CATCHMARK
2 0 1 5 A N N U A L R E P O R T
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KEY FACTS
425,000 acres of commercial timberlands
401,200 fee acres
23,800 leased acres
Approximately 16.8 mm tons of merchantable timber
Well-diversified species and product mix
74% pine / 26% hardwood by acreage
51% sawtimber / 49% pulpwood by volume
Sustainable Forestry Initiative-certified
All data as of December 31, 2015.
PROPERTY LOCATIONS
Counties highlighted in which CatchMark has property ownership and/or leasehold interest. The green shaded area of the map is for illustrative purposes only to show the area in which the properties are located. CatchMark properties are not contiguous and map is not drawn to scale.
Dear Stockholders:
At CatchMark, we tirelessly strive to execute a particularly focused business plan—aggregate the highest
quality properties with robust inventory and high levels of productivity, and then thoughtfully manage forest
growth and harvests to help ensure predictable and healthy earnings for the long-term.
Solid Results
Again in 2015, our strategy paid off with excellent full-year results, which will set the stage for continued
year-over-year gains in 2016, durable future earnings, and potential dividend increases. These expected
advances should track further recovery in the nation’s housing markets as well as continued growth in the
pulp and paper markets led by the paper packaging sector.
The company highlights for 2015 included significant growth in key metrics which exceeded our
expectations:
• Increased revenues to $69.1 million, a 27% gain over full-year 2014.
• Increased Adjusted EBITDA to $32.2 million, a 36% increase over full-year 20141.
• Increased total harvest volumes to 1.84 million tons from 1.37 million tons in 2014, a 35% increase.
Sustaining and growing our dividend over time remains a primary objective of management and the board,
and we paid out quarterly dividends at $0.125 per share during the year.
Acquisitions Focus
We also continue to grow our portfolio of well-stocked properties with a goal of assembling the highest
quality timberland portfolio in the industry.
• By year end, CatchMark’s total owned interests in prime timberlands across the U.S. South had
expanded to approximately 425,000 acres—a 53% increase since the beginning of 2014.
• For the year, acquisitions totaled $73.7 million for 42,900 acres, including entry into three new
states North Carolina, South Carolina, and Tennessee.
The new timberland purchases in strong mill markets met our parameters for soil attributes, forest genetics,
and complementary age classifications; and we believe these acquisitions will help achieve our targets for
increasing high-value inventory mix.
Timberland sales for the year also attained our targets—totaling approximately 6,400 acres in
19 transactions for $11.8 million. These selective dispositions take advantage of selling less productive
tracts so that we can deploy proceeds into the purchase of more productive timberland.
1 See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Adjusted EBITDA” in
the enclosed Annual Report on Form 10-K for the definition and information regarding why we present Adjusted EBITDA and for a
reconciliation of this non-GAAP financial measure to net income (loss).
Operations Excellence and Sustainability
A crucial component of our business strategy concentrates on meeting demand in our mill markets through
focused merchandizing and supply chain management as well as successfully integrating acquisitions as
expeditiously as possible to maximize current harvest volumes. Throughout the year we were able to adjust
to, and overcome, wet weather conditions across many of our regions and took advantage of favorable
market pricing opportunities, which enhanced our revenues and increased Adjusted EBITDA. For 2015,
timber sales revenues increased by 30% mainly due to an increase in harvest volume derived from acquired
properties over the previous 12 months.
Sound forest management also is essential for augmenting future timber growth, enhancing productivity,
and increasing timberland values. We believe land stewardship which employs best practices for
reforestation, protecting waterways, and sheltering wildlife habitats ultimately leads to healthier
timberlands and greater long-term yields. During 2015, CatchMark maintained certification of our
timberlands by the Sustainable Forestry Initiative, and we are determined to continue to meet these
rigorous industry environmental standards.
Strong Balance Sheet
The company’s balance sheet at year end was low leveraged and provided ample liquidity for continued
growth.
• Our multi-draw term loan was expanded in a refinancing to $365 million, with $85 million
outstanding at year end. The refinancing increased CatchMark’s total credit facility at year end by
$90 million to approximately $500 million, which includes an unfunded $35 million revolving line
of credit and a $100 million term loan.
• Our fixed charge coverage ratio was a comfortable 11 times Adjusted EBITDA, based on 12-month
trailing results.
• We had about $315 million available to deploy for future timberland purchases at year end.
• Capital was also allocated for a $30 million share repurchase program announced during summer
2015 for opportunistically acquiring CatchMark shares at attractive pricing. As of year end, we
had repurchased nearly 600,000 shares at an average price of $10.25 per share.
• Our weighted average cost of debt was 2.65% during 2015, which was further reduced by
approximately 0.90% from the patronage refund paid from our lenders.
Favorable 2016 Outlook
For the year ahead, our business plan and strategy remain on the same general course to maintain a
long-term growth trajectory.
• We are optimistic about the ongoing housing market recovery with most industry forecasts
projecting at least high single-digit/low double-digit, year-over-year growth in housing starts.
• Demographic trends and pricing levels suggest several more years of housing growth and supply-
demand drivers could reach an inflection point, driving timber product pricing significantly higher,
particularly in the most desirable markets where our properties are located.
• Even at level product pricing, we anticipate increasing CatchMark’s harvest volumes and revenues
from recent acquisitions and capitalizing on an improved inventory mix with higher contribution
from sawtimber which offer larger operating margins than other timber products. In that regard, we
forecast a harvest mix in excess of 40% sawtimber during the year, moving closer to our objective
of a 50/50 mix of pulpwood and sawtimber.
Long-term Growth
With capital available to allocate and indications of a higher volume of attractive acquisition opportunities
coming to market, we are poised to augment our portfolio, continuing to focus on the U.S. South, but ready
to expand into other regions if expected returns merit our investment. Under any circumstances, we remain
disciplined about purchasing properties that will provide long-term productivity, merchantable inventory,
and are accretive to current cash yield.
In summary, we believe our business strategy and execution have succeeded in delivering promised results
and growth. We will continue to allocate capital to build a portfolio of premier timberlands, operate these
properties to maximize harvest yields given market conditions, and help ensure sustainable production
through implementing the highest standards of forest management practices. Over time, this formula is
primed to provide durable earnings and dividends, while creating greater value for our stockholders.
On behalf of management, the Board of Directors and our team of extraordinarily committed employees,
thank you for investing in CatchMark.
Sincerely,
Jerry Barag
President and Chief Executive Officer
This letter contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend for such forward-looking statements
to be covered by the applicable safe harbor provisions for forward-looking statements contained in such Acts. For more information
regarding our forward-looking statements, see “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A—Risk
Factors” in the enclosed Annual Report on Form 10-K.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2015
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Period from ______ to _______.
Commission File Number 001-36239
CATCHMARK TIMBER TRUST, INC
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of incorporation or organization)
5 Concourse Parkway, Suite 2325, Atlanta, GA
(Address of principal executive offices)
20-3536671
(I.R.S. Employer Identification Number)
30328
(Zip Code)
(855) 858-9794
Registrant’s telephone number, including area code
____________________________________________________________________
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class
CLASS A COMMON STOCK
Name of exchange on which registered
NEW YORK STOCK EXCHANGE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes
No
Yes
No
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.
No
Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted 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 and post such files).
No
Yes
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated flier, a non-accelerated filer or smaller reporting company. See definition of
“large accelerated filer” and “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes
No
As of June 30, 2015, the aggregate market value of the registrant’s Class A common stock held by non-affiliates of the registrant was $453.0 million. The aggregate
market value was calculated by using the closing price of the Class A common stock as of that date on the New York Stock Exchange, which was $11.57 per share.
As of February 29, 2016: 38,800,917 shares of the registrant's Class A common stock were outstanding
FORM 10-K
CATCHMARK TIMBER TRUST, INC.
TABLE OF CONTENTS
PART I.
Item 1.
Business............................................................................................................
Item 1A. Risk Factors ......................................................................................................
Item 1B. Unresolved Staff Comments.............................................................................
Properties..........................................................................................................
Item 2.
Item 3.
Legal Proceedings ............................................................................................
Item 4. Mine Safety Disclosures...................................................................................
PART II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and
Issuer Purchases of Equity Securities...............................................................
Item 6.
Selected Financial Data ....................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations ....................................................................................................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk .........................
Financial Statements and Supplementary Data ................................................
Item 8.
Changes in and Disagreements with Accountants on Accounting and
Item 9.
Financial Disclosure .........................................................................................
Item 9A Controls and Procedures...................................................................................
Item 9B. Other Information.............................................................................................
PART III.
Item 10. Directors, Executive Officers, and Corporate Governance ..............................
Item 11. Executive Compensation ..................................................................................
Item 12.
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters ............................................................................
Item 13. Certain Relationships and Related Transactions, and Director Independence .
Principal Accountant Fees and Services...........................................................
Item 14.
PART IV.
Item 15. Exhibits and Financial Statement Schedules....................................................
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report on Form 10-K of CatchMark Timber Trust, Inc. and subsidiaries
(“CatchMark Timber Trust,” “we,” “our,” or “us”) may be considered forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). In addition, CatchMark Timber Trust, or the executive
officers on CatchMark Timber Trust’s behalf, may from time to time make forward-looking statements in reports and
other documents CatchMark Timber Trust files with the Securities and Exchange Commission (the "SEC") or in
connection with oral statements made to the press, potential investors, or others. We intend for all such forward-looking
statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the
Securities Act and the Exchange Act. Such statements include, in particular, statements about our plans, strategies, and
prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause
actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to
be a guarantee of our performance in future periods.
Forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,”
“will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak only as of the date that this report is
filed with the SEC. We make no representations or warranties (express or implied) about the accuracy of any such
forward-looking statements contained in this Form 10-K, and we do not intend to publicly update or revise any forward-
looking statements, whether as a result of new information, future events, or otherwise.
Any such forward-looking statements are subject to risks, uncertainties, and other factors and are based on a number
of assumptions involving judgments with respect to, among other things, future economic, competitive, and market
conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from
actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow
from operations, make distributions to stockholders, and maintain the value of our timberland properties, may be
significantly hindered. See Item 1A herein for a discussion of some, although not all, of the risks and uncertainties that
could cause actual results to differ materially from those presented in our forward-looking statements.
PART I
ITEM 1.
BUSINESS
General
CatchMark Timber Trust, Inc. ("CatchMark Timber Trust") (NYSE: CTT), a Maryland corporation, is a self-
administered and self-managed real estate company that invests in timberlands and has elected to be taxed as a real
estate investment trust ("REIT") for federal income tax purposes. CatchMark Timber Trust incorporated in 2005,
commenced operations in 2007, and conducts substantially all of its business through CatchMark Timber Operating
Partnership, L.P. (“CatchMark Timber OP”), a Delaware limited partnership. CatchMark Timber Trust is the general
partner of CatchMark Timber OP, possesses full legal control and authority over its operations, and owns 99.99% of
its common partnership units. CatchMark LP Holder, LLC (“CatchMark LP Holder”), a wholly-owned subsidiary of
CatchMark Timber Trust, is the sole limited partner of CatchMark Timber OP (See Note 7 – Noncontrolling Interest
of the accompanying consolidated financial statements for more information). In addition, CatchMark Timber TRS,
Inc. (“CatchMark TRS”), a Delaware corporation, was formed as a wholly owned subsidiary of CatchMark Timber
OP. Unless otherwise noted, references to CatchMark Timber Trust, "we", "us", or "our" herein shall include CatchMark
Timber Trust and all of its subsidiaries, including CatchMark Timber OP, and the subsidiaries of CatchMark Timber
OP, including CatchMark TRS.
We primarily engage in the ownership, management, acquisition, and disposition of timberland properties located in
the United States. The focus of our business is to invest in timberlands and to actively manage such assets to provide
current income and attractive long-term returns to our stockholders. We generate recurring income and cash flow from
the harvest and sale of timber, as well as from non-timber related revenue sources, such as rent from hunting and
recreational leases.
When and where we believe it is appropriate, we also periodically generate income and cash flow from timberland
sales, including the sale of higher-and-better use, or HBU, properties. HBU properties are timberland properties that
have a higher-value use beyond growing timber, such as properties that can be sold for development, conservation,
recreational or other rural purposes at prices in excess of traditional timberland values. We also expect to realize
additional long-term returns from the potential appreciation in value of our timberlands as well as from the potential
biological growth of our standing timber inventory in excess of our timber harvest.
For each of the three years ended December 31, 2015, 2014 and 2013, our revenues from timber sales, timberland
sales, and non-timber related sources, as a percentage of our total revenue, are set forth in the table below:
Timber sales
Timberland sales
Other revenues
Total
2015
2014
2013
76%
17%
7%
100%
75%
20%
5%
100%
83%
8%
9%
100%
As of December 31, 2015, approximately 397,200 acres, or 93% of our timberland available for hunting and recreational
uses, had been leased to tenants under operating leases that expire between March and June 2016.
1
Current Timberland Holdings
As of December 31, 2015, we owned interests in approximately 425,000 acres of timberland in the U.S. South, consisting
of approximately 401,200 acres held in fee-simple interests, or our fee timberlands, and approximately 23,800 acres
held in leasehold interests, or our leased timberlands. As of December 31, 2015, our timberlands were comprised of
approximately 74% pine stands and 26% hardwood stands (by acreage) and contained an estimated 16.8 million tons
of merchantable inventory.
Please refer to Item 2 – Properties for more details on our timber and timberland properties.
Our Business and Growth Strategies
Our objective is to produce long-term cash flow and value growth from carefully managing our existing portfolio,
participating in ongoing timber product price recovery, and undertaking timberland acquisitions and selective
timberland dispositions through the ongoing implementation of the following business and growth strategies:
Actively Manage Our Timberlands for Long-Term Results. We seek to maximize long-term returns by actively managing
our timberlands to achieve an optimum balance among biological timber growth, current harvest cash flow, and
responsible environmental stewardship. Further, we expect to continue making investments in forest technology,
including improved seedlings, in order to increase the sustainable yield of our timberlands over the long-term.
Maximize Profitability on Timber Sales. We actively manage our log merchandising efforts together with delivered
and stumpage sales with the goal of achieving the highest available price for our timber products. We compete with
other timberland owners on the basis of the quality of our logs, the prices of our logs, our reputation as a reliable
supplier and our ability to meet customer specifications. We will continue to work diligently and proactively with our
third-party contractors to ensure that we optimize our logging, hauling, sorting, and merchandising operations to extract
the maximum profitability from each of our logs based on the foregoing considerations.
Pursue Attractive Timberland Acquisitions. We seek to identify and acquire high quality timberland properties, with
our average deal size ranging from 10,000 to 40,000 acres. Generally, we expect to focus our acquisition efforts in the
most commercially desirable timber-producing regions of the U.S. South, although we may also pursue opportunistic
acquisitions outside of these regions. Critical evaluation of prospective property acquisitions is an essential component
of our acquisition strategy. When evaluating acquisition opportunities, we assess a full range of matters relating to the
prospective timberland property or properties, including, but not limited to:
• Local market dynamics
• Predominantly pine merchantable inventory mix
• Sustainable productivity (on a tons per-acre, per-year basis)
• Quality of existing and prospective customers
• Target unlevered cash yields
Due to the expected liquidation of the ownership positions of a number of timberland investment management
organizations over the next several years, we expect there will be a robust supply of attractive timberlands available
for sale. We may also enter into additional fiber supply agreements with respect to acquired properties in order to
ensure a steady source of demand for our incremental timber production.
2
Opportunistically Sell HBU Lands. We continuously assess potential alternative uses of our timberlands, as some of
our properties may be more valuable for development, conservation, recreational or other rural purposes than for
growing timber. We intend to capitalize on the value of our timberland portfolio by opportunistically monetizing HBU
timberlands. When evaluating our HBU opportunities, we assess a full range of matters relating to the timberland
property or properties, including, but not limited to:
• Suboptimal inventory stocking
• Predominantly hardwood merchantable inventory mix
• Substandard productivity
The close proximity of our existing timberlands to several major population centers provides us with opportunities to
periodically sell parcels of our land at favorable valuations. We generally expect to monetize 1% to 2% of our fee
timberland acreage on an annual basis pursuant to our land sales program, although such results may vary. We may
also decide to pursue various land entitlements on certain properties in order to realize higher long-term values on
such properties.
Practice Sound Environmental Stewardship. We will remain committed to responsible environmental stewardship and
sustainable forestry. Our timberlands, except those that have been recently acquired, have been are third-party audited
and certified in accordance with the 2015-2019 SFI (Sustainable Forest Initiative) standard. We are currently taking
the necessary procedures to get our recently acquired timberlands third-party audited and certified in accordance with
the SFI standards within the next 12 months. SFI standards promote sustainable forest management through recognized
core principles, including measures to protect water quality, biodiversity, wildlife habitat and at-risk species. Our
timberlands are further managed to meet or exceed all state regulations through the implementation of best management
practices as well as internal policies designed to ensure compliance. We believe our continued commitment to
environmental stewardship will allow us to maintain our timberlands’ productivity, grow our customer base and enhance
our reputation as a preferred timber supplier.
Financing Strategy
Our long-term financing strategy seeks to maximize balance sheet liquidity and operational flexibility for the purpose
of generating current income and attractive long-term returns for our stockholders. We intend to employ prudent
amounts of equity and debt financing as a means of providing additional funds for the selective acquisitions of timber
assets, to refinance existing debt or for general corporate purposes. In particular, we seek to maximize balance sheet
liquidity and flexibility by:
• Maintaining sufficient liquidity through borrowing capacity under our credit facilities and cash-on-hand;
• Minimizing the amount of near-term debt maturities in a single year;
• Maintaining low to modest leverage; and
• Maintaining access to diverse sources of capital.
We finance our timber assets using a variety of methods and determine the amount of equity and debt financing to be
used when acquiring an asset by evaluating terms available in the credit markets (such as interest rate, repayment
provisions and maturity), our cost of equity capital and our assessment of the particular asset’s risk. Historically, a
significant portion of our debt has consisted of long-term borrowings secured by our timber assets.
We anticipate that we will continue to use a number of different sources to finance our operations and selective
acquisitions going forward, including cash from operations, proceeds from asset dispositions, funds available under
bank credit facilities (which may or may not be secured by our assets), potential future issuances of common or preferred
equity or partnership interests in our operating partnership or any combination of these sources, to the extent available
to us, or other sources that may become available from time to time.
3
Transaction Activity
In connection with furthering our investment and operating objectives, we have executed the following timberland
transactions:
Acquisitions
During the year ended December 31, 2015, we completed eight timberland acquisitions in Georgia, Louisiana, North
Carolina, South Carolina, Tennessee and Texas, totaling approximately 42,900 acres for $73.3 million, exclusive of
closing costs. The acquisitions were funded with a combination of cash on hand as well as borrowings under our
existing credit agreement. The timberlands acquired in 2015 are well stocked with merchantable pine inventory, located
in strong pulpwood and sawtimber markets, and complement our existing timberland portfolio while expanding into
new subregional markets within the U.S. South. The 2015 acquisitions added approximately 1.8 million tons to our
merchantable timber inventory, comprised of 80% pine plantations by acreage and 49% sawtimber by tons.
Since our initial listed public offering (the "IPO") in December 2013, we have acquired a total of approximately 164,500
acres of timberland and expanded our timberland ownership into Florida, Louisiana, North Carolina, South Carolina,
Tennessee and Texas. The acquisitions since our IPO have added 6.6 million tons to our merchantable timber inventory,
comprised of 77% pine plantations by acreage and 56% sawtimber by tons.
Dispositions
During the year ended December 31, 2015, we sold approximately 6,400 acres of timberland in Alabama, Georgia,
and Texas, for $11.8 million. The timberland dispositions represented approximately 1.6% of our timberland acreage
(measured based on average monthly timberland acreage in 2015).
Mahrt Timber Agreements
We are party to a master stumpage agreement and a fiber supply agreement (collectively, the “Mahrt Timber
Agreements”) with a wholly owned subsidiary of WestRock Company ("WestRock"). The master stumpage agreement
provides that we will sell specified amounts of timber and make available certain portions of our timberlands to
CatchMark TRS for harvesting. The fiber supply agreement provides that WestRock will purchase specified tonnage
of timber from CatchMark TRS at specified prices per ton, depending upon the type of timber product. The prices for
the timber purchased pursuant to the fiber supply agreement are negotiated every two years but are subject to quarterly
adjustments based on an index published by Timber Mart-South, a quarterly trade publication that reports raw forest
product prices in 11 southern states. The initial term of the Mahrt Timber Agreements is October 9, 2007 through
December 31, 2032, subject to extension and early termination provisions. The Mahrt Timber Agreements ensure a
long-term supply of wood fiber products for WestRock in order to meet its paperboard and lumber production
requirements at specified mills and provide us with a reliable consumer for the wood products from our timberlands.
For the years ended December 31, 2015, 2014, and 2013, approximately 23%, 34%, and 60%, respectively, of our net
timber sales revenue was derived from the Mahrt Timber Agreements. For 2016, we are required to make available
for purchase by WestRock, and WestRock is required to purchase, a minimum of approximately 0.4 million tons of
timber at fiber supply agreement pricing.
Economic Dependency and Credit Risk of Customers
We are dependent upon the ability of our timber customers to pay their contractual amounts as they become due. The
inability of a customer to pay future supply agreement amounts would have a negative impact on our results of
operations. We are not aware of any reason why our current customers will not be able to pay their contractual amounts
as they become due in all material respects. Situations preventing our customers from paying contractual amounts
could result in a material adverse impact on our results of operations.
4
For the year ended December 31, 2015, our largest customer, WestRock, represented 31% of our consolidated revenues.
No other customer represented more than 10% of our consolidated revenues. The loss of WestRock would have a
material adverse effect on our operating results. We sold timber to 42 customers in 2015, compared to 30 in 2014, an
increase predominantly driven by recent timberland acquisitions (See Transaction Activity under Item 1 – Business).
Competition
We compete with various private and industrial timberland owners as well as governmental agencies that own or
manage timberlands in the U.S. South. Due to transportation and delivery costs, pulp, paper and wood products
manufacturing facilities typically purchase wood fiber within a 100-mile radius of their location, which thereby limits,
to some degree, the number of significant competitors in any specific regional market. Factors affecting the level of
competition in our industry include price, species, grade, quality, proximity to the mill customer, and our reliability
and consistency as a supplier. Also, as we seek to acquire assets, we are in competition for targeted timberland tracts
with other similar timber investment companies, as well as investors in land for purposes other than growing timber.
As a result, we may have to pay more for the timberland tracts to become the purchaser if another suitable tract cannot
be substituted. When it becomes time to dispose of timberland tracts, we will again be in competition with sellers of
similar tracts to locate suitable purchasers of timberland.
Seasonality
We typically experience seasonally lower harvest activity during the winter and early spring due to weather conditions,
as rains limit operations.
Recent Tax Legislation
On December 18, 2015, President Obama signed into law the Consolidated Appropriations Act, 2016, an omnibus
spending bill, with a division referred to as the Protecting Americans From Tax Hikes Act of 2015, which changes
certain of the rules affecting REIT qualification and taxation of REITs and REIT stockholders described under the
heading “Certain United States Federal Income Tax Considerations” in our Prospectus included in our Registration
Statement on Form S-3 filed June 20, 2014. These changes are briefly summarized as follows:
• For taxable years beginning after 2017, the percentage of a REIT’s total assets that may be represented by
securities of one or more TRSs is reduced from 25% to 20%.
• For distributions in taxable years beginning after 2014, the preferential dividend rules no longer apply to us
as a “publicly offered REIT,” as defined in new Code Section 562(c)(2).
• For taxable years beginning after 2015, debt instruments issued by publicly offered REITs are treated as real
estate assets for purposes of the 75% asset test, but interest on debt of a publicly offered REIT will not be
qualifying income under the 75% gross income test unless the debt is secured by real property. Under a new
asset test, not more than 25% of the value of a REIT’s assets may consist of debt instruments that are issued
by publicly offered REITs and would not otherwise be treated as qualifying real estate assets.
• For taxable years beginning after 2015, to the extent rent attributable to personal property is treated as rents
from real property (because rent attributable to the personal property for the taxable year does not exceed 15%
of the total rent for the taxable year for such real and personal property), the personal property will be treated
as a real estate asset for purposes of the 75% asset test. Similarly, debt obligation secured by a mortgage on
both real and personal property will be treated as a real estate asset for purposes of the 75% asset test, and
interest thereon will be treated as interest on an obligation secured by real property, if the fair market value of
the personal property does not exceed 15% of the fair market value of all property securing the debt.
• For taxable years beginning after 2015, a 100% excise tax will apply to “redetermined services income,” i.e.,
non-arm’s-length income of a REIT’s TRS attributable to services provided to, or on behalf of, the REIT (other
than services provided to REIT tenants, which are potentially taxed as redetermined rents).
• For taxable years beginning after 2014, the period during which dispositions of properties with net built-in
gains acquired from C corporations in carry-over basis transactions will trigger the built-in gains tax is reduced
5
from ten years to five years. We are no longer subject to the built-in gains tax with respect to properties we
held as of January 1, 2009.
• REITs are subject to a 100% tax on net income from “prohibited transactions,” i.e., sales of dealer property
(other than “foreclosure property”). These rules also contain safe harbors under which certain sales of real
estate assets will not be treated as prohibited transactions. One of the requirements for the current safe harbors
is that (I) the REIT does not make more than seven sales of property (subject to specified exceptions) during
the taxable year at issue, or (II) the aggregate adjusted bases (as determined for purposes of computing earnings
and profits) of property (other than excepted property) sold during the taxable year does not exceed 10% of
the aggregate bases in the REIT’s assets as of the beginning of the taxable year, or (III) the fair market value
of property (other than excepted property) sold during the taxable year does not exceed 10% of the fair market
value of the REIT’s total assets as of the beginning of the taxable year. If a REIT relies on clause (II) or (III),
substantially all of the marketing and certain development expenditures with respect to the properties sold
must be made through an independent contractor. For taxable years beginning after December 18, 2015,
clauses (II) and (III) are liberalized to permit the REIT to sell properties with an aggregate adjusted basis (or
fair market value) of up to 20% of the aggregate bases in (or fair market value of) the REIT’s assets as long
as the 10% standard is satisfied on average over the three-year period comprised of the taxable year at issue
and the two immediately preceding taxable years. In addition, for taxable years beginning after 2015, for
REITs that rely on clauses (II) or (III), a TRS may make the marketing and development expenditures that
previously had to be made by independent contractors.
• A number of changes applicable to REITs are made to the FIRPTA rules for taxing non-US persons on gains
from sales of US real property interests (“USRPIs”):
• For dispositions and distributions on or after December 18, 2015, the stock ownership thresholds for
exemption from FIRPTA taxation on sale of stock of a publicly traded REIT and for recharacterizing
capital gain dividends as ordinary dividends is increased from not more than 5% to not more than
10%.
• Effective December 18, 2015, new rules will simplify the determination of whether we are a
“domestically controlled qualified investment entity.”
• For dispositions and distributions after December 18, 2015, “qualified foreign pension funds” as
defined in new Code Section 897(l)(2) and entities that are wholly owned by a qualified foreign pension
fund are exempted from FIRPTA and FIRPTA withholding. New FIRPTA rules also apply to “qualified
shareholders” as defined in new Code Section 897(k)(3).
• For sales of USRPIs occurring after February 16, 2016, the FIRPTA withholding rate for sales of
USRPIs and certain distributions generally increases from 10% to 15%.
Environmental Matters
See Item 1A — Risk Factors, Risk Related to Our Business and Operations for discussions of environmental matters
that impact our business.
Executive Officers of the Registrant
Name
Jerry Barag
Brian M. Davis
John F. Rasor
Age
57
46
72
Position(s)
Chief Executive Officer, President and Director
Senior Vice President, Chief Financial Officer, Treasurer and Assistant
Secretary
Chief Operating Officer, Secretary and Director
6
Jerry Barag has served as our Chief Executive Officer and President since our transition to self-management on
October 25, 2013 and became a director on December 17, 2013. Mr. Barag served as our consultant from August 2013
to his appointment as our Chief Executive Officer and President. Mr. Barag brings over 30 years of real estate, timberland
and investment experience, including expertise in acquisitions, divestitures, asset management, property management
and financing. From September 2011 to our transition to self-management, Mr. Barag has served as a Principal with
Mr. Rasor of TimberStar Advisors, an Atlanta-based timberland investment consulting firm, where he specialized in
acquiring and managing timberlands in the United States. From 2004 to September 2011, he served as Managing
Director of TimberStar, a timberland investment joint venture among himself, Mr. Rasor, iStar Financial, Inc. and other
institutional investors. While at TimberStar, he oversaw the acquisition of over $1.4 billion of timberlands in Arkansas,
Louisiana, Maine and Texas. From 2003 to 2004, he served as Chief Investment Officer of TimberVest, LLC, or
TimberVest, an investment manager specializing in timberland investment planning. Prior to joining TimberVest, Mr.
Barag served as Chief Investment Officer and Chairman of the Investment Committees for Lend Lease, a subsidiary
of Lend Lease Corp., a construction, development and real estate investment management advisory company traded
on the Australian Securities Exchange. Mr. Barag received his Bachelor of Science from The University of Pennsylvania,
Wharton School.
Brian M. Davis was appointed as our Senior Vice President and Chief Financial Officer in March 2013, as our Assistant
Secretary in August 2013 and as our Treasurer since our transition to self-management on October 25, 2013. Mr. Davis
served as Senior Vice President and Chief Financial Officer of Wells Timberland Investment Management Organization,
or Wells TIMO, from March 2009 until our transition to self-management on October 25, 2013 and as Vice President
from October 2007 through March 2009. From March 2013 to September 2013, he was Senior Vice President and
Chief Financial Officer of Wells Core Office Income REIT, Inc., or Wells Core. From February 2012 to September
2013, Mr. Davis served as the Chief of Strategic Product Management for Wells REF with responsibility for the strategic
planning, development and leadership of the corporate finance organization. In addition, Mr. Davis served as Senior
Vice President of Wells Capital, Inc., or Wells Capital, from February 2013 to September 2013. From 2000 until joining
Wells Real Estate Funds, or Wells REF, in 2007, Mr. Davis worked at Atlanta-based SunTrust Bank, where he held
various positions delivering capital market solutions – advisory, capital raising, and forward risk management to public
and private companies. Mr. Davis previously held positions with CoBank of Denver, Colorado, as Capital Markets
Officer from 1998 to 2000, and with SunTrust as Portfolio Manager for the AgriFoods Specialty Lending Group from
1994 to 1998. Mr. Davis received his Bachelor of Business Administration and Master of Business Administration
from Ohio University.
John F. Rasor has served as our Chief Operating Officer and Secretary since our transition to self-management on
October 25, 2013 and became a director on December 17, 2013. Mr. Rasor served as our consultant from August 2013
to his appointment as our Chief Operating Officer and Secretary. Mr. Rasor brings over 45 years of experience in the
timberland and forest products industries, including expertise in manufacturing, fiber procurement and log
merchandising, sales and distribution. From September 2011 to our transition to self-management, Mr. Rasor has
served as a Principal with Mr. Barag of TimberStar Advisors. From 2004 to September 2011, he served as Managing
Director of TimberStar. During his 40-year career with Georgia-Pacific Corporation, or Georgia Pacific, Mr. Rasor
served as an Executive Vice President of Georgia-Pacific from 1996 to 2003, where he was responsible for all of
Georgia-Pacific’s timberland and the procurement of all the wood and fiber needed to operate Georgia-Pacific’s mills.
He also played a key role in the separation of Georgia-Pacific’s timberland assets into a separate operating entity in
1997 that subsequently merged with Plum Creek Timber Company, Inc. in 2001. Following the separation of Georgia
Pacific’s timberland assets, Mr. Rasor assumed responsibility for several of Georgia Pacific’s building products business
units and staff positions in addition to serving as a member of the Executive Management Committee of the company.
Mr. Rasor attended Willamette University and the University of Oregon.
Employees
As of December 31, 2015, we had 14 employees.
7
Access to SEC Filings and Other Information
We file annual, quarterly and current reports, proxy statements and other information required by the Exchange Act
with the SEC. Access to copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, and other filings we make with the SEC, including amendments to such filings, may be obtained free
of charge from our website at www.catchmark.com, or through a link to the www.sec.gov website. These filings are
available promptly after we file them with, or furnish them to, the SEC.
We have also made available on our website our audit committee charter, compensation committee charter, nominating
and corporate governance committee charter, code of business conduct and ethics and corporate governance principles.
Information on, or accessible through, our website is not part of, and is not incorporated into, this report.
ITEM 1A.
RISK FACTORS
Below are some of the risks and uncertainties that could cause our actual results to differ materially from those presented
in our forward-looking statements. The risks and uncertainties described below are not the only ones we face but do
represent those risks and uncertainties that we believe are material to our business, operating results, prospects, and
financial condition. Additional risks and uncertainties not presently known to us or that we currently deem immaterial
may also harm our business.
Risks Related to Our Business and Operations
The cyclical nature of the forest products industry could impair our operating results.
Our operating results are affected by the cyclical nature of the forest products industry. Our operating results depend
on prices for timber that can experience significant variation and that have been historically volatile. Like other
participants in the forest products industry, we have limited direct influence over the timing and extent of price changes
for cellulose fiber, timber, and wood products. Although some of the supply agreements we have or expect to enter
into in the future fix the price of our harvested timber for a period of time, these contracts may not protect us from the
long-term effects of price declines and may restrict our ability to take advantage of price increases.
The demand for timber and wood products is affected primarily by the level of new residential construction activity,
the supply of manufactured timber products, including imports of timber products, and, to a lesser extent, repair and
remodeling activity and other commercial and industrial uses. The demand for timber also is affected by the demand
for wood chips in the pulp and paper markets and for hardwood in the furniture and other hardwood industries. The
demand for cellulose fiber is related to the demand for disposable products such as diapers and feminine hygiene
products. These activities are, in turn, subject to fluctuations due to, among other factors:
•
•
•
•
changes in domestic and international economic conditions;
interest and currency rates;
population growth and changing demographics; and
seasonal weather cycles (for example, dry summers and wet winters).
Decreases in the level of residential construction activity generally reduce demand for logs and wood products. This
can result in lower revenues, profits, and cash flows. In addition, increases in the supply of logs and wood products
at both the local and national level also can lead to downward pressure on prices during favorable price environments.
Timber owners generally increase production volumes for logs and wood products during favorable price environments.
Such increased production, however, when coupled with even modest declines in demand for these products in general,
could lead to oversupply and lower prices. Oversupply can result in lower revenues, profits, and cash flows to us and
could negatively impact our results of operations.
8
Increasing competition from a variety of substitute products could lead to declines in demand for wood products
and negatively impact our business.
Wood products are subject to increasing competition from a variety of substitute products, including products made
from engineered wood composites, fiber/cement composites, plastics and steel, as well as import competition from
other worldwide suppliers. This could result in lower demand for wood products and impair our operating results.
Our cash distributions are not guaranteed and may fluctuate.
Our board of directors, in its sole discretion, determines the amount of the distributions (including the determination
of whether to retain net capital gains income) to be provided to our stockholders. Our board will determine whether
to authorize a distribution and the amount of such distribution based on its consideration of a number of factors
including, but not limited to, our results of operations, cash flow and capital requirements, economic conditions, tax
considerations, borrowing capacity and other factors, including debt covenant restrictions that may impose limitations
on cash payments, future acquisitions and divestitures, harvest levels, changes in the price and demand for our products
and general market demand for timberlands, including those timberlands that have higher-and-better uses. In addition,
our board of directors may choose to retain operating cash flow for investment purposes, working capital reserves or
other purposes, and these retained funds, although increasing the value of our underlying assets, may not
correspondingly increase the market price of our common stock. Consequently, our distribution levels may fluctuate.
Our failure to meet the market’s expectations with regard to future cash distributions likely would adversely affect the
market price of our common stock.
We are substantially dependent on our business relationship with WestRock, and our continued success will depend
on its economic performance.
The Mahrt Timber Agreements we entered into with WestRock provide that we will sell (through CatchMark TRS)
specified amounts of timber to WestRock, subject to market pricing adjustments and certain early termination rights
of the parties. The Mahrt Timber Agreements are intended to ensure a long-term source of supply of wood fiber products
for WestRock, in order to meet its paperboard and lumber production requirements at specified mills and provide us
with a reliable customer for the wood products from our timberlands. Our financial performance is substantially
dependent on the economic performance of WestRock as a consumer of our wood products. Approximately 23% of
our net timber sales revenue for 2015 was derived from the Mahrt Timber Agreements, which significantly exceeded
the minimum amount of timber that WestRock was required to purchase pursuant to the Mahrt Timber Agreements.
If WestRock does not continue to purchase significantly more than the minimum amount of timber it is required to
purchase from us, or if WestRock becomes unable to purchase the required minimum amount of timber from us, there
could be a material adverse effect on our business and financial condition.
In addition, in the event of a force majeure impacting WestRock, which is defined by the Mahrt Timber Agreements
to include, among other things, lightning, fires, storms, floods, infestation, other acts of God or nature, power failures
and labor strikes or lockouts by employees, the amount of timber that WestRock is required to purchase in the calendar
year would be reduced pro rata based on the period during which the force majeure was in effect and continuing. If
the force majeure is in effect and continuing for 15 days or more, WestRock would not be required to purchase the
timber that was not purchased during the force majeure period. If the force majeure is in effect and continuing for
fewer than 15 days, WestRock would have up to 180 days after the termination of the force majeure period to purchase
the timber that was not purchased during the force majeure period. As a result, the occurrence of a force majeure under
the terms of the Mahrt Timber Agreements could adversely impact our business and financial condition.
If we are unable to find suitable investments or pay too much for properties, we may not be able to achieve our
investment objectives, and the returns on our investments will be lower than they otherwise would be.
A key component of our business and growth strategies is pursue timberland acquisition opportunities. Our ability to
identify and acquire desirable timberlands depends upon the performance of our management team in the selection of
our investments. We also face significant competition in pursuing timberland investments from other REITs; real estate
9
limited partnerships, pension funds and their advisors; bank and insurance company investment accounts; individuals;
and other entities. The market for high-quality timberland is highly competitive given how infrequently those assets
become available for purchase. As a result, many real estate investors have built up their cash positions and face
aggressive competition to purchase quality timberland assets. A significant number of entities and resources competing
for high-quality timberland properties support relatively high acquisition prices for such properties, which may reduce
the number of acquisition opportunities available to, or affordable for, us and could put pressure on our profitability
and our ability to pay distributions to stockholders. In addition, our future acquisitions, if any, may not perform in
accordance with our expectations. Finally, we anticipate financing these acquisitions through proceeds from equity or
debt offerings (including offerings of partnership units by our operating partnership), borrowings, cash from operations,
proceeds from asset dispositions, or any combination thereof, and our inability to finance acquisitions on favorable
terms or the failure of any acquisitions to conform to our expectations, could adversely affect our results of operations.
We cannot assure you that we will be successful in obtaining suitable investments on financially attractive terms, that
we will be able to finance the purchase of such investments or that, if we make investments, our objectives will be
achieved.
We depend on external sources of capital for future growth and our ability to access the capital markets may be
restricted.
Our ability to finance our growth is dependent to a significant degree on external sources of capital and our ability to
access such capital on favorable terms could be hampered by a number of factors, many of which are outside of our
control, including, without limitation, a decline in general market conditions, decreased market liquidity, increases in
interest rates, an unfavorable market perception of our growth potential, a decrease in our current or estimated future
earnings or a decrease in the market price of our common stock. In addition, our ability to access additional capital
may be limited by the terms of our bylaws, which restrict our incurrence of debt, and by our existing indebtedness,
which, among other things, restricts our incurrence of debt and the payment of dividends. Any of these factors,
individually or in combination, could prevent us from being able to obtain the capital we require on terms that are
acceptable to us, and the failure to obtain necessary capital could materially adversely affect our future growth.
As a relatively small public company, our general and administrative expenses are a larger percentage of our total
revenues than many other public companies.
Our total assets as of December 31, 2015 were $599.1 million and our revenues for the year ended December 31, 2015
were $69.1 million. Because our company is smaller than many other publicly-traded REITs, our general and
administrative expenses are, and we expect will continue to be, a larger percentage of our total revenues than many
other public companies. If we are unable to access external sources of capital and grow our business, our general and
administrative expenses will have a greater effect on our financial performance and may reduce the amount of cash
flow available to distribute to our stockholders.
Economic conditions in the geographic regions from which we derive a significant portion of our revenue could
negatively affect our business, financial condition and results of operations.
Our business is affected by global economic conditions and the general level of economic activity in the geographic
regions in which we operate. The concentration of our business in certain geographic regions exacerbates this risk.
Although U.S. macroeconomic conditions have shown signs of improvement during 2015, timber and log prices have
not fully recovered to pre-recession levels and may not for a number of years. If the economic recovery slows or stalls,
we may experience downward pressure on the amounts we are able to charge our customers. If the economy or credit
market conditions in general deteriorate, our cash flows, business, financial condition and results of operations would
be adversely affected.
We are dependent on Forest Resource Consultants and American Forestry Management to manage our timberlands.
We are party to timberland operating agreements with Forest Resource Consultants, Inc., or FRC, and American
Forestry Management, Inc., or AFM (collectively, the "Forest Managers"), which are renewable on an annual basis.
10
Pursuant to these agreements, we depend upon our Forest Managers to manage and operate our timberlands and related
timber operations, and to ensure delivery of timber to WestRock and other timber customers. To the extent we lose the
services of our Forest Managers, we are unable to obtain the services of our Forest Managers at a reasonable price, or
our Forest Managers do not perform the services in accordance with the timberland operating agreements, our results
of operations may be adversely affected.
Our real estate investment activity is concentrated in timberlands, making us more vulnerable economically than
if our investments were diversified.
We have only acquired timberlands and expect to make additional timberlands acquisitions in the future. We are subject
to risks inherent in concentrating investments in real estate. The risks resulting from a lack of diversification become
even greater as a result of our strategy to invest primarily, if not exclusively, in timberlands. A downturn in the real
estate industry generally or the timber or forest products industries specifically could reduce the value of our properties
and could require us to recognize impairment losses from our properties. A downturn in the timber or forest products
industries also could prevent our customers from making payments to us and, consequently, would prevent us from
meeting debt service obligations or making distributions to our stockholders. The risks we face may be more pronounced
than if we diversified our investments outside real estate or outside timberlands.
Our timberlands are located in the U.S. South, and adverse economic and other developments in that area could
have a material adverse effect on us.
All of our timberlands are located in the U.S. South. As a result, we may be susceptible to adverse economic and other
developments in this region, including industry slowdowns, business layoffs or downsizing, relocations of businesses,
changes in demographics, increases in real estate and other taxes and increased regulation, any of which could have
a material adverse effect on us.
In addition, the geographic concentration of our property makes us more susceptible to adverse impacts from a single
natural disaster such as fire, hurricane, earthquake, insect infestation, drought, disease, ice storms, windstorms, flooding
and other factors that could negatively impact our timber production.
We depend on the efforts and expertise of our key executive officers and would be adversely affected by the loss of
their services.
We depend on the efforts and expertise of our Chief Executive Officer, our Chief Operating Officer and our Chief
Financial Officer, to execute our business strategy and we cannot guarantee their continued service. The loss of their
services, and our inability to find suitable replacements, would have an adverse effect on our business.
If we fail to maintain an effective system of disclosure controls and procedures and integrated internal controls,
we may not be able to report our financial results accurately, which could have a material adverse effect on us.
We are required to report our operations on a consolidated basis under the Generally Accepted Accounting Principles
("GAAP"). If we fail to maintain proper overall business controls, our results of operations could be harmed or we
could fail to meet our reporting obligations. In addition, the existence of a material weakness or significant deficiency
could result in errors in our financial statements that could require a restatement, cause us to fail to meet our reporting
obligations and cause stockholders to lose confidence in our reported financial information, which could have a material
adverse effect on us. In addition, we will have to modify our disclosure controls and procedures and internal controls
in connection with our transition to self-management, which may increase the risk to us of experiencing a significant
deficiency or material weakness in our internal controls or failing to maintain effective disclosure controls and
procedures. If we fail to establish and maintain such new controls effectively, we may experience inaccuracies or delays
in our financial reporting. In the case of any joint ventures we might enter into, we may also be subject to additional
risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputation damage relating
to, overall business controls, that are not under our control which could have a material adverse effect on us. In addition,
we rely on our Forest Managers and their systems to provide us with certain information related to our operations,
11
including our timber sales. Although we review such information prior to incorporating it into our accounting systems,
we cannot assure the accuracy of such information. If Forest Managers’ systems fail to accurately report to us the
information on which we rely, we may not be able to accurately report our financial results, which could have a material
adverse effect on us.
The costs requirements of complying with the Exchange Act and the Sarbanes Oxley Act may strain our resources
and occupy the time and energies of management.
We are subject to the Exchange Act and the Sarbanes Oxley Act of 2002, including Section 404. The Sarbanes Oxley
Act requires that we maintain and certify that we have effective disclosure controls and procedures and internal control
over financial reporting. As a result of our transition to an accelerated filer, we are now required to include an attestation
report of our independent registered public accounting firm regarding the effectiveness of our internal control over
financial reporting in our annual reports on Form 10-K. These requirements will increase our costs and may place a
strain on our systems and resources. The effort to comply with these requirements and maintain effective internal
controls may divert management’s attention from other business concerns, which could adversely affect our business,
financial condition or results of operations.
We have experienced net losses attributable to our common stockholders historically and may experience losses
again in the future.
From our inception through the end of 2015, other than in 2014, we have incurred net losses attributable to our common
stockholders. Historical net losses have generally been a result of non-cash charges. If we are unable to generate net
income in the future, and continue to incur net losses, our financial condition, results of operations, cash flows, and
our ability to service our indebtedness and make distributions to our stockholders would be materially and adversely
affected, any of which could adversely affect the market price of our Class A common stock (our "common stock").
We are subject to the credit risk of our customers. The failure of any of our customers to make payments due to us
under supply agreements could have an adverse impact on our financial performance.
Current and future customers who agree to purchase our timber under supply contracts will range in credit quality
from high to low. We assume the full credit risk of these parties, as we have no payment guarantees under the contract
or insurance if one of these parties fails to make payments to us. While we intend to continue acquiring timberlands
in well-developed and active timber markets with access to numerous customers, we may not be successful in this
endeavor. Depending upon the location of any additional timberlands we acquire and the supply agreements we enter
into, our supply agreements may be concentrated among a small number of customers. Even though we may have
legal recourse under our contracts, we may not have any practical recourse to recover payments from some of our
customers if they default on their obligations to us. Any bankruptcy or insolvency of our customers, or failure or delay
by these parties to make payments to us under our agreements, would cause us to lose the revenue associated with
these payments and adversely impact our cash flow, financial condition and results of operations.
We intend to sell portions of our timberlands, either because they are HBU properties or in response to changing
conditions, but if we are unable to sell these timberlands promptly or at the price that we anticipate, our land sale
revenues may be reduced, which could reduce the cash available for distribution to our stockholders.
On an annual basis, we intend to sell approximately 1% to 2% of our fee timberland acreage, specifically timberlands
that we have determined have become more valuable for development, recreational, conservation and other uses than
for growing timber, which we refer to as HBU properties. We intend to use the proceeds from these sales to support
our distributions to our stockholders. We may also sell portions of our timberland from time to time in response to
changing economic, financial or investment conditions. Because timberlands are relatively illiquid investments, our
ability to promptly sell timberlands is limited. The following factors, among others, may adversely affect the timing
and amount of our income generated by sales of our timberlands:
12
•
•
•
general economic conditions;
availability of funding for governmental agencies, developers, conservation organizations, individuals
and others to purchase our timberlands for recreational, conservation, residential or other purposes;
local real estate market conditions, such as oversupply of, or reduced demand for, properties sharing
the same or similar characteristics as our timberlands;
•
competition from other sellers of land and real estate developers;
• weather conditions or natural disasters having an adverse effect on our properties;
•
•
•
•
•
•
relative illiquidity of real estate investments;
forestry management costs associated with maintaining and managing timberlands;
changes in interest rates and in the availability, cost and terms of debt financing;
impact of federal, state and local land use and environmental protection laws;
changes in governmental laws and regulations, fiscal policies and zoning ordinances, and the related
costs of compliance with laws and regulations, fiscal policies and ordinances; or
it may be necessary to delay sales in order to minimize the risk that gains would be subject to the
100% prohibited transactions tax.
In acquiring timberlands and in entering into long-term supply agreements, we may agree to lock-out provisions that
materially restrict us from selling that property for a period of time or impose other restrictions, such as a limitation
on the amount of debt that can be placed or repaid on that property. These factors and any others that would impede
our ability to respond quickly to market opportunities could adversely impact our results of operations and reduce our
cash available to pay distributions to our stockholders.
Large-scale increases in the supply of timber may affect timber prices and reduce our revenues.
The supply of timber available for sale in the market could increase for a number of reasons, including producers
introducing new capacity or increasing harvest levels. Some governmental agencies, principally the U.S.D.A. Forest
Service and the U.S. Department of the Interior’s Bureau of Land Management, own large amounts of timberlands. If
these agencies choose to sell more timber from their holdings than they have been selling in recent years, timber prices
could fall and our revenues could be reduced. Any large reduction in the revenues we expect to earn from our timberlands
would reduce the returns, if any, we are able to achieve for our stockholders.
Uninsured losses relating to the timberlands we own and may acquire may reduce our stockholders’ returns.
The volume and value of timber that can be harvested from the timberlands we own and may acquire may be limited
by natural disasters such as fire, hurricane, earthquake, insect infestation, drought, disease, ice storms, windstorms,
flooding, and other weather conditions and natural disasters, as well as other causes such as theft, trespass,
condemnation, or other casualty. We do not intend to maintain insurance for any loss to our standing timber from
natural disasters or other causes. Any funds used for such losses would reduce cash available for distributions to our
stockholders.
Harvesting our timber may be subject to limitations that could adversely affect our results of operations.
Our primary assets are our timberlands. Weather conditions, timber growth cycles, property access limitations,
availability of contract loggers and haulers, and regulatory requirements associated with the protection of wildlife and
water resources may restrict our ability to harvest our timberlands. Other factors that may restrict our timber harvest
include damage to our standing timber by fire, hurricane, earthquake, insect infestation, drought, disease, ice storms,
windstorms, flooding and other weather conditions and natural disasters. Changes in global climate conditions could
13
intensify one or more of these factors. Although damage from such causes usually is localized and affects only a limited
percentage of standing timber, there can be no assurance that any damage affecting our timberlands will in fact be so
limited. As is common in the forest products industry, we do not maintain insurance coverage for damage to our
timberlands. Furthermore, we may choose to invest in timberlands that are intermingled with sections of federal land
managed by the U.S.D.A. Forest Service or other private owners. In many cases, access might be achieved only through
a road or roads built across adjacent federal or private land. In order to access these intermingled timberlands, we
would need to obtain either temporary or permanent access rights to these lands from time to time. Our revenue, net
income, and cash flow from our operations will be dependent to a significant extent on the continued ability to harvest
timber on our timberlands at adequate levels and in a timely manner. Therefore, if we were to be restricted from
harvesting on a significant portion of our timberlands for a prolonged period of time, or if material damage to a
significant portion of our standing timber were to occur, then our results of operations could be adversely affected.
We face possible liability for environmental clean-up costs and wildlife protection laws related to the timberlands
we acquire, which could increase our costs and reduce our profitability and cash distributions to our stockholders.
Our business is subject to laws, regulations, and related judicial decisions and administrative interpretations relating
to, among other things, the protection of timberlands, endangered species, timber harvesting practices, recreation and
aesthetics and the protection of natural resources, air and water quality that are subject to change and frequently enacted.
These changes may adversely affect our ability to harvest and sell timber, and remediate contaminated properties. We
are subject to regulation under, among other laws, the Clean Air Act, the Clean Water Act, the Resource Conservation
and Recovery Act, the Comprehensive Environmental Response Compensation and Liability Act of 1980, the National
Environmental Policy Act, and the Endangered Species Act, as well as comparable state laws and regulations. Violations
of various statutory and regulatory programs that apply to our operations could result in civil penalties; damages,
including natural resource damages; remediation expenses; potential injunctions; cease-and-desist orders; and criminal
penalties.
Laws and regulations protecting the environment have generally become more stringent in recent years and could
become more stringent in the future. Some environmental statutes impose strict liability, rendering a person liable for
environmental damage without regard to the person’s negligence or fault. We may acquire timberlands subject to
environmental liabilities, such as clean-up of hazardous substance contamination and other existing or potential
liabilities of which we are not aware, even after investigations of the properties. We may not be able to recover any of
these liabilities from the sellers of these properties. The cost of these clean-ups could therefore increase our operating
costs and reduce our profitability and cash available to make distributions to our stockholders. The existence of
contamination or liability also may materially impair our ability to use or sell affected timberlands.
The Endangered Species Act and comparable state laws protect species threatened with possible extinction. At least
one species present on our timberlands has been, and in the future more may be, protected under these laws. Protection
of threatened and endangered species may include restrictions on timber harvesting, road-building, and other forest
practices on private, federal, and state land containing the affected species. The size of the area subject to restriction
varies depending on the protected species at issue, the time of year, and other factors, but can range from less than one
acre to several thousand acres.
The Clean Water Act regulates the direct and indirect discharge of pollutants into the waters of the United States. Under
the Clean Water Act, it is unlawful to discharge any pollutant from a “point source” into navigable waters of the United
States without a permit obtained under the National Pollutant Discharge Elimination System permit program of the
Environmental Protection Agency, or the EPA. Storm water from roads supporting timber operations that is conveyed
through ditches, culverts and channels are exempted by EPA rule from this permit requirement, leaving these sources
of water discharge to state regulation. The scope of these state regulations vary by state and are subject to change, and
the EPA’s exemption has recently been subject to legal challenges and legislative responses. To the extent we are subject
to future federal or state regulation of storm water runoff from roads supporting timber operations, our operational
costs to comply with such regulations could increase and our results of operations could be adversely affected.
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Our estimates of the timber growth rates on our properties may be inaccurate, which would impair our ability to
realize expected revenues from those properties.
We rely upon estimates of the timber growth rates and yield when acquiring and managing timberlands. These estimates
are central to forecasting our anticipated timber revenues and expected cash flows. Growth rates and yield estimates
are developed by forest statisticians using measurements of trees in research plots on a property. The growth equations
predict the rate of height and diameter growth of trees so that foresters can estimate the volume of timber that may be
present in the tree stand at a given age. Tree growth varies by soil type, geographic area, and climate. Inappropriate
application of growth equations in forest management planning may lead to inaccurate estimates of future volumes.
If these estimates are inaccurate, our ability to manage our timberlands in a profitable manner will be diminished,
which may cause our results of operations to be adversely affected.
Changes in assessments, property tax rates and state property tax laws may reduce our net income and our ability
to make distributions to our stockholders.
Our expenses may be increased by assessments of our timberlands and changes in property tax laws. We generally
intend to hold our timberlands for a substantial amount of time. Property values tend to increase over time, and as
property values increase, the related property taxes generally also increase, which would increase the amount of taxes
we pay. In addition, changes to state tax laws or local initiatives could also lead to higher tax rates on our timberlands.
Because each parcel of a large timberland property is independently assessed for property tax purposes, our timberlands
may receive a higher assessment and be subject to higher property taxes. In some cases, the cost of the property taxes
may exceed the income that could be produced from that parcel if we continue to hold it as timberland. If our timberlands
become subject to higher tax rates, such costs could have a material adverse effect on our financial condition, results
of operations and ability to make distributions to our stockholders.
Changes in land uses in the vicinity of our timberlands may increase the amount of the property that we classify
as HBU properties, and property tax regulations may reduce our ability to realize the values of those HBU properties.
An increase in the value of other properties in the vicinity of our timberlands may prompt us to sell parcels of our land
as HBU properties. Local, county and state regulations may prohibit us from, or penalize us for, selling a parcel of
timberland for real estate development. Some states regulate the number of times that a large timberland property may
be subdivided within a specified time period, which would also limit our ability to sell our HBU property. In addition,
in some states timberland is subject to certain property tax policies that are designed to encourage the owner of the
timberland to keep the land undeveloped. These policies may result in lower taxes per acre for our timberlands as long
as they are used for timber purposes only. However, if we sell a parcel of timberland in such states as HBU property,
we may trigger tax penalties, which could require us to repay all of the tax benefits that we have received. Our inability
to sell our HBU properties on terms that are favorable to us could negatively affect our financial condition and our
ability to make distributions to our stockholders.
We may be unable to properly estimate non-timber revenues from any properties that we acquire, which would
impair our ability to acquire attractive properties, as well as our ability to derive the anticipated revenues from those
properties.
If we acquire additional properties, we likely will expect to realize revenues from timber and non-timber-related
activities, such as the sale of conservation easements and recreational leases. Non-timber activities can contribute
significantly to the revenues that we derive from a particular property. We will rely on estimates to forecast the amount
and extent of revenues from non-timber-related activities on our timberlands. If our estimates concerning the revenue
from non-timber-related activities are incorrect, we will not be able to realize the projected revenues. If we are unable
to realize the level of revenues that we expect from non-timber activities, our revenues from the underlying timberland
would be less than expected and our results of operations and ability to make distributions to our stockholders may be
negatively impacted.
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The impacts of any climate-related legislation or regulation remain uncertain at this time.
There are several international, federal and state-level proposals addressing domestic and global climate issues.
Generally, such proposals in the United States could impose regulation or taxation on the production of carbon dioxide
and other “greenhouse gases” in an attempt to reduce emissions to the atmosphere, and provide tax and other incentives
to produce and use more “clean energy.” Any future legislative and regulatory activity in this area could, in some way,
affect us, but it is unclear at this time whether any such impact would be positive, negative or significant.
We rely on information technology in our operations, and any material failure, inadequacy, interruption or security
failure of that technology could harm our business.
We rely on information technology networks and systems, including the Internet, to process, transmit and store
electronic information and to manage or support a variety of our business processes, including financial transactions
and maintenance of records, which may include confidential information. We rely on commercially available systems,
software, tools and monitoring to provide security for processing, transmitting and storing confidential information,
such as individually identifiable information relating to financial accounts. Although we have taken steps to protect
the security of the data maintained in our information systems, it is possible that our security measures will not be able
to prevent the systems’ improper functioning, or the improper disclosure of personally identifiable information such
as in the event of cyber-attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks
by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential
information. Any failure to maintain proper function, security and availability of our information systems could interrupt
our operations, damage our reputation, subject us to liability claims or regulatory penalties and could materially and
adversely affect us.
Changes in energy and fuel costs could affect our results of operations and financial condition.
Energy costs are a significant operating expense for our logging and hauling contractors and for the contractors who
support the customers of our standing timber. Energy costs can be volatile and are susceptible to rapid and substantial
increases due to factors beyond our control, such as changing economic conditions, political unrest, instability in
energy-producing nations, and supply and demand considerations. Although the price of oil has recently decreased,
increases in the price of oil could adversely affect our business, financial condition and results of operations. In addition,
an increase in fuel costs, and its impact on the cost and availability of transportation for our products and the cost and
availability of third party logging and hauling contractors, could have a material adverse effect on the operating costs
of our contractors and our standing timber customers as well as in defining economically accessible timber stands.
Such factors could in turn have a material adverse effect on our business, financial condition and results of operations.
Any joint ventures that we may enter into may pose unique risks.
In the future, we may participate in joint ventures from time to time, including but not limited to, joint ventures involving
the ownership and management of timberlands. Any joint venture involves risks including, but not limited to, the risk
that one or more of our joint venture partners takes actions that are contrary to our agreed upon terms, our instructions
to them or to our policies or objectives, any one of which could cause adverse consequences for us.
In the event that we make international investments, we will be subject to changes in global market trends that
could adversely impact our ability to make distributions to our stockholders.
We may determine to acquire timberlands located in timber-producing regions outside the United States. These
international investments could cause our business to be subject to unexpected, uncontrollable and rapidly changing
events and circumstances in addition to those experienced in U.S. locations. Adverse changes in the following factors,
among others, could have a negative impact on our business, results of operations, and our financial condition:
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effects of exposure to currency other than U.S. dollars, due to having non-U.S. customers and foreign
operations;
potentially adverse tax consequences, including restrictions on the repatriation of earnings;
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regulatory, social, political, labor or economic conditions in a specific country or region; and
trade protection laws, policies and measures, and other regulatory requirements affecting trade and
investment, including loss or modification of exemptions for taxes and tariffs, and import and export
licensing requirements.
Risks Related to Our Organizational Structure
Our board of directors may change significant corporate policies without stockholder approval.
Our investment, financing, borrowing and distribution policies and our policies with respect to all other activities,
including growth, debt, capitalization and operations, are determined by our board of directors. These policies may be
amended or revised at any time and from time to time at the discretion of our board of directors without a vote of our
stockholders. As a result, the ability of our stockholders to control our policies and practices is extremely limited. In
addition, our board of directors may change our policies with respect to conflicts of interest provided that such changes
are consistent with applicable legal and regulatory requirements, including the listing standards of the New York Stock
Exchange ("NYSE"). A change in these policies could have an adverse effect on our financial condition, results of
operations, cash flows, per share trading price of our common stock and ability to satisfy our debt service obligations
and to make distributions to our stockholders.
Our board of directors may increase the number of authorized shares of stock and issue stock without stockholder
approval, including in order to discourage a third party from acquiring our company in a manner that could result
in a premium price to our stockholders.
Subject to applicable legal and regulatory requirements, our charter authorizes our board of directors, without
stockholder approval, to amend our charter from time to time to increase or decrease the aggregate number of authorized
shares of stock or the number of authorized shares of stock of any class or series, to authorize us to issue authorized
but unissued shares of our common stock or preferred stock and to classify or reclassify any unissued shares of our
common stock or preferred stock into other classes or series of stock and to set the preferences, rights and other terms
of such classified or unclassified shares. As a result, we may issue series or classes of common stock or preferred stock
with preferences, dividends, powers and rights, voting or otherwise, that are senior to, or otherwise conflict with, the
rights of holders of our common stock. In addition, our board of directors could establish a series of preferred stock
that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might
involve a premium price for our common stock or that our stockholders may believe is in their best interests.
In order to preserve our status as a REIT, our charter limits the number of shares a person may own, which may
discourage a takeover that could otherwise result in a premium price for our common stock or otherwise benefit
our stockholders.
Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to
preserve our qualification as a REIT for U.S. federal income tax purposes. Unless exempted by our board of directors
(prospectively or retroactively), no person may actually or constructively own more than 9.8% in value of the
outstanding shares of our capital stock or more than 9.8% (by value or number of shares, whichever is more restrictive)
of the outstanding shares of our common stock. This restriction may have the effect of delaying, deferring or preventing
a change in control of our company, including an extraordinary transaction (such as a merger, tender offer or sale of
all or substantially all of our assets) that might provide a premium price for our common stock or otherwise be in the
best interest of our stockholders.
Certain provisions of Maryland law could inhibit changes in control of us, which could lower the value of our
common stock.
Certain provisions of the Maryland General Corporation Law ("MGCL"), may have the effect of inhibiting or deterring
a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise
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could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-
prevailing market price of such shares, including:
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“business combination” provisions that, subject to limitations, prohibit certain business combinations
between us and an “interested stockholder” (defined generally as any person who beneficially owns 10%
or more of the voting power of our outstanding voting stock or an affiliate or associate of ours who, at any
time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of
our then outstanding stock) or an affiliate of an interested stockholder for five years after the most recent
date on which the stockholder becomes an interested stockholder, and thereafter may impose super majority
stockholder voting requirements unless certain minimum price conditions are satisfied; and
“control share” provisions that provide that “control shares” of our company (defined as shares which,
when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one
of three increasing ranges of voting power in electing directors) acquired in a “control share
acquisition” (defined as the direct or indirect acquisition of ownership or control of outstanding “control
shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote
of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
We have opted out of these provisions of the MGCL, in the case of the business combination provisions of the MGCL
by resolution of our board of directors, and in the case of the control share provisions of the MGCL pursuant to a
provision in our bylaws. However, following our opt out, in the future, our board of directors may by resolution elect
to opt in to the business combination provisions of the MGCL and our board of directors may, by amendment to our
bylaws and without stockholder approval, opt in to the control share provisions of the MGCL.
Title 3, Subtitle 8 of the MGCL permits our board of directors, without stockholder approval and regardless of what
is currently provided in our charter or bylaws, to implement certain takeover defenses, including adopting a classified
board. Such takeover defenses may have the effect of inhibiting a third party from making an acquisition proposal for
us or of delaying, deferring or preventing a change in control of us under the circumstances that otherwise could provide
our stockholders with the opportunity to realize a premium over the then current market price.
In addition, the advance notice provisions of our bylaws could delay, defer or prevent a transaction or a change of
control of our company that might involve a premium price for holders of our common stock or that our stockholders
may believe to be in their best interests. Likewise, if our board of directors were to opt in to the business combination
provisions of the MGCL or the provisions of Title 3, Subtitle 8 of the MGCL, or if the provision in our bylaws opting
out of the control share acquisition provisions of the MGCL were rescinded by our board of directors, these provisions
of the MGCL could have similar anti-takeover effects.
Our rights and the rights of our stockholders to take action against our directors and officers are limited, which
could limit your recourse in the event of actions that you do not believe are in your best interests.
Maryland law provides that a director or officer has no liability in that capacity if he or she satisfies his or her duties
to us. As permitted by the MGCL, our charter limits the liability of our directors and officers to us and our stockholders
for money damages, except for liability resulting from:
•
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actual receipt of an improper benefit or profit in money, property or services; or
a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that
was material to the cause of action adjudicated.
In addition, our charter obligates us to indemnify our directors and officers for actions taken by them in that capacity
to the maximum extent permitted by Maryland law. The indemnification agreements that we entered into with our
directors and certain of our officers also require us to indemnify these directors and officers for actions taken by them
in those capacities to the maximum extent permitted by Maryland law. As a result, we and our stockholder may have
more limited rights against our directors and officers than might otherwise exist. Accordingly, in the event that actions
taken in good faith by any of our directors or officers impede the performance of our company, your ability to recover
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damages from such director or officer will be limited. In addition, we are obligated to advance the defense costs incurred
by our directors and our officers, and may, in the discretion of our board of directors, advance the defense costs incurred
by our employees and other agents in connection with legal proceedings.
Risks Related to Our Debt Financing
Our existing indebtedness and any future indebtedness we may incur could adversely affect our financial health
and operating flexibility.
We have entered into a fourth amended and restated credit agreement (the “2014 Amended Credit Agreement") that
provides for a senior secured credit facility of up to $500 million, which includes a $100 million term loan facility, a
$35 million revolving credit facility and a $365 million multi-draw credit facility. We had a total of $185 million
outstanding as of December 31, 2015, $100 million of which was outstanding on the term loan and $85 million of
which was outstanding on the multi-draw credit facility.
Our existing indebtedness and any indebtedness we may incur in the future could have important consequences to us
and the trading price of our common stock, including:
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limiting our ability to borrow additional amounts for working capital, capital expenditures, debt service
requirements, execution of our growth strategy or other purposes;
limiting our ability to use operating cash flow in other areas of our business because we must dedicate a
portion of these funds to service the debt;
increasing our vulnerability to general adverse economic and industry conditions, including increases in
interest rates;
limiting our ability to capitalize on business opportunities, including the acquisition of additional
properties, and to react to competitive pressures and adverse changes in government regulation;
limiting our ability or increasing the costs to refinance indebtedness;
limiting our ability to enter into marketing and hedging transactions by reducing the number of
counterparties with whom we can enter into such transactions as well as the volume of those transactions;
forcing us to dispose of one or more properties, possibly on disadvantageous terms;
forcing us to sell additional equity securities at prices that may be dilutive to existing stockholders;
causing us to default on our obligations or violate restrictive covenants, in which case the lenders or
mortgagees may accelerate our debt obligations, foreclose on the properties that secure their loans and
take control of our properties that secure their loans and collect rents and other property income; and
in the event of a default under any of our recourse indebtedness or in certain circumstances under our
mortgage indebtedness, we would be liable for any deficiency between the value of the property securing
such loan and the principal and accrued interest on the loan.
If any one of these events were to occur, our financial condition, results of operations, cash flow and our ability to
satisfy our principal and interest obligations could be materially and adversely affected.
Our financial condition could be adversely affected by financial and other covenants and other provisions under
the 2014 Amended Credit Agreement or other debt agreements.
Pursuant to the 2014 Amended Credit Agreement, we are required to comply with certain financial and operating
covenants, including, among other things, covenants that require us to maintain certain leverage and coverage ratios
and covenants that prohibit or restrict our ability to incur additional indebtedness, grant liens on our real or personal
property, make certain investments, dispose of our assets and enter into certain other types of transactions. The 2014
Amended Credit Agreement also prohibits us from declaring, setting aside funds for, or paying any dividend,
distribution, or other payment to our stockholders other than as required to maintain our REIT qualification if our LTV
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ratio is greater than or equal to 45%. We may declare and pay distributions so long as our LTV ratio remains below
45% and we maintain a minimum fixed-charge coverage ratio of 1.05:1.00, or minimum liquidity balance as defined
by the credit agreement. This requirement has restricted our ability to pay cash distributions in the past. Our credit
agreement also subjects us to mandatory prepayment from proceeds generated from dispositions of timberlands, which
may have the effect of limiting our ability to make distributions under certain circumstances. The mandatory prepayment
excludes (1) 1.5% of the aggregate cost basis of its timberland if its LTV Ratio is between 30% and 40% and up
to 2.0% of the aggregate cost basis if its LTV Ratio does not exceed 30%; and (2) lease termination proceeds of less
than $2.0 million in a single termination until aggregate lease termination proceeds during the term of the facility
exceeds $5.0 million. These restrictions may prevent us from taking actions that we believe would be in the best interest
of our business and may make it difficult for us to successfully execute our business strategy or effectively compete
with companies that are not similarly restricted. In addition, a breach of these covenants or other event of default would
allow CoBank, ACB ("CoBank") to accelerate payment of the loan. Given the restrictions in our debt covenants on
these and other activities, we may be significantly limited in our operating and financial flexibility and may be limited
in our ability to respond to changes in our business or competitive activities in the future.
We may incur additional indebtedness which could increase our business risks and may reduce the value of your
investment.
We have acquired, and in the future may acquire, real properties by borrowing funds. In addition, we may incur mortgage
debt and pledge some or all of our real properties as security for that debt to obtain funds to acquire additional real
properties. We may also borrow funds if needed to satisfy the REIT tax qualification requirement that we distribute at
least 90% of our annual REIT taxable income to our stockholders. We may also borrow funds if we otherwise deem
it necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes. Our
bylaws do not limit us from incurring debt until our aggregate debt would exceed 200% of our net assets.
Significant borrowings by us increase the risks of a stockholder’s investment. If there is a shortfall between the cash
flow from our properties and the cash flow needed to service our indebtedness, then the amount available for distributions
to stockholders may be reduced. In addition, incurring mortgage debt increases the risk of loss since defaults on
indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the
property securing the loan that is in default, thus reducing the value of a stockholder’s investment. For tax purposes,
a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the
outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage
exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but we would not receive
any cash proceeds. We may give full or partial guarantees to lenders of mortgage debt on behalf of the entities that
own our properties. When we give a guaranty on behalf of an entity that owns one of our properties, we will be
responsible to the lender for satisfaction of the debt if it is not paid by such entity. If any mortgages or other indebtedness
contains cross-collateralization or cross-default provisions, a default on a single loan could affect multiple properties.
Our decision to hedge against interest rate changes may have a material adverse effect on our financial results and
condition, and there is no assurance that our hedges will be effective.
We use interest rate hedging arrangements in order to manage our exposure to interest rate volatility. These hedging
arrangements involve risk, including the risk that counterparties may fail to honor their obligations under these
arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, that the
amount of income that we may earn from hedging transactions may be limited by federal tax provisions governing
REITs, and that these arrangements may result in higher interest rates than we would otherwise pay. Moreover, no
amount of hedging activity can completely insulate us from the risks associated with changes in interest rates. Failure
to hedge effectively against interest rate changes may materially adversely affect our results of operations and financial
condition.
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Our investment strategies employ a significant amount of leverage.
Our investment strategies generally employ leverage. Our financing arrangements and their related hedging instruments
contain operating and financial covenants with which we must comply on a continuing basis. Our failure to comply
with these operating and financial covenants could result in one or more of our financing or hedging arrangements
being declared in default, cancelled or not renewed.
High mortgage interest rates may make it difficult for us to finance or refinance properties, which could reduce
the number of properties we can acquire, our net income, and the amount of cash distributions we can make.
If mortgage debt is unavailable at reasonable interest rates, we may not be able to finance the purchase of properties.
If we place mortgage debt on properties, we run the risk of being unable to refinance the properties when the loans
become due, or of being unable to refinance on favorable terms. If interest rates are higher when we refinance the
properties, our income could be reduced. If any of these events occur, our cash flow would be reduced. This, in turn,
would reduce cash available for distribution to our stockholders and may hinder our ability to raise more capital by
issuing more stock or by borrowing more money.
Increases in interest rates could increase the amount of our debt payments and hinder our ability to pay distributions
to our stockholders.
We have incurred significant indebtedness that accrues interest at a variable rate, and we may incur additional debt in
the future. Interest we pay under the 2014 Amended Credit Agreement and any other debt we incur will reduce our
operating cash flows and hinder our ability to make distributions to our stockholders. Additionally, if we incur additional
variable-rate debt, increases in interest rates would increase our interest cost, which would reduce our cash flows and
our ability to pay distributions to our stockholders. In addition, if we need to repay existing debt during periods of
high interest rates, we could be required to sell one or more of our investments in order to repay the debt, which sale
at that time might not permit realization of the maximum return on such investments.
Economic conditions may have an impact on our business, our financial condition, and our ability to obtain debt
financing in ways that we currently cannot predict.
Turmoil in the global financial system may have an impact on our business and our financial condition. Despite
improved access to capital for some companies, the capital and credit markets continue to be affected by extreme
volatility and have experienced disruption during the past several years. The health of the global capital markets remains
a concern. We have relied on debt financing to finance our timberlands. As a result of the uncertainties in the credit
market, we may not be able to refinance our existing indebtedness or to obtain additional debt financing on attractive
terms. If we are not able to refinance existing indebtedness on attractive terms at its maturity, we may be forced to
dispose of some of our assets. Disruptions in the financial markets could have an impact on our interest rate swap
agreements if our counterparties are forced to default on their obligations to us due to bankruptcy, lack of liquidity,
operational failure, or other reasons. We may be materially and adversely affected in the event of a significant default
by one of our counterparties. In addition, depressed economic conditions could influence the levels of consumer
spending and reduce the demand for goods produced from our wood, which would have a material adverse effect on
our financial condition. Our ability to make future principal and interest payments on our debt depends upon our future
performance, which is subject to general economic conditions; industry cycles; and financial, business, and other
factors affecting our operations, many of which are beyond our control.
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Federal Income Tax Risks
Failure to continue to qualify as a REIT would cause us to be taxed as a regular corporation, which would
substantially reduce funds available for distributions to our stockholders and materially and adversely affect our
financial condition and results of operations.
We believe that we have been organized, owned and operated in conformity with the requirements for qualification
and taxation as a REIT under the Internal Revenue Code (the "Code") and that our intended manner of ownership and
operation will enable us to continue to meet the requirements for qualification and taxation as a REIT for federal
income tax purposes. Our qualification as a REIT depends upon our ability to meet requirements regarding our
organization and ownership, distributions of our income, the nature and diversification of our income and assets, and
other tests imposed by the Code. We cannot assure you that we will satisfy the requirements for REIT qualification in
the future. Future legislative, judicial or administrative changes to the federal income tax laws could be applied
retroactively, which could result in our disqualification as a REIT.
If we fail to qualify as a REIT for any taxable year, we will be subject to federal and state income tax on our taxable
income, if any, at corporate rates and, possibly, penalties. In addition, we would generally be disqualified from treatment
as a REIT for the four taxable years following the year of losing our REIT status. To the extent we have taxable net
income, losing our REIT status would reduce our net earnings available for investment or distribution to stockholders
because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the
dividends-paid deduction, and we would no longer be required to make distributions. If this occurs, we might be
required to borrow funds or liquidate some investments in order to pay the applicable tax. Our failure to qualify as a
REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our
common stock.
Even if we continue to qualify to be taxed as a REIT for federal income tax purposes, we may be subject to other
tax liabilities that reduce our cash flows.
Even if we continue to qualify to be taxed as a REIT for federal income tax purposes, we may be subject to some
federal, state, and local taxes on our income or property. For example:
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In order to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income to
our stockholders (determined without regard to the dividends-paid deduction or net capital gain). To the
extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable
income (including net capital gain), we will be subject to federal and state corporate income tax on the
undistributed income.
• We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we
pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain
net income, and 100% of our undistributed income from prior years.
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If we have net income from the sale of foreclosure property that we hold primarily for sale to customers
in the ordinary course of business or other non-qualifying income from foreclosure property, we must
pay a tax on that income at the highest corporate income tax rate.
If we sell a property, other than foreclosure property, that we hold primarily for sale to customers in the
ordinary course of business, our gain may be subject to the 100% “prohibited transaction” tax.
• Our taxable REIT subsidiaries will be subject to tax on their taxable income.
Certain of our business activities are potentially subject to the prohibited transaction tax, which could reduce the
return on stockholders’ investments.
As a REIT, we would be subject to a 100% tax on any net income from “prohibited transactions.” In general, prohibited
transactions are sales or other dispositions of property to customers in the ordinary course of business. Delivered logs,
if harvested and sold by a REIT directly, would likely constitute property held for sale to customers in the ordinary
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course of business and would, therefore, be subject to the prohibited transactions tax if sold at a gain. Accordingly,
under the timber agreements, we sell standing timber to CatchMark TRS under pay-as-cut contracts which generate
capital gain to us under Section 631(b) of the Code (to the extent the timber has been held by us for more than one
year), and CatchMark TRS, in turn, harvests such timber and sells logs to WestRock. This structure should avoid the
prohibited transactions tax, and we use a similar structure for the sale of delivered logs to other customers. However,
if the IRS were to successfully disregard CatchMark TRS’ role as the harvester and seller of such logs for federal
income tax purposes, our income, if any, from such sales could be subject to the 100% penalty tax. In addition, sales
by us of HBU property at the REIT level could, in certain circumstances, constitute prohibited transactions. We intend
to avoid the 100% prohibited transaction tax by satisfying safe harbors in the Code, structuring dispositions as non-
taxable like-kind exchanges or making sales that otherwise would be prohibited transactions through one or more TRS'
whose taxable income is subject to regular corporate income tax. We may not, however, always be able to identify
properties that might be treated as part of a “dealer” land sales business. For example, if we sell any HBU properties
at the REIT level that we incorrectly identify as property not held for sale to customers in the ordinary course of
business or that subsequently become properties held for sale to customers in the ordinary course of business, we may
be subject to the 100% prohibited transactions tax.
The taxable income of CatchMark TRS is subject to federal and applicable state and local income tax. While we seek
to structure the pricing of our timber sales to CatchMark TRS at market rates, the IRS could assert that such pricing
does not reflect arm’s-length pricing and impute additional taxable income to CatchMark TRS or impose excise taxes.
To maintain our REIT status, we may be forced to forgo otherwise attractive opportunities, which could lower the
return on stockholders’ investments.
To qualify as a REIT, we must satisfy tests on an ongoing basis concerning, among other things, the sources of our
income, nature of our assets, and the amounts we distribute to our stockholders. We may be required to make distributions
to stockholders at times when it would be more advantageous to reinvest cash in our business or when we do not have
funds readily available for distribution. Compliance with the REIT requirements may hinder our ability to operate
solely on the basis of maximizing profits.
Even though we intend to maintain our REIT status, our cash dividends are not guaranteed and may fluctuate.
Generally, REITs are required to distribute 90% of their ordinary taxable income. We have substantial net operating
losses that, subject to possible limitations, will reduce our taxable income. In addition, capital gains may be retained
by us but would be subject to income taxes. If capital gains are retained rather than distributed, our stockholders would
be notified and they would be deemed to have received a taxable distribution, with a refundable credit for any federal
income tax paid by us. Accordingly, we will not be required to distribute material amounts of cash if substantially all
of our taxable income is income from timber-cutting contracts or sales of timberland that is treated as capital gains
income. Our board of directors, in its sole discretion, determines the amount of quarterly dividends to be provided to
our stockholders based on consideration of a number of factors, including but not limited to, tax considerations.
Consequently, our dividend levels may fluctuate.
Our use of taxable REIT subsidiaries may affect the value of our common stock relative to the share price of other
REITs.
We conduct a portion of our business activities through one or more taxable REIT subsidiaries, or TRSs. A TRS is a
fully taxable corporation that may earn income that would not be qualifying REIT income if earned directly by us.
Our use of TRSs enables us to engage in non-REIT-qualifying business activities. However, under the Code, no more
than 25% (20% after 2017) of the value of the assets of a REIT may be represented by securities of one or more TRSs.
This limitation may affect our ability to increase the size of our non-REIT-qualifying operations. Furthermore, because
the income earned by our TRSs is subject to corporate income tax and is not subject to the requirement to distribute
annually at least 90% of our REIT taxable income to our stockholders, our use of TRSs may cause our common stock
to be valued differently than the shares of other REITs that do not use TRSs as extensively as we use them.
23
We may be limited in our ability to fund distributions on our capital stock and pay our indebtedness using cash
generated through our TRSs.
Our ability to receive dividends from our TRSs is limited by the rules with which we must comply to maintain our
status as a REIT. In particular, at least 75% of gross income for each taxable year as a REIT must be derived from
passive real estate sources including sales of our standing timber and other types of qualifying real estate income, and
no more than 25% of our gross income may consist of dividends from TRSs and other non-real estate income. This
limitation on our ability to receive dividends from our TRSs may affect our ability to fund cash distributions to our
stockholders or make payments on our borrowings using cash flows from our TRSs. The net income of our TRSs is
not required to be distributed, and income that is not distributed will not be subject to the REIT income distribution
requirement.
We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our
operating flexibility and reduce the market price of our common stock.
At any time, the federal income tax laws governing REITs or the administrative and judicial interpretations of those
laws may be amended. We cannot predict when or if any new federal income tax law, regulation, or administrative
and judicial interpretation, or any amendment to any existing federal income tax law, regulation or administrative or
judicial interpretation, will be adopted, promulgated or become effective and any such law, regulation, or interpretation
may take effect retroactively. We and our stockholders could be adversely affected by any such change in, or any new,
federal income tax law, regulation or administrative and judicial interpretation.
Risks Related to Our Common Stock
The market price and trading volume of our common stock may be volatile.
The U.S. stock markets, including the NYSE, on which our common stock listed under the symbol “CTT,” have
experienced significant price and volume fluctuations. As a result, the market price of shares of our common stock is
likely to be similarly volatile, and investors in shares of our common stock may experience a decrease in the value of
their shares, including decreases unrelated to our operating performance or prospects. We cannot assure you that the
market price of our common stock will not fluctuate or decline significantly in the future.
In addition to the risks listed in this “Risk Factors” section, a number of factors could negatively affect our share price
or result in fluctuations in the price or trading volume of our common stock, including:
•
•
•
•
•
•
•
•
•
•
the annual yield from distributions on our common stock as compared to yields on other financial
instruments;
equity issuances by us, or future sales of substantial amounts of our common stock by our existing or
future stockholders, or the perception that such issuances or future sales may occur;
short sales or other derivative transactions with respect to our common stock;
changes in market valuations of companies in the timberland or real estate industries;
increases in market interest rates or a decrease in our distributions to stockholders that lead purchasers
of our common stock to demand a higher yield;
fluctuations in stock market prices and volumes;
additions or departures of key management personnel;
our operating performance and the performance of other similar companies;
actual or anticipated differences in our quarterly operating results;
changes in expectations of future financial performance or changes in estimates of securities analysts;
24
•
•
•
•
•
•
•
•
•
•
•
•
publication of research reports about us or our industry by securities analysts or failure of our results to
meet expectations of securities analysts;
failure to qualify as a REIT;
adverse market reaction to any indebtedness we incur in the future;
strategic decisions by us or our competitors, such as acquisitions, divestments, spin-offs, joint ventures,
strategic investments or changes in business strategy;
the passage of legislation or other regulatory developments that adversely affect us or our industry;
speculation in the press or investment community;
changes in our earnings;
failure to satisfy the listing requirements of the NYSE;
failure to comply with the requirements of the Sarbanes-Oxley Act;
actions by institutional stockholders;
changes in accounting principles; and
general market conditions, including factors unrelated to our performance.
In the past, securities class action litigation has often been instituted against companies following periods of volatility
in the price of their common stock. This type of litigation could result in substantial costs and divert our management’s
attention and resources, which could have a material adverse effect on our cash flows, our ability to execute our business
strategy and our ability to make distributions to our stockholders.
If securities analysts do not publish research or reports about our business or if they downgrade our common stock
or our sector, the price of our common stock could decline.
The trading market for our common stock will rely in part on the research and reports that industry or financial analysts
publish about us or our business. We do not control analysts. Furthermore, if one or more of the analysts who do cover
us downgrades our shares of common stock or our industry, or the stock of any of our competitors, the price of our
shares could decline. If one or more of these analysts ceases coverage of our company, we could lose attention in the
market, which in turn could cause the price of our shares of common stock to decline.
Future offerings of debt securities, which would be senior to our common stock, or equity securities, which would
dilute our existing stockholders and may be senior to our common stock, may adversely affect the market price of
our common stock.
In the future, we may attempt to increase our capital resources by offering debt or equity securities, including medium
term notes, senior or subordinated notes and classes of preferred or common stock. Debt securities or shares of preferred
stock will generally be entitled to receive interest payments or distributions, both current and in connection with any
liquidation or sale, prior to the holders of our common stock. We are not required to offer any such additional debt or
equity securities to existing common stockholders on a preemptive basis. Therefore, offerings of common stock or
other equity securities may dilute the holdings of our existing stockholders. Future offerings of debt or equity securities,
or the perception that such offerings may occur, may reduce the market price of our common stock or the distributions
that we pay with respect to our common stock. Because we may generally issue any such debt or equity securities in
the future without obtaining the consent of our stockholders, you will bear the risk of our future offerings reducing
the market price of our common stock and diluting your proportionate ownership.
Increases in market interest rates may result in a decrease in the value of our common stock.
One of the factors that may influence the price of our common stock will be our distribution rate on the common stock
(as a percentage of the share price of our common stock), relative to market interest rates. We have declared and paid
25
cash distributions for the first time in each quarter during 2014 and expect to declare cash distributions in the future.
If market interest rates increase, prospective purchasers of our common stock may desire a higher yield on our common
stock or seek securities paying higher dividends or yields. Higher interest rates would not, however, result in more
funds being available for distribution and, in fact, would likely increase our borrowing costs and might decrease our
funds available for distribution, and therefore we may not be able, or may not choose to, pay a higher distribution rate.
As a result, if interest rates rise, it is likely that the market price of our common stock will decrease, because potential
investors may require a higher dividend yield on our common stock as market rates on interest-bearing securities, such
as bonds, rise.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
As of December 31, 2015, we owned interests in approximately 425,000 acres of timberland in the U.S. South, consisting
of approximately 401,200 acres of fee timberlands and approximately 23,800 acres of leased timberlands. Our leased
timberlands include approximately 20,400 acres under one long-term lease expiring in 2022, which we refer to as the
long-term contract or the LTC lease, and approximately 3,400 acres under a single-rotation lease that expires in 2019,
which we refer to as the private land management or the PLM lease. As of December 31, 2015, our timberlands
contained acreage comprised of approximately 74% pine stands and 26% hardwood stands located within an attractive
and competitive fiber basket encompassing a numerous and diverse group of pulp, paper, and wood products
manufacturing facilities.
Acres by state as of December 31, 2015
Fee
Lease
Total
Alabama
Florida
Georgia
Louisiana
North Carolina
South Carolina
Tennessee
Texas
Total:
72,800
2,500
254,600
21,300
1,600
12,500
300
35,600
401,200
5,600
—
18,200
—
—
—
—
—
23,800
78,400
2,500
272,800
21,300
1,600
12,500
300
35,600
425,000
Our timberlands contained an estimated 16.8 million tons of merchantable inventory as of December 31, 2015. The
table below shows the merchantable inventory volumes by product as of December 31, 2015:
Merchantable timber inventory:
Fee
Lease
Total
Tons (in millions)
Pulpwood
Sawtimber (1)
Total:
(1)
Includes chip-n-saw and sawtimber.
8.2
7.8
16.0
0.4
0.4
0.8
8.6
8.2
16.8
Our methods of estimating timber inventory are consistent with industry practices. We must use various assumptions
and judgments to determine both our current timber inventory and the timber inventory that will be available over the
harvest cycle; therefore, the physical quantity of such timber may vary significantly from our estimates. Our estimated
inventory is calculated for each tract by utilizing growth formulas based on representative sample tracts and tree counts
for various diameter classifications. The calculation of inventory is subject to periodic adjustments based on statistical
sampling of the harvestable timbered acres, known as timber sample cruises, actual volumes harvested and other timber
activity, including timberland sales. In addition to growth, the inventory calculation takes into account in-growth,
26
which is the annual transfer of the oldest pre-merchantable age class into merchantable inventory. The age at which
timber is considered merchantable is reviewed periodically and updated for changing harvest practices, future harvest
age profiles and biological growth factors.
During certain growth stages in the life of a tree stand, the value of the timber may increase significantly. For example,
one such period of time is when pulpwood trees reach “chip-n-saw” size, which, in the Southern United States, generally
occurs between 16-22 years in the life of a tree. Southern pine “chip-n-saw” prices may be two to three times those
for pulpwood trees. Another value increase occurs when trees can be sold as large sawlogs, which generally occurs
when the tree is older than approximately 23 years of age in the Southern United States. The value of a tree stand is
directly tied to the age and size of the trees within that tree stand.
The graph below presents the approximate number of acres of our timberland as of December 31, 2015 by age class:
(1)Acres presented in the graph includes fee timberland only and excludes 30,200 acres of non-forest land and 2,900 acres leased
to a third party.
(2) Natural Pine and Hardwood represents acres that have been seeded by standing older pine trees near the site through the natural
process of seeds dropping from the cones of the older trees. Natural pine sites generally include some mix of natural occurring
hardwood trees as well.
(3) Planted Pine are site-prepared acres that are hand or machine planted with pine seedlings to maximize the growth potential and
inventory carrying capacity of the soils. Planted pine acre inventory is devoted to pine species only.
27
Forests are subject to a number of natural hazards, including damage by fire, hurricanes, insects and disease.
Changes in global climate conditions may intensify these natural hazards. Severe weather conditions and other
natural disasters can also reduce the productivity of timberlands and disrupt the harvesting and delivery of forest
products. Because our timberlands are concentrated in the U.S. South, damage from natural disasters could impact a
material portion of our timberlands at one time. Our active forest management should help to minimize these risks.
Consistent with the practices of other timber companies, we do not maintain insurance against loss of standing
timber on our timberlands due to natural disasters or other causes.
ITEM 3.
LEGAL PROCEEDINGS
From time to time, we are party to legal proceedings, which arise in the ordinary course of our business. We are not
currently involved in any legal proceedings of which the outcome is reasonably likely to have a material adverse effect
on our results of operations or financial condition. Nor are we aware of any such legal proceedings contemplated by
governmental authorities.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
28
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Stockholders of Record
Our common stock trades on the NYSE under the symbol “CTT”. As of February 29, 2016, we had approximately
38.8 million shares of common stock outstanding held by 2,244 stockholders of record. No other classes of our common
stock were outstanding as of February 29, 2016.
The table below reflects the dividends declared per share and the range of intra-day high and low prices of our common
stock, for the periods indicated, as reported by the New York Stock Exchange:
2015
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
2014
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Dividends
High
Low
Cash Dividend
$
$
$
$
$
$
$
$
11.58
11.91
12.29
12.33
11.92
13.77
14.11
14.40
$
$
$
$
$
$
$
$
10.06
7.90
11.26
11.25
10.28
10.54
12.61
12.05
$
$
$
$
$
$
$
$
0.125
0.125
0.125
0.125
0.125
0.125
0.110
0.110
Since our listing on the NYSE in December 2013, we have made and intend to continue to make regular quarterly
dividends of all or substantially all of our REIT taxable income to holders of our common stock. Dividends will be
made to those stockholders who are stockholders as of the dividend record dates. The amount of distributions paid and
the taxable portion thereof in prior periods are not necessarily indicative of amounts anticipated in future periods.
The amount of dividends that we may pay to our common stockholders are determined by our board of directors in its
sole discretion and is dependent upon a number of factors, including, but not limited to, our financial condition, our
capital requirements, our expectations of future sources of liquidity, current and future economic conditions and market
demand for timber and timberlands, and tax considerations, including annual distribution requirements necessary to
maintain our status as a REIT under the Code.
Our distributions to stockholders will be taxable dividends to the extent of our earnings and profits. Distributions in
excess of our earnings and profits will reduce a stockholder’s basis in its stock and will not be taxable except to the
extent such distributions exceed the stockholder’s basis in its stock. In 2015, we did not have positive earnings, and
no portion of our distributions was taxable as a dividend. REIT dividends generally are taxable at ordinary income
rates, unless designated as capital gain dividends or as qualified dividends. Net income attributable to timber sales
and timber cutting contracts generally will be long-term capital gain, and dividends attributable thereto will be capital
gain dividends that are taxed to non-corporate taxpayers at rates not exceeding 20%, as compared to the maximum
39.6% rate applicable to ordinary income. All distributions treated as dividends are included in net investment income
which is subject to an additional 3.8% unearned income Medicare tax in the case of high-income individuals, estates
and trusts.
29
The tax treatment of our quarterly dividend distributions paid on our common stock to our stockholders during the
year ended December 31, 2015 is presented below. All dividend payments were made in cash (in thousands, except
for per-share data):
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
% of Total
Distribution
2015
Total cash distributed
Per-share capital gain
Per-share return of capital
Total per-share distribution
$
$
$
$
4,919
$
4,920
$
4,903
$
4,847
— $
— $
— $
0.125
0.125
$
$
0.125
0.125
$
$
0.125
0.125
$
$
—
0.125
0.125
—%
100%
100%
The terms of our credit agreement prohibit us from declaring, setting aside funds for, or paying any dividend, distribution,
or other payment to our stockholders other than as required to maintain our REIT qualification if our loan-to-value
("LTV") ratio is greater than or equal to 45% or we are otherwise in default as defined in the credit agreement. We
may use proceeds from dispositions in any fiscal year totaling up to 1.5% of the aggregate cost basis of our timberland
if our LTV is in excess of 30% but less than 40% and up to 2.0% of the aggregate cost basis if our LTV ratio does not
exceed 30%.
Purchases of Equity Securities by the Issuer and Affiliated Pur
The following table provides information regarding our purchases of our common stock during the quarter
ended December 31, 2015:
Period
October 1 - October 31
November 1 - November 30
December 1- December 31
Total
Total Number of
Shares Purchased
(1)
134,799
1,605
$
$
— $
136,404
Average
Price
Paid per
Share
10.35
10.72
—
Total Number of
Shares
Purchased as
Part of Publicly
Announced Plans
or Programs (1)
134,799
1,605
$
$
— $
136,404
Maximum Number (Or
Approximate Dollar Value)
of Shares that May Yet Be
Purchased Under the Plans
or Programs (1)
24.0 million
24.0 million
24.0 million
(1) On August 7, 2015, our Board of Directors authorized a share repurchase program under which we may repurchase up
to $30 million of our outstanding common shares. As of December 31, 2015, we had repurchased approximately
584,000 shares of our common stock for a total of approximately $6.0 million. All purchases of outstanding common
shares were made in open-market transactions.
Stock Performance Graph
The following graph compares the cumulative total return of our stock from our listing on December 12, 2013 to
December 31, 2015 with the Russell 3000, a broad-based market index of issuers with similar capitalization, and with
the S&P Global Timber & Forestry Index, an industry specific market index of peer issuers. The graph assumes a $100
investment in each of the indices on December 12, 2013, and the reinvestment of all dividends.
30
The data in the following table was used to create the above graph as of the respective dates:
CatchMark Timber Trust, Inc.
Russell 3000
S&P Global Timber & Forestry Index
12/12/2013
12/31/2013
12/31/2014
12/31/2015
$
$
$
100
100
100
$
$
$
103
104
106
$
$
$
87
115
106
$
$
$
91
113
96
31
ITEM 6.
SELECTED FINANCIAL DATA
The following selected financial data as of and for the five years ended December 31, 2015 should be read in conjunction
with the accompanying consolidated financial statements and related notes in Item 8 — Financial Statements and
Supplementary Data hereof. All amounts are in thousands except for per-share, tonnage and acreage data.
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Cash and cash equivalents
Restricted cash and cash equivalents
Total assets (1)
Total liabilities (1)
Total stockholders’ equity
Outstanding debt
Total revenues
Operating income (loss) (2)
Net income (loss) (2)
Net income (loss) available to common
stockholders (2)
Per-share data—basic and diluted:
Net income (loss) available to common
stockholders (2)
Weighted-average common
shares outstanding
Cash dividends paid per common share
Cash Flow
Adjusted EBITDA(4)
Net cash provided by (used in) operating
activities
Net cash used in investing activities
Net cash provided by (used in) financing
activities
Capital Expenditures
Capital expenditures-acquisitions (5)
Capital expenditures-other
Selected Operating Data:
Timber Sales Volume (tons):
Pulpwood
Sawtimber
Total
$
$
$
$
$
2015
2014
As of December 31,
2013
2012
8,025
$
17,365
$
8,614
$
11,221
— $
$
599,095
188,057
411,038
185,002
2015
69,122
(4,820)
(8,387)
(8,387)
$
$
$
$
$
$
$
— $
— $
2,050
564,489
119,797
444,692
$
$
$
337,572
57,640
279,932
$
$
$
349,081
138,994
210,087
118,000
For the Year Ended December 31,
52,160
$
$
132,356
2014
54,311
3,118
660
660
2013
32,048
(8,602)
(13,197)
(13,557)
$
$
$
$
2012
44,200
(3,700)
(8,871)
(9,245)
2011
6,849
6,762
343,812
154,004
189,808
122,026
2011
40,018
(6,072)
(11,945)
(13,502)
$
$
$
$
$
$
$
$
$
$
(0.21)
$
0.02
(1.03)
$
(0.73)
$
(1.18)
39,348
31,568
13,146
12,742
11,396
0.50
$
0.47
$
— $
— $
—
32,168
28,494
(78,461)
40,627
75,793
2,668
$
$
$
$
$
$
23,671
19,845
(238,433)
227,339
237,527
906
$
$
$
$
$
$
3,469
(1,071)
(137)
(1,399)
1,743
444
$
$
$
$
$
$
15,497
11,426
(18,342)
11,289
22,524
531
$
$
$
$
$
$
7,218
4,572
(536)
(5,976)
1,096
531
1,131,475
708,764
1,840,239
885,980
479,460
1,365,440
636,227
283,223
919,450
697,307
358,683
969,549
306,063
1,055,990
1,275,612
Delivered % as of total volume
Stumpage % as of total volume
60%
40%
70%
30%
80%
20%
81%
19%
86%
14%
32
Net timber sales price ($ per ton)
Pulpwood
Sawtimber
Timberland Sales
Gross sales
Basis of timberland sold
Acres sold
Price per acre
Timberland Acquisitions
Gross acquisitions (3)
Timberland acquisitions, in acres
Price per acre ($/acre)
Period End Acres
Fee
Lease
Total
$
$
$
$
$
$
$
13
26
11,845
8,886
6,407
1,849
73,305
42,905
1,709
401,200
23,800
425,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
13
24
10,650
5,072
3,761
2,832
235,158
121,612
1,934
364,700
28,600
393,300
12
20
2,499
1,570
1,167
2,141
1,404
1,786
786
$
$
$
$
$
$
$
247,200
30,900
278,100
10
21
10,972
7,188
6,016
1,824
20,474
30,199
678
246,300
42,500
288,800
$
$
$
$
$
$
$
9
20
1,741
1,172
1,125
1,548
1,000
1,397
716
222,400
76,300
298,700
(1) Effective January 1, 2015, we elected to early adopt Accounting Standards Update 2015-03 "Interest - Imputation of
Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" in which deferred financing costs are
now required to be presented on the balance sheet as a direct deduction from the carrying amount of the related debt
liability instead of being presented as an asset. The new accounting pronouncement was applied on a retrospective basis.
For further information, please refer to Note 2 – Summary of Significant Accounting Policies in the accompanying
consolidated financial statements.
(2) Effective January 1, 2015, we changed our depletion method on our long-term fee and leased timber to the straight-line
method. For further information regarding our change in depletion methodology, please refer to Note 2 – Summary of
Significant Accounting Policies in the accompanying consolidated financial statements.
(3) Exclusive of transaction costs.
(4) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Adjusted EBITDA”
for the definition and information regarding why we present Adjusted EBITDA and for a reconciliation of this non-GAAP
financial measure to net income (loss).
(5)
Includes transaction costs.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the Selected Financial Data in Item 6 –
Selected Financial Data above and our accompanying consolidated financial statements and notes thereto. See also
“Cautionary Note Regarding Forward-Looking Statements” preceding Part I.
Overview
We primarily engage in the ownership, management, acquisition, and disposition of timberland properties located in
the U.S. South. During 2015, we continued to execute our business growth strategy as we completed eight separate
transactions in the U.S. South, acquiring approximately 42,900 acres of high-quality timberland. In aggregate, they
are expected to increase our annual harvest volumes by 0.2 million to 0.3 million tons over the next decade. These
acquisitions complement our existing timberland portfolio and expand our customer base into new markets within the
U.S. South.
33
As of December 31, 2015, we owned interests in approximately 425,000 acres of timberland within an attractive and
competitive fiber basket encompassing a numerous and diverse group of pulp, paper and wood products manufacturing
facilities. We believe that our timberlands are high-quality industrial forestlands that have been intensively managed
for sustainable commercial timber production. As of December 31, 2015, our timberlands contained acreage comprised
of 74% pine stands and 26% hardwood stands, and our timber inventory consisted of an estimated 16.8 million tons
of merchantable timber inventory, including 8.6 million tons of pulpwood and 8.2 million tons of sawtimber.
We generate recurring income and cash flow from the harvest and sale of timber, as well as from non-timber related
revenue sources, such as rents from recreational leases. When and where we believe it is appropriate, we also periodically
generate income and cash flow from the sale of HBU timberland. We also expect to realize additional long-term returns
from the potential appreciation in value of our timberlands as well as from the potential biological growth of our
standing timber inventory in excess of our timber harvest.
A substantial portion of our timber sales are derived from the Mahrt Timber Agreements under which we sell specified
amounts of timber to WestRock subject to market pricing adjustments. The percentage of our annual net timber sales
revenue derived from WestRock continues to decrease as a result of our recent acquisitions and expansion of our
customer base. For the years ended December 31, 2015, 2014, and 2013, approximately 23%, 34%, and 60%,
respectively, of our net timber sales revenue was derived from the Mahrt Timber Agreements. See Item 1 – Business
for additional information regarding the material terms of the Mahrt Timber Agreements.
Our operating strategy entails funding expenditures related to the recurring operations of our timberlands, including
interest on outstanding indebtedness and certain capital expenditures (excluding timberland acquisitions), with
operating cash flows, assessing the amount of operating cash flows that will be required for additional timberland
acquisitions, and distributing residual operating cash flows, if any, to our stockholders.
In connection with furthering that strategy, we will continue to focus on enhancing long-term value for our stockholders
and providing durable earnings to grow our dividend to stockholders by efficiently integrating new acquisitions in
high demand fiber basket markets, increasing sustainable harvest volumes, and improving product mix. We continue
to practice intensive forest management and silvicultural techniques that increase the biological growth of the forest.
Before the impact of any potential acquisitions, we plan to sustainably harvest between 1.9 million and 2.1 million
tons of timber in 2016, up from the 1.8 million tons in 2015. We expect to monetize 1% to 2% of our fee timberland
acreage pursuant to our land sales program, resulting in timberland sales revenue between $11.0 million and $13.0
million. Capital expenditures (excluding timberland acquisitions) for 2016 are expected to be between $3.5 million
and $4.5 million. We will continue our deliberate growth strategy for new acquisitions, focusing at present in the U.S.
South, by targeting:
• markets that demonstrate favorable long-term demand and allow for superior merchandizing to mill customers;
•
•
timberland properties with superior productivity characteristics from soil attributes and forest genetics which
can provide durable harvest revenue and sustain long-term growth; and
properties with trees at the right age classes to complement existing holdings and support sustainable harvest
volumes.
We believe that we have access to adequate capital resources to achieve our growth targets for 2016 with the credit
facilities available under the 2014 Amended Credit Agreement (see Liquidity and Capital Resources for details).
General Economic Conditions and Timber Market Factors Impacting Our Business
Our operating results are influenced by a variety of factors, including timber prices; the demand for pulp and paper
products, lumber, panel, and other wood-related products; the supply of timber; and competition. Timber prices can
experience significant variations and have been historically volatile. The demand for timber and wood products is
affected primarily by the level of new residential construction activity, repair and remodeling activity, the supply of
34
manufactured timber products including imports, and, to a lesser extent, other commercial and industrial uses. The
demand for timber also is affected by the demand for wood chips in the pulp and paper markets and for hardwood in
the furniture and other hardwood industries.
The U.S. economy as well as the housing market continued to recover in 2015. According to the U.S. Bureau of
Economic Analysis, the real gross domestic product increased by 2.4% in 2015, which is comparable to the increase
of 2.4% in 2014. The U.S. Census Bureau estimated that 1.1 million housing units were started in 2015 as compared
to 1.0 million housing units in 2014, up by 10.8%. The continued recovery of the housing market helped strengthen
our product mix and our net timber pricing.
In the markets in which we operate, average timber prices continued the upward trend and all categories increased in
2015 as compared to 2014, with the exception of hardwood pulpwood pricing. Hardwood pulpwood pricing returned
to near-normal pricing in 2015, primarily due to above average pricing realized in 2014 as a result of unusually wet
weather at the beginning of 2014. Pine pulpwood prices increased and are near the highest level in a decade primarily
as a result of unusually wet weather. Upturns in housing starts and housing completions drove up lumber production
in the region which contributed to higher sawlog prices. For 2016, we anticipate pulpwood and sawtimber prices to
remain steady.
Liquidity and Capital Resources
Overview
Cash flows generated from our operations are primarily used to fund recurring expenditures and distributions to our
stockholders. We maintained a quarterly stockholder distribution rate of $0.50 per share throughout 2015, totaling
$19.6 million. During the same period, we generated net cash from operations of $28.5 million. The amount of
distributions to common stockholders is determined by our board of directors and is dependent upon a number of
factors, including funds deemed available for distribution based principally on our current and future projected operating
cash flows, reduced by capital requirements necessary to maintain our existing timberland portfolio. In determining
the amount of distributions to common stockholders, we also consider our financial condition, our expectations of
future sources of liquidity, current and future economic conditions, market demand for timber and timberlands, and
tax conditions, including the annual distribution requirements necessary to maintain our status as a REIT under the
Code.
In determining how to allocate cash resources in the future, we will initially consider the source of the cash. We
anticipate using a portion of cash generated from operations, after payments of periodic operating expenses and interest
expense, to fund certain capital expenditures required for our timberlands. Any remaining cash generated from
operations may be used to partially fund timberland acquisitions and pay distributions to stockholders. Therefore, to
the extent that cash flows from operations are lower, timberland acquisitions and stockholder distributions are
anticipated to be lower as well. Capital expenditures, including new timberland acquisitions, are generally funded with
cash from operations or existing debt availability; however, proceeds from future debt financings and equity offerings
may be used to fund capital expenditures, acquire new timberland properties and pay down existing and future
borrowings.
Short-Term Liquidity and Capital Resources
For the year ended December 31, 2015, net cash provided by operating activities was $28.5 million, a $8.6 million
increase from the year ended December 31, 2014, primarily driven by a $9.6 million increase in net cash receipts from
timber sales as a result of an increase in harvest volume due to recent acquisitions and a $0.8 million increase in net
cash receipts from timberland sales due to an increase in the number of acres sold, offset by an approximately $1.5
million increase in cash paid for interest and increases in general and administrative expenses, other operating expenses,
and forestry management expenses due to the growth of our business.
For the year ended December 31, 2015, we used $75.8 million (including transaction costs) to acquire approximately
42,900 acres of timberland properties with proceeds from borrowings under our credit facilities and cash on-hand. We
35
spent $2.7 million in reforestation, building roads, and purchase of other fixed assets during the year ended December
31, 2015.
Net cash provided by financing activities for the year ended December 31, 2015 was $40.6 million and represented
$67.5 million in proceeds from borrowings under the 2014 Multi-Draw Term Facility, offset by $0.5 million of debt
repayments, $19.6 million of dividend payments to our common stockholders, $6.0 million of repurchases of our
common shares, and $0.8 million of financing costs paid.
We believe that we have access to adequate liquidity and capital resources, including cash flow generated from
operations, cash on-hand, and borrowing capacity, necessary to meet our current and future obligations that become
due over the next twelve months. As of December 31, 2015, we had a cash balance of $8.0 million and had access to
$315.0 million of additional borrowing availability under the 2014 Amended Credit Facilities (see 2014 Amended
Credit Facilities below).
Long-Term Liquidity and Capital Resources
Over the long-term, we expect our primary sources of capital to include net cash flows from operations, including
proceeds from strategic property sales, proceeds from secured or unsecured financings from banks and other lenders,
and public offerings of our common stock. Our principal demands for capital include operating expenses, interest
expense on any outstanding indebtedness, certain capital expenditures (other than timberland acquisitions), repayment
of debt, timberland acquisitions, and stockholder distributions.
Our bylaws preclude us from incurring debt in excess of 200% of our net assets. As of December 31, 2015, our debt-
to-net-assets ratio, defined as our total debt as a percentage of our total gross assets (other than intangibles) less total
liabilities, was approximately 34%. Our debt-to-net-assets ratio will vary based on our level of current and future
borrowings, which will depend on the level of net cash flows from operations, our acquisition activities, and proceeds
raised from public offerings of our common stock. Before additional borrowings and equity issuances, principal
payments, and timberland acquisitions or dispositions, we expect our debt-to-net-assets ratio to remain relatively stable
in the near future.
Additionally, in 2014, we filed a universal shelf-registration statement with the SEC (see Shelf Registration below),
which provides us with future flexibility to offer a variety of debt and equity securities, from time-to-time, in one or
more offerings. Currently, we do not have any immediate plans to utilize the universal shelf registration.
Contractual Obligations and Commitments
As of December 31, 2015, our contractual obligations are as follows:
(in thousands)
Contractual Obligations
Debt obligations (1)
Estimated interest on debt obligations (1) (2)
Operating lease obligations (3)
Other liabilities (4)
Payments Due by Period
Total
2016
2017-2018
2019-2020
Thereafter
$
185,002
$
— $
— $
— $
185,002
37,836
4,048
621
4,897
647
114
9,793
1,294
200
9,793
1,084
169
13,353
1,023
138
Total
$
227,507
$
5,658
$
11,287
$
11,046
$
199,516
(1) Represents respective obligations under the 2014 Amended Credit Agreement as of December 31, 2015. $100 million of
which was outstanding under the 2014 Term Loan Facility and $85 million of which was outstanding under the 2014
Multi-Draw Term Facility (see 2014 Amended Credit Facilities below).
(2) Amounts include impact of an interest rate swap. See Note 5 – Interest Rate Swaps of our accompanying consolidated
financial statements for additional information.
(3)
Includes payment obligation on approximately 7,330 acres that are subleased to a third party.
36
(4) Represents net present value of future payments to satisfy a liability assumed upon a timberland acquisition.
2014 Amended Credit Facilities
On December 23, 2014, we entered into a fourth amended and restated credit agreement (the “2014 Amended Credit
Agreement") with CoBank, Agfirst Farm Credit Bank, (“Agfirst”), Cooperatieve Rabobank, U.A. (“Rabobank”) and
certain other financial institutions.
The 2014 Amended Credit Agreement originally provided for borrowing under credit facilities consisting of:
•
•
•
a $35 million revolving credit facility (the “2014 Revolving Credit Facility”),
a $275 million multi-draw term credit facility (the “2014 Multi-Draw Term Facility”), and
a $100 million term loan (the “2014 Term Loan Facility”, and together with the Revolving Credit Facility
and the Multi-Draw Term Facility, the “2014 Amended Credit Facilities”).
The 2014 Amended Credit Agreement provides that the 2014 Amended Credit Facilities may be increased, upon the
agreement of lenders willing to increase their loans, by up to $200 million. On December 11, 2015, we increased our
credit availability under the 2014 Multi-Draw Term Facility by $90 million, from $275 million to $365 million.
Borrowings under the 2014 Revolving Credit Facility may be used for general working capital, to support letters of
credit, to fund cash earnest money deposits, to fund acquisitions in an amount not to exceed $5.0 million, and other
general corporate purposes. The 2014 Multi-Draw Term Facility may be drawn upon up to eight times during the period
beginning on December 23, 2014 through December 23, 2017 and may be used to finance domestic timber acquisitions
and associated expenses, refinance loan amounts under the 2014 Revolving Credit Facility, and purchase up to $25.0
million in CatchMark Timber Trust common stock. Amounts repaid under the 2014 Multi-Draw Term Facility may be
re-borrowed prior to the third anniversary of the closing date.
The 2014 Revolving Credit Facility bears interest at an adjustable rate equal to a base rate plus between 0.50% and
1.50% or a LIBOR rate plus between 1.50% and 2.50%, in each case depending on our LTV Ratio, and will terminate
and all amounts under the facility will be due and payable on December 23, 2019. The 2014 Multi-Draw Term Facility
bears interest at an adjustable rate equal to a base rate plus between 0.75% and 1.75% or a LIBOR rate plus between
1.75% and 2.75%, in each case depending on the LTV Ratio, and will terminate and all amounts under the facility will
be due and payable on December 23, 2021. The 2014 Multi-Draw Term Facility is interest only until the maturity date;
however, if the our LTV Ratio is equal to or in excess of 40%, then principal payments will be required to be made
beginning on December 31, 2017 at a per annum rate of 5% of the principal amount outstanding under the 2014 Multi-
Draw Term Facility. The 2014 Term Loan Facility bears interest at an adjustable rate equal to a base rate plus 1.75%
or a LIBOR rate plus 1.75%, and will terminate and all amounts under the facility will be due and payable on
December 23, 2024.
Patronage Refunds
Under the terms of the 2014 Amended Credit Agreement, we are now eligible to receive annual patronage refunds,
which are profit distributions made by CoBank and other Farm Credit System banks (the "patronage banks"). The
annual patronage refund is dependent on the weighted-average debt balance under the 2014 Multi-Draw Term Facility
and the 2014 Term Loan Facility with each participating lender, as calculated by CoBank, for the respective fiscal
year, as well as the financial performance of the patronage banks. In March 2015, we received a patronage refund on
our borrowings during the nine days of 2014 where the 2014 Amended Credit Facilities were outstanding.
37
Debt Covenants
The 2014 Amended Credit Agreement contains, among others, the following financial covenants:
•
limits the LTV Ratio to 45% at the end of each fiscal quarter and upon the sale or acquisition of any property;
and
•
requires that we maintain a fixed coverage charge ratio of not less than 1.05:1.
We were in compliance with the financial covenants of the 2014 Amended Credit Agreement as of December 31, 2015.
Shelf Registration
On June 20, 2014, we filed a universal shelf registration statement (the "Shelf Registration") on Form S-3 with the
SEC, which was declared effective on July 2, 2014. The Shelf Registration provides us with future flexibility to offer,
from time-to-time, of up to $600 million in an undefined combination of common stock, preferred stock, debt securities,
depositary shares, or warrants. The terms of any such future offerings would be established at the time of an offering.
As of December 31, 2015, we have approximately $431.1 million of potential, future offerings remaining under the
Shelf Registration.
Share Repurchase Program
On August 7, 2015, our board of directors approved a stock repurchase program for up to $30.0 million of our common
stock at management's discretion. The program has no set duration and the board may discontinue or suspend the
program at any time. During the year ended December 31, 2015, we repurchased 584,356 shares of our common stock
at an average price of $10.25 per share for a total of approximately $6.0 million. All common stock purchases under
the stock repurchase program were made in open-market transactions and were funded with cash on-hand. As discussed
above, we can borrow up to $25.0 million under the Multi-Draw Term Facility to repurchase our common stock.
Management believes that opportunistic repurchases of our common stock is a prudent use of capital resources.
Dividends
On February 18, 2016, our board of directors declared a cash dividend of $0.125 per share for its Class A common
stock for stockholders of record on February 29, 2016, payable on March 16, 2016. The amount of future dividends
that we may pay to our common stockholders will be determined by our board of directors (as described in the Overview
section above).
Results of Operations
Overview
Our results of operations are materially impacted by the fluctuating nature of timber prices, changes in the levels and
mix of our harvest volumes, the level of timberland sales, changes to associated depletion rates, and varying interest
expense based on the amount and cost of outstanding borrowings. Timber sales volumes, net timber sales prices, and
timberland sales, and changes in the levels and composition of each of the years ended December 31, 2015, 2014, and
2013 are shown in the following tables:
38
Timber sales volume (tons)
Pulpwood
Sawtimber (1)
Net timber sales price (per ton)(2)
Pulpwood
Sawtimber
Timberland sales
Gross sales (000's)
Sales volumes (acres)
Sales price (per acre)
Timber sales volume (tons)
Pulpwood
Sawtimber (1)
Net timber sales price (per ton)(2)
Pulpwood
Sawtimber
Timberland sales
Gross sales (000's)
Sales volumes (acres)
Sales price (per acre)
Years Ended December 31,
2015
2014
Change
%
28 %
48 %
35 %
(1)%
6 %
1,131,475
708,764
1,840,239
885,980
479,460
1,365,440
13
26
11,845
6,407
1,849
$
$
$
$
13
24
10,650
3,761
2,832
Years Ended December 31,
2014
2013
Change
%
39%
69%
49%
14%
20%
885,980
479,460
1,365,440
636,227
283,223
919,450
13
24
10,650
3,761
2,832
$
$
$
$
12
20
2,499
1,167
2,141
$
$
$
$
$
$
$
$
(1)
Includes sales of chip-n-saw and sawtimber.
(2) Prices per ton are rounded to the nearest dollar and shown on a stumpage basis (i.e., net of contract logging and
hauling costs) and, as such, the sum of these prices multiplied by the tons sold does not equal timber sales in the
accompanying consolidated statements of operations for the years ended December 31, 2015, 2014, and 2013.
Comparison of the year ended December 31, 2015 versus the year ended December 31, 2014
Revenues. Revenues increased to $69.1 million for the year ended December 31, 2015 from $54.3 million for the year
ended December 31, 2014 primarily due to an increase in timber sales revenue of $12.2 million, an increase in timberland
sales revenue of $1.2 million and an increase of $1.4 million in other revenues. Timber sales revenue increased by
30%, mainly due to an increase in harvest volume as a result of incremental harvest on properties acquired in the past
12 months.
39
Details of timber sales by product for the years ended December 31, 2015 and 2014 are shown in the following table:
(in thousands)
Timber sales(1)
Pulpwood
Sawtimber (2)
For the
Year Ended
December 31,
2014
Changes attributable to:
Volume
Price
For the Year
Ended
December 31,
2015
$
$
23,800 $
16,835
40,635 $
(203) $
336
133 $
4,263 $
7,806
12,069 $
27,860
24,977
52,837
(1) Timber sales are presented on a gross basis.
(2)
Includes sales of chip-n-saw and sawtimber.
Timberland sales revenue increased due to selling more acres in 2015. However, our average sales price per acre on
timberland sales was down in 2015 as a result of receiving above-average pricing on a large land sale during the fourth
quarter of 2014. Other revenues increased due to receiving $0.5 million in easement income as well as having more
acreage under recreational leases due to the growth of our timberland portfolio.
Operating expenses. Contract logging and hauling costs increased to $19.9 million for the year ended December 31,
2015 from $17.3 million for the year ended December 31, 2014 as a result of a 16% increase in delivered sales volume.
Delivered sales volume as a percentage of our total harvest volume decreased to 60% in 2015 from 70% in 2014.
Depletion expense increased by 83% to $27.1 million in 2015 from $14.8 million in 2014, due to a 35% increase in
harvest volume and higher blended depletion rates. As a result of changing to the straight-line depletion method in the
first quarter of 2015, depletion expense on our long-term fee timber was $4.5 million higher than it would have been
under the normalized depletion method. For additional information on change in depletion method, see Application
of Critical Accounting Policies below.
Costs of timberland sales increased to $9.7 million for the year ended December 31, 2015 from $5.6 million for the
year ended December 31, 2014 due to selling more acres. Other operating expenses increased to $4.3 million for the
year ended December 31, 2015 from $2.9 million for the year ended December 31, 2014, primarily as a result of higher
property taxes and other costs associated with having more acres under management.
Forestry management fees increased to $4.5 million for the year ended December 31, 2015 from $3.6 million for the
year ended December 31, 2014. Forestry management fees are earned based on number of acres under management
and timber sales revenue generated. The increase in 2015 was a result of having more acres under management and
generating higher timber sales revenue driven by the growth of our timberland portfolio. Land rent expense decreased
to $0.7 million in 2015 from $0.8 million in 2014 primarily due to expirations of PLM leases.
General and administrative expenses increased to $7.7 million for the year ended December 31, 2015 from $6.2 million
for the year ended December 31, 2014 due to higher compensation costs and legal fees. Compensation costs increased
by $1.1 million, due to a $0.4 million increase as a result of new restricted stock issuances under the Long-Term
Incentive Plan (See Note 9 – Stock-based Compensation in the accompanying consolidated financial statements) and
a $0.7 million increase as a result of an increase in the number of full-time employees due to the growth of our business.
Legal costs increased by $0.3 million primarily due to receiving a net insurance recovery claim of $0.4 million in 2014
under our director and officer insurance policy for costs and expenses associated with the SEC's on-going investigation
into Wells Investment Securities, Inc. ("WIS"), the dealer-manager of our two completed non-listed public offerings,
and us (See Other Regulatory Matters below).
Interest income. Interest income decreased by $0.2 million for year ended December 31, 2015 due to receiving counter-
party payment upon termination of our interest rate swap agreement in July 2014.
40
Interest expense. Interest expense increased to $3.6 million for the year ended December 31, 2015 from $2.6 million
for the year ended December 31, 2014, primarily due to a higher average debt balance through the period and a higher
fixed rate under our current interest rate swap agreement, offset by accrued patronage refunds of $1.3 million. See Note
4 – Note Payable and Line of Credit of our accompanying consolidated financial statements for additional information
regarding patronage refunds.
Net loss. We incurred a $8.4 million net loss for the year ended December 31, 2015 as compared to generating net
income of $0.7 million for the year ended December 31, 2014 due to a $7.9 million decrease in our operating income,
a $0.9 million increase in our interest expense, and a $0.2 million decrease in interest income. We incurred an operating
loss of $4.8 million for the year ended December 31, 2015, as opposed to generating operating income of $3.1 million
for the year ended December 31, 2014, due to a $12.3 million increase in depletion expense, a $1.4 million increase
in other operating expenses, a $0.9 million increase in forestry management fees, a $1.5 million increase in general
and administrative expenses and a $3.0 million decrease in net revenue generated from timberland sales, offset by a
$9.6 million increase in timber sales revenue net of contract logging and hauling and a $1.4 million increase in other
operating income. We sustained a net loss for the year ended December 31, 2015 primarily as result of the change in
our depletion method (see above) and incurring interest expense of approximately $3.6 million in connection with
borrowings used to finance the purchase of our timberlands. Our net loss per share available to common stockholders
decreased to $0.21 for the year ended December 31, 2015 from net income per share available to common stockholders
of $0.02 for the year ended December 31, 2014. We anticipate future net income or losses to fluctuate with timber
prices, harvest volumes and mix, depletion rates, timberland sales, and interest expense based on our level and costs
of current and future borrowings.
Comparison of the year ended December 31, 2014 versus the year ended December 31, 2013
Revenues. Revenues increased to $54.3 million for the year ended December 31, 2014 from $32.0 million for the year
ended December 31, 2013 primarily due to an increase in timber sales revenue of $13.9 million and an increase in
timberland sales revenue of $8.2 million. Timber sales revenue increased by 52%, 30% of which came from revenue
generated from properties acquired in 2014, 17% of which was driven by higher harvest volume on the legacy Mahrt
timberland, and 5% of which was due to better pricing on the legacy Mahrt timberland as a result of increases in
demand and supply shortages as a result of wet weather.
Details of timber sales by product for the years ended December 31, 2014 and 2013 are shown in the following table:
(in thousands)
Timber sales(1)
Pulpwood
Sawtimber (2)
For
Year Ended
December 31,
2013
Changes attributable to:
Volume
Price
For the Year
Ended
December 31,
2014
$
$
16,751 $
9,953
26,704 $
727 $
588
1,315 $
6,322 $
6,294
12,616 $
23,800
16,835
40,635
(1) Timber sales are presented on a gross basis.
(2)
Includes sales of chip-n-saw and sawtimber.
Timberland sales revenue increased due to selling more acres in 2014.
logging and hauling costs
Operating expenses. Contract
to $17.3 million for 2014 from $13.6
million for 2013 as a result of a 31% increase in delivered sales volume. Delivered sales volume as a percentage of
our total harvest volume decreased to 70% in 2014 from 80% in 2013. Depletion expense increased by 74% to $14.8
million in 2014 from $8.5 million in 2013, due to a 49% increase in harvest volume and higher blended depletion rates.
Our blended depletion rates were higher in 2014, primarily because 22% of our harvest came from 2014 acquisitions,
which depleted at higher rates than our long-term fee timber. Cost of timberland sales increased due to selling more
acres.
increased
41
Forestry management fees increased to $3.6 million for the year ended December 31, 2014 from $2.8 million for the
year ended December 31, 2013. Forestry management fees are earned based on number of acres under management
and timber sales revenue generated. The increase in 2014 was a result of having more acres under management and
generating higher timber sales revenue driven by the growth of our timberland portfolio. Land rent expense decreased
to $0.8 million in 2014 from $1.0 million in 2013 primarily due to expirations of leases.
General and administrative expenses decreased to $6.2 million for the year ended December 31, 2014 from $10.2
million for the year ended December 31, 2013, primarily due to the elimination of advisory fees and expense
reimbursements, lower legal costs, and a lower stock compensation expense, offset by an increase in salary and benefits
costs. The termination of the advisory agreement with Wells TIMO (see Related Party Transactions and Agreements)
eliminated advisory fees and expense reimbursements, which contributed to a decrease of $3.6 million in general and
administrative expenses. Our legal costs decreased by $1.8 million, primarily due to incurring expenses in 2013 during
our transition to self-management and preparations for our IPO and receiving a $0.6 million insurance reimbursement
under our director and officer insurance policy for costs incurred in 2013 and 2014 in connection with an SEC
investigation into WIS and us (see Item 1 — Business). Our stock compensation expense decreased by $1.4 million due
to the issuance of restricted stock grants to our employees contingent on the completion of our IPO in 2013.
As a result of becoming a self-managed company and a listed public company, we incurred a $1.8 million increase in
salary and benefit costs as well as other costs and expenses. We also incurred $0.2 million in stockholder communication
expenses in response to a tender offer for our common stock during the first and fourth quarter of 2014 and $0.2
million in connection with the filing of the shelf registration and our follow-on listed public offering.
Interest income. Interest income increased to $0.2 million for year ended December 31, 2014 due to receiving counter-
party payment upon termination of our interest rate swap agreement in July 2014.
Interest expense. Interest expense decreased to $2.6 million for the year ended December 31, 2014 from $4.7
million for the year ended December 31, 2013, primarily due to more favorable interest rates, a lower average
outstanding debt balance, and a decrease in non-cash interest expense, offset by an increase in unused commitment
fees to lenders. Our cash paid for interest, without consideration for unused commitment fees, decreased by $1.7
million due to a lower outstanding debt balance and more favorable interest rate during the fiscal year 2014. Our non-
cash interest expense decreased by $0.6 million due to a lower amount of non-recurring write-off of deferred financing
costs. These decreases were offset by a $0.4 million increase in unused commitment fees charged by our lenders.
Net income. We generated $0.7 million of net income for the year ended December 31, 2014 as compared to a net loss
of $13.2 million for the year ended December 31, 2013 due to a $11.7 million increase in our operating income, a $2.1
million decrease in our interest expense, and a $0.2 million increase in interest income. We generated operating income
of $3.1 million for the year ended December 31, 2014, which is an improvement of $11.7 million over the year
ended December 31, 2013, due to a $3.9 million increase in timber sales revenue net of contract logging and hauling
and depletion expense, a $4.3 million increase in net revenue generated from timberland sales, coupled with a $4.0
million decrease in general and administrative expenses. We generated net income for the year ended 2014 primarily
as a result of generating operating income of $3.1 million, receiving interest income of $0.2 million, and incurring
interest expense of approximately $2.6 million. Our net income per share available to common stockholders increased
to $0.02 for the year ended December 31, 2014 from a net loss per share available to common stockholders of $1.03 for
the year ended December 31, 2013.
42
Adjusted EBITDA
The discussion below is intended to enhance the reader’s understanding of our operating performance and ability to
satisfy lender requirements. Earnings from Continuing Operations before Interest, Taxes, Depletion, and Amortization
(“EBITDA”) is a non-GAAP measure of operating performance and cash generating capacity. EBITDA is defined by
the SEC; however, we have excluded certain other expenses due to their non-cash nature, and we refer to this measure
as Adjusted EBITDA. As such, our Adjusted EBITDA may not be comparable to similarly titled measures reported
by other companies and should not be viewed as an alternative to net income or cash from operations as measurements
of our operating performance. Due to the significant amount of timber assets subject to depletion and the significant
amount of financing subject to interest and amortization expense, management considers Adjusted EBITDA to be an
important measure of our financial condition and cash generating ability. Our credit agreements contains a minimum
debt service coverage ratio based, in part, on Adjusted EBITDA since this measure is representative of adjusted income
available for interest payments.
For the year ended December 31, 2015, Adjusted EBITDA was $32.2 million, a $8.5 million increase from the year
ended December 31, 2014, primarily due to a $9.6 million increase in net timber sales, a $0.8 million increase in
revenue from net timberland sales, and a $1.4 million increase in other revenues, offset by increases in cash paid for
general and administrative expenses, other operating expenses, and forestry management fees.
Our reconciliation of net income (loss) to Adjusted EBITDA for the years ended December 31, 2015, 2014, and 2013
follows:
(in thousands)
Net income (loss)
Add:
2015
2014
2013
$
(8,387)
$
660
$
(13,197)
Depletion
Basis of timberland sold
Amortization (1)
Stock-based compensation expense
Unrealized gain on interest rate swaps that do not
qualify for hedge accounting treatment
Interest expense (1)
Adjusted EBITDA
$
27,091
8,886
765
889
—
2,924
32,168
$
14,788
5,072
836
418
—
1,897
23,671
$
8,505
1,570
1,487
1,838
(129)
3,395
3,469
(1) For the purpose of the above reconciliation, amortization includes amortization of deferred financing costs, amortization
of intangible lease assets, and amortization of mainline road costs, which are included in either interest expense, land
rent expense, or other operating expenses in the accompanying consolidated statements of operations.
Portfolio Information
As of December 31, 2015, we owned interests in 425,000 acres of timberland in the U.S. South, consisting of 401,200
acres held in fee-simple interests and 23,800 acres held in leasehold interests. As of December 31, 2015, our timberlands
comprised of approximately 74% pine stands and 26% hardwood stands (by acreage) and contained an estimated 16.8
million tons of merchantable inventory.
For more information on our portfolio, see Item 2 – Properties.
Election as a REIT
We have elected to be taxed as a REIT under the Code, and have operated as such beginning with our taxable year
ended December 31, 2009. To qualify to be taxed as a REIT, we must meet certain organizational and operational
requirements, including a requirement to distribute at least 90% of our adjusted taxable income, as defined in the Code,
to our stockholders, computed without regard to the dividends-paid deduction and by excluding our net capital gain.
43
As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders.
If we fail to qualify to be taxed as a REIT in any taxable year, we will then be subject to federal income taxes on our
taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income
tax purposes for that year and for the four years following the year during which qualification is lost, unless the Internal
Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect
our net income and net cash available for distribution to our stockholders. However, we believe that we are organized
and operate in such a manner as to qualify for treatment as a REIT for federal income tax purposes.
Inflation
The Mahrt Timber Agreements provide that we will sell to WestRock specified amounts of timber subject to quarterly
market pricing adjustments and monthly fuel pricing adjustments, which are intended to protect us from, and mitigate
the risk of, the impact of inflation. The price of timber has generally increased with increases in inflation; however,
we have not noticed a significant impact from inflation on our revenues, net sales, or income from continuing operations.
See Item 1 – Business for additional information regarding the material terms of the Mahrt Timber Agreements.
Application of Critical Accounting Policies
Our accounting policies have been established to conform to generally accepted accounting principles in the United
States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to use
judgment in the application of accounting policies, including making estimates and assumptions. These judgments
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenue and expenses during the reporting periods. If management’s
judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible
that different accounting policies would have been applied or different amounts of assets, liabilities, revenues, and
expenses would have been recorded, thus resulting in a different presentation of the financial statements or different
amounts reported in the financial statements. Additionally, other companies may utilize different estimates that may
impact comparability of our results of operations to those of companies in similar businesses.
A discussion of the accounting policies that management deems critical because they may require complex judgment
in their application or otherwise require estimates about matters that are inherently uncertain, is provided below.
Timber Assets
Timber and timberlands, including logging roads, are stated at cost less accumulated depletion for timber harvested
and accumulated amortization. We capitalize timber and timberland purchases. Reforestation costs, including all costs
associated with stand establishment, such as site preparation, costs of seeds or seedlings, planting, fertilization and
herbicide application, are capitalized. Timber carrying costs, such as real estate taxes, insect control, wildlife control,
leases of timberlands and forestry management personnel salaries and fringe benefits, are expensed as incurred. Costs
of major roads are capitalized and amortized over their estimated useful lives. Costs of roads built to access multiple
logging sites over numerous years are capitalized and amortized over seven years. Costs of roads built to access a
single logging site are expensed as incurred.
Depletion
We recognize depletion expense as timber is harvested. Prior to January 1, 2015, depletion rates for timber held longer
than 12 months were determined annually using the normalized depletion method, by dividing (a) the sum of (i) net
carrying value of merchantable and premerchantable timber, and (ii) projected and approved reforestation costs to be
capitalized over the remaining harvest cycle; by (b) the estimated merchantable timber volume expected to be harvested
over the same period. The projected future harvest volume was derived by using a specialized modeling software based
on the specific management regime adapted and a set of scientific formulas. Significant management judgments were
involved to develop estimates of future harvest volumes and future reforestation costs. For each timber tract owned
less than one year, depletion rates are generally determined by dividing the acquisition cost attributable to its timber
by the volume of timber acquired.
44
Effective January 1, 2015, we changed the depletion method on our long-term timber to the straight-line method.
Straight-line depletion rates are established at least annually by dividing the remaining merchantable inventory book
value by current standing timber inventory volume. We believe the change from the normalized depletion method to
the straight-line depletion method is preferable as the straight-line method is based on the actual costs recorded and
volumes of timber that are merchantable as of the date that the depletion rates are determined. It is less reliant on
subjective and complex estimates as it does not include future costs to be incurred or expected timber growth.
In accordance with Financial Accounting Standards Board, Accounting Standards Codification 250, we determined
that the change in depletion method is a change in accounting estimate effected by a change in accounting principle,
and accordingly, the straight-line method was applied on a prospective basis, effective January 1, 2015.
Evaluating the Recoverability of Timber Assets
We continually monitor events and changes in circumstances that could indicate that the carrying amounts of our timber
assets may not be recoverable. When indicators of potential impairment are present that suggest that the carrying
amounts of timber assets may not be recoverable, we assess the recoverability of these assets by determining whether
the carrying value will be recovered through the undiscounted future operating cash flows expected from the use of
the asset and its eventual disposition. Impairment losses would be recognized for (i) long-lived assets used in our
operations when the carrying value of such assets exceeds the undiscounted cash flows estimated to be generated from
the future operations of those assets, and (ii) long-lived assets held for sale when the carrying value of such assets
exceeds an amount equal to their fair value less selling costs. Estimated fair values are calculated based on the following
information in order of preference, dependent upon availability: (i) recently quoted market prices, (ii) market prices
for comparable properties, or (iii) the present value of undiscounted cash flows, including estimated salvage value.
We intend to use one harvest cycle for the purpose of evaluating the recoverability of timber and timberlands used in
our operations. Future cash flow estimates are based on probability-weighted projections for a range of possible
outcomes and are discounted at risk-free rates of interest. We consider assets to be held for sale at the point at which
a sale contract is executed and the buyer has made a nonrefundable earnest money deposit against the contracted
purchase price. We have determined that there has been no impairment of our long-lived assets to date.
Allocation of Purchase Price of Acquired Assets
Upon the acquisition of timberland properties, we allocate the purchase price to tangible assets, consisting of timberland
and timber, and identified intangible assets and liabilities, which may include values associated with in-place leases
or supply agreements, based in each case on our estimate of their fair values. The values of tangible assets are then
allocated to timberland and timber based on our determination of the relative fair value of these assets.
Intangible Lease Assets
In-place ground leases with us as the lessee have value associated with effective contractual rental rates that are below
market rates. Such values are calculated based on the present value (using a discount rate that reflects the risks associated
with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place lease
and (ii) our estimate of fair market lease rates for the corresponding in-place lease, measured over a period equal to
the remaining term of the lease. The capitalized below-market in-place lease values are recorded as intangible lease
assets and are amortized as adjustments to land rent expense over the weighted-average remaining term of the respective
leases.
Revenue Recognition
Revenue from the sale of timber is recognized when the following criteria are met: (i) persuasive evidence of an
agreement exists, (ii) legal ownership and the risk of loss are transferred to the purchaser, (iii) price and quantity are
determinable, and (iv) collectibility is reasonably assured. Our primary sources of revenue are recognized as follows:
45
(1) For delivered sales contracts, which include amounts sufficient to cover costs of logging and hauling of
timber, revenues are recognized upon delivery to the customer.
(2) For pay-as-cut contracts, the purchaser acquires the right to harvest specified timber on a tract, at an agreed-
upon price per unit. Payments and contract advances are recognized as revenue as the timber is harvested
based on the contracted sale rate per unit.
(3) Revenues from the sale of higher-and-better use timberland and nonstrategic timberlands are recognized
when title passes and full payment or a minimum down payment is received and full collectibility is assured.
If a down payment of less than the minimum down payment is received at closing, we will record revenue
based on the installment method.
(4) For recreational leases, rental income collected in advance is recorded as other liabilities in the accompanying
consolidated balance sheets until earned over the term of the respective recreational lease and recognized
as other revenue.
In addition to the sources of revenue noted above, we also may enter into lump-sum sale contracts, whereby the
purchaser generally pays the purchase price upon execution of the contract. Title to the timber and risk of loss transfers
to the buyer at the time the contract is consummated. Revenues are recognized upon receipt of the purchase price.
When the contract expires, ownership of the remaining standing timber reverts to us; however, adjustments are not
made to the revenues previously recognized.
Related-Party Transactions and Agreements
During 2013 and 2014, we were party to agreements with our former sponsor and its affiliates, whereby we incurred
and paid fees and reimbursements for certain advisory, transition and space-related services. On October 25, 2013, we
terminated our advisory agreement with Wells TIMO, our former advisor, and hired the employees necessary to perform
the corporate management functions previously performed by our former advisor. In connection with the termination
of the advisory agreement on October 25, 2013, we (i) redeemed the special partnership units of our operating partnership
previously held by our advisor for no consideration and (2) purchased on the 200 common partnerships units of our
operating partnership held by our advisor for $1,312, which was based on our estimate of the per share value as of
September 30, 2012. See Note 12 – Related-Party Transactions and Agreements of our accompanying consolidated
financial statements for details of our related-party transactions, agreements, and fees.
All related person transactions must be approved or ratified by a majority of the disinterested directors on our board
of directors.
Commitments and Contingencies
We are subject to certain commitments and contingencies with regard to certain transactions. Refer to Note 6 –
Commitments and Contingencies of our accompanying consolidated financial statements for further explanation.
Examples of such commitments and contingencies include:
• Mahrt Timber Agreements;
• Timberland Operating Agreements;
• Obligations under Operating Leases; and
• Litigation.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our
financial condition or changes in financial condition, revenues or expenses, results of operations, liquidity, capital
expenditures, or capital resources.
46
Other Regulatory Matters
In February 2013, we received a formal subpoena for documents and information from the SEC in connection with
the SEC’s non-public, formal, fact finding investigation regarding Wells Investment Securities, Inc., or WIS, the former
dealer-manager for our previous non-listed public offerings, and our company. According to the SEC, the investigation
relates to whether there have been violations of certain provisions of the federal securities laws regarding valuation,
potential distributions, marketing and suitability. We have fully cooperated with the SEC and completed our production
of documents and information in response to the subpoena in April 2014.
We have not been accused of any wrongdoing by the SEC. We also have been informed by the SEC that the existence
of this investigation does not mean that the SEC has concluded that anyone has violated any laws or regulations or
that the SEC has a negative opinion of any person, entity or security. We cannot reasonably estimate the timing of the
conclusion of the investigation, nor can we predict whether or not the SEC will take any action against us as a result
of the investigation and, if they do, what the ultimate outcome will be.
To date, the costs related to our response to this subpoena have been covered by our insurance company, subject to a
deductible, and we expect that any additional costs will be covered by insurance.
Subsequent Event
See Note 16 – Subsequent Events of our accompanying consolidated financial statements and Part II, Item 9B – Other
Information for details of events and transactions occurring after the year ended December 31, 2015.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
As a result of entering into our credit agreements, we are exposed to interest rate changes. Our interest rate risk
management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our
overall borrowing costs. To achieve these objectives, we have entered into interest rate swap agreements, and may
enter into other interest rate swaps, caps, or other arrangements in order to mitigate our interest rate risk on a related
financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes; however,
certain of our derivatives may not qualify for hedge accounting treatment. All of our debt was entered into for other
than trading purposes. We manage our ratio of fixed-to-floating-rate debt with the objective of achieving a mix that
we believe is appropriate in light of anticipated changes in interest rates. We closely monitor interest rates and will
continue to consider the sources and terms of our borrowing facilities to determine whether we have appropriately
guarded ourselves against the risk of increasing interest rates in future periods.
As of December 31, 2015, the outstanding balance of the 2014 Amended Credit Agreement was $185 million, $100
million of which was outstanding under the 2014 Term Loan Facility and $85 million of which was outstanding under
the 2014 Multi-Draw Term Facility. The 2014 Term Loan Facility matures on December 23, 2024 and bears interest
at an adjustable rate based on one-month LIBOR Rate plus a margin of 1.75%, while the 2014 Multi-Draw Term
Facility matures on December 23, 2021 and bears interest at an adjustable rate based on one-month LIBOR Rate plus
a margin ranging from 1.75% to 2.75%, depending on the LTV Ratio.
On December 24, 2014, in connection with entering into the 2014 Amended Credit Agreement, we entered into an
interest rate swap agreement (the "2014 Rabobank Swap") with a notional amount of $35.0 million, which became
effective on December 23, 2014. Under the terms of the 2014 Rabobank Swap, we pay interest at a fixed rate of 2.395%
per annum to Rabobank and receive one-month LIBOR-based interest payments from Rabobank between December 23,
2014 and December 23, 2024.
As of December 31, 2015, $35 million of our total debt outstanding is subject to an effectively fixed-interest rate when
coupled with the 2014 Rabobank Swap. As of December 31, 2015, this balance incurred interest expense at an average
rate of 4.145%. A change in the market interest rate impacts the net financial instrument position of our effectively
fixed-rate debt portfolio; however, it has no impact on interest incurred or cash flows.
47
As of December 31, 2015, after consideration of the 2014 Rabobank Swap, $150 million of our total debt outstanding
is subject to an effectively variable interest rate. As of December 31, 2015, this balance incurred interest expense at a
weighted-average rate of 2.30%.
As of December 31, 2015, the weighted-average interest rate of the 2014 Amended Credit Agreement, after
consideration of the 2014 Rabobank Swap, was 2.65%. A 1.0% change in interest rates would result in a change in
interest expense of approximately $1.5 million per year. The amount of effectively variable-rate debt outstanding in
the future will be largely dependent upon the level of cash from operations and the rate at which we are able to deploy
such proceeds toward repayment of the 2014 Amended Credit Agreement and acquisition of timberland properties.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data filed as part of this report are set forth, beginning on page F-1 of
this report.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in or disagreements with our independent registered public accountants during the years
ended December 31, 2015, 2014, or 2013.
ITEM 9A.
CONTROLS AND PROCEDURES
Management’s Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of management, including the Principal
Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this annual report. Based
upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure
controls and procedures were effective as of the end of the period covered by this annual report in providing a reasonable
level of assurance that information we are required to disclose in reports that we file or submit under the Exchange
Act is recorded, processed, summarized, and reported within the time periods in SEC rules and forms, including
providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated
and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as a process designed by, or under the supervision
of, the Principal Executive Officer and Principal Financial Officer and effected by our board of directors, management,
and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP and includes those policies and procedures
that:
•
•
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and disposition of our assets;
provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that our receipts and expenditures are being made only in
accordance with authorizations of management and/or members of the board of directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of our assets that could have a material effect on the financial statements.
48
Because of the inherent limitations of internal control over financial reporting, including the possibility of human error,
and the circumvention or overriding of controls, material misstatements may not be prevented or detected on a timely
basis. In addition, projections of any evaluation of effectiveness to future periods are subject to the risks that controls
may become inadequate because of changes and conditions or that the degree of compliance with policies or procedures
may deteriorate. Accordingly, even internal controls determined to be effective can provide only reasonable assurance
that the information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized,
and represented within the time periods required.
Our management has assessed the effectiveness of our internal control over financial reporting at December 31, 2015.
To make this assessment, we used the criteria for effective internal control over financial reporting described in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013). Based on this assessment, our management believes that, as of December 31, 2015, our system of internal
control over financial reporting met those criteria, and therefore our management has concluded that we maintained
effective internal control over financial reporting as of December 31, 2015.
Deloitte & Touche LLP, an independent registered public accounting firm and the auditor of our consolidated financial
statements, has audited the effectiveness of our internal control over financial reporting as of December 31, 2015 and
issued an attestation report. The report appears on page F-3 within Item 15 — Exhibits and Financial Schedules of this
annual report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2015
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
For the quarter ended December 31, 2015, all items required to be disclosed under Form 8-K were reported under
Form 8-K.
49
PART III
We will file a definitive Proxy Statement for our 2016 Annual Meeting of Stockholders (the "2016 Proxy Statement")
with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain
information required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections
of the 2016 Proxy Statement that specifically address the items required to be set forth herein are incorporated by
reference.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
A list of our executive officers is found in the Executive Officers of the Registrant section of Item 1 – Business. The
other information required by this Item is incorporated by reference from our 2016 Proxy Statement.
ITEM 11
EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from our 2016 Proxy
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated by reference from our 2016 Proxy
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR
INDEPENDENCE
The information required by this Item is incorporated by reference from our 2016 Proxy
ITEM 14
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated by reference from our 2016 Proxy Statement.
50
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(a)
(a)
(a)
(b)
(c)
1. A list of the financial statements contained herein is set forth on page F-1 hereof.
2. All financial statement schedules have been omitted because they are not applicable, not material, or
the required information is shown in the consolidated financial statements or the notes thereto.
3. The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached
hereto.
See (a) 3 above.
See (a) 2 above.
51
Pursuant to the requirements of Sections 13 or 15(d) 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 this 7th day of March 2016.
SIGNATURES
CATCHMARK TIMBER TRUST, INC.
(Registrant)
Date: March 7, 2016
By:
/s/ JERRY BARAG
Jerry Barag
President, Chief Executive Officer, and Director
Signature
Title
Date
/S/ JERRY BARAG
Jerry Barag
/S/ BRIAN M. DAVIS
Brian M. Davis
/S/ JOHN F. RASOR
John F. Rasor
/S/ WILLIS J. POTTS, JR.
Willis J. Potts, Jr.
/S/ DONALD S. MOSS
Donald S. Moss
/S/ HENRY G. ZIGTEMA
Henry G. Zigtema
/S/ ALAN D. GOLD
Alan D. Gold
/S/ DOUGLAS D. RUBENSTEIN
Douglas Rubenstein
/S/ PAUL S. FISHER
Paul S. Fisher
President, Chief Executive Officer, and Director
March 7, 2016
Senior Vice President, Chief Financial Officer,
Treasurer, Assistant Secretary, and
Principal Accounting Officer
March 7, 2016
Chief Operating Officer, Secretary and Director
March 7, 2016
Chairman of the Board
March 7, 2016
Independent Director
March 7, 2016
Independent Director
March 7, 2016
Independent Director
March 7, 2016
Independent Director
March 7, 2016
Independent Director
March 7, 2016
52
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Statements
Report of Independent Registered Public Accounting Firm ............................................................................................
Consolidated Balance Sheets as of December 31, 2015 and 2014...................................................................................
Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 and 2013.................................
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2015, 2014, and 2013 ...............
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2015, 2014, and 2013................
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014, and 2013..............................
Notes to Consolidated Financial Statements ....................................................................................................................
Page
F- 2
F- 4
F- 5
F- 6
F- 7
F- 8
F- 9
F- 1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
CatchMark Timber Trust, Inc.
We have audited the accompanying consolidated balance sheets of CatchMark Timber Trust, Inc. and subsidiaries (the
"Company") as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive
loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2015. These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of
CatchMark Timber Trust, Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations
and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting
principles generally accepted in the United States of America.
As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting
for and disclosure of debt issuance costs during the year ended December 31, 2015, and retrospectively applied this
change to all periods presented, due to the adoption of Accounting Standards Update 2015-03, “Simplifying the
Presentation of Debt Issuance Costs,” and Accounting Standards Update 2015-15, “Presentation and Subsequent
Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements”.
As discussed in Note 2 to the consolidated financial statements, the Company has elected to change its method of
accounting for depletion during the year ended December 31, 2015.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company's internal control over financial reporting as of December 31, 2015, based on the criteria
established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated March 7, 2016 expressed an unqualified opinion on the Company's
internal control over financial reporting.
/s/ DELOITTE & TOUCHE LLP
Atlanta, Georgia
March 7, 2016
F- 2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
CatchMark Timber Trust, Inc.
We have audited the internal control over financial reporting of CatchMark Timber Trust, Inc. and subsidiaries (the
"Company") as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is
responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness
of internal control over financial reporting, included in the accompanying Report of Management on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial
reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's
principal executive and principal financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on
the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion
or improper management override of controls, material misstatements due to error or fraud may not be prevented or
detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial
reporting to future periods are subject to the risk that the controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of December 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated financial statements as of and for the year ended December 31, 2015 of the Company and
our report dated March 7, 2016, expressed an unqualified opinion on those consolidated financial statements and
included an explanatory paragraph regarding the Company’s adoption of the new accounting standards for reporting
of debt issuance costs and an explanatory paragraph regarding the Company’s change in method of accounting for
depletion.
/s/ DELOITTE & TOUCHE LLP
Atlanta, Georgia
March 7, 2016
F- 3
CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per-share amounts)
$
$
$
Assets:
Cash and cash equivalents
Accounts receivable
Prepaid expenses and other assets
Deferred financing costs, less accumulated amortization of $123 and $39 as of
December 31, 2015 and 2014, respectively
Timber assets (Note 3):
Timber and timberlands, net
Intangible lease assets, less accumulated amortization of $934 and $931 as of
December 31, 2015 and 2014, respectively
Total assets
Liabilities:
Accounts payable and accrued expenses
Other liabilities
Note payable and line of credit, less net deferred financing costs (Note 4)
Total liabilities
Commitments and Contingencies (Note 6)
Stockholders’ Equity:
Class A common stock, $0.01 par value; 900,000 and 896,500 shares authorized;
38,975 and 36,193 shares issued and outstanding as of December 31, 2015 and
2014, respectively
Class B-3 common stock, $0.01 par value; 0 and 3,500 shares authorized; 0 and
3,164 shares issued and outstanding as of December 31, 2015 and 2014,
respectively
Additional paid-in capital
Accumulated deficit and distributions
Accumulated other comprehensive loss
Total stockholders’ equity
December 31,
2015
2014
$
8,025
2,562
3,277
354
17,365
798
2,781
418
584,854
543,101
23
26
599,095
$
564,489
$
3,307
3,703
181,047
188,057
—
390
—
607,409
(195,341)
(1,420)
411,038
2,359
3,265
114,173
119,797
—
362
32
612,518
(167,364)
(856)
444,692
564,489
Total liabilities and stockholders’ equity
$
599,095
$
See accompanying notes.
F- 4
CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
Revenues:
Timber sales
Timberland sales
Other revenues
Expenses:
Contract logging and hauling costs
Depletion
Cost of timberland sales
Forestry management expenses
General and administrative expenses
Land rent expense
Other operating expenses
Operating income (loss)
Other income (expense):
Interest income
Interest expense
Gain (loss) on interest rate swap
Net income (loss)
Dividends to preferred stockholder
Net income (loss) available to common stockholders
Weighted-average common shares outstanding
—basic and diluted
Per-share information—basic and diluted:
Net income (loss) available to common stockholders
Years Ended December 31,
2015
2014
2013
$
52,837
11,845
4,440
69,122
19,911
27,091
9,747
4,495
7,667
736
4,295
73,942
(4,820)
6
(3,573)
—
(3,567)
(8,387)
$
40,635
10,650
3,026
54,311
17,322
14,788
5,558
3,567
6,185
831
2,942
51,193
3,118
177
(2,635)
—
(2,458)
660
—
(8,387)
$
—
660
$
26,703
2,499
2,846
32,048
13,606
8,505
1,754
2,769
10,201
1,043
2,772
40,650
(8,602)
3
(4,705)
107
(4,595)
(13,197)
(360)
(13,557)
39,348
31,568
13,146
(0.21)
$
0.02
$
(1.03)
$
$
$
See accompanying notes.
F- 5
CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
Net income (loss)
Other comprehensive income (loss):
Market value adjustment to interest rate swap
Comprehensive loss
$
$
Years Ended December 31,
2015
2014
2013
(8,387)
$
660
$
(13,197)
(564)
(8,951)
$
(1,125)
(465)
$
957
(12,240)
See accompanying notes.
F- 6
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L
CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash Flows from Operating Activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Years Ended December 31,
2014
2013
2015
$
(8,387) $
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$
(13,197)
Depletion
Basis of timberland sold
Noncash interest expense
Stock-based compensation expense
Other amortization
Unrealized gain on interest rate swaps
Changes in assets and liabilities:
Accounts receivable
Prepaid expenses and other assets
Accounts payable and accrued expenses
Due to affiliates
Other liabilities
Net cash provided by (used in) operating activities
Cash Flows from Investing Activities:
Capital expenditures (excluding timberland acquisitions)
Timberland acquisitions
Funds released from escrow accounts
Net cash used in investing activities
Cash Flows from Financing Activities:
Proceeds from notes payable
Repayment of notes payable
Financing costs paid
Issuance of common stock
Dividends paid to common stockholders
Repurchase of common stock
Redemptions of common stock
Redemptions of preferred stock
Dividends paid on preferred stock redeemed
Other offering costs paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
27,091
8,886
648
889
117
—
(1,764)
187
985
—
(158)
28,494
(2,668)
(75,793)
—
(78,461)
67,500
(498)
(781)
—
(19,590)
(6,004)
—
—
—
—
40,627
(9,340)
17,365
Cash and cash equivalents, end of period
$
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$
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5,072
738
418
98
—
(204)
619
(998)
—
(1,346)
19,845
(906)
(237,527)
—
(238,433)
320,750
(254,910)
(3,302)
190,222
(15,336)
(43)
—
—
—
(10,042)
227,339
8,751
8,614
17,365
$
8,505
1,570
1,332
1,838
156
(129)
64
(1,144)
1,395
(1,326)
(135)
(1,071)
(444)
(1,743)
2,050
(137)
—
(80,196)
(1,494)
142,105
—
(582)
(680)
(37,392)
(11,568)
(11,592)
(1,399)
(2,607)
11,221
8,614
See accompanying notes.
F- 8
CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015, 2014, AND 2013
1.
Organization
CatchMark Timber Trust, Inc. ("CatchMark Timber Trust") (NYSE: CTT), a Maryland corporation, primarily engages
in the ownership, management, acquisition, and disposition of timberlands located in the southeastern United States
and has elected to be taxed as a real estate investment trust ("REIT") for federal income tax purposes. CatchMark
Timber Trust incorporated in 2005 and commenced operations in 2007. CatchMark Timber Trust conducts substantially
all of its business through CatchMark Timber Operating Partnership, L.P. (“CatchMark Timber OP”), a Delaware
limited partnership. CatchMark Timber Trust is the general partner of CatchMark Timber OP, possesses full legal
control and authority over its operations, and owns 99.99% of its common partnership units. CatchMark LP Holder,
LLC (“CatchMark LP Holder”), a wholly-owned subsidiary of CatchMark Timber Trust formed in 2013, is the sole
limited partner of CatchMark Timber OP (see Note 7 – Noncontrolling Interest for more information). In addition,
CatchMark Timber TRS, Inc. (“CatchMark TRS”) was formed as a wholly owned subsidiary of CatchMark Timber
OP. Unless otherwise noted, references herein to CatchMark Timber Trust shall include CatchMark Timber Trust and
all of its subsidiaries, including CatchMark Timber OP, and the subsidiaries of CatchMark Timber OP, including
CatchMark TRS.
2.
Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The consolidated financial statements of CatchMark Timber Trust have been prepared in accordance with accounting
principles generally accepted in the United States (“GAAP”) and shall include the accounts of any variable interest
entity (“VIE”) in which CatchMark Timber Trust or its subsidiaries is deemed the primary beneficiary. With respect
to entities that are not VIEs, CatchMark Timber Trust’s consolidated financial statements shall also include the accounts
of any entity in which CatchMark Timber Trust or its subsidiaries owns a controlling financial interest and any limited
partnership in which CatchMark Timber Trust or its subsidiaries owns a controlling general partnership interest. In
determining whether a controlling interest exists, CatchMark Timber Trust considers, among other factors, the
ownership of voting interests, protective rights, and participatory rights of the investors.
CatchMark Timber Trust owns a controlling financial interest in CatchMark Timber OP, CatchMark LP Holder and
CatchMark TRS and, accordingly, includes the accounts of these entities in its consolidated financial statements. The
financial statements of CatchMark Timber OP, CatchMark LP Holder and CatchMark TRS are prepared using
accounting policies consistent with those used by CatchMark Timber Trust. All intercompany balances and transactions
have been eliminated in consolidation.
Use of Estimates
The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes.
Actual results could differ from those estimates.
F- 9
Fair Value Measurements
CatchMark Timber Trust estimates the fair value of its assets and liabilities (where currently required under GAAP)
consistent with the provisions of the accounting standard for fair value measurements and disclosures. Under this
guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. While various techniques and assumptions
can be used to estimate fair value depending on the nature of the asset or liability, the accounting standard for fair
value measurements and disclosures provides the following fair value technique parameters and hierarchy, depending
upon availability:
Level 1 — Assets or liabilities for which the identical term is traded on an active exchange, such as publicly-
traded instruments or futures contracts.
Level 2 — Assets and liabilities valued based on observable market data for similar instruments.
Level 3 — Assets or liabilities for which significant valuation assumptions are not readily observable in the
market. Such assets or liabilities are valued based on the best available data, some of which may
be internally developed. Significant assumptions may include risk premiums that a market
participant would require.
Cash and Cash Equivalents
CatchMark Timber Trust considers all highly liquid investments purchased with an original maturity of three months
or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments
are stated at cost, which approximates fair value and may consist of investments in money market accounts.
Accounts Receivable
Accounts receivable are recorded at the original amount earned, net of allowances for doubtful accounts, which
approximates fair value. Accounts receivable are deemed past due based on their respective payment terms.
Management assesses the realizability of accounts receivable on an ongoing basis and provides for allowances as such
balances, or portions thereof, become uncollectible. As of December 31, 2015, 2014, and 2013, no allowances have
been provided against accounts receivable. As of December 31, 2015, CatchMark Timber Trust has recorded $1.3
million of estimated patronage refunds due from CoBank, ACB (“CoBank”) as accounts receivable (please refer to
Note 4 – Note Payable and Line of Credit for further information regarding patronage refunds).
Prepaid Expenses and Other Assets
Prepaid expenses and other assets are primarily comprised of prepaid rent, insurance, and operating costs, equipment
and furniture, net of accumulated depreciation, and deferred costs associated with pending acquisitions. Prepaid
expenses are expensed as incurred or reclassified to other asset accounts upon being put into service in future periods.
Balances without future economic benefit are written off as they are identified.
Deferred Financing Costs
Deferred financing costs are comprised of costs incurred in connection with securing financing from third-party lenders
and are capitalized and amortized on a straight-line basis (which approximates the effective interest rate method) over
the terms of the related financing arrangements. For the year ended December 31, 2015, CatchMark Timber Trust has
elected to early adopt Accounting Standards Update 2015-03, Interest - Imputation of Interest (Subtopic
835-30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03") and Accounting Standards Update
2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit
Arrangements ("ASU 2015-15"). Under ASU 2015-03, CatchMark Timber Trust has presented the deferred financing
costs relating to its outstanding debt on the balance sheet as a direct deduction from the carrying amount of the related
debt liability instead of as an asset. Under ASU 2015-15, CatchMark Timber Trust has presented deferred financing
costs associated with its line of credit agreement, which may not have an outstanding balance at times, as an asset on
F- 10
the accompanying consolidated balance sheets. ASU 2015-03 and ASU 2015-15 were applied on a retrospective basis
and represent a change in accounting principle. The following financial statement line items for the year ended
December 31, 2014 were effected by the change in accounting principle:
(in thousands)
Consolidated Balance Sheet
December 31, 2014
Deferred financing costs, less accumulated
amortization
Note payable and line of credit, less net
unamortized deferred financing costs
$
$
4,245
118,000
$
$
418
114,173
$
$
(3,827)
(3,827)
As Reported
As Adjusted
Effect of Change
For further information regarding our credit agreements, outstanding balance of debt and associated deferred financing
costs, please refer to Note 4 – Note Payable and Line of Credit. CatchMark Timber Trust recognized amortization of
deferred financing costs for the years ended December 31, 2015, 2014, and 2013 of approximately $0.6 million, $0.7
million, and $1.3 million, respectively, which is included in interest expense in the accompanying consolidated
statements of operations.
Timber Assets
Timber and timberlands, including logging roads, are stated at cost less accumulated depletion for timber harvested
and accumulated road amortization. CatchMark Timber Trust capitalizes timber and timberland purchases.
Reforestation costs, including all costs associated with stand establishment, such as site preparation, cost of seedlings,
fertilization, and herbicide application, are capitalized and amortized over their estimated useful lives. Timber carrying
costs, such as real estate taxes, insect control, wildlife control, leases of timberlands, and forestry management personnel
salaries and fringe benefits, are expensed as incurred. Costs of major roads are capitalized and amortized over their
estimated useful lives. Costs of roads built to access multiple logging sites over numerous years are capitalized and
amortized over seven years. Costs of roads built to access a single logging site are expensed as incurred.
Depletion
CatchMark Timber Trust recognizes depletion expense as timber is harvested. Prior to January 1, 2015, depletion rates
for timber held longer than 12 months were determined annually using the normalized depletion method by dividing
(a) the sum of (i) net carrying value of merchantable and premerchantable timber, and (ii) projected approved
reforestation costs to be capitalized over the remaining harvest cycle, by (b) the estimated merchantable timber volume
expected to be harvested over the same period. The projected future harvest volume was derived by using a specialized
modeling software based on the specific management regime adopted and a set of scientific formulas. Significant
management judgments were involved to develop estimates of future harvest volumes and future reforestation costs.
For each fee timber tract owned less than one year, depletion rates are generally determined by dividing the acquisition
cost attributable to its timber by the volume of timber acquired.
Effective January 1, 2015, CatchMark Timber Trust changed the depletion method on its long-term timber to the
straight-line method. Straight-line depletion rates are established at least annually by dividing the remaining
merchantable inventory book value by current standing timber inventory volume. Management believes the change
from the normalized depletion method to the straight-line depletion method is preferable as the straight-line method
is based on the actual costs recorded and volumes of timber that are merchantable as of the date that the depletion rates
are determined. It is less reliant on subjective and complex estimates as it does not include future costs to be incurred
or expected timber growth.
F- 11
In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 250,
CatchMark Timber Trust determined that the change in depletion method is a change in accounting estimate effected
by a change in accounting principle, and accordingly, the straight-line method was applied on a prospective basis,
effective January 1, 2015.
If CatchMark Timber Trust had continued using the normalized depletion method, depletion expense for the year ended
December 31, 2015 would have been $4.5 million, or $0.11 per share, lower than the depletion expense it recorded
using the straight-line depletion method.
Evaluating the Recoverability of Timber Assets
CatchMark Timber Trust continually monitors events and changes in circumstances that could indicate that the carrying
amounts of the timber assets in which CatchMark Timber Trust has an ownership interest may not be recoverable.
When indicators of potential impairment are present that suggest that the carrying amounts of timber assets may not
be recoverable, CatchMark Timber Trust assesses the recoverability of these assets by determining whether the carrying
value will be recovered through the undiscounted future operating cash flows expected from the use of the asset and
its eventual disposition. Impairment losses would be recognized for (i) long-lived assets used in CatchMark Timber
Trust’s operations when the carrying value of such assets exceeds the undiscounted cash flows estimated to be generated
from the future operations of those assets, and (ii) long-lived assets held for sale when the carrying value of such assets
exceeds an amount equal to their fair value less selling costs. Estimated fair values are calculated based on the following
information in order of preference, dependent upon availability: (i) recently quoted market prices, (ii) market prices
for comparable properties, or (iii) the present value of undiscounted cash flows, including estimated salvage value.
CatchMark Timber Trust intends to use one harvest cycle for the purpose of evaluating the recoverability of timber
and timberlands used in its operations. Future cash flow estimates are based on discounted probability-weighted
projections for a range of possible outcomes. CatchMark Timber Trust considers assets to be held for sale at the point
at which a sale contract is executed and the buyer has made a non-refundable earnest money deposit against the
contracted purchase price. CatchMark Timber Trust has determined that there has been no impairment of its long-lived
assets to date.
Allocation of Purchase Price of Acquired Assets
Upon the acquisition of timberland properties, CatchMark Timber Trust allocates the purchase price to tangible assets,
consisting of timberland and timber, and identified intangible assets and liabilities, which may include values associated
with in-place leases or supply agreements, based in each case on management’s estimate of their fair values. The values
of tangible assets are then allocated to timberland and timber based on management’s determination of the relative
fair value of these assets.
Intangible Lease Assets
In-place ground leases with CatchMark Timber Trust as the lessee have value associated with effective contractual
rental rates that are below market rates. Such values are calculated based on the present value (using a discount rate
that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be
paid pursuant to the in-place lease and (ii) management’s estimate of fair market lease rates for the corresponding in-
place lease, measured over a period equal to the remaining terms of the leases. The capitalized below-market in-place
lease values are recorded as intangible lease assets and are amortized as adjustments to land rent expense over the
weighted-average remaining term of the respective leases.
Fair Value of Debt Instruments
CatchMark Timber Trust applied the provisions of the accounting standard for fair value measurements and disclosures
in estimations of fair value of its debt instruments based on Level 2 assumptions. The fair value of the outstanding
note payable was estimated based on discounted cash flow analysis using the current observable market borrowing
rates for similar types of borrowing arrangements as of the measurement date. The discounted cash flow method of
assessing fair value results in a general approximation of book value, and such value may never actually be realized.
F- 12
Preferred Stock
The proceeds from issued and outstanding shares of preferred stock and dividends payable on preferred stock were
recorded as preferred stock.
Common Stock
The par value of CatchMark Timber Trust’s issued and outstanding shares of common stock is recorded as common
stock. The remaining gross proceeds, net of offering costs, are recorded as additional paid-in capital.
Interest Rate Swaps
CatchMark Timber Trust has entered into interest rate swap contracts to mitigate its exposure to changing interest rates
on variable rate debt instruments. CatchMark Timber Trust does not enter into derivative or interest rate transactions
for speculative purposes; however, certain of its derivatives may not qualify for hedge accounting treatment. The fair
values of interest rate swaps are recorded as either prepaid expenses and other assets or other liabilities in the
accompanying consolidated balance sheets. Changes in the fair value of the effective portion of interest rate swaps
that are designated as hedges are recorded as other comprehensive income (loss), while changes in the fair value of
the ineffective portion of hedges, if any, are recognized in current earnings. Changes in the fair value of interest rate
swaps that do not qualify for hedge accounting treatment are recorded as gain (loss) on interest rate swap in the
consolidated statements of operations. Amounts received or paid under interest rate swaps are recorded as interest
expense for contracts that qualify for hedge accounting treatment and as gain (loss) on interest rate swaps for contracts
that do not qualify for hedge accounting treatment.
CatchMark Timber Trust applied the provisions of the accounting standard for fair value measurements and disclosures
in recording its interest rate swap at fair value. The fair value of the interest rate swap, classified under Level 2, was
determined using a third-party proprietary model that is based on prevailing market data for contracts with matching
durations, current and anticipated London Interbank Offered Rate ("LIBOR") information, consideration of CatchMark
Timber Trust's credit standing, credit risk of counterparties, and reasonable estimates about relevant future market
conditions.
Revenue Recognition
Revenue from the sale of timber is recognized when the following criteria are met: (i) persuasive evidence of an
agreement exists, (ii) legal ownership and the risk of loss are transferred to the purchaser, (iii) price and quantity are
determinable, and (iv) collectibility is reasonably assured. CatchMark Timber Trust’s primary sources of revenue are
recognized as follows:
(1) For delivered sales contracts, which include amounts sufficient to cover costs of logging and hauling of
timber, revenues are recognized upon delivery to the customer.
(2) For pay-as-cut contracts, the purchaser acquires the right to harvest specified timber on a tract, at an agreed-
upon price per unit. Payments and contract advances are recognized as revenue as the timber is harvested
based on the contracted sale rate per unit.
(3) Revenues from the sale of HBU and nonstrategic timberlands are recognized when title passes and full
payment or a minimum down payment is received and full collectibility is assured. If a down payment of
less than the minimum down payment is received at closing, CatchMark Timber Trust will record revenue
based on the installment method.
(4) For recreational leases, rental income collected in advance is recorded as other liabilities in the accompanying
consolidated balance sheets until earned over the term of the respective recreational lease and recognized
as other revenue.
F- 13
In addition to the sources of revenue noted above, CatchMark Timber Trust also may enter into lump-sum sale contracts,
whereby the purchaser generally pays the purchase price upon execution of the contract. Title to the timber and risk
of loss transfers to the buyer at the time the contract is consummated. Revenues are recognized upon receipt of the
purchase price. When the contract expires, ownership of the remaining standing timber reverts to CatchMark Timber
Trust; however, adjustments are not made to the revenues previously recognized.
Stock-based Compensation
CatchMark Timber Trust has issued stock-based compensation in the form of stock options and restricted stock to its
directors and employees pursuant to its Long-Term Incentive Plan. Restricted stock awards issued are considered
equity awards and are recorded as a reduction to additional paid-in capital upon issuance. The fair value of stock
options and restricted stock is recognized over the respective weighted-average vesting periods by charging expense
and recording additional paid-in capital. For those awards with performance conditions, expense is only recorded if it
is deemed probable that the performance condition will be achieved. Stock-based compensation expense in the
accompanying consolidated statements of operations is recorded as forestry management expenses for those employees
whose job is related to forest operations and as general and administrative expense for all other employees and directors.
See Note 9 – Stock Based Compensation for a description of CatchMark Timber Trust’s Long-Term Incentive Plan.
Earnings Per Share
Basic earnings (loss) per share available to common stockholders is calculated as net income (loss) available to common
stockholders divided by the weighted-average number of common shares outstanding during the period. Net income
(loss) available to common stockholders is calculated as net income (loss) less dividends payable to or accumulated
to preferred stockholders. Diluted earnings (loss) per share available to common stockholders equals basic earnings
per share available to common stockholders, adjusted to reflect the dilution that would occur if all outstanding securities
convertible into common shares or contracts to issue common shares were converted or exercised and the related
proceeds are then used to repurchase common shares. Basic and diluted earnings (loss) per share were the same for
all periods presented as the dilutive effect of outstanding securities was immaterial.
Income Taxes
CatchMark Timber Trust has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the
“Code”), and has operated as such beginning with its taxable year ended December 31, 2009. To qualify to be taxed
as a REIT, CatchMark Timber Trust must meet certain organizational and operational requirements, including a
requirement to distribute at least 90% of its ordinary taxable income to its stockholders. As a REIT, CatchMark Timber
Trust generally is not subject to federal income tax on taxable income it distributes to stockholders. If CatchMark
Timber Trust fails to qualify as a REIT in any taxable year, it will then be subject to federal and state income taxes on
its taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal
income tax purposes for four years following the year during which qualification is lost unless the IRS
grants CatchMark Timber Trust relief under certain statutory provisions.
CatchMark Timber Trust has elected to treat CatchMark TRS as a taxable REIT subsidiary. CatchMark Timber Trust
may perform certain non-customary services, including real estate or non-real-estate related services, through
CatchMark TRS. Earnings from services performed through CatchMark TRS are subject to federal and state income
taxes irrespective of the dividends paid deduction available to REITs for federal income tax purposes. In addition, for
CatchMark Timber Trust to continue to qualify to be taxed as a REIT, CatchMark Timber Trust’s investment in
CatchMark TRS and any other TRSs may not exceed 25% (20% after 2017) of the value of the total assets of CatchMark
Timber Trust.
Deferred tax assets and liabilities represent temporary differences between the financial reporting basis and the tax
basis of assets and liabilities based on the enacted rates expected to be in effect when the temporary differences reverse.
Deferred tax expense or benefit is recognized in the financial statements according to the changes in deferred tax assets
or liabilities between years. Valuation allowances are established to reduce deferred tax assets when it becomes more
likely than not that such assets, or portions thereof, will not be realized. No provision for federal income taxes has
F- 14
been made in the accompanying consolidated financial statements, other than the provision relating to CatchMark
TRS, as CatchMark Timber Trust did not generate taxable income for the periods presented. See Note 13 – Income
Taxes for more information.
CatchMark Timber Trust is also subject to certain state and local taxes related to the operations of timberland properties
in certain locations, which have been provided for in the accompanying consolidated financial statements. CatchMark
Timber Trust records interest and penalties related to uncertain tax positions as general and administrative expense in
the accompanying consolidated statements of operations.
Business Segments
CatchMark Timber Trust owns interests in approximately 425,000 acres of timberland located in the U.S. South.
CatchMark Timber Trust operates in a single reporting segment, and the presentation of CatchMark Timber Trust’s
financial condition and performance is consistent with the way in which CatchMark Timber Trust’s operations are
managed.
Recent Accounting Pronouncements
In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2015-02, Consolidation - Amendments to the Consolidation Analysis ("ASU 2015-02"). ASU 2015-02 modifies existing
consolidation guidance related to (i) limited partnerships and similar legal entities, (ii) the evaluation of variable
interests for fees paid to decision makers or service providers, (iii) the effect of fee arrangements and related parties
on the primary beneficiary determination, and (iv) certain investment funds. These changes are expected to limit the
number of consolidation models and place more emphasis on risk of loss when determining a controlling financial
interest. ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December
15, 2015. The adoption of ASU 2015-02 will not have an impact on CatchMark Timber Trust's consolidated financial
statements or associated disclosures.
3.
Timber Assets
As of December 31, 2015 and 2014, timber and timberlands consisted of the following, respectively:
(in thousands)
Timber
Timberlands
Mainline roads
Timber and timberlands
(in thousands)
Timber
Timberlands
Mainline roads
Timber and timberlands
As of December 31, 2015
Accumulated
Depletion or
Amortization
Gross
281,198 $
330,446
707
612,351 $
27,091 $
—
406
27,497 $
As of December 31, 2014
Accumulated
Depletion or
Amortization
Gross
258,648 $
298,944
614
558,206 $
14,788 $
—
317
15,105 $
$
$
$
$
Net
254,107
330,446
301
584,854
Net
243,860
298,944
297
543,101
F- 15
Timberland Acquisitions
During the year ended December 31, 2015, 2014 and 2013, CatchMark Timber Trust acquired approximately 42,900
acres, 121,600 acres and 1,800 acres of timberland for approximately $73.3 million, $235.2 million and $1.4 million,
respectively, excluding closing costs. A detailed breakout of acreage acquired by state is listed below:
Acres Acquired In:
2015
2014
2013
Alabama
Florida
Georgia
Louisiana
North Carolina
South Carolina
Tennessee
Texas
Total
Timberland Sales
—
—
9,900
300
1,600
12,500
300
18,300
42,900
—
2,500
79,600
21,000
—
—
—
18,500
121,600
1,800
—
—
—
—
—
—
—
1,800
During the years ended December 31, 2015, 2014 and 2013, CatchMark Timber Trust sold approximately 6,400 acres,
3,800 acres, and 1,200 acres of timberland, respectively, for approximately $11.8 million, $10.7 million, and $2.5 million,
respectively. CatchMark Timber Trust’s cost basis in the timberland sold was approximately $8.9 million, $5.1 million,
and $1.6 million respectively. A detailed breakout of land sale acreage by state is listed below:
Acres Sold In:
2015
2014
2013
Alabama
Georgia
Texas
Total
Current Timberland Portfolio
3,000
2,200
1,200
6,400
800
3,000
—
3,800
300
900
—
1,200
As of December 31, 2015, CatchMark Timber Trust owned interests in approximately 425,000 acres of timberlands in
the U.S. South, approximately 401,200 acres of which were held in fee-simple interests and approximately 23,800 acres
were held in leasehold interests. A detailed breakout of land acreage by state is listed below:
Acres by state as of December 31, 2015
Fee
Lease
Total
Alabama
Florida
Georgia
Louisiana
North Carolina
South Carolina
Tennessee
Texas
Total:
72,800
2,500
254,600
21,300
1,600
12,500
300
35,600
401,200
5,600
—
18,200
—
—
—
—
—
23,800
78,400
2,500
272,800
21,300
1,600
12,500
300
35,600
425,000
F- 16
Intangible Lease Assets
Intangible Lease Assets consist of capitalized below-market in-place ground leases and are amortized as adjustments to
land rent expense over the weighted-average remaining term of the respective leases. CatchMark Timber Trust had net
below-market lease assets of approximately $23,000 and $26,000 as of December 31, 2015 and 2014, respectively, and
recognized amortization of this asset of approximately $4,000, $4,000, and $86,000 in 2015, 2014, and 2013, respectively.
4.
Note Payable and Line of Credit
As of December 31, 2015 and 2014, CatchMark Timber Trust had the following indebtedness outstanding:
(in thousands)
2014 Term Loan Facility
2014 Multi-Draw Term Facility
Maturity Date
December 23, 2024
December 23, 2021
Total Principal Balance
Less: Net Unamortized Deferred Financing Costs (1)
Total
(1)
Outstanding Balance as of
December 31, 2015 December 31, 2014
$
100,000
18,000
118,000
(3,827)
100,000
85,002
185,002
$
$
$
$
(3,955) $
$
181,047
114,173
$
Net Unamortized Deferred Financing Costs represent costs incurred for borrowings under the 2014 Term Loan Facility
and the 2014 Multi-Draw Term Facility only. For further information regarding accounting treatment of deferred financing
costs, see Note 2 – Summary of Significant Accounting Policies.
CoBank Loan
CatchMark Timber Trust entered into a senior credit agreement (the “CoBank Loan”) on September 28, 2012 with a
syndicate of banks with CoBank serving as the administrative agent, Agfirst Farm Credit Bank (“Agfirst”) and
Cooperatieve Rabobank, U.A. (“Rabobank”). Under the CoBank Loan, CatchMark Timber Trust borrowed $133.0
million through a term loan facility ("CoBank Term Loan") and had access to a $15.0 million revolving credit facility
(the "CoBank Revolver"). Proceeds from the CoBank Term Loan were used to pay off the outstanding balance under
CatchMark Timber Trust's previous credit agreement, fund costs associated with closing the CoBank Loan, and partially
fund a timberland acquisition. No amount was drawn under the CoBank Revolver.
The CoBank Loan bore interest at an adjustable rate based on one-month LIBOR plus an applicable margin ranging
from 2.00% to 2.75% (the “LIBOR Rate”), based on the loan-to-collateral-value ratio (the “LTV Ratio”).
On December 19, 2013, CatchMark Timber Trust paid down the CoBank Loan by $80.2 million using proceeds from
its initial listed public offering.
Amended CoBank Loan
On December 19, 2013, CatchMark Timber Trust entered into a third amended and restated credit agreement (the
“Amended CoBank Loan”) with CoBank, Agfirst, RaboBank and certain other financial institutions. The Amended
CoBank Loan amended and restated the CoBank Loan in its entirety.
The Amended CoBank Loan provided for borrowing under credit facilities consisting of:
•
•
•
a $15.0 million revolving credit facility (the “Revolving Credit Facility”),
a $150.0 million multi-draw term credit facility (the “Multi-Draw Term Facility”), and
the remaining amount outstanding under the CoBank Term Loan (the “Term Loan Facility”, and together
with the Revolving Credit Facility and the Multi-Draw Term Facility, the “2013 Credit Facilities”), which
was $52.2 million.
F- 17
The Amended CoBank Loan provided that the New Credit Facilities may be increased, upon the agreement of lenders
willing to increase their loans, by up to $75.0 million, consisting of up to a $10.0 million increase in the Revolving
Credit Facility and the remainder available for incremental term loans.
The Revolving Credit Facility bore interest at an adjustable rate equal to a base rate plus between 0.50% and 1.75% or
a LIBOR rate plus between 1.50% and 2.75%, in each case depending on CatchMark Timber Trust's LTV Ratio. The
Multi-Draw Term Facility bore interest at an adjustable rate equal to a base rate plus between 0.75% and 2.00% or
a LIBOR rate plus between 1.75% and 3.00%, in each case depending on the LTV Ratio. The Multi-Draw Term Facility
was interest only until the maturity date. The Term Loan Facility bore interest at an adjustable rate equal to a base
rate plus between 0.50% and 1.75% or a LIBOR rate plus between 1.50% and 2.75%, in each case depending on
the CatchMark Timber Trust
On May 30, 2014, CatchMark Timber Trust amended the Amended CoBank Loan to increase the availability under
the Revolving Credit Facility by $10.0 million, from $15.0 million to $25.0 million, and increase the availability under
the Multi-Draw Term Facility by $65.0 million, from $150.0 million to $215.0 million.
2014 Amended Credit Agreement
On December 23, 2014, CatchMark Timber Trust entered into a fourth amended and restated credit agreement (the
“2014 Amended Credit Agreement”) with CoBank, Agfirst, RaboBank and certain other financial institutions. The
2014 Amended Credit Agreement amended and restated the Amended CoBank Loan in its entirety.
The 2014 Amended Credit Agreement originally provided for borrowing under credit facilities consisting of:
•
•
•
a $35.0 million revolving credit facility (the “2014 Revolving Credit Facility”),
a $275.0 million multi-draw term credit facility (the “2014 Multi-Draw Term Facility”), and
a $100.0 million term loan (the “2014 Term Loan Facility”, and together with the 2014 Revolving Credit
Facility and the 2014 Multi-Draw Term Facility, the “2014 Amended Credit Facilities”).
The terms of the 2014 Amended Credit Agreement provided that 2014 Amended Credit Facilities may be increased,
upon the agreement of lenders willing to increase their loans, by up to $200.0 million. On December 11, 2015, CatchMark
Timber Trust increased its credit availability under the 2014 Multi-Draw Term Facility by $90.0 million, from $275.0
million to $365.0 million.
Borrowings under the 2014 Revolving Credit Facility may be used for general working capital, to support letters of
credit, to fund cash earnest money deposits, to fund acquisitions in an amount not to exceed $5.0 million, and other
general corporate purposes. The 2014 Revolving Credit Facility will bear interest at an adjustable rate equal to a base
rate plus between 0.50% and 1.50% or a LIBOR rate plus between 1.50% and 2.50%, in each case depending on
CatchMark Timber Trust's LTV Ratio, and will terminate and all amounts under the facility will be due and payable
on December 23, 2019.
The 2014 Multi-Draw Term Facility may be drawn upon up to eight times during the period beginning on December
23, 2014 through December 23, 2017 and may be used to finance domestic timber acquisitions and associated expenses,
refinance loan amounts under the 2014 Revolving Credit Facility, and purchase up to $25.0 million in CatchMark
Timber Trust common stock. Amounts repaid under the 2014 Multi-Draw Term Facility may be re-borrowed prior to
the third anniversary of the closing date. The 2014 Multi-Draw Term Facility will bear interest at an adjustable rate
equal to a base rate plus between 0.75% and 1.75% or a LIBOR rate plus between 1.75% and 2.75%, in each case
depending on the LTV Ratio, and will terminate and all amounts under the facility will be due and payable on
December 23, 2021. The 2014 Multi-Draw Term Facility is interest only until the maturity date; however, if the
CatchMark Timber Trust’s LTV Ratio is equal to or in excess of 40%, then principal payments will be required to be
made beginning on December 31, 2017 at a per annum rate of 5% of the principal amount outstanding under the 2014
Multi-Draw Term Facility.
F- 18
The 2014 Term Loan Facility shall be used solely to refinance the balance outstanding under the Multi-Draw Term
Facility under the Amended CoBank Loan. The 2014 Term Loan Facility will bear interest at an adjustable rate equal
to a base rate plus 1.75% or a LIBOR rate plus 1.75%, and will terminate and all amounts under the facility will be
due and payable on December 23, 2024.
In March 2015, CatchMark Timber Trust received a patronage refund on its borrowings under the 2014 Amended
Credit Agreement during 2014. The refund was calculated by CoBank and approximated 0.91% of CatchMark Timber
Trust's weighted average balance outstanding under the 2014 Term Loan Facility and the 2014 Multi-Draw Term
Facility (collectively, "patronage loans"). Of the total amount received, 75% was received in cash and 25% was received
in equity in patronage banks. CatchMark Timber Trust expects to receive a patronage refund for 2015 and accrued for
the expected refunds by multiplying the weighted average outstanding balance on the patronage loans by 0.90%. For
the year ended December 31, 2015, CatchMark Timber Trust recorded $1.3 million in patronage refunds as a credit to
its interest expense.
CatchMark Timber Trust pays the lenders an unused commitment fee on the unused portion of the 2014 Multi-Draw
Term Facility and 2014 Revolving Credit Facility, at an adjustable rate ranging from 0.20% to 0.35%, depending on
the LTV Ratio.
The 2014 Amended Credit Agreement contains, among others, the following financial covenants:
•
•
limits the LTV Ratio to 45% at the end of each fiscal quarter and upon the sale or acquisition of any property;
requires that CatchMark Timber Trust maintains a fixed coverage charge ratio of not less than 1.05:1.00.
CatchMark Timber Trust was in compliance with the financial covenants of the 2014 Amended Credit Agreement as
of December 31, 2015.
CatchMark Timber Trust’s obligations under the 2014 Amended Credit Agreement are collateralized by a first priority
lien on the timberlands owned by CatchMark Timber Trust’s subsidiaries and substantially all of CatchMark Timber
Trust’s subsidiaries’ other assets in which a security interest may lawfully be granted, including, without limitation,
accounts, equipment, inventory, intellectual property, bank accounts and investment property. In addition, CatchMark
Timber Trust's obligations under the 2014 Amended Credit Agreement are jointly and severally guaranteed by all of
CatchMark Timber Trust and its subsidiaries pursuant to the terms of the 2014 Amended Credit Agreement. CatchMark
Timber Trust has also agreed to guarantee certain losses caused by certain willful acts of CatchMark Timber Trust or
its subsidiaries.
Interest Paid and Fair Value of Outstanding Debt
During the years ended December 31, 2015, 2014 and 2013, CatchMark Timber Trust made the following interest
payments on its borrowings:
(in thousands)
CoBank Loan
Amended CoBank Loan
2014 Amended Credit Agreement
2015
2014
2013
—
—
3,253
3,253
$
—
1,706
—
1,706
$
2,935
92
—
3,027
$
Included in the interest payments for the years ended December 31, 2015 and 2014 were unused commitment fees of
$0.4 million and $0.4 million, respectively. No interest paid was capitalized during the years ended December 31,
2015, 2014 and 2013.
F- 19
As of December 31, 2015, and 2014, the weighted-average interest rate on these borrowings, after consideration of an
interest rate swap (see Note 5 – Interest Rate Swaps), was 2.65% and 2.58%, respectively. As of December 31, 2015
and 2014, the fair value of CatchMark Timber Trust's outstanding debt approximated its book value. The fair value
was estimated based on discounted cash flow analysis using the current market borrowing rates for similar types of
borrowing arrangements as of the measurement dates.
5.
Interest Rate Swaps
2014 RaboBank Swap
On December 24, 2014, in connection with entering into the 2014 Amended Credit Agreement, CatchMark Timber
Trust entered into an interest rate swap with RaboBank to hedge its exposure to changing interest rates on $35.0 million
of the 2014 Amended Credit Agreement that is subject to a variable interest rate (the "2014 RaboBank Swap"). The
2014 RaboBank Swap became effective on December 23, 2014 and matures on December 23, 2024. Under the terms
of the 2014 RaboBank Swap, CatchMark Timber Trust pays interest at a fixed rate of 2.395% per annum to RaboBank
and receives one-month LIBOR-based interest payments from RaboBank. The 2014 RaboBank Swap qualifies for
hedge accounting treatment.
2013 RaboBank Swap
CatchMark Timber Trust was party to an interest rate swap agreement with RaboBank to hedge its exposure to changing
interest rates on $80.0 million of its variable interest rate term loan (the “2013 RaboBank Swap”). The 2013 RaboBank
Swap became effective on March 28, 2013 and was scheduled to mature on September 30, 2017. Under the terms of
the 2013 RaboBank Swap, CatchMark Timber Trust paid interest at a fixed rate of 0.9075% per annum to RaboBank
and received one-month LIBOR-based interest payments from Rabobank. The 2013 RaboBank Swap qualified for
hedge accounting treatment.
On December 19, 2013, in connection with entering into the Amended CoBank Loan, CatchMark Timber Trust unwound
$47.0 million of the notional amount of the 2013 RaboBank Swap and received a cash payment of approximately $0.1
million from Rabobank as settlement. This amount was reclassified from accumulated other comprehensive income
and recognized as realized gain on interest rate swap in current earnings in the consolidated statements of operations.
In connection with the payoff of its outstanding indebtedness under the Amended CoBank Loan on July 18, 2014,
CatchMark Timber Trust terminated the 2013 RaboBank Swap and received a counter-party payment of approximately
$0.2 million from Rabobank, which was recorded as interest income in the accompanying consolidated statements of
operations.
F- 20
Fair Value and Cash Paid for Interest Under Interest Rate Swap Agreements
The following table presents information about CatchMark Timber Trust’s interest rate swap measured at fair value
as of December 31, 2015 and 2014:
(in thousands)
Instrument Type
Derivatives designated as hedging instruments:
Estimated Fair Value as of
December 31,
Balance Sheet Classification
2015
2014
Interest rate swap contract
Other liabilities
$
(1,420) $
(856)
During the year ended December 31, 2015, CatchMark Timber Trust recognized a change in fair value of the 2014
Rabobank Swap agreement of approximately $0.6 million as other comprehensive loss. There was no hedge
ineffectiveness on the 2014 Rabobank Swap required to be recognized in current earnings. During the year ended
December 31, 2015, 2014, and 2013, net payments of approximately $0.8 million, $0.1 million, $0.4 million were
made under the swap agreements by CatchMark Timber Trust and were recorded as interest expense, respectively.
6.
Commitments and Contingencies
Mahrt Timber Agreements
In connection with its acquisition of timberlands from WestRock Company (“WestRock”), CatchMark Timber Trust
entered into a fiber supply agreement and a master stumpage agreement (collectively, the “Mahrt Timber Agreements”)
with a wholly owned subsidiary of WestRock. The fiber supply agreement provides that WestRock will purchase
specified tonnage of timber from CatchMark TRS at specified prices per ton, depending upon the type of timber. The
fiber supply agreement is subject to quarterly market pricing adjustments based on an index published by Timber Mart-
South, a quarterly trade publication that reports raw forest product prices in 11 southern states. The master stumpage
agreement provides that CatchMark Timber Trust will sell specified amounts of timber and make available certain
portions of its timberlands to CatchMark TRS for harvesting. The initial term of the Mahrt Timber Agreements is
October 9, 2007 through December 31, 2032, subject to extension and early termination provisions. The Mahrt Timber
Agreements ensure a long-term source of supply of wood fiber products for WestRock in order to meet its paperboard
and lumber production requirements at specified mills and provide CatchMark Timber Trust with a reliable customer
for the wood products from its timberlands. For the years ended December 31, 2015, 2014, and 2013, approximately
23%, 34%, and 60%, respectively, of our net timber sales revenue was derived from the Mahrt Timber Agreements.
WestRock can terminate the Mahrt Timber Agreements prior to the expiration of the initial term if CatchMark Timber
Trust replaces Forest Resource Consultants, Inc. ("FRC") as the forest manager without the prior written consent of
WestRock, except pursuant to an internalization of the company's forestry management functions. CatchMark Timber
Trust can terminate the Mahrt Timber Agreements if WestRock (1) ceases to operate the Mahrt mill for a period that
exceeds 12 consecutive months, (2) fails to purchase a specified tonnage of timber for two consecutive years, subject
to certain limited exceptions or (3) fails to make payments when due (and fails to cure within 30 days). In addition,
either party can terminate the Mahrt Timber Agreements if the other party commits a material breach (and fails to cure
within 60 days) or becomes insolvent.
In addition, the Mahrt Timber Agreements provide for adjustments to both parties' obligations in the event of a force
majeure, which is defined to include, among other things, lightning, fires, storms, floods, infestation and other acts of
God or nature.
F- 21
Timberland Operating Agreements
Pursuant to the terms of the timberland operating agreement between CatchMark Timber Trust and FRC (the "FRC
Timberland Operating Agreement"), FRC manages and operates approximately 410,400 acres of CatchMark Timber
Trust's timberlands and related timber operations, including ensuring delivery of timber to WestRock in compliance
with the Mahrt Timber Agreements. In consideration for rendering the services described in the FRC Timberland
Operating Agreement, CatchMark Timber Trust pays FRC (i) a monthly management fee based on the actual acreage
FRC manages, which is payable monthly in advance, and (ii) an incentive fee based on revenues generated by the
timber operations. The incentive fee is payable quarterly in arrears. The FRC Timberland Operating Agreement, as
amended, is effective through March 31, 2017, with the option to extend for one-year periods and may be terminated
by either party with mutual consent or by CatchMark Timber Trust with or without cause upon providing 120 days’
prior written notice.
Pursuant to the terms of the timberland operating agreement between CatchMark Timber Trust and American Forestry
Management, Inc, ("AFM" and the "AFM Timberland Operating Agreement", respectively), AFM manages and
operates approximately 14,600 acres of CatchMark Timber Trust's timberlands and related timber operations, including
ensuring delivery of timber to customers. In consideration for rendering the services described in the AFM Timberland
Operating Agreement, CatchMark Timber Trust pays AFM (i) a monthly management fee based on the actual acreage
AFM manages, which is payable monthly in advance, and (ii) an incentive fee based on revenues generated by the
timber operations. The incentive fee is payable quarterly in arrears. The AFM Timberland Operating Agreement is
effective through November 30, 2016, with the option to extend for one-year periods and may be terminated by either
party with mutual consent or by CatchMark Timber Trust with or without cause upon providing 120 days’ prior written
notice.
Obligations under Operating Leases
CatchMark Timber Trust held leasehold interests related to the use of approximately 23,800 acres of timberland as of
December 31, 2015. These operating leases have expiration dates ranging from 2019 through 2022. Approximately
20,400 acres of these leased timberlands are leased to CatchMark Timber Trust under one long-term lease that expires
in May 2022 (the “LTC Lease”). The LTC Lease calls for four quarterly lease payments totaling $3.10 per acre plus
an annual adjustment payment based on the change in a price index as published by the U.S. Department of Labor’s
Bureau of Labor Statistics from the LTC Lease’s base year of 1956. The all-in, per-lease acre rate, after considering
both the quarterly and the annual adjustment payments, was $20.64 for the lease year ended May 2015, which was
used to calculate the following remaining required payments (in thousands) under the terms of the operating leases as
of December 31, 2015:
2016
2017
2018
2019
2020
Thereafter
$
$
647
647
647
542
542
1,023
4,048
Litigation
From time to time, CatchMark Timber Trust may be a party to legal proceedings, claims, and administrative proceedings
that arise in the ordinary course of its business. Management makes assumptions and estimates concerning the likelihood
and amount of any reasonably possible loss relating to these matters using the latest information available. CatchMark
Timber Trust records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range
of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a
range, CatchMark Timber Trust accrues the best estimate within the range. If no amount within the range is a better
estimate than any other amount, CatchMark Timber Trust accrues the minimum amount within the range. If an
F- 22
unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, CatchMark Timber Trust
discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an
unfavorable outcome is reasonably possible and the estimated loss is material, CatchMark Timber Trust discloses the
nature and estimate of the possible loss of the litigation. CatchMark Timber Trust does not disclose information with
respect to litigation where an unfavorable outcome is considered to be remote.
CatchMark Timber Trust is not currently involved in any legal proceedings of which the outcome is reasonably likely
to have a material adverse effect on the results of operations or financial condition of CatchMark Timber Trust.
CatchMark Timber Trust is not aware of any legal proceedings contemplated by governmental authorities.
7.
Noncontrolling Interest
CatchMark Timber Trust is the general partner of CatchMark Timber OP and owns 99.99% of its common partnership
units. CatchMark LP Holder is the sole limited partner, holding 200 common units representing approximately 0.01%
of the partnership interests. Limited partners holding common units of partnership interests in CatchMark Timber OP
have the option to redeem such units after the units have been held for one year. Unless CatchMark Timber Trust
exercises its right to purchase common units of CatchMark Timber OP for shares of its common stock, CatchMark
Timber OP would redeem such units with cash.
8.
Stockholders' Equity
Under CatchMark Timber Trust's charter, it has authority to issue a total of 1,000 million shares of capital stock. Of
the total shares authorized, 900 million shares are designated as common stock with a par value of $0.01 per share,
100 million shares are designated as preferred stock.
Class B-3 Common Stock Conversion
On February 18, 2015, the board of directors approved the acceleration of the conversion of all of CatchMark Timber
Trust's Class B-3 common stock into Class A common stock from June 12, 2015 to February 27, 2015. Upon completion
of this conversion, all outstanding shares of CatchMark Timber Trust's common stock are shares of Class A common
stock, eligible to trade on the NYSE.
Share Repurchase Program
On August 7, 2015, the board of directors authorized a stock repurchase program under which CatchMark Timber
Trust may repurchase up to $30.0 million of its outstanding common shares. The program has no set duration and the
board may discontinue or suspend it at any time. During the year ended December 31, 2015, CatchMark Timber Trust
repurchased 584,356 shares of common stock for approximately $6.0 million. All common stock purchases through
the end of December 2015 under the stock repurchase program were made in open-market transactions. As
of December 31, 2015, CatchMark Timber Trust had 39.0 million shares of common stock outstanding and may
purchase up to an additional $24.0 million under the program.
9.
Stock Based Compensation
Amended and Restated Long-Term Incentive Plan
CatchMark Timber Trust grants restricted shares of its common stock to its directors and employees pursuant to its
Amended and Restated 2005 Long-Term Incentive Plan (the “LTIP”). The LTIP provides for issuance of up to 1.15
million shares of Class A common stock through October 25, 2023.
F- 23
Equity Compensation for Independent Directors
Effective for the period January 1, 2014 to September 30, 2015, each of the independent directors received, on the day
following an annual stockholders meeting, a number of restricted shares of CatchMark Timber Trust common stock
having a value of $30,000 on the grant date. The number of restricted shares granted to each independent director was
determined by dividing $30,000 by the fair market value per share of CatchMark Timber Trust's common stock on the
grant date. The restricted shares will vest in thirds on each of the first three anniversaries of the grant, subject to the
independent director’s continued service on the board on each such date, or on the earlier occurrence of a change in
control of our company or the independent director’s death, disability or termination with cause.
Effective October 1, 2015, each of the independent directors receives, on the first business day immediately prior to
the date on which CatchMark Timber Trust holds its annual stockholders meeting, a number of shares of CatchMark
Timber Trust common stock having a value of $50,000 on the grant date. The number of shares granted to each
independent director will be determined by dividing $50,000 by the fair market value per share of CatchMark Timber
Trust's common stock on the grant date. The shares are fully-vested and non-forfeitable upon the respective grant date.
Additionally, one of the independent directors elected to receive a portion of his compensation in shares of CatchMark
Timber Trust's common stock in lieu of cash. Accordingly, CatchMark Timber Trust granted 2,392 shares to this
independent director during 2015. These shares vested immediately upon issuance.
Stock Ownership Guidelines for Independent Directors
On October 24, 2013, the board of directors adopted stock ownership guidelines for independent directors which
require that each independent director own shares of CatchMark Timber Trust's common stock having a value of four
times his or her annual cash retainer. Each director must meet the stock ownership guidelines by the later of October
25, 2018, or the fifth anniversary of his or her election to the board. Until the ownership guidelines are met, or at any
time the director is not in compliance with the guidelines, he or she must retain 100% of any shares received from our
company for service on the board, with an exception for shares sold for the limited purposes of paying the exercise
price, in the case of stock options, or satisfying any applicable tax liability related to the award.
Equity Compensation for Employees
CatchMark Timber Trust grants restricted stock to its employees pursuant to its LTIP. The awards are granted by the
compensation committee of the board of directors of CatchMark Timber Trust (the "Compensation Committee").
Service-based restricted stock grants typically vest ratably over a multi-year period. Performance-based restricted stock
grants are awarded to the executive officers and the restricted shares may be earned based on the level of achievement
of certain pre-determined performance goals over the performance period. The maximum number of shares that could
be earned during the performance period are awarded on the grant date. Earned awards are determined by the
Compensation Committee after the end of the performance period and vest over a period specific to each performance
grant.
Restricted Stock Activity
During the year ended December 31, 2015, CatchMark Timber Trust granted to its employees and independent directors
the following restricted shares of its Class A common stock:
Service-based restricted stock (1) (2)
Performance-based restricted stock (3)
Total
Employees
Independent
Directors
77,900
118,900
196,800
12,585
—
12,585
Total
90,485
118,900
209,385
(1) The service-based restricted stock issued to employees vests over four years.
(2) The service-based restricted stock issued to independent directors vests over three years.
F- 24
(3) The performance-based restricted stock awards (the "2015 Performance Awards") represent the maximum number of
shares that could be earned by the executive officers based on the relative performance of CatchMark Timber Trust's
total stockholder return (the "TSR") as compared to a pre-established peer group's TSR and to the Russell 3000 Index.
50% of the earned award vests on the date it is determined by the Compensation Committee and the remaining 50%
vests on the one year anniversary of the determination date.
A rollforward of CatchMark Timber Trust's unvested restricted stock award activity for the year ended December 31,
2015 is as follows:
Employees
Independent Directors
Number of
Underlying
Shares
Weighted
Average
Grant Date
Fair Value
Number of
Underlying
Shares
Weighted
Average
Grant Date
Fair Value
91,500
196,800
$
$
— $
(10,200) $
278,100 $
13.54
8.94
—
13.51
10.29
$
13,608
$
12,585
(5,292) $
— $
20,901 $
14.42
11.92
14.38
—
12.71
Unvested at December 31, 2014
Granted
Vested
Forfeited
Unvested at December 31, 2015
The fair value of serviced-based restricted stock grants is determined by the close price of CatchMark Timber Trust's
common stock on the grant date. The fair value of the 2015 Performance Award was calculated using the Monte-Carlo
simulation with the following assumptions:
Grant date market price (February 18, 2015)
Weighted average fair value per granted share
$
$
Assumptions:
Volatility
Expected term (years)
Risk-free interest rate
11.63
7.01
38.54%
3.0
1.06%
The weighted-average grant date fair value of restricted stock granted for the years ended December 31, 2015,
2014 and 2013 was $9.12, $13.79 and $13.58, respectively. The fair value of restricted stock that vested during the
years ended December 31, 2015, 2014, and 2013 was approximately $0.1 million, $0.2 million, and $1.8 million,
respectively.
CatchMark Timber Trust recognized compensation expenses over the period from the date of grant to the vesting date.
During the year ended December 31, 2015, 2014 and 2013, CatchMark Timber Trust recorded $0.7 million, $0.3
million and $1.5 million of stock-based compensation cost in General and Administrative Expenses, and $0.2 million,
$0.1 million and $0.4 million of stock-based compensation expense in Forestry Management Expenses, respectively.
As of December 31, 2015, approximately $2.1 million of unrecognized compensation expenses related to non-vested
restricted stock remained and will be recognized over a weighted-average period of 3.0 years.
10.
Recreational Leases
CatchMark Timber Trust leases certain access rights to individuals and companies for recreational purposes. These
operating leases generally have terms of one year with certain provisions to extend the lease agreements for another
one-year term. CatchMark Timber Trust retains substantially all of the risks and benefits of ownership of the timberland
properties leased to tenants. As of December 31, 2015, approximately 397,200 acres, or 93%, of CatchMark Timber
Trust’s timberland available for hunting and recreational uses had been leased to tenants under operating leases that
expire between March and June 2016. Under the terms of the recreational leases, tenants are required to pay the entire
rent upon execution of the lease agreement. Such rental receipts are recorded as other liabilities until earned over the
terms of the respective recreational leases and recognized as other revenue. As of December 31, 2015 and 2014,
F- 25
approximately $1.6 million and $1.5 million, respectively, of such rental receipts are recorded as other liabilities in
the accompanying consolidated balance sheets. For the three years ended December 31, 2015, 2014, and 2013,
CatchMark Timber Trust recognized other revenues related to recreational leases of approximately $3.5 million, $2.7
million, $2.5 million, respectively.
11.
Supplemental Disclosures of Noncash Activities
Outlined below are significant noncash investing and financing transactions for the years ended December 31 2015,
2014, and 2013, respectively:
(in thousands)
Write-off of fully amortized deferred financing costs
Other liabilities assumed upon acquisition of timberland
2015
2014
2013
$
$
— $
— $
459
$
— $
1,371
125
12.
Related-Party Transactions and Agreements
CatchMark Timber Trust previously operated as an externally advised REIT, advised by Wells Timberland Investment
Management Organization, or Wells TIMO, a subsidiary of Wells Real Estate Funds (collectively, "Wells"). During
the periods ended December 31, 2014 and 2013, CatchMark Timber Trust was party to several agreements with Wells,
as described below. Since June 30, 2014, CatchMark Timber Trust has had no contractual relationship with Wells.
• Advisory Agreement – Under the terms of the advisory agreement in place from January 1, 2013 to October
25, 2013, including various amendments and restatements, CatchMark Timber Trust incurred fees and
reimbursements payable to Wells for asset management, asset dispositions, and administrative services.
• Consulting Service Agreement – Wells provided CatchMark Timber Trust with certain consulting, support and
transitional services at the direction of CatchMark Timber Trust, in order to facilitate CatchMark Timber Trust’s
successful transition to self-management. The Consulting Service Agreement remained in effect until June 30,
2014
• Sublease Agreement – Wells and CatchMark Timber OP entered into the sublease agreement on October 25,
2013, pursuant to which CatchMark Timber OP subleased from Wells a portion of the office space used and
occupied by Wells. The term of the sublease commenced on October 25, 2013, and terminated on March 31,
2014.
Related-Party Costs
Pursuant to the terms of the agreements described above, CatchMark Timber Trust incurred the following related-party
costs for the years ended December 31, 2014 and 2013, respectively:
(in thousands)
Advisor fees and expense reimbursements
Consulting fees
Office rent
Disposition fees
Total
13.
Income Taxes
2014
2013
— $
137
18
—
155
$
3,562
50
—
39
3,651
$
$
CatchMark Timber Trust has elected to be taxed as a REIT, and therefore its operations are generally not subject to
U.S. federal and state income taxes. As of January 1, 2009 (the "REIT Commencement Date"), its REIT commencement
date, CatchMark Timber Trust had net built-in gains on its timber assets of approximately $18.3 million. CatchMark
Timber Trust elected not to take such net built-in gains into income immediately prior to the REIT Commencement
Date, but rather subsequently recognize gain on the disposition of any assets it holds at the REIT Commencement
F- 26
Date, if disposed of within the applicable period beginning on the REIT Commencement Date. With the passage of
the Protecting Americans from Tax Hikes Act in 2015, the built-in gain period has been permanently reduced to five
years. CatchMark Timber Trust has exceeded the five year built-in gain period since the REIT commencement date
and is, therefore, no longer subject to the built-in gain tax.
At December 31, 2015, CatchMark Timber Trust had federal and state net operating loss carryforwards of approximately
$128.8 million and $105.6 million, respectively. Such net operating loss carryforwards may be utilized, subject to
certain limitations, to offset future taxable income, including net built-in gains. If not utilized, the federal net operating
loss carryforwards will begin to expire in 2027, and the state net operating loss carryforwards will begin to expire in
2022.
As of December 31, 2015 and 2014, the tax basis carrying value of CatchMark Timber Trust’s total assets was
approximately $571.9 million and approximately $552.9 million, respectively.
CatchMark Timber Trust records deferred income taxes using enacted tax laws and rates for the years in which the
taxes are expected to be paid. Deferred income tax assets and liabilities are recorded based on the differences between
the financial reporting and income tax bases of assets and liabilities. A valuation allowance is provided when it is more
likely than not that some portion or all of a deferred tax asset will not be realized. Components of the deferred tax
asset as of December 31, 2015 and 2014 were attributable to the operations of CatchMark TRS only and were as
follows:
(in thousands)
Deferred tax assets:
Net operating loss carryforward
Gain on timberland sales
Other
Total gross deferred tax asset
Valuation allowance
Total net deferred tax asset
Deferred tax liability:
Timber depletion
Gain on timberland sales
Total gross deferred tax liability
Deferred tax asset, net
As of December 31,
2015
2014
$
$
$
$
9,468
$
4
33
9,505
(9,294)
211
211
—
211
$
$
— $
7,653
—
20
7,673
(7,670)
3
—
3
3
—
Income taxes for financial reporting purposes differ from the amount computed by applying the statutory federal rate
primarily due to the effect of state income taxes and valuation allowances (net of federal benefit). A reconciliation of
the federal statutory income tax rate to CatchMark TRS’ effective tax rate for the years ended December 31, 2015,
2014, and 2013 is as follows:
F- 27
Federal statutory income tax rate
State income taxes, net of federal benefit
Other temporary differences
Write-off of due to affiliates
Other permanent differences
Valuation allowance
Effective tax rate
14.
Quarterly Results (unaudited)
2015
2014
2013
34.00%
34.00%
34.00%
3.13
0.27
—
(0.01)
(37.39)
—%
3.21
0.50
—
(0.02)
(37.69)
—%
3.06
(0.02)
—
21.03
(58.07)
—%
Presented below is a summary of the unaudited quarterly financial information for the years ended December 31,
2015 and 2014:
(in thousands, except per-share amounts)
2015
Revenues
Operating loss (2)
Net loss (2)
Net loss available to common stockholders (2)
Basic and diluted net loss per share available to
common stockholders(1) (2)
$
$
$
$
$
Revenues
Operating income (loss)
Net income (loss)
Net income (loss) available to common stockholders
Basic and diluted net income (loss) per share available
to common stockholders(1)
$
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
20,244
$
(14) $
(817) $
(817) $
$
14,174
(1,479) $
(2,330) $
(2,330) $
$
17,629
(1,069) $
(1,944) $
(1,944) $
17,075
(2,258)
(3,296)
(3,296)
(0.02) $
(0.06) $
(0.05) $
(0.08)
First
Quarter
8,870
(3)
(388)
(388)
2014
Second
Quarter
11,901
433
(349)
(349)
Third
Quarter
Fourth
Quarter
12,653
(277)
(764)
(764)
20,887
2,964
2,161
2,161
(0.02) $
(0.01) $
(0.02) $
0.05
(1)
(2)
The sum of the quarterly amounts do not equal income per share for the year ended December 31, 2014 due to the changes
in weighted-average shares outstanding over the year.
See Note 2 – Summary of Significant Accounting Policies regarding our change in depletion methodology that was
effective January 1, 2015.
15.
Customer Concentration
For the years ended December 31, 2015, 2014, and 2013, WestRock represented 31%, 39%, and 60% of CatchMark
Timber Trust's total revenues. No other customer represented more than 10% of CatchMark Timber Trust's total revenues
during these periods.
16.
Subsequent Event
On February 18, 2016, CatchMark Timber Trust declared a cash dividend of $0.125 per share for its Class A common
stock for stockholders of record on February 29, 2016, payable on March 16, 2016.
F- 28
EXHIBIT INDEX
Exhibit
Number
Description
3.1
3.2
3.3
3.4
3.5
3.6
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8+
10.9+
10.10+
Sixth Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Quarterly
Report on Form 10-Q for the quarter ended June 30, 2013 filed on August 9, 2013
First Articles of Amendment to the Sixth Articles of Amendment and Restatement (incorporated by reference
to Exhibit 3.2 to the Registration Statement on Form S-11 (File No. 333-191322) filed on September 23, 2013
(the “Initial S-11 Registration Statement”))
Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on
October 25, 2013 (the “October 25 Form 8-K”))
Articles of Amendment (incorporated by reference to Exhibit 3.2 to the October 25 Form 8-K)
Articles Supplementary (incorporated by reference to Exhibit 3.3 to the October 25 Form 8-K)
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.6 to Registration Statement on Form
S-8 (File No. 333-191916) filed on October 25, 2013 (the “S-8 Registration Statement”)
Master Self-Management Transition Agreement by and among CatchMark Timber Trust, Inc., CatchMark
Timber Operating Partnership, L.P., Wells Timberland Management Organization, LLC and Wells Real Estate
Funds, Inc. (incorporated by reference to Exhibit 10.2 to the Initial S-11 Registration Statement)
Amendment No. 1 to the Master Self-Management Transition Agreement by among CatchMark Timber Trust,
Inc., CatchMark Timber Operating Partnership, L.P., Wells Timberland Management Organization, LLC and
Wells Real Estate Funds, Inc. (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-
Q for the quarter ended September 30, 2013 filed on October 30, 2013 (the “2013 Third Quarter Form 10-Q”))
Transition Services Agreement by and among CatchMark Timber Trust, Inc., CatchMark Timber Operating
Partnership, L.P. and Wells Real Estate Funds, Inc. (incorporated by reference to Exhibit 10.7 to the 2013
Third Quarter Form 10-Q)
Preferred Stock Redemption Agreement by and among CatchMark Timber Trust, Inc., Wells Real Estate
Funds, Inc., Leo F. Wells, III and Douglas P. Williams (incorporated by reference to Exhibit 10.4 to the Initial
S-11 Registration Statement)
Amendment to the Preferred Stock Redemption Agreement dated as of September 20, 2013 by and among
CatchMark Timber Trust, Inc., Wells Real Estate Funds, Inc., Leo F. Wells, III and Douglas P. Williams
(incorporated by reference to as Exhibit 10.5 to the Initial S-11 Registration Statement)
Amendment No. 2 to the Preferred Stock Redemption Agreement by and among CatchMark Timber Trust,
Inc., Wells Real Estate Funds, Inc. Leo F. Wells, III and Douglas P. Williams (incorporated by reference to
Exhibit 10.6 to the 2013 Third Quarter Form 10-Q)
Third Amended and Restated Agreement of Limited Partnership of Wells Timberland Operating Partnership,
L.P. ((incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended
June 30, 2009 filed on August 7, 2009)
Amended and Restated 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the S-8
Registration Statement)
CatchMark Timber Trust, Inc. Amended and Restated Independent Directors Compensation Plan (Effective
January 1, 2014) (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed on February
19, 2014)
CatchMark Timber Trust, Inc. Amended and Restated Independent Directors Compensation Plan (as amended
and restated on July 30, 2015) (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-
Q for the quarter ended September 30, 2015 filed on November 2, 2015)
Exhibit
Number
10.11+
10.12+
10.13+
10.14+*
10.15+
10.16+
10.17+
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
Description
Form of 2013 Performance-Based Restricted Stock Award Certificate under the Amended and Restated
CatchMark Timber Trust, Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.72 to
the Annual Report on Form 10-K for the year ended December 31, 2013 filed on March 13, 2014 (the “2013
Form 10-K”))
Form of Service-Based Restricted Stock Award Certificate under the Amended and Restated CatchMark
Timber Trust, Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.74 to the 2013
Form 10-K)
Form of Restricted Stock Unit Award Certificate under the Amended and Restated CatchMark Timber Trust,
Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.73 to the 2013 Form 10-K)
Form of 2015 Performance-Based Restricted Stock Award Certificate under the Amended and Restated
CatchMark Timber Trust, Inc. 2005 Long-Term Incentive Plan (filed herewith)
Employment Agreement by and between CatchMark Timber Trust, Inc. and Jerry Barag (incorporated by
reference to Exhibit 10.9 to the 2013 Third Quarter Form 10-Q)
Employment Agreement by and between CatchMark Timber Trust, Inc. and John F. Rasor (incorporated by
reference to Exhibit 10.10 to the 2013 Third Quarter Form 10-Q)
Employment Agreement by and between CatchMark Timber Trust, Inc. and Brian M. Davis (incorporated by
reference to Exhibit 10.11 to the 2013 Third Quarter Form 10-Q)
Amended and Restated Security Agreement dated as of March 24, 2010 between Wells Timberland Operating
Partnership, L.P., Timberlands II, LLC, as the borrowers, Wells Timberland TRS, Inc., Wells TRS Harvesting
Operations, LLC, Wells Timberland HBU, LLC, in favor of CoBank, ACB, as administrative agent and certain
financial institutions as the lenders (incorporated by reference to Exhibit 10.17 to the 2009 Form 10-K)
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.12 to the Initial S-11
Registration Statement)
Third Amended and Restated Credit Agreement, dated as of December 19, 2013, by and among Timberlands
II, LLC and CatchMark Timber Operating Partnership, L.P., as Borrowers, CoBank, ACB, as Administrative
Agent, Joint Lead Arranger, Sole Bookrunner, Swingline Lender and Issuing Lender, AgFirst Farm Credit
Bank, as Joint Lead Arranger and Syndication Agent, Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A.
“RaboBank Nederland”, New York Branch, as Document Agent, and Certain Financial Institutions, as the
Lenders (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on December 26,
2013 (the “December 26 Form 8-K”))
Second Amended and Restated Security Agreement, dated as of December 19, 2013, made by CatchMark
Timber Operating Partnership, L.P., Timberlands II, LLC, CatchMark Timber TRS, Inc., CatchMark TRS
Harvesting Operations, LLC, CatchMark HBU, LLC in favor of CoBank, ACB, as administrative agent for the
benefit of itself and each Lender Party (incorporated by reference to Exhibit 10.2 to the December 26 Form 8-
K )
Second Amended and Restated Security Agreement, dated as of December 19, 2013, made by CatchMark
Timber Trust, Inc. in favor of CoBank, ACB, as administrative agent for the benefit of itself and each Lender
Party (incorporated by reference to Exhibit 10.3 to the December 26 Form 8-K )
Second Amended and Restated Limited Guaranty, dated as of December 19, 2013, made by CatchMark
Timber Trust, Inc. in favor of CoBank, ACB, as administrative agent for the benefit of itself and each Lender
Party (incorporated by reference to Exhibit 10.4 to the December 26 Form 8-K )
Second Amended and Restated Guaranty, dated as of December 19, 2013 made by CatchMark Timber TRS,
Inc. in favor of CoBank, ACB, as administrative agent for the benefit of itself and each Lender Party
(incorporated by reference to Exhibit 10.5 to the December 26 Form 8-K )
Second Amended and Restated Guaranty made by CatchMark TRS Harvesting Operations, LLC in favor of
CoBank, ACB, as administrative agent for the benefit of itself and each Lender Party(incorporated by
reference to Exhibit 10.6 to the December 26 Form 8-K )
Amended and Restated Guaranty made by CatchMark HBU, LLC in favor of CoBank, ACB, as administrative
agent for the benefit of itself and each Lender Party (incorporated by reference to Exhibit 10.7 to the
December 26 Form 8-K )
Exhibit
Number
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
Description
Second Amended and Restated Pledge Agreement, dated as of December 19, 2013, made by CatchMark
Timber Operating Partnership, L.P., Timberlands II, LLC, CatchMark Timber TRS, Inc., CatchMark TRS
Harvesting Operations, LLC, CatchMark HBU, LLC in favor of CoBank, ACB, as administrative agent for the
benefit of itself and each Lender Party (incorporated by reference to Exhibit 10.8 to the December 26 Form 8-
K )
Joinder and Amendment Agreement dated May 30, 2014, by and among Timberlands II, LLC., and
CatchMark Timber Operating Parntership, L.P., as borrowers, CatchMark Texas Timberlands GP, LLC, and
Catchmark Texas Timberlands LP, L.P., as subsidiaries, and CoBank A.C.B., as Administrative Agent
(incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended June
30, 2014 filed on August 14, 2014)
Fourth Amended and Restated Credit Agreement, dated as of December 23, 2014, by and among CatchMark
Timber Operating Partnership, L.P., as Borrower, certain Guarantors, CoBank, ACB, as Administrative Agent,
Joint Lead Arranger, Sole Bookrunner, Swingline Lender and Issuing Lender, AgFirst Farm Credit Bank, as
Joint Lead Arranger and Syndication Agent, Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A.
“RaboBank Nederland”, New York Branch, as Document Agent, and Certain Financial Institutions, as the
Lenders (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December 30,
2014 (the “December 30, 2014 8-K”))
Third Amended and Restated Security Agreement, dated as of December 23, 2014, made by CatchMark
Timber Operating Partnership, L.P., Timberlands II, LLC, CatchMark Timber TRS, Inc., CatchMark TRS
Harvesting Operations, LLC, CatchMark HBU, LLC, CatchMark Texas Timberlands GP, LLC and CatchMark
Texas Timberlands, L.P. in favor of CoBank, ACB, as administrative agent for the benefit of itself and each
Lender Party (incorporated by reference to Exhibit 10.2 to the December 30, 2014 Form 8-K)
Third Amended and Restated Pledge Agreement, dated as of December 23, 2014, made by CatchMark Timber
Operating Partnership, L.P., Timberlands II, LLC, CatchMark Timber TRS, Inc., CatchMark TRS Harvesting
Operations, LLC, CatchMark HBU, LLC, CatchMark Texas Timberlands GP, LLC and CatchMark Texas
Timberlands, L.P. in favor of CoBank, ACB, as administrative agent for the benefit of itself and each Lender
Party (incorporated by reference to Exhibit 10.4 to the December 30, 2014 Form 8-K)
Georgia Form of Recognition Agreement (Master Stumpage Agreement) dated as of October 9, 2007 among
Timberlands II, LLC, Wells TRS Harvesting Operations, LLC, MeadWestvaco Coated Board, Inc.,
MeadWestvaco Corporation, CoBank, ACB, as the senior administrative agent, and Wachovia Bank, N.A., as
the subordinated administrative agent (incorporated by reference to Exhibit 10.17 to the Registration
Statement on Form S-11 (No. 333-129651) filed on December 14, 2007 (“Post-Effective Amendment No. 2”)
Alabama Form of Recognition Agreement (Master Stumpage Agreement) dated as of October 9, 2007 among
Timberlands II, LLC, Wells TRS Harvesting Operations, LLC, MeadWestvaco Coated Board, Inc.,
MeadWestvaco Corporation, CoBank, ACB, as the senior administrative agent, and Wachovia Bank, N.A., as
the subordinated administrative agent (incorporated by reference to Exhibit 10.18 to Post-Effective
Amendment No. 2)
Georgia Form of Recognition Agreement (Fiber Supply Agreement) dated as of October 9, 2007 among Wells
TRS Harvesting Operations, LLC, Timberlands II, LLC, MeadWestvaco Coated Board, Inc., MeadWestvaco
Corporation, CoBank, ACB, as the senior administrative agent, and Wachovia Bank, N.A., as the subordinated
administrative agent (incorporated by reference to Exhibit 10.19 to Post-Effective Amendment No. 2)
Alabama Form of Recognition Agreement (Fiber Supply Agreement) dated as of October 9, 2007 among
Wells TRS Harvesting Operations, LLC, Timberlands II, LLC, MeadWestvaco Coated Board, Inc.,
MeadWestvaco Corporation, CoBank, ACB, as the senior administrative agent, and Wachovia Bank, N.A., as
the subordinated administrative agent (incorporated by reference to Exhibit 10.20 to Post-Effective
Amendment No. 2)
Master Stumpage Agreement dated October 9, 2007 by and among Timberlands II, LLC, Wells TRS
Harvesting Operations, LLC, and MeadWestvaco Coated Board, Inc. (incorporated by reference to Exhibit
10.25 to the 2009 Form 10-K)
Fiber Supply Agreement dated October 9, 2007 by and among Wells TRS Harvesting Operations, LLC,
MeadWestvaco Corporation, and MeadWestvaco Coated Board, Inc. (incorporated by reference to Exhibit
10.26 to the 2009 Form 10-K)
Purchase and Sale Agreement dated July 7, 2014 between Wildwood Timberlands, LLC, as seller, and
CatchMark Timber Trust, Inc., as buyer (incorporated by reference to Exhibit 10.1 to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 2014 filed on November 13, 2014)
Exhibit
Number
10.39
21.1*
23.1*
31.1*
31.2*
32.1*
Description
Purchase and Sale Agreement dated March 13, 2014 between Forestree VI LP and Forestree VI Texas LP, as
seller, and CatchMark Timber Trust, Inc., as buyer (incorporated by reference to Exhibit 10.2 to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2014 filed on May 13, 2014)
Subsidiaries of the Company
Consent of Deloitte & Touche LLP
Certification of the Principal Executive Officer of the Company, pursuant to Securities Exchange Act Rule
13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of the Principal Financial Officer of the Company, pursuant to Securities Exchange Act Rules
13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Statement of the Principal Executive Officer and Principal Financial Officer of the Company, pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*
XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema Document
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
*
+
Filed herewith.
Management contract or compensatory plan or arrangement.
This page intentionally left blank.
CatchMark Timber Trust, Inc.
Board of Directors and Executive Officers
Jerry Barag, Chief Executive Officer, President and Director
Brian M. Davis, Senior Vice President, Chief Financial Officer, Treasurer, and Assistant Secreta
Paul S. Fisher, Independent Director
Alan D. Gold, Independent Director
Donald S. Moss, Independent Director
Willis J. Potts, Jr., Chairman of the Board, and Independent Director
John F. Rasor, Chief Operating Officer, Secretary and Director
Douglas D. Rubenstein, Independent Director
Henry G. Zigtema, Independent Director
Headquarters
CatchMark Timber Trust, Inc.
5 Concourse Parkway
Suite 2325
Atlanta, GA 30328
Telephone: 855-858-9794
www.CatchMark.com
Stock Information
Listed: New York Stock Exchange
Symbol: CTT
Stock Transfer Agent and Registrar
Computershare Trust Company
P.O. Box 30170
College Station, TX 77842-3170
855-862-0044
Annual Meeting
Date: June 24, 2016
Time: 10 am
Location:
The Westin Atlanta Perimeter North
7 Concourse Parkway NE
Atlanta, GA 30328
Filings
All reports filed electronically by CatchMark
Timber Trust, Inc., with the U.S. Securities and
Exchange Commission, including the Annual
Report on Form 10-K, quarterly reports on Form
10-Q, and current event reports on Form 8-K,
are accessible at no charge to the investor on
the CatchMark Timber Trust, Inc. website at
www.CatchMark.com.
For Additional Information and Assistance
For additional information about CatchMark
Timber Trust, Inc., please visit our investor
website, www.CatchMark.com.
Investors also may contact a Shareholder
Services Specialist for assistance weekdays
at 855-862-0044.
Data as of December 31, 2015, unless otherwise stated.
CatchMark Timber Trust, Inc.
5 Concourse Parkway
Suite 2325
Atlanta, GA 30328
855-858-9794
www.CatchMark.com
In recognition of its responsible forest
management, CatchMark has earned
certification under the prestigious
Sustainable Forestry Initiative®,
one of the world’s largest programs
promoting sustainable forestry.
SFI-00104
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©2016 CatchMark Timber Trust