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Merger with Deltic | 12 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
Merger with Deltic | NOTE 2. Merger with Deltic On February 20, 2018 (merger date), Deltic Timber Corporation (Deltic) merged into a wholly-owned subsidiary of Potlatch Corporation. Deltic owned approximately 530,000 acres of timberland, operated two sawmills, a medium density fiberboard facility (MDF) and was engaged in real estate development primarily in Arkansas. The merger created a combined company with a diversified timberland base of approximately 1.9 million acres, including approximately 930,000 acres in Arkansas. It uniquely positions us to expand our integrated model of timberland ownership and lumber manufacturing, provide s tax savings on Deltic’s timber harvest earnings and increase our exposure to the Texas housing market. Under the merger agreement, each issued and outstanding share of Deltic common stock was exchanged for 1.80 shares of Potlatch common stock, with cash paid in lieu of any fractional shares. Upon consummation of the merger with Deltic, all outstanding Deltic stock options (which fully vested as of the merger date) and restricted stock units (RSUs) were converted into Potlatch RSUs, after giving effect to the 1.8 exchange ratio. Because the Deltic stock options were fully vested and relate to services rendered to Deltic prior to the merger, the replacement stock options were also fully vested, and their fair value is included in the consideration transferred. A portion of the replacement RSUs relate to services to be performed post-merger and therefore are not included in consideration transferred. See additional details about replacement share-based payment awards in Note 17: Equity-Based Compensation Plans. The acquisition of total assets of $1.4 billion was a noncash investing and financing activity comprised of $1.1 billion in equity consideration transferred to Deltic shareholders and $0.3 billion of liabilities assumed. We expensed approximately $22.1 million and $3.4 million of merger-related costs during the years ended December 31, 2018 and 2017, respectively. Total merger-related costs consisted of:
| • | $12.2 million and $3.3 million of merger-related costs during the years ended December 31, 2018 and 2017, respectively, for professional fees such as investment banker fees, legal, accounting and appraisal services; and
| • | $9.9 million and $0.1 million of restructuring related costs during the years ended December 31, 2018 and 2017, respectively, primarily for termination benefits, which includes accelerated share-based payment costs, for qualifying terminations.
These costs are included in Deltic merger-related costs in our Consolidated Statements of Income. The amount of revenue and income before taxes from the acquired Deltic operations included in our Consolidated Statement of Income from February 21, 2018 through December 31, 2018 was $265.5 million and $21.6 million, respectively. The following summarizes unaudited pro forma information that presents combined amounts as if this merger occurred at the beginning of 2017:
| Year Ended December 31, |
(in thousands, except per share amounts) | 2018 |  |  | 2017 |
Net sales | $ | 1,013,242 |  |  | $ | 920,860 |
Net earnings attributable to PotlatchDeltic common shareholders | $ | 145,685 |  |  | $ | 77,732 |
Basic earnings per share attributable to PotlatchDeltic common shareholders | $ | 2.16 |  |  | $ | 1.15 |
Diluted earnings per share attributable to PotlatchDeltic common shareholders | $ | 2.15 |  |  | $ | 1.15 |
Pro forma net earnings attributable to PotlatchDeltic common shareholders excludes $27.6 million and $16.8 million of non-recurring merger-related costs incurred by both companies during the years ended December 31, 2018 and 2017, respectively, of which $18.9 million were incurred by Deltic prior to the merger. Pro forma basic and diluted earnings per share assumes issuance of 22.0 million shares that were issued at the merger date and the issuance of 4.8 million shares for the Deltic earnings and profits special distribution as of the beginning of 2017. Refer to Note 6: Earnings Per Share. Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results. The following table summarizes the estimated fair value measurements of assets acquired and liabilities assumed as of the merger date, including measurement period adjustments identified:
(in thousands) | Preliminary Allocation |  |  | Measurement Period Adjustments |  |  | Final Allocation |
ASSETS |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 3,419 |  |  | $ | — |  |  | $ | 3,419 |
Customer receivables |  | 12,709 |  |  |  | — |  |  |  | 12,709 |
Inventories |  | 17,316 |  |  |  | — |  |  |  | 17,316 |
Other current assets |  | 8,276 |  |  |  | (2,991 | ) |  |  | 5,285 |
Real estate held for development and sale |  | 79,000 |  |  |  | 4,000 |  |  |  | 83,000 |
Property, plant and equipment |  | 265,901 |  |  |  | (5,132 | ) |  |  | 260,769 |
Timber and timberlands |  | 1,060,000 |  |  |  | (4,255 | ) |  |  | 1,055,745 |
Mineral rights |  | — |  |  |  | 6,236 |  |  |  | 6,236 |
Trade name and customer relationships intangibles |  | 19,000 |  |  |  | 500 |  |  |  | 19,500 |
Other long-term assets |  | 2,010 |  |  |  | 1,546 |  |  |  | 3,556 |
Total assets acquired |  | 1,467,631 |  |  |  | (96 | ) |  |  | 1,467,535 |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  | 12,604 |  |  |  | 11 |  |  |  | 12,615 |
Long-term debt |  | 229,968 |  |  |  | 144 |  |  |  | 230,112 |
Pension and other postretirement employee benefits |  | 36,909 |  |  |  | — |  |  |  | 36,909 |
Deferred tax liabilities, net |  | 44,439 |  |  |  | (251 | ) |  |  | 44,188 |
Other long-term liabilities |  | 936 |  |  |  | — |  |  |  | 936 |
Total liabilities assumed |  | 324,856 |  |  |  | (96 | ) |  |  | 324,760 |
Net assets acquired | $ | 1,142,775 |  |  | $ | — |  |  | $ | 1,142,775 |
The initial allocation of purchase price was recorded using the preliminary estimated fair value of assets acquired and liabilities assumed based upon the best information available to management at the time. The purchase price allocation was finalized as of December 31, 2018. The measurement period adjustments reflect additional information obtained to record the fair value of certain assets acquired and liabilities assumed based on facts and circumstances existing as of the acquisition date. Measurement period adjustments reflected above did not have a material impact to earnings or cash flows for the year ended December 31, 2018.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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