What changed in this filing

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Item 1. Financial Statements

2020-10-30 compared with 2020-07-31 · 124 added, 105 removed, 558 unchanged (29% of the section changed)

3 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2020 2019 2020 2019

15 unchanged sentences

Change in fair value of interest rate swaps 147 ( 569 ) ( 2,681 ) ( 3,103 )

Loss on extinguishment of debt ( 13,968 ) — ( 13,968 ) —

( 20,747 ) ( 8,077 ) ( 36,937 ) ( 22,805 )

13 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2020 2019 2020 2019

Net income $ 103,192 $ 27,171 $ 148,978 $ 66,278

Other comprehensive income (loss), net of tax

Other comprehensive income, net of tax

Defined benefit pension plans

2 unchanged sentences

Effect of settlements, net of tax of $ — , $ 341 , $ 22 and $ 341 , respectively

Other comprehensive income (loss), net of tax 150 ( 33 ) 365 ( 65 )

— 1,001 64 1,001

Other comprehensive income, net of tax 151 969 516 904

Comprehensive income $ 103,343 $ 28,140 $ 149,494 $ 67,182

2 unchanged sentences

Consolidated Balance Sheets

September 30,

2020 December 31,

19 unchanged sentences

Consolidated Balance Sheets (continued)

September 30,

2020 December 31,

8 unchanged sentences

Interest payable 3,596 6,723

Dividends payable 62,722 —

Other 92,335 69,772

23 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

Cash provided by (used for) operations

8 unchanged sentences

Other 205 ( 235 )

Loss on extinguishment of debt 13,968 —

Decrease (increase) in working capital, net of acquisitions

16 unchanged sentences

Payments of long-term debt, including revolving credit facility ( 405,774 ) ( 5,500 )

Payments of deferred financing costs ( 6,222 ) —

Dividends paid on common stock ( 12,553 ) ( 11,070 )

27 unchanged sentences

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

Net income 103,192 103,192

Other comprehensive income 151 151

Common stock issued 4 — —

Stock-based compensation 2,494 2,494

Common stock dividends ($ 1.70 per share)

( 67,534 ) ( 67,534 )

Proceeds from exercise of stock options 125 125

Balance at September 30, 2020 44,568 $ 446 5,367 $ ( 138,909 ) $ 536,025 $ ( 49,732 ) $ 430,306 $ 778,136

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

21 unchanged sentences

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

Net income 27,171 27,171

Other comprehensive income 969 969

Common stock issued 1 — —

Stock-based compensation 1,947 1,947

Common stock dividends ($ 0.09 per share)

( 3,567 ) ( 3,567 )

Tax withholding payments on stock-based awards ( 1 ) ( 1 )

Proceeds from exercise of stock options 27 27

Other ( 1 ) ( 1 )

Balance at September 30, 2019 44,343 $ 443 5,367 $ ( 138,909 ) $ 531,119 $ ( 46,748 ) $ 385,661 $ 731,566

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

6 unchanged sentences

We operate our business using two reportable segments:

(1) Wood Products, which primarily manufactures EWP and plywood, and (2) Building Materials Distribution, which is a wholesale distributor of building materials.

(1) Wood Products, which primarily manufactures EWP and plywood, and (2) Building Materials Distribution (BMD), which is a wholesale distributor of building materials.

For more information, see Note 12, Segment Information.

35 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 $ 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.

For our Building Materials Distribution segment, costs related to shipping and handling of $ 49.2 million and $ 46.9 million, for the three months ended September 30, 2020 and 2019, respectively, and $ 134.1 million and $ 127.3 million for the nine months ended September 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 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.

Rebates are generally estimated based on the expected amount to be paid and recorded as a decrease in "Sales." At September 30, 2020, and December 31, 2019, we had $ 62.7 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 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.

At September 30, 2020, and December 31, 2019, we had $ 7.7 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.

8 unchanged sentences

Our lease agreements do not contain any residual value guarantees.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term.

11 unchanged sentences

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

September 30,

2020 December 31,

5 unchanged sentences

Property and equipment consisted of the following asset classes:

September 30,

2020 December 31,

11 unchanged sentences

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 June 30, 2020.

No triggering event was identified during the quarter ended September 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 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.

As of September 30, 2020, and December 31, 2019, we held $ 466.0 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 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.

At September 30, 2020, and December 31, 2019, the book value of our fixed-rate debt was $ 400.0 million and $ 350.0 million, respectively, and the fair value was estimated to be $ 430.0 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.

We estimated the fair value of our fixed-rate debt using quoted market prices of our debt in inactive markets (Level 2 inputs).

The interest rate on our term loans is based on market conditions such as the London Interbank Offered Rate (LIBOR) or a base rate.

Because the interest rate on the term loans is based on current market conditions, we believe that the estimated fair value of the outstanding balance on our term loans approximates book value.

The interest rate on our variable-rate debt is based on market conditions such as the London Interbank Offered Rate (LIBOR) or a base rate.

Because the interest rate on the variable-rate debt is based on current market conditions, we believe that the estimated fair value of the outstanding balance on our variable-rate debt approximates book value.

As discussed below, we also have interest rate swaps to mitigate our variable interest rate exposure, the fair value of which is measured based on Level 2 inputs.

Interest Rate Risk and Interest Rate Swaps

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

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

At September 30, 2020, we had $ 50.0 million of variable-rate debt outstanding based on one-month LIBOR after the pay-off of our $ 45.0 million term loan in July 2020, described in Note 6, Debt.

During the three months ended September 30, 2020, we liquidated our interest rate swap agreements with notional principal amounts of $ 45.0 million in conjunction with the pay-off of the $ 45.0 million term loan.

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

2 unchanged sentences

We do not speculate using derivative instruments.

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

At September 30, 2020, we had two 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 $ 50.0 million of variable rate debt exposure.

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.

Payments on one interest rate swap, entered into in 2016, with a notional principal amount of $ 50.0 million is due on a monthly basis at an annual fixed rate of 1.007 % and expires in February 2022 (Initial Swap).

During the three months ended June 30, 2020, we entered into another forward interest rate swap agreement which commences on the expiration date of the Initial Swap.

Payments on this interest rate swap with a notional principal amount of $ 50.0 million will be due on a monthly basis at an annual fixed rate of 0.39 % and expires in June 2025.

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 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 September 30, 2020, we recorded a long-term liability of $ 0.8 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 June 30, 2020, receivables from two customers accounted for approximately 16 % and 13 % 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 September 30, 2020, receivables from two customers accounted for approximately 13 % and 11 % of total receivables.

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

19 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 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.

For the three and nine months ended September 30, 2020, we recorded $ 34.6 million and $ 50.0 million, respectively, of income tax expense and had an effective rate of 25.1 % in both periods.

For the three and nine months ended September 30, 2019, we recorded $ 9.7 million and $ 22.6 million, respectively, of income tax expense and had an effective rate of 26.2 % and 25.4 %, respectively.

For all periods, 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 nine months ended September 30, 2020, cash paid for taxes, net of refunds received were $ 35.3 million.

During the nine months ended September 30, 2019, refunds received, net of cash taxes paid, were $ 7.1 million.

Net Income Per Common Share

6 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2020 2019 2020 2019

6 unchanged sentences

Net income per common share - Diluted $ 2.61 $ 0.69 $ 3.78 $ 1.69

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.

The computation of the dilutive effect of other potential common shares excludes stock awards representing no shares of common stock in both the three months ended September 30, 2020 and 2019, and 0.2 million of common stock shares in both the nine months ended September 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:

September 30,

2020 December 31,

3 unchanged sentences

4.875% senior notes due 2030 400,000 —

5.625% senior notes due 2024 — 350,000

Deferred financing costs ( 6,417 ) ( 4,456 )

10 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 June 30, 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 September 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 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.

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

During the nine months ended September 30, 2020, the average interest rate on the ABL Term Loan was approximately 2.47 %.

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 1.7 % during the six months ended June 30, 2020.

After giving effect to expected patronage distributions, the effective average net interest rate on the ABL Term Loan was approximately 1.5 % during the nine months ended September 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.

Interest on our Term Loan is payable monthly.

In December 2016, we prepaid $ 30 million of the Term Loan, which became available to reborrow.

In November 2018, we terminated the ability to reborrow this prepaid Term Loan.

This prepayment of $ 30 million satisfied our principal obligations due on the sixth, seventh, and eighth anniversaries of the Closing Date.

Pursuant to the Term Loan Agreement, the borrowers are required to maintain, as of the end of any fiscal quarter, a Capitalization Ratio lower than 60 %, a Consolidated Net Worth greater than $ 350 million, and Available Liquidity greater than $ 100 million (each as defined in the Term Loan Agreement).

In addition, under the Term Loan Agreement, and subject to certain exceptions, the borrowers may not, among other things, (i) incur indebtedness, (ii) incur liens, (iii) make junior payments, (iv) make certain investments, and (v) under certain circumstances, make capital expenditures in excess of $ 50 million during four consecutive quarters.

The Term Loan Agreement also includes customary representations of the borrowers and provides for certain events of default customary for similar facilities.

The Term Loan 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 Term Loan Agreement, and (ii) our interest coverage ratio is greater than or equal to 3 :1 at such time or (iii) our fixed-charge coverage ratio is greater than or equal to 1 :1.

Interest rates under the Term Loan Agreement are based, at our election, on either the LIBOR or a base rate, as defined in the Term Loan Agreement, plus a spread over the index.

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 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.

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

In December 2016, we repaid $ 30 million of the Term Loan.

In July 2020, we paid off the remaining balance on the Term Loan of $ 45.0 million, thus satisfying and discharging our obligations under the Term Loan.

Interest rates under the Term Loan Agreement were based, at our election, on either the LIBOR or a base rate, as defined in the Term Loan Agreement, plus a spread over the index.

The applicable spread for the Term Loan ranged 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 nine months ended September 30, 2020, the average interest rate on the Term Loan was approximately 2.82 %.

We have received and expect to receive patronage credits through the period in which the Term Loan was outstanding.

After giving effect to expected patronage distributions, the effective average net interest rate on the Term Loan was approximately 1.8 %.

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 of 1933, as amended (Securities Act).

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

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

In connection with the issuance of the $ 400 million of 4.875 % senior notes due July 1, 2030 (2030 Notes) described below, we commenced a tender offer to purchase any and all of our $ 350 million aggregate principal amount of 2024 Notes then outstanding.

On July 27, 2020, we accepted for purchase an aggregate principal amount of $ 212.5 million of the 2024 Notes that were tendered.

On September 1, 2020, we redeemed the remaining $ 137.5 million in aggregate principal amount of the 2024 Notes outstanding and our obligations under the indenture, pursuant to which the 2024 Notes were issued, were satisfied and discharged.

In connection with these transactions, we recognized a pre-tax loss on the extinguishment of debt of $ 14.0 million during the three months ended September 30, 2020.

The loss includes $ 10.8 million of debt extinguishment premium payments and $ 3.2 million for the write-off of unamortized deferred financing costs.

On July 27, 2020, we issued the 2030 Notes through a private placement that was exempt from the registration requirements of the Securities Act.

The 2030 Notes 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.

Following the sale of our 2030 Notes, as noted above, we used the net proceeds of the sale to repurchase or redeem any and all of our 2024 Notes, to pay off our Term Loan of $ 45.0 million, and to pay related financings fees and expenses related to the offering of the 2030 Notes and incurred in connection with the repurchase or redemption of the 2024 Notes.

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.

11 unchanged sentences

The indenture governing the 2030 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 both six months ended June 30, 2020 and 2019, cash payments for interest was $ 11.5 million.

For the nine months ended September 30, 2020 and 2019, cash payments for interest were $ 21.2 million and $ 22.7 million, respectively.

The components of lease expense were as follows:

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2020 2019 2020 2019

9 unchanged sentences

Supplemental cash flow information related to leases was as follows:

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

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

Cash paid for amounts included in the measurement of lease liabilities

6 unchanged sentences

Other information related to leases was as follows:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Weighted-average remaining lease term (years)

4 unchanged sentences

Finance leases 7.7 % 8.5 %

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

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

Operating Leases Finance Leases

13 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2020 2019 2020 2019

6 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.

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.

During the nine months ended September 30, 2020, we contributed $ 12.7 million in cash to the pension plans.

During the third quarter 2020, we repurchased two BMD real property locations we previously had contributed to our qualified defined benefit pension plan (Pension Plan) for approximately $ 11.4 million, which were recorded as pension contributions.

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.

For the remainder of 2020, we expect to make approximately $ 0.1 million in cash contributions to our nonqualified salaried pension plans.

We have announced to plan participants our intention to terminate our Pension Plan (Plan Termination).

In conjunction with the Plan Termination, we froze accrual of all benefits on our Pension Plan effective August 31, 2020.

In addition, we purchased a buy-in group annuity contract (Buy-In) from The Prudential Insurance Company of America (Prudential), which was funded with plan assets on August 6, 2020.

In anticipation of the Plan Termination, the Buy-In will fund lump-sum payments made to eligible plan participants.

The lump-sum program is expected to close on October 31, 2020 and participants who elect to participate will receive payment on or about December 2, 2020, after which, neither the Pension Plan nor Prudential will have any further obligations to those participants.

After completion of the lump-sum program, we expect to exercise our option to convert the Buy-In to a buy-out group annuity contract (Buy-Out) for no additional premium.

When the Buy-Out becomes effective, we plan to irrevocably transfer to Prudential the future benefit obligations and annuity administration for all remaining plan participants (or their beneficiaries) in the Pension Plan.

We expect these transactions to fully eliminate the liabilities of our Pension Plan, upon which we will record the related non-cash accounting adjustments as required by the application of pension settlement accounting rules.

Stock-Based Compensation

2 unchanged sentences

PSU and RSU Awards

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.

During the nine months ended September 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 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 nine months ended September 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 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.

During the nine months ended September 30, 2020 and 2019, we granted an aggregate of 125,716 and 166,675 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.

1 unchanged sentence

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

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:

During the nine months ended September 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 nine months ended September 30, 2020:

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

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

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

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

_______________________________

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

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

Compensation Expense

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Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2020 2019 2020 2019

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Total $ 2,494 $ 1,947 $ 5,839 $ 6,016

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.

The related tax benefit for both the nine months ended September 30, 2020 and 2019, was $ 1.5 million.

As of September 30, 2020, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $ 11.2 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 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.

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.

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

On September 28, 2020 , our board of directors declared a supplemental dividend of $ 1.60 per share on our common stock, payable on November 2, 2020 , to stockholders of record on October 15, 2020 .

At September 30, 2020, we accrued $ 62.7 million in "Dividends payable" on our Consolidated Balance Sheets, representing our supplemental dividend declaration.

On October 29, 2020 , our board of directors declared a quarterly dividend of $ 0.10 per share on our common stock, payable on December 15, 2020 , to stockholders of record on December 1, 2020 .

For a description of the restrictions in our asset-based credit facility 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.

Accumulated Other Comprehensive Loss

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

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

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2020 2019 2020 2019

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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 $ 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.

Related-party sales to LTP from our Wood Products segment in our Consolidated Statements of Operations were $ 2.8 million and $ 4.0 million, respectively, during the three months ended September 30, 2020 and 2019, and $ 9.5 million and $ 12.8 million, respectively, during the nine months ended September 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 $ 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.

Related-party wood fiber purchases from LTP were $ 15.6 million and $ 21.4 million, respectively, during the three months ended September 30, 2020 and 2019, and $ 52.0 million and $ 62.7 million, respectively, during the nine months ended September 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

September 30 Nine Months Ended

2020 2019 2020 2019

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

For the nine months ended September 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

September 30 Nine Months Ended

2020 2019 2020 2019

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(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.

(b) Wood Products segment operating income for the nine months ended September 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 June 30, 2020, there have been no material changes to the above commitments disclosed in the 2019 Form 10-K.

As of September 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 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 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.

As of September 30, 2020, there have been no material changes to the guarantees disclosed in the 2019 Form 10-K, except for debt transactions disclosed in Note 6, Debt.

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