VARIABLE INTEREST ENTITIES (Note)

9 Months Ended

Sep. 30, 2020

Variable Interest Entities [Abstract]

Variable Interest Entities

As of September 30, 2020, the fair value of the Timber Notes and Extension Loans was $4.92 billion and $4.24 billion, respectively, for the 2015 Financing Entities. The Timber Notes and Extension Loans are classified as Level 2 within the fair value hierarchy, which is further defined in Note 17 in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

The Timber Notes of $4.85 billion mature in August 2021. The Extension Loans of $4.22 billion mature in November and December of 2020, and we are currently negotiating the extension of these third-party loans to August 2021 and expect to complete the extension before the maturity dates. The Timber Notes and Extension Loans are shown in Current nonrecourse financial assets of variable interest entities and Current nonrecourse financial liabilities of variable interest entities, respectively, on the accompanying balance sheet.

Failure to extend these third-party loans to August 2021 prior to their respective maturity dates in November and December of 2020 could necessitate a disposition of the installment notes to facilitate the $4.22 billion debt payment. We are confident we would be able to dispose of the installment notes, if necessary.

Activity between the Company and the 2015 Financing Entities was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2020		2019		2020		2019
Revenue (a)	$	24	$	24	$	71	$	71
Expense (a)	32		32		96		96
Cash receipts (b)	48		48		95		95
Cash payments (c)	64		64		128		128

(a)The revenue and expense are included in Interest expense, net in the accompanying statement of operations.

(b)The cash receipts are interest received on the Financial assets of special purpose entities.

(c)The cash payments represent interest paid on Nonrecourse financial liabilities of special purpose entities.

As of September 30, 2020, the fair value of the Timber Notes and Extension Loans was $2.29 billion and $2.12 billion, respectively, for the 2007 Financing Entities. The Timber Notes and Extension Loans are classified as Level 2 within the fair value hierarchy, which is further defined in Note 17 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Activity between the Company and the 2007 Financing Entities was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2020		2019		2020		2019
Revenue (a)	$	7	$	19	$	35	$	61
Expense (b)	8		19		36		60
Cash receipts (c)	5		16		28		48
Cash payments (d)	8		17		34		53

(a)The revenue is included in Interest expense, net in the accompanying statement of operations and includes approximately $5 million and $14 million for the three and nine months ended September 30, 2020 and 2019, respectively, of accretion income for the amortization of the basis difference adjustment on the Financial assets of special purpose entities.

(b)The expense is included in Interest expense, net in the accompanying statement of operations and includes approximately $2 million and $5 million for the three and nine months ended September 30, 2020 and 2019, respectively, of accretion expense for the amortization of the basis difference adjustment on the Nonrecourse financial liabilities of special purpose entities.

(c)The cash receipts are interest received on the Financial assets of special purpose entities.

(d)The cash payments are interest paid on Nonrecourse financial liabilities of special purpose entities.