2.
ITEM 3.



PART II
 
 
ITEM 5.

ITEM 6.

ITEM 7.

 

 

 

 

 

 

 
   TIMBERLANDS

 

 

 
   REAL ESTATE

 

 

 
   INCOME TAXES

 

 

 

 
   FINANCING

 

 

 

 

 

ITEM 7A.

 

ITEM 8.

 

 

 

 

 

 

 

ITEM 9.

ITEM 9A.

 

 

 

 

ITEM 9B.
OTHER INFORMATION — NOT APPLICABLE
 
 
 
 
PART III
 
 
ITEM 10.

ITEM 11.

ITEM 12.

ITEM 13.

ITEM 14.

 
 
 
PART IV
 
 
ITEM 15.

 

 

 

 

 
 
 
 
CERTIFICATIONS
116

 
 
 
 
COMPANY OFFICERS
119



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OUR BUSINESS
We are a forest products company that grows and harvests trees, builds homes and makes a range of forest products essential to everyday lives. Our goal is to do this safely, profitably and responsibly. We are committed to operate as a sustainable company. We focus on increasing energy and resource efficiency, reducing greenhouse gas emissions, reducing water consumption, conserving natural resources, and offering products that meet human needs with superior sustainability attributes. We operate with world class safety results, understand and address the needs of the communities in which we operate, and present ourselves transparently.
We have offices or operations in 11 countries and have customers worldwide. We manage 20.3 million acres of forests, of which we own 5.7 million acres, lease 0.7 million acres and have renewable, long-term licenses on 13.9 million acres. In 2011, we generated $6.2 billion in net sales from our continuing operations.
This portion of our Annual Report and Form 10-K provides detailed information about who we are, what we do and where we are headed. Unless otherwise specified, current information reported in this Form 10-K is as of the fiscal year ended December 31, 2011.
We break out financial information such as revenues, earnings and assets by the business segments that form our company. We also discuss the development of our company and the geographic areas where we do business.
We report our financial condition in two groups:
Forest Products — our forest products-based operations, principally the growing and harvesting of timber, the manufacture, distribution and sale of forest products and corporate governance activities; and
Real Estate — our real estate development and construction operations.
Throughout this Form 10-K, unless specified otherwise, references to “we,” “our,” “us” and “the company” refer to the consolidated company, including both Forest Products and Real Estate.

WE CAN TELL YOU MORE
AVAILABLE INFORMATION
We meet the information-reporting requirements of the Securities Exchange Act of 1934 by filing periodic reports, proxy statements and other information with the Securities and Exchange Commission (SEC). These reports and statements — information about our company’s business, financial results and other matters — are available at:
the SEC Internet site — www.sec.gov;
the SEC’s Public Conference Room, 100 F St. N.E., Washington, D.C., 20549, (800) SEC-0330; and
our Internet site — www.weyerhaeuser.com.
When we file the information electronically with the SEC, it also is added to our Internet site.
 
WHO WE ARE
We started out as Weyerhaeuser Timber Company, incorporated in the state of Washington in January 1900, when Frederick Weyerhaeuser and 15 partners bought 900,000 acres of timberland.

REAL ESTATE INVESTMENT TRUST (REIT) ELECTION
Starting with our 2010 fiscal year, we elected to be taxed as a REIT. We expect to derive most of our REIT income from investments in timberlands, including the sale of standing timber through pay-as-cut sales contracts. REIT income can be distributed to shareholders without first paying corporate level tax, substantially eliminating the double taxation on income. A significant portion of our timberland segment earnings receives this favorable tax treatment. We are, however, subject to corporate taxes on built-in-gains (the excess of fair market value over tax basis at January 1, 2010) on sales of real property (other than standing timber) held by the REIT during the first 10 years following the REIT conversion. We continue to be required to pay federal corporate income taxes on earnings of our Taxable REIT Subsidiary (TRS), which principally includes our manufacturing businesses, our real estate development business and our non-qualified timberland segment income.
 
OUR BUSINESS SEGMENTS
In the Consolidated Results section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, you will find our overall performance results for our business segments:
Timberlands,
Wood Products,
Cellulose Fibers,
Real Estate and
Corporate and Other.
Detailed financial information about our business segments and our geographic locations is in Note 2: Business Segments and Note 21: Geographic Areas in the Notes to Consolidated Financial Statements, as well as in this section and in the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CURRENT MARKET CONDITIONS
In 2011, the U.S. economy slowed its pace of recovery. The underlying causes included the Japan earthquake and tsunami, the U.S. deficit and related political instability and European debt crisis. These factors weighed heavily on the economy, delaying many anticipated improvements in key economic indicators. The U.S. housing market continues to be affected by these events and consequently lags other sectors in the recovery. Improvement in the latter part of 2011 in key areas such as job creation, industrial production and GDP may help spur growth in U.S. housing; however, the sector remains burdened by excess inventory and a diminished pool of qualified home buyers. The health of the U.S. housing

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market strongly affects our Real Estate, Wood Products and Timberlands segments. Real Estate focuses on building single family homes. Wood Products primarily sells into the new residential building and repair and remodel markets. Demand for logs from our Timberlands segment is affected by the production of wood-based building products as well as export demand. Cellulose Fibers is primarily affected by global demand and the relative strength of the U.S. dollar.

COMPETITION IN OUR MARKETS
We operate in highly competitive domestic and foreign markets, with numerous companies selling similar products. Many of our products also face competition from substitutes for wood and wood-fiber products. In real estate development, our competitors include numerous regional and national firms. We compete in our markets primarily through price, product quality and service levels.
Our business segments’ competitive strategies are as follows:
Timberlands — Extract maximum value from each acre we own or manage.
Wood Products — Deliver high-quality lumber, structural panels, engineered wood products and complementary products for residential and commercial applications.
Cellulose Fibers — Concentrate on value-added pulp products.
Real Estate — Deliver unique value propositions in target markets.

SALES OUTSIDE THE U.S.
In 2011, $2.2 billion — 36 percent — of our total consolidated sales and revenues from continuing operations were to customers outside the U.S. The table below shows sales outside the U.S. for the last three years.
SALES OUTSIDE THE U.S. IN MILLIONS OF DOLLARS
  
2011

2010

2009

Exports from the U.S.
$
1,775

$
1,610

$
1,237

Canadian export and domestic sales
363

327

219

Other foreign sales
70

52

32

Total
$
2,208

$
1,989

$
1,488

Percent of total sales
36
%
33
%
29
%

OUR EMPLOYEES
We have approximately 12,800 employees. This number includes:
11,910 employed in North America and
890 employed by our operations outside of North America.
Of these employees, approximately 3,400 are members of unions covered by multi-year collective-bargaining agreements. More information about these agreements is in Note 8: Pension and Other Postretirement Benefit Plans in the Notes to Consolidated Financial Statements.

COMPARABILITY OF DATA
Over the last five years, we have exited businesses that did not fit our long-term strategic direction. As you review our results for the past five years, it may be helpful to keep in mind the following divestitures and the segments affected.
Summary of Recent Divestitures
YEAR
TRANSACTION
SEGMENTS AFFECTED
2011
Westwood Shipping Lines – sold
Corporate and Other segment
2011
Hardwoods operations – sold
Wood Products segment
2010
Five short line railroads – sold
Corporate and Other segment
2009
Trus Joist® Commercial division – sold
Wood Products segment
2008
Containerboard, Packaging and Recycling segment – sold
Containerboard, Packaging and Recycling segment
2008
Australian operations – sold
Corporate and Other segment
2008
Uruguay operations – partition completed
Timberlands and Corporate and Other segments
2007
Fine Paper and related assets – divested
Fine Paper, Timberlands and Wood Products segments
2007
New Zealand operations – sold
Corporate and Other segment
2007
Canadian wood products distribution centers – sold
Wood Products segment
Additional information related to our discontinued operations can be found in Note 3: Discontinued Operations in the Notes to Consolidated Financial Statements. Information pertaining to segment comparability can be found in Note 2: Business Segments in the Notes to Consolidated Financial Statements.

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WHAT WE DO
This section provides information about how we:
grow and harvest trees,
manufacture and sell products made from them,
build and sell homes and
develop land.
For each of our business segments, we provide details about what we do, where we do it, how much we sell and where we are headed.

TIMBERLANDS
Our Timberlands business segment manages 6.4 million acres of private commercial forestland worldwide. We own 5.7 million of those acres and lease the other 0.7 million acres. In addition, we have renewable, long-term licenses on 13.9 million acres of forestland located in four Canadian provinces. The tables presented in this section include data from this segment's business units as of the end of 2011.
WHAT WE DO
Forestry Management
Our Timberlands business segment:
grows and harvests trees for use as lumber, other wood and building products and pulp and paper;
exports logs to other countries where they are made into products;
plants seedlings — and in parts of Canada we use natural regeneration — to reforest the harvested areas using the most effective regeneration method for the site and species;
monitors and cares for the new trees as they grow to maturity; and
seeks to sustain and maximize the timber supply from our forestlands while keeping the health of our environment a key priority.
Our goal is to maximize returns by selling logs and stumpage to internal and external customers. We focus on solid wood and use intensive silviculture to improve forest productivity and returns while managing our forests on a sustainable basis to meet customer and public expectations.
International operations in this segment consist principally of forest plantations, forest licenses and converting assets in South America. We serve as owners or managing partner in these operations, which are either wholly-owned subsidiaries or joint ventures. In Brazil, we are the managing partner in a joint venture established in 2004. We own 67 percent of this joint venture and Fibria Celulose SA owns the remaining 33 percent. A hardwood sawmill with 65,000 cubic meters of capacity produces high-value eucalyptus (Lyptus®) lumber and related appearance wood products. In China, we are the managing partner in a joint venture established in 2007. We own 51 percent of this joint venture and Fujian Yong’An Forestry Company owns the remaining 49 percent. As of December 31, 2011, the joint venture managed 44,000 acres of timberlands.
Sustainable Forestry Practices
We are committed to responsible environmental stewardship wherever we operate, managing forests to produce financially mature timber while protecting the ecosystem services they provide. Our working forests include places with unique environmental, cultural, historical or recreational value. To protect their unique qualities, we follow regulatory requirements, voluntary standards and implement the Sustainable Forestry Initiative® (SFI) standard. Independent auditing of all of the forests we own or manage in the United States and Canada certifies that we meet the SFI standard. Our forestlands in Uruguay are Forest Stewardship Council (FSC) certified or managed to the developing Uruguayan national forestry management standard designed to meet the Program for the Endorsement of Forest Certification (PEFC).
Canadian Forestry Operations
In Canada, we have licenses to operate forestlands that provide raw material for our manufacturing units in various provinces. When we harvest trees, we pay the provinces at stumpage rates set by the government, which generally are based on prevailing market prices. We do not generate any profit in the Timberlands segment from the harvest of timber from the licensed acres in Canada.
Other Values From Our Timberlands
In the United States, we actively manage mineral, oil and gas leases on our land and use geologic databases to identify and market opportunities for commercial mineral and geothermal development. We recognize leasing revenue over the terms of agreements with customers. Revenue primarily comes from:
royalty payments on oil and gas production;
upfront bonus payments from oil and gas leasing and exploration activity;
royalty payments on hard minerals (rock, sand and gravel);
geothermal lease and option revenues; and
the sale of mineral assets.
In managing mineral resources, we generate revenue related to our ownership of the minerals and, separately, related to our ownership of the surface. The ownership of mineral rights and surface acres may be held by two separate parties. Materials that can be mined from the surface, and whose value comes from factors other than their chemical composition, typically belong to the surface owner. Examples of surface materials include rock, sand, gravel, dirt and topsoil. The mineral owner holds the title to commodities that derive value from their unique chemical composition. Examples of mineral rights include oil, gas, coal (even if mined at the surface) and precious metals. If the two types of rights conflict, then mineral rights generally are superior to surface rights. A third type of land right is geothermal, which can belong to either the surface or mineral owner. We routinely reserve mineral and geothermal rights when selling surface timberlands acreage.

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Timberlands Products
PRODUCTS
HOW THEY’RE USED
Logs
Logs are made into lumber, other wood and building products and pulp and paper products
Timberlands
Timberland tracts are exchanged to improve our timberland portfolio or are sold to third parties by our land development subsidiary within this segment
Timber
Standing timber is sold to third parties
Minerals, oil and gas
Sold into construction and energy markets
Other products
Includes seed and seedlings, poles, as well as plywood and hardwood lumber produced by our international operations, primarily in South America
HOW WE MEASURE OUR PRODUCT
We report Timberlands data in cubic meters. Cubic meters measure the total volume of wood fiber in a tree or log that we can sell. Cubic meter volume is determined from the large and small-end diameters and length and provides a more consistent and comparative measure of timber and log volume among operating regions, species, size and seasons of the year than other units of measure.
We also use two other units of measure when transacting business including:
thousand board feet (MBF) — used in the West to measure the expected lumber recovery from a tree or log, but it does not include taper or recovery of nonlumber residual products; and
green tons — used in the South to measure weight, but factors used for conversion to product volume can vary by species, size, location and season.
Both measures are accurate in the regions where they are used, but they do not provide a meaningful basis for comparisons between the regions.
The conversion rate for MBF to cubic meters varies based on several factors including diameter, length and taper of the timber. The average conversion rate for MBF to cubic meters is approximately 6.7 cubic meters per MBF.
The conversion rate from green tons to cubic meters also varies based on the season harvested and the specific gravity of the wood for the region where the timber is grown. An average conversion rate for green tons to cubic meters is approximately 0.825 cubic meters per green ton.
WHERE WE DO IT
Our timberlands assets are located primarily in North America. In the U.S. we own and manage sustainable forests in nine states for use in wood products and pulp and paper manufacturing. We own or lease:
4.0 million acres in the southern U.S. (Alabama, Arkansas, Louisiana, Mississippi, North Carolina, Oklahoma and Texas); and
2.0 million acres in the Pacific Northwest (Oregon and Washington).
Our international operations are located primarily in Uruguay and China. In Uruguay we own 300,000 acres and have long-term leases on 26,000 acres. In China we have long-term leases on 44,000 acres.
In addition, we have renewable, long-term licenses on 13.9 million acres of forestland owned by the provincial government of four Canadian provinces.
Our total timber inventory — including timber on owned and leased land in our U.S. and international operations — is approximately 297 million cubic meters. The timber inventory on licensed lands in Canada is approximately 384 million cubic meters. The amount of timber inventory does not translate into an amount of lumber or panel products because the quantity of end products:
varies according to the species, size and quality of the timber; and
will change through time as the mix of these variables adjust.
The species, size and grade of the trees affects the relative value of our timberlands.
DISCUSSION OF OPERATIONS BY GEOGRAPHY
Summary of 2011 Timber Inventory and Timberland Locations
United States
GEOGRAPHIC AREA
MILLIONS
OF CUBIC
METERS

THOUSANDS OF ACRES AT
DECEMBER 31, 2011
 
  
TOTAL
INVENTORY

FEE
OWNERSHIP

LONG-
TERM
LEASES

TOTAL
ACRES

U.S.:
 
 
 
 
West
154

1,961


1,961

South
135

3,399

665

4,064

Total U.S.
289

5,360

665

6,025


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Western United States
Our Western acres are well situated to serve the wood product markets in Oregon and Washington. Their location near Weyerhaeuser mills and many third-party facilities allows for multiple sales opportunities. In addition, our location on the West Coast provides access to higher-value export markets for Douglas fir and hemlock logs in Japan, Korea and China. The size and quality of our Western timberlands, coupled with their proximity to several deep-water port facilities, positions us to meet the needs of Pacific Rim log markets.
Our lands are composed primarily of Douglas fir, a species highly valued for its structural strength. Our coastal lands also contain western hemlock and have a higher proportion of hemlock than our interior holdings. Our management systems, which provide us a competitive operating advantage, range from research and forestry, to technical planning models, mechanized harvesting and marketing and logistics.
The average age of timber harvested in 2011 was 51 years. Most of our U.S. timberland is intensively managed for timber production, but some areas are conserved for environmental, historical, recreational or cultural reasons. Some of our older trees are protected in acreage set aside for conservation, and some are not yet logged due to harvest rate regulations. While over the long term our average harvest age will decrease in accordance with our sustainable forestry practices, we will only harvest approximately 1.5 percent of our Western acreage each year.
Southern United States
Our Southern acres predominantly contain southern yellow pine and encompass timberlands in seven states. This area provides a constant year round flow of logs to a variety of internal and third-party customers. We sell grade logs to mills that manufacture a diverse range of products including lumber, plywood and veneer. We also sell chips and fiber logs to oriented strand board, pulp and paper mills. Our timberlands are well located to take advantage of road, logging and transportation systems for efficient delivery of logs to these customers.
We intensively manage our timber plantations using forestry research and planning systems to optimize grade log production. We also actively manage our land to capture revenues from our oil, gas and hard minerals resources. We do this while providing quality habitat for a range of animals and birds, which is in high demand for recreational purposes. We lease more than 95 percent of our acres to the public and state wildlife agencies for recreational purposes.
The average age of timber harvested in 2011 was 31 years for southern yellow pine. In accordance with our sustainable forestry practices, we harvest approximately 3.0 percent to 3.5 percent of our acreage each year in the South.
International
GEOGRAPHIC AREA
MILLIONS
OF CUBIC
METERS

THOUSANDS OF ACRES AT
DECEMBER 31, 2011
 
  
TOTAL
INVENTORY

FEE
OWNERSHIP

LONG-TERM
LEASES

TOTAL
ACRES

Uruguay
7

300

26

326

China(1)
1


44

44

Total International
8

300

70

370

(1)   Includes Weyerhaeuser percentage ownership of timberlands owned and managed through joint ventures
Our forestlands in Uruguay are approximately 51 percent loblolly pine and 49 percent eucalyptus. On average, the timber in Uruguay is in the first third of its rotation age. It is entering into that part of the growth rotation when we will see increased volume accretion. About 93 percent of the area to be planted has been afforested to date. The afforestation program is planned to be completed within the next two years.
In Uruguay, the target rotation ages are 21 to 22 years for pine and 14 to 17 years for eucalyptus. We manage both species to a grade (appearance) regime.
We also operate a plywood mill in Uruguay with a production capacity of 210,000 cubic meters and a production volume of 140,500 cubic meters reached in 2011.
In Brazil, Weyerhaeuser is a managing partner in a joint venture. We own 67 percent and Fibria Celulose SA owns 33 percent. A hardwood sawmill with 65,000 cubic meters of capacity produces high-value eucalyptus (Lyptus®) lumber and related appearance wood products. The mill’s production in 2011 was 56,000 cubic meters.
Our investment in China is a joint venture with a public company that is controlled by the state and local governments. Weyerhaeuser is the managing partner in a joint venture started in 2007. Ownership is 51 percent Weyerhaeuser and 49 percent Fujian Yong’An Forestry Company. The joint venture currently manages 44,000 acres of timberlands.
In China, the target rotation age is seven years, since we are managing the forests of loblolly pine and eucalyptus for fiber.
Canada — Licensed Timberlands
GEOGRAPHIC AREA
MILLIONS
OF CUBIC
METERS

THOUSANDS OF ACRES AT
DECEMBER 31, 2011

  
TOTAL
INVENTORY
LICENSED
STANDING VOLUME

TOTAL
LICENSE
ARRANGEMENTS

Canada:
 
 
Alberta
253

5,306

British Columbia
12

1,018

Ontario
39

2,573

Saskatchewan
80

4,968

Total Canada
384

13,865


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We lease and license forestland in Canada from the provincial government to secure the volume for our manufacturing units in the various provinces. When the volume is harvested, we pay the province at stumpage rates set by the government and generally based on prevailing market prices. The harvested logs are transferred to our manufacturing facilities at cost (stumpage plus harvest, haul and overhead costs less any margin on selling logs to third parties). Any conversion profit is recognized at the respective mill in either the Cellulose Fibers or Wood Products segment.
Five-Year Summary of Timberlands Production
PRODUCTION IN THOUSANDS
  
  
2011

2010

2009

2008

2007

Fee depletion – cubic meters:
 
 
 
 
 
West
6,595

5,569

6,359

10,626

10,403

South
9,738

8,197

8,996

12,363

12,645

International(1)
854

349

503



Total
17,187

14,115

15,858

22,989

23,048

(1)   International forestlands started commercial thinning in 2009 leading to production volumes.
Our Timberlands annual fee depletion represents the harvest of the timber assets we own. Depletion is a method of expensing the cost of establishing the fee timber asset base over the harvest or timber sales volume. The decline in fee depletion from 2008 through 2010 reflects the company’s decision to defer harvest and preserve the long-term value of the assets.
HOW MUCH WE SELL
Our net sales to unaffiliated customers over the last two years were:
$1.0 billion in 2011 — up 19 percent from 2010; and
$874 million in 2010.
Our intersegment sales over the last two years were:
$646 million in 2011 — up 7 percent from 2010; and
$603 million in 2010.
Five-Year Summary of Net Sales for Timberlands
NET SALES IN MILLIONS OF DOLLARS
 
 
 
 
 
  
2011

2010

2009

2008

2007

To unaffiliated customers:
 
 
 
 
 
Logs:
 
 
 
 
 
West
$
545

$
414

$
329

$
547

$
565

South
196

145

144

97

56

Canada
17

17

13

20

38

Total
758

576

486

664

659

Pay as cut timber sales
34

33

31

32

25

Timberlands sales and exchanges(1)
77

109

66

73

128

Higher and better use land sales(1)
25

22

11

11

33

Minerals, oil and gas
53

60

62

61

40

Products from international operations(2)
86

65

44

40

12

Other products
11

9

14

18

25

Subtotal sales to unaffiliated customers
1,044

874

714

899

922

Intersegment sales:
 
 
 
 
 
United States
424

409

392

817

983

Other
222

194

145

217

363

Subtotal intersegment sales
646

603

537

1,034

1,346

Total
$
1,690

$
1,477

$
1,251

$
1,933

$
2,268

(1)   Higher and better use timberland and non-strategic timberlands are conducted through Forest Products subsidiaries.
(2)   Includes logs, plywood and hardwood lumber harvested or produced by our international operations, primarily in South America.

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Five-Year Trend for Total Net Sales in Timberlands
Percentage of 2011 Sales to Unaffiliated Customers
Log Sales Volumes
Logs sold to unaffiliated customers in 2011 increased approximately 2,316 thousand cubic meters — 27 percent — from 2010.
Sales volumes in the West increased 791 cubic meters — 18 percent — primarily due to strong export demand. Our western sales to unaffiliated customers generally are higher-grade logs sold into the export market and domestic-grade logs sold to West Coast sawmills.
Sales to unaffiliated customers in the South increased 1.5 million cubic meters — 45 percent — primarily due to increased harvest levels and increased sales of logs to third parties. Our southern sales volumes to unaffiliated customers generally are lower-grade fiber logs sold to pulp or containerboard mills. We use most of our high-grade logs in our own converting facilities.
Sales volumes from Canada decreased 28 thousand cubic meters — 6 percent — in 2011. This decrease in volume to unaffiliated customers primarily was due to increased demand by our internal mills for logs mainly in Alberta.
Sales volumes from our international operations increased 31 thousand cubic meters — 11 percent — in 2011. This increase in volume was due to sales of logs to China.
We sell three grades of logs — domestic grade, domestic fiber and export. Factors that may affect log sales in each of these categories include:
domestic grade log sales — lumber usage, primarily for housing starts and repair and remodel activity, the needs of our own mills and the availability of logs from both outside markets and our own timberlands;
domestic fiber log sales — demand for chips by pulp and containerboard mills; and
export log sales — the level of housing starts in Japan, where most of our North American export logs are sold.
Our sales volumes include logs purchased in the open market and all our domestic and export logs that are sold to unaffiliated customers or transferred at market prices to our internal mills by the sales and marketing staff within our Timberlands business units.
Five-Year Summary of Log Sales Volumes to Unaffiliated Customers for Timberlands
SALES VOLUMES IN THOUSANDS
  
2011

2010

2009

2008

2007

Logs – cubic
meters:
 
 
 
 
 
West
5,267

4,476

4,479

6,967

6,212

South
4,879

3,357

3,536

2,347

1,581

Canada
479

507

409

529

925

International
314

283

305

329


Total
10,939

8,623

8,729

10,172

8,718


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Log Prices
The majority of our log sales to unaffiliated customers involves sales to the export market and to other domestic sawmills in the Pacific Northwest. Following is a five-year summary of selected export log prices.
Five-Year Summary of Selected Export Log Prices (#2 Sawlog Bark On — $/MBF)
Our log prices are affected by the supply of and demand for grade and fiber logs and are influenced by the same factors that affect log sales. Export log prices are particularly affected by the Japanese housing market.
Average 2011 log realizations in the West increased from 2010 — primarily due to higher demand for logs in the Chinese market. Export prices rose as a result of the demand from China, which also resulted in higher Western domestic prices. Average 2011 log realizations in the South decreased from 2010 — primarily due to weaker demand for logs in the South.
Minerals and Energy Products
Mineral revenue decreased in 2011 as recognition of leasing revenue was completed on older leases and sales of producing oil and gas properties was limited. The decline was partially offset by increased oil and gas royalties as the Haynesville Shale gas wells began to produce commercially. Earnings from construction aggregates decreased slightly. Revenues from wind power and geothermal agreements increased from year-to-year, as the company entered into three new wind power agreements and three new geothermal agreements.
WHERE WE’RE HEADED
Our competitive strategies include:
managing forests on a sustainable basis to meet customer and public expectations;
reducing the time it takes to realize returns by practicing intensive forest management and focusing on the most advantageous markets;
efficiently delivering raw materials to internal supply chains;
building long-term relationships with external customers who rely on a consistent supply of high-quality raw material;
continuously reviewing our portfolio of land holdings to create the greatest value for the company;
investing in technology and advances in silviculture to improve yields and timber quality;
positioning ourselves as one of the largest, lowest-cost growers of global softwood and hardwood timber;
leveraging our mineral ownership position; and
positioning ourselves to take advantage of new market opportunities that may be created by energy and climate change legislation and regulation.
In addition, we believe we will generate additional revenues from new products and services, such as wetland mitigation banking and conservation easements, and from participating in emerging carbon and energy markets.

WOOD PRODUCTS
We are a large manufacturer and distributor of wood products primarily in North America and Asia.
WHAT WE DO
Our wood products segment:
provides a family of high-quality softwood lumber, engineered lumber, structural panels and other specialty products to the residential, multi-family and light commercial markets;
delivers innovative homebuilding solutions to help our customers quickly and efficiently meet their customers’ needs;
sells our products and services primarily through our own sales organizations and distribution facilities as well as building materials that we purchase from other manufacturers;
sells certain products into the repair and remodel market through the wood preserving and home-improvement warehouse channels; and
exports our softwood lumber and engineered building materials to Asia and Europe.


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Wood Products
PRODUCTS
HOW THEY’RE USED
Structural lumber
Structural framing for new residential, repair and remodel, treated applications, industrial and commercial structures
Engineered lumber
• Solid section
• I-joists
Floor and roof joists, and headers and beams for residential, multi-family and commercial structures
Structural panels
• Oriented strand board (OSB)
• Softwood plywood
Structural sheathing, subflooring and stair tread for residential, multi-family and commercial structures
Other products
Complementary building products such as cedar, decking, siding, insulation, rebar and engineered lumber connectors
WHERE WE DO IT
We operate manufacturing facilities in the United States and Canada. We distribute through a combination of Weyerhaeuser and third-party locations. Information about the locations, capacities and actual production of our manufacturing facilities is included below.
Principal Manufacturing Locations
Locations of our principal manufacturing facilities as of December 31, 2011, by major product group were:
Structural lumber
– U.S. — Alabama, Arkansas, Louisiana, Mississippi, North Carolina, Oklahoma, Oregon and Washington
– Canada — Alberta and British Columbia
Engineered lumber
– U.S. — Alabama, Georgia, Louisiana, Oregon and West Virginia
– Canada — British Columbia and Ontario
Oriented strand board
– U.S. — Louisiana, Michigan, North Carolina and West Virginia
– Canada — Alberta and Saskatchewan
Softwood plywood
– U.S. — Arkansas and Louisiana
Summary of 2011 Wood Products Capacities
CAPACITIES IN MILLIONS
  
PRODUCTION
CAPACITY

NUMBER OF
FACILITIES

Structural lumber – board feet
4,515

18

Engineered solid section – cubic feet
33

7

Engineered I-joists – lineal feet
380

3

Oriented strand board – square feet (3/8”)
3,015

6

Softwood plywood – square feet (3/8”)
460

2

Capacities include two indefinitely closed facilities that produce engineered solid section and I-joists products.
In response to market conditions over the last few years, we sold or closed a number of facilities and curtailed production at several other mills. We also sold our hardwoods operations in August 2011. More information about this sale is in Note 3: Discontinued Operations in the Notes to Consolidated Financial Statements. The sales and closures include:
Sales:
– 2011 — two lumber mills, one oriented strand board mill, one engineered lumber mill and our hardwoods operations;
– 2010 — one lumber mill; and
– 2009 — TJ® Commercial business, Albany Trucking and one engineered lumber mill.
Permanent closures:
– 2011 — three engineered lumber mills;
– 2010 — one lumber mill, one engineered lumber mill, one oriented strand board mill; and
– 2009 — four lumber mills, two engineered lumber mills and six distribution centers.
Indefinite closures:
– 2010 — one engineered lumber mill; and
– 2009 — one lumber mill and five engineered lumber mills.
In addition to these sales and closures, we discontinued our contractual relationship with two southern lumber mills in 2010. We no longer produce lumber at Bogalusa, Louisiana and Silver Creek, Mississippi.

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Five-Year Summary of Wood Products Production
PRODUCTION IN MILLIONS
 
 
 
 
 
  
2011

2010

2009

2008

2007

Structural lumber – board feet
3,528

3,289

3,098

4,451

5,490

Engineered solid section – cubic feet(1)
13

15

11

22

28

Engineered I-joists – lineal feet(1)
122

133

109

218

339

Oriented strand board – square feet (3/8”)
2,127

1,721

1,448

2,468

3,428

Softwood plywood – square feet (3/8”)(2)
197

212

150

333

423

Hardwood lumber – board feet(3)
135

231

201

253

294

(1)   Weyerhaeuser engineered I-joist facilities also may produce engineered solid section.
(2)   All Weyerhaeuser plywood facilities also produce veneer.
(3) Reflects the sale of our hardwoods operations in August 2011.

HOW MUCH WE SELL
Revenues of our Wood Products business segment come from sales to wood products dealers, do-it-yourself retailers, builders and industrial users. In 2011, Wood Products net sales were $2.5 billion, a decrease of 4 percent, compared with $2.6 billion in 2010.
Five-Year Summary of Net Sales for Wood Products
NET SALES IN MILLIONS OF DOLLARS
 
  
2011

2010

2009

2008

2007

Structural lumber
$
1,087

$
1,044

$
846

$
1,351

$
2,006

Engineered solid section
253

272

238

414

608

Engineered I-joists
161

171

162

284

467

Oriented strand board
361

334

234

416

589

Softwood plywood
69

73

58

148

293

Hardwood lumber(1)
138

223

206

291

355

Other products produced
156

145

146

225

226

Other products purchased for resale(1)
273

329

344

639

1,155

Total
$
2,498

$
2,591

$
2,234

$
3,768

$
5,699

(1) Reflects the sale of our hardwoods operations in August 2011.
Five-Year Trend for Total Net Sales in Wood Products
Percentage of 2011 Net Sales in Wood Products

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Wood Products Volume
The volume of structural lumber and OSB sold in 2011 increased from 2010 due to increased demand and the re-opening of our Hudson Bay, Saskatchewan OSB facility. Volumes for engineered lumber decreased primarily due to continued weakness in the U.S. housing market.
Five-Year Summary of Sales Volume for Wood Products
SALES VOLUMES IN MILLIONS
  
2011

2010

2009

2008

2007

Structural lumber – board feet
3,586

3,356

3,319

4,659

6,344

Engineered solid section – cubic feet
14

15

13

23

30

Engineered I-joists – lineal feet
128

145

139

227

338

Oriented strand board – square feet (3/8”)
2,008

1,607

1,432

2,438

3,466

Softwood Plywood – square feet (3/8”)
258

260

223

474

912

    Hardwood lumber – board feet(1)
162

269

252

324

363

(1) Reflects the sale of our hardwoods operations in August 2011.
Wood Products Prices
Prices for commodity wood products — Structural lumber, OSB and Plywood — decreased in 2011 from 2010.
In general, the following factors influence prices for wood products:
Demand for wood products used in residential and multi-family construction and the repair and remodel of existing homes affects prices. Residential construction is influenced by factors such as population growth and other demographics, the level of employment, consumer confidence, consumer income, availability of financing and interest rate levels, and the supply and pricing of existing homes on the market. Repair and remodel activity is affected by the size and age of existing housing inventory and access to home equity financing and other credit.
The availability of supply of commodity building products such as structural lumber, OSB and plywood affects prices. A number of factors can influence supply, including changes in production capacity and utilization rates, weather, raw material supply and availability of transportation.
The North American housing market continues to struggle through the worst downturn on record. Demand for new homes fell dramatically from 2006 through 2009, and has been relatively flat from 2010 through 2011. Because demand for wood products is tied so closely to home construction, the weakness in this industry has resulted in depressed demand for and prices of wood products. The following graphs reflect product price trends for the past five years.
Five-Year Summary of Selected Published Lumber Prices — $/MBF

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Five-Year Summary of Selected Published Oriented Strand Board Prices — $/MSF
WHERE WE’RE HEADED
Our competitive strategies include:
improving our cost competitiveness through operational excellence;
expanding our customer base in nonresidential markets and geographies outside of North America;
continuing to develop innovative building solutions and products to meet customer needs; and
differentiating our products and services from other manufacturers to create demand for them in the marketplace, and build on our reputation as the preferred provider of quality building products.

CELLULOSE FIBERS
Our cellulose fibers segment is one of the world’s largest producers of absorbent fluff used in products such as diapers. We also manufacture liquid packaging board and other pulp products. We have a 50 percent interest in North Pacific Paper Corporation (NORPAC) — a joint venture with Nippon Paper Industries that produces newsprint and high-brightness publication papers.
WHAT WE DO
Our cellulose fibers segment:
provides cellulose fibers for absorbent products in markets around the world;
works closely with our customers to develop unique or specialized applications;
manufactures liquid packaging board used primarily for the production of containers for liquid products; and
generates energy, of which 84 percent is from black liquor produced at the mills and biomass.
Cellulose Fibers Products
PRODUCTS
HOW THEY’RE USED
Pulp
• Fluff pulp (Southern softwood kraft fiber)
• Papergrade pulp (Southern and Northern
  softwood kraft fiber)
• Specialty chemical cellulose pulp
• Used in sanitary disposable products that require bulk, softness and absorbency
• Used in products that include printing and writing papers and tissue
• Used in textiles, absorbent products, specialty packaging, specialty applications and
 proprietary high-bulking fibers
Liquid packaging board
Converted into containers to hold liquid materials such as milk, juice and tea
Other products
• Slush pulp
• Wet lap pulp
Used in the manufacture of paper products
WHERE WE DO IT
Our cellulose fibers (pulp) products are distributed through a global direct sales network, and our liquid packaging products are sold directly to carton and food product packaging converters in North America and Asia. Locations of our principal manufacturing facilities by major product group are:
Pulp
– U.S. — Georgia (2), Mississippi and North Carolina
– Canada — Alberta
Liquid packaging board
– U.S. — Washington
Summary of 2011 Cellulose Fibers Capacities
CAPACITIES IN THOUSANDS
  
PRODUCTION
CAPACITY

NUMBER OF
FACILITIES

Pulp – air-dry metric tons
1,835

5

Liquid packaging board – tons
300

1


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Five-Year Summary of Cellulose Fibers Production
PRODUCTION IN THOUSANDS
  
2011

2010

2009

2008

2007

Pulp – air-dry metric tons
1,769

1,774

1,629

1,760

1,851

Liquid packaging board – tons
307

316

282

297

283

HOW MUCH WE SELL
Revenues of our Cellulose Fibers segment come from sales to customers who use the products for further manufacturing or distribution and for direct use. Our net sales were $2.1 billion in 2011, an increase of 8 percent, compared with $1.9 billion in 2010.
Five-Year Summary of Net Sales for Cellulose Fibers
NET SALES IN MILLIONS OF DOLLARS
  
2011

2010

2009

2008

2007

Pulp
$
1,617

$
1,489

$
1,148

$
1,357

$
1,478

Liquid packaging board
346

337

290

290

247

Other products
95

85

73

118

107

Total
$
2,058

$
1,911

$
1,511

$
1,765

$
1,832

Five-Year Trend for Total Net Sales in Cellulose Fibers
Percentage of 2011 Net Sales in Cellulose Fibers
Pulp Volumes
Our sales volumes of cellulose fiber products were 1.8 million tons in 2011 and 1.7 million tons in 2010 and 2009.
Factors that affect sales volumes for cellulose fiber products include:
growth of the world gross domestic product and
demand for paper production and diapers.
Five-Year Summary of Sales Volume for Cellulose Fibers
SALES VOLUMES IN THOUSANDS
  
2011

2010

2009

2008

2007

Pulp – air-dry metric tons
1,756

1,714

1,697

1,704

2,070

Liquid packaging board – tons
297

311

288

302

286

Pulp Prices

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Our average pulp prices in 2011 increased compared with 2010 due to the:
weakening of the U.S. dollar,
level of demand and
world economic environment.
Five-Year Summary of Selected Published Pulp Prices — $/TON
WHERE WE’RE HEADED
Our competitive strategies include:
improving our cost-competitiveness through operational excellence and noncapital solutions;
focusing capital investments on new and improved product capabilities, cost-reduction, and green energy opportunities;
collaborating with third parties to develop new value-added products; and
focusing research and development resources on new ways to expand and improve the range of applications for cellulose fibers and new product opportunities.

REAL ESTATE
Our Real Estate business segment includes our wholly-owned subsidiary Weyerhaeuser Real Estate Company (WRECO) and its subsidiaries.
WHAT WE DO
The Real Estate segment focuses on:
constructing single-family housing and
developing residential lots for our use and for sale.
Real Estate Products and Activities
PRODUCTS
HOW THEY’RE USED
Single-family housing
Residential living
Land
Residential lots and land for construction and sale, master-planned communities with mixed-use property
WHERE WE DO IT
Our operations are concentrated in metropolitan areas in Arizona, California, Maryland, Nevada, Texas, Virginia and Washington.
HOW MUCH WE SELL
We are one of the top 20 homebuilding companies in the United States as measured by annual single-family home closings.
Our revenues decreased to $838 million in 2011, down 9 percent, compared with $923 million in 2010. This decrease occurred as a result of fewer home closings in a challenged market, affected by low consumer confidence, high unemployment, tightened mortgage underwriting standards and continued downward pressure on pricing caused by excess supply.
The following factors affect revenues in our Real Estate business segment:
The market prices of the homes that we build varies.
The product and geographic mix of sales varies based on the following:
the markets where we build vary by geography;
– we build homes that range in price points to meet our target customers’ needs, from first-time to semi-custom homes based on geography; and
– the mix of price points, which differ for traditional, single-family detached homes and attached products such as townhomes and condominiums.
Land and lot sales are a component of our activities. These sales do not occur evenly from year to year and may range from approximately 5 percent to 15 percent of total Real Estate revenues annually.
From time to time, we sell apartment buildings and other income producing properties.

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Five-Year Summary of Net Sales for Real Estate
REVENUE IN MILLIONS OF DOLLARS
  
2011

2010

2009

2008

2007

Single-family housing
$
768

$
842

$
832

$
1,294

$
2,079

Land
67

64

68

99

213

Other
3

17

4

15

67

Total
$
838

$
923

$
904

$
1,408

$
2,359

Five-Year Trend for Total Net Sales in Real Estate
Percentage Breakdown of 2011 Net Sales in Real Estate
Five-Year Summary of Single-Family Unit Statistics
SINGLE-FAMILY UNIT STATISTICS
  
2011

2010

2009

2008

2007

Homes sold
1,902

1,914

2,269

2,522

4,152

Homes closed
1,912

2,125

2,177

3,188

4,427

Homes sold but not closed (backlog)
429

439

650

558

1,224

Cancellation rate
16
%
20
%
23
%
32
%
26
%
Buyer traffic
50,125

68,430

65,781

112,817

181,896

Average price of homes closed
$
402,000

$
396,000

$
382,000

$
406,000

$
470,000

Single-family gross margin – excluding impairments (%)(1)
23.3
%
23.7
%
17.5
%
15.1
%
21.5
%
(1)   Single-family gross margin equals revenue less cost of sales and period costs (other than impairments, deposit write-offs and project abandonments).
During 2011, we experienced lower traffic year-over-year, however the number of homes sold remained comparable as our conversion rates improved.
WHERE WE’RE HEADED
Our competitive strategies include:
offering customer-driven, distinct value propositions to specific market niches in each of our targeted geographies;
delivering quality homes to satisfied customers — measured, in part, by “willingness to refer” rates from independent surveys of homebuyers;
replicating best practices developed in each geographic area; and
optimizing value from our land portfolio.


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CORPORATE AND OTHER
WHAT WE DO
Corporate and Other includes certain gains or charges that are not related to an individual operating segment and the portion of items such as share-based compensation, pension and postretirement costs, foreign exchange transaction gains and losses associated with financing and other general and administrative expenses that are not allocated to the business segments. Historically, Corporate and Other included the results of our transportation operations. This included our five short line railroads that were sold at the end of 2010 and Westwood Shipping Lines that was sold on September 30, 2011. Westwood results are included in our results of discontinued operations.
HOW MUCH WE SELL
Sales and revenues for Corporate and Other are related to our discontinued transportation and international operations. In 2011, our net sales were $180 million compared with $253 million in 2010. The decrease in revenues is due to the sale of our transportation operations.
Five-Year Summary of Net Sales for Corporate and Other
NET SALES IN MILLIONS OF DOLLARS
  
2011

2010

2009

2008

2007

Transportation(1)
$
180

$
253

$
165

$
259

$
223

International wood products(2)



133

209

Total
$
180

$
253

$
165

$
392

$
432

(1) Reflects the sale of Westwood Shipping Lines in September 2011 and our five short line railroads in December 2010.
(2)   Reflects the divestitures of our Australian operations in July 2008.
Five-Year Trend for Total Net Sales in Corporate and Other, Including Discontinued Operations
Catchlight Energy
Catchlight Energy is Weyerhaeuser’s joint venture with Chevron, which is focused on the commercialization of liquid transportation fuels produced from conversion of forest-based material. During 2011, Catchlight was engaged in research and development work in the areas of sustainability, feedstock sourcing and scalability, and conversion technologies. Catchlight Energy also spent time developing relationships with selected technology partners. Our share of Catchlight Energy results are reported in Corporate and Other.

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NATURAL RESOURCE AND ENVIRONMENTAL MATTERS
Many social values are expressed in the laws and regulations that pertain to growing and harvesting timber. We participate in voluntary certification of our timberlands to assure that we sustain their values including the protection of wildlife and water quality. We are also subject to laws regulating forestry practices. Changes in law and regulation can significantly affect local or regional timber harvest levels and market values of timber-based raw materials.

ENDANGERED SPECIES PROTECTIONS
In the United States, a number of fish and wildlife species that inhabit geographic areas near or within our timberlands have been listed as threatened or endangered under the federal Endangered Species Act (ESA) or similar state laws, including:
the northern spotted owl, the marbled murrelet, a number of salmon species, bull trout and steelhead trout in the Pacific Northwest;
several freshwater mussel and sturgeon species; and
the red-cockaded woodpecker, gopher tortoise and American burying beetle in the South or Southeast.
Additional species or populations may be listed as threatened or endangered as a result of pending or future citizen petitions or petitions initiated by federal or state agencies.
Restrictions on our timber harvests result, or could result from:
federal and state requirements to protect habitat for threatened and endangered species;
additional listings of fish and wildlife species as endangered, threatened or sensitive under the ESA or similar state laws; or
regulatory actions taken in the future by federal or state agencies to protect habitat for these species.
Such actions also could increase our operating costs and affect timber supply and prices in general.
In Canada:
The federal Species at Risk Act (SARA) requires protective measures for species identified as being at risk and for critical habitat.
Environment Canada announced a series of western science studies in 2010 that, with other landscape information, are designed to
identify critical habitat.
The Canadian Minister of the Environment released for comment in 2011 a strategy for the recovery of the boreal woodland caribou population under SARA.
The identification and protection of habitat may, over time, result in additional restrictions on timber harvests and other forest management practices that could increase operating costs for operators of forestlands in Canada. To date these Canadian measures have not had, and in 2012 will not have, a significant effect on our harvesting operations. We anticipate that future measures will not disproportionately affect Weyerhaeuser as compared with comparable operations.

REGULATIONS AFFECTING FORESTRY PRACTICES
In the United States, regulations established by federal, state and local governments or agencies to protect water quality and wetlands could affect future harvests and forest management practices on some of our timberlands. Forest practice acts in some states in the United States that increasingly affect present or future harvest and forest management activities include:
limits on the size of clearcuts,
requirements that some timber be left unharvested to protect water quality and fish and wildlife habitat,
regulations regarding construction and maintenance of forest roads,
rules requiring reforestation following timber harvest,
procedures for state agencies to review and approve proposed forest practice activities and
various permit programs.
Each state in which we own timberlands has developed best management practices to reduce the effects of forest practices on water quality and aquatic habitats. Additional and more stringent regulations may be adopted by various state and local governments to achieve water-quality standards under the federal Clean Water Act, protect fish and wildlife habitats, or achieve other public policy objectives.
In Canada, our forest operations are carried out on public forestlands under forest licenses. All forest operations are subject to:
forest practices and environmental regulations and
license requirements established by contract between us and the relevant province designed to:
protect environmental values and
encourage other stewardship values.
On May 18, 2010, 21 member companies of the Forest Products Association of Canada (FPAC), including Weyerhaeuser’s Canadian subsidiary, announced the signing of a Canadian Boreal Forest Agreement (CBFA) with nine environmental organizations. The CBFA applies to approximately 72 million hectares of public forests licensed to FPAC members and, when fully implemented, is expected to lead to the conservation of significant areas of Canada’s boreal forest and protection of woodland caribou. CBFA signatories continue to meet with provincial governments, and aboriginal and local communities to seek their participation in advancing the goals of the CBFA. Progress under the CBFA is measured by an independent auditor.
 

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FOREST CERTIFICATION STANDARDS
We operate in North America under the Sustainable Forestry Initiative®. This is a certification standard designed to supplement government regulatory programs with voluntary landowner initiatives to further protect certain public resources and values. The Sustainable Forestry Initiative® is an independent standard, overseen by a governing board consisting of:
conservation organizations,
academia,
the forest industry and
large and small forest landowners.
Compliance with the Sustainable Forestry Initiative® may result in some increases in our operating costs and curtailment of our timber harvests in some areas.

WHAT THESE REGULATIONS AND CERTIFICATION PROGRAMS MEAN TO US
The regulatory and nonregulatory forest management programs described above have:
increased our operating costs;
resulted in changes in the value of timber and logs from our timberlands;
contributed to increases in the prices paid for wood products and wood chips during periods of high demand;
sometimes made it more difficult for us to respond to rapid changes in markets, extreme weather or other unexpected circumstances; and
potentially encouraged further reductions in the usage of, or substitution of other products for, lumber and plywood.
We believe that these kinds of programs have not had, and in 2012 will not have, a significant effect on the total harvest of timber in the United States or Canada. However, these kinds of programs may have such an effect in the future. We expect we will not be disproportionately affected by these programs as compared with typical owners of comparable timberlands. We also expect that these programs will not significantly disrupt our planned operations over large areas or for extended periods.

CANADIAN ABORIGINAL RIGHTS
Many of the Canadian forestlands are subject to the constitutionally protected treaty or common-law rights of aboriginal peoples of Canada. Most
of British Columbia (B.C.) is not covered by treaties, and as a result the claims of B.C.’s aboriginal peoples relating to forest resources are
largely unresolved, although many aboriginal groups are engaged in treaty discussions with the governments of B.C. and Canada.
Final or interim resolution of claims brought by aboriginal groups is expected to result in:
additional restrictions on the sale or harvest of timber,
potential increase in operating costs and
effects on timber supply and prices in Canada.
We believe that such claims will not have a significant effect on our total harvest of timber or production of forest products in 2012, although they
may have such an effect in the future. In 2008, FPAC, of which we are a member, signed a Memorandum of Understanding with the Assembly of
First Nations, under which the parties agree to work together to strengthen Canada’s forest sector through economic-development initiatives and
business investments, strong environmental stewardship and the creation of skill-development opportunities particularly targeted to aboriginal
youth.

POLLUTION-CONTROL REGULATIONS
Our operations are subject to various laws and regulations, including:
federal,
state,
provincial and
local pollution controls.
These laws and regulations, as well as market demands, impose controls with regard to:
air, water and land;
solid and hazardous waste management;
disposal and remediation; and
the chemical content of some of our products.
Compliance with these laws, regulations and demands usually involves capital expenditures as well as additional operating costs. We cannot easily quantify the future amounts of capital expenditures we might have to make to comply with these laws, regulations and demands or the effects on our operating costs because in some instances compliance standards have not been developed or have not become final or definitive. In addition, it is difficult to isolate the environmental component of most manufacturing capital projects.
Our capital projects typically are designed to:
enhance safety,
extend the life of a facility,
increase capacity,
increase efficiency,
change raw material requirements,
increase the economic value of assets or products and
comply with regulatory standards.
We estimate that our capital expenditures made primarily for environmental compliance were approximately $5 million in 2011 (approximately 2 percent of total capital expenditures). Based on our understanding of current regulatory requirements in the U.S. and Canada, we expect no material capital expenditures for environmental compliance in 2012.

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ENVIRONMENTAL CLEANUP
We are involved in the environmental investigation or remediation of numerous sites. Of these sites:
we may have the sole obligation to remediate,
we may share that obligation with one or more parties,
several parties may have joint and several obligations to remediate or
we may have been named as a potentially responsible party for sites designated as Superfund sites.
Our liability with respect to these various sites ranges from insignificant to substantial. The amount of liability depends on:
the quantity, toxicity and nature of materials at the site; and
the number and economic viability of the other responsible parties.
We spent approximately $5 million in 2011 and expect to spend approximately $6 million in 2012 on environmental remediation of these sites.
It is our policy to accrue for environmental-remediation costs when we:
determine it is probable that such an obligation exists and
can reasonably estimate the amount of the obligation.
We currently believe it is reasonably possible that our costs to remediate all the identified sites may exceed our current accruals of $34 million. The excess amounts required may be insignificant or could range, in the aggregate, up to $90 million over several years. This estimate of the upper end of the range of reasonably possible additional costs is much less certain than the estimates we currently are using to determine how much to accrue. The estimate of the upper range also uses assumptions less favorable to us among the range of reasonably possible outcomes.

REGULATION OF AIR EMISSIONS IN THE U.S.
The United States Environmental Protection Agency (EPA) had promulgated regulations for air emissions from:
pulp and paper manufacturing facilities,
wood products facilities and
industrial boilers.
These regulations cover:
hazardous air pollutants that require use of maximum achievable control technology (MACT) and
controls for pollutants that contribute to smog, haze and more recently greenhouse gases.
The U.S. Court of Appeals for the D.C. Circuit issued decisions in 2007:
vacating the MACT standards for air emissions from industrial boilers and process heaters and
remanding the standards for plywood and composite wood products to the EPA.
The EPA must promulgate:
technology and residual risk review for pulp and paper manufacturing facilities,
supplemental MACT standards for plywood and composite products and
new MACT standards for boilers.
Pending final action by the EPA, we expect:
some states may implement MACT requirements for boilers on a case-by-case basis and
we might spend as much as $30 million to $45 million over the next few years to comply with the MACT standards that are finally determined by the EPA and the states.
We cannot currently quantify the amount of capital we will need in the future to comply with new regulations being developed by the EPA or Canadian environmental agencies because final rules have not been promulgated.
In 2007, the U.S. Supreme Court ruled that greenhouse gases are pollutants that can be subject to regulation under the Clean Air Act. As a result, the EPA:
promulgated regulations in 2009 for reporting greenhouse gas emissions that are applicable to our manufacturing operations;
issued a final rule in 2010 to limit the growth in greenhouse gas emissions from new projects meeting certain emission thresholds starting in 2011 that applies to our manufacturing operations on a project-by-project basis;
issued a final rule deferring for three years greenhouse gas permitting requirements for carbon dioxide emissions from biomass;
initiated in 2011 efforts to further develop independent scientific analysis and rulemaking on how biomass emissions should be treated.
It is unclear what the effect of EPA’s greenhouse gas regulations will be on our operations until final rules regarding biomass emissions are promulgated.
To address concerns about greenhouse gases as a pollutant, we:
closely monitor legislative, regulatory and scientific developments pertaining to climate change;
adopted in 2006, as part of the Company's sustainability program, a goal of reducing greenhouse gas emissions by 40 percent by 2020 compared with our emissions in 2000, assuming a comparable portfolio and regulations;
determined to achieve this goal by increasing energy efficiency and using more greenhouse gas-neutral, biomass fuels instead of fossil fuels; and
reduced greenhouse gas emissions by approximately 26 percent considering changes in the asset portfolio according to 2010 data, compared to our 2000 baseline.

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Additional factors that could affect greenhouse gas emissions in the future include:
policy proposals by state governments regarding regulation of greenhouse gas emissions,
Congressional legislation regulating greenhouse gas emissions within the next several years or
establishment of a multistate and federal greenhouse gas emissions reduction trading system with potentially significant implications for all U.S. businesses.
It is not yet known when and to what extent these policy activities may come into force or how they may relate to each other in the future.
We believe these measures have not had, and in 2012 will not have, a significant effect on our operations, although they may have such an effect in the future. We expect we will not be disproportionately affected by these measures as compared with typical owners of comparable operations. We maintain an active forestry research program to track and understand any potential effect from actual climate change related parameters that could affect the forests we own and manage and do not anticipate any disruptions to our planned operations.

REGULATION OF AIR EMISSIONS IN CANADA
In Canada:
We participate in negotiations between the FPAC and Environment Canada to define industry obligations for complying with Canada’s national plan for reducing greenhouse gas emissions and achieving ambient air quality objectives over the next several years.
We work with provincial forestry associations to develop technically sound and economically viable policies, practices and procedures for
measuring, reporting and managing greenhouse gas emissions and protecting air quality.
The Canada federal government:
proposed a regulatory framework for air emissions in 2007 that adopted some aspects of the Kyoto Protocol;
called for mandatory reductions in greenhouse gas emissions for heavy industrial emissions producers, among other measures, to be put in place by 2010;
signed the Copenhagen Accord in December 2009, committing to reducing its greenhouse gas emissions by 17 percent below 2005 levels; and
announced in December 2011 that it is withdrawing from the Kyoto Protocol.
All Canadian provincial governments:
have greenhouse gas reporting requirements;
are working on reduction strategies; and
together with the Canadian federal government, are considering new or revised emission standards.
We believe these measures have not had, and in 2012 will not have, a significant effect on our operations, although they may have such an effect in the future. We expect we will not be disproportionately affected by these measures as compared with typical owners of comparable operations. We also expect that these measures will not significantly disrupt our planned operations.

REGULATION OF WATER
In the U.S., as a result of litigation (some of which is ongoing), additional federal or state permits will be required in the future
under the federal Clean Water Act in one or more of the states in which we operate in relation to:
pollution discharges from forest roads,
other drainage features on forest land and
the application of pesticides, including herbicides, on forest lands.
Some of these permits will be in effect in 2012 and will entail additional costs for Weyerhaeuser and some other forest landowners.
In Canada, in 2011, a National Round Table on the Environment and the Economy (NRTEE) proposed changes to water-use management across Canada and recommended that federal, provincial and territorial governments develop new water strategies. NRTEE will convene experts from across Canada to develop a national action plan on how to effectively implement the report's recommendations. Recommendations, which have not yet been developed, may entail additional costs. However, we do not expect a disproportionate effect on Weyerhaeuser as compared to comparable operations of other forest landowners.

POTENTIAL CHANGES IN POLLUTION REGULATION
State governments continue to promulgate total maximum daily load (TMDL) requirements for pollutants in water bodies that do not meet state
or EPA water quality standards. State TMDL requirements may:
set limits on pollutants that may be discharged to a body of water; or
set additional requirements, such as best management practices for nonpoint sources, including timberland operations, to reduce the
amounts of pollutants.
It is not possible to estimate the capital expenditures that may be required for us to meet pollution allocations across the various proposed state
TMDL programs until a specific TMDL is promulgated.
Various levels of government in Canada have started work to address water usage and quality issues. Regional watershed protection is increasing and appears to be a part of future water strategies across Canada. As part of our membership in the U.S. Business Roundtable S.E.E. Change (society, environment and economy) initiative, we established a goal in May 2008 to reduce water use at our cellulose fibers mills 20 percent by the end of 2012, using a 2007 baseline. We achieved a 16 percent water use reduction in 2010 compared to our 2007 baseline.
 

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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. These statements:
use forward-looking terminology,
are based on various assumptions we make and
may not be accurate because of risks and uncertainties surrounding the assumptions we make.
Factors listed in this section — as well as other factors not included — may cause our actual results to differ from our forward-looking statements. There is no guarantee that any of the events anticipated by our forward-looking statements will occur. Or if any of the events occur, there is no guarantee what effect it will have on our operations or financial condition.
We will not update our forward-looking statements after the date of this report.
FORWARD-LOOKING TERMINOLOGY
Some forward-looking statements discuss our plans, strategies and intentions. They use words such as expects, may, will, believes, should, approximately, anticipates, estimates and plans. In addition, these words may use the positive or negative or other variations of those terms.
STATEMENTS
We make forward-looking statements of our expectations regarding first quarter 2012 as compared to fourth quarter 2011, including:
increased fee harvest volumes in the West, slightly improved average selling prices due to a higher percentage of export logs sold to Japan, flat fee harvest volume and prices in the South, higher fuel costs across all geographies, higher silviculture expenses in the South, and slightly higher earnings in the Timberlands segment excluding earnings from disposition of non-strategic timberlands;
increased sales and slightly higher selling prices for lumber, higher sales volumes and over five percent increase in selling prices for oriented strand board, increased sales volumes and flat prices for engineered wood products, higher log costs in the South and Canada and lower log costs in the West, higher operating rates across all product lines, and a smaller loss from continuing operations in the Wood Products segment excluding special items;
considerably lower average selling prices for pulp and slightly lower shipment volumes, significantly higher maintenance costs and lower production due to scheduled annual maintenance outages, higher energy and chemical costs, and substantially lower earnings in the Cellulose Fibers segment;
seasonally lower home closing volume, lower average selling prices and margins due to mix, and a loss from single-family homebuilding operations in the Real Estate segment.
In addition, we base our forward-looking statements on the expected effect of:
the economy;
regulations;
adverse litigation outcomes and the adequacy of reserves;
changes in accounting principles;
contributions to pension plans;
projected benefit payments;
projected tax rates and credits; and
other related matters.
RISKS, UNCERTAINTIES AND ASSUMPTIONS
Major risks and uncertainties — and assumptions that we make — that affect our business include, but are not limited to:
general economic conditions, including employment rates, housing starts, the level of interest rates, availability of financing for home mortgages, and strength of the U.S. dollar;
market demand for our products, which is related to the strength of the various U.S. business segments and economic conditions;
performance of our manufacturing operations, including maintenance requirements;
successful execution of our internal performance plans, including restructurings and cost-reduction initiatives;
level of competition from domestic and foreign producers;
raw material and energy prices and transportation costs;
the effect of design value changes on demand for the company's southern yellow pine lumber;
the effect of forestry, land use, environmental and other governmental regulations;
federal tax policies;
legal proceedings;
the effect of timing of retirements and changes in the market price of our common stock on charges for share-based compensation;
the effect of weather;
risk of loss from fires, floods, windstorms, hurricanes, pest infestations and other natural disasters;
changes in accounting principles;
performance of pension fund investments and related derivatives; and
other factors described under Risk Factors.
EXPORTING ISSUES
We are a large exporter, affected by changes in:
economic activity in Europe and Asia — especially Japan and China;
currency exchange rates — particularly the relative value of the U.S. dollar to the euro and the Canadian dollar, and the relative value of the euro to the yen; and
restrictions on international trade or tariffs imposed on imports.


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RISK FACTORS
We are subject to certain risks and events that, if one or more of them occur, could adversely affect our business, our financial condition, our results of operations and the trading price of our common stock.
You should consider the following risk factors, in addition to the other information presented in this report and the matters described in “Forward-Looking Statements,” as well as the other reports and registration statements we file from time to time with the SEC, in evaluating us, our business and an investment in our securities.
The risks below are not the only risks we face. Additional risks not currently known to us or that we currently deem immaterial also may adversely affect our business.

RISKS RELATED TO OUR INDUSTRIES AND BUSINESS

MACROECONOMIC CONDITIONS
The industries in which we operate are sensitive to macroeconomic conditions and consequently highly cyclical.
The overall levels of demand for the products we manufacture and distribute and consequently our sales and profitability reflect fluctuations in levels of end-user demand, which depend in part on general macroeconomic conditions in North America and worldwide as well as on local economic conditions. Current economic conditions in the United States and the global economic downturn, combined with the decreased availability of credit due to extremely conservative underwriting criteria and high foreclosure rates, has resulted in a continued weakness in the homebuilding industry (including the company’s Real Estate business), increased inventories of available new homes, significant declines in home prices, loss of home-equity values and loss of consumer confidence and demand. Our Wood Products segment is highly dependent on the strength of the homebuilding industry and the weakness in that industry has resulted in depressed prices of and demand for wood products and building materials. This has been further reflected in declining prices and demand for logs and reduced harvests in our Timberland segment. The length and magnitude of industry cycles have varied over time and by product, but generally reflect changes in macroeconomic conditions. A further decline in the recovery of consumer demand could further adversely affect our businesses.

COMMODITY PRODUCTS
Many of our products are commodities that are widely available from other producers.
Because commodity products have few distinguishing properties from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand and competition from substitute products. Prices for our products are affected by many factors outside of our control, and we have no influence over the timing and extent of price changes, which often are volatile. Our profitability with respect to these products depends, in part, on managing our costs, particularly raw material and energy costs, which represent significant components of our operating costs and can fluctuate based upon factors beyond our control. Prices of and demand for many of our products have declined significantly in recent quarters, while many of our raw material or energy costs have increased. This has adversely affected both our sales and profitability.

INDUSTRY SUPPLY OF LOGS, WOOD PRODUCTS AND PULP
Excess supply of products may adversely affect prices and margins.
Industry supply of logs, wood products and pulp is subject to changing macroeconomic and industry conditions that may cause producers to idle or permanently close individual machines or entire mills or to decrease harvest levels. To avoid substantial cash costs in connection with idling or closing a mill, some producers choose to continue to operate at a loss, which could prolong weak prices due to oversupply. Oversupply of products also may result from producers introducing new capacity or increasing harvest levels in response to favorable short-term pricing trends. Industry supplies of pulp also are influenced by overseas production capacity, which has grown in recent years and is expected to continue to grow. While the weakness of the U.S. dollar in recent years has improved the company’s competitive position and mitigated the levels of imports, the recent strengthening of the U.S. dollar and decreases in demand for consumer products in emerging markets may result in increased imports of pulp from overseas, resulting in lower prices. Continuation of these factors could materially and adversely affect sales volumes and margins of our operations.
 
HOMEBUILDING MARKET AND ECONOMIC RISKS
Continuing high foreclosure rates, low demand and low levels of consumer confidence could continue to adversely affect our sales volume, pricing and margins and result in further impairments.
Demand for homes is sensitive to changes in economic conditions such as the level of employment, consumer confidence, consumer income, the availability of financing and interest rate levels. During the period of 2007 through 2011, the mortgage industry experienced significant instability and increasing default rates, particularly with regard to subprime and other nonconforming loans. This caused many lenders to tighten credit requirements and reduce the number of mortgage loans available for financing home purchases. Demand for new homes also has been adversely affected by factors such as continued high unemployment, elevated foreclosure rates and distress sales of houses, significant declines in home values and a collapse of consumer confidence. While our cancellation rates have improved, homebuyers may still find it more advantageous to forfeit a deposit than to complete the purchase of the home because of the fear of further price declines.
The company has traditionally carried a larger supply of land for development than many of our competitors. Some of the land was purchased during the last few years. Land prices have fallen in these markets and may continue to fall. As new housing demand in our markets has fallen significantly, we have elected to sell some of our non-strategic land and lots at a loss or declined to exercise options, even though that required us to forfeit deposits and write off preacquisition costs. We also have changed our competitive strategies in some markets and elected to discontinue or postpone development in other markets in response to the downturn. As a result, we continue to look for opportunities to reposition our portfolio through the sale of our assets.

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Our homebuyers’ ability to qualify for and obtain affordable mortgages could be affected by changes in government sponsored entities and private mortgage insurance companies supporting the mortgage market.
The federal government has historically had a significant role in supporting mortgage lending through its sponsorship of Fannie Mae and Freddie Mac. As a result of turbulence in the credit markets and mortgage finance industry in the last few years, the effect of the federal government’s conservatorship of these government sponsored entities on the short-term and long-term demand for new housing remains unclear. The liquidity provided to the mortgage industry by Fannie Mae and Freddie Mac, both of which purchase home mortgages and mortgage-backed securities originated by mortgage lenders, is critical to the housing market. There have been significant concerns about the future purpose of Fannie Mae and Freddie Mac and a number of proposals to curtail their activities over time are under review. Any limitations or restrictions on the availability of financing by these entities could adversely affect interest rates, mortgage financing, and increase the effective cost of our homes, which could reduce demand for our homes and adversely affect our results of operations.
Changes in tax regulations could harm our future sales and earnings.
Significant costs of homeownership include mortgage interest expense and real estate taxes, both of which are generally deductible for an individual’s federal and, in some cases, state income taxes. Any changes to income tax laws by the federal government or a state government to eliminate or substantially reduce these income tax deductions, as has been considered from time to time, would increase the after-tax cost of owning a home. Increases in real estate taxes by local governmental authorities also increase the cost of homeownership. Any such increases to the cost of homeownership could adversely affect the demand for and sales prices of new homes.

CAPITAL MARKETS
Deterioration in economic conditions and the credit markets could adversely affect our access to capital.
Financial and credit markets have been experiencing a period of turmoil that has included the failure or sale of various financial institutions, a continuing series of international economic crises, particularly in Europe, and increasingly restrictive underwriting standards. While it is difficult to predict the ultimate results of these events, they may impair the company’s ability to borrow money. Similarly, our customers may be unable to borrow money to fund their operations.
Continued deteriorating or volatile market conditions could:
adversely affect our ability to access credit markets on terms acceptable to us,
limit our capital expenditures for repair or replacement of existing facilities or equipment,
adversely affect our compliance with covenants under existing credit agreements,
result in adverse changes in the credit ratings of our debt securities,
have an adverse effect on our customers and suppliers and their ability to purchase our products,
adversely affect the banks providing financial security for the transaction structures used to defer taxes related to several major sales of timber,
adversely affect the performance of our pension plans requiring additional company contributions and
reduce our ability to take advantage of growth and expansion opportunities.

CHANGES IN CREDIT RATINGS
Changes in credit ratings issued by nationally recognized statistical rating organizations could adversely affect our cost of financing and have an adverse effect on the market price of our securities.
Credit rating agencies rate our debt securities on factors that include our operating results, actions that we take, their view of the general outlook for our industry and their view of the general outlook for the economy. Actions taken by the rating agencies can include maintaining, upgrading or downgrading the current rating or placing the company on a watch list for possible future downgrading. Downgrading the credit rating of our debt securities or placing us on a watch list for possible future downgrading could limit our access to the credit markets, increase our cost of financing, and have an adverse effect on the market price of our securities.

SUBSTITUTION
Some of our products are vulnerable to declines in demand due to competing technologies or materials.
Our products may compete with nonfiber-based alternatives or with alternative products in certain market segments. For example, plastic, wood/plastic or composite materials may be used by builders as alternatives to the products produced by our Wood Products businesses such as lumber, veneer, plywood and oriented strand board. Changes in prices for oil, chemicals and wood-based fiber can change the competitive position of our products relative to available alternatives and could increase substitution of those products for our products. As the use of these alternatives grows, demand for our products may further decline.

CHANGES IN PRODUCT MIX OR PRICING
Our results of operations and financial condition could be materially adversely affected by changes in product mix or pricing.
Our results may be affected by a change in our sales mix. Our outlook assumes a certain volume and product mix of sales. If actual results vary from this projected volume and product mix of sales, our operations and our results could be negatively affected. Our outlook also assumes we will be successful in implementing previously announced or future price increases, or plans to move customers to higher-priced products. Delays in acceptance of price increases or failure of customers to accept higher-priced products could negatively affect our results. Moreover, price discounting, if required to maintain our competitive position, could result in lower than anticipated price realizations.

INTENSE COMPETITION
We face intense competition in our markets, and the failure to compete effectively could have a material adverse effect on our business, financial condition and results of operations.
We compete with North American and, for many of our product lines, global producers, some of which may have greater financial resources and lower production costs than we do. The principal basis for competition is selling price. Our ability to maintain satisfactory margins depends in large part on our ability to control our costs. Our industries also are particularly sensitive to other factors including innovation, design, quality and service, with varying emphasis on these factors depending on the product line. To the extent that one or more of our competitors become more

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successful with respect to any key competitive factor, our ability to attract and retain customers could be materially adversely affected. If we are unable to compete effectively, such failure could have a material adverse effect on our business, financial condition and results of operations.

MATERIAL DISRUPTION OF MANUFACTURING
A material disruption at one of our manufacturing facilities could prevent us from meeting customer demand, reduce our sales or negatively affect our results of operation and financial condition.
Any of our manufacturing facilities, or any of our machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including:
unscheduled maintenance outages;
prolonged power failures;
equipment failure;
a chemical spill or release;
explosion of a boiler;
the effect of a drought or reduced rainfall on its water supply;
labor difficulties;
disruptions in the transportation infrastructure, including roads, bridges, railroad tracks and tunnels;
fires, floods, windstorms, earthquakes, hurricanes or other catastrophes;
terrorism or threats of terrorism;
governmental regulations; and
other operational problems.
Any such downtime or facility damage could prevent us from meeting customer demand for our products or require us to make unplanned capital expenditures. If one of these machines or facilities were to incur significant downtime, our ability to meet our production targets and satisfy customer requirements could be impaired, resulting in lower sales and income.
 
CAPITAL REQUIREMENTS
Our operations require substantial capital.
The company has substantial capital requirements for expansion and repair or replacement of existing facilities or equipment. Although we maintain our production equipment with regular scheduled maintenance, key pieces of equipment may need to be repaired or replaced periodically. The costs of repairing or replacing such equipment and the associated downtime of the affected production line could have a material adverse effect on our financial condition, results of operations and cash flows.
We believe our capital resources will be adequate to meet our current projected operating needs, capital expenditures and other cash requirements. If for any reason we are unable to provide for our operating needs, capital expenditures and other cash requirements on economic terms, we could experience a material adverse effect on our business, financial condition, results of operations and cash flows.

LAWS AND REGULATIONS
We could incur substantial costs as a result of compliance with, violations of, or liabilities under applicable environmental laws and other laws and regulations.
We are subject to a wide range of general and industry-specific laws and regulations relating to the protection of the environment, including those governing:
air emissions;
wastewater discharges;
harvesting;
silvicultural activities;
the storage, management and disposal of hazardous substances and wastes;
the cleanup of contaminated sites;
landfill operation and closure obligations;
forestry operations and endangered species habitat; and
health and safety matters.
For example, the U.S. Environmental Protection Agency (EPA) is in the process of developing Maximum Achievable Control Technology (MACT) standards that regulate air emissions from pulp and paper facilities, wood products facilities and industrial boilers. The EPA also is in the process of developing final rules regulating greenhouse gases that apply to our operations on a project-by-project basis and may be applied to carbon dioxide emissions from biomass. These and similar laws and regulations in the U.S. and Canada will require us to obtain authorizations from and comply with the authorization requirements of the appropriate governmental authorities, which have considerable discretion over the terms and timing of permits.
We have incurred, and we expect to continue to incur, significant capital, operating and other expenditures complying with applicable environmental laws and regulations and as a result of remedial obligations. We also could incur substantial costs, such as civil or criminal fines, sanctions and enforcement actions (including orders limiting our operations or requiring corrective measures, installation of pollution control equipment or other remedial actions), cleanup and closure costs, and third-party claims for property damage and personal injury as a result of violations of, or liabilities under, environmental laws and regulations.
As the owner and operator of real estate, including in our homebuilding business, we may be liable under environmental laws for cleanup, closure and other damages resulting from the presence and release of hazardous substances on or from our properties or operations. The amount and timing of environmental expenditures is difficult to predict, and in some cases, our liability may exceed forecasted amounts or the value of the property itself. The discovery of additional contamination or the imposition of additional cleanup obligations at our sites or third-party sites may result in significant additional costs. Any material liability we incur could adversely affect our financial condition or preclude us from making capital expenditures that otherwise would benefit our business.
We also anticipate public policy developments at the state, federal and international level regarding climate change and energy access, security and competitiveness. We expect these developments to address emission of carbon dioxide, renewable energy and fuel standards, and the

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monetization of carbon. Compliance with regulations that implement new public policy in these areas might require significant expenditures. Enactment of new environmental laws or regulations or changes in existing laws or regulations, or the interpretation of these laws or regulations, might require significant expenditures. We also anticipate public policy developments at the state, federal and international level regarding taxes, health care and a number of other areas that could require significant expenditures.

CURRENCY EXCHANGE RATES
We will be affected by changes in currency exchange rates.
We have manufacturing operations in Canada, Uruguay and Brazil. We are also a large exporter and compete with producers of products very similar to ours. Therefore, we are affected by changes in the strength of the U.S. dollar relative to the Canadian dollar, euro and yen, and the strength of the euro relative to the yen.

AVAILABILITY OF RAW MATERIALS AND ENERGY
Our business and operations could be materially adversely affected by changes in the cost or availability of raw materials and energy.
We rely heavily on certain raw materials (principally wood fiber and chemicals) and energy sources (principally natural gas, electricity, coal and fuel oil) in our manufacturing processes. Our ability to increase earnings has been, and will continue to be, affected by changes in the costs and availability of such raw materials and energy sources. We may not be able to fully offset the effects of higher raw material or energy costs through hedging arrangements, price increases, productivity improvements or cost-reduction programs.

TRANSPORTATION
We depend on third parties for transportation services and increases in costs and the availability of transportation could materially adversely affect our business and operations.
Our business depends on the transportation of a large number of products, both domestically and internationally. We rely primarily on third parties for transportation of the products we manufacture or distribute as well as delivery of our raw materials. In particular, a significant portion of the goods we manufacture and raw materials we use are transported by railroad or trucks, which are highly regulated.
If any of our third-party transportation providers were to fail to deliver the goods we manufacture or distribute in a timely manner, we may be unable to sell those products at full value — or at all. Similarly, if any of these providers were to fail to deliver raw materials to us in a timely manner, we may be unable to manufacture our products in response to customer demand. In addition, if any of these third parties were to cease operations or cease doing business with us, we may be unable to replace them at reasonable cost.
Any failure of a third-party transportation provider to deliver raw materials or finished products in a timely manner could harm our reputation, negatively affect our customer relationships and have a material adverse effect on our financial condition and results of operation.
In addition, an increase in transportation rates or fuel surcharges could materially adversely affect our sales and profitability.

REIT STATUS
If we fail to remain qualified as a REIT, we would be subject to tax at corporate rates and would not be able to deduct dividends to shareholders when computing our taxable income because our timber-related income will be subject to taxation.
In any taxable year in which we fail to qualify as a REIT, unless we are entitled to relief under the Internal Revenue Code:
We would be subject to federal and state income tax on our taxable income at regular corporate rates.
We would not be allowed to deduct dividends to shareholders in computing our taxable income.
We also would be disqualified from treatment as a REIT for the four taxable years following the year during which we lost qualification.
If we fail to qualify as a REIT, we might need to borrow funds or liquidate some investments to pay the additional tax liability. Accordingly, funds available for investment or dividends to our shareholders could be reduced.
Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code to our operations and the determination of various factual matters and circumstances not entirely within our control. There are only limited judicial or administrative interpretations of these provisions. Although we operate in a manner consistent with the REIT qualification rules, we cannot assure you that we are or will remain so qualified.
In addition, federal and state tax laws are constantly under review by persons involved in the legislative process, the Internal Revenue Service, the United States Department of the Treasury, and state taxing authorities. Changes to the tax law could adversely affect our shareholders. We cannot predict with certainty whether, when, in what forms, or with what effective dates, the tax laws applicable to us or our shareholders may be changed.
Certain of our business activities are potentially subject to prohibited transactions tax or corporate-level income tax.
Under the Internal Revenue Code, REITs generally must engage in the ownership and management of income producing real estate. For the Company, this generally includes owning and managing a timberland portfolio for the production and sale of standing timber. Accordingly, the manufacture and sale by us of wood products, the harvesting and sale of logs, and the development or sale of certain timberlands, the manufacture and sale of pulp products, the development of real estate, the building and sale of single-family houses and the development and sale of land and lots for real estate development are conducted through one or more of our wholly-owned taxable REIT subsidiaries (“TRSs”) because such activities could generate non-qualifying REIT income and could constitute “prohibited transactions.” Prohibited transactions are defined by the Internal Revenue Code generally to be sales or other dispositions of property to customers in the ordinary course of a trade or business. By conducting our business in this manner we believe that we satisfy the REIT requirements of the Internal Revenue Code and are not subject to the 100 percent tax that could be imposed if a REIT were to conduct a prohibited transaction. We may not always be successful, however, in limiting such activities to our TRSs. Therefore, we could be subject to the 100 percent prohibited transactions tax if such instances were to occur. The net income of our TRSs is subject to corporate-level income tax.
The extent of our use of our TRS may affect the price of our common shares relative to the share price of other REITs.
We conduct a significant portion of our business activities through one or more TRSs. Our use of our TRSs enables us to engage in non-REIT qualifying business activities such as the sale of logs, production and sale of wood products and pulp products, real estate development and

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single-family home sales, and sale of HBU property. Our TRSs are subject to corporate-level tax. Therefore, we pay income taxes on the income generated by our TRSs. Under the Code, no more than 25 percent of the value of the gross assets of a REIT may be represented by securities of one or more TRS. This limitation may affect our ability to increase the size of our TRSs’ operations. Furthermore, our use of TRSs may cause the market to value our common shares differently than the shares of other REITs, which may not use TRSs as extensively as we use them.
We may be limited in our ability to fund distributions using cash generated through our taxable REIT subsidiaries.
The ability of the REIT to receive dividends from our TRS is limited by the rules with which we must comply to maintain our status as a REIT. In particular, at least 75 percent of gross income for each taxable year as a REIT must be derived from passive real estate sources including sales of our standing timber and other types of qualifying real estate income and no more than 25 percent of our gross income may consist of dividends from our TRS and other non-real estate income.
This limitation on our ability to receive dividends from our TRSs may affect our ability to fund cash distributions to our shareholders using cash flows from our TRSs. We can, however, under current law, issue stock dividends for up to 90 percent of our regular dividend distribution for calendar years through 2011. The net income of our TRSs is not required to be distributed, and income that is not distributed will not be subject to the REIT income distribution requirement.
Our cash dividends are not guaranteed and may fluctuate.
Generally, REITs are required to distribute 90 percent of their ordinary taxable income and 95 percent of their net capital gains income. Capital gains may be retained by the REIT, but would be subject to income taxes. If capital gains are retained rather than distributed, our shareholders would be notified and they would be deemed to have received a taxable distribution, with a refundable credit for any federal income tax paid by the REIT. Accordingly, we believe that we are not required to distribute material amounts of cash since substantially all of our taxable income is treated as capital gains income. Our Board of Directors, in its sole discretion, determines the amount of quarterly dividends to be provided to our shareholders based on consideration of a number of factors. These factors include, but are not limited to, our results of operations, cash flow and capital requirements, economic conditions, tax considerations, borrowing capacity and other factors, including debt covenant restrictions that may impose limitations on cash payments, future acquisitions and divestitures, harvest levels, changes in the price and demand for our products and general market demand for timberlands including those timberland properties that have higher and better uses. Consequently, our dividend levels may fluctuate.
We may not be able to complete desired like-kind exchange transactions for timberlands and real estate we sell.
When we sell timberlands and real estate, we generally seek to match these sales with the acquisition of suitable replacement timberlands. This allows us “like-kind exchange” treatment for these transactions under section 1031 and related regulations of the Code. This matching of sales and purchases provides us with significant tax benefits, most importantly the deferral of any gain on the property sold until ultimate disposition of the replacement property. While we attempt to complete like-kind exchanges wherever practical, we may not be able to do so in all instances due to various factors, including the lack of availability of suitable replacement property on acceptable terms and our inability to complete a qualifying like-kind exchange transaction within the time frames required by the Code. The inability to obtain like-kind exchange treatment would result in the payment of taxes with respect to the property sold, and a corresponding reduction in earnings and cash available for distribution to shareholders as dividends.

LEGAL PROCEEDINGS
We are a party to a number of legal proceedings, and adverse judgments in certain legal proceedings could have a material adverse effect on our financial condition.
The costs and other effects of pending litigation against us and related insurance recoveries cannot be determined with certainty. Although the disclosure in Note 15: Legal Proceedings, Commitments and Contingencies of Notes to Consolidated Financial Statements contains management’s current views of the effect such litigation will have on our financial results, there can be no assurance that the outcome of such proceedings will be as expected.
For example, there have been several lawsuits filed against us alleging that we violated U.S. antitrust laws. Those included lawsuits alleging antitrust violations against us and other manufacturers of oriented strand board and lawsuits alleging antitrust violations with respect to alder logs and lumber. All of these matters have been settled.
It is possible that there could be adverse judgments against us in some or all major litigation against us and that we could be required to take a charge for all or a portion of any damage award. Any such charge could materially and adversely affect our results of operations for the quarter or year in which we record it.

EXPORT TAXES
We may be required to pay significant export taxes or countervailing and anti-dumping duties for exported products.
We may experience reduced revenues and margins on some of our businesses as a result of export taxes or countervailing and anti-dumping duty applications. For example, in 2001, a group of companies filed petitions with the U.S. Department of Commerce and the International Trade Commission claiming that production of softwood lumber in Canada was being subsidized by Canada and that imports into the U.S. from Canada were being sold in U.S. markets at less than their fair value. We have softwood lumber facilities in Canada that export lumber into the U.S. We paid a total of $370 million in deposits for countervailing duty and anti-dumping tariffs from 2002 through 2006 related to those lumber exports. The U.S. and Canadian governments reached a settlement of the dispute in 2006. As a result of the settlement, we received a refund of $344 million in the fourth quarter of 2006. However, our Canadian softwood lumber facilities will have to pay an export tax when the price of lumber is at or below a threshold price. The export tax could be as high as 22.5 percent if a province exceeds its total allotted export share. The U.S. subsequently claimed that British Columbia violated the 2006 agreement by downgrading timber in British Columbia's interior region to lower its price. Canada has responded to the claim, which will be heard by the London Court of International Arbitration in March 2012. If the U.S. claims are upheld, our Canadian operations could be subject to damage claims for as much as $15 million. Similar types of actions have been initiated from time to time against us and other U.S. producers of products such as paper or lumber by countries such as China and Korea. It is possible that countervailing duty and antidumping tariffs, or similar types of tariffs could be imposed on us in the future. We may experience reduced revenues and margins in any business that is subject to such tariffs or to the terms of the settlements of such international disputes. These tariffs or settlement terms could have a material adverse effect on our business, financial results and financial condition, including facility closures or impairments of assets.

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NATURAL DISASTERS
Our business and operations could be adversely affected by weather, fire, infestation or natural disasters.
Our timberlands assets may be damaged by adverse weather, severe wind and rainstorms, fires, pest infestation or other natural disasters. Because our manufacturing processes primarily use wood fiber, in many cases from our own timberlands, in the event of material damage to our timberlands, our operations could be disrupted or our production costs could be increased.

SOUTHERN YELLOW PINE DESIGN VALUES
The demand for our southern yellow pine could be adversely affected by design value changes.
The Southern Pine Inspection Bureau (SPIB) submitted proposed design value changes to the American Lumber Standards Committee (ALSC) in 2011 for visually graded southern yellow pine lumber. The proposed changes were the result of tests on southern yellow pine No. 2 2X4 specimens that showed reductions in certain design values. Our Southern timberlands predominantly contain southern yellow pine. We sell both visually graded and mechanically graded southern yellow pine. Under the SPIB proposal, design values for mechanically graded lumber would not change. The ALSC held two public hearings on the matter and the results of the tests. On January 11, 2012, the ALSC Board of Review approved new design values for southern yellow pine 2X4 lumber of grade No. 2 and lower, with a recommended effective date of June 1, 2012, but declined to approve design value changes for other sizes. Further testing and analysis of other sizes of southern yellow pine is expected to be completed later in 2012. It is unknown whether the testing of other sizes will result in a SPIB proposal for additional design value changes or what changes the ALSC Board of Review would make or the timing for their implementation if changes were proposed. The design value reductions for visually graded southern yellow pine 2X4s of grade No. 2 and lower, and the possibility of additional design value reductions for other widths could result in an increase in product substitution or species substitution and could adversely affect demand for visually graded southern yellow pine.

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

STOCK-PRICE VOLATILITY
The price of our common stock may be volatile.
The market price of our common stock may be influenced by many factors, some of which are beyond our control, including those described above under "Risks Related to our Industries and Business" and the following:
actual or anticipated fluctuations in our operating results or our competitors' operating results;
announcements by us or our competitors of new products, capacity changes, significant contracts, acquisitions or strategic investments;
our growth rate and our competitors’ growth rates;
the financial market and general economic conditions;
changes in stock market analyst recommendations regarding us, our competitors or the forest products industry generally, or lack of analyst coverage of our common stock;
sales of our common stock by our executive officers, directors and significant stockholders or sales of substantial amounts of common stock;
changes in accounting principles; and
changes in tax laws and regulations.
In addition, there has been significant volatility in the market price and trading volume of securities of companies operating in the forest products industry that often has been unrelated to the operating performance of particular companies.
Some companies that have had volatile market prices for their securities have had securities litigation brought against them. If litigation of this type is brought against us, it could result in substantial costs and would divert management’s attention and resources.

UNRESOLVED STAFF COMMENTS
There are no unresolved comments that were received from the SEC staff relating to our periodic or current reports under the Securities Exchange Act of 1934.
 
PROPERTIES
Details about our facilities, production capacities and locations are found in the Our Business — What We Do section of this report.
For details about our Timberlands properties, go to Our Business/What We Do/Timberlands/Where We Do It.
For details about our Wood Products properties, go to Our Business/What We Do/Wood Products/Where We Do It.
For details about our Cellulose Fibers properties, go to Our Business/What We Do/Cellulose Fibers/Where We Do It.
For details about our Real Estate properties, go to Our Business/What We Do/Real Estate/Where We Do It.
Production capacities listed represent annual production volume under normal operating conditions and producing a normal product mix for each individual facility. Production capacities do not include any capacity for facilities that were sold or permanently closed as of the end of 2011.

LEGAL PROCEEDINGS
See Note 15: Legal Proceedings, Commitments and Contingencies in the Notes to Consolidated Financial Statements for a summary of legal proceedings.


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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock trades on the following exchanges under the symbol WY:
New York Stock Exchange and
Chicago Stock Exchange
As of December 31, 2011, there were approximately 9,724 holders of record of our common shares. Dividend-per-share data and the range of closing market prices for our common stock for each of the four quarters in 2011 and 2010 are included in Note 22: Selected Quarterly Financial Information (unaudited) in the Notes to Consolidated Financial Statements.
INFORMATION ABOUT SECURITIES AUTHORIZED FOR ISSUANCE UNDER OUR EQUITY COMPENSATION PLAN
 
NUMBER OF
SECURITIES TO BE
ISSUED UPON
EXERCISE OF
OUTSTANDING
OPTIONS,
WARRANTS AND
RIGHTS (A)

WEIGHTED
AVERAGE EXERCISE
PRICE OF
OUTSTANDING
OPTIONS,
WARRANTS AND
RIGHTS (B)

NUMBER OF
SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
UNDER EQUITY
COMPENSATION PLANS
(EXCLUDING
SECURITIES REFLECTED
IN COLUMN (A) (C)

Equity compensation plans approved by security holders(1)
32,799,526

$
22.37

11,714,621

Equity compensation plans not approved by security holders
N/A

N/A

N/A

Total
32,799,526

$
22.37

11,714,621

(1)   Includes 1,738,574 restricted stock units and 314,426 performance share units. Because there is no exercise price associated with restricted stock units and performance share units, such stock units are not included in the weighted average price calculation.
 
INFORMATION ABOUT COMMON STOCK REPURCHASES DURING 2011
 
TOTAL NUMBER OF SHARES (OR UNITS) PURCHASED

AVERAGE PRICE PAID PER SHARE (OR UNIT)
TOTAL NUMBER OF SHARES (OR UNITS) PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS
MAXIMUM NUMBER (OR APPROXIMATE DOLLAR VALUE) OF SHARES (OR UNITS) THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS
Common Stock Repurchases During Third Quarter:
July

N/A


$
248,142,704

August
1,199,800

$
16.67

1,199,800

$
250,000,000

September
589,824

$
15.89

589,824

$
240,625,690

Total repurchases during third quarter
1,789,624

$
16.41

1,789,624

$
240,625,690

Common Stock Repurchases During Fourth Quarter:
October
500,000

$
15.33

500,000

$
232,962,165

November

N/A


$
232,962,165

December

N/A


$
232,962,165

Total repurchases during fourth quarter
500,000

$
15.33

500,000

$
232,962,165

Total common stock repurchases during 2011
2,289,624

$
15.63

2,289,624

$
232,962,165

(1)   On August 11, 2011, our board of directors terminated the 2008 stock repurchase program and approved the 2011 stock repurchase program under which we are authorized to repurchase up to $250 million of outstanding shares. As of December 31, 2011, we had repurchased $20 million and $17 million under the 2008 and 2011 programs, respectively. All common stock purchases under both programs were made in open-market transactions.
 

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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
Weyerhaeuser Company, S&P 500 and S&P Global Timber & Forestry Index

PERFORMANCE GRAPH ASSUMPTIONS
Assumes $100 invested on December 31, 2006 in Weyerhaeuser common stock, the S&P 500 Index and the S&P Global Timber & Forestry Index.
Total return assumes dividends are reinvested quarterly.
Measurement dates are the last trading day of the calendar year shown.

 

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SELECTED FINANCIAL DATA
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES
PER SHARE
  
  
  
  
  
  
2011

2010

2009

2008

2007

Diluted earnings (loss) from continuing operations attributable to Weyerhaeuser common shareholders
$
0.59

3.96

(2.38
)
(8.73
)
(1.06
)
Diluted earnings (loss) from discontinued operations attributable to Weyerhaeuser common shareholders(1)
0.02

0.03

(0.20
)
3.16

4.66

Diluted net earnings (loss) attributable to Weyerhaeuser common shareholders
$
0.61

3.99

(2.58
)
(5.57
)
3.60

Dividends paid
$
0.60

26.61

0.60

2.40

2.40

Weyerhaeuser shareholders’ interest (end of year)
$
7.95

8.60

19.13

22.78

37.80

FINANCIAL POSITION
  
  
  
  
  
  
2011

2010

2009

2008

2007

Total assets:
 

 

 

 

 

Forest Products
$
10,681

11,476

13,248

14,080

20,026

Real Estate
1,917

1,953

2,002

2,615

3,736

Total
$
12,598

13,429

15,250

16,695

23,762

Total long-term debt:
 

 

 

 

 

Forest Products
$
4,193

4,710

5,284

5,560

6,566

Real Estate
285

350

402

456

775

Total
$
4,478

5,060

5,686

6,016

7,341

Weyerhaeuser shareholders’ interest
$
4,263

4,612

4,044

4,814

7,981

Percent earned on average Weyerhaeuser shareholders’ interest
7.5
%
29.6
%
(12.3
)%
(18.4
)%
9.3
%
OPERATING RESULTS
  
  
  
  
  
  
2011

2010

2009

2008

2007

Net sales and revenues
$
6,216

5,954

5,068

7,413

10,065

Earnings (loss) from continuing operations
$
319

1,274

(525
)
(1,911
)
(284
)
Discontinued operations, net of income taxes(1)
12

9

(43
)
669

1,023

Net earnings (loss)
331

1,283

(568
)
(1,242
)
739

Less: Net loss (earnings) attributable to noncontrolling interest

(2
)
23

66

51

Net earnings (loss) attributable to Weyerhaeuser common shareholders
$
331

1,281

(545
)
(1,176
)
790

CASH FLOWS
  
  
  
  
  
  
2011

2010

2009

2008

2007

Net cash from operations
$
291

689

(203
)
(1,411
)
489

Cash from investing activities
$
122

164

276

5,571

917

Cash from financing activities
$
(927
)
(1,255
)
(498
)
(1,980
)
(1,535
)
Net change in cash and cash equivalents
$
(514
)
(402
)
(425
)
2,180

(129
)
STATISTICS (UNAUDITED)
  
  
  
  
  
  
2011

2010

2009

2008

2007

Number of employees
12,800

14,250

14,888

19,843

37,857

Number of shareholder accounts at year-end:
 

 

 

 

 

Common
9,724

10,050

10,577

11,088

10,489

Exchangeable




1,037

Number of shares outstanding at year-end (thousands):
 

 

 

 

 

Common
536,425

535,976

211,359

211,289

209,546

Exchangeable




1,600

Weighted average shares outstanding – diluted (thousands)
539,879