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 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 September 30, 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 tables present our revenue from contracts with customers disaggregated by product type for the three and nine months ended September 30, 2018 and 2017:



Three Months Ended	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Real Estate		Trading		Elim.			Total
September 30, 2018
Pulpwood		$19,998		$3,560		$7,278	—			$2,487	—				$33,323
Sawtimber	13,734		23,495		56,663		—		28,321		—			122,213
Hardwood	1,071		—		—		—		—		—			1,071
Total Timber Sales	34,803		27,055		63,941		—		30,808		—			156,607
License Revenue, Primarily From Hunting	4,016		224		98		—		—		—			4,338
Other Non-Timber/Carbon Revenue	637		468		2,226		—		—		—			3,331
Agency Fee Income	—		—		—		—		172		—			172
Total Non-Timber Sales	4,653		692		2,324		—		172		—			7,841
Improved Development	—		—		—		1,352		—		—			1,352
Unimproved Development	—		—		—		1,175		—		—			1,175
Rural	—		—		—		4,489		—		—			4,489
Non-strategic / Timberlands	—		—		—		29,152		—		—			29,152
Large Dispositions	—		—		—		—		—		—			—
Total Real Estate Sales	—		—		—		36,168		—		—			36,168

Revenue from Contracts with Customers	39,456		27,747		66,265		36,168		30,980		—			200,616
Other Non-Timber Sales, Primarily Lease	206		68		—		—		—		—			274
Intersegment	—		—		—		—		30		(30		)	—
Total Revenue		$39,662		$27,815		$66,265		$36,168		$31,010		($30	)		$200,890

September 30, 2017
Pulpwood		$18,260		$2,515		$7,344	—			$3,425	—				$31,544
Sawtimber	12,485		16,131		62,569		—		36,828		—			128,013
Hardwood	1,152		—		—		—		—		—			1,152
Total Timber Sales	31,897		18,646		69,913		—		40,253		—			160,709
License Revenue, Primarily from Hunting	4,171		161		36		—		—		—			4,368
Other Non-Timber Revenue	1,042		233		146		—		—		—			1,421
Agency Fee Income	—		—		—		—		433		—			433
Total Non-Timber Sales	5,213		394		182		—		433		—			6,222
Improved Development	—		—		—		46		—		—			46
Unimproved Development	—		—		—		13,905		—		—			13,905
Rural	—		—		—		3,125		—		—			3,125
Non-strategic / Timberlands	—		—		—		164		—		—			164
Large Dispositions	—		—		—		—		—		—			—
Total Real Estate Sales	—		—		—		17,240		—		—			17,240

Revenue from Contracts with Customers	37,110		19,040		70,095		17,240		40,686		—			184,171
Other Non-Timber Sales, Primarily Lease	191		57		—		—		—		—			248
Total Revenue		$37,301		$19,097		$70,095		$17,240		$40,686	—				$184,419



Nine Months Ended	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Real Estate		Trading		Elim.			Total
September 30, 2018
Pulpwood		$61,898		$11,648		$20,910	—			$10,548	—				$105,004
Sawtimber	45,452		77,172		162,627		—		105,309		—			390,560
Hardwood	2,882		—		—		—		—		—			2,882
Total Timber Sales	110,232		88,820		183,537		—		115,857		—			498,446
License Revenue, Primarily From Hunting	12,137		450		292		—		—		—			12,879
Other Non-Timber/Carbon Revenue	8,320		1,923		5,053		—		—		—			15,296
Agency Fee Income	—		—		—		—		460		—			460
Total Non-Timber Sales	20,457		2,373		5,345		—		460		—			28,635
Improved Development	—		—		—		3,817		—		—			3,817
Unimproved Development	—		—		—		8,621		—		—			8,621
Rural	—		—		—		10,969		—		—			10,969
Non-strategic / Timberlands	—		—		—		98,685		—		—			98,685
Large Dispositions	—		—		—		—		—		—			—
Total Real Estate Sales	—		—		—		122,092		—		—			122,092

Revenue from Contracts with Customers	130,689		91,193		188,882		122,092		116,317		—			649,173
Other Non-Timber Sales, Primarily Lease	609		209		—		—		—		—			818
Intersegment	—		—		—		—		66		(66		)	—
Total Revenue		$131,298		$91,402		$188,882		$122,092		$116,383		($66	)		$649,991

September 30, 2017
Pulpwood		$52,407		$8,683		$18,956	—			$9,972	—				$90,018
Sawtimber	40,088		54,203		144,550		—		105,964		—			344,805
Hardwood	2,895		—		—		—		—		—			2,895
Total Timber Sales	95,390		62,886		163,506		—		115,936		—			437,718
License Revenue, Primarily from Hunting	11,809		354		154		—		—		—			12,317
Other Non-Timber Revenue	4,184		2,037		320		—		—		—			6,541
Agency Fee Income	—		—		—		—		1,051		—			1,051
Total Non-Timber Sales	15,993		2,391		474		—		1,051		—			19,909
Improved Development	—		—		—		189		—		—			189
Unimproved Development	—		—		—		16,405		—		—			16,405
Rural	—		—		—		15,357		—		—			15,357
Non-strategic / Timberlands	—		—		—		47,558		—		—			47,558
Large Dispositions	—		—		—		41,951		—		—			41,951
Total Real Estate Sales	—		—		—		121,460		—		—			121,460

Revenue from Contracts with Customers	111,383		65,277		163,980		121,460		116,987		—			579,087
Other Non-Timber Sales, Primarily Lease	584		203		—		—		—		—			787
Total Revenue		$111,967		$65,480		$163,980		$121,460		$116,987	—				$579,874

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/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 acreage of standing timber	Contract execution (point-in-time)	Full payment due upon contract execution
Stumpage Agreed Volume	Right to harvest an agreed upon volume 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 tables present our timber sales disaggregated by contract type for the three and nine months ended September 30, 2018 and 2017:



Three Months Ended	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Trading		Total
September 30, 2018
Stumpage Pay-as-Cut		$16,984	—		—		—			$16,984
Stumpage Lump Sum	284		2,143		—		—		2,427
Stumpage Agreed Volume	—		—		—		—		—
Total Stumpage	17,268		2,143		—		—		19,411

Delivered Wood (Domestic)	15,856		24,912		24,771		1,813		67,352
Delivered Wood (Export)	1,679		—		39,170		28,995		69,844
Total Delivered	17,535		24,912		63,941		30,808		137,196

Total Timber Sales		$34,803		$27,055		$63,941		$30,808		$156,607

September 30, 2017
Stumpage Pay-as-Cut		$18,607	—		—		—			$18,607
Stumpage Lump Sum	1,954		3,987		—		—		5,941
Stumpage Agreed Volume	—		—		—		—		—
Total Stumpage	20,561		3,987		—		—		24,548

Delivered Wood (Domestic)	11,336		14,659		24,440		1,808		52,243
Delivered Wood (Export)	—		—		45,473		38,445		83,918
Total Delivered	11,336		14,659		69,913		40,253		136,161

Total Timber Sales		$31,897		$18,646		$69,913		$40,253		$160,709



Nine Months Ended	Southern Timber		Pacific Northwest Timber		New Zealand Timber		Trading		Total
September 30, 2018
Stumpage Pay-as-Cut		$59,348	—		—		—			$59,348
Stumpage Lump Sum	2,358		11,854		—		—		14,212
Stumpage Agreed Volume	—		—		—		—		—
Total Stumpage	61,706		11,854		—		—		73,560

Delivered Wood (Domestic)	44,399		76,966		70,521		4,317		196,203
Delivered Wood (Export)	4,127		—		113,016		111,540		228,683
Total Delivered	48,526		76,966		183,537		115,857		424,886

Total Timber Sales		$110,232		$88,820		$183,537		$115,857		$498,446

September 30, 2017
Stumpage Pay-as-Cut		$56,956	—		—		—			$56,956
Stumpage Lump Sum	6,997		6,574		—		—		13,571
Stumpage Agreed Volume	—		1,234		—		—		1,234
Total Stumpage	63,953		7,808		—		—		71,761

Delivered Wood (Domestic)	31,437		55,078		63,883		4,132		154,530
Delivered Wood (Export)	—		—		99,623		111,804		211,427
Total Delivered	31,437		55,078		163,506		115,936		365,957

Total Timber Sales		$95,390		$62,886		$163,506		$115,936		$437,718

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.

The following table summarizes revenue recognized during the three and nine months ended September 30, 2018 and 2017 that was included in the contract liability balance at the beginning of each year:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Revenue recognized from contract liability balance at the beginning of the year (a)		$355		$459		$8,685		$8,369


(a)	Revenue recognized was primarily from hunting licenses and the use of advances on pay-as-cut timber sales.