Financial Instruments

9 Months Ended

Sep. 30, 2012

Derivative Instrument Detail [Abstract]

Fair Value Disclosures

Financial Instruments

The following table presents the estimated fair values of our financial instruments as of the balance sheet dates:

	September 30, 2012				December 31, 2011
(Dollars in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash, restricted cash and short-term investments (Level 1)	$	62,988	$	62,988	$	70,808	$	70,808
Net derivative asset related to interest rate swaps (Level 2)	3,170		3,170		2,409		2,409
Derivative asset related to lumber swap (Level 2)	—		—		480		480
Long-term debt, including current installments on long-term debt (including fair value adjustments related to fair value hedges) (Level 2)	345,721		361,111		366,403		373,791

FAIR VALUE HEDGES OF INTEREST RATE RISK

As of September 30, 2012, we had six separate interest rate swap agreements with notional amounts totaling $46.75 million, associated with our $22.5 million debentures and $24.25 million of our medium-term notes. The swaps convert interest payments with fixed rates between 6.95% and 8.89% to variable rates of three-month LIBOR plus spreads between 4.738% and 6.518%. The interest rate swaps terminate at various dates between December 2015 and February 2018.

No net unrealized gain or loss was recognized in income for all periods presented because we recognized no hedge ineffectiveness.

NON-DESIGNATED LUMBER SWAP

In February 2012, we entered into two commodity swap contracts for a total of 22,500 mbf (thousand board feet) of southern yellow pine, which settled during the second quarter of 2012. In September 2011, we entered into a commodity swap contract for 31,200 mbf of southern yellow pine with an effective date of November 1, 2011 and a termination date of February 29, 2012. In October 2010, we entered into a commodity swap contract for 14,300 mbf of southern yellow pine, which settled in the first quarter of 2011. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in net income. As of September 30, 2012 there were no outstanding lumber swap contracts.

The following table presents the fair values of derivative instruments as of the balance sheet dates:

(Dollars in thousands)	Balance Sheet Location	September 30, 2012		December 31, 2011
Fair Value of Derivative Assets:
Derivatives designated as hedging instruments:
Interest rate contracts	Other assets (non-current)	$	3,170	$	2,409
Total derivatives designated as hedging instruments		$	3,170	$	2,409
Derivatives not designated as hedging instruments:
Lumber contracts	Receivables, net	$	—	$	480
Total derivatives not designated as hedging instruments		$	—	$	480

There were no derivatives recorded as liabilities as of September 30, 2012 or December 31, 2011.

The following table details the effect of derivatives on the Consolidated Statements of Income for the quarters and nine months ended September 30:

	Location of Gain (Loss)  Recognized in Income	Gain (Loss) Recognized in Income
		Quarter Ended				Nine Months Ended
		September 30,				September 30,
(Dollars in thousands)		2012		2011		2012			2011
Derivatives designated in fair value hedging relationships:
Interest rate contracts
Realized gain on hedging instrument(1)	Interest expense	$	213	$	255	$	646		$	791
Net gain recognized in income from fair value hedges		$	213	$	255	$	646		$	791
Derivatives not designated as hedging instruments:
Lumber contracts
Unrealized gain (loss) on derivative	Cost of goods sold	$	—	$	1,650	$	(480	)	$	4,401
Realized gain (loss) on derivative	Cost of goods sold	—		304		(396		)	553
Net gain (loss) recognized in income from derivatives not designated as hedging instruments		$	—	$	1,954	$	(876	)	$	4,954

⁽¹⁾  Realized gain on hedging instrument consists of net cash settlements and interest accruals on the interest rate swaps during the periods.