What changed in this filing

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Item 1. Financial Statements

2020-07-31 compared with 2020-05-07 · 201 added, 79 removed, 462 unchanged (38% of the section changed)

3 unchanged sentences

Three Months Ended

June 30 Six Months Ended

2020 2019 2020 2019

(thousands, except per-share data)

Sales $ 1,242,760 $ 1,230,081 $ 2,413,294 $ 2,272,167

Costs and expenses

5 unchanged sentences

Other (income) expense, net ( 170 ) 188 ( 1 ) ( 120 )

1,190,990 1,184,949 2,335,977 2,205,381

Income from operations 51,770 45,132 77,317 66,786

4 unchanged sentences

Change in fair value of interest rate swaps ( 514 ) ( 1,551 ) ( 2,828 ) ( 2,534 )

( 6,850 ) ( 7,663 ) ( 16,190 ) ( 14,728 )

Income before income taxes 44,920 37,469 61,127 52,058

Income tax provision ( 11,334 ) ( 9,751 ) ( 15,341 ) ( 12,951 )

Net income $ 33,586 $ 27,718 $ 45,786 $ 39,107

Weighted average common shares outstanding:

Basic 39,312 39,087 39,238 38,986

Diluted 39,387 39,199 39,381 39,185

Net income per common share:

Basic $ 0.85 $ 0.71 $ 1.17 $ 1.00

Diluted $ 0.85 $ 0.71 $ 1.16 $ 1.00

Dividends declared per common share $ 0.10 $ 0.09 $ 0.20 $ 0.18

3 unchanged sentences

Three Months Ended

June 30 Six Months Ended

2020 2019 2020 2019

Net income $ 33,586 $ 27,718 $ 45,786 $ 39,107

Other comprehensive income (loss), net of tax

1 unchanged sentence

Amortization of actuarial (gain) loss, net of tax of $ 51 , $( 11 ), $ 102 , and $( 22 ), respectively

150 ( 33 ) 301 ( 65 )

Effect of settlements, net of tax of $ — , $ — , $ 22 and $ — , respectively

4 unchanged sentences

Consolidated Balance Sheets

2020 December 31,

Cash and cash equivalents $ 361,436 $ 285,237

Trade, less allowances of $ 890 and $ 591

350,673 215,894

Related parties 417 568

Other 9,772 15,184

Inventories 456,129 497,596

Prepaid expenses and other 14,716 8,285

4 unchanged sentences

Timber deposits 14,212 12,287

Goodwill 60,382 60,382

Intangible assets, net 17,186 17,797

Deferred income taxes 7,620 7,952

Other assets 6,982 9,194

Total assets $ 1,841,075 $ 1,693,351

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

1 unchanged sentence

Consolidated Balance Sheets (continued)

2020 December 31,

(thousands, except per-share data)

1 unchanged sentence

Accounts payable

Trade $ 320,839 $ 222,930

Related parties 1,835 1,624

1 unchanged sentence

Compensation and benefits 78,386 83,943

Income taxes payable 7,391 —

Interest payable 6,696 6,723

Other 70,140 69,772

Total current liabilities 485,287 384,992

5 unchanged sentences

Other long-term liabilities 17,635 12,757

175,902 166,485

Commitments and contingent liabilities

5 unchanged sentences

Treasury stock, 5,367 shares at cost

( 138,909 ) ( 138,909 )

Additional paid-in capital 533,406 533,345

6 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

Cash provided by (used for) operations

Net income $ 45,786 $ 39,107

Items in net income not using (providing) cash

5 unchanged sentences

Loss on curtailment of facility (excluding severance) 1,476 —

Decrease (increase) in working capital

Other 164 ( 33 )

Decrease (increase) in working capital, net of acquisitions

Receivables ( 129,532 ) ( 93,977 )

Inventories 41,102 13,324

Prepaid expenses and other ( 6,989 ) ( 4,773 )

2 unchanged sentences

Income taxes payable 8,616 16,735

Net cash used for operations

Other 1,220 ( 923 )

Net cash provided by operations 118,276 66,852

Cash provided by (used for) investment

Expenditures for property and equipment ( 28,849 ) ( 32,824 )

Acquisitions of businesses and facilities — ( 15,675 )

Proceeds from sale of facilities — 2,493

2 unchanged sentences

Cash provided by (used for) financing

Borrowings of long-term debt, including revolving credit facility — 5,500

Payments of long-term debt, including revolving credit facility — ( 5,500 )

Dividends paid on common stock ( 8,562 ) ( 7,562 )

Tax withholding payments on stock-based awards ( 3,309 ) ( 3,574 )

Other ( 1,763 ) ( 369 )

Net cash used for financing ( 13,634 ) ( 11,505 )

Net decrease in cash and cash equivalents

Net increase in cash and cash equivalents 76,199 10,736

Balance at beginning of the period 285,237 191,671

3 unchanged sentences

Consolidated Statements of Stockholders' Equity

Treasury Stock

Additional Paid-In Capital

Accumulated Other Comprehensive Loss

Retained Earnings

Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total

Shares Amount Shares Amount

Balance at December 31, 2019 44,353 $ 444 5,367 $ ( 138,909 ) $ 533,345 $ ( 50,248 ) $ 356,698 $ 701,330

Net income 12,200 12,200

Other comprehensive income 215 215

2 unchanged sentences

Common stock dividends ($ 0.10 per share)

( 3,866 ) ( 3,866 )

Tax withholding payments on stock-based awards ( 3,309 ) ( 3,309 )

Proceeds from exercise of stock options 27 27

Other ( 2 ) ( 2 )

Balance at March 31, 2020 44,564 $ 446 5,367 $ ( 138,909 ) $ 531,735 $ ( 50,033 ) $ 365,032 $ 708,271

Net income 33,586 33,586

Other comprehensive income 150 150

Stock-based compensation 1,671 1,671

Common stock dividends ($ 0.10 per share)

( 3,970 ) ( 3,970 )

Balance at June 30, 2020 44,564 $ 446 5,367 $ ( 138,909 ) $ 533,406 $ ( 49,883 ) $ 394,648 $ 739,708

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Stockholders' Equity (continued)

Treasury Stock

Additional Paid-In Capital

Accumulated Other Comprehensive Loss

Retained Earnings

Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total

Shares Amount Shares Amount

Balance at December 31, 2018 44,076 $ 441 5,367 $ ( 138,909 ) $ 528,654 $ ( 47,652 ) $ 330,056 $ 672,590

Net income 11,389 11,389

Other comprehensive loss ( 32 ) ( 32 )

2 unchanged sentences

Common stock dividends ($ 0.09 per share)

( 3,561 ) ( 3,561 )

Tax withholding payments on stock-based awards ( 3,569 ) ( 3,569 )

Other ( 2 ) ( 2 )

Balance at March 31, 2019 44,341 $ 443 5,367 $ ( 138,909 ) $ 527,283 $ ( 47,684 ) $ 337,884 $ 679,017

Net income 27,718 27,718

Other comprehensive loss ( 33 ) ( 33 )

Common stock issued 1 — —

Stock-based compensation 1,869 1,869

Common stock dividends ($ 0.09 per share)

( 3,545 ) ( 3,545 )

Tax withholding payments on stock-based awards ( 5 ) ( 5 )

Balance at June 30, 2019 44,342 $ 443 5,367 $ ( 138,909 ) $ 529,147 $ ( 47,717 ) $ 362,057 $ 705,021

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

44 unchanged sentences

In our Wood Products segment, we view our shipping and handling costs as a cost of the manufacturing process and the movement of product to our end customers.

For our Building Materials Distribution segment, costs related to shipping and handling of $ 40.7 million and $ 36.5 million , respectively, are included in "Selling and distribution expenses" in our Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019 .

For our Building Materials Distribution segment, costs related to shipping and handling of $ 44.2 million and $ 43.4 million, for the three months ended June 30, 2020 and 2019, respectively, and $ 84.9 million and $ 80.3 million for the six months ended June 30, 2020 and 2019, respectively, are included in "Selling and distribution expenses" in our Consolidated Statements of Operations.

In our Building Materials Distribution segment, our activities relate to the purchase and resale of finished product, and excluding shipping and handling costs from “Materials, labor, and other operating expenses (excluding depreciation)” provides us a clearer view of our operating performance and the effectiveness of our sales and purchasing functions.

2 unchanged sentences

We provide the rebates to increase the sell-through of our products.

Rebates are generally estimated based on the expected amount to be paid and recorded as a decrease in "Sales." At March 31, 2020 , and December 31, 2019 , we had $ 45.5 million and $ 49.4 million , respectively, of rebates payable to our customers recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets.

Rebates are generally estimated based on the expected amount to be paid and recorded as a decrease in "Sales." At June 30, 2020, and December 31, 2019, we had $ 45.4 million and $ 49.4 million, respectively, of rebates payable to our customers recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets.

We adjust our estimate of revenue at the earlier of when the probability of rebates paid changes or when the amounts become fixed.

2 unchanged sentences

We receive rebates and allowances from our vendors under a number of different programs, including vendor marketing programs.

At March 31, 2020 , and December 31, 2019 , we had $ 6.2 million and $ 9.2 million , respectively, of vendor rebates and allowances recorded in "Receivables, Other" on our Consolidated Balance Sheets.

At June 30, 2020, and December 31, 2019, we had $ 6.9 million and $ 9.2 million, respectively, of vendor rebates and allowances recorded in "Receivables, Other" on our Consolidated Balance Sheets.

Rebates and allowances received from our vendors are recognized as a reduction of "Materials, labor, and other operating expenses (excluding depreciation)" when the product is sold, unless the rebates and allowances are linked to a specific incremental cost to sell a vendor's product.

12 unchanged sentences

We use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments.

In determining our incremental borrowing rates, we give consideration to publicly available interest rates for instruments with similar characteristics, including credit rating, term, and collateralization.

In determining our incremental borrowing rates, we

give consideration to publicly available interest rates for instruments with similar characteristics, including credit rating, term, and collateralization.

For purposes of determining straight-line rent expense, the lease term is calculated from the date we first take possession of the facility, including any periods of free rent and any renewal option periods we are reasonably certain of exercising.

6 unchanged sentences

Inventories included the following (work in process is not material):

2020 December 31,

Finished goods and work in process $ 383,202 $ 413,020

Logs 33,145 45,574

Other raw materials and supplies 39,782 39,002

$ 456,129 $ 497,596

Property and Equipment

Property and equipment consisted of the following asset classes:

2020 December 31,

Land $ 38,274 $ 39,304

Buildings 144,538 140,008

Improvements 61,955 61,187

Mobile equipment, information technology, and office furniture 171,438 165,445

1 unchanged sentence

Construction in progress 30,645 34,846

1,124,157 1,107,257

Less accumulated depreciation ( 677,384 ) ( 630,308 )

$ 446,773 $ 476,949

Long-Lived Asset Impairment

1 unchanged sentence

An impairment of long-lived assets exists when the carrying value is not recoverable through future undiscounted cash flows from operations and when the carrying value of an asset or asset group exceeds its fair value.

No triggering event was identified during the quarter ended March 31, 2020.

No triggering event was identified during the quarter ended June 30, 2020.

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.

6 unchanged sentences

Our cash is recorded at cost, which approximates fair value, and our cash equivalents are money market funds.

As of March 31, 2020 , and December 31, 2019 , we held $ 182.1 million and $ 259.5 million , respectively, in money market funds that are measured at fair value on a recurring basis using Level 1 inputs.

As of June 30, 2020, and December 31, 2019, we held $ 333.9 million and $ 259.5 million, respectively, in money market funds that are measured at fair value on a recurring basis using Level 1 inputs.

The recorded values of accounts receivable and accounts payable approximate fair values based on their short-term nature.

At March 31, 2020 , and December 31, 2019 , the book value of our fixed-rate debt for each period was $ 350.0 million , and the fair value was estimated to be $ 331.6 million and $ 364.7 million , respectively.

At June 30, 2020, and December 31, 2019, the book value of our fixed-rate debt for each period was $ 350.0 million, and the fair value was estimated to be $ 353.5 million and $ 364.7 million, respectively.

The difference between the book value and the fair value is derived from the difference between the period-end market interest rate and the stated rate of our fixed-rate, long-term debt.

5 unchanged sentences

We are exposed to interest rate risk arising from fluctuations in variable-rate LIBOR on our term loans and when we have loan amounts outstanding on our Revolving Credit Facility.

At March 31, 2020 , we had $ 95.0 million of variable-rate debt outstanding based on one-month LIBOR.

At June 30, 2020, we had $ 95.0 million of variable-rate debt outstanding based on one-month LIBOR.

Our objective is to limit the variability of interest payments on our debt.

2 unchanged sentences

We do not speculate using derivative instruments.

At March 31, 2020 , we had two interest rate swap agreements with notional principal amounts of $ 50.0 million and $ 45.0 million .

At June 30, 2020, we had four interest rate swap agreements.

Under the interest rate swaps, we receive one-month LIBOR-based variable interest rate payments and make fixed interest rate payments, thereby fixing the interest rate on $ 95.0 million of variable rate debt exposure.

Payments on the interest rate swaps with notional principal amounts of $ 50.0 million and $ 45.0 million are due on a monthly basis at an annual fixed rate of 1.007 % and 1.256 % , respectively, and expire in February 2022 and March 2022, respectively.

Payments on two interest rate swaps, entered into in 2016, with notional principal amounts of $ 50.0 million and $ 45.0 million are due on a monthly basis at an annual fixed rate of 1.007 % and 1.256 %, respectively, and expire in February 2022 and March 2022, respectively (Initial Swaps).

During the three months ended June 30, 2020, we entered into two forward interest rate swap agreements which commence on the expiration date of the Initial Swaps.

Payments on these two interest rate swaps with notional principal amounts of $ 50.0 million and $ 45.0 million will be due on a monthly basis at an annual fixed rate of 0.39 % and 0.431 %, respectively, and expire in June 2025 and December 2025, respectively.

The interest rate swap agreements were not designated as cash flow hedges, and as a result, all changes in the fair value are recognized in "Change in fair value of interest rate swaps" in our Consolidated Statements of Operations rather than through other comprehensive income.

At March 31, 2020 , we recorded a long-term liability of $ 1.5 million in "Other long-term liabilities" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreements.

At June 30, 2020, we recorded a long-term liability of $ 2.0 million in "Other long-term liabilities" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreements.

At December 31, 2019, we recorded a long-term asset of $ 0.8 million in "Other assets" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreements.

2 unchanged sentences

We are exposed to credit risk related to customer accounts receivable.

In order to manage credit risk, we consider customer concentrations and current economic trends and monitor the creditworthiness of significant customers based on ongoing credit evaluations.

At March 31, 2020 , receivables from two customers accounted for approximately 13 % and 12 % of total receivables.

In order to manage credit risk, we consider customer concentrations and current economic trends and monitor the creditworthiness of significant customers based on

ongoing credit evaluations.

At June 30, 2020, receivables from two customers accounted for approximately 16 % and 13 % of total receivables.

At December 31, 2019, receivables from these two customers accounted for approximately 14 % and 12 % of total receivables.

6 unchanged sentences

The amendments are effective for eligible contract modifications subsequent to March 12, 2020 and through December 31, 2022.

We are currently evaluating the effects of this ASU on our consolidated financial statements.

The adoption of this standard did not have a material effect on our financial statements, but we will assess any eligible contract modifications in the future.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

2 unchanged sentences

The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted.

We are currently evaluating the effects of this ASU on our consolidated financial statements.

We currently do not expect the adoption of the guidance to have a material effect on our financial statements, but will continue to monitor the standard through the effective date.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20):

5 unchanged sentences

There were no other accounting standards recently issued that had or are expected to have a material impact on our consolidated financial statements and associated disclosures.

For the three months ended March 31, 2020 and 2019 , we recorded $ 4.0 million and $ 3.2 million , respectively, of income tax expense and had an effective rate of 24.7 % and 21.9 % , respectively.

During the three months ended March 31, 2020 , the primary reason for the difference between the federal statutory income tax rate of 21 % and the effective tax rate was the effect of state taxes, offset by excess tax benefits of vested share-based payment awards and accounting for the tax impact of the CARES Act.

During the three months ended March 31, 2019 , the primary reason for the difference between the federal statutory income tax rate of 21 % and the effective tax rate was the effect of state taxes, offset by excess tax benefits of vested share-based payment awards.

During the three months ended March 31, 2020 , cash paid for taxes, net of refunds received, was $ 5.3 million .

During the three months ended March 31, 2019 , refunds received, net of cash taxes paid, were $ 11.0 million .

For the three and six months ended June 30, 2020, we recorded $ 11.3 million and $ 15.3 million, respectively, of income tax expense and had an effective rate of 25.2 % and 25.1 %, respectively.

During the three and six months ended June 30, 2020, the primary reason for the difference between the federal statutory income tax rate of 21 % and the effective tax rate was the effect of state taxes.

For the three and six months ended June 30, 2019, we recorded $ 9.8 million and $ 13.0 million, respectively, of income tax expense and had an effective rate of 26.0 % and 24.9 %, respectively.

During the three and six months ended June 30, 2019, the primary reason for the difference between the federal statutory income tax rate of 21 % and the effective tax rate was the effect of state taxes.

During the six months ended June 30, 2020, cash paid for taxes, net of refunds received were $ 8.9 million.

During the six months ended June 30, 2019, refunds received, net of cash taxes paid, were $ 10.6 million.

Net Income Per Common Share

6 unchanged sentences

Three Months Ended

June 30 Six Months Ended

2020 2019 2020 2019

(thousands, except per-share data)

Net income $ 33,586 $ 27,718 $ 45,786 $ 39,107

Weighted average common shares outstanding during the period (for basic calculation) 39,312 39,087 39,238 38,986

3 unchanged sentences

Net income per common share - Diluted $ 0.85 $ 0.71 $ 1.16 $ 1.00

The computation of the dilutive effect of other potential common shares excludes stock awards representing no shares and 0.2 million shares of common stock, respectively, in the three months ended March 31, 2020 and 2019 .

The computation of the dilutive effect of other potential common shares excludes stock awards representing 0.1 million and 0.2 million shares of common stock, respectively, in the three months ended June 30, 2020 and 2019, and 0.1 million and 0.2 million of common stock shares, respectively, in the six months ended June 30, 2020 and 2019.

Under the treasury stock method, the inclusion of these stock awards would have been antidilutive.

4 unchanged sentences

Long-term debt consisted of the following:

2020 December 31,

Asset-based revolving credit facility due 2025 $ — $ —

6 unchanged sentences

On May 15, 2015, Boise Cascade and its principal operating subsidiaries, Boise Cascade Wood Products, L.L.C., and Boise Cascade Building Materials Distribution, L.L.C., as borrowers, and Boise Cascade Wood Products Holdings Corp., as guarantor, entered into an Amended and Restated Credit Agreement, as amended, (Amended Agreement) with Wells Fargo Capital Finance, LLC, as administrative agent, and the banks named therein as lenders.

On March 13, 2020, we entered into the sixth amendment to the Amended Agreement to reduce the maximum amount available for revolving loans from $ 370 million to $ 350 million (Revolving Credit Facility) and to extend the maturity date of the Credit Agreement from May 1, 2022, to the earlier of (i) March 13, 2025 and (ii) 90 days prior to the maturity of our $ 350 million of 5.625 % senior notes due September 1, 2024 (or the maturity date of any permitted refinancing indebtedness in respect thereof).

The term loan within the Amended Agreement remains at $ 50.0 million (ABL Term Loan).

5 unchanged sentences

The Amended Agreement also contains a requirement that we meet a 1 :1 fixed-charge coverage ratio (FCCR), applicable only if Availability falls below 10 % of the aggregate revolving lending commitments, or $ 35 million.

Availability exceeded the minimum threshold amounts required for testing of the FCCR at all times since entering into the Amended Agreement, and Availability at March 31, 2020 , was $ 345.4 million .

Availability exceeded the minimum threshold amounts required for testing of the FCCR at all times since entering into the Amended Agreement, and Availability at June 30, 2020, was $ 345.4 million.

The Amended Agreement permits us to pay dividends only if at the time of payment (i) no default has occurred or is continuing (or would result from such payment) under the Amended Agreement, and (ii) pro forma Excess Availability (as defined in the Amended Agreement) is equal to or exceeds 25 % of the aggregate Revolver Commitments (as defined in the Amended Agreement) or (iii) (x) pro forma Excess Availability is equal to or exceeds 15 % of the aggregate Revolver Commitment and (y) our fixed-charge coverage ratio is greater than or equal to 1 :1 on a pro forma basis.

4 unchanged sentences

In addition, we are required to pay an unused commitment fee at a rate of 0.25 % per annum of the average unused portion of the lending commitments.

At both March 31, 2020 , and December 31, 2019 , we had no borrowings outstanding under the Revolving Credit Facility and $ 4.6 million of letters of credit outstanding.

At both June 30, 2020, and December 31, 2019, we had no borrowings outstanding under the Revolving Credit Facility and $ 4.6 million of letters of credit outstanding.

These letters of credit and borrowings, if any, reduce Availability under the Revolving Credit Facility by an equivalent amount.

4 unchanged sentences

Interest rates under the ABL Term Loan are based, at our election, on either LIBOR or a base rate, as defined in the Amended Agreement, plus a spread over the index elected that ranges from 1.75 % to 2.00 % for LIBOR rate loans and from 0.75 % to 1.00 % for base rate loans, both dependent on the amount of Average Excess Availability (as defined in the Amended Agreement).

During the three months ended March 31, 2020 , the average interest rate on the ABL Term Loan was approximately 3.26 % .

During the six months ended June 30, 2020, the average interest rate on the ABL Term Loan was approximately 2.75 %.

We have received and expect to continue receiving patronage credits under the ABL Term Loan.

2 unchanged sentences

Patronage credits are recorded as a reduction to interest expense in the year earned.

After giving effect to expected patronage distributions, the effective average net interest rate on the ABL Term Loan was approximately 2.3 % during the three months ended March 31, 2020 .

After giving effect to expected patronage distributions, the effective average net interest rate on the ABL Term Loan was approximately 1.7 % during the six months ended June 30, 2020.

On March 30, 2016 (Closing Date), Boise Cascade and its principal operating subsidiaries, Boise Cascade Wood Products, L.L.C., and Boise Cascade Building Materials Distribution, L.L.C., as borrowers, and the guarantors party thereto, entered into a term loan agreement, as amended, (Term Loan Agreement) with American AgCredit, PCA, as administrative agent and sole lead arranger, and other banks in the Farm Credit system named therein as lenders.

The Term Loan Agreement was for a $ 75.0 million secured term loan (Term Loan).

The outstanding principal balance of the Term Loan amortizes and is payable in equal installments of $ 10 million per year on each of the sixth, seventh, eighth, and ninth anniversaries of the

Closing Date, with the remaining principal balance due and payable on March 30, 2026.

The outstanding principal balance of the Term Loan amortizes and is payable in equal installments of $ 10 million per year on each of the sixth, seventh, eighth, and ninth anniversaries of the Closing Date, with the remaining principal balance due and payable on March 30, 2026.

Interest on our Term Loan is payable monthly.

8 unchanged sentences

The applicable spread for the Term Loan ranges from 1.875 % to 2.125 % for LIBOR rate loans, and 0.875 % to 1.125 % for base rate loans, both dependent on our Interest Coverage Ratio (as defined in the Term Loan Agreement).

During the three months ended March 31, 2020 , the average interest rate on the Term Loan was approximately 3.55 % .

During the six months ended June 30, 2020, the average interest rate on the Term Loan was approximately 2.97 %.

We have received and expect to continue receiving patronage credits under the Term Loan.

1 unchanged sentence

The Term Loan is secured by a first priority mortgage on our Thorsby, Alabama, and Roxboro, North Carolina, EWP facilities and a first priority security interest on the equipment and certain tangible personal property located therein.

On August 29, 2016, Boise Cascade issued $ 350 million of 5.625 % senior notes due September 1, 2024 (2024 Notes), through a private placement that was exempt from the registration requirements of the Securities Act.

Interest on our 2024 Notes is payable semiannually in arrears on March 1 and September 1.

13 unchanged sentences

The indenture governing the 2024 Notes provides for customary events of default and remedies.

On July 27, 2020, we issued $ 400 million of 4.875 % senior notes due July 1, 2030 (2030 Notes), to repurchase any and all of our 2024 Notes in a cash tender offer, to redeem any 2024 Notes that remain outstanding after the consummation of the tender offer, to pay off our American AgCredit Term Loan of $ 45.0 million, and to pay related financings fees and expenses.

For more information related to these debt transactions, see Note 14, Subsequent Events.

Interest Rate Swaps

1 unchanged sentence

Cash Paid for Interest

For the three months ended March 31, 2020 and 2019 , cash payments for interest were $ 10.7 million and $ 10.8 million , respectively.

For both six months ended June 30, 2020 and 2019, cash payments for interest was $ 11.5 million.

The components of lease expense were as follows:

Three Months Ended

June 30 Six Months Ended

2020 2019 2020 2019

Operating lease cost $ 3,361 $ 3,367 $ 6,707 $ 6,708

8 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Three Months Ended

Six Months Ended June 30, 2020 Six Months Ended June 30, 2019

Cash paid for amounts included in the measurement of lease liabilities

6 unchanged sentences

Other information related to leases was as follows:

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Weighted-average remaining lease term (years)

4 unchanged sentences

Finance leases 7.7 % 8.5 %

As of March 31, 2020 , our minimum lease payment requirements for noncancelable operating and finance leases are as follows:

Operating Leases

Finance Leases

As of June 30, 2020, our minimum lease payment requirements for noncancelable operating and finance leases are as follows:

Operating Leases Finance Leases

Remainder of 2020 $ 6,398 $ 1,908

2021 12,858 3,853

2022 11,937 3,859

2023 11,636 3,898

2024 11,060 3,893

Thereafter 34,992 40,967

Total future minimum lease payments 88,881 58,378

interest ( 20,924 ) ( 25,129 )

Total lease obligations 67,957 33,249

1 unchanged sentence

Long-term lease obligations $ 58,913 $ 31,816

As of March 31, 2020 , the minimum lease payment amount for operating leases signed but not yet commenced was $ 3.9 million .

Retirement and Benefit Plans

1 unchanged sentence

Three Months Ended

June 30 Six Months Ended

2020 2019 2020 2019

Service cost $ 166 $ 161 $ 334 $ 322

Interest cost 1,473 1,809 2,946 3,625

4 unchanged sentences

Service cost is recorded in the same income statement line items as other employee compensation costs arising from services rendered, and the other components of net periodic benefit expense are recorded in "Pension expense (excluding service costs)" in our Consolidated Statements of Operations.

During the three months ended March 31, 2020 , we contributed $ 0.7 million in cash to the pension plans.

For the remainder of 2020 , we expect to make approximately $ 1.0 million in cash contributions to the pension plans.

We announced to plan participants that we will freeze accrual of all benefits on our qualified defined benefit pension plan (Pension Plan) effective August 31, 2020, as well as our intention to terminate the Pension Plan.

During the six months ended June 30, 2020, we contributed $ 1.1 million in cash to the pension plans.

For the remainder of 2020, we expect to make approximately $ 13 million in cash contributions to the pension plans, which includes the repurchase of two BMD locations leased from the Pension Plan.

For information related to the contribution of properties to our qualified defined benefit pension plan, see Note 12, Retirement and Benefit Plans, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" in our 2019 Form 10-K.

Stock-Based Compensation

In February 2020 and 2019, we granted two types of stock-based awards under our incentive plan:

In first quarter 2020 and 2019, we granted two types of stock-based awards under our incentive plan:

performance stock units (PSUs) and restricted stock units (RSUs).

PSU and RSU Awards

During the three months ended March 31, 2020 , we granted 94,850 PSUs to our officers and other employees, subject to performance and service conditions.

During the six months ended June 30, 2020, we granted 94,850 PSUs to our officers and other employees, subject to performance and service conditions.

For the officers, the number of shares actually awarded will range from 0 % and 200 % of the target amount, depending upon Boise Cascade's 2020 return on invested capital (ROIC), as approved by our Compensation Committee in accordance with the related grant agreement.

1 unchanged sentence

Because the ROIC and EBITDA components contain a performance condition, we record compensation expense over the requisite service period based on the most probable number of shares expected to vest.

During the three months ended March 31, 2019 , we granted 110,923 PSUs to our officers and other employees, subject to performance and service conditions.

During the six months ended June 30, 2019, we granted 110,923 PSUs to our officers and other employees, subject to performance and service conditions.

During the 2019 performance period, officers and other employees earned 93 % and 96 %, respectively, of the target based on Boise Cascade’s 2019 ROIC and EBITDA, determined by our Compensation Committee in accordance with the related grant agreement.

The PSUs granted to officers generally vest in a single installment three years from the date of grant, while the PSUs granted to other employees vest in three equal tranches each year after the grant date.

During the three months ended March 31, 2020 and 2019 , we granted an aggregate of 125,716 and 165,350 RSUs, respectively, to our officers, other employees, and nonemployee directors with only service conditions.

During the six months ended June 30, 2020 and 2019, we granted an aggregate of 125,716 and 166,180 RSUs, respectively, to our officers, other employees, and nonemployee directors with only service conditions.

The RSUs granted to officers and other employees vest in three equal tranches each year after the grant date.

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We based the fair value of PSU and RSU awards on the closing market price of our common stock on the grant date.

During both of the three months ended March 31, 2020 and 2019 , the total fair value of PSUs and RSUs vested was $ 11.1 million .

The following summarizes the activity of our PSUs and RSUs awarded under our incentive plan for the three months ended March 31, 2020 :

Number of shares

Weighted Average Grant-Date Fair Value

Number of shares

Weighted Average Grant-Date Fair Value

During the six months ended June 30, 2020 and 2019, the total fair value of PSUs and RSUs vested was $ 11.1 million and $ 11.4 million, respectively.

The following summarizes the activity of our PSUs and RSUs awarded under our incentive plan for the six months ended June 30, 2020:

Number of shares Weighted Average Grant-Date Fair Value Number of shares Weighted Average Grant-Date Fair Value

Outstanding, December 31, 2019 295,347 $ 31.09 257,564 $ 31.14

Granted 94,850 36.45 125,716 36.45

Performance condition adjustment (a) ( 6,989 ) 29.48 — —

Outstanding, March 31, 2020

Vested ( 162,622 ) 28.93 ( 143,807 ) 30.88

Forfeited ( 24,246 ) 32.57 ( 26,707 ) 32.82

Outstanding, June 30, 2020 196,340 $ 35.34 212,766 $ 34.24

_______________________________

Represents total PSUs forfeited during the three months ended March 31, 2020 related to the 2019 performance condition adjustment described above.

(a) Represents total PSUs forfeited during the six months ended June 30, 2020 related to the 2019 performance condition adjustment described above.

Compensation Expense

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Three Months Ended

The related tax benefit for the three months ended March 31, 2020 and 2019 , was $ 0.4 million and $ 0.6 million , respectively.

As of March 31, 2020 , total unrecognized compensation expense related to nonvested share-based compensation arrangements was $ 8.5 million .

June 30 Six Months Ended

2020 2019 2020 2019

PSUs $ 691 $ 736 $ 1,301 $ 1,715

RSUs 980 1,133 2,044 2,354

Total $ 1,671 $ 1,869 $ 3,345 $ 4,069

The related tax benefit for the six months ended June 30, 2020 and 2019, was $ 0.8 million and $ 1.0 million, respectively.

As of June 30, 2020, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $ 9.8 million.

This expense is expected to be recognized over a weighted-average period of 2.0 years.

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On November 14, 2017, we announced that our board of directors approved a dividend policy to pay quarterly cash dividends to holders of our common stock.

For more information regarding our dividend declarations and payments made during the three months ended March 31, 2020 and 2019 , see "Common stock dividends" on our Consolidated Statements of Stockholders' Equity.

On May 7, 2020 , our board of directors declared a dividend of $ 0.10 per share on our common stock, payable on June 15, 2020 , to stockholders of record on June 1, 2020 .

For more information regarding our dividend declarations and payments made during each of the six months ended June 30, 2020 and 2019, see "Common stock dividends" on our Consolidated Statements of Stockholders' Equity.

On July 30, 2020 , our board of directors declared a dividend of $ 0.10 per share on our common stock, payable on September 15, 2020 , to stockholders of record on September 1, 2020 .

For a description of the restrictions in our asset-based credit facility, Term Loan, and the indenture governing our senior notes on our ability to pay dividends, see Note 6, Debt.

Future quarterly dividend declarations, including amount per share, record date and payment date, will be made at the discretion of our board of directors and will depend upon, among other things, legal capital requirements and surplus, our future operations and earnings, general financial condition, contractual obligations, restrictions imposed by our asset-based credit facility, term loan, and the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.

operations and earnings, general financial condition, contractual obligations, restrictions imposed by our asset-based credit facility, term loan, and the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.

Accumulated Other Comprehensive Loss

The following table details the changes in accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019 :

The following table details the changes in accumulated other comprehensive loss for the three and six months ended June 30, 2020 and 2019:

Three Months Ended

June 30 Six Months Ended

2020 2019 2020 2019

Beginning balance, net of taxes

$ ( 50,033 ) $ ( 47,684 ) $ ( 50,248 ) $ ( 47,652 )

Amortization of actuarial (gain) loss, before taxes (a) 201 ( 44 ) 403 ( 87 )

Effect of settlements, before taxes (a) — — 86 —

Income taxes ( 51 ) 11 ( 124 ) 22

Ending balance, net of taxes $ ( 49,883 ) $ ( 47,717 ) $ ( 49,883 ) $ ( 47,717 )

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Represents amounts reclassified from accumulated other comprehensive loss.

(a) Represents amounts reclassified from accumulated other comprehensive loss.

These amounts are included in the computation of net periodic pension cost.

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Accordingly, we do not consolidate LTP's results in our financial statements.

Related-party sales to LTP from our Wood Products segment in our Consolidated Statements of Operations were $ 4.2 million and $ 4.5 million , respectively, during the three months ended March 31, 2020 and 2019 .

Related-party sales to LTP from our Wood Products segment in our Consolidated Statements of Operations were $ 2.5 million and $ 4.3 million, respectively, during the three months ended June 30, 2020 and 2019, and $ 6.8 million and $ 8.8 million, respectively, during the six months ended June 30, 2020 and 2019.

These sales are recorded in "Sales" in our Consolidated Statements of Operations.

Costs and Expenses

Related-party wood fiber purchases from LTP were $ 22.6 million and $ 20.0 million , respectively, during the three months ended March 31, 2020 and 2019 .

Related-party wood fiber purchases from LTP were $ 13.8 million and $ 21.4 million, respectively, during the three months ended June 30, 2020 and 2019, and $ 36.4 million and $ 41.4 million, respectively, during the six months ended June 30, 2020 and 2019.

These costs are recorded in "Materials, labor, and other operating expenses (excluding depreciation)" in our Consolidated Statements of Operations.

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Three Months Ended

June 30 Six Months Ended

2020 2019 2020 2019

Wood Products (a)

LVL $ 5.3 $ 12.0 $ 11.3 $ 23.9

I-joists 2.6 8.0 7.1 13.3

Other engineered wood products 5.2 8.6 11.6 14.3

Plywood and veneer 65.2 63.5 129.0 130.9

Lumber 12.3 14.0 24.6 27.2

Byproducts 15.7 18.0 36.4 38.0

Other 2.2 8.6 9.0 19.4

108.5 132.7 229.0 267.1

Building Materials Distribution

Commodity 490.0 450.7 930.1 849.0

General line 448.1 429.6 845.6 753.1

Engineered wood products 196.2 217.2 408.6 403.0

1,134.3 1,097.4 2,184.3 2,005.1

Amounts represent sales to external customers.

$ 1,242.8 $ 1,230.1 $ 2,413.3 $ 2,272.2

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(a) Amounts represent sales to external customers.

Sales are calculated after intersegment sales eliminations to our Building Materials Distribution segment, as well as the cost of EWP rebates and sales allowances provided at various stages of the supply chain (including distributors, retail lumberyards, and professional builders).

For the three months ended March 31, 2020 , approximately 79 % of Wood Products' EWP sales volumes were to our Building Materials Distribution segment.

For the six months ended June 30, 2020, approximately 80 % of Wood Products' EWP sales volumes were to our Building Materials Distribution segment.

An analysis of our operations by segment is as follows:

Three Months Ended

June 30 Six Months Ended

2020 2019 2020 2019

Net sales by segment

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___________________________________

Primarily represents intersegment sales from our Wood Products segment to our Building Materials Distribution segment.

Wood Products segment operating income for the three months ended March 31, 2020 , includes $ 15.0 million of accelerated depreciation and $ 1.7 million of other closure-related costs due to the permanent curtailment of I-joist production at our Roxboro, North Carolina facility.

(a) Primarily represents intersegment sales from our Wood Products segment to our Building Materials Distribution segment.

(b) Wood Products segment operating income for the six months ended June 30, 2020, includes $ 15.0 million of accelerated depreciation and $ 1.7 million of other closure-related costs due to the permanent curtailment of I-joist production at our Roxboro, North Carolina facility.

For more information, see Note 5, Curtailment of Manufacturing Facility.

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In addition, we have purchase obligations for goods and services, capital expenditures, and raw materials entered into in the normal course of business.

As of March 31, 2020 , there have been no material changes to the above commitments disclosed in the 2019 Form 10-K.

As of June 30, 2020, there have been no material changes to the above commitments disclosed in the 2019 Form 10-K.

Legal Proceedings and Contingencies

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Financial Statements and Supplementary Data" in our 2019 Form 10-K describes the nature of our guarantees, including the approximate terms of the guarantees, how the guarantees arose, the events or circumstances that would require us to perform under the guarantees, and the maximum potential undiscounted amounts of future payments we could be required to make.

As of March 31, 2020 , there have been no material changes to the guarantees disclosed in the 2019 Form 10-K.

As of June 30, 2020, there have been no material changes to the guarantees disclosed in the 2019 Form 10-K.

Subsequent Events

On July 27, 2020, we issued $ 400 million of 4.875 % senior notes due July 1, 2030 (2030 Notes), to fund the repurchase of any and all of our 2024 Notes in a cash tender offer, to redeem any 2024 Notes that remain outstanding after the consummation of the tender offer, to pay off our American AgCredit Term Loan of $ 45.0 million, and to pay related financing fees and expenses.

In connection with the repurchase and redemption of our 2024 Notes, we expect to recognize a pre-tax loss on extinguishment of debt of approximately $ 14.0 million during the third quarter of 2020, including $ 11.0 million of repurchase and redemption premiums and $ 3.0 million for the write-off of unamortized deferred financing costs.

The 2030 Notes are exempt from the registration requirements of the Securities Act and mature on July 1, 2030, with interest payable semiannually in arrears on January 1 and July 1, commencing on January 1, 2021.

The 2030 Notes are guaranteed by each of our existing and future direct or indirect domestic subsidiaries that is a guarantor under our Amended Agreement.

The 2030 Notes are senior unsecured obligations and rank equally with all of the existing and future senior indebtedness of Boise Cascade Company and of the guarantors, senior to all of their existing and future subordinated indebtedness, effectively subordinated to all of their present and future senior secured indebtedness (including all borrowings with respect to our Amended Agreement to the extent of the value of the assets securing such indebtedness), and structurally subordinated to the indebtedness of any subsidiaries that do not guarantee the 2030 Notes.

The terms of the indenture governing the 2030 Notes, among other things, limit the ability of Boise Cascade and our restricted subsidiaries to:

incur additional debt;

declare or pay dividends;

redeem stock or make other distributions to stockholders;

make investments;

create liens on assets;

consolidate, merge or transfer substantially all of their assets;

enter into transactions with affiliates;

and sell or transfer certain assets.

The indenture governing the 2030 Notes provides for customary events of default and remedies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements