VARIABLE INTEREST ENTITIES (Note)

6 Months Ended

Jun. 30, 2024

Variable Interest Entities [Abstract]

Variable Interest Entity Disclosure

Variable Interest Entities

As of June 30, 2024, the fair value of the Timber Notes and Extension Loans for the 2007 Financing Entities was $2.4 billion and $2.1 billion, respectively. The Timber Notes and Extension Loans are classified as Level 2 within the fair value hierarchy, which is further defined in Note 1 in the Company’s Annual Report.

The Timber Notes of $2.4 billion and the Extension Loans of $2.1 billion both mature in 2027 and are shown in Long-term nonrecourse financial assets of variable interest entities and Long-term nonrecourse financial liabilities of variable interest entities, respectively, on the accompanying condensed consolidated balance sheet.

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

	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2024		2023		2024		2023
Revenue (a)	$	38	$	36	$	77	$	69
Expense (b)	35		35		70		66
Cash receipts (c)	34		28		68		55
Cash payments (d)	32		30		66		57

(a)The revenue is included in interest expense, net in the accompanying statement of operations and includes approximately $4 million and $9 million for both the three months and sixth months ended June 30, 2024 and 2023, respectively, of accretion income for the amortization of the basis difference adjustment on the Long-term financial assets of variable interest entities.

(b)The expense is included in interest expense, net in the accompanying statement of operations and includes approximately $1 million and $3 million for both the three months an sixth months ended June 30, 2024 and 2023, respectively, of accretion expense for the amortization of the basis difference adjustment on the Long-term nonrecourse financial liabilities of variable interest entities.

(c)The cash receipts are interest received on the Long-term financial assets of variable interest entities.

(d)The cash payments are interest paid on Long-term nonrecourse financial liabilities of variable interest entities.

On September 2, 2022, the Company and the Internal Revenue Service agreed to settle the previously disclosed timber monetization restructuring tax matter involving the variable interest entities that were restructured in 2015 ("the 2015 Financing Entities") in connection with an extension of installment notes and third-party loans. Under this agreement, the Company agreed to fully resolve the matter and pay $252 million in U.S. federal income taxes. As a result, interest was charged upon closing of the audit. The Company has paid $252 million in U.S. federal income taxes and $58 million in interest expense as a result of the settlement agreement. Of this amount, the Company paid $163 million in U.S. federal income taxes and $30 million in interest during the first quarter of 2023, with the Company fully satisfying the remaining payment terms of the settlement agreement regarding the 2015 Financing Entities timber monetization restructuring tax matter during the second quarter of 2023.