REVENUE

ADOPTION OF ASC 606

For information on the adoption of ASC 606, including changes to significant accounting policies and required transition disclosures, see Note 1 — Basis of Presentation.

REVENUE RECOGNITION

The Company recognizes revenues when control of promised goods or services (“performance obligations”) is transferred to customers, in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services (“transaction price”). The Company generally satisfies performance obligations within a year of entering into a contract and therefore has applied the disclosure exemption found under ASC 606-10-50-14. Unsatisfied performance obligations as of March 31, 2018 are primarily due to advances on stumpage contracts and unearned license revenue. These performance obligations are expected to be satisfied within the next twelve months. The Company generally collects payment within a year of satisfying performance obligations and therefore has elected not to adjust revenues for a financing component.

The following table presents our revenue from contracts with customers disaggregated by product type for the three months ended March 31, 2018 and 2017:



Three Months Ended	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Real Estate		Trading		Elim.			Total
March 31, 2018
Pulpwood		$21,606		$3,419		$5,844	—			$4,257	—				$35,126
Sawtimber	15,937		27,068		44,745		—		34,826		—			122,576
Hardwood	597		—		—		—		—		—			597
Total Timber Sales	38,140		30,487		50,589		—		39,083		—			158,299
License Revenue, Primarily From Hunting	4,084		25		52		—		—		—			4,161
Other Non-Timber/Carbon Revenue	1,195		805		2,323		—		—		—			4,323
Agency Fee Income	—		—		—		—		123		—			123
Total Non-Timber Sales	5,279		830		2,375		—		123		—			8,607
Improved Development	—		—		—		1,121		—		—			1,121
Unimproved Development	—		—		—		7,446		—		—			7,446
Rural	—		—		—		1,652		—		—			1,652
Non-strategic / Timberlands	—		—		—		25,845		—		—			25,845
Large Dispositions	—		—		—		—		—		—			—
Total Real Estate Sales	—		—		—		36,064		—		—			36,064

Revenue from Contracts with Customers	43,419		31,317		52,964		36,064		39,206		—			202,970
Other Non-Timber Sales, Primarily Lease	169		57		—		—		—		—			226
Intersegment	—		—		—		—		6		(6		)	—
Total Revenue		$43,588		$31,374		$52,964		$36,064		$39,212		($6	)		$203,196

March 31, 2017
Pulpwood		$18,976		$3,359		$5,161	—			$2,837	—				$30,333
Sawtimber	13,023		21,433		35,579		—		31,140		—			101,175
Hardwood	716		—		—		—		—		—			716
Total Timber Sales	32,715		24,792		40,740		—		33,977		—			132,224
License Revenue, Primarily from Hunting	3,830		97		46		—		—		—			3,973
Other Non-Timber Revenue	2,390		946		88		—		—		—			3,424
Agency Fee Income	—		—		—		—		288		—			288
Total Non-Timber Sales	6,220		1,043		134		—		288		—			7,685
Improved Development	—		—		—		—		—		—			—
Unimproved Development	—		—		—		—		—		—			—
Rural	—		—		—		6,739		—		—			6,739
Non-strategic / Timberlands	—		—		—		5,599		—		—			5,599
Large Dispositions	—		—		—		41,951		—		—			41,951
Total Real Estate Sales	—		—		—		54,289		—		—				$54,289

Revenue from Contracts with Customers	38,935		25,835		40,874		54,289		34,265		—			194,198
Other Non-Timber Sales, Primarily Lease	203		90		—		—		—		—			293
Total Revenue		$39,138		$25,925		$40,874		$54,289		$34,265	—				$194,491

REVENUE RECOGNITION FOR TIMBER SALES AND NON-TIMBER INCOME

Revenue from the sale of timber is recognized when control passes to the buyer. The Company utilizes two primary methods or sales channels for the sale of timber, a stumpage or standing timber model and a delivered log model. The sales method the Company employs depends upon local market conditions and which method management believes will provide the best overall margins. Under the stumpage model, standing timber is sold primarily under pay-as-cut contracts, with specified duration (typically one year or less) and fixed prices, whereby revenue is recognized as timber is severed and the sales volume is determined. The Company also sells stumpage under lump-sum contracts for specified parcels where the Company receives cash for the full agreed value of the timber prior to harvest and control passes to the buyer upon signing the contract. The Company retains interest in the land, slash products, and the use of the land for recreational and other purposes. Any uncut timber remaining at the end of the contract period reverts to the Company. Revenue is recognized for lump-sum timber sales when payment is received, the contract is signed and control passes to the buyer. A third type of stumpage sale the Company utilizes is an agreed-volume sale, whereby revenue is recognized using the output method, as periodic physical observations are made of the percentage of acreage harvested.

Under the delivered log model, the Company hires third-party loggers and haulers to harvest timber and deliver it to a buyer. Sales of domestic logs generally do not require an initial payment and are made to third-party customers on open credit terms. Sales of export logs generally require a letter of credit from an approved bank. Revenue is recognized when the logs are delivered and control has passed to the buyer. For domestic log sales, control is considered passed to the buyer as the logs are delivered to the customer’s facility. For export log sales (primarily in New Zealand), control is considered passed to the buyer upon delivery onto the export vessel.

Non-timber income is primarily comprised of hunting and recreational licenses. Such income and any related cost are recognized ratably over the term of the agreement and included in “Sales” and “Cost of sales”, respectively. Payment is generally due upon contract execution.

The following table summarizes revenue recognition and general payment terms for timber sales:



Contract Type	Performance Obligation	Timing of Revenue Recognition	General Payment Terms
Stumpage Pay-as-Cut	Right to harvest a unit (i.e. ton, MBF, JAS m3) of standing timber	As timber is severed (point-in-time)	Initial payment between 5% and 20% of estimated contract value; collection generally within 10 days of severance
Stumpage Lump Sum	Right to harvest an agreed upon volume of standing timber	Contract execution (point-in-time)	Full payment due upon contract execution
Stumpage Agreed Volume	Right to harvest an agreed upon acreage of standing timber	As timber is severed (over-time)	Payments made throughout contract term at the earlier of a specified harvest percentage or time elapsed
Delivered Wood (Domestic)	Delivery of a unit (i.e. ton, MBF, JAS m3) of timber to customer’s facility	Upon delivery to customer’s facility (point-in-time)	No initial payment and on open credit terms; collection generally within 30 days of invoice
Delivered Wood (Export)	Delivery of a unit (i.e. ton, MBF, JAS m3) onto export vessel	Upon delivery onto export vessel (point-in-time)	Letter of credit from an approved bank; collection generally within 30 days of delivery

The following table presents our timber sales disaggregated by contract type for the three months ended March 31, 2018 and 2017:



Three Months Ended	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Trading		Total
March 31, 2018
Stumpage Pay-as-Cut		$22,511	—		—		—			$22,511
Stumpage Lump Sum	1,818		5,106		—		—		6,924
Stumpage Agreed Volume	—		—		—		—		—
Total Stumpage	24,329		5,106		—		—		29,435

Delivered Wood (Domestic)	13,377		25,381		20,103		937		59,798
Delivered Wood (Export)	434		—		30,486		38,146		69,066
Total Delivered	13,811		25,381		50,589		39,083		128,864

Total Timber Sales		$38,140		$30,487		$50,589		$39,083		$158,299

March 31, 2017
Stumpage Pay-as-Cut		$20,102	—		—		—			$20,102
Stumpage Lump Sum	2,797		2,580		—		—		5,377
Stumpage Agreed Volume	—		1,180		—		—		1,180
Total Stumpage	22,899		3,760		—		—		26,659

Delivered Wood (Domestic)	9,816		21,032		18,845		1,007		50,700
Delivered Wood (Export)	—		—		21,895		32,970		54,865
Total Delivered	9,816		21,032		40,740		33,977		105,565

Total Timber Sales		$32,715		$24,792		$40,740		$33,977		$132,224

REVENUE RECOGNITION FOR REAL ESTATE SALES

The Company recognizes revenue on sales of real estate generally at the point in time when cash has been received, the sale has closed, and control has passed to the buyer. A deposit of 5% is generally required at the time a purchase and sale agreement is executed, with the balance due at closing. On sales of real estate containing future performance obligations, revenue is recognized using the input method based on costs incurred to date relative to the total costs expected to fulfill the performance obligations in the contract with the customer.

REVENUE RECOGNITION FOR LOG TRADING

Log trading revenue is generally recognized when procured logs are delivered to the buyer and control has passed. For domestic log trading, control is considered passed to the buyer as the logs are delivered to the customer’s facility. For export log trading control is considered passed to the buyer upon delivery onto the export vessel. The Trading segment also includes sales from log agency contracts, whereby the Company acts as an agent managing export services on behalf of third parties. Revenue for log agency fees are recognized net of related costs.

Contract Balances

The timing of revenue recognition, invoicing and cash collections results in accounts receivable and deferred revenue (contract liabilities) on the Consolidated Balance Sheets. Accounts receivable are recorded when the Company has an unconditional right to consideration for completed performance under the contract. Contract liabilities relate to payments received in advance of performance under the contract. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract.

Revenue recognized for the three months ended March 31, 2018, and March 31, 2017, that was included in the contract liability balance at the beginning of each year was $6.4 million and $4.8 million, respectively. This revenue was primarily from hunting licenses and the use of advances on pay-as-cut timber sales.