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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange act).

The number of shares of common stock of the registrant outstanding as of ~~October 28, 2019~~July 29, 2020 was ~~67,221,086.~~66,871,281.

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share amounts)	2019			2018			2019			2018			2020			2019			2020			2019
Revenues	$	226,302		$	289,199		$	623,599		$	757,329		$	181,555		$	215,581		$	390,435		$	397,297
Costs and expenses:
Cost of goods sold		182,634			195,584			512,522			515,645			149,836			175,673			321,882			329,888
Selling, general and administrative expenses		12,472			14,901			43,994			45,449			16,811			14,952			31,018			31,522
Gain on sale of facility		—			—			(9,176	)		—			—			—			—			(9,176	)
Deltic merger-related costs		—			972			—			21,245
		195,106			211,457			547,340			582,339			166,647			190,625			352,900			352,234
Operating income		31,196			77,742			76,259			174,990			14,908			24,956			37,535			45,063
Interest expense, net		(8,475	)		(10,109	)		(21,821	)		(25,125	)		(8,339	)		(7,882	)		(12,037	)		(13,346	)
Loss on extinguishment of debt		—			—			(5,512	)		—			—			—			—			(5,512	)
Pension settlement charge														—			—			(42,988	)		—
Non-operating pension and other postretirement employee benefit costs		(935	)		(1,942	)		(2,804	)		(5,707	)		(3,478	)		(889	)		(7,113	)		(1,869	)
Income before income taxes		21,786			65,691			46,122			144,158
Income tax expense		(1,221	)		(5,355	)		(1,860	)		(23,077	)
Net income	$	20,565		$	60,336		$	44,262		$	121,081
Income (loss) before income taxes														3,091			16,185			(24,603	)		24,336
Income taxes														(453	)		952			10,409			(639	)
Net income (loss)													$	2,638		$	17,137		$	(14,194	)	$	23,697

Net income per share:
Net income (loss) per share:
Basic	$	0.30		$	0.96		$	0.65		$	2.06		$	0.04		$	0.25		$	(0.21	)	$	0.35
Diluted	$	0.30		$	0.93		$	0.65		$	2.03		$	0.04		$	0.25		$	(0.21	)	$	0.35
Dividends per share	$	0.40		$	0.40		$	1.20		$	1.20		$	0.40		$	0.40		$	0.80		$	0.80
Weighted-average shares outstanding:
Basic		67,446			62,986			67,781			58,765			67,176			67,664			67,321			67,774
Diluted		67,545			64,722			67,848			59,542			67,359			67,713			67,321			67,866

The accompanying notes are an integral part of these condensed consolidated financial statements.

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2019

2018

2019

2018

Net income

$
20,565

$
60,336

$
44,262

$
121,081

Other comprehensive (loss) income, net of tax:

Pension and other postretirement employee benefits:

Amortization of prior service credit included in net income, net of tax benefit of $(562), $(565), $(1,684) and $(1,695)

(1,598
)

(1,608
)

(4,792
)

(4,824
)
Amortization of actuarial loss included in net income, net of tax expense of $943, $1,164, $2,829 and $3,491

2,685

3,311

8,053

9,934

Cash flow hedges, net of tax (benefit) expense of $(387), $166, $(1,300) and $386

(6,978
)

1,591

(25,908
)

1,850

Other comprehensive (loss) income, net of tax

(5,891
)

3,294

(22,647
)

6,960

Comprehensive income

$
14,674

$
63,630

$
21,615

$
128,041

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Net income (loss)	$	2,638		$	17,137		$	(14,194	)	$	23,697
Other comprehensive income (loss), net of tax:
Pension and other postretirement employee benefits:
Net loss arising during the period, net of tax benefit of $0, $0, $6,817 and $0		—			—			(19,402	)		—
Effect of pension settlement, net of tax benefit of $0, $0, $11,177 and $0		—			—			31,811			—
Amortization of prior service credit included in net income (loss), net of tax benefit of $75, $561, $152 and $1,122		(215	)		(1,597	)		(430	)		(3,194	)
Amortization of actuarial loss included in net income (loss), net of tax expense of $1,034, $915, $2,223 and $1,886		2,942			2,605			6,326			5,368
Cash flow hedges, net of tax expense (benefit) of $4, $(549), $(1,806) and $(913)		(1,847	)		(10,417	)		(40,372	)		(18,930	)
Other comprehensive income (loss), net of tax		880			(9,409	)		(22,067	)		(16,756	)
Comprehensive income (loss)	$	3,518		$	7,728		$	(36,261	)	$	6,941

The accompanying notes are an integral part of these condensed consolidated financial statements.

(in thousands, except per share amounts)	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	94,747		$	76,639		$	80,987		$	83,310
Customer receivables, net		27,214			21,405			24,588			14,167
Inventories, net		54,202			60,805			52,215			65,781
Other current assets		23,492			22,675			22,107			20,183
Assets held for sale		—			80,674
Total current assets		199,655			262,198			179,897			183,441
Property, plant and equipment, net		278,587			272,193			286,169			286,383
Investment in real estate held for development and sale		76,924			79,537			73,541			74,233
Timber and timberlands, net		1,649,196			1,672,815			1,618,975			1,638,663
Intangible assets, net		17,244			17,828			16,660			17,049
Other long-term assets		35,448			21,281			29,928			35,290
Total assets	$	2,257,054		$	2,325,852		$	2,205,170		$	2,235,059

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	78,274		$	60,993		$	75,937		$	60,577
Current portion of long-term debt		39,995			39,973			45,988			45,974
Current portion of pension and other postretirement employee benefits		5,997			5,997			6,701			6,701
Liabilities held for sale		—			29,321
Total current liabilities		124,266			136,284			128,626			113,252
Long-term debt		716,350			715,391			711,001			710,495
Pension and other postretirement employee benefits		110,548			110,659			142,708			115,463
Deferred tax liabilities, net		14,913			32,009			10,942			20,165
Other long-term obligations		55,248			16,730			86,417			48,853
Total liabilities		1,021,325			1,011,073			1,079,694			1,008,228
Commitments and contingencies
Stockholders' equity:
Preferred stock, authorized 4,000 shares, 0 shares issued		—			—			—			—
Common stock, $1 par value, authorized 100,000 shares, issued and outstanding 67,221 and 67,570 shares		67,221			67,570
Common stock, $1 par value, authorized 100,000 shares, issued and outstanding 66,871 and 67,221 shares								66,871			67,221
Additional paid-in capital		1,664,333			1,659,031			1,670,184			1,666,299
Accumulated deficit		(343,747	)		(282,391	)		(442,153	)		(359,330	)
Accumulated other comprehensive loss		(152,078	)		(129,431	)		(169,426	)		(147,359	)
Total stockholders’ equity		1,235,729			1,314,779			1,125,476			1,226,831
Total liabilities and stockholders' equity	$	2,257,054		$	2,325,852		$	2,205,170		$	2,235,059

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Nine Months Ended September 30,						Six Months Ended June 30,
(in thousands)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	44,262		$	121,081
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income							$	(14,194	)	$	23,697
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, depletion and amortization		52,589			53,685			37,215			33,411
Basis of real estate sold		14,211			10,673			9,191			8,983
Gain on sale of facility		(9,176	)		—			—			(9,176	)
Loss on extinguishment of debt		5,512			—			—			5,512
Change in deferred taxes		(16,943	)		13,879			(13,849	)		(17,238	)
Pension and other postretirement employee benefits		8,907			12,221			11,833			5,937
Pension settlement charge								42,988			—
Equity-based compensation expense		5,362			6,518			3,865			3,449
Other, net		(2,692	)		(1,220	)		(177	)		(1,928	)
Change in working capital and operating-related activities, net		13,745			(9,429	)		16,397			22,490
Real estate development expenditures		(5,738	)		(3,081	)		(2,487	)		(4,481	)
Funding of pension and other postretirement employee benefits		(4,612	)		(55,959	)		(2,839	)		(3,135	)
Net cash provided by operating activities		105,427			148,368			87,943			67,521

CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment additions		(25,596	)		(18,496	)		(10,295	)		(15,502	)
Timberlands reforestation and roads		(13,269	)		(12,464	)		(7,776	)		(8,190	)
Acquisition of timber and timberlands		(278	)		(166	)		(4,730	)		(278	)
Proceeds on sale of facility		58,793			—			1,000			58,793
Proceeds on disposition of property, plant and equipment		2,017			11
Other, net		520			644			2,113			433
Cash and cash equivalents acquired in Deltic merger		—			3,419
Net cash provided by (used in) investing activities		22,187			(27,052	)
Net cash (used in) provided by investing activities								(19,688	)		35,256

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends to common stockholders		(80,834	)		(75,305	)
Proceeds from Potlatch revolving line of credit		—			100,000
Repayment of Potlatch revolving line of credit		—			(100,000	)
Repayment of Deltic revolving line of credit		—			(106,000	)
Proceeds from issue of long-term debt		150,000			100,000
Distributions to common stockholders								(53,685	)		(53,946	)
Repurchase of common stock								(15,364	)		(25,173	)
Proceeds from issuance of long-term debt								—			150,000
Repayment of long-term debt		(150,000	)		(14,250	)		—			(150,000	)
Premiums and fees on debt retirement		(4,865	)		—			—			(4,865	)
Repurchase of common stock		(25,173	)		—
Other, net		(393	)		(4,975	)		(526	)		(264	)
Net cash used in financing activities		(111,265	)		(100,530	)		(69,575	)		(84,248	)
Change in cash, cash equivalents and restricted cash		16,349			20,786			(1,320	)		18,529
Cash, cash equivalents and restricted cash at beginning of period		79,441			120,457			84,254			79,441
Cash, cash equivalents and restricted cash at end of period	$	95,790		$	141,243		$	82,934		$	97,970

NONCASH INVESTING AND FINANCING ACTIVITIES
Long-term debt assumed by buyer in sale of facility	$	29,000		$	—		$	—		$	29,000
Accrued property, plant and equipment additions	$	453		$	785		$	706		$	244
Accrued timberlands reforestation and roads	$	1,406		$	1,034		$	462		$	592
Equity issued as consideration for our merger with Deltic	$	—		$	1,142,775
Earnings and profits distribution payable	$	—		$	222,000

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the ~~same such~~ amounts shown in the Condensed Consolidated Statements of Cash Flows.

(in thousands)	September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019
Cash and cash equivalents	$	94,747	$	137,535	$	80,987	$	97,970
Restricted cash included in other short-term and long-term assets¹		1,043		3,708
Restricted cash included in other long-term assets¹						1,947		—
Total cash, cash equivalents, and restricted cash	$	95,790	$	141,243	$	82,934	$	97,970

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Common Stock						Additional Paid-			Accumulated			Accumulated Other Comprehensive			Total Stockholders'			Common Stock						Additional Paid-			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
(in thousands, except per share amounts)	Shares			Amount			in Capital			Deficit			Loss			Equity			Shares			Amount			in Capital			Deficit			Loss			Equity
Balance, December 31, 2018		67,570		$	67,570		$	1,659,031		$	(282,391	)	$	(129,431	)	$	1,314,779
Balance, December 31, 2019																				67,221		$	67,221		$	1,666,299		$	(359,330	)	$	(147,359	)	$	1,226,831
Net loss																				—			—			—			(16,832	)		—			(16,832	)
Shares issued for stock compensation																				131			131			(131	)		—			—			—
Equity-based compensation expense																				—			—			1,885			—			—			1,885
Pension plans and OPEB obligations																				—			—			—			—			15,578			15,578
Cash flow hedges																				—			—			—			—			(38,525	)		(38,525	)
Common dividends, $0.40 per share																				—			—			—			(26,941	)		—			(26,941	)
Repurchase of common stock																				(401	)		(401	)		—			(11,954	)		—			(12,355	)
Other transactions, net																				—			—			69			(96	)		—			(27	)
Balance, March 31, 2020																				66,951		$	66,951		$	1,668,122		$	(415,153	)	$	(170,306	)	$	1,149,614
Net income		—			—			—			6,560			—			6,560			—			—			—			2,638			—			2,638
Shares issued for stock compensation		297			297			(297	)		—			—			—			9			9			(9	)		—			—			—
Equity-based compensation expense		—			—			1,617			—			—			1,617			—			—			1,980			—			—			1,980
Pension plans and OPEB obligations		—			—			—			—			1,166			1,166			—			—			—			—			2,727			2,727
Cash flow hedges		—			—			—			—			(8,513	)		(8,513	)		—			—			—			—			(1,847	)		(1,847	)
Common dividends, $0.40 per share		—			—			—			(27,065	)		—			(27,065	)		—			—			—			(26,744	)		—			(26,744	)
Repurchase of common stock		(279	)		(279	)		—			(9,879	)		—			(10,158	)		(89	)		(89	)		—			(2,920	)		—			(3,009	)
Other transactions, net		—			—			99			(99	)		—			—			—			—			91			26			—			117
Balance, March 31, 2019		67,588		$	67,588		$	1,660,450		$	(312,874	)	$	(136,778	)	$	1,278,386
Net income		—			—			—			17,137			—			17,137
Shares issued for stock compensation		5			5			(5	)		—			—			—
Equity-based compensation expense		—			—			1,832			—			—			1,832
Pension plans and OPEB obligations		—			—			—			—			1,008			1,008
Cash flow hedges		—			—			—			—			(10,417	)		(10,417	)
Common dividends, $0.40 per share		—			—			—			(26,881	)		—			(26,881	)
Repurchase of common stock		(407	)		(407	)		—			(14,608	)		—			(15,015	)
Other transactions, net		—			—			104			(104	)		—			—
Balance, June 30, 2019		67,186		$	67,186		$	1,662,381		$	(337,330	)	$	(146,187	)	$	1,246,050
Net income		—			—			—			20,565			—			20,565
Shares issued for stock compensation		35			35			(35	)		—			—			—
Equity-based compensation expense		—			—			1,913			—			—			1,913
Pension plans and OPEB obligations		—			—			—			—			1,087			1,087
Cash flow hedges		—			—			—			—			(6,978	)		(6,978	)
Common dividends, $0.40 per share		—			—			—			(26,888	)		—			(26,888	)
Other transactions, net		—			—			74			(94	)		—			(20	)
Balance, September 30, 2019		67,221		$	67,221		$	1,664,333		$	(343,747	)	$	(152,078	)	$	1,235,729

Balance, June 30, 2020																				66,871		$	66,871		$	1,670,184		$	(442,153	)	$	(169,426	)	$	1,125,476

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

	Common Stock						Additional Paid-			Accumulated			Accumulated Other Comprehensive			Total Stockholders'			Common Stock						Additional Paid-			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
(in thousands, except per share amounts)	Shares			Amount			in Capital			Deficit			Loss			Equity			Shares			Amount			in Capital			Deficit			Loss			Equity
Balance, December 31, 2017		40,612		$	40,612		$	359,144		$	(104,363	)	$	(94,851	)	$	200,542
Net income		—			—			—			14,597			—			14,597
Shares issued for stock compensation		162			162			(162	)		—			—			—
Common stock issued for Deltic merger		21,981			21,981			1,120,794			—			—			1,142,775
Equity-based compensation expense		—			—			3,279			—			—			3,279
Pension plans and OPEB obligations		—			—			—			—			1,725			1,725
Cash flow hedges		—			—			—			—			(990	)		(990	)
Cumulative effects of adoption of accounting standards		—			—			—			24,564			(23,265	)		1,299
Common dividends, $0.40 per share		—			—			—			(25,102	)		—			(25,102	)
Other transactions, net		—			—			(2,653	)		(30	)		—			(2,683	)
Balance, March 31, 2018		62,755		$	62,755		$	1,480,402		$	(90,334	)	$	(117,381	)	$	1,335,442
Balance, December 31, 2018																				67,570		$	67,570		$	1,659,031		$	(282,391	)	$	(129,431	)	$	1,314,779
Net income		—			—			—			46,148			—			46,148			—			—			—			6,560			—			6,560
Shares issued for stock compensation		(1	)		(1	)		1			—			—			—			297			297			(297	)		—			—			—
Equity-based compensation expense		—			—			1,610			—			—			1,610			—			—			1,617			—			—			1,617
Pension plans and OPEB obligations		—			—			—			—			1,682			1,682			—			—			—			—			1,166			1,166
Cash flow hedges		—			—			—			—			1,249			1,249			—			—			—			—			(8,513	)		(8,513	)
Common dividends, $0.40 per share		—			—			—			(25,101	)		—			(25,101	)		—			—			—			(27,065	)		—			(27,065	)
Repurchase of common stock																				(279	)		(279	)		—			(9,879	)		—			(10,158	)
Other transactions, net		—			—			35			(139	)		—			(104	)		—			—			99			(99	)		—			—
Balance, June 30, 2018		62,754		$	62,754		$	1,482,048		$	(69,426	)	$	(114,450	)	$	1,360,926
Balance, March 31, 2019																				67,588		$	67,588		$	1,660,450		$	(312,874	)	$	(136,778	)	$	1,278,386
Net income		—			—			—			60,336			—			60,336			—			—			—			17,137			—			17,137
Shares issued for stock compensation		1			1			(1	)		—			—			—			5			5			(5	)		—			—			—
Equity-based compensation expense		—			—			1,629			—			—			1,629			—			—			1,832			—			—			1,832
Pension plans and OPEB obligations		—			—			—			—			1,703			1,703			—			—			—			—			1,008			1,008
Cash flow hedges		—			—			—			—			1,591			1,591			—			—			—			—			(10,417	)		(10,417	)
Common dividends, $0.40 per share		—			—			—			(25,102	)		—			(25,102	)		—			—			—			(26,881	)		—			(26,881	)
Deltic earnings and profits special distribution, $3.54 per share		—			—			—			(222,000	)		—			(222,000	)
Repurchase of common stock																				(407	)		(407	)					(14,608	)					(15,015	)
Other transactions, net		—			—			74			(88	)		—			(14	)		—			—			104			(104	)		—			—
Balance, September 30, 2018		62,755		$	62,755		$	1,483,750		$	(256,280	)	$	(111,156	)	$	1,179,069

Balance, June 30, 2019																				67,186		$	67,186		$	1,662,381		$	(337,330	)	$	(146,187	)	$	1,246,050

The accompanying notes are an integral part of these condensed consolidated financial statements.

For purposes of this report, any reference to “PotlatchDeltic,” “Potlatch,” “the company,” “we,” “us” and “our” means PotlatchDeltic Corporation and all of its wholly owned subsidiaries, except where the context indicates otherwise.

We are primarily engaged in activities associated with timberland management, including the sale of timber, the management of approximately ~~1.9~~1.8 million acres of timberlands and the purchase and sale of timberlands. We are also engaged in the manufacture and sale of wood products and the development of real estate.

The accompanying unaudited Condensed Consolidated Financial Statements provide an overall view of our results and financial condition and reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. ~~Intercompany transactions and accounts have been eliminated in consolidation.~~ Except as otherwise disclosed in these Notes to Condensed Consolidated Financial Statements, such adjustments are of a normal, recurring nature. Intercompany transactions and accounts have been eliminated in consolidation. The 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 accounting principles generally accepted in the United States (GAAP) 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, ~~2018,~~2019, as filed with the Securities and Exchange Commission on February ~~27, 2019.~~19, 2020. Results of operations for interim periods should not be regarded as necessarily indicative of the results that may be expected for the full year.

The preparation of our Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses. The full extent to which COVID-19 will directly or indirectly impact our business, results of operations and financial condition, will depend on future developments that are highly uncertain, including new information that may emerge concerning COVID-19, the additional actions taken to contain it or treat it, as well as the severity and duration of the economic impact on local, regional, and national customers, suppliers and markets.

At any given time, we are subject to claims and actions incidental to the operations of our business. Based on information currently available, we do not expect that any sums we may ~~receive or~~ have to pay in connection with any legal proceeding would have a materially adverse effect on our consolidated financial position or net cash flow.

On June 21, 2020, we announced an agreement to sell approximately 72,000 acres of rural timberland in Minnesota to The Conservation Fund for approximately $48.0 million in cash, subject to certain closing adjustments as defined in the agreement. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2020.

In ~~February 2016,~~August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~No. 2016-02,~~ ~~Leases (Topic 842)~~. The objective of the new standard is to establish principles for lessees and lessors to report information about the amount, timing and uncertainty of cash flows arising from a lease and disclose key information about leasing arrangements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. For leases with a term of 12 months or less, the lessee is permitted to make an accounting policy election by class of underlying asset to not recognize lease assets and lease liabilities. The standard, along with subsequent amendments, was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach was required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (i) its effective date or (ii) the beginning of the earliest comparable period presented in the financial statements as its date of initial application.

We adopted ASU 2016-02, along with subsequent amendments, on January 1, 2019 and used the effective date as our date of initial application. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided, for dates and periods before January 1, 2019. The new standard provides several optional practical expedients in transition and for an entity’s ongoing accounting. We elected the following practical expedients as part of our adoption of the standard:

~~Upon adoption of this ASU we recorded $14.0 million for right of use assets and lease liabilities for our operating leases on our~~ ~~Condensed Consolidated Balance Sheet. The adoption of this ASU did not impact our~~ ~~Condensed Consolidated Statement of Income~~ ~~and our~~ ~~Condensed Consolidated Statement of Cash Flows. See~~ ~~Note 14: Leases~~ ~~for our expanded disclosures.~~

~~In August 2018, the FASB issued ASU~~ No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 clarifies that implementation costs incurred by customers in cloud computing arrangements are deferred if they would be capitalized by customers in software licensing arrangements under the internal-use software guidance. Additionally, ASU 2018-15 clarifies that all capitalized costs must be presented in the same financial statement line item as the cloud computing arrangement. The standard ~~will be~~was effective, on either a prospective or retrospective basis, for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. ~~We are finalizing our evaluation of the impact~~The prospective adoption of this standard on ~~our consolidated financial statements and based on our assessment to date, we do~~January 1, 2020 did not ~~expect~~have a material impact ~~upon adoption.~~our Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for defined benefit pension plans and other postretirement plans. ASU 2018-14 iswas effective for fiscal years ending after December 15, 2020, including interim periods within those years and requires retrospective adoption; early adoption is permitted. ~~ASU 2018-14 will only impact our pension and other postretirement employee benefits disclosures, and we do~~The adoption of this standard on January 1, 2020 did not ~~believe there will be~~have a material impact on ~~those~~our defined benefit pension plan and other postretirement plan disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies certain disclosure requirements related to fair value measurements including (i) requiring disclosures on changes in unrealized gains and losses in other comprehensive income for recurring Level 3 fair value measurements; and (ii) a requirement to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 iswas effective for fiscal years beginning after December 15, 2019, including interim periods within those ~~years; early~~years. The adoption ~~is permitted. ASU 2018-13 will only~~of this standard on January 1, 2020 did not have a material impact on our fair value measurement ~~disclosures,~~disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 contains practical expedients and ~~we do not believe there will be a material impact~~exceptions to US GAAP guidance on ~~those disclosures.~~

On February 20, 2018 Deltic Timber Corporation (Deltic) merged with a wholly owned subsidiary of PotlatchDeltic. Deltic owned approximately 530,000 acres of timberland, operated 2 sawmills, a medium density fiberboard facility (MDF)contract modifications and ~~was engaged in real estate development primarily in Arkansas.~~

~~The acquisition of total assets of $1.4 billion was a noncash investing and financing activity comprised of $1.1 billion in equity consideration transferred~~hedge accounting to ~~Deltic shareholders and $0.3 billion of liabilities assumed.~~

~~We expensed $1.0 million and $21.2 million of merger-related costs during~~ease the ~~three and nine months ended September 30, 2018, respectively. Total merger-related costs consisted of:~~

~~These costs are included in Deltic merger-related costs in ourCondensed Consolidated Statements of Income~~.

~~The amount of revenue and income before income taxes~~financial reporting impacts related to the expected market transition from the ~~acquired Deltic operations included~~London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. Companies can apply the ASU immediately. Unlike other topics, the provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to be completed. We are currently evaluating the impact this guidance may have on our Condensed Consolidated Financial Statements ~~of Income~~ ~~from February 21, 2018 to September 30, 2018 were as follows:~~

~~The following presents the unaudited pro forma consolidated financial information of the company as if the merger with Deltic was completed on January 1, 2017:~~

~~Pro forma net earnings attributable to PotlatchDeltic common shareholders excludes $1.0 million~~ and $26.7 million of non-recurring merger-related costs incurred by both companies during the three and nine months ended September 30, 2018, of which $5.4 million were incurred by Deltic prior to the merger. Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.related disclosures.

On December 20, 2018, we entered into an Asset Purchase and Sale Agreement (the Agreement) with Roseburg Forest Products Co. to sell the Deltic MDF facility for $92.0 million, consisting of $63.0 million in cash and assumption of $29.0 million of revenue bonds. The purchase price was subject to post-closing adjustments for certain changes in working capital as defined in the Agreement. The transaction closed on February 12, 2019 resulting in a $9.2 million pre-tax gain on sale. ~~Cash~~Net proceeds received in February 2019 after ~~working capital adjustments,~~ closing costs and other expenses were ~~approximately $58.8~~$60.0 million. The net proceeds were reduced by $1.2 million during the second quarter of 2019 following the finalization of the post-closing working capital adjustments. A portion of the purchase price iswas escrowed pending satisfaction of certain covenants as outlined in the Agreement. These funds were fully released to us during the three months ended March 31, 2020. In addition, we had a carryover tax basis in the facility from the Deltic merger, and as a result, we recorded a reduction to deferred tax liabilities and increase to income taxes payable of $15.8 million at the date of sale.

At December 31, 2018, the assets and liabilities to be disposed met the criteria to be classified as held for sale and were reflected as such at their carrying value. At December 31, 2018, assets held for sale on the ~~Condensed Consolidated Balance Sheet~~ of $80.7 million consists of $72.1 million of property, plant and equipment, $7.7 million related to inventories and $0.9 million of customer list intangibles. The related liabilities held for sale of $29.3 million on the~~December 31, 2018~~ ~~Condensed Consolidated Balance Sheet~~ ~~include $29.0 million of revenue bonds.~~ The sale of the MDF facility iswas not considered a strategic shift that has or will have a major effect on our operations or financial results and therefore ~~does~~did not meet the requirements for presentation as discontinued operations.

The ~~majority of~~following table represents our revenues ~~are derived from the sale of delivered logs, manufactured~~by major product. For additional information regarding our segments, see Note 5: Segment Information.

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Timberlands
Northern region
Sawlogs	$	30,638		$	30,467		$	72,045		$	62,966
Pulpwood		1,236			1,148			2,671			3,209
Stumpage		-			-			316			106
Other		292			353			595			564
Total Northern revenues		32,166			31,968			75,627			66,845

Southern region
Sawlogs		21,205			20,979			45,144			39,416
Pulpwood		10,872			11,282			22,073			23,093
Stumpage		817			144			1,646			466
Other		2,285			2,508			5,280			5,219
Total Southern revenues		35,179			34,913			74,143			68,194

Total Timberlands revenues		67,345			66,881			149,770			135,039

Wood Products
Lumber		102,793			103,054			214,732			193,559
Residuals and Panels		23,423			34,976			56,484			76,777
Total Wood Products revenues		126,216			138,030			271,216			270,336

Real Estate
Rural real estate		9,879			30,315			17,171			34,534
Development real estate		1,672			3,755			3,964			4,428
Other		1,554			2,362			2,939			3,634
Total Real Estate revenues		13,105			36,432			24,074			42,596

Total segment revenues		206,666			241,343			445,060			447,971
Intersegment Timberlands revenues¹		(25,111	)		(25,762	)		(54,625	)		(50,674	)
Total consolidated revenues	$	181,555		$	215,581		$	390,435		$	397,297

In general, a customer receivable is recorded as we deliver wood products, ~~residual wood by-products~~logs and ~~real estate.~~residuals. We ~~recognize revenue in accordance with FASB Accounting Standards Codification Topic 606,~~ ~~Revenue from Contracts with Customers~~ ~~(ASC 606). Performance obligations associated with real estate sales are~~ generally ~~satisfied at a point in time when all conditions of closing~~receive payment shortly after products have been ~~met and title transfers to the buyer. Real estate closings are generally facilitated through an escrow process.~~

received by our customers. At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we recorded ~~$7.2~~deferred revenue of $10.4 million and ~~$4.3~~$5.5 million, respectively, for contract ~~liabilities recorded as deferred revenue.~~liabilities. These contract ~~related~~ liabilities predominately relate to hunting and other access rights on our timberlands and member related activities at the Chenal Country Club. These contract liabilities are recognized over the term of the contracts, which is typically twelve months or less, except membership initiation fees at the ~~Chenal Country Club~~country club which typically are recognized up to 10 years. Other contract asset and liability balances, such as prepayments, are immaterial. For real estate sales, we typically receive the entire consideration in cash at closing.

~~The following table represents our revenues by major product. For additional information regarding our segments, see~~ ~~Note 6: Segment Information~~.

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)
2019

2018

2019

2018

Timberlands

Northern region

Sawlogs
$
53,152

$
69,658

$
116,118

$
168,869

Pulpwood

1,489

1,575

4,698

4,654

Stumpage

3

39

109

175

Other

1,085

765

1,649

1,233

55,729

72,037

122,574

174,931

Southern region

Sawlogs

24,053

21,974

63,469

61,194

Pulpwood

15,754

13,700

38,847

36,138

Stumpage

767

653

1,233

2,106

Other

2,506

3,057

7,725

6,069

43,080

39,384

111,274

105,507

Total Timberlands revenues

98,809

111,421

233,848

280,438

Wood Products

Lumber

108,364

138,281

301,923

367,062

Residuals and Panels

35,279

60,744

112,056

165,363

Total Wood Products revenues

143,643

199,025

413,979

532,425

Real Estate

Rural real estate

9,689

8,238

44,223

29,740

Development real estate

7,674

1,287

12,102

4,249

Other¹

1,500

1,708

5,134

4,230

Total Real Estate revenues

18,863

11,233

61,459

38,219

Total Segment Revenues

261,315

321,679

709,286

851,082

Intersegment Timberlands revenues²

(35,013
)

(32,480
)

(85,687
)

(93,753
)
Total consolidated revenues
$
226,302

$
289,199

$
623,599

$
757,329

During the second quarter of 2019, we changed the name of our Resource segment to Timberlands. There were no changes in the segment’s business activities, components or information provided to our chief operating decision makers as a result of the change.

Our businesses are organized into 3 reportable operating segments: Timberlands, Wood Products and Real Estate. ~~Management activities in the~~The Timberlands segment ~~include~~includes planting and harvesting trees and building and maintaining roads. The Timberlands segment also generates revenues from non-timber resources such as hunting leases, recreation permits and leases, mineral rights contracts, oil and gas royalties ~~biomass production~~ and carbon sequestration. The Wood Products segment manufactures and markets lumber and plywood. The ~~business of our~~ Real Estate segment includes the sale of land holdings deemed non-strategic or identified as having higher and better use ~~alternatives. The Real Estate segment also engages in~~alternatives, master planned ~~communities,~~community development ~~activities~~ and ~~includes~~a country club.

The reportable segments follow the same accounting policies used for our Condensed Consolidated Financial Statements, with the exception of the valuation of inventories. For most of our operations, we use the last-in, first-out (LIFO) method of valuing inventory. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Interim LIFO calculations are based on management’s best estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation. I~~nventories not valued under LIFO are recorded at the lower of average cost or net realizable value.~~ ~~All segment~~ inventories which are reported using the average cost ~~method. The LIFO reserve and intersegment eliminations are recorded at the corporate level.~~method for purposes of reporting segment results.

Management primarily evaluates the performance of its segments and allocates resources to them based upon Adjusted EBITDDA. EBITDDA is calculated as net income (loss) before interest expense, income taxes, basis of real estate sold, depreciation, depletion and amortization. Adjusted EBITDDA further excludes certain specific items that are considered to hinder comparison of the performance of our businesses either year-on-year or with other businesses. Management uses Adjusted EBITDDA to compare the operating performance of our segments on a consistent basis and to evaluate the performance and effectiveness of each segment’s operational strategies. Our calculation of Adjusted EBITDDA may not be comparable to that reported by other companies.

The following table summarizes information ~~on revenues, intersegment eliminations, Adjusted EBITDDA, depreciation, depletion and amortization, basis of real estate sold and total assets~~ for each of the company’s reportable segments and includes a reconciliation of Total Adjusted EBITDDA to income (loss) before income taxes. Corporate information is included to reconcile segment data to the Condensed Consolidated Financial Statements.

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2019			2018			2019			2018			2020			2019			2020			2019
Revenues:
Timberlands	$	98,809		$	111,421		$	233,848		$	280,438		$	67,345		$	66,881		$	149,770		$	135,039
Wood Products		143,643			199,025			413,979			532,425			126,216			138,030			271,216			270,336
Real Estate		18,863			11,233			61,459			38,219			13,105			36,432			24,074			42,596
		261,315			321,679			709,286			851,082			206,666			241,343			445,060			447,971
Intersegment Timberlands revenues¹		(35,013	)		(32,480	)		(85,687	)		(93,753	)		(25,111	)		(25,762	)		(54,625	)		(50,674	)
Consolidated revenues	$	226,302		$	289,199		$	623,599		$	757,329		$	181,555		$	215,581		$	390,435		$	397,297

Adjusted EBITDDA:
Timberlands	$	42,996		$	58,680		$	95,977		$	140,068		$	25,659		$	26,131		$	60,641		$	52,981
Wood Products		5,903			46,446			11,058			126,962			10,907			(2,071	)		24,136			5,155
Real Estate		14,678			7,467			48,697			27,769			9,256			31,316			16,596			34,019
Corporate		(6,930	)		(8,989	)		(26,930	)		(28,969	)		(10,534	)		(9,346	)		(19,206	)		(20,000	)
Eliminations and adjustments		(1,635	)		(1,794	)		3,542			(5,080	)		85			3,050			777			5,177
Total Adjusted EBITDDA		55,012			101,810			132,344			260,750			35,373			49,080			82,944			77,332
Interest expense, net²														(8,339	)		(7,882	)		(12,037	)		(13,346	)
Depreciation, depletion and amortization														(17,765	)		(16,727	)		(36,403	)		(32,524	)
Basis of real estate sold		(5,228	)		(4,248	)		(14,211	)		(10,673	)		(2,693	)		(7,427	)		(9,191	)		(8,983	)
Depreciation, depletion and amortization		(18,786	)		(18,836	)		(51,310	)		(51,982	)
Interest expense, net²		(8,475	)		(10,109	)		(21,821	)		(25,125	)
Loss on extinguishment of debt		—			—			(5,512	)		—			—			—			—			(5,512	)
Pension settlement charge														—			—			(42,988	)		—
Non-operating pension and other postretirement employee benefits		(935	)		(1,942	)		(2,804	)		(5,707	)		(3,478	)		(889	)		(7,113	)		(1,869	)
Gain (loss) on fixed assets		198			(12	)		260			(11	)
Gain on sale of facility		—			—			9,176			—			—			—			—			9,176
Inventory purchase price adjustment in cost of goods sold³		—			—			—			(1,849	)
Deltic merger-related costs⁴		—			(972	)		—			(21,245	)
Income before income taxes	$	21,786		$	65,691		$	46,122		$	144,158
(Loss) gain on disposal of fixed assets														(7	)		30			185			62
Income (loss) before income taxes													$	3,091		$	16,185		$	(24,603	)	$	24,336

Depreciation, depletion and amortization:
Timberlands	$	12,627		$	12,730		$	33,361		$	35,974		$	11,566		$	10,469		$	24,157		$	20,734
Wood Products		5,763			5,827			16,666			15,250			5,798			5,861			11,428			10,903
Real Estate		152			81			508			198			156			147			316			356
Corporate		244			198			775			560			245			250			502			531
		18,786			18,836			51,310			51,982			17,765			16,727			36,403			32,524
Bond discounts and deferred loan fees²		392			609			1,279			1,703			406			410			812			887
Total depreciation, depletion and amortization	$	19,178		$	19,445		$	52,589		$	53,685		$	18,171		$	17,137		$	37,215		$	33,411

Basis of real estate sold:
Real Estate	$	5,283		$	4,267		$	14,326		$	10,886		$	3,212		$	7,455		$	9,716		$	9,043
Eliminations and adjustments		(55	)		(19	)		(115	)		(213	)		(519	)		(28	)		(525	)		(60	)
Total basis of real estate sold	$	5,228		$	4,248		$	14,211		$	10,673		$	2,693		$	7,427		$	9,191		$	8,983

~~A reconciliation of our business segment total assets to total assets in the~~ ~~CondensedConsolidatedBalance Sheets~~ ~~is as follows:~~

The following table reconciles the number of shares used in calculating basic and diluted earnings per share:

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2019		2018		2019		2018		2020		2019		2020			2019
Net income	$	20,565	$	60,336	$	44,262	$	121,081
Net income (loss)									$	2,638	$	17,137	$	(14,194	)	$	23,697

Basic weighted-average shares outstanding		67,446		62,986		67,781		58,765		67,176		67,664		67,321			67,774
Incremental shares due to:
Performance shares		65		270		50		263		153		26		—			21
Restricted stock units		34		37		17		33		30		23		—			71
Stock portion of earnings and profits distribution		—		1,429		—		481
Diluted weighted-average shares outstanding		67,545		64,722		67,848		59,542		67,359		67,713		67,321			67,866

Basic net income per share	$	0.30	$	0.96	$	0.65	$	2.06
Diluted net income per share	$	0.30	$	0.93	$	0.65	$	2.03
Basic net income (loss) per share									$	0.04	$	0.25	$	(0.21	)	$	0.35
Diluted net income (loss) per share									$	0.04	$	0.25	$	(0.21	)	$	0.35

For stock-based awards, the dilutive effect is calculated using the treasury stock method. Under this method, the dilutive effect is computed as if the awards were exercised at the beginning of the period (or at time of issuance, if later) and assumes the related proceeds were used to repurchase common stock at the average market price during the period. Related proceeds include future compensation cost associated with the stock award.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020 there were approximately ~~25,000~~39,000 and ~~134,000~~490,000 stock-based awards, respectively, that were excluded from the calculation of diluted earnings per share because they were anti-dilutive. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019 there were approximately ~~16,000~~95,000 and ~~38,000~~71,000 stock-based awards, respectively, that were excluded from the calculation of diluted earnings per share because they were anti-dilutive. Anti-dilutive stock-based awards could be dilutive in future periods.

In February 2018 we issued 22.0 million shares in connection with the Deltic merger. Further, on August 30, 2018, the board of directors approved a special distribution of $222.0 million, or approximately $3.54 per share. The special distribution amount equaled our determination of the accumulated earnings and profits of Deltic as of the merger date and was distributed in order to maintain the company’s qualification as a REIT for U.S. federal income tax purposes. The special distribution ~~was paid on November 15, 2018, to stockholders of record on September 27, 2018 through the issuance of~~ 4.8 million shares of our common stock and distribution of $44.4 million in cash. The weighted average shares for the dilutive effect on earnings per share from the stock portion of the special distribution was based on the August 30, 2018 declaration date for the three and nine months ended September 30, 2018. ~~See~~ ~~Note 3: Merger with Deltic~~ ~~for further discussion on the merger.~~

On August 30, 2018, our board of directors authorized management to repurchase up to $100.0 million of common stock with no time limit set for the repurchase (the 2018 Repurchase Program). WeDuring the three and six months ended June 30, 2020, we repurchased~~0.7 million~~ 88,933 and 489,850 shares of common stock (at a total consideration of ~~$25.2~~$3.0 million and $15.4 million) ~~during~~, respectively, under the 2018 Repurchase Program. During the three and six months ended June 30, 2019 ~~and~~ we repurchased 0407,293 and 686,240 shares ~~during the three months ended September 30, 2019~~of common stock (at a total consideration of $15.0 million and $25.2 million), respectively, under the 2018 Repurchase Program. All common stock purchases under the 2018 Repurchase ~~Programs~~Program were made in open-market transactions. ~~NaN shares were repurchased during the three and nine months ended September~~At June 30, ~~2018. At September 30, 2019,~~2020, we had remaining authorization of ~~$74.8~~$59.5 million for future stock repurchases under the 2018 Repurchase Program.

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 cash settled. There were 0 unsettled repurchases as of ~~September~~June 30, ~~2019.~~2020. We retire shares upon repurchase. Any excess repurchase price over par is recorded in accumulated deficit.

(in thousands)	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Logs	$	26,657		$	37,303		$	19,999		$	33,313
Lumber, panels and veneer		30,390			27,420			30,189			31,639
Materials and supplies		12,383			11,310			14,029			12,831
Total inventories		69,430			76,033			64,217			77,783
Less: LIFO reserve		(15,228	)		(15,228	)		(12,002	)		(12,002	)
Total inventories, net	$	54,202		$	60,805		$	52,215		$	65,781

(in thousands)	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Property, plant and equipment	$	492,798		$	472,695		$	508,874		$	498,113
Less: accumulated depreciation		(214,211	)		(200,502	)		(222,705	)		(211,730	)
Total property, plant and equipment, net	$	278,587		$	272,193		$	286,169		$	286,383

(in thousands)	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Timber and timberlands	$	1,565,890	$	1,590,997	$	1,536,576	$	1,554,882
Logging roads		83,306		81,818		82,399		83,781
Total timber and timberlands, net	$	1,649,196	$	1,672,815	$	1,618,975	$	1,638,663

(in thousands)	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Accrued payroll and benefits	$	16,004	$	20,130	$	17,716	$	12,920
Accounts payable		16,565		12,073		17,106		12,734
Deferred revenue						10,395		5,514
Accrued taxes						9,269		6,638
Accrued interest		5,818		8,642		6,829		6,946
Accrued taxes		18,902		7,389
Deferred revenue		7,242		4,282
Operating lease liabilities		4,883		—		4,783		4,998
Other current liabilities		8,860		8,477		9,839		10,827
Total accounts payable and accrued liabilities	$	78,274	$	60,993	$	75,937	$	60,577

~~In January 2019, we refinanced $150.0~~At June 30, 2020, our total outstanding long-term debt included $693.5 million of ~~7.50% senior notes (Senior Notes) due in 2019 with a $150.0 million~~ term loan that will mature in 2029. The new term loan carries a variable interest rate of one-month LIBOR plus 1.85%. We paid $0.5 million of lender fees on the new term loan. Concurrent with the new term loan, we entered into a $150.0 million interest rate swap to fix the rate at 4.56%. Upon the refinancing, we redeemed and paid all outstanding Senior Notes, including a redemption premium of $4.9 million which is included in the loss on extinguishment of debt in our ~~Condensed Consolidated Statements of Income. Subsequent to the refinancing, $693.5 million was outstanding~~loans under our Second Amended and Restated Term Loan ~~Agreement.~~Agreement (Amended Term Loan Agreement) with our primary lender, of which $46.0 million matures in December 2020. Certain borrowings under the Amended Term Loan Agreement are at variable rates of one or three-month LIBOR plus a spread between 1.85% and 2.15%. We have entered into interest rate swaps for these variable rate term loans to fix the interest rate. See Note: 9 Derivative Instruments for additional information.

~~As part of the Deltic merger, we assumed the obligations relating to the letter~~At June 30, 2020 there were no borrowings under our $380.0 million revolving line of credit ~~supporting Deltic’s $29.0~~and approximately $1.0 million ~~Union County, Arkansas Taxable Industrial Revenue Bonds 1998 Series due October 1, 2027 associated with the Deltic MDF facility. As~~ of December 31, 2018, the bonds were classified as held for sale as part of the sale of the Deltic MDF facility and excluded from long-term debt. As part of the sale of the MDF facility, the bonds were assumed by the buyer and the letterour revolving line of credit was ~~terminated. See~~ ~~Note 4: Sale~~utilized for outstanding letters of ~~Deltic MDF Facility~~.credit. As provided in the revolving line of credit agreement, borrowings may be increased by up to an additional $420.0 million. The revolving line of credit agreement also includes a sublimit of $75.0 million for the issuance of standby letters of credit and a sublimit of $25.0 million for swing line loans. Usage under either or both subfacilities reduces availability under the revolving line of credit. We may utilize borrowings under the credit facility to, among other things, refinance existing indebtedness and provide funding for working capital requirements, capital projects, acquisitions and other general corporate expenditures.

~~As of September 30, 2019, we~~We were in compliance with all debt and credit agreement covenants ~~and approximately $1.0 million of our $380.0 million credit facility was utilized by outstanding letters of credit.~~at June 30, 2020.

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 are considered fair value hedges. 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.

At~~We have a $40.0 million term loan that matures in December 2019.~~ ~~In September 2019, we entered into a $40.0 million interest rate swap, the objective which is to lock in the index component rate on an expected new term loan in December 2019. This cash flow hedge requires settlement in December 2019.~~

~~Additionally, at September~~ June 30, ~~2019,~~2020, we have 56 interest rate swaps associated with ~~$357.5~~$397.5 million of term loan debt. These swaps are cash flow hedges that convert variable rates ranging from three-month and one-month LIBOR plus 1.85% to 2.15%, to fixed rates ranging from ~~3.88%~~3.17% to 4.82%. Our cash flow hedges are expected to be highly effective in achieving offsetting cash flows attributable to the hedged interest rate risk through the term of the ~~hedge. At September 30, 2019,~~hedges.

In March 2020, we entered into $653.5 million of forward starting interest rate swaps. These forward starting interest rate swaps effectively hedge the ~~amount~~variability in future benchmark interest payments attributable to changes in interest rates on future debt refinancing by locking in fixed rates on our anticipated future refinancing of ~~net losses expected~~$653.5 million of term loan debt maturing December 2020 through January 2029. The fixed interest rate components for these forward swaps range from 0.85% to ~~be reclassified into earnings in~~1.17%. The variable rate component on these forward interest rate swaps is one-month LIBOR. Accordingly, the ~~next 12 months is approximately $3.6 million.~~forward rate swaps were designated as cash flow hedges. In addition, these cash flow hedges require settlement on the stated maturity date for each respective term loan currently outstanding.

The following table presents the gross fair values of derivative instruments on our Condensed Consolidated Balance Sheets:

			Asset Derivatives					Liability Derivatives						Asset Derivatives					Liability Derivatives
(in thousands)		Location	September 30, 2019		December 31, 2018		Location	September 30, 2019		December 31, 2018			Location	June 30, 2020		December 31, 2019		Location	June 30, 2020		December 31, 2019
Derivatives designated in cash flow hedging relationships:	Derivatives designated in cash flow hedging relationships:											Derivatives designated in cash flow hedging relationships:
Interest rate contracts		Other assets, non-current	$	736	$	1,510	Other long-term obligations	$	29,322	$	2,888		Other assets, current¹	$	—	$	—	Accounts payable and accrued liabilities¹	$	1,768	$	—
Interest rate contracts													Other assets, non-current		—		1,601	Other long-term obligations		61,207		22,398
														$	—	$	1,601		$	62,975	$	22,398

The following table details the effect of derivatives on our Condensed Consolidated Statements of ~~Income~~Operations:

			Three Months Ended September 30,						Nine Months Ended September 30,								Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)		Location	2019			2018			2019			2018				Location	2020			2019			2020			2019
Derivatives designated in fair value hedging relationships:
Interest rate contracts
Realized loss on interest rate contracts¹		Interest expense	$	—		$	(52	)	$	(18	)	$	(138	)
Loss on hedged debt basis adjustment included in debt extinguishment				—			—			(165	)		—
			$	—		$	(52	)	$	(183	)	$	(138	)
Derivatives designated in cash flow hedging relationships:	Derivatives designated in cash flow hedging relationships:														Derivatives designated in cash flow hedging relationships:
Interest rate contracts
(Loss) income recognized in other comprehensive income, net of tax			$	(7,384	)	$	1,330		$	(26,576	)	$	1,394
Loss reclassified from accumulated other comprehensive income¹		Interest expense	$	(406	)	$	(261	)	$	(668	)	$	(456	)
Loss recognized in other comprehensive loss, net of tax																	$	(3,669	)	$	(10,598	)	$	(43,032	)	$	(19,192	)
Loss reclassified from accumulated other comprehensive loss¹																Interest expense	$	(1,822	)	$	(181	)	$	(2,660	)	$	(262	)

Interest expense, net			$	8,475		$	10,109		$	21,821		$	25,125				$	8,339		$	7,882		$	12,037		$	13,346

¹Realized loss on hedging instruments consist of net cash settlements and interest accruals on interest rate swaps during the periods.

At June 30, 2020, approximately $9.1 million of net losses are expected to be reclassified into earnings over the next 12 months. However, this expected amount to be reclassified into earnings is subject to volatility as the ultimate amount recognized in earnings is based on the market LIBOR rate at the time of cash settlement.

The following table presents the estimated fair values of our financial instruments:

	September 30, 2019						December 31, 2018						June 30, 2020						December 31, 2019
(in thousands)	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Carrying Amount			Fair Value			Carrying Amount			Fair Value
Derivative assets related to interest rate swaps (Level 2)	$	736		$	736		$	1,510		$	1,510		$	—		$	—		$	1,601		$	1,601
Derivative liabilities related to interest rate swaps (Level 2)	$	(29,322	)	$	(29,322	)	$	(2,888	)	$	(2,888	)	$	(62,975	)	$	(62,975	)	$	(22,398	)	$	(22,398	)

Long-term debt, including current portion (Level 2):
Term loans	$	(689,657	)	$	(704,498	)	$	(539,169	)	$	(539,037	)	$	(690,144	)	$	(718,225	)	$	(689,820	)	$	(703,437	)
Senior notes		—			—			(149,786	)		(154,328	)
Revenue bonds		(65,735	)		(68,384	)		(94,735	)		(93,144	)		(65,735	)		(65,945	)		(65,735	)		(68,200	)
Medium-term notes		(3,000	)		(3,484	)		(3,000	)		(3,419	)		(3,000	)		(3,568	)		(3,000	)		(3,480	)
Total long-term debt¹	$	(758,392	)	$	(776,366	)	$	(786,690	)	$	(789,928	)	$	(758,879	)	$	(787,738	)	$	(758,555	)	$	(775,117	)

Company owned life insurance asset (COLI) (Level 3)	$	4,073		$	4,073		$	3,104		$	3,104		$	2,967		$	2,967		$	4,157		$	4,157

The fair value of interest rate swaps are determined using a discounted cash flow analysis on 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 quoted market prices for 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 company owned life insurance is based on the amount at which it could be redeemed and, accordingly, approximates fair value.

We believe that our other financial instruments, including cash and cash equivalents, receivables and payables have net carrying values that approximate their fair values with only insignificant differences. This is primarily due to the short-term nature of these ~~instruments and the allowance for doubtful accounts.~~instruments.

On May 6, 2019 (the Effective Date) the stockholders approved our 2019 Long-Term Incentive Plan (the 2019 Plan). The total amount of PotlatchDeltic common stock authorized for issuance under the 2019 Plan includes, in addition toAt June 30, 2020, approximately 1.2 million new shares approved by our stockholders: (i) the total number of shares available for future awards under the Potlatch Corporation 2014 Long-Term Incentive Plan and its predecessor plans (the Prior Plans) as of the Effective Date and (ii) the number of undelivered shares subject to outstanding awards under the Prior Plans that will become available for future issuance as provided for under the 2019 Plan. At September 30, 2019, approximately 1.4 million shares are available for future use under our long-term incentive ~~plans.~~plan.

Share-based compensation activity during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 included the following:

(Shares in thousands)	Granted		Vested		Forfeited		Granted		Vested		Forfeited
Performance Share Awards (PSAs)		142		—		6		125,001		—		2,879
Restricted Stock Units (RSUs)		102		19		2		68,263		27,671		959

~~A total of 0.3~~Approximately 0.1 million shares of common stock were issued during the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020 as a result of PSA and RSU vesting during 2019 and 2020.

The following table details equity-based compensation expense and the related income tax ~~benefit.~~benefit:

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2019		2018		2019		2018		2020		2019		2020		2019
Equity-based compensation expense:
Performance share awards	$	1,186	$	1,074	$	3,417	$	3,084	$	1,243	$	1,187	$	2,401	$	2,231
Restricted stock units		705		536		1,892		1,470		718		629		1,426		1,187
Deferred compensation stock equivalent units expense		22		16		53		197		19		15		38		31
Accelerated share-based termination benefits in connection with the merger		—		3		—		1,767
Total equity-based compensation expense	$	1,913	$	1,629	$	5,362	$	6,518	$	1,980	$	1,831	$	3,865	$	3,449

Total tax benefit recognized for equity-based expense	$	79	$	74	$	234	$	258	$	93	$	83	$	176	$	155

PSAs granted under the stock incentive plans have a three-year performance period and shares are issued at the end of the period if the performance measures are met. The performance measures are based on the percentile ranking of our total shareholder return relative to the total shareholder return performance of both a selected peer group of companies and a larger group of indexed companies over the three-year performance period. The number of shares actually issued, as a percentage of the amount subject to the PSA, could range from 0% to 200%. PSAs granted under our stock incentive plans do not have voting rights unless and until shares are issued upon settlement. If shares are issued at the end of the three-year performance measurement period, the recipients will receive dividend equivalents in the form of additional shares at the time of payment equal to the dividends that would have been paid on the shares earned had the recipients owned the shares during the three-year period. Therefore, the shares are not considered participating securities. The fair value of performance shares granted in ~~2019~~2020 was ~~$37.87~~$45.04 per share.

The following table presents the key inputs used in the Monte Carlo simulation to calculate the fair value of the performance share awards in ~~2019:~~2020:

Stock price as of valuation date	$	35.01		$	42.16
Risk-free rate		2.47	%		1.42	%
Expected volatility		25.15	%		25.74	%
Expected dividend yield (assuming full reinvestment)		—			—
Expected term (years)		3.00			3.00

RSU awards accrue dividend equivalents based on dividends paid during the RSU vesting period. The dividend equivalents will be converted into additional RSUs that will vest in the same manner as the underlying RSUs to which they relate. Therefore, the shares are not considered participating securities. The terms of the awards state that the RSUs will vest in a given time period of one to three years and the terms of certain awards follow a vesting schedule within the given time period. The fair value of RSUs granted equaled our common share price on the date of grant factoring in any required post-vesting holding periods. The weighted average fair value of all RSUs granted during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 was ~~$36.64.~~$38.77 per share.

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. ~~In addition,~~During the six months ended June 30, 2020 we ~~had carryover~~recorded an income tax ~~basis~~benefit of approximately $11.2 million associated with the $43.0 million pension settlement charge recorded in the ~~MDF facility from the Deltic merger and as a result,~~first quarter. Additionally, during the ~~nine~~first quarter of 2020 we recorded an increase in deferred tax assets of $6.8 million associated with the $26.2 million remeasurement of our pension plan obligations. See Note 14: Pension and Other Postretirement Employee Benefitsfor further details. During the six months ended ~~September~~June 30, 2019 we recorded a reduction to deferred tax liabilities and an increase to income taxes payable of $15.8 million atrelated to the ~~date~~sale of ~~sale.~~the Deltic MDF facility. See Note 4:3: Sale of Deltic MDF Facility for further details. ~~In addition, during the third quarter of 2018, we recorded a tax benefit of $5.3 million primarily related to deducting contributions to our qualified pension plans at the higher 2017 income tax rate.~~

We lease certain equipment, office space and land. ~~ROU~~Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ~~Operating~~

The following table presents supplemental balance sheet information related to lease ~~ROU~~ assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. We consider our recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates. Most leases include one or more options to renew, with renewal terms that can extend the lease term between one to five years. The exercise of lease renewal options is at our sole discretion. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. liabilities:

¹Finance lease assets are presented net of accumulated amortization of $0.7 million and ~~liabilities were $1.9~~$0.3 million ~~at September~~as of June 30, ~~2019.~~2020 and December 31, 2019, respectively.

~~For certain equipment leases, we apply a portfolio approach to effectively account for~~The following table presents the ~~operating~~components of lease ROU assets and liabilities. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. Certain leases also include options to purchase the leased equipment. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants and we do not have any significant sublease income.

~~Operating lease costs (excluding~~¹Excludes short-term leases and variable lease costs, which are ~~immaterial) for the three and nine months ended September 30, 2019 were $1.6 million and $4.5 million, respectively.~~immaterial

~~At September 30, 2019, the future minimum lease payment obligations under noncancelable operating leases were as follows:~~The following tables presents supplemental cash flow information related to leases:

We did not have any capital leases during 2018. Operating lease rent expense primarily for office space, machinery and equipment was $1.2 million and $3.6 million for the three and nine months ended September 30, 2018, respectively.

~~At December 31, 2018, future minimum lease payment obligations under noncancelable operating leases were as follows:~~

In February 2020 we purchased a group annuity contract from an insurance company to transfer $101.1 million of our outstanding pension benefit obligation related to our qualified pension plans to the insurance company. This transaction was funded with plan assets. As a result of the transaction, the insurance company assumed responsibility for annuity administration and benefit payments to select retirees, with 0 change to their monthly retirement benefit payment amounts. In connection with this transaction we recorded a non-cash pretax settlement charge of $43.0 million during the three months ended March 31, 2020 in non-operating expense, net, accelerating the recognition of actuarial losses included in accumulated other comprehensive loss that would have been recognized in future periods.

The settlement triggered a remeasurement of plan assets and liabilities. We updated the discount rate used to measure our projected benefit obligation for the qualified pension plans as of February 29, 2020 and to calculate the related net periodic benefit cost for the remainder of 2020 to 2.95% from 3.40%. All other pension assumptions remain unchanged. The net effect of the remeasurement was a reduction in the funded status of our qualified pension plans of approximately $26.2 million, primarily driven by the decrease in the discount rate.

The following tables detail the components of net periodic cost (benefit) of our pension plans and other postretirement employee benefits (OPEB):

													Three Months Ended June 30,
													Pension						OPEB
(in thousands)													2020			2019			2020			2019
Service cost													$	2,176		$	1,862		$	112		$	80
Interest cost														2,568			4,692			376			375
Expected return on plan assets														(3,151	)		(5,541	)		—			—
Amortization of prior service cost (credit)														28			53			(319	)		(2,211	)
Amortization of actuarial loss														3,559			3,321			417			200
Total net periodic cost (benefit)													$	5,180		$	4,387		$	586		$	(1,556	)

	Three Months Ended September 30,												Six Months Ended June 30,
	Pension						OPEB						Pension						OPEB
(in thousands)	2019			2018			2019			2018			2020			2019			2020			2019
Service cost	$	1,942		$	2,181		$	93		$	99		$	4,466		$	3,883		$	254		$	185
Interest cost		4,618			4,344			397			391			6,132			9,231			751			794
Expected return on plan assets		(5,548	)		(5,095	)		—			—			(7,737	)		(11,095	)		—			—
Amortization of prior service cost (credit)		52			46			(2,211	)		(2,219	)		56			106			(638	)		(4,422	)
Amortization of actuarial loss		3,374			4,148			253			327			7,713			6,748			836			507
Net periodic cost (benefit) before pension settlement charge														10,630			8,873			1,203			(2,936	)
Pension settlement charge														42,988			—			—			—
Net periodic cost (benefit)	$	4,438		$	5,624		$	(1,468	)	$	(1,402	)	$	53,618		$	8,873		$	1,203		$	(2,936	)

	Nine Months Ended September 30,
	Pension						OPEB
(Dollars in thousands)	2019			2018			2019			2018
Service cost	$	5,825		$	6,272		$	278		$	242
Interest cost		13,849			12,648			1,191			1,091
Expected return on plan assets		(16,643	)		(14,938	)		—			—
Amortization of prior service cost (credit)		158			139			(6,633	)		(6,658	)
Amortization of actuarial loss		10,122			12,442			760			983
Net periodic cost (benefit)	$	13,311		$	16,563		$	(4,404	)	$	(4,342	)

During the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, funding of pension and other postretirement employee benefit plans was ~~$4.6~~$2.8 million and ~~$56.0~~$3.1 million, respectively. ~~$52.1~~Further, as allowed under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) passed in March 2020, we will defer approximately $4.4 million of required 2020 contributions for our qualified pension benefit contributions during the nine months ended September 30, 2018 were designated for and included as deductions on our 2017 income tax return which allowed us to deduct those payments at a higher rate.plans until 2021.

During ~~2019,~~2020, changes in amounts included in our accumulated other comprehensive loss (AOCL) by component on our Condensed Consolidated Balance Sheets, net of tax, are:

Pension Plans

OPEB

(in thousands)

Gains and losses on cash flow hedges

Actuarial Loss

Prior Service Cost

Actuarial Loss

Prior Service Credit

Total

Balance at December 31, 2018

$
1,560

$
128,849

��
$
404

$
7,269

$
(8,651
)

$
129,431

Amounts arising during the period

26,576

—

—

—

—

26,576

Amounts reclassified from AOCL to earnings

(668
)

(7,490
)

(117
)

(563
)

4,909

(3,929
)
Net change

25,908

(7,490
)

(117
)

(563
)

4,909

22,647

Balance at September 30, 2019

$
27,468

$
121,359

$
287

$
6,706

$
(3,742
)

$
152,078

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Pension Plans
Balance at beginning of period	$	101,524		$	126,678		$	117,028		$	129,253
Net loss arising during the period		—			—			19,402			—
Effect of pension settlement		—			—			(31,811	)		—
Amounts reclassified from AOCL to earnings		(2,654	)		(2,497	)		(5,749	)		(5,072	)
Balance at end of period	$	98,870		$	124,181		$	98,870		$	124,181
Other Postretirement Benefit Plans
Balance at beginning of period	$	10,257		$	27		$	10,331		$	(1,382	)
Amounts reclassified from AOCL to earnings		(73	)		1,489			(147	)		2,898
Balance at end of period	$	10,184		$	1,516		$	10,184		$	1,516
Cash Flow Hedges
Balance at beginning of period	$	58,525		$	10,073		$	20,000		$	1,560
Net loss arising during the period		3,669			10,598			43,032			19,192
Amounts reclassified from AOCL to earnings		(1,822	)		(181	)		(2,660	)		(262	)
Balance at end of period	$	60,372		$	20,490		$	60,372		$	20,490
Accumulated other comprehensive loss, end of period	$	169,426		$	146,187		$	169,426		$	146,187

~~Amortization of actuarial loss and prior service (cost) credit are components of net periodic benefit cost (credit), see~~See Note ~~15:~~14: Pension and Other Postretirement Employee Benefits and ~~see~~ Note ~~10:~~9: Derivative Instruments for additional ~~information regarding amounts arising for cash flow hedges during the period.~~information.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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, expected impacts of COVID-19 on our business and our ability to continue operations during the pandemic, fair value of hedging instruments and swaps, expected return on pension assets, recognition of compensation costs relating to our performance share awards and RSUs, required contributions to pension plans, expected amortization of unrecognized compensation cost of performance share awards and RSUs, amount of net losses on cash flow hedges expected to be reclassified into earnings in the next 12 months, expected tax payments and deferrals, anticipated share repurchases and dividend payments, expected liquidity, potential uses of our credit facility, the U.S. housing market, home repair and remodeling activity, the lumber and log markets, expected harvest volumes, expected lumber shipments, expected rural real estate and residential real estate development sales, including the closing of the sale of approximately 72,000 rural acres in the fourth quarter of 2020, the average price per acre and developed lot, sufficiency of cash to meet operating requirements, ~~2019~~2020 capital expenditures 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. Important factors that could cause or contribute to such differences include, but are not limited to, the following:

For a discussion of some of the factors that may affect our business, results and prospects and a nonexclusive listing of forward-looking statements, 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, ~~2018.~~2019 and Risk Factors in Part II, Item 1A in this Form 10-Q.

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.

We are a leading timberland real estate investment trust (REIT) with operations in seven states where we own approximately ~~1.9~~1.8 million acres of timberland, six sawmills, an industrial grade plywood mill and real estate development projects.

Our business is organized into three business segments: Timberlands, Wood Products and Real Estate. The Timberlands segment includes planting and harvesting trees and building and maintaining roads. The Timberlands segment also generates revenues from non-timber resources such as hunting leases, recreation permits and leases, mineral rights contracts, oil and gas royalties and carbon sequestration. The Wood Products segment manufactures and markets lumber and plywood. The Real Estate segment includes the sale of land holdings deemed non-strategic or identified as having higher and better use alternatives, master planned community development and a country club.

Our Timberlands 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~~sizeable portion of the Timberlands segment’s total revenues. Our other segments generally do not generate intersegment revenues. In the discussion of our consolidated results of operations, our revenues and expenses are reported after elimination of intersegment revenues and expenses. In the business segment discussions, each segment’s revenues and expenses, as applicable, are presented before elimination of intersegment revenues and expenses.

The operating results of our Timberlands, Wood Products and Real Estate business segments have been and will continue to be influenced by a variety of factors, including the cyclical nature of the forest products industry, tariffs, quotas and trade agreements, 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, lumber prices, weather conditions, disruptions or inefficiencies in our supply chain including the availability of transportation, 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, impact of pandemics and other factors.

To supplement our financial statements presented in accordance with generally accepted accounting principles in the United States (GAAP), we use certain non-GAAP measures on a consolidated basis, including Adjusted EBITDDA and Cash Available for Distribution (CAD), which are defined and further explained and reconciled to the nearest GAAP measure in the Liquidity and Performance Measures section below. Our definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to and not a substitute for, financial information prepared in accordance with GAAP.

Adjusted EBITDDA is a non-GAAP measure that management uses in evaluating performance, ~~allocate~~allocating resources between segments, and that investors can use to evaluate the operational performance of the assets under management. It removes the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis. This measure should not be considered in isolation from and is not intended to represent an alternative to, our results reported in accordance with GAAP. Management believes that this non-GAAP measure, when read in conjunction with our GAAP financial statements, provides useful information to investors by facilitating the comparability of our ongoing operating results over the periods presented, the ability to identify trends in our underlying business and the comparison of our operating results against analyst financial models and operating results of other public companies that supplement their GAAP results with non-GAAP financial measures.

Our definition of EBITDDA and Adjusted EBITDDA may be different from similarly titled measures reported by other companies. We define EBITDDA as net income (loss) before interest expense, income taxes, basis of real estate sold, depreciation, depletion and amortization. Adjusted EBITDDA further excludes certain specific items that are considered to hinder comparison of the performance of our businesses either year-on-year or with other businesses. See Note 6:5: Segment Information in the Notes to the Condensed Consolidated Financial Statements for information related to the use of segment Adjusted EBITDDA.

The United States Department of Homeland Security has designated the forest and wood products industry as an "essential critical infrastructure workforce," which recognizes the importance of these operations in supporting critical infrastructure and construction projects. The demand for timber is directly affected by the underlying demand for lumber and other wood-products, as well as by the demand for pulp, paper and packaging. Our Timberlands and Wood Products segments are impacted by demand for new homes in the United States and by repair and remodeling activity.

~~During~~ The COVID-19 pandemic has introduced significant economic and business uncertainty, along with volatile financial market conditions during the first half of ~~2019, U.S. single family~~2020 which is expected to continue into the future.

A housing ~~starts remained tepid~~construction slowdown in the spring due to social-distancing rules and delayed permits and inspections led to a massive destocking of lumber in the supply chain as well as significant curtailment of North American lumber manufacturing capacity. The atypical early spring pullback in lumber production coupled with strong demand led to an acute shortage that underpins a historic run in lumber prices that began in the second quarter and is continuing.

In our Wood Products segment, lumber shipments of 249 million board feet during the second quarter of 2020 were constrained by lower production hours, particularly in April when we lost a week of production at our Warren, Arkansas sawmill due to a tornado-caused power outage. For the third quarter of 2020, we plan to ship 270 to 280 million board feet of lumber and expect our average lumber price to be significantly higher in the third quarter compared to the second quarter.

The demand for our industrial grade plywood product line was adversely affected in the second quarter as these products are used in boat, recreational vehicle and furniture industries, many of which were forced to temporarily shut down. As a result, ~~of land~~we temporarily suspended operations at our St. Maries, Idaho industrial plywood facility for three weeks and ~~labor shortages and rising construction costs making it difficult~~ran at a reduced operating posture for ~~builders to construct more affordable housing units. Further, extended inclement weather across~~ the ~~country for a good portion~~balance of the ~~first half of 2019 impacted building conditions and delayed the~~second quarter after restarting production in May. Our plywood mill returned to normal ~~start of the building season. Building conditions have since improved as~~ ~~September 2019 was the second month~~operating posture in a row where seasonally adjusted annual rate of single-family starts were above 0.9 million units. Additionally, as property repair and remodel is often done soon after buying, repair and remodeling activity in 2019 has also seen modest growth.

Lumber prices are significantly below first half of 2018 levels but have seen modest increases since December 2018. Many buyers continue to maintain low inventories due to softening demand and readily available supply. However, we believe the improved seasonally adjusted annual rate of single-family housing starts in August and September 2019, combined with industry production curtailments announced in 2019 will have a positive effect on lumber pricing.July 2020.

In our Timberlands segment, the Northern region experienced an increase in sawlog volume in the first half of 2020 because of favorable harvest conditions compared to the prior year. Southern pine sawlog prices remain stable and our harvest volumes improved in the first half of 2020 as a result of favorable harvest conditions. However, our Southern region harvest volumes were adversely impacted by third-party mill curtailments due to COVID-19 during the second quarter of 2020. We do not anticipate making up the pulpwood shortfall during the remainder of 2020. We expect total harvest volumes to be between 1.5 and 1.7 million tons in the third quarter of 2020. Because we index ~~a significant portion~~approximately 70% of our Idaho sawlogs to the price of lumber under long-term supply ~~agreements.~~ ~~The Northern region experienced a decline in~~agreements, we expect Idaho sawlog ~~pricing and volume because of the lower lumber pricing and decreased demand in the first half of 2019. Since then, mills have continued~~prices to ~~work through existing higher log cost log inventory.~~

~~Southern region log supply has been affected by wet weather in the first half of 2019 restricting log supply and resulting in increased sawlog prices. The onset of drier weather~~increase significantly in the third quarter.

On June 21, 2020, we announced an agreement to sell approximately 72,000 acres of rural timberland in Minnesota to The Conservation Fund (TCF) for approximately $48.0 million in cash, subject to certain adjustments as defined in the agreement. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of ~~2019 resulted in an increase in sawlog supply in~~2020.For the ~~Southern market~~year, we expect to ~~take advantage~~sell 93,000 to 97,000 acres of attractive prices. This has resulted in Southern region mill log inventories shifting to higher levels. Consequently, we scaled back on planned harvest levels in the third quarter of 2019. We expect our harvest volumes to return to normal, higher levels in 2020.

~~Our Real Estate segment benefited from two large~~ rural land, ~~sales in~~including the ~~second quarter of 2019 and increased sales in Chenal Valley during the first three quarters of 2019 compared to the same period in 2018.~~72,000-acre Minnesota transaction. Residential and commercial sales in Chenal Valley mainly follow the national housing market trends but do experience microeconomic factors for the area including economic growth and the availability of builders, contractors and workforce to support development efforts.We expect the economic impacts from COVID-19 to negatively affect our Chenal Valley real estate development sales. We anticipate selling approximately 20 residential lots in the third quarter of 2020.

Finally, we anticipate our current cash balances, cash flows from operations and our available sources of liquidity will be more than adequate to meet our cash requirements. At June 30, 2020 we had approximately $81.0 million in cash and cash equivalents and availability of $379.0 million on our revolving line of credit. Additionally, expected net proceeds from the Minnesota timberlands transaction discussed above will further enhance our liquidity position and flexibility. As the impact of COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. See Liquidity and Capital Resources section below for further discussion of our liquidity.

The following table sets forth changes in our Condensed Consolidated Statements of ~~Income~~Operations. Our Business Segment Results provide a more detailed discussion of our segments:

	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended June 30,									Six Months Ended June 30,
(in thousands)	2019			2018			Change			2019			2018			Change			2020			2019			Change			2020			2019			Change
Revenues	$	226,302		$	289,199		$	(62,897	)	$	623,599		$	757,329		$	(133,730	)	$	181,555		$	215,581		$	(34,026	)	$	390,435		$	397,297		$	(6,862	)
Costs and expenses:
Cost of goods sold		182,634			195,584			(12,950	)		512,522			515,645			(3,123	)		149,836			175,673			(25,837	)		321,882			329,888			(8,006	)
Selling, general and administrative expenses		12,472			14,901			(2,429	)		43,994			45,449			(1,455	)		16,811			14,952			1,859			31,018			31,522			(504	)
Gain on sale of facility		—			—			—			(9,176	)		—			(9,176	)		—			—			—			—			(9,176	)		9,176
Deltic merger-related costs		—			972			(972	)		—			21,245			(21,245	)
		195,106			211,457			(16,351	)		547,340			582,339			(34,999	)		166,647			190,625			(23,978	)		352,900			352,234			666
Operating income		31,196			77,742			(46,546	)		76,259			174,990			(98,731	)		14,908			24,956			(10,048	)		37,535			45,063			(7,528	)
Interest expense, net		(8,475	)		(10,109	)		1,634			(21,821	)		(25,125	)		3,304			(8,339	)		(7,882	)		(457	)		(12,037	)		(13,346	)		1,309
Loss on extinguishment of debt		—			—			—			(5,512	)		—			(5,512	)		—			—			—			—			(5,512	)		5,512
Pension settlement charge																				—			—			—			(42,988	)		—			(42,988	)
Non-operating pension and other postretirement benefit costs		(935	)		(1,942	)		1,007			(2,804	)		(5,707	)		2,903			(3,478	)		(889	)		(2,589	)		(7,113	)		(1,869	)		(5,244	)
Income before income taxes		21,786			65,691			(43,905	)		46,122			144,158			(98,036	)
Income tax expense		(1,221	)		(5,355	)		4,134			(1,860	)		(23,077	)		21,217
Net income	$	20,565		$	60,336		$	(39,771	)	$	44,262		$	121,081		$	(76,819	)
Income (loss) before income taxes																				3,091			16,185			(13,094	)		(24,603	)		24,336			(48,939	)
Income taxes																				(453	)		952			(1,405	)		10,409			(639	)		11,048
Net income (loss)																			$	2,638		$	17,137		$	(14,499	)	$	(14,194	)	$	23,697		$	(37,891	)
Total Adjusted EBITDDA¹	$	55,012		$	101,810		$	(46,798	)	$	132,344		$	260,750		$	(128,406	)	$	35,373		$	49,080		$	(13,707	)	$	82,944		$	77,332		$	5,612

~~Third~~Second Quarter ~~2019~~2020 Compared with ~~Third~~Second Quarter ~~2018~~2019

Revenues were ~~$226.3~~$181.6 million, a decrease of ~~$62.9~~$34.0 million compared with the same period in 2018. Revenues decreased as a result of lower lumber prices and lower sawlog prices in the Northern region indexed to lumber prices. In addition, the third quarter of 2018 included the operations of the Deltic MDF facility which was sold in the firstsecond quarter of 2019. ~~These decreases~~Declines in lumber and plywood shipments, rural acres sold, and development real estate lot sales were partially offset by ~~increased~~increases in lumber ~~shipments, higher~~prices, Northern sawlog prices and Southern harvest ~~volumes and increased rural and development real estate sales.~~volumes.

Cost of goods sold decreased ~~$13.0~~$25.8 million compared with the ~~same period in 2018,~~second quarter of 2019 due primarily ~~due~~ to lower lumber shipments and the ~~inclusion in 2018 of costs related to the Deltic MDF~~temporary curtailment and reduced operating posture at our plywood facility. ~~The decrease was partially offset by increased harvest activities and increased lumber shipments.~~

Selling, general and administrative expenses ~~for~~increased $1.9 million compared with the ~~third~~second quarter of 2019 ~~were $12.5~~primarily as a result of mark-to-market adjustments for deferred equity compensation plans and higher estimated performance-based variable compensation.

Non-operating pension and other postretirement benefit costs increased $2.6 million ~~compared with $14.9 million during the same period in 2018. The decrease~~ compared to the ~~third~~second quarter of ~~2018~~2019. This increase was ~~primarily due to lower estimated performance-based variable compensation, reductions in workers compensation provisions~~because prior service credits of $1.9 million per quarter were fully amortized at the end of 2019. Non-operating pension and ~~lower consultant and professional service fees.~~

Merger-related costs for the third quarter 2018 were $1.0 million. This included $0.9 million in merger costs for various professional fees including legal fees, accounting and appraisal fees. Restructuringother postretirement benefit costs were ~~$0.1 million, consisting primarily of termination benefits~~also impacted by a decrease in the discount rate used to determine the benefit obligations and ~~costs associated with systems integration.~~

~~Net interest expense was $8.5 million, compared with $10.1 million for the same period~~a decrease in 2018. The decline in interest expense resulted primarily from the refinancing $150.0 million of 7.5% Senior Notes with a new long-term loan and the entry into an interest rate swap to fix the rate at 4.56% in January 2019. See ~~Note 9: Debtin theNotes to Condensed Consolidated Financial Statementsfor a more detailed discussion of our borrowings.~~expected return on plan assets.

Income taxes for the second quarter of 2020 was a $0.5 million income tax expense compared with $1.0 million income tax benefit for the ~~third~~second quarter ~~2019 was $1.2 million compared with $5.4 million for the prior year period.~~of 2019. Income taxes are primarily due to income or loss from our taxable REIT subsidiaries (TRS). For the three months ended ~~September~~June 30, ~~2019,~~2020, the TRS’s pre-tax income ~~before income tax~~ was ~~$4.7~~$1.5 million. For the same period in ~~2018,~~2019, the TRS’s ~~income~~loss before income tax was ~~$41.5~~$6.5 million.

~~Also, during the third quarter of 2018, we recorded a tax benefit of $5.3 million primarily related to deducting contributions to our qualified pension plans at the higher 2017 income tax rate.~~

Total Adjusted EBITDDA for the ~~third~~second quarter of ~~2019 was $55.0~~2020 decreased $13.7 million compared to ~~$101.8 million in~~ the ~~third~~second quarter of ~~2018.~~2019. The decrease in Total Adjusted EBITDDA was driven primarily by decreased lumber pricing and lower realizations on Idaho sawlogs indexed to lumber pricing. These decreases were partially offset by lower estimated performance-based variable compensation, lower consultant and professional services fees, increased harvest volumes, increased lumber shipments and increased residential and commercialoperating results in our Real Estate segment as 2019 included a large sale in Arkansas with no similar sales ~~at Chenal Valley in~~during the ~~third~~second quarter of ~~2019 compared to the third quarter of 2018.~~2020. Refer to the Business ~~Segments~~Segment Results below for further discussions on activities for each of our segments.

~~See~~ ~~Liquidity and Performance Measuresfor a reconciliation of Total Adjusted EBITDDA to net income, the closest comparable GAAP measure, for each of the periods presented.~~

Revenues were ~~$623.6~~$390.4 million, a decrease of ~~$133.7~~$6.9 million compared with the ~~same period~~first half of 2019. Revenues in 2018. Revenues decreased as a result of lower lumber prices and lower sawlog prices indexed to lumber prices in the Northern region. Revenues also declined as full sawmills in the Northern region and inclement weather in the Southern region during the first half of 2019 ~~led~~included revenues related to ~~harvest activities shifting~~our Deltic Medium Density Fiberboard (MDF) facility that we sold in the first quarter of 2019 and a 1,787-acre rural real estate sale for $11,000 per acre with no similar transactions in the first half of 2020. In addition, we shipped less plywood in 2020 due to ~~later in 2019. Also, operations in 2019 only included 1.5 months of operations at the Deltic MDF facility compared to 7.5 months in 2018.~~a temporary curtailment and reduced operating posture. These ~~declines in revenue~~decreases were ~~partly~~mostly offset by ~~higher revenue from~~ increased lumber prices, lumber shipments, sawlog ~~and pulpwood~~ prices in the ~~Southern region, increased lumber shipments, two large rural land sales~~Northern Region and ~~increased sales in Chenal Valley during the first three quarters of 2019 compared to the same period in 2018.~~harvest volumes.

Cost of goods sold decreased ~~$3.1~~$8.0 million compared with the same period in ~~2018. This decrease was~~2019 primarily due to ~~lower logging~~the temporary curtailment and ~~hauling costs, lower log costs in~~reduced operating posture at our plywood facility during the ~~Northern region due~~second quarter of 2020 and because 2019 included approximately 1.5 months of activity related to ~~indexed log pricing declines and of operations at~~ the Deltic MDF ~~facility for 1.5 months in 2019 compared to 7.5 months in 2018.~~Facility. These decreases were ~~partially~~partly offset by ~~higher lumber shipments primarily as a result of a full nine months of the acquired Deltic sawmill operations~~increased harvest activities and increased ~~log costs in the Southern region.~~

Selling, general and administrative expenses for the first nine months of 2019 were $44.0 million compared with $45.4 million during the same period in 2018. The decrease was primarily due to lower estimated performance-based variable compensation and lower consultant and professional service fees.

Merger-related costs for the nine months ended September 30, 2018 were $21.2 million. This included $11.5 million in merger costs for investment banking fees, legal fees, accounting and appraisal fees and other costs related to filing the joint proxy/prospectus for the merger. Also included were restructuring costs of $9.7 million, consisting primarily of termination benefits, which included accelerated share-based payment costs for qualifying terminations.lumber shipments.

~~On December 20, 2018,~~In February 2019 we ~~entered into an Asset Purchase and Sale Agreement with~~closed on the sale of our Deltic MDF facility to Roseburg Forest Products Co. ~~to sell the Deltic MDF facility~~ for $92.0 ~~million. The transaction closed on February 12, 2019~~million, before certain working capital adjustments, resulting in a $9.2 million pre-tax gain on sale. ~~See~~ ~~Note 4: Sale of Deltic MDF Facility~~ ~~in theNotes to Condensed Consolidated Financial Statements~~.

Net interest expense ~~was $21.8~~decreased $1.3 million ~~for the nine months ended September 30, 2019~~ compared with ~~$25.1 million for~~ the ~~same period in 2018. The decline in interest expense was~~first half of 2019 primarily due to ~~increased patronage dividends from our lenders and reduced interest costs from~~ the refinancing of ~~our~~ $150.0 million of 7.5% Senior Notes ~~in January 2019 described above. These decreases were partly offset by a full nine months~~(Senior Notes) during the first quarter of ~~interest expense in 2019 associated with $230.0 million of long-term debt assumed or refinanced in connection with the Deltic merger in 2018.~~2019.

As part of the $150.0 million Senior Notes redemption ~~in January~~during the first quarter of 2019 we incurred a redemption premium of $4.9 million and wrote off certain unamortized debt costs. ~~See~~ ~~Note 9: Debt~~

In February 2020 we purchased a group annuity contract from an insurance company to transfer $101.1 million of our outstanding pension benefit obligation related to our qualified pension plans. This transaction was funded with plan assets. In connection with this transaction, we recorded a non-cash pretax settlement charge of $43.0 million.

Non-operating pension and other postretirement benefit costs increased $5.2 million compared to the first half of 2019. This increase was because prior service credits of $1.9 million per quarter were fully amortized at the end of 2019. Non-operating pension and other postretirement benefit costs were also impacted by a decrease in the~~Notes~~ discount rate used to ~~Condensed Consolidated Financial Statements~~.determine the benefit obligations and a decrease in expected return on plan assets.

Income taxes for the first half of 2020 was a $10.4 million income tax benefit compared with a $0.6 million income tax expense for the first ~~nine months~~half of ~~2019 was $1.9 million compared with $23.1 million for the prior year period.~~2019. Income taxes are primarily due to income or loss from our taxable REIT subsidiaries (TRS). For the ~~nine~~six months ended ~~September~~June 30, 2020, the TRS’s loss before income tax was $41.3 million, which included a $43.0 million pension settlement charge. For the same period in 2019, the TRS’s income before income tax was ~~$5.3~~$0.7 million which ~~includes~~included the gain on sale of the Deltic MDF facility. ~~For the same period last year, the TRS’s income before income tax was $110.6 million.~~ ~~Also, during the third quarter of 2018, we recorded a tax benefit of $5.3 million primarily related to deducting contributions to our qualified pension plans at the higher 2017 income tax rate.~~

Total Adjusted EBITDDA for the first ~~nine months~~half of ~~2019 was $132.3~~2020 increased $5.6 million compared to ~~$260.8 million for~~ the ~~same period in 2018.~~first half of 2019. The ~~decrease~~increase in Total Adjusted EBITDDA was driven primarily by ~~decreased lumber pricing year over year, lower realizations on Idaho sawlogs indexed to lumber pricing~~increased operating results in our Timberlands and ~~decreased harvest volumes year on year. These decreases were~~Wood Products business segments partially offset by ~~increased lumber shipments, increased sawlog prices~~a decrease in ~~the Southern region, two large~~ rural ~~land sales~~real estate acres and development lots sold in ~~Arkansas and increased residential and commercial sales at Chenal Valley.~~our Real Estate segment. Refer to the Business ~~Segments~~Segment Results below for further discussions on activities for each of our segments.

~~See~~ ~~Liquidity and Performance Measuresfor a reconciliation of Total Adjusted EBITDDA to net income, the closest comparable GAAP measure, for each of the periods presented.~~

	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended June 30,							Six Months Ended June 30,
(in thousands)	2019		2018		Change			2019		2018		Change			2020		2019		Change			2020		2019		Change
Revenues¹	$	98,809	$	111,421	$	(12,612	)	$	233,848	$	280,438	$	(46,590	)	$	67,345	$	66,881	$	464		$	149,770	$	135,039	$	14,731
Costs and expenses:
Logging and hauling		45,099		42,077		3,022			108,551		111,282		(2,731	)		31,655		30,536		1,119			70,259		63,452		6,807
Other		9,063		8,497		566			24,257		23,222		1,035			8,277		8,530		(253	)		15,568		15,194		374
Selling, general and administrative expenses		1,651		2,167		(516	)		5,063		5,866		(803	)		1,754		1,684		70			3,302		3,412		(110	)
Timberlands Adjusted EBITDDA²	$	42,996	$	58,680	$	(15,684	)	$	95,977	$	140,068	$	(44,091	)	$	25,659	$	26,131	$	(472	)	$	60,641	$	52,981	$	7,660

	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended June 30,							Six Months Ended June 30,
Harvest Volumes (in tons)	2019		2018		Change			2019		2018		Change			2020		2019		Change			2020		2019		Change
Northern region
Sawlog		529,030		500,138		28,892			1,227,451		1,326,556		(99,105	)		302,917		324,556		(21,639	)		736,787		698,421		38,366
Pulpwood		39,371		37,953		1,418			118,534		114,770		3,764			31,463		30,520		943			69,264		79,163		(9,899	)
Stumpage		602		3,210		(2,608	)		7,978		13,268		(5,290	)		—		—		—			23,178		7,376		15,802
Total		569,003		541,301		27,702			1,353,963		1,454,594		(100,631	)		334,380		355,076		(20,696	)		829,229		784,960		44,269

Southern region
Sawlog		496,388		469,336		27,052			1,358,140		1,399,216		(41,076	)		490,754		448,918		41,836			1,039,221		861,752		177,469
Pulpwood		475,313		446,914		28,399			1,190,486		1,185,018		5,468			372,234		341,909		30,325			739,333		715,173		24,160
Stumpage		58,659		61,690		(3,031	)		123,815		187,010		(63,195	)		100,231		22,807		77,424			190,468		65,156		125,312
Total		1,030,360		977,940		52,420			2,672,441		2,771,244		(98,803	)		963,219		813,634		149,585			1,969,022		1,642,081		326,941

Total harvest volume		1,599,363		1,519,241		80,122			4,026,404		4,225,838		(199,434	)		1,297,599		1,168,710		128,889			2,798,251		2,427,041		371,210

Sales Price/Unit ($ per ton)
Northern region¹
Sales Price/Unit ($ per ton)¹
Northern region
Sawlog	$	100	$	139	$	(39	)	$	95	$	127	$	(32	)	$	101	$	94	$	7		$	98	$	90	$	8
Pulpwood	$	38	$	42	$	(4	)	$	40	$	41	$	(1	)	$	39	$	38	$	1		$	39	$	41	$	(2	)
Stumpage	$	5	$	12	$	(7	)	$	14	$	13	$	1		$	—	$	—	$	—		$	14	$	14	$	—

Southern region¹
Southern region
Sawlog	$	48	$	47	$	1		$	47	$	44	$	3		$	43	$	47	$	(4	)	$	43	$	46	$	(3	)
Pulpwood	$	33	$	31	$	2		$	33	$	31	$	2		$	29	$	33	$	(4	)	$	30	$	32	$	(2	)
Stumpage	$	13	$	11	$	2		$	10	$	11	$	(1	)	$	8	$	6	$	2		$	9	$	7	$	2
													-

The following table summarizes Timberlands Adjusted EBITDDA variances for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared with the three and ~~nine~~six months ended ~~September~~June 30, ~~2018:~~2019:

(in thousands)	Three Months Ended			Nine Months Ended			Three Months Ended			Six Months Ended
Timberlands Adjusted EBITDDA September 30, 2018	$	58,680		$	140,068
Timberlands Adjusted EBITDDA June 30, 2019							$	26,131		$	52,981
Sales price and mix		(17,580	)		(39,766	)		(2,561	)		828
Harvest volume		2,694			(5,631	)		1,947			7,584
Other revenue		(231	)		2,071			(284	)		92
Logging and hauling costs per unit		(501	)		(518	)		244			(580	)
Forest management		(658	)		(899	)		282			(273	)
Administrative, indirect and overhead costs		592			652			(100	)		9
Timberlands Adjusted EBITDDA September 30, 2019	$	42,996		$	95,977
Timberlands Adjusted EBITDDA June 30, 2020							$	25,659		$	60,641

~~Third~~Second Quarter 2020 Compared with Second Quarter 2019 ~~Compared with Third Quarter 2018~~

Timberlands Adjusted EBITDDA for the ~~third~~second quarter of ~~2019 was $43.0 million, a decrease of $15.7~~2020 decreased $0.5 million compared with the same period in ~~2018. The change~~2019, primarily as a result of the following:

Timberlands Adjusted EBITDDA ~~was~~for the first half of 2020 increased $7.7 million compared with the same period in 2019, primarily ~~the~~as a result of the following:

Timberlands Adjusted EBITDDA for the first nine months of 2019 was $96.0 million, a decrease of $44.1 million compared with the same period in 2018. The change in Timberlands Adjusted EBITDDA was primarily the result of the following:

	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended June 30,									Six Months Ended June 30,
(in thousands)	2019			2018			Change			2019			2018			Change			2020			2019			Change			2020			2019			Change
Revenues	$	143,643		$	199,025		$	(55,382	)	$	413,979		$	532,425		$	(118,446	)	$	126,216		$	138,030		$	(11,814	)	$	271,216		$	270,336		$	880
Costs and expenses¹
Fiber costs		67,579			74,233			(6,654	)		205,594			208,197			(2,603	)		58,950			68,988			(10,038	)		123,962			138,015			(14,053	)
Freight, logging and hauling		19,769			25,664			(5,895	)		53,722			61,282			(7,560	)		13,522			17,729			(4,207	)		30,924			33,953			(3,029	)
Manufacturing costs		45,224			50,902			(5,678	)		137,745			137,970			(225	)		41,951			45,080			(3,129	)		86,955			92,521			(5,566	)
Finished goods inventory change		3,426			(368	)		3,794			(453	)		(8,318	)		7,865			(1,898	)		6,213			(8,111	)		(7	)		(3,879	)		3,872
Selling, general and administrative expenses		2,082			2,160			(78	)		6,625			6,340			285			2,779			2,093			686			5,050			4,543			507
Other		(340	)		(12	)		(328	)		(312	)		(8	)		(304	)		5			(2	)		7			196			28			168
Wood Products Adjusted EBITDDA²	$	5,903		$	46,446		$	(40,543	)	$	11,058		$	126,962		$	(115,904	)	$	10,907		$	(2,071	)	$	12,978		$	24,136		$	5,155		$	18,981

	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended June 30,							Six Months Ended June 30,
	2019		2018		Change			2019		2018		Change			2020		2019		Change			2020		2019		Change
Lumber shipments (MBF)¹		298,807		284,566		14,241			809,733		747,960		61,773			249,239		272,523		(23,284	)		532,206		510,926		21,280
Lumber sales prices ($ per MBF)	$	363	$	486	$	(123	)	$	373	$	491	$	(118	)	$	412	$	378	$	34		$	404	$	379	$	25

The following table summarizes Wood Products Adjusted EBITDDA variances for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared with the three and ~~nine~~six months ended ~~September~~June 30, ~~2018:~~2019:


(in thousands)	Three Months Ended			Nine Months Ended			Three Months Ended			Six Months Ended
Wood Products Adjusted EBITDDA September 30, 2018	$	46,446		$	126,962
Wood Products Adjusted EBITDDA June 30, 2019							$	(2,071	)	$	5,155
Lumber:
Price		(34,185	)		(85,459	)		9,556			13,476
Manufacturing costs per unit		203			(7,182	)		(952	)		(2,900	)
Log costs per unit		1,242			(3,542	)		1,244			3,150
Inventory charge		(2,650	)		(2,650	)		7,396			7,396
Residuals, panels and other		(5,373	)		(17,282	)		(4,266	)		(2,141	)
Administrative, indirect and overhead costs		220			211
Wood Products Adjusted EBITDDA September 30, 2019	$	5,903		$	11,058
Wood Products Adjusted EBITDDA June 30, 2020							$	10,907		$	24,136

~~Third~~Second Quarter ~~2019~~2020 Compared with ~~Third~~Second Quarter ~~2018~~2019

Lumber shipments were 298.8 million board feet in the third quarter of 2019, an increase of 14.2 million board feet compared to the third quarter of 2018. This increase was primarily a result of increased production and timing of customer shipments.

Wood Products Adjusted EBITDDA for ~~third~~the second quarter ~~2019 was $5.9 million, a decrease~~ of ~~$40.5~~2020 increased $13.0 million compared with the ~~third quarter~~same period in 2019 primarily as a result of ~~2018 primarily due to~~ the following:

~~Lumber shipments increased 61.8 million board feet to 809.7 million board feet during the first nine months of~~ 2019 ~~compared to 748.0 million board feet during the first nine months of 2018. This increase was primarily due to a full nine months of operations at the Deltic mills in 2019.~~

Wood Products Adjusted EBITDDA for the first ~~nine months~~half of ~~2019 was $11.1 million, a decrease of $115.9~~2020 increased $19.0 million compared with the same period in ~~2018~~2019 primarily ~~due to~~as a result of the following:

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,							Six Months Ended June 30,
(in thousands)	2019		2018		Change		2019		2018		Change		2020		2019		Change			2020		2019		Change
Revenues	$	18,863	$	11,233	$	7,630	$	61,459	$	38,219	$	23,240	$	13,105	$	36,432	$	(23,327	)	$	24,074	$	42,596	$	(18,522	)
Costs and expenses
Costs of goods sold		2,902		2,578		324		8,943		7,189		1,754		2,610		3,787		(1,177	)		5,041		6,041		(1,000	)
Selling, general and administrative expenses		1,283		1,188		95		3,819		3,261		558		1,239		1,329		(90	)		2,437		2,536		(99	)
Real Estate Adjusted EBITDDA¹	$	14,678	$	7,467	$	7,211	$	48,697	$	27,769	$	20,928	$	9,256	$	31,316	$	(22,060	)	$	16,596	$	34,019	$	(17,423	)

Rural Real Estate	Three Months Ended September 30,								Three Months Ended June 30,
	2019				2018				2020				2019
	Acres Sold		Average Price/Acre		Acres Sold		Average Price/Acre		Acres Sold		Average Price/Acre		Acres Sold		Average Price/Acre
Higher and better use (HBU)		975	$	3,225		1,136	$	4,615		2,257	$	2,545		2,497	$	8,551
Recreation real estate		5,037	$	1,261		2,024	$	1,480		2,216	$	1,364		1,637	$	1,382
Non-strategic timberland		213	$	906		—	$	—		1,064	$	1,045		8,241	$	813
Total		6,225	$	1,557		3,160	$	2,608		5,537	$	1,784		12,375	$	2,450

	Nine Months Ended September 30,								Six Months Ended June 30,
	2019				2018				2020				2019
	Acres Sold		Average Price/Acre		Acres Sold		Average Price/Acre		Acres Sold		Average Price/Acre		Acres Sold		Average Price/Acre
Higher and better use (HBU)		4,231	$	6,363		4,065	$	2,937		2,887	$	2,676		3,257	$	7,302
Recreation real estate		7,817	$	1,281		7,765	$	1,244		3,096	$	1,404		2,779	$	1,315
Non-strategic timberland		8,894	$	820		9,045	$	900		3,993	$	1,277		8,681	$	818
Total		20,942	$	2,112		20,875	$	1,425		9,976	$	1,721		14,717	$	2,347


Development Real Estate	Three Months Ended September 30,								Three Months Ended June 30,
	2019				2018				2020				2019
	Lots or Acres Sold		Average $/ Lot or Acres		Lots or Acres Sold		Average $/ Lot or Acres		Lots Sold		Average Price/ Lot		Lots Sold		Average Price/ Lot
Residential lots	42		$	110,504	9		$	143,000		17	$	97,059		44	$	85,345
Commercial acres	6		$	512,506		—	$	—

	For the Nine Months Ended September 30,								Six Months Ended June 30,
	2019				2018				2020				2019
	Lots or Acres Sold		Average $/ Lot or Acres		Lots or Acres Sold		Average $/ Lot or Acres		Lots Sold		Average Price/ Lot		Lots Sold		Average Price/ Lot
Residential lots		93	$	97,519		34	$	101,100		40		98,550		51	$	86,825
Commercial acres		6	$	512,506		—	$	—

The following table summarizes Real Estate Adjusted EBITDDA variances for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared with the three and ~~nine~~six months ended ~~September~~June 30, ~~2018:~~2019:


(in thousands)	Three Months Ended			Nine Months Ended			Three Months Ended			Six Months Ended
Real Estate Adjusted EBITDDA September 30, 2018	$	7,467		$	27,769
Real Estate Adjusted EBITDDA June 30, 2019							$	31,316		$	34,019
Rural real estate sales		5,788			18,821			(20,435	)		(17,363	)
Development real estate sales		1,773			4,351			(2,892	)		(1,160	)
Selling, general and administrative expenses		(95	)		(556	)		90			100
Other costs, net		(255	)		(1,688	)		1,177			1,000
Real Estate Adjusted EBITDDA September 30, 2019	$	14,678		$	48,697
Real Estate Adjusted EBITDDA June 30, 2020							$	9,256		$	16,596

Second Quarter 2020 Compared with Second Quarter 2019 ~~Compared with Third Quarter 2018~~

Real Estate Adjusted EBITDDA for the ~~third~~second quarter of ~~2019 was $14.7 million, an increase of $7.2~~2020 decreased $22.1 million compared with the same period in ~~2018. The increase in Real Estate Adjusted EBITDDA was~~2019 primarily ~~the~~as a result of the following:

Real Estate Adjusted EBITDDA for the first ~~nine months~~half of ~~2019 was $48.7 million, an increase of $20.9~~2020 decreased $17.4 million compared with the same period in ~~2018. The increase in Real Estate Adjusted EBITDDA was~~2019 primarily ~~the~~as a result of the following:

~~As of September 30, 2019, our cash and cash equivalents were $94.7 million, an increase of $18.1 million from December 31, 2018.~~ Changes in significant sources of cash for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are presented by categories as follows:

	Nine Months Ended September 30,						Six Months Ended June 30,
(in thousands)	2019			2018			2020			2019
Net cash provided by operating activities	$	105,427		$	148,368		$	87,943		$	67,521
Net cash provided by (used in) investing activities	$	22,187		$	(27,052	)
Net cash (used in) provided by investing activities							$	(19,688	)	$	35,256
Net cash used in financing activities	$	(111,265	)	$	(100,530	)	$	(69,575	)	$	(84,248	)

Net cash provided by operating activities ~~was $105.4~~increased $20.4 million ~~for the first nine months of 2019, a $43.0 million decrease~~ compared to the first ~~nine months~~half of ~~2018.~~

2019. Changes in cash provided by operating activities was ~~negatively~~ impacted ~~by:~~by the following:

~~Changes in cash provided by operating activities was positively impacted by:~~

Changes in cash flows from investing activities were primarily a result of the following:

~~Net cash provided by investing activities was $22.2 million for the nine months ended September 30, 2019, compared with $27.1 million used in 2018.~~

~~Net~~Changes in cash ~~used in~~flows from financing activities ~~was $111.3 million and $100.5 million for~~were primarily a result of the ~~nine months ended September 30, 2019 and 2018, respectively.~~following:

We invest cash in maintenance and discretionary capital expenditures ~~for our facilities in~~at our Wood ~~Product operations. We evaluate discretionary capital improvements based on an expected level of return on investment.~~Products facilities. We also invest cash in the reforestation of timberlands and construction of roads in our Timberlands operations and to develop land in our Real Estate development operations. InWe evaluate discretionary capital improvements based on an expected level of

return on investment. While we currently expect to spend a total of approximately $40 to $44 million for capital expenditures during 2020, we ~~expect we~~are reviewing options to pull some 2021 high return mill projects forward to this year.

We are deferring payments of approximately $8.4 million for our 2020 employer portion of social security payroll tax and contributions to qualified pension plans as allowed under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). These payments will ~~spend approximately $65 to $70 million~~be funded in ~~Woods Products, Timberlands~~2021 and ~~Real Estate segments in 2019.~~2022 as required under the CARES Act.

On August 30, 2018, the board of directors authorized the repurchase of up to $100.0 million of common stock with no time limit set for the repurchase. At ~~September~~June 30, ~~2019,~~2020, we had remaining authorization of ~~$74.8~~$59.5 million for future stock repurchase under the 2018 ~~repurchase program.~~Repurchase Program. Stock repurchases in the future will depend on a variety of factors including our cash position, alternative investment opportunities, our desired level of liquidity, debt covenant restrictions and our stock price.

	September 30,			December 31,
(in thousands)	2019			2018			June 30, 2020			December 31, 2019
Long-term debt	$	756,345		$	755,364		$	756,989		$	756,469
Cash and cash equivalents		(94,747	)		(76,639	)		(80,987	)		(83,310	)
Net debt		661,598			678,725			676,002			673,159
Market capitalization¹		2,762,111			2,137,915			2,543,104			2,908,653
Enterprise value	$	3,423,709		$	2,816,640		$	3,219,106		$	3,581,812

Net debt to enterprise value		19.3	%		24.1	%		21.0	%		18.8	%
Dividend yield²		3.9	%		5.1	%		4.2	%		3.7	%
Weighted-average cost of debt, after tax³		3.3	%		3.5	%		3.3	%		3.3	%

The discussion below is presented to enhance the reader’s understanding of our operating performance, ability to generate cash and satisfy rating agency and creditor requirements. This information includes two measures: Adjusted EBITDDA and Cash Available for Distribution (CAD). These measures are not defined by GAAP and the discussion of Adjusted EBITDDA and CAD is not intended to conflict with or change any of the GAAP disclosures described herein.

Adjusted EBITDDA is a non-GAAP measure that management uses in evaluating performance, to allocate resources between segments, and that investors can use to evaluate the operational performance of the assets under management. It removes the impact of specific items that management believes do not directly reflect the core business operations on an ongoing basis. This measure should not be considered in isolation from and is not intended to represent an alternative to our results reported in accordance with GAAP. Management believes that this non-GAAP measure, when read in conjunction with our GAAP financial statements, provides useful information to investors by facilitating the comparability of our ongoing operating results over the periods presented, the ability to identify trends in our underlying business and the comparison of our operating results against analyst financial models and operating results of other public companies that supplement their GAAP results with non-GAAP financial measures.

Our definition of EBITDDA may be different from similarly titled measures reported by other companies. We define EBITDDA as net income (loss) before interest expense, income taxes, basis of real estate sold, depreciation, depletion and amortization. Adjusted EBITDDA further excludes certain specific items that are considered to hinder comparison of the performance of our businesses either year-on-year or with other businesses.

We reconcile Total Adjusted EBITDDA to net income (loss) for the consolidated company as it is the most comparable GAAP measure.

The following table provides a reconciliation of net income (loss) to Total Adjusted EBITDDA for the respective periods:

	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended June 30,					Six Months Ended June 30,
(in thousands)	2019			2018		2019			2018		2020		2019			2020			2019
Net income	$	20,565		$	60,336	$	44,262		$	121,081
Net income (loss)											$	2,638	$	17,137		$	(14,194	)	$	23,697
Interest expense, net		8,475			10,109		21,821			25,125		8,339		7,882			12,037			13,346
Income tax		1,221			5,355		1,860			23,077
Income taxes												453		(952	)		(10,409	)		639
Depreciation, depletion and amortization		18,786			18,836		51,310			51,982		17,765		16,727			36,403			32,524
Basis of real estate sold		5,228			4,248		14,211			10,673		2,693		7,427			9,191			8,983
Loss on extinguishment of debt		—			—		5,512			—		—		—			—			5,512
Pension settlement charge												—		—			42,988			—
Non-operating pension and other postretirement benefit costs		935			1,942		2,804			5,707		3,478		889			7,113			1,869
Deltic merger related costs		—			972		—			21,245
Gain on sale of facility		—			—		(9,176	)		—		—		—			—			(9,176	)
Inventory purchase price adjustment in cost of goods sold		—			—		—			1,849
(Gain) loss on fixed assets		(198	)		12		(260	)		11
Loss (gain) on disposal of fixed assets												7		(30	)		(185	)		(62	)
Total Adjusted EBITDDA	$	55,012		$	101,810	$	132,344		$	260,750	$	35,373	$	49,080		$	82,944		$	77,332

We define CAD as cash provided by operating activities adjusted for capital spending for purchases of property, plant and equipment, timberlands reforestation and roads and ~~acquisition of timber and timberlands.~~timberland acquisitions not classified as strategic. Management believes CAD is a useful indicator of the company’s overall liquidity, as it provides a measure of cash generated that is available for dividends to common stockholders (an important factor in maintaining our REIT status), repurchase of the company’s common shares, debt repayment, acquisitions and other discretionary and nondiscretionary activities. Our definition of CAD is limited in that it does not solely represent residual cash flows available for discretionary expenditures since the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view CAD as a measure that provides supplemental information to our Condensed Consolidated Statements of Cash Flows. Our definition of CAD may be different from similarly titled measures reported by other companies, including those in our industry. CAD is not necessarily indicative of the CAD that may be generated in future periods.

The following table provides a reconciliation of cash provided by operating activities to CAD:

	Nine Months Ended September 30,						Six Months Ended June 30,
(in thousands)	2019			2018			2020			2019
Cash provided by operating activities¹	$	105,427		$	148,368		$	87,943		$	67,521
Capital expenditures		(39,143	)		(31,126	)		(22,801	)		(23,970	)
CAD	$	66,284		$	117,242		$	65,142		$	43,551
Net cash provided by (used in) investing activites²	$	22,187		$	(27,052	)
Net cash (used in) provided by investing activities²							$	(19,688	)	$	35,256
Net cash used in financing activities	$	(111,265	)	$	(100,530	)	$	(69,575	)	$	(84,248	)

~~In January 2019, we refinanced $150.0~~At June 30, 2020, our total outstanding net long-term debt was $757.0 million, of ~~7.50% Senior Notes due~~which $46.0 million matures in ~~2019 with a $150.0~~December 2020. Included in total outstanding long-term debt was $693.5 million of term loan ~~that will mature in 2029. The new term loan carries a variable interest rate of one-month LIBOR plus 1.85%. Concurrent~~principal balances under our Second Amended and Restated Term Loan Agreement (Amended Term Loan Agreement) with the new term loan, we entered into an interest rate swap to fix the rate at 4.56%. Upon the refinancing, we redeemed and paid all outstanding Senior Notes, including a redemption premium of $4.9 million, and paid $0.5 million of lender fees on the new term loan. Subsequent to the refinancing, $693.5 million was outstandingour primary lender. Certain borrowings under the Amended Term Loan ~~Agreement.~~Agreement are at variable rates of one or three-month LIBOR plus a spread between 1.85% and 2.15%. We entered into interest rate swaps for these variable rate term loans to fix the interest rates.

At June 30, 2020 there were no borrowings under our $380.0 million revolving line of credit and approximately $1.0 million of the revolving line of credit was utilized for outstanding letters of credit. As provided in the revolving line of credit agreement, borrowings may be increased by up to an additional $420.0 million. We may utilize borrowings under the

~~We have a $40.0 million term loan that matures in December 2019. We expect~~credit facility to, among other things, refinance ~~this term loan at maturity.~~ ~~In September 2019, we entered into a $40.0 million interest rate swap, the objective of which is to lock in the index component rate on an expected new term loan in December 2019. This cash flow hedge requires settlement in December 2019.~~existing indebtedness and provide funding for working capital requirements, capital projects, acquisitions and other general corporate expenditures.

A number of our debt instruments and associated interest rate derivative agreements have an interest rate tied to LIBOR. In July 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. We are monitoring the developments with respect to the potential phasing out of LIBOR after 2021 and will work with our lenders and counter parties to identify a suitable replacement rate and amend our agreements to reflect this new reference rate accordingly. We do not believe that the discontinuation of LIBOR as a reference rate in our debt and interest rate derivative agreements will have a material adverse effect on our financial position or materially affect our interest expense.

As of ~~September~~June 30, ~~2019,~~2020, we were in compliance with all debt and credit agreement ~~covenants,~~covenants. ~~there were no borrowings under the revolving line of credit and approximately $1.0 million of the $380.0 million credit facility was utilized by outstanding letters of credit.~~

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 ~~September~~June 30, ~~2019:~~2020:

Covenant Requirement

Actual at

September 30, 2019

Covenant Requirement

Actual at

June 30, 2020

Interest coverage ratio

≥

3.00 to 1.00

5.61

≥

3.00 to 1.00

6.28

Leverage ratio

≤

40%

20%

≤

40%

21%

~~Other than~~In March 2020, we entered into $653.5 million of forward starting interest rate swaps. These forward starting interest rate swaps effectively hedge the ~~$150.0~~variability in future benchmark interest payments attributable to changes in interest rates on future debt refinancing by locking fixed interest rates on our anticipated future refinancing of $653.5 million ~~refinance~~ of term loan debt maturing December 2020 through January 2029. The fixed interest rate components for these forward starting interest rate swaps range from 0.85% to 1.17%. The variable rate component on these forward starting interest rate swaps is 1-month LIBOR. Accordingly, the ~~7.50% Senior Notes described in~~ forward starting rate swaps were designated as cash flow hedges. In addition, these cash flow hedges require settlement on the stated maturity date for each respective term loan currently outstanding. See Note 9: ~~Debt~~Derivatives in the Notes to Condensed Consolidated Financial Statements~~, which are incorporated herein by reference,~~ for additional information.

Other than these new forward starting interest rate swaps there have been no material changes to our contractual obligations during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 outside the ordinary course of business.

Two major debt rating agencies routinely evaluate our debt and our cost of borrowing can increase or decrease depending on our credit rating. ~~During 2018, both~~Both Moody’s and S&P ~~Global upgraded~~rate our debt ~~rating to~~ investment grade. There have been no changes in our credit rating during the ~~nine~~six months ended ~~September~~June 30, ~~2019. In August 2019 S&P Global revised their outlook on the company to negative from stable.~~ 2020.

We currently are not a party to off-balance sheet arrangements that would require disclosure under this section.

There have been no significant changes during ~~2019~~2020 to our critical accounting policies presented in our ~~2018~~2019 Annual Report on Form 10-K.

~~Other than the $150.0 million refinance of the Senior Notes described in~~ ~~Note 9: Debt~~ ~~in the~~ ~~Notes to Condensed Consolidated Financial Statements, which is incorporated herein by reference, our exposures to~~Our market risk ~~have not changed materially since December 31, 2018. For quantitative~~exposure on financial instruments includes interest rate risk on our bank credit facility, term loans, interest rate swap agreements and ~~qualitative disclosures about market risk, see Item 7A –~~ ~~Quantitative~~forward-starting interest rate swap agreements. We are exposed to interest rate volatility on existing variable rate debt instruments and ~~Qualitative Disclosure about Market Risk~~future incurrences of fixed or variable rate debt, which exposure primarily relates to movements in ~~our 2018 Annual Report on Form 10-K.~~

~~The table below provides information about our outstanding long-term debt, weighted-average~~various interest ~~rates and~~rates. We use interest rate swaps ~~as of September 30, 2019. For debt obligations, the table presents principal cash flows~~ and ~~related weighted-average interest rates by expected maturity dates. For~~forward starting interest rate swaps to hedge our exposure to the ~~table presents notional amounts~~impact of interest rate changes on existing debt and ~~weighted-average~~future debt issuances, respectively. All market risk sensitive instruments were entered into for purposes other than trading purposes.

At June 30, 2020, we have six interest rate swaps associated with $397.5 million of term loan debt. The cash flow hedges convert variable rates ranging from three-month and one-month LIBOR plus 1.85% to 2.15%, to fixed rates ranging from 3.17% to 4.82%. Our cash flow hedges are expected to be highly effective in achieving offsetting cash flows attributable to the hedged interest rate risk through the term of the hedge.

In March 2020, we entered into $653.5 million of forward starting interest rate swaps. These forward starting interest rate swaps effectively hedge the variability in future benchmark interest payments attributable to changes in interest rates on future debt refinancing by ~~expected (contractual)~~locking fixed interest rates on our anticipated future refinancing of $653.5 million of term loan debt maturing December 2020 through January 2029. The fixed interest rate components for these forward starting interest rate swaps range from 0.85% to 1.17%. The variable rate component on these forward starting interest rate swaps is one-month LIBOR. Accordingly, the forward starting rate swaps were designated as cash flow hedges. In addition, these cash flow hedges require settlement on the stated maturity ~~dates. Notional amounts are used to calculate~~date for each respective term loan currently outstanding.

At June 30, 2020, the ~~contractual payments to be exchanged under the contract. Weighted-average variable~~total outstanding principal balance on our debt agreements was $762.2 million. Interest rates ~~are based~~ on ~~implied forward rates in the yield curve.~~all outstanding debt is fixed, either through a fixed interest rate or corresponding interest rate swap.

EXPECTED MATURITY DATE

(in thousands)

2019

2020

2021

2022

2023

THEREAFTER

TOTAL

FAIR VALUE

Variable rate debt:

Principal due

$
40,000

$
40,000

$
40,000

$
—

$
—

$
277,500

$
397,500

$
397,500

Average interest rate

3.61
%

3.44
%

3.28
%

—

—

3.21
%

3.28
%

Fixed rate debt:

Principal due

$
—

$
6,000

$
—

$
43,000

$
40,000

$
275,735

$
364,735

$
378,866

Average interest rate

—

3.70
%

—

4.60
%

4.49
%

3.98
%

4.10
%

Interest rate swaps:

Variable to fixed

$
40,000

$
40,000

$
40,000

$
—

$
—

$
277,500

$
397,500

$
(28,586
)
Average pay rate

1.23
%

2.84
%

2.92
%

—

—

2.66
%

2.56
%

Average receive rate

1.87
%

1.54
%

1.38
%

—

—

1.29
%

1.38
%

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 ~~September~~June 30, ~~2019.~~2020. 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 ~~September~~June 30, ~~2019.~~2020.

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.

No changes occurred in our internal control over financial reporting during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We believe there is no pending or threatened litigation that could have a material adverse effect on our financial position, operations or liquidity.

~~There have been no material changes in~~Our business and results of operations are subject to numerous risks and uncertainties, many of which are beyond our control.The following discussion supplements and updates 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, ~~2018.~~2019. The impacts of the COVID-19 pandemic on the economy is affecting and is expected to continue to affect our business and financial results andshould be considered carefully, in addition to the information set forth elsewhere in this Form 10-Q and the Annual Report on Form 10-K for the year-ended December 31, 2019, including under Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Events beyond our control such as pandemics (including the COVID-19 outbreak) could negatively impact our business.

In March 2020 the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. Shortly thereafter, the United States declared a national emergency concerning the outbreak, and all states and several municipalities subsequently declared public health emergencies.These declarations have resulted in a wide-range of actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19.Such actions included quarantines, “stay-at-home” orders and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. These restrictions have prevented or significantly restricted us, our employees, vendors and customers from conducting some or all business activities for an indefinite period of time. Under the governmental restrictions put in place, our Timberlands and Wood Products segments were designated as an essential business in states that had issued stay-at-home orders and as such, we have continued to operate each of our businesses at full capacity where market conditions allow while maintaining the health and safety of our employees, contractors, suppliers and customers. This outbreak has spread widely throughout the United States and while governmental restrictions began to ease by the end of the second quarter in several states, they are subject to change and may, depending on direction from local authorities and the pandemic’s effects on the public, require us, our suppliers or our customers to limit or suspend operations.

We have introduced measures to protect the health and well-being of our workforce and customers. Such measures include, among other things, encouraging office employees to work remotely where their duties allow, restricting travel and group meetings, increasing the frequency of cleaning and disinfecting, screening visitors and vendors at our locations, implementing mask-wearing protocols, and requiring physical distancing where it is practical. However, such measures will not be sufficient to eliminate all exposure to the COVID-19 virus. We have experienced exposure to the virus at certain of our facilities. We have implemented plans and procedures in the event of a workplace exposure to aid in the protection of our workforce including a temporary shutdown of certain production areas in the facility in order to perform proper cleaning and disinfection procedures. If additional exposures to the virus occur in the future we may be required to temporarily shut down certain operations for additional cleaning and disinfecting.

Pandemics, such as COVID-19, that bring about widespread national or global economic hardship, have had and will have impacts on pricing and demand for our timber, lumber, and real estate businesses. We have experienced and expect to continue to experience unpredictable demand for certain of our products and continue to adjust production as necessary to match demand. There have been adverse effects on the demand for our products and disruptions to our supply chain, the manufacturing and distribution of our timber and wood products and demand for our real estate properties, all of which could worsen in the future. We are actively monitoring the COVID-19 outbreak and its potential impact on our operations, workforce, supply chain and our consolidated results of operations.

Our predictions about the impact that COVID-19 will have on our business, financial condition, or results of operations may not be accurate as they depend on future developments, which are highly uncertain and cannot be predicted with confidence. Such developments include, but are not limited to, the severity of the virus’s impact on the economy, the future geographic spread or mutation of COVID-19 or the outbreak of another virulent disease, continuation of or changes in governmental responses to disease outbreak, the duration of disease outbreak, the timing and effectiveness of treatment and testing options, including availability of a vaccine, and consequential restrictions, business disruptions, the effectiveness of responsive actions taken in the United States and other countries to contain the disease and actions that may be taken by our competitors, suppliers or customers. A recession, further market correction, or depression resulting from the spread of COVID-19 could materially affect our business, financial condition, results of operations, liquidity, our

stock price and access to capital markets. The impact of COVID-19 or other virulent disease may also trigger the occurrence, or exacerbate, other risks discussed in Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019, any of which could have a material adverse effect on our business, results of operation, cash flows and financial condition.

On August 30, 2018, our board of directors authorized management to repurchase up to $100.0 million of common stock with no time limit set for the repurchase (the 2018 Repurchase Program). ~~No repurchases were made by the Company during the third quarter of 2019.~~During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we repurchased ~~686,240~~489,850 shares of common stock for ~~$25.2~~$15.4 million (including transaction costs) under the 2018 Repurchase Program. Transaction costs are not counted against authorized funds. All common stock purchases were made in open-market transactions. At ~~September~~June 30, ~~2019,~~2020, we had remaining authorization of ~~$74.8~~$59.5 million for future stock repurchases under the 2018 Repurchase Program.

The following table provides information with respect to purchases of common stock made by the company during second quarter 2020:

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.

601 West First Avenue, Suite 1600
Spokane, Washington	99201
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock	PCH	Nasdaq Global Select Market



		Page Number
PART I. - FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of ~~Income~~Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Index for the Notes to Condensed Consolidated Financial Statements	8
	Notes to Condensed Consolidated Financial Statements	9
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2322
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3837
ITEM 4.	Controls and Procedures	3837

PART II. - OTHER INFORMATION
ITEM 1.	Legal Proceedings	3938
ITEM 1A.	Risk Factors	3938
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
ITEM 6.	Exhibits	40

SIGNATURE		41

(in thousands, except per share amounts)	Three Months Ended, September 30, 2018		Nine Months Ended, September 30, 2018
Net sales	$	83,385	$	192,244
Income before income taxes	$	17,180	$	25,869


(in thousands, except per share amounts)	Three Months Ended, September 30, 2018		Nine Months Ended, September 30, 2018
Net sales	$	289,199	$	795,992
Net earnings attributable to PotlatchDeltic common shareholders	$	61,327	$	142,314
Basic earnings per share attributable to PotlatchDeltic common shareholders	$	0.91	$	2.13
Diluted earnings per share attributable to PotlatchDeltic common shareholders	$	0.91	$	2.12

Large Accelerated Filer	☒	Accelerated Filer	☐	Non-accelerated Filer	☐
Smaller Reporting Company	☐	Emerging Growth Company	☐


Note 1: Basis of Presentation	9
Note 2: Recent Accounting Pronouncements	10
Note 3: Sale of Deltic MDF Facility	10
Note 4: Revenue Recognition	11
Note 5: Segment Information	12
Note 6: Earnings Per Share	14
Note 7: Certain Balance Sheet Components	15
Note 8: Debt	15
Note 9: Derivative Instruments	16
Note10: Fair Value Measurements	17
Note 11: Equity Based Compensation	17
Note 12: Income Taxes	18
Note 13: Leases	19
Note 14: Pension and Other Postretirement Benefits	20
Note 15: Components of Accumulated Other Comprehensive Loss	21

(in thousands)	Classification	June 30, 2020		December 31, 2019
Assets
Operating lease assets	Other long-term assets	$	13,425	$	15,772
Finance lease assets¹	Property, plant and equipment, net		4,448		2,360
Total lease assets		$	17,873	$	18,132

Liabilities
Current
Operating lease liabilities	Accounts payable and accrued liabilities	$	4,783	$	4,998
Finance lease liabilities	Accounts payable and accrued liabilities		1,218		644
Noncurrent
Operating lease liabilities	Other long-term obligations		8,647		10,775
Finance lease liabilities	Other long-term obligations		3,201		1,703
Total lease liabilities		$	17,849	$	18,120

	~~September 30, 2019~~
~~Weighted-average remaining terms (years)~~		~~4.40~~
~~Weighted-average discount rate~~		~~4.13~~	%

(in thousands)
2019	$	1,432
2020		5,282
2021		4,263
2022		2,597
2023		1,662
After 2023		2,610
Total lease payments		17,846
Less: interest¹		1,530
Present value of lease liabilities	$	16,316

(in thousands)
2019	$	5,130
2020		4,135
2021		3,142
2022		1,538
2023		629
2024 and thereafter		575
Total	$	15,149

	EXPECTED MATURITY DATE
(in thousands)	2019			2020			2021			2022			2023			THEREAFTER			TOTAL			FAIR VALUE
Variable rate debt:
Principal due	$	40,000		$	40,000		$	40,000		$	—		$	—		$	277,500		$	397,500		$	397,500
Average interest rate		3.61	%		3.44	%		3.28	%		—			—			3.21	%		3.28	%
Fixed rate debt:
Principal due	$	—		$	6,000		$	—		$	43,000		$	40,000		$	275,735		$	364,735		$	378,866
Average interest rate		—			3.70	%		—			4.60	%		4.49	%		3.98	%		4.10	%
Interest rate swaps:
Variable to fixed	$	40,000		$	40,000		$	40,000		$	—		$	—		$	277,500		$	397,500		$	(28,586	)
Average pay rate		1.23	%		2.84	%		2.92	%		—			—			2.66	%		2.56	%
Average receive rate		1.87	%		1.54	%		1.38	%		—			—			1.29	%		1.38	%

Common Share Purchases	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan
April 1 - April 30		—	$	—		—	$	62,504,102
May 1 - May 31		88,933	$	33.81		88,933	$	59,496,899
June 1 - June 30		—	$	—		—	$	59,496,899
Total		88,933				88,933

EXHIBIT NUMBER	DESCRIPTION
(3)(a)*	Third Restated Certificate of Incorporation of the Registrant, effective February 20, 2018, filed as Exhibit 3.1 to the Current Report on Form 8-K filed by the Registrant on February 21, 2018.
(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)	See Exhibits (3)(a) and (3)(b). The 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 PotlatchDeltic Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended ~~September~~June 30 ~~2019,~~2020, filed on ~~October 30, 2019~~July 31, 2020 formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of ~~Income~~Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and ~~nine~~six months ~~September~~ended June 30, ~~2019~~2020 and ~~2018,~~2019, (iii) the Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, (iv) the Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, (v) the Condensed Consolidated Statements of Stockholders’ Equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 and (vi) the Notes to Condensed Consolidated Financial Statements.
(104)	Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).

		PotlatchDeltic Corporation
		(Registrant)

		By	/s/ WAYNE WASECHEK
			Wayne Wasechek
			Corporate Controller (Duly Authorized; Principal Accounting Officer)


Date:	~~October 30, 2019~~July 31, 2020