What changed in this filing

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Item 1. Financial Statements

2021-10-29 compared with 2021-07-30 · 113 added, 30 removed, 388 unchanged (27% of the section changed)

5 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Net sales ( Note 3 )

2 unchanged sentences

General and administrative expenses

Other operating costs, net ( Note 15 )

Other operating costs (income), net ( Note 15 )

Operating income

12 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Other comprehensive income (loss):

8 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE

SEPTEMBER 30,

Current assets:

3 unchanged sentences

Inventories ( Note 5 )

Assets held for sale ( Note 14 )

Prepaid expenses and other current assets

21 unchanged sentences

issued and outstanding:

749,782 thousand shares at June 30, 2021 and 747,385 thousand shares at

749,037 thousand shares at September 30, 2021 and 747,385 thousand shares at

December 31, 2020

8 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2021

SEPTEMBER 2020

Cash flows from operations:

5 unchanged sentences

Share-based compensation expense ( Note 13 )

Gain on sale of timberlands ( Note 14 )

Timber casualty loss ( Note 15 )

Receivables, net

9 unchanged sentences

Proceeds from note receivable held by variable interest entities ( Note 6 )

Proceeds from sale of Montana timberlands ( Note 14 )

Proceeds from sale of timberlands ( Note 14 )

Net cash from investing activities

6 unchanged sentences

Proceeds from exercise of stock options

Repurchases of common shares ( Note 4 )

Net cash from financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Net change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Cash paid (received) during the period for:

7 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Common shares:

1 unchanged sentence

Issued for exercise of stock options and vested units

Repurchases of common shares ( Note 4 )

Balance at end of period

2 unchanged sentences

Issued for exercise of stock options

Repurchases of common shares ( Note 4 )

Share-based compensation

17 unchanged sentences

REVENUE RECOGNITION

NET EARNINGS PER SHARE

NET EARNINGS PER SHARE AND SHARE REPURCHASES

VARIABLE INTEREST ENTITIES

7 unchanged sentences

TIMBERLAND ACQUISITIONS AND DIVESTITURES

OTHER OPERATING COSTS, NET

OTHER OPERATING COSTS (INCOME), NET

RESTRICTED CASH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE QUARTERS AND YEAR-TO-DATE PERIODS ENDED JUNE 30, 2021 AND 2020

FOR THE QUARTERS AND YEAR-TO-DATE PERIODS ENDED SEPTEMBER 30, 2021 AND 2020

BASIS OF PRESENTATION

22 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Sales to unaffiliated customers:

17 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Net sales to unaffiliated customers:

23 unchanged sentences

Other Wood Products sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations.

NET EARNINGS PER SHARE

NET EARNINGS PER SHARE AND SHARE REPURCHASES

Our basic and diluted earnings per share were:

$ 1.37 during second quarter 2021 and $ 2.28 during year-to-date 2021;

$ 0.10 during second quarter 2020 and $ 0.30 during year-to-date 2020.

$ 0.64 during third quarter 2021 and $ 2.92 during year-to-date 2021;

$ 0.38 during third quarter 2020 and $ 0.68 during year-to-date 2020.

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

3 unchanged sentences

SHARES IN THOUSANDS

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Weighted average common shares outstanding – basic

12 unchanged sentences

SHARES IN THOUSANDS

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Stock options

Performance share units

Share Repurchase Program

On September 22, 2021, we announced that our board of directors approved a new share repurchase program (the 2021 Repurchase Program) under which we are authorized to repurchase up to $ 1 billion of outstanding shares.

Concurrently, the board terminated the remaining repurchase authorization under the share repurchase program approved by the board in February 2019 (the 2019 Repurchase Program).

During year-to-date 2021, we repurchased 780,228 common shares for approximately $ 26 million under the 2019 Repurchase Program.

As of September 30, 2021, we had remaining authorization of $ 1 billion for future share repurchases under the 2021 Repurchase Program.

We did no t repurchase shares during year-to-date 2020.

All common stock repurchases under the 2019 Repurchase Program were made in open-market transactions.

We record share repurchases upon trade date as opposed to the settlement date when cash is disbursed.

We record a liability for repurchases that have not yet been settled as of period end.

There were no unsettled repurchases as of September 30, 2021 or December 31, 2020.

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

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 30,

LIFO inventories:

12 unchanged sentences

We were the primary beneficiary and consolidated the assets and liabilities of the SPEs involved in these transactions.

The assets of the buyer-sponsored SPEs were financial investments which consisted of bank guarantees.

The assets of the buyer-sponsored SPEs were financial investments which consist ed of bank guarantees.

These bank guarantees were in turn backed by bank notes, which were the liabilities of the monetization SPEs.

7 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Interest cost

7 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Interest cost

14 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 30,

Compensation and employee benefit costs

1 unchanged sentence

Customer rebates, volume discounts and deferred income

Dividends payable

Taxes payable

LONG-TERM DEBT AND LINE OF CREDIT

In October 2021, we repaid our $ 150 million 9.00 percent notes at maturity.

In May 2021, we repaid our $ 225 million variable-rate term loan that was scheduled to mature in July 2026 .

In September 2020, we redeemed our $ 325 million 3.25 percent notes due in March 2023 .

A pretax charge of $ 23 million was included in “Interest expense, net of capitalized interest” in the Consolidated Statement of Operations in third quarter 2020 for the make-whole premium in connection with the early extinguishment of the $ 325 million notes.

In March 2020, we issued $ 750 million of 4.00 percent notes due in April 2030 .

4 unchanged sentences

Borrowings are at LIBOR plus a spread or at other interest rates mutually agreed upon between the borrower and the lending banks.

We had no outstanding borrowings on our credit facility as of June 30, 2021 and December 31, 2020.

We had no outstanding borrowings on our credit facility as of September 30, 2021 and December 31, 2020.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

SEPTEMBER 30,

DOLLAR AMOUNTS IN MILLIONS

17 unchanged sentences

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

As of June 30, 2021, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $ 58 million.

As of September 30, 2021, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $ 64 million.

These amounts are recorded in "Accrued liabilities" and "Other liabilities" on our Consolidated Balance Sheet .

4 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Balance at beginning of period

Other comprehensive income before reclassifications

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive loss to earnings ( 2)

3 unchanged sentences

Balance at beginning of period

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive loss to earnings ( 2)

36 unchanged sentences

Washington Divestiture

On April 30, 2021, we announced an agreement to sell 145,000 acres of timberlands in the North Cascades region of Washington.

On April 30, 2021, we announced an agreement to sell 145 thousand acres of timberlands in the North Cascades region of Washington.

On July 7, 2021, we completed the sale for $ 261 million in cash proceeds, which is net of purchase price adjustments and closing costs.

This transaction was structured as a like-kind exchange along with the Alabama acquisition discussed below.

As a result of the sale, a gain of approximately $ 30 million will be recorded in the Timberlands segment in our third quarter 2021 Consolidated Statement of Operations .

As a result of the sale, a gain of $ 32 million was recorded in the Timberlands segment in our third quarter 2021 Consolidated Statement of Operations .

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

However, the related assets have met the relevant criteria to be classified as held for sale in the current period Consolidated Balance Sheet .

The designation as held for sale requires us to record the related net assets at the lower of their current cost basis or fair value, less an amount of estimated selling costs.

This classification does not affect the presentation in the Consolidated Statement of Operations .

The held for sale classification did change the presentation of the related assets from long-term to current on our Consolidated Balance Sheet .

As of June 30, 2021, “Assets held for sale” had a balance of $ 229 million, which consisted primarily of timberlands and other related assets.

Alabama Acquisition

On February 25, 2021, we announced an agreement to purchase 69,200 acres of southwest Alabama timberlands for approximately $ 149 million.

On February 25, 2021, we announced an agreement to purchase 69 thousand acres of southwest Alabama timberlands for approximately $ 149 million.

We completed the purchase on April 27, 2021 and recorded $ 148 million of timberland assets in “Timber and timberlands at cost, less depletion” and $ 1 million of related assets in “Property and equipment, net” on our Consolidated Balance Sheet .

As discussed above, this transaction was structured as a like-kind exchange, and therefore, the southwest Alabama timberlands were held on our behalf by an intermediary as of June 30, 2021 .

As discussed above, this transaction was structured as a like-kind exchange.

Montana Divestiture

On December 17, 2019, we announced an agreement to sell 630,000 acres of Montana timberlands, which was part of our Timberlands business segment.

On December 17, 2019, we announced an agreement to sell 630 thousand acres of Montana timberlands, which was part of our Timberlands business segment.

On March 26, 2020, we completed the sale for $ 145 million in cash proceeds, which is net of purchase price adjustments and closing costs.

1 unchanged sentence

The divestiture was not considered a strategic shift that had, or will have, a major effect on our operations or financial results and therefore did not meet the requirements for presentation as discontinued operations.

OTHER OPERATING COSTS, NET

Other operating costs, net were comprised of the following:

OTHER OPERATING COSTS (INCOME), NET

Other operating costs (income), net were comprised of the following:

QUARTER ENDED

1 unchanged sentence

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2021

SEPTEMBER 2020

SEPTEMBER 2021

SEPTEMBER 2020

Foreign exchange losses (gains), net

Gain on sale of timberlands

Litigation expense, net

1 unchanged sentence

Research and development expenses

Total other operating costs, net

Timber casualty loss

Total other operating costs (income), net

Timber Casualty Loss

In September 2020, forest fires in the state of Oregon, commonly referred to as the Holiday Farm, Beachie Creek, Riverside, and Archie Creek fires, spread from adjacent lands onto portions of our Oregon timberland properties.

We recorded a timber casualty loss of $ 80 million in third quarter 2020 which represented the estimated book value of timber and related assets that could not be salvaged based on information available at that time.

The loss was attributable to our Timberlands segment and was recorded within “Other operating costs (income), net” in the Consolidated Statement of Operations .

During year-to-date 2021, we have harvested a substantial majority of our planned salvage volume in Oregon.

The additional information obtained from our salvage operations has not resulted in a change to the estimated loss previously recorded.

As a real estate investment trust (REIT), we generally are not subject to federal corporate income taxes on REIT taxable income that is distributed to shareholders.

3 unchanged sentences

federal statutory tax rate of 21 percent primarily due to state and foreign income taxes and tax benefits associated with our nontaxable REIT earnings.

RESTRICTED CASH

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on our Consolidated Balance Sheet that sum to the total of the amounts shown in the Consolidated Statement of Cash Flows :

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 30,

Cash and cash equivalents

Restricted cash included in other assets ( 1)

Total cash, cash equivalents and restricted cash

Amounts included in restricted cash as of September 30, 2021 are comprised of proceeds held by a qualified intermediary that are intended to be reinvested in timber and timberlands through a like-kind exchange transaction.

Amounts included in restricted cash as of September 30, 2020 were primarily comprised of proceeds held by a qualified intermediary that were subsequently reinvested in timber and timberlands through a like-kind exchange transaction, as well as additional funds held in escrow related to that transaction.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements