UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
x
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2016
or
o
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number 1-32729
POTLATCH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
82-0156045
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
601 West First Avenue, Suite 1600
Spokane, Washington
99201
(Address of principal executive offices)
(Zip Code)
(509) 835-1500
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
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
Accelerated filer
Non-accelerated filer
o (Do not check if a smaller reporting company)
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The number of shares of common stock of the registrant outstanding as of July 25, 2016 was 40,518,533.
POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES
Table of Contents
PageNumber
PART I. - FINANCIAL INFORMATION
ITEM 1.
Financial Statements (unaudited)
Consolidated Statements of Income (Loss)
2
Consolidated Statements of Comprehensive Income (Loss)
3
Condensed Consolidated Balance Sheets at June 30, 2016 and December 31, 2015
4
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015
5
Notes to Condensed Consolidated Financial Statements
6
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
15
ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
24
ITEM 4.
Controls and Procedures
PART II. - OTHER INFORMATION
Legal Proceedings
25
ITEM 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
ITEM 6.
Exhibits
SIGNATURE
26
EXHIBIT INDEX
27
Part I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Potlatch Corporation and Consolidated Subsidiaries
Unaudited (Dollars in thousands, except per share amounts)
Quarters Ended June 30,
Six Months Ended June 30,
2016
2015
Revenues
$
141,495
128,747
269,391
262,872
Costs and expenses:
Cost of goods sold
113,377
109,441
223,192
217,213
Selling, general and administrative expenses
13,824
11,995
26,833
24,321
Loss on sale of central Idaho timber and timberlands
48,522
—
175,723
121,436
298,547
241,534
Operating income (loss)
(34,228
)
7,311
(29,156
21,338
Interest expense, net
(8,206
(8,016
(14,231
(16,085
Income (loss) before income taxes
(42,434
(705
(43,387
5,253
Income tax benefit
11,196
1,416
12,306
1,114
Net income (loss)
(31,238
711
(31,081
6,367
Net income (loss) per share:
Basic
(0.77
0.02
(0.76
0.16
Diluted
Dividends per share
0.375
0.75
Weighted-average shares outstanding (in thousands):
40,784
40,843
40,837
40,822
40,963
40,933
The accompanying notes are an integral part of these condensed consolidated financial statements.
Unaudited (Dollars in thousands)
Other comprehensive income, net of tax:
Pension and other postretirement employee benefits:
Amortization of prior service credit included in net
periodic cost, net of tax of $(815), $(848), $(1,630)
and $(1,697)
(1,274
(1,328
(2,549
(2,656
Amortization of actuarial loss included in net
periodic cost, net of tax of $1,826, $1,900, $3,521
and $3,837
2,857
2,974
5,507
6,003
Cash flow hedge, net of tax of $(264), $-, $(369) and $-
(413
(577
Other comprehensive income, net of tax
1,170
1,646
2,381
3,347
Comprehensive income (loss)
(30,068
2,357
(28,700
9,714
See Note 7: Derivative Instruments and Note 9: Pension and Other Postretirement Employee Benefits for additional information. Amortization of prior service credit and amortization of actuarial loss are included in the computation of net periodic cost (benefit).
Condensed Consolidated Balance Sheets
June 30, 2016
December 31, 2015
ASSETS
Current assets:
Cash
25,301
7,886
Short-term investments
40,077
39
Receivables, net
22,531
13,420
Inventories
30,045
35,162
Other assets
17,162
14,246
Total current assets
135,116
70,753
Property, plant and equipment, net
74,558
75,285
Timber and timberlands, net
643,814
816,599
Deferred tax assets, net
51,569
46,600
9,088
7,375
Total assets
914,145
1,016,612
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Revolving line of credit borrowings
30,000
Current portion of long-term debt
5,082
5,007
Accounts payable and accrued liabilities
48,290
39,740
Current portion of pension and other postretirement employee benefits
5,973
Total current liabilities
59,345
80,720
Long-term debt
581,205
598,874
Pension and other postretirement employee benefits
119,590
119,369
Other long-term obligations
13,462
13,913
Total liabilities
773,602
812,876
Commitments and contingencies
Stockholders' equity:
Common stock, $1 par value
40,519
40,681
Additional paid-in capital
352,497
350,541
Accumulated deficit
(140,351
(72,983
Accumulated other comprehensive loss
(112,122
(114,503
Total stockholders’ equity
140,543
203,736
Total liabilities and stockholders' equity
Condensed Consolidated Statements of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation, depletion and amortization
16,474
15,597
Basis of real estate sold
5,421
1,008
Change in deferred taxes
(6,784
(1,707
Employee benefit plans
6,416
3,166
Equity-based compensation expense
2,176
2,259
Other, net
(1,280
(5,496
Change in working capital and operating-related activities, net
5,797
(4,538
Net cash from operating activities
45,661
16,656
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments
(40,038
24,537
Property, plant and equipment
(3,488
(12,248
Timberlands reforestation and roads
(5,544
(6,004
Acquisition of timber and timberlands
(1,161
Net proceeds from sale of central Idaho timber and timberlands
111,460
109
433
Net cash from investing activities
61,338
6,718
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends to common stockholders
(30,453
(30,507
Repayment of revolving line of credit borrowings
(30,000
Proceeds from revolving line of credit borrowings
15,000
Repayment of long-term debt
(47,600
Proceeds from issuance of long-term debt
27,500
Repurchase of common stock
(5,956
Change in book overdrafts
(2,836
(2,246
Employee tax withholdings on vested performance share awards
(102
(1,445
(137
(37
Net cash from financing activities
(89,584
(19,235
Increase in cash
17,415
4,139
Cash at beginning of period
4,644
Cash at end of period
8,783
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid (received) during the period for:
Interest, net of amounts capitalized
13,791
13,702
Income taxes, net
(1,740
1,512
NOTE 1. BASIS OF PRESENTATION
For purposes of this report, any reference to “Potlatch,” “the company,” “we,” “us,” and “our” means Potlatch Corporation and all of its wholly-owned subsidiaries, except where the context indicates otherwise.
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements; certain disclosures normally provided in accordance with generally accepted accounting principles in the United States have been omitted. This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on February 12, 2016. We believe that all adjustments necessary for a fair statement of the results of such interim periods have been included and all such adjustments are of a normal recurring nature.
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases, which, among other things, requires lessees to recognize most leases on the balance sheet. We have operating leases covering office space, equipment, land and vehicles expiring at various dates through 2028, which would require a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, to be recognized in the statement of financial position. Lease costs would generally continue to be recognized on a straight-line basis. The future minimum payments required under our operating leases totaled $9.6 million at December 31, 2015. The ASU is effective for us on January 1, 2019.
In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which changes several aspects of the accounting for share-based payment award transactions, including accounting for income taxes, diluted shares outstanding, classification of excess tax benefits on the statement of cash flows, forfeitures and minimum statutory tax withholding requirements. This ASU is effective for us on January 1, 2017. The adoption of this guidance is not expected to have a significant effect on our consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which eliminates the probable recognition threshold for credit impairments. The new guidance broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually to include forecasted information, as well as past events and current conditions. There is no specified method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate. This ASU is effective for us on January 1, 2020. Our credit loss estimates are reflected in our allowance for doubtful accounts on accounts receivables, which had a balance of $0.4 million at December 31, 2015. The adoption of this guidance is not expected to have a significant effect on our consolidated financial statements.
NOTE 3. EARNINGS PER SHARE
The following table reconciles the number of shares used in calculating basic and diluted earnings per share:
(Dollars in thousands, except per share amounts)
Basic weighted-average shares outstanding
40,784,129
40,842,672
40,836,503
40,822,326
Incremental shares due to:
Performance shares
100,915
92,130
Restricted stock units
19,901
18,396
Diluted weighted-average shares outstanding
40,963,488
40,932,852
Basic net income (loss) per share
Diluted net income (loss) per share
No dilutive potential shares were included in the computation of diluted net income (loss) per share for the three and six months ended 2016 due to the net loss. For the three months ended June 30, 2016 and 2015, there were 107,769 and 1,000 stock-based awards that were excluded from the calculation of diluted earnings per share because they were anti-dilutive. For the six months ended June 30, 2016 and 2015, there were 67,846 and 80,726 anti-dilutive stock-based awards. Anti-dilutive stock-based awards could be dilutive in future periods.
We repurchased 169,625 shares of common stock during the quarter at an average price of $35.08 per share totaling $6.0 million. The shares were retired and the excess repurchase price over par was allocated to accumulated deficit.
NOTE 4. CERTAIN BALANCE SHEET COMPONENTS
INVENTORIES
(Dollars in thousands)
Inventories:
Logs
4,882
9,920
Lumber, plywood and veneer
16,533
16,932
Materials and supplies
8,630
8,310
Total inventories
PROPERTY, PLANT AND EQUIPMENT
250,502
248,750
Less: accumulated depreciation
(175,944
(173,465
Total property, plant and equipment, net
7
NOTE 5. LOSS ON SALE OF CENTRAL IDAHO TIMBER AND TIMBERLANDS
On April 21, 2016, we sold approximately 172,000 acres of timberlands located in central Idaho for $114 million. The company purchased the property in 2007 and 2008 for the purpose of growing and harvesting timber and selling rural recreation parcels. In the recession of 2008 the central Idaho rural recreational real estate market collapsed and has not fully recovered. The sale frees up capital without having to wait for the rural recreation real estate market in central Idaho to recover. We recorded a loss of $48.5 million before taxes in our Real Estate segment in the second quarter of 2016. Historical earnings generated by the property have been positive, but not material.
The asset group was classified as held and used as of March 31, 2016. Neither a signed letter of intent, nor an approved purchase agreement were in place as of that date. Because negotiations were underway with the buyer at the end of the first quarter, we believed that it was prudent to complete an undiscounted cash flow analysis to determine whether the asset group was impaired. Given the long period of time over which cash flows would be generated in the hold scenario and management’s belief that the likelihood that a sale would be completed was 20%, the undiscounted cash flows significantly exceeded the book basis of the asset group. Therefore, at March 31, 2016 management concluded that the asset group was not impaired and recorded the loss on sale in the second quarter of 2016.
NOTE 6. DEBT
In February 2016, we amended our term loan agreement to provide an additional loan in the amount of $27.5 million. This additional tranche refinanced $27.5 million of long-term debt that matured in December 2015 and February 2016. The new debt matures in 2026 and carries a rate equal to 3-month LIBOR plus 2.15% per annum.
In June 2016, we repaid $42.6 million of revenue bonds. The bonds carried a rate of 5.9% and had a maturity date in 2026.
NOTE 7. DERIVATIVE INSTRUMENTS
From time to time, we enter into derivative financial instruments to manage certain cash flow and fair value risks. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset or liability to a particular risk, such as interest rate risk, are considered fair value hedges. We have seven fair value interest rate swaps to convert interest payments on fixed-rate debt to variable-rate 3-month LIBOR plus a spread.
Derivatives designated and qualifying as a hedge of the exposure to variability in the cash flows of a specific asset or liability that is attributable to a particular risk, such as interest rate risk, are considered cash flow hedges. We have one interest rate swap to convert variable-rate debt, comprised of 3-month LIBOR plus a spread, to fixed-rate debt. Our cash flow hedge is expected to be highly effective in achieving offsetting cash flows attributable to the hedged interest rate risk through the term of the hedge. Therefore, changes in the fair value of the interest rate swap are recorded as a component of other comprehensive income and will be recognized in earnings when the hedged interest rate affects earnings. The amounts paid or received on this interest rate hedge will be recognized as adjustments to interest expense. As of June 30, 2016, the amount of net losses expected to be reclassified into earnings in the next 12 months is $0.3 million.
The following table presents the gross fair values of derivative instruments on our Condensed Consolidated Balance Sheets:
Asset Derivatives
Liability Derivatives
Location
Derivatives designated as
hedging instruments:
Interest rate contracts
Other assets, current
82
946
Other assets, non-current
1,610
574
Total derivatives designated
as hedging instruments
1,692
581
8
The following table details the effect of derivatives on our Consolidated Statements of Income:
Derivatives designated in fair value
hedging relationships:
Realized gain on interest rate contracts1
Interest expense
214
409
456
788
Derivatives designated in cash flow
Gain (loss) recognized on derivative,
net of tax of $(264) and $(369) (effective
portion)
Other Comprehensive Income
(490
(654
Gain (loss) reclassified into
income (effective portion)
(77
Net effect on other comprehensive income (loss)
1 Realized gain on hedging instruments consists of net cash settlements and interest accruals on the fair value interest rate swaps during the periods. Net cash settlements are included in the supplemental cash flow information within interest, net of amounts capitalized in the Condensed Consolidated Statements of Cash Flows.
NOTE 8. FINANCIAL INSTRUMENTS
The following table presents the estimated fair values of our financial instruments:
Carrying
Amount
Fair
Value
Cash and short-term investments (Level 1)
65,378
7,925
Asset related to interest rate swaps (Level 2)
Liability related to interest rate swaps (Level 2)
Long-term debt, including fair value adjustments related to
hedging instruments (Level 2)
586,287
609,232
603,881
626,021
Company owned life insurance asset (COLI) (Level 3)
1,683
687
For cash and short-term investments, the carrying amount approximates fair value due to the short-term nature of these financial instruments.
The fair value of the interest rate swaps were determined by discounting the expected cash flows of each derivative. The analysis reflects the contractual terms of the derivatives, including the period to maturity and uses observable market-based inputs, including interest rate forward curves.
The fair value of our long-term debt is estimated based upon the quoted market prices for the same or similar debt issues, or estimated based on average market prices for comparable debt when there is no quoted market price.
The contract value of our COLI, the amount at which it could be redeemed, is used as a practical expedient to estimate fair value because market prices are not readily available.
9
NOTE 9. PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFITS
The following tables detail the components of net periodic cost (benefit) of our pension plans and other postretirement employee benefits (OPEB):
Pension
OPEB
Service cost
1,747
1,531
Interest cost
4,258
4,259
355
345
Expected return on plan assets
(4,734
(5,192
Amortization of prior service cost (credit)
129
152
(2,218
(2,328
Amortization of actuarial loss
4,253
4,408
430
466
Net periodic cost (benefit)
5,653
5,158
(1,431
(1,513
3,254
3,061
11
8,510
8,518
710
728
(9,500
(10,383
259
303
(4,438
(4,656
8,170
8,816
858
1,024
10,693
10,315
(2,863
(2,893
During the six months ended June 30, 2016 and 2015, we paid non-qualified supplemental pension benefits of $0.7 million and $0.9 million.
During the six months ended June 30, 2016 and 2015, we paid OPEB benefits of $1.9 million and $1.8 million.
The following tables detail the pension and OPEB changes in accumulated other comprehensive loss (AOCL):
Quarter ended June 30, 2016
Total
Balance at March 31
125,776
(12,648
113,128
Amortization of defined benefit items, net of tax:1
Prior service credit (cost)
(79
1,353
1,274
Actuarial loss
(2,594
(263
(2,857
Total reclassification for the period
(2,673
1,090
(1,583
Balance at June 30
123,103
(11,558
111,545
Quarter ended June 30, 2015
131,480
(14,789
116,691
(92
1,420
1,328
(2,689
(285
(2,974
(2,781
1,135
(1,646
128,699
(13,654
115,045
10
Six Months Ended June 30, 2016
Balance at January 1
128,244
(13,741
114,503
(158
2,707
2,549
(4,983
(524
(5,507
(5,141
2,183
(2,958
Six Months Ended June 30, 2015
134,261
(15,869
118,392
(184
2,840
2,656
(5,378
(625
(6,003
(5,562
2,215
(3,347
1 Amortization of prior service credit (cost) and amortization of actuarial loss are included in the computation of net periodic cost (benefit).
NOTE 10. EQUITY-BASED COMPENSATION
As of June 30, 2016, we had two stock incentive plans under which performance shares, restricted stock units (RSUs) and deferred compensation stock equivalent units outstanding. These plans have received shareholder approval. We were originally authorized to issue up to 1.6 million shares and 1.0 million shares under our 2005 Stock Incentive Plan and 2014 Stock Incentive Plan, respectively. At June 30, 2016, approximately 1.1 million shares were authorized for future use. We issue new shares of common stock to settle performance shares, restricted stock units and deferred compensation stock equivalent units.
The following table details equity-based compensation expense and the related income tax benefit:
Employee equity-based compensation expense:
951
950
1,705
1,822
271
232
471
437
Total employee equity-based compensation expense
1,222
1,182
Deferred compensation stock equivalent units expense
220
47
420
166
Total tax benefit recognized for share-based expense
89
78
155
PERFORMANCE SHARES
The following table presents the key inputs used in the Monte Carlo simulation to calculate the fair value of the performance share awards in 2016 and 2015:
Stock price as of valuation date
25.92
40.00
Risk-free rate
0.88
%
1.07
Expected volatility
23.82
21.09
Expected dividends
5.79
3.75
Expected term (years)
3.00
The following table summarizes outstanding performance share awards as of June 30, 2016, and changes during the six months ended June 30, 2016:
(Dollars in thousands, except grant date fair value)
Shares
Weighted-Avg.
Grant Date
Fair Value
Aggregate
Intrinsic Value
Unvested shares outstanding at January 1
161,049
41.26
Granted
125,469
30.02
Unvested shares outstanding at June 30
286,518
36.64
9,770
As of June 30, 2016, there was $5.1 million of unrecognized compensation cost related to unvested performance share awards, which is expected to be recognized over a weighted-average period of 1.7 years.
RESTRICTED STOCK UNITS
The following table summarizes outstanding RSU awards as of June 30, 2016, and changes during the six months ended June 30, 2016:
44,531
40.95
43,320
26.08
Vested
(2,000
39.12
85,851
33.03
2,928
The fair value of each RSU equaled our common share price on the date of grant. The total fair value of RSU awards that vested during the six months ended June 30, 2016 was $0.1 million. As of June 30, 2016, there was $1.6 million of total unrecognized compensation cost related to unvested RSU awards, which is expected to be recognized over a weighted-average period of 1.7 years.
DEFERRED COMPENSATION STOCK EQUIVALENT UNITS
A long-term incentive award is granted annually to our directors, and payable upon a director's separation from service. Directors may also elect to defer their annual retainers, payable in the form of stock. All stock unit equivalent accounts are credited with dividend equivalents. As of June 30, 2016, there were 148,248 shares outstanding that will be distributed in the future to directors as common stock.
Issuance of restricted stock units awarded to certain officers and select employees may also be deferred. All stock unit equivalent accounts are credited with dividend equivalents. As of June 30, 2016, there were 65,357 RSUs which had vested, but issuance of the related stock had been deferred.
NOTE 11. INCOME TAXES
As a real estate investment trust (REIT), we generally are not subject to federal and state corporate income taxes on income of the REIT that we distribute to our shareholders. We conduct certain activities through our taxable REIT subsidiaries (TRS), which are subject to corporate level federal and state income taxes. These taxable activities are principally comprised of our wood products manufacturing operations and certain real estate investments. Therefore, income tax expense or benefit is primarily due to income or loss of the TRS, as well as permanent book versus tax differences.
As a result of the loss on sale of central Idaho timberlands, in the second quarter of 2016 $5.5 million was reclassed from a net operating loss carryforward within deferred taxes to receivables, net.
12
NOTE 12. COMMITMENTS AND CONTINGENCIES
In January 2007, the Environmental Protection Agency (EPA) notified us that we are a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the Clean Water Act for cleanup of a site known as Avery Landing in northern Idaho. We own a portion of the land at the Avery Landing site, which we acquired in 1980 from the Milwaukee Railroad. The land we own at the site and adjacent properties were contaminated with petroleum as a result of the Milwaukee Railroad's operations at the site prior to 1980. On July 5, 2011, the EPA issued an Action Memorandum for the Avery Landing site selecting contaminant extraction and off-site disposal as the remedial alternative. On May 23, 2012, we signed a consent order with the EPA pursuant to which we agreed to provide $1.75 million in funding for EPA cleanup on a portion of our property (including the adjacent riverbank owned by the Idaho Department of Lands). The EPA cleanup was completed in October 2012. On April 4, 2013, the EPA issued a unilateral administrative order requiring us to remediate the portion of the Avery Landing site that we own. Our remediation was completed in October 2013. On September 25, 2015 the EPA sent us a letter asserting that the EPA and the Department of Transportation (the current owner of a portion of the adjacent property remediated by the EPA) (DOT) had incurred $9.6 million in unreimbursed response costs associated with the site and that we were liable for such costs. We believe we have meritorious defenses to this claim and we intend to defend ourselves vigorously. We have reserved all of our rights to seek reimbursement for the costs of remediation from all parties potentially responsible. We executed a tolling agreement with the EPA and DOT suspending the statute of limitations on the claim until June 2016 in order to facilitate negotiations of a final settlement and release. In June 2016, the parties agreed to extend the tolling agreement through October 6, 2016 and settlement negotiations continue. We accrued $0.2 million for this matter in the first quarter of 2016 and an additional $0.8 million for this matter in the second quarter of 2016.
13
NOTE 13. SEGMENT INFORMATION
The following table summarizes information by business segment:
Revenues:
Resource
54,826
44,111
103,536
98,066
Wood Products
90,924
84,191
174,162
173,424
Real Estate
9,954
10,745
15,520
13,856
155,704
139,047
293,218
285,346
Elimination of intersegment revenues - Resource
(14,209
(10,300
(23,827
(22,474
Total consolidated revenues
Operating income (loss):
15,672
8,797
25,879
23,775
4,695
(1,953
5,651
1,547
Real Estate1
(43,429
8,521
(41,354
10,120
Eliminations and adjustments
(969
539
496
3,514
(24,031
15,904
(9,328
38,956
Corporate
(10,197
(8,593
(19,828
(17,618
Depreciation, depletion and amortization:
5,387
4,797
11,515
11,051
1,800
1,661
3,701
3,237
1
30
7,188
6,473
15,219
14,318
213
251
421
535
Bond discounts and deferred loan fees
468
369
834
744
Total depreciation, depletion and amortization
7,869
7,093
Basis of real estate sold:
3,509
5,754
1,181
(122
(110
(333
(173
Total basis of real estate sold
3,387
600
1 In the second quarter of 2016, we sold approximately 172,000 acres of timberlands located in central Idaho for $114 million at a loss of $48.5 million before taxes.
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Information
This report contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, effectiveness of the cash flow hedge, recognition of compensation costs relating to our performance shares and RSUs, real estate demand and pricing, log prices, lumber demand and prices, business conditions for our business segments, Resource segment results, Wood Products segment results, Real Estate segment results, benefit of stronger Canadian dollar, 2016 capital spending, stock repurchase, debt refinancing, reduced interest expense, expected harvest levels in 2016 and beyond, and similar matters. Words such as “anticipate,” “expect,” “will,” “intend,” “plan,” “target,” “project,” “believe,” “seek,” “schedule,” “estimate,” “could,” “can,” “may” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements reflect our current views regarding future events based on estimates and assumptions and are therefore subject to known and unknown risks and uncertainties and are not guarantees of future performance. Our actual results of operations could differ materially from our historical results or those expressed or implied by forward-looking statements contained in this report. For a nonexclusive listing of forward-looking statements and potential factors affecting our business, refer to “Cautionary Statement Regarding Forward-Looking Information” on page 1 and “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015.
Forward-looking statements contained in this report present our views only as of the date of this report. Except as required under applicable law, we do not intend to issue updates concerning any future revisions of our views to reflect events or circumstances occurring after the date of this report.
Results of Operations
Our business is organized into three business segments: Resource, Wood Products and Real Estate. Our Resource segment supplies our Wood Products segment with a portion of its wood fiber needs. These intersegment revenues are based on prevailing market prices and typically represent a significant portion of the Resource segment’s total revenues. Our other segments generally do not generate intersegment revenues.
In our discussions of consolidated results of operations, our revenues are reported after elimination of intersegment revenues. In our discussion by business segment, each segment's revenues are presented before the elimination of intersegment revenues.
The operating results of our Resource, Wood Products and Real Estate business segments have been and will continue to be influenced by a variety of factors, including cyclical fluctuations in the forest products industry, changes in timber prices and in harvest levels from our timberlands, competition, timberland valuations, demand for our non-strategic timberland for higher and better use purposes, changes in lumber prices, the efficiency and level of capacity utilization of our wood products manufacturing operations, changes in our principal expenses such as log costs, asset dispositions or acquisitions and other factors.
Overview
During the first half of 2016, lumber demand increased as compared with the same time last year when lumber prices were decreasing. U.S. housing starts increased 8% year-over-year and the do-it-yourself market has been strong. The Canadian dollar strengthened about 6% against the U.S. dollar during 2016, which benefits lumber manufacturers located in the United States by reversing some of the competitive advantage Canada had in 2015.
In April 2016, we sold approximately 172,000 acres of non-strategic timberlands located in central Idaho for $114 million in our Real Estate segment. The sale freed up capital for a common stock repurchase program and the repayment of long-term debt without having to wait for the rural recreation real estate market in central Idaho to recover. We repurchased shares of common stock totaling $6.0 million and repaid $42.6 million in long-term debt in the three months ended June 30, 2016.
Consolidated Results Comparing the Quarters Ended March 31, 2016 and 2015
The following table sets forth changes in our Consolidated Statements of Income (Loss):
% Change
10%
2%
4%
3%
Selling, general and
administrative expenses
15%
*
(12%)
Income (loss) before
income taxes
* Percentage change not meaningful.
Our Business Segment Results provide a more detailed discussion of our segments.
Three months ended June 30, 2016 compared with three months ended June 30, 2015
Revenues increased 10% in the second quarter of 2016, compared with the same period last year, primarily due to a 16% increase in harvest volumes and 12% increase in lumber shipments.
Six months ended June 30, 2016 compared with six months ended June 30, 2015
Revenues increased 2% in the first half of 2016, compared with the same period last year, primarily due to a 10% increase in harvest volumes and 9% increase in lumber shipments, partially offset by 8% lower lumber sales prices.
Cost of goods sold increased 4% in the second quarter of 2016, compared with the same period last year, primarily due to logging and hauling on the higher harvest volumes and an increase in the average land basis of real estate sold due to geographic mix.
Cost of goods sold increased 3% in the first half of 2016, compared with the same period last year, primarily due to additional log and haul volumes and an increase in the average land basis of real estate sold due to geographic mix.
Selling, general and administrative expenses increased $1.8 million in the second quarter of 2016, compared with the same period last year, due primarily to an $0.8 million expense related to Avery Landing and higher non-cash mark-to-market adjustments related to our deferred compensation plans, which are impacted by the market price of our common stock.
16
Selling, general and administrative expenses increased $2.5 million in the first half of 2016, compared with the same period last year, due primarily to a $1.0 million expense related to Avery Landing and higher non-cash mark-to-market adjustments related to our deferred compensation plans, which are impacted by the market price of our common stock.
See Note 12: Commitments and Contingencies for a more detailed discussion of Avery Landing.
In April 2016, we sold approximately 172,000 acres of non-strategic timberlands located in central Idaho for $114 million, less selling costs of $2.5 million. This divestiture resulted in a $48.5 million loss before income taxes.
Interest expense increased in the second quarter of 2016, compared with the same period last year, due to unamortized debt issuance costs that were expensed in the second quarter associated with the repayment of the $42.6 million revenue bonds.
Interest expense decreased in the first half of 2016, compared with the same period last year, due primarily to a $2.2 million patronage dividend received in the first quarter of 2016. The patronage dividend was higher in 2016, as compared with 2015, as a result of the debt used to fund the acquisition of timberlands in Alabama and Mississippi in December 2014.
Income tax provision
Income taxes are primarily due to income or loss from our taxable REIT subsidiaries (TRS). For the second quarter of 2016, the income tax benefit of $11.2 million is the result of the TRS’s loss before income tax of $31.1 million, partially offset by discrete tax items. For the second quarter of 2015, the income tax benefit of $1.4 million was the result of the TRS’s loss before income taxes of $3.9 million.
For the first half of 2016, the income tax benefit of $12.3 million is the result of the TRS’s loss before income tax of $33.2 million, discrete tax items, and permanent book versus tax differences. For the first half of 2015, the income tax benefit of $1.1 million was the result of the TRS’s loss before income tax of $2.6 million and permanent book versus tax differences.
17
Business Segment Results
Resource Segment
Revenues1
24%
6%
Cost of goods sold:
Logging and hauling
24,964
21,141
18%
49,773
47,725
Depreciation, depletion and
amortization
4,742
14%
10,918
5%
Other
7,267
7,893
(8%)
13,457
12,725
37,618
33,776
11%
74,745
71,368
Selling, general and administrative
expenses
1,536
1,538
2,912
2,923
Operating income
78%
9%
Harvest Volumes (in tons)
Northern region
Sawlog
388,575
287,979
35%
755,427
739,527
Pulpwood
44,497
31,284
42%
96,858
79,124
22%
Stumpage
1,061
3,277
(68%)
17,268
20,180
(14%)
434,133
322,540
869,553
838,831
Southern region
175,498
142,107
23%
360,549
296,837
21%
240,277
270,518
(11%)
488,429
447,863
65,596
53,176
121,675
93,137
31%
481,371
465,801
970,653
837,837
16%
Total harvest volume
915,504
788,341
1,840,206
1,676,668
Sales Price/Unit ($ per ton)
Sawlog2
84
85
(1%)
Pulpwood2
40
41
(2%)
42
83%
44%
33
34
(3%)
32
(6%)
23
53%
21
1 Intersegment fiber revenues were $14.2 million and $10.3 million for the quarters ended June 30 in 2016 and 2015 and $23.8 million and $22.5 million for the six months ended June 30 in 2016 and 2015, which are not eliminated above.
2 Sawlog and pulpwood sales prices are on a delivered basis, which includes contracted logging and hauling costs.
18
Resource segment revenues increased 24% in the second quarter of 2016, compared with the same period last year,
Volumes in our Northern region increased 35% in the second quarter of 2016, compared with the same period last year, due to an early spring breakup that occurred in the first quarter and favorable spring hauling conditions in the second quarter. Sawlog prices were comparable in both periods.
Harvest volumes in our Southern region were 3% higher in the second quarter of 2016 due to favorable weather and the sale of stumpage contracts. Southern sawlog prices are up slightly from last year while pulpwood prices are lower due to high pulp mill inventories. Stumpage prices fluctuate based on the mix of pulpwood and sawlog volumes and the mix of hardwood and softwood.
Resource segment revenues increased 6% in the first half of 2016, compared with the same period last year.
Harvest volumes in our Northern region increased 4% in the first half of 2016, compared with the same period last year. Volumes were lower than planned in the first quarter due to an early spring breakup and favorable spring hauling conditions that allowed the shortfall to be more than made up in the second quarter. A significant portion of our sawlog sales in our Northern region are indexed to lumber prices on a one to three month lag.
Harvest volumes in our Southern region were 16% higher in the first half of 2016 due in large part to the contributions of the Alabama and Mississippi timberlands, which were acquired in December 2014 and were ramping up in the first quarter of 2015. Southern sawlog prices were flat while pulpwood sale prices decreased 6% due to high inventories at pulpwood mills. Stumpage prices fluctuate based on the mix of pulpwood and sawlog volumes and the mix of hardwood and softwood.
Cost of Goods Sold
The increase in harvest volumes resulted in higher logging, hauling and depletion expense. Lower diesel prices resulted in slightly lower hauling rates.
The increase in harvest volumes resulted in higher logging, hauling and depletion expense. Lower diesel prices resulted in slightly lower hauling rates. Other expenses were higher primarily due to an increase in the number of acres fertilized, largely in our Southern region.
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Wood Products Segment
8%
0%
Cost of goods sold:1
Fiber costs
40,842
39,904
79,194
82,339
(4%)
Freight, logging and hauling
11,786
10,974
7%
23,171
22,666
Manufacturing costs
32,914
31,443
63,090
62,733
1%
Finished goods inventory change
(777
2,629
(130%)
1,781
(88%)
84,765
84,950
165,669
169,519
1,464
1,194
2,842
2,358
(340%)
265%
Lumber shipments (MBF)
170,829
152,071
12%
332,821
306,277
Lumber sales prices ($ per MBF)
351
338
368
1 Intersegment fiber costs were $14.2 million and $10.3 million for the quarters ended June 30 in 2016 and 2015 and $23.8 million and $22.5 million for the six months ended June 30 in 2016 and 2015, which are not eliminated above.
Revenues were $6.7 million higher in the second quarter of 2016, compared with the same period last year, due primarily to higher lumber shipments.
Revenues were $0.7 million higher in the first half of 2016, compared with the same period last year. Higher lumber shipments were almost entirely offset by lower lumber sales prices.
Cost of goods sold fluctuated based on the following factors:
•
Fiber costs increased $0.9 million due to higher production volumes, partially offset by lower per unit log costs, primarily in the Lake States.
The increase in freight costs primarily related to residual hauling costs that were previously the responsibility of the customer.
Higher manufacturing costs were the result of higher production volumes and scheduled maintenance at our Warren, Arkansas mill, which was completed in conjunction with the installation of a capital project and resulted in 12 days of downtime.
Inventory will fluctuate based on a combination of volume and fiber and manufacturing costs. With the shutdown at the Warren mill in the second quarter of 2016, we sold much of our lumber inventories at that mill while building inventories at our other mills. In the first half of 2015, lumber inventory levels were reduced as a result of downtime for two large capital projects.
Fiber costs decreased $3.1 million due to lower per unit log costs in most of our mills, partially offset by higher production volumes.
The increase in freight, logging and hauling costs of $0.5 million relates to additional freight for residuals that were previously the responsibility of the customer.
20
Higher manufacturing costs were the result of higher production volumes, scheduled maintenance at our Warren mill which resulted in 12 days of downtime in the second quarter, and 11 days of downtime at our St. Maries, Idaho sawmill in the first quarter of 2016 due to log shortages resulting from an unseasonably warm winter. The first half of 2015 also included scheduled outages for capital projects.
Real Estate Segment
(7%)
394%
387%
718
841
(15%)
1,336
1,292
4,227
1,551
7,090
2,473
634
673
1,262
1,263
Sale of central Idaho timber and timberlands
In the second quarter of 2016, we sold approximately 172,000 acres of timberlands located in central Idaho for $114 million, resulting in a loss of $48.5 million before tax. The company purchased the property in 2007 and 2008 for the purpose of growing and harvesting timber and selling rural recreation parcels. In the recession of 2008, the central Idaho rural recreational real estate market collapsed and has not fully recovered. The sale freed up capital without having to wait for the rural recreation real estate market in central Idaho to recover.
Excluding the sale of central Idaho timberlands, during the second quarter of 2016 we sold an additional 1,390 acres, as compared with the same time last year, at a lower weighted average sales price. The average sale prices per acre was higher in the prior year largely due to the sale of two commercial real estate sites included in HBU and geographic mix.
Acres Sold
Average
Price/Acre
Higher and better use (HBU)
3,348
2,263
514
11,467
Rural real estate
1,489
1,215
3,280
1,394
Non-strategic timberland
693
818
346
813
Central Idaho timberland
171,598
665
177,128
4,140
Excluding the sale of central Idaho timberlands, in the first half of 2016 we sold an additional 2,710 acres, as compared with the same time last year, at a lower weighted average sales price. The average sale prices per acre was higher in the prior year largely due to the sale of two commercial real estate sites included in HBU and geographic mix.
4,436
$ 2,226
757
$ 8,937
3,770
$ 1,331
4,402
$ 1,134
797
$ 785
1,134
$ 876
$ 665
$ —
180,601
6,293
Liquidity and Capital Resources
At June 30, 2016, our financial highlights included:
cash and short-term investments of $65.4 million,
credit agreement borrowing capacity of $248.8 million, and
long-term debt of $581.2 million.
Net Cash from Operations
Net cash provided from operating activities was:
$45.7 million in 2016 and
$16.7 million in 2015.
Net cash from operations increased $29.0 million for the six months ended June 30, 2016, compared with the same period last year, primarily due to:
Higher customer receipts of $6 million resulting from increased revenues in Resource, Wood Products and Real Estate;
Lower cash operating costs of $18 million primarily due to lower inventories and per unit log costs; and
A cash tax refund of $1.7 million in 2016 compared with cash taxes paid of $1.5 million in 2015.
Net Cash Flows from Investing Activities
Net cash provided from investing activities was $61.3 million for the six months ended June 30, 2016, compared with $6.7 million in 2015. Short-term investments increased $40.0 million in the first half of 2016 primarily due to the proceeds of $111.5 million from the sale of approximately 172,000 acres of timberlands located in central Idaho, compared with a decrease of $24.5 million in the first half of 2015 primarily due to lower log and lumber prices.
Capital spending for property, plant and equipment and timber reforestation and roads during the first half of 2016 was $9.2 million lower than the same period in 2015. During the first half of 2015, we completed two large capital projects at our lumber mills. Capital spending for property, plant and equipment and timber reforestation and roads is expected to be $19 million in 2016, compared with $32.7 million in 2015.
Net Cash Flows from Financing Activities
Net cash used in financing activities was $89.6 million and $19.2 million for the six months ended June 30, 2016 and 2015, respectively. Net cash used in financing activities in 2016 was primarily attributable to the $77.6 million repayment of borrowings (see Credit and Term Loan Agreements below), $30.5 million of dividends to stockholders and $6.0 million in the repurchase of common stock, partially offset by $27.5 million in proceeds from the issuance of long-term debt. In 2015, net cash used in financing activities was primarily attributable to dividend payments to stockholders of $30.5 million, partially offset by a $15.0 million draw on our revolving line of credit.
22
Credit and Term Loan Agreements
In February 2016, we amended our term loan agreement to provide an additional loan in the amount of $27.5 million. This additional tranche refinanced $27.5 million of long-term debt that matured in December 2015 and February 2016. The new debt matures in 2026 and carries a rate equal to 3-month LIBOR plus 2.15% per annum. At June 30, 2016, our term loan debt includes nine tranches totaling $349.5 million.
During the third quarter of 2016, we plan to refinance $65.7 million of revenue bonds, which carry a rate of 6.0% and mature in 2024.
As of June 30, 2016, approximately $1.2 million of capacity under our credit agreement was utilized by outstanding letters of credit, resulting in $248.8 million available for additional borrowings under our credit agreement.
The following table sets forth the financial covenants in the credit and term loan agreements and our status with respect to these covenants as of June 30, 2016:
Covenant Requirement
Actuals at
Interest coverage ratio
≥
3.00 to 1.00
7.18
Leverage ratio
≤
40%
26%
Allowable acres that may be sold1
480,000
1 Actual acres sold as of June 30, 2016, were 202,811 and 16,059 under the credit and term loan agreements, respectively. The term loan agreement allows for an exclusion of up to 250,000 acres sold in the fiscal years ending December 31, 2016 and December 31, 2017.
Senior Notes
The terms of our senior notes limit our ability and the ability of any subsidiary guarantors to enter into restricted transactions, which include the ability to borrow money, pay dividends, redeem or repurchase capital stock, enter into sale and leaseback transactions and create liens. However, such restricted transactions are permitted if the balance of our cumulative Funds Available for Distribution (FAD), and a FAD basket amount, provide sufficient funds to cover such restricted payments. At June 30, 2016, our cumulative FAD was $187.8 million and the FAD basket was $90.1 million.
Sale of Central Idaho Timberlands
On April 21, 2016, we sold approximately 172,000 acres of timberlands located in central Idaho for $114 million. Net cash received was $111.5 million.
As a result of this sale, we have updated the number of non-core timberlands to be approximately 220,000 acres. This includes approximately 55,000 acres of HBU property, 55,000 acres of non-strategic timberland and 110,000 acres of rural recreational real estate property.
In addition, we have updated our harvest level to range between 3.8 million and 4.6 million tons each year over the next several years, depending on market conditions and other factors, assuming no significant timberland acquisitions or dispositions. Based on our current projections, which are based on constant timberland holdings, and that take into consideration such factors as market conditions, the ages of our timber stands and recent timberland sales and acquisitions, we expect to harvest approximately 4.2 million tons in 2016.
Contractual Obligations
There have been no material changes to our contractual obligations in the six months ended June 30, 2016 outside the ordinary course of business.
Off-Balance Sheet Arrangements
We currently are not a party to off-balance sheet arrangements that would require disclosure under this section.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposures to market risk have not changed materially since December 31, 2015. For quantitative and qualitative disclosures about market risk, see Item 7A – “Quantitative and Qualitative Disclosure about Market Risk” in our 2015 Annual Report on Form 10-K.
Quantitative Information about Market Risks
The table below provides information about our outstanding long-term debt, weighted-average interest rates and interest rate swaps as of June 30, 2016. For debt obligations, the table presents principal cash flows and related weighted-average interest rates by expected maturity dates. For interest rate swaps, the table presents notional amounts and weighted-average interest rates by expected (contractual) maturity dates. Notional amounts are used to calculate the contractual payments to be exchanged under the contract. Weighted-average variable rates are based on implied forward rates in the yield curve.
EXPECTED MATURITY DATE
2017
2018
2019
2020
THEREAFTER
TOTAL
FAIR VALUE
Variable rate debt:
Principal due
40,000
67,500
147,500
Average interest rate
2.65
3.33
3.06
Fixed rate debt:
11,000
14,250
150,000
6,000
258,735
439,985
459,094
5.64
8.88
7.50
3.70
4.96
5.95
Interest rate swaps:
Fixed to variable
5,000
50,000
69,250
Average pay rate
7.07
7.02
6.84
6.89
Average receive rate
7.88
Variable to fixed
1.73
1.52
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We conducted an evaluation (pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act)), under the supervision and with the participation of management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of June 30, 2016. These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation, the CEO and CFO have concluded that these disclosure controls and procedures were effective as of June 30, 2016.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Internal Control over Financial Reporting
In the six months ended June 30, 2016, there were no changes in our internal control over financial reporting that occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Other than the environmental proceeding described in Note 12: Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements, which is incorporated herein by reference, we believe there is no pending or threatened litigation that could have a material adverse effect on our financial position, operations or liquidity.
ITEM 1A. RISK FACTORS
There have been no material changes in the risk factors previously disclosed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ISSUER PURCHASES OF EQUITY SECURITIES
On April 26, 2016, the company announced that its Board of Directors had authorized management to repurchase up to $60 million of common stock over a period of 24 months (the “Repurchase Plan”).
Common Share Purchases
Shares Purchased
Average Price Paid Per Share
Shares Purchased as Part of a Publicly Announced Plan
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan
April (4/28/16 - 4/30/16)
94,625
35.46
56,644,779
May (5/1/16 - 5/31/16)
75,000
34.61
54,048,978
June (6/1/16 - 6/30/16)
Total Shares Purchased
169,625
35.08
During the second quarter of 2016, we repurchased 169,625 shares of common stock for $5.96 million (including transaction costs). Transaction costs are not counted against authorized funds under the Repurchase Plan. All purchases 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 to account for repurchases that have not been settled. There were no unsettled repurchases as of June 30, 2016.
ITEM 6. EXHIBITS
Exhibits are listed in the Exhibit Index.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
By
/S/ STEPHANIE A. BRADY
Stephanie A. Brady
Controller
(Duly Authorized; Principal Accounting Officer)
Date:
July 26, 2016
EXHIBIT
NUMBER
DESCRIPTION
(3)(a)*
Second Restated Certificate of Incorporation of the Registrant, effective February 3, 2006, filed as Exhibit 99.2 to the Current Report on Form 8-K filed by the Registrant on February 6, 2006.
(3)(b)*
Bylaws of the Registrant, as amended through February 18, 2009, filed as Exhibit (3)(b) to the Current Report on Form 8-K filed by the Registrant on February 20, 2009.
(4)
Registrant undertakes to furnish to the Commission, upon request, any instrument defining the rights of holders of long-term debt.
(31)
Rule 13a-14(a)/15d-14(a) Certifications.
(32)
Furnished statements of the Chief Executive Officer and Chief Financial Officer under 18 U.S.C. Section 1350.
101
The following financial information from Potlatch Corporation’s Quarterly Report on Form 10-Q for the quarter and six months ended June 30, 2016, filed on July 26, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Income for the quarter and six months ended June 30, 2016 and 2015, (ii) the Consolidated Statements of Comprehensive Income for the quarter and six months ended June 30, 2016 and 2015, (iii) the Condensed Consolidated Balance Sheets at June 30, 2016 and December 31, 2015, (iv) the Condensed Consolidated Statements of Cash Flows for the quarter and six months ended June 30, 2016 and 2015, and (v) the Notes to Condensed Consolidated Financial Statements.
* Incorporated by reference