What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2021-02-22 compared with 2020-02-24 · 288 added, 258 removed, 406 unchanged (57% of the section changed)

15 unchanged sentences

Our products are used in the construction of new residential housing, including single-family, multi-family, and manufactured homes, the repair-and-remodeling of existing housing, the construction of light industrial and commercial buildings, and industrial applications.

We have a broad base of approximately 5,000 customers, which includes a diverse mix of retail lumberyards, home improvement centers, leading wholesalers, specialty distributors, and industrial converters.

We have a broad base of customers, which includes a diverse mix of retail lumberyards, home improvement centers, leading wholesalers, specialty distributors, and industrial converters.

Our Wood Products and BMD segments are vertically-integrated from wood fiber procurement through distribution.

2 unchanged sentences

We recorded income from operations of $335.0 million during the year ended December 31, 2020, compared with $136.5 million during the same period in the prior year.

In our Wood Products segment, we recorded segment income of $54.2 million for the year ended December 31, 2019 , compared to a segment loss of $10.0 million in 2018 .

The results in 2018 included $55.0 million of accelerated depreciation on assets at a permanently curtailed facility, as well as facility sale and curtailment related losses of $38.3 million.

Excluding these losses, segment income decreased approximately $29 million due to lower sales prices of plywood, offset partially by lower wood fiber costs, particularly OSB (used in the manufacture of I-joists) and logs, as well as higher EWP prices.

In addition, general and administrative expenses also decreased.

In our BMD segment, income improved $3.7 million to $116.2 million for the year ended December 31, 2019 , from $112.5 million for the year ended December 31, 2018 , driven primarily by a gross margin increase of $37.0 million , resulting from higher sales of general line products and improved gross margins on commodity products compared with 2018.

The majority of the improvement in gross margins was offset by increased selling and distribution expenses and depreciation and amortization of $29.3 million and $2.5 million , respectively.

In our Wood Products segment, income increased by $73.5 million to $127.7 million for the year ended December 31, 2020, from $54.2 million in 2019.

The increase in segment income was due primarily to higher plywood sales prices, as well as higher I-joist sales volumes and lower manufacturing costs.

These improvements were offset partially by accelerated depreciation of $15.0 million and other closure-related costs at our Roxboro, North Carolina facility, as well as lower EWP prices and higher wood fiber costs, particularly OSB (used in the manufacture of I-joists).

In our BMD segment, income improved $131.3 million to $247.5 million for the year ended December 31, 2020, from $116.2 million for the year ended December 31, 2019, driven by a gross margin increase of $173.0 million, resulting primarily from improved gross margins on commodity products, as well as higher sales of general line products compared with 2019.

The margin improvement was offset partially by increased selling and distribution expenses and general and administrative expenses of $35.7 million and $4.2 million, respectively.

These changes are discussed further in "Our Operating Results" below.

1 unchanged sentence

At December 31, 2020, we had $345.2 million of unused committed bank line availability.

We generated $93.6 million of cash during the year ended December 31, 2019 , as cash provided by operations was offset partially by capital spending, funding the acquisition of a wholesale building materials distribution location in Birmingham, Alabama, dividends paid on our common stock, and tax withholding payments on stock-based awards.

We generated $120.1 million of cash during the year ended December 31, 2020, as cash provided by operations and issuances of long-term debt was offset partially by debt payments, capital spending, and dividends paid on our common stock.

A further description of our cash sources and uses for the comparative periods are discussed in "Liquidity and Capital Resources" below.

As both a manufacturer and a distributor, our 2020 financial results were favorably impacted by higher commodity wood products pricing compared to pricing in 2019.

During 2020, our business experienced rapidly evolving market conditions and economic uncertainties surrounding the impact of COVID-19, and various restrictions that limited residential construction activity.

In response to COVID-19 uncertainties, early in the second quarter, our Wood Products segment and many other producers in our industry reduced production levels.

In addition, many companies involved in the manufacture and distribution

of building materials dramatically reduced inventory levels in late first quarter and early second quarter in response to falling commodity wood products prices and future demand uncertainty.

As restrictions were loosened or rescinded, construction activity resumed mid-second quarter and continued at a robust pace throughout the remainder of 2020.

Across commodity product lines, product demand in the third quarter exceeded supply, and producers struggled to restore capacity because of COVID-19 related disruptions and natural disasters, causing significant increases in commodity products prices.

In the fourth quarter, composite lumber and panel prices fell sharply during October and November 2020 before a strong pricing rebound in December 2020.

Our BMD warehouse sales were strong throughout the third and fourth quarters as our retail lumberyard customers relied on our broad base of inventory and high service levels to minimize their working capital investment given COVID-19 related uncertainties and historically high commodity product prices.

In addition, we have had strong demand from our home center customers in response to elevated repair and remodel and "do-it-yourself" activity as people are spending more time at home during the pandemic.

As we begin 2021, Wood Products continues to experience periodic short-term disruptions at many locations due to COVID-19 as we continue to make efforts to restore production rates to pre-COVID-19 levels in response to strong end-product demand, particularly for our EWP.

In addition, we have experienced COVID-19 related short-term disruptions at our BMD locations and our activity levels across our distribution network continue to vary widely as COVID-19 impacts geographies across the U.S.

to differing degrees, and federal, state, or local restrictions are implemented or rescinded.

To date, we have not experienced significant supply chain disruptions that would limit our ability to meet customer delivery commitments or source the necessary raw materials and finished goods needed by our operations.

We continue to conduct business with modifications to mill and distribution center housekeeping and cleanliness protocols, employee travel, employee work locations, and virtualization or cancellation of certain sales and marketing events, among other modifications.

In addition, we continue to actively monitor evolving developments and may take actions that alter our business operations as may be required by federal, state, or local authorities, or that we determine are in the best interests of our employees, customers, suppliers, communities, and stockholders.

While there continues to be a heightened level of economic uncertainty due to the pandemic, low mortgage rates, continuation of work-from-home practices by many in the economy, and demographics in the U.S.

have created a favorable demand environment for new residential construction, particularly single-family housing starts, which we expect to continue in 2021.

Furthermore, with homeowners spending more time at home, repair and remodel spending may remain elevated as homeowners invest in existing homes.

As of February 2021, the Blue Chip Economic Indicators consensus forecast for 2021 single- and multi-family housing starts in the U.S.

was approximately 1.34 million units, compared with actual housing starts of 1.29 million in 2019 and 1.25 million in 2018 , as reported by the U.S.

was 1.51 million units, compared with actual housing starts of 1.38 million in 2020 and 1.29 million in 2019, as reported by the U.S.

Census Bureau.

Although we believe U.S.

demographics are supportive of

higher levels of housing starts, we expect only modest near-term residential construction growth due to constraints faced by builders, such as availability of labor and building lots, as well as affordability constraints faced by prospective buyers.

The pace of household formation rates and residential repair-and-remodeling activity will be affected by employment growth, wage growth, prospective home buyers' access to and cost of financing, housing affordability, and consumer confidence, as well as other factors.

Household formation rates in turn will be a key factor behind the demand for new construction.

In addition, the size of new single-family residences as well as the mix of single and multi-family starts will influence product consumption.

We will continue to manage our production levels to our sales demand.

As both a manufacturer and a distributor, our 2019 financial results were impacted by lower lumber, OSB, and plywood pricing compared to pricing in 2018.

Additional industry capacity brought on in 2018, and more plywood imports from South America, when coupled with a generally flat residential construction activity, led to supply and demand imbalances.

Commodity wood product pricing during 2020 will be a key driver of our financial results and will be dependent on industry operating rates, net import and export activity, transportation constraints or disruptions, inventory levels in various distribution channels, and seasonal demand patterns.

On February 20, 2020 , we made a decision to permanently curtail I-joist production at our Roxboro, North Carolina facility by March 31, 2020 .

Across our industry, I-joist consumption per housing start has trended downward in recent years which we believe is due to decreases in the median home size and an increasing proportion of slab on grade new home construction.

Because Roxboro is a higher cost facility and we have additional available I-joist capacity at our Alexandria, Louisiana facility, we plan to permanently curtail Roxboro I-joist production.

We do not anticipate any impact on our customers.

We expect to record approximately $18 million of charges during first quarter 2020, substantially all of which will be to fully depreciate the curtailed I-joist production assets.

Although we believe that current U.S.

demographics support the higher level of forecasted housing starts, and many national home builders are reporting strong near-term backlogs, the impacts of COVID-19 on residential construction and repair-and-remodeling activity are uncertain.

Strong demand when coupled with capacity constraints in late fourth quarter 2020 and early first quarter 2021 created supply/demand imbalances in the marketplace and historically high pricing levels for commodity lumber and panel products.

As a wholesale distributor of a broad mix of commodity products and a manufacturer of certain commodity products, our sales and profitability are influenced by changes in commodity product prices.

Factors That Affect Our Operating Results and Trends

8 unchanged sentences

Therefore, our profitability with respect to these commodity products depends, in significant part, on effective facilities maintenance programs, and on managing our cost structure, particularly raw materials and labor, which represent the largest components of our operating costs.

Composite structural panel and lumber prices have been historically volatile.

Composite structural panel and lumber prices have been volatile historically.

The following table provides changes in the average composite panel, including certain panel subcategories, and average composite lumber prices as reflected by Random Lengths, an industry publication, for the periods noted below.

In addition to the year-over-year average price changes, 2018 was a year of exceptional price volatility when compared to historical results over the last eight years as both composite panel and composite lumber prices experienced the largest difference between high and low price levels within a calendar year, with sharp increases in the first half of the year followed by significant declines in the back half of the year.

In addition to the year-over-year average price changes, 2020 and 2018 were years of exceptional price volatility when compared to historical results.

Year Ended December 31

2019 versus 2018

2018 versus 2017

2017 versus 2016

2020 versus 2019 2019 versus 2018 2018 versus 2017

Increase (decrease) in composite panel prices 54% (27)% 10%

9 unchanged sentences

New residential construction activity has historically been volatile with demand influenced by several economic conditions, including domestic population growth, immigration rates, residential vacancy and foreclosure rates, demand for second homes, and existing home prices.

The pace of household formation rates and residential repair-and-remodeling activity will also be affected by continued employment growth, wage growth, prospective home buyers' access to financing, improved consumer confidence, as well as other factors.

The pace of household formation rates and residential repair-and-remodeling activity will also be affected by the economic impact of COVID-19, employment levels, wage growth, housing affordability, availability of construction labor, materials, and building lots, prospective home buyers' access to financing, consumer confidence, as well as other factors.

Improved household formation rates in turn will help stimulate new construction.

In addition, the size of new single-family residences as well as the mix of single and multi-family starts will influence product consumption.

We have expanded our market position in EWP in recent years and further increases in EWP demand will be highly influenced by further recovery in single-family housing starts.

Increases in EWP demand will be highly influenced by single-family housing starts.

Industry supply for the products we produce and distribute is influenced primarily by price-induced changes in the operating rates of existing facilities, but is also influenced over time by the introduction of new product technologies, capacity additions and closures, restart of idled capacity, and log availability.

New LVL capacity in the southeastern United States came on-line in late 2019, which we expect will add competitive volume and pricing pressure to the LVL marketplace.

The balance of supply and demand in the U.S.

6 unchanged sentences

Our principal raw material is wood fiber, which accounted for approximately 42% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation), for our Wood Products segment in 2020.

Logs comprised approximately 79% of our wood fiber costs during 2019 , and we satisfy our log requirements through a combination of purchases under supply agreements, open-market purchases, and purchases pursuant to contracts awarded under public auctions conducted by federal, state, and local authorities.

Logs comprised approximately 73% of our wood fiber costs during 2020, and we satisfy our log requirements through a combination of purchases under supply agreements, open-market purchases, and purchases pursuant to contracts awarded under public auctions.

The following table provides changes in our average per-unit log costs for the periods noted below:

Year Ended December 31

2019 versus 2018

2018 versus 2017

2017 versus 2016

2020 versus 2019 2019 versus 2018 2018 versus 2017

Increase (decrease) in per-unit log costs 1% (10)% 13%

The cost of logs is correlated with prevailing product prices for building materials and manufacturers' expectations for future product prices, with an increase in product prices driving increases in log costs.

Generally, increases in the cost of logs lag product price increases, as improved manufacturer profitability often leads to increased demand for logs.

Prices for logs have been historically cyclical in response to changes in domestic and foreign demand and supply.

Our aggregate cost of obtaining logs is also affected by fuel costs and the distance of the log source from our facilities, as we are often required to arrange for harvesting and delivery of the logs we purchase from the source to our facilities.

Demand for dimension lumber has a strong influence on log pricing, as the dimension lumber industry is the largest consumer of logs.

In the future, we also expect the level of foreign demand for log exports from the western U.S.

to fluctuate based on economic activity in China and other Pacific Rim countries, currency exchange rates, and the availability of log supplies from other countries such as Canada, Russia, and New Zealand.

Log costs in the western U.S.

have historically been more volatile due to foreign demand for log exports.

In addition, per-unit log costs in the western U.S.

are higher than per-unit

log costs in the southern U.S.

Our log requirements and our access to supply, as well as the cost of obtaining logs, are subject to change based on, among other things, the availability of logs in each of our operating areas, our operating schedules, competition from other manufacturers, the effect of governmental laws and regulations, impacts of weather or fire on log availability, and the status of environmental appeals.

Per-unit log costs in the western U.S.

are higher than per-unit log costs in the southern U.S.

due to higher harvest and delivery costs, as well as various supply-side constraints, including seasonal weather-related restrictions, slower growth cycles, and a higher proportion of federal and state timberland ownership.

Sustained periods of high log costs may impair the cost competitiveness of our manufacturing facilities.

Our log requirements and our access to supply, as well as the cost of obtaining logs, are subject to change based on, among other things, the effect of governmental laws and regulations, our manufacturing operations not operating in the normal course of business, impacts of weather or fire on log availability, and the status of environmental appeals.

We also purchase OSB, which is used as the vertical web to assemble I-joists, from a supplier with multiple locations throughout North America.

OSB accounted for approximately 7% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2020.

OSB is a commodity, and prices have been historically volatile in response to industry capacity restarts and operating rates, inventory levels in various distribution channels, and seasonal demand patterns.

Sustained periods of high OSB costs lead to significantly higher costs of our I-joist production.

OSB is a commodity, and prices have been historically volatile in response to industry capacity and operating rates, inventory levels in various distribution channels, and seasonal demand patterns.

Sustained periods of high OSB costs lead to higher costs of our I-joist production.

Wood fiber also includes, to a lesser extent than OSB, lumber purchased from third parties for I-joist production at our Canadian EWP facility and for production at our laminated beam plant in Idaho.

7 unchanged sentences

Year Ended December 31

2020 2019 2018

Sales $ 5,474.8 $ 4,643.4 $ 4,995.3

Costs and expenses

5 unchanged sentences

Other (income) expense, net — (0.8) (1.4)

5,139.8 4,506.9 4,923.3

Income from operations $ 335.0 $ 136.5 $ 72.0

(percentage of sales)

Sales 100.0 % 100.0 % 100.0 %

Costs and expenses

5 unchanged sentences

Other (income) expense, net — — —

93.9 % 97.1 % 98.6 %

Income from operations 6.1 % 2.9 % 1.4 %

3 unchanged sentences

Year Ended December 31

2020 2019 2018

Housing Starts (a)

Single-family 990.1 887.7 875.8

Multi-family 389.9 402.3 374.1

1,380.0 1,290.0 1,249.9

Segment Sales

1 unchanged sentence

Building Materials Distribution 4,952.0 4,137.7 $ 4,287.7

Intersegment eliminations and other

Intersegment eliminations (801.1) (769.5) (825.7)

$ 5,474.8 $ 4,643.4 $ 4,995.3

Wood Products

7 unchanged sentences

Average Net Selling Prices

Laminated veneer lumber (LVL) (cubic foot)

LVL (cubic foot) $ 18.26 $ 18.66 $ 18.11

I-joists (1,000 equivalent lineal feet) 1,244 1,270 1,218

5 unchanged sentences

Product Line Sales

Commodity 46.6 % 41.7 % 48.3 %

General line 35.6 % 38.2 % 33.1 %

Engineered wood products 17.8 % 20.1 % 18.6 %

1 unchanged sentence

_______________________________________

(a) Actual U.S.

housing starts as reported by the U.S.

Census Bureau.

We define gross margin as "Sales" less "Materials, labor, and other operating expenses (excluding depreciation)." Substantially all costs included in "Materials, labor, and other operating expenses (excluding depreciation)" for our Building Materials Distribution segment are for inventory purchased for resale.

(b) We define gross margin as "Sales" less "Materials, labor, and other operating expenses (excluding depreciation)." Substantially all costs included in "Materials, labor, and other operating expenses (excluding depreciation)" for our Building Materials Distribution segment are for inventory purchased for resale.

Gross margin percentage is gross margin as a percentage of segment sales.

2020 Compared With 2019

For the year ended December 31, 2020, total sales increased $831.4 million, or 18%, to $5,474.8 million from $4,643.4 million during the year ended December 31, 2019.

As described below, the increase in sales was driven by the changes in sales prices and volumes for the products we manufacture and distribute.

During 2020, U.S.

housing starts increased 7%, with single-family starts up 12%, compared with 2019.

Single-family housing starts are the primary driver of our sales volumes and typically result in higher building product utilization per start than multi-family units.

For the year ended December 31, 2020, average composite lumber and average composite panel prices were 57% and 54% higher, respectively, compared with the same period in the prior year, as reflected by Random Lengths composite lumber and panel pricing.

These increases in composite commodity pricing resulted in higher sales in both of our segments, as noted below.

Wood Products.

During the year ended December 31, 2020, sales, including sales to our BMD segment, increased $48.7 million, or 4%, to $1,323.9 million from $1,275.2 million in 2019.

The increase in sales was driven primarily by higher plywood prices of 30%, resulting in increased sales of $101.0 million.

In addition, higher sales volumes for I-joists of 6% resulted in increased sales of $18.1 million.

These increases were offset partially by lower sales volumes for plywood and LVL of 6% and 3%, respectively, resulting in decreased sales of $22.4 million and $10.4 million, respectively.

The lower volume for plywood sales reflects our continued work to optimize veneer into EWP production, as well as periodic short-term disruptions related to COVID-19.

Net sales prices for LVL and I-joists each decreased 2%, resulting in decreased sales of $6.9 million and $6.2 million, respectively.

In addition, other sales, including by-products, freight, and logs, decreased compared with the prior year period.

Building Materials Distribution.

During the year ended December 31, 2020, sales increased $814.3 million, or 20%, to $4,952.0 million from $4,137.7 million in 2019.

Compared with the prior year, the overall increase in sales was driven by sales price and sales volume increases of 13% and 7%, respectively.

By product line, commodity sales increased 34%, or $584.4 million, general line product sales increased 11%, or $181.7 million, and sales of EWP (substantially all of which is sourced through our Wood Products segment) increased 6%, or $48.2 million.

Costs and Expenses

Materials, labor, and other operating expenses (excluding depreciation) increased $570.3 million, or 14%, to $4,536.1 million for the year ended December 31, 2020, compared with $3,965.8 million during the prior year.

In our Wood Products segment, materials, labor, and other operating expenses decreased, due to lower sales volumes, offset partially by higher per-unit costs of OSB (used in the manufacture of I-joists) of 36%, compared with 2019.

Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment decreased by 640 basis points, which was primarily due to higher plywood sales prices, resulting in improved leveraging of manufacturing costs, including labor and wood fiber costs.

In BMD, the increase in materials, labor, and other operating expenses was driven by higher purchased materials costs as a result of higher commodity prices and higher sales volumes, compared with 2019.

However, the BMD segment MLO rate improved 140 basis points compared with 2019 due primarily to improved gross margin percentages for our commodity product sales, driven by an increasing commodity price environment during the majority of 2020.

Depreciation and amortization expenses increased $15.0 million, or 19%, to $95.2 million for the year ended December 31, 2020, compared with $80.1 million during the prior year.

The increase was due primarily to recording accelerated depreciation of $15.0 million in first quarter 2020 to fully depreciate the curtailed I-joist production assets at our Roxboro, North Carolina facility.

For additional information, see Note 6, Curtailment of Manufacturing Facilities, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Selling and distribution expenses increased $37.5 million, or 10%, to $428.3 million for the year ended December 31, 2020, compared with $390.7 million for the prior year.

The increase was due primarily to higher employee-related expenses, mostly incentive compensation, of $34.0 million, as well as higher shipping and handling costs of $3.3 million.

These increases were offset partially by lower travel and entertainment expenses of $5.7 million.

General and administrative expenses increased $7.6 million, or 11%, to $78.6 million for the year ended December 31, 2020, compared with $71.1 million for the prior year.

The increase was due primarily to higher employee-related expenses, mostly incentive compensation, of $11.8 million, offset partially by lower travel and entertainment expenses of $2.2 million and other discretionary expenses.

Loss on sale and curtailment of facilities of $1.7 million for the year ended December 31, 2020, represents various closure-related costs due to the permanent curtailment of I-joist production at our Roxboro, North Carolina, facility.

For additional information, see Note 6, Curtailment of Manufacturing Facilities, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Income From Operations

Income from operations increased $198.6 million to $335.0 million for the year ended December 31, 2020, compared with $136.5 million for the year ended December 31, 2019.

Wood Products.

For the year ended December 31, 2020, segment income increased $73.5 million to $127.7 million from $54.2 million for the year ended December 31, 2019.

The increase in segment income was due primarily to higher plywood sales prices, as well as higher I-joist sales volumes and lower manufacturing costs.

These improvements were offset partially by accelerated depreciation of $15.0 million and other closure-related costs of $1.7 million at our Roxboro, North Carolina facility, as well as lower EWP prices and higher wood fiber costs.

In addition, selling and distribution expenses and general and administrative expenses increased $1.9 million and $0.6 million, respectively.

Building Materials Distribution.

For the year ended December 31, 2020, segment income increased $131.3 million to $247.5 million from $116.2 million for the year ended December 31, 2019.

The increase in segment income was driven by a gross margin increase of $173.0 million, resulting primarily from improved gross margins on commodity products, as well as higher sales of general line products compared with 2019.

The margin improvement was offset partially by increased selling and distribution expenses and general and administrative expenses of $35.7 million and $4.2 million, respectively.

Unallocated corporate expenses increased $6.2 million to $40.2 million for the year ended December 31, 2020, from $34.0 million for the year ended December 31, 2019.

The increase was due primarily to higher incentive compensation and business interruption losses.

As part of our self-insured risk retention program, corporate absorbed approximately $3.5 million of estimated business interruption losses at Wood Products facilities in 2020.

The losses resulted from downtime at our Louisiana manufacturing facilities due to hurricanes and from a fire-related production disruption at our Chester, South Carolina, plywood plant.

Pension expense (excluding service costs).

In December 2020, we eliminated our qualified defined benefit pension plan (Pension Plan).

The process of eliminating the Pension Plan included lump-sum payments made to eligible plan participants at their election and the purchase of a buy-out group annuity contract (Buy-Out) from The Prudential Insurance Company of America (Prudential), which was funded with plan assets.

When the Buy-Out became effective on December 31, 2020, we irrevocably transferred to Prudential the future benefit obligations and annuity administration for all remaining plan participants (or their beneficiaries) in the Pension Plan.

These transactions fully eliminated the liabilities of our Pension Plan, resulting in a non-cash settlement charge of $6.2 million in fourth quarter 2020.

On September 30, 2019, we transferred $19.8 million of our Pension Plan assets to Prudential for the purchase of a group annuity contract.

Under the arrangement, Prudential assumed ongoing responsibility for administration and benefit payments for approximately 10% of our U.S.

qualified pension plan projected benefit obligations at the time of the transaction.

As a result of the transaction, we recognized a non-cash settlement charge of $1.3 million in third quarter 2019.

For additional information related to our Pension Plan, see Note 12, Retirement and Benefit Plans, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Change in fair value of interest rate swaps.

For information related to our interest rate swaps, see the discussion under "Disclosures of Financial Market Risks" and "Financial Instruments" included in this "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.

Loss on extinguishment of debt.

In connection with the issuance of the $400 million of 4.875% senior notes due July 1, 2030 (2030 Notes), we commenced a tender offer to purchase any and all of our $350 million aggregate principal amount of 5.625% senior notes due September 1, 2024 (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.

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

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

information related to our indebtedness, see Note 10, Debt, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

2019 Compared With 2018

For the year ended December 31, 2019, total sales decreased $351.9 million, or 7%, to $4,643.4 million from $4,995.3 million during the year ended December 31, 2018.

22 unchanged sentences

In our Wood Products segment, the decrease in materials, labor, and other operating expenses was primarily driven by lower sales volumes, as well as lower per-unit costs of OSB (used in the manufacture of I-joists) and logs of 33% and 10%, respectively, compared with 2018.

However, materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment increased by 100 basis points, which was primarily due to lower plywood sales prices, resulting in decreased leveraging of labor and other manufacturing costs, offset partially by lower wood fiber costs.

However, the MLO rate in our Wood Products segment increased by 100 basis points, which was primarily due to lower plywood sales prices, resulting in decreased leveraging of labor and other manufacturing costs, offset partially by lower wood fiber costs.

In BMD, the decrease in materials, labor, and other operating expenses was driven by lower purchased materials costs as a result of lower commodity prices, compared with 2018.

7 unchanged sentences

Selling and distribution expenses increased $27.6 million, or 8%, to $390.7 million for the year ended December 31, 2019, compared with $363.1 million for the prior year.

The increase was due mostly to higher employee-related expenses and

shipping and handling costs of $17.9 million and $5.0 million, respectively, driven by increased sales volumes in our BMD segment, which includes the impact of the BMD Acquisitions.

The increase was due mostly to higher employee-related expenses and shipping and handling costs of $17.9 million and $5.0 million, respectively, driven by increased sales volumes in our BMD segment, which includes the impact of the BMD Acquisitions.

General and administrative expenses increased $2.3 million, or 3%, to $71.1 million for the year ended December 31, 2019, compared with $68.8 million for the prior year.

The increase was due primarily to higher base compensation expenses and information technology related expenses of $2.6 million and $0.4 million, respectively, offset partially by lower professional service related expenses of $1.1 million.

Loss on sale and curtailment of facilities of $38.3 million for the year ended December 31, 2018, relates to the

Loss on sale and curtailment of facilities of $38.3 million for the year ended December 31, 2018, relates to the following:

• Impairment and sale related losses of $24.0 million upon classifying the Wood Products facility in Moncure, North Carolina, as held for sale (Moncure Impairment Loss) and a loss of $11.5 million related to the sale of Wood Products facilities in Northeast Oregon (NEO Impairment Loss).

15 unchanged sentences

Building Materials Distribution.

For the year ended December 31, 2019 , segment income increased $3.7 million to $116.2 million from $112.5 million for the year ended December 31, 2018 .

For the year ended December 31, 2019, segment income increased $3.7 million to

$116.2 million from $112.5 million for the year ended December 31, 2018.

The increase in segment income was driven primarily by a gross margin increase of $37.0 million, resulting from higher sales of general line products and improved gross margins on commodity products compared with 2018.

3 unchanged sentences

Pension expense (excluding service costs).

On September 30, 2019, we transferred $19.8 million of our qualified defined benefit pension plan (Pension Plan) assets to The Prudential Insurance Company of America (Prudential) for the purchase of a group annuity contract.

Under the arrangement, Prudential assumed ongoing responsibility for administration and benefit payments for approximately 10% of our U.S.

qualified pension plan projected benefit obligations at the time of the transaction.

As a result of the transaction, we recognized a non-cash settlement charge of $1.3 million in third quarter 2019.

On April 25, 2018, and August 10, 2018, we transferred $151.8 million and $124.8 million, respectively, of our Pension Plan assets to Prudential for the purchase of group annuity contracts.

On September 30, 2019, April 25, 2018, and August 10, 2018, we transferred $19.8 million, $151.8 million, and $124.8 million, respectively, of our Pension Plan assets to Prudential for the purchase of group annuity contracts.

Under the arrangements, Prudential assumed ongoing responsibility for administration and benefit payments of the related transferred Pension Plan obligations.

As a result of the transactions, we recognized non-cash pension settlement charges of $12.0 million and $11.3 million, respectively, in second and third quarters 2018.

For additional information related to the transfer of pension plan assets, see Note 12, Retirement and Benefit Plans , of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Change in fair value of interest rate swaps.

For information related to our interest rate swaps, see the discussion under "Disclosures of Financial Market Risks" and "Financial Instruments" included in this "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.

2018 Compared With 2017

For the year ended December 31, 2018, total sales increased $563.3 million, or 13%, to $4,995.3 million from $4,432.0 million during the year ended December 31, 2017.

As described below, the improvement in sales was driven by the changes in sales volumes and prices for the products we manufacture and distribute.

During 2018, U.S.

housing starts increased 4%, with single-family starts up 3%, compared with 2017.

Single-family housing starts are the primary driver of our sales volumes and typically result in higher building product utilization per start than multi-family units.

For the year ended December 31, 2018, average composite lumber and average composite panel prices were up 12% and 10%, respectively, compared with the same period in the prior year, as reflected by Random Lengths composite lumber and panel pricing.

These improvements in composite commodity pricing resulted in improved sales in both of our segments, as noted below.

Wood Products.

During the year ended December 31, 2018, sales, including sales to our BMD segment, increased $159.5 million, or 12%, to $1,533.3 million from $1,373.8 million in 2017.

The increase in sales was driven primarily by higher sales prices for plywood of 13%, resulting in increased sales of $55.6 million.

In addition, sales prices for I-joists and LVL increased 9% and 8%, respectively, resulting in increased sales of $23.1 million and $23.3 million, respectively.

Sales volumes for LVL and I-joists increased 2% and 1%, respectively, resulting in increased sales of $6.0 million and $1.7 million, respectively.

The increase in sales also includes the impact of adoption of the new revenue standard which resulted in increased "Sales" and "Materials, labor, and other operating expense (excluding depreciation)" of $24.5 million related to certain byproduct sales previously netted against costs.

These increases were offset partially by a decrease in plywood sales volumes of 2%, or $10.8 million.

In addition, with the sale of our particleboard facility and the sale or closure of three of our five sawmills during 2018, our combined particleboard and lumber sales decreased by approximately $11.0 million.

Building Materials Distribution.

During the year ended December 31, 2018, sales increased $513.9 million, or 14%, to $4,287.7 million from $3,773.8 million in 2017.

Compared with the prior year, the overall increase in sales was driven by sales price and sales volume increases of 8% and 6%, respectively.

By product line, commodity sales increased 14%, or $261.9 million, general line product sales increased 12%, or $152.0 million, and sales of EWP (substantially all of which is sourced through our Wood Products segment) increased 14%, or $100.0 million.

Costs and Expenses

Materials, labor, and other operating expenses (excluding depreciation) increased $488.0 million, or 13%, to $4,307.6 million for the year ended December 31, 2018, compared with $3,819.6 million during the prior year.

In our Wood Products segment, the increase in materials, labor, and other operating expenses was primarily driven by higher per-unit costs of logs and OSB (used in the manufacture of I-joists) of 13% and 2%, respectively, compared with the prior year.

The increase in per-unit log costs was primarily due to an increase in the price of logs in the western U.S.

However, the MLO rate in our Wood Products segment decreased by 160 basis points, which was primarily due to higher sales prices, resulting in improved leveraging of labor and wood fiber costs.

In BMD, the increase in materials, labor, and other operating expenses was driven by higher purchased materials costs as a result of higher sales volumes, as well as a 70 basis point increase in the MLO rate, compared with the prior year.

Our BMD MLO rate for the year ended December 31, 2018 was negatively impacted by the sharp decline in commodity prices during the second half of 2018.

Depreciation and amortization expenses increased $66.5 million, or 83%, to $146.8 million for the year ended December 31, 2018, compared with $80.4 million during the prior year.

The increase was due primarily to recording accelerated depreciation of $55.0 million in fourth quarter 2018 to fully depreciate the curtailed LVL production assets at our

Roxboro, North Carolina facility.

The increase is also due to initiating depreciation on approximately $45 million of veneer and LVL-related assets at our Roxboro, North Carolina EWP facility in fourth quarter 2017, as well as other capital expenditures.

For more information on the curtailed assets, see Note 6, Curtailment of Manufacturing Facilities , of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Selling and distribution expenses increased $35.9 million, or 11%, to $363.1 million for the year ended December 31, 2018, compared with $327.2 million for the prior year.

The increase was due mostly to higher employee-related expenses and shipping and handling costs of $16.7 million and $12.3 million, respectively, primarily as a result of higher delivery and base compensation costs associated with increased sales volumes in our BMD segment.

General and administrative expenses increased $5.8 million, or 9%, to $68.8 million for the year ended December 31, 2018, compared with $63.0 million for the prior year.

The increase was due primarily to higher base compensation expenses and professional service related expenses of $3.8 million and $3.2 million, respectively, offset partially by lower incentive compensation expenses of $1.5 million related to operating performance.

Loss on sale and curtailment of facilities was $38.3 million for the year ended December 31, 2018.

For additional information, see Note 6, Curtailment of Manufacturing Facilities and Note 7, Sale of Manufacturing Facilities of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

For the year ended December 31, 2018, other (income) expense, net, was $1.4 million of income, which primarily included a gain on the sale of property in our Wood Products segment.

For the year ended December 31, 2017, other (income) expense, net, was $0.4 million of expense, which included a $1.0 million non-cash asset write-down, offset by a $1.2 million gain from the sale of machinery and equipment, in our Wood Products segment.

Income From Operations

Income from operations decreased $69.4 million to $72.0 million for the year ended December 31, 2018, compared with $141.4 million of income for the year ended December 31, 2017.

Wood Products.

For the year ended December 31, 2018, segment loss was $10.0 million compared to segment income of $53.6 million for the year ended December 31, 2017.

The $63.7 million decrease in segment income was due primarily to accelerated depreciation of $55.0 million to fully depreciate the curtailed LVL production assets at our Roxboro, North Carolina facility, the Moncure Impairment Loss, and the NEO Impairment Loss, as well as higher log and OSB costs.

In addition, general and administrative expenses and selling and distribution expenses increased $4.6 million and $1.9 million respectively.

The asset charges and higher expenses were offset partially by higher sales prices of plywood and EWP.

Building Materials Distribution.

For the year ended December 31, 2018, segment income decreased $4.3 million to $112.5 million from $116.8 million for the year ended December 31, 2017.

The decline in segment income was driven primarily by increased selling and distribution expenses and depreciation and amortization of $34.1 million and $2.8 million, respectively.

The higher expenses were offset partially by a gross margin increase of $33.0 million generated from a sales increase of 14%.

Unallocated corporate expenses increased $1.5 million to $30.5 million for the year ended December 31, 2018, from $29.0 million for the year ended December 31, 2017.

The increase was primarily due to an increase in base compensation expenses and other general administrative expenses, offset partially by lower incentive compensation.

Pension expense (excluding service costs).

On April 25, 2018, and August 10, 2018, we transferred $151.8 million and $124.8 million, respectively, of our pension plan assets to The Prudential Insurance Company of America (Prudential) for the purchase of group annuity contracts.

Under the arrangements, Prudential assumed ongoing responsibility for administration and benefit payments for all plan participants in payout status as of July 1, 2018, which comprised over 60% of our U.S.

qualified pension plan projected benefit obligations.

As a result of the transactions, we recognized non-cash pension settlement charges of $12.0 million and $11.3 million, respectively, in second and third quarters 2018.

As a result of the transactions, we recognized non-cash pension settlement charges of $1.3 million and $23.3 million, respectively, for the years ended December 31, 2019 and 2018.

For additional information related to the transfer of pension plan assets, see Note 12, Retirement and Benefit Plans, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Interest Expense.

Interest expense increased $0.8 million, or 3%, to $26.2 million for the year ended December 31, 2018, compared with $25.4 million for the prior year.

The increase was due primarily to additional interest expense related to

an increase in capital lease assets.

For more information related to our indebtedness, see Note 10, Debt, and Note 11, Leases, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10- K.

Change in fair value of interest rate swaps.

For information related to our interest rate swaps, see the discussion under "Disclosures of Financial Market Risks" and "Financial Instruments" included in this "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.

Income Tax Provision

2 unchanged sentences

During the year ended December 31, 2020, the primary reasons for the difference between the federal statutory income tax rate of 21% and the effective tax rate were the effect of the following:

• A $38.8 million increase in income tax expense, or an effect of 13.5%, from the required release of stranded tax effects upon elimination of our Pension Plan in December 2020 (Plan Termination).

For additional information related to the Plan Termination and the related release of stranded tax effects, see Note 4, Income Taxes, and Note 12, Retirement and Benefit Plans, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

• A $12.3 million increase in income tax expense, or an effect of 4.3%, from state income taxes.

During the year ended December 31, 2019, the primary reasons for the difference between the federal statutory income tax rate of 21% and the effective tax rate were the effect of the following:

• A $4.4 million increase in income tax expense, or an effect of 4.1%, from state income taxes.

• A $1.7 million increase in income tax expense, or an effect of 1.6%, from permanent differences, including meals and entertainment and nondeductible executive compensation.

1 unchanged sentence

During the year ended December 31, 2018, the primary reasons for the difference between the federal statutory income tax rate of 21% and the effective tax rate were the effect of the following:

A $3.8 million reduction in income tax expense, or an effect of 17.2%, resulting from the remeasurement of deferred income taxes to the new federal statutory rate of 21%, which mostly relates to a $20.0 million discretionary pension contribution made during 2018, for which we received a tax deduction at the 2017 federal income tax rate.

• A $3.8 million reduction in income tax expense, or an effect of 17.2%, resulting from the remeasurement of deferred income taxes to the new federal statutory rate of 21%, which mostly relates to a $20.0 million discretionary pension contribution made during 2018, for which we received a tax deduction at the 2017 federal income tax rate of 35%.

• A $1.7 million reduction in income tax expense, or an effect of 7.8%, from excess tax benefits of share-based payment awards.

1 unchanged sentence

• A $1.5 million increase in income tax expense, or an effect of 6.9%, from permanent differences, including meals and entertainment and nondeductible executive compensation.

During the year ended December 31, 2017, the primary reasons for the difference between the federal statutory income tax rate of 35% and the effective tax rate were the effect of the following:

An $8.1 million reduction in income tax expense, or an effect of 6.9%, resulting from the remeasurement of deferred income taxes to the new federal statutory rate of 21%.

A $3.7 million increase in income tax expense, or an effect of 3.2%, from state income taxes.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”), was enacted by the U.S.

The legislation makes broad and complex changes to the U.S.

tax code affecting the taxation of businesses in all industries.

The most significant impact to our financial statements is the reduction of the corporate federal income tax rate from 35% to 21%.

For more information related to the Tax Act, see Note 4, Income Taxes , of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Industry Mergers and Acquisitions

On November 19, 2020, West Fraser Timber Co.

(West Fraser) and Norbord Inc.

(Norbord) announced a definitive agreement pursuant to which West Fraser will acquire all of the shares of Norbord.

The acquisition closed during the first quarter of 2021.

West Fraser supplies product to our BMD segment, and Norbord is a supplier to both our Wood Products and BMD segments.

We believe we have good relationships with these vendors and we do not expect the transaction to have a material impact on our future results of operations.

On August 27, 2020, Builders FirstSource, Inc.

(BFS) and BMC Stock Holdings (BMC) announced a definitive merger agreement.

The merger closed in early January 2021.

BFS and BMC are both customers of ours.

We believe we have good relationships with these customers.

Because this transaction closed recently, we cannot yet assess the impact, if any, this customer combination may have on our future results of operations.

Liquidity and Capital Resources

1 unchanged sentence

At December 31, 2020, we had $750.6 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability).

Our cash and cash equivalents increased by $93.6 million during the year ended December 31, 2019 , as cash provided by operations was offset partially by capital spending, acquisition funding, dividends paid on our common stock, and tax withholding payments on stock-based awards, as further discussed below.

Our cash and cash equivalents increased by $120.1 million during the year ended December 31, 2020, as cash provided by operations and issuances of long-term debt were offset partially by debt payments, capital spending, dividends paid on our common stock, and tax withholding payments on stock-based awards, as further discussed below.

At December 31, 2020, our cash was invested in high-quality, short-term investments, which we record in "Cash and cash equivalents." The majority of our cash and cash equivalents is invested in money market funds that are broadly diversified and invested in high-quality, short-duration securities, including commercial paper, certificates of deposit, U.S.

2 unchanged sentences

Though we have not experienced any losses on our cash and cash equivalents to date and we do not anticipate incurring any losses, we cannot be assured that we will not experience losses on our short-term investments.

We believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, funding of acquisitions, lease obligations, working capital, pension contributions, and to pay cash dividends to holders of our common stock over the next 12 months.

We believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, funding of acquisitions, lease obligations, working capital, and to pay cash dividends to holders of our common stock over the next 12 months.

We expect to fund our seasonal and intra-month working capital requirements in 2021 from cash on hand and, if necessary, borrowings under our revolving credit facility.

3 unchanged sentences

Our primary uses of cash are for expenses related to the manufacture and distribution of building products, including inventory purchased for resale, wood fiber, labor, energy, and glues and resins.

In addition to paying for ongoing operating costs, we use cash to invest in our business, service our debt and pension obligations, pay dividends, repurchase our common stock, and meet our contractual obligations and commercial commitments.

In addition to paying for ongoing operating costs, we use cash to invest in our business, service our debt, pay dividends, repurchase our common stock, and meet our contractual obligations and commercial commitments.

Below is a discussion of our sources and uses of cash for operating activities, investing activities, and financing activities.

Year Ended December 31

2020 2019 2018

Net cash provided by operations $ 294,516 $ 245,647 $ 163,611

5 unchanged sentences

The $48.9 million increase in cash provided by operations in 2020 relates primarily to the following:

• A $131.3 million increase in income in our BMD segment and a $73.5 million increase in income in our Wood Products segment.

See "Operating Results" above for a discussion on our results for 2020.

• A $35.7 million increase in working capital during 2020, compared with a $47.4 million decrease in working capital during 2019.

Working capital is subject to cyclical operating needs, seasonal buying patterns for inventory purchased for resale and logs, the timing of the collection of receivables, and the timing of payment of payables and expenses.

The increase in working capital in 2020 was primarily attributable to higher receivables and inventories, offset partially by an increase in accounts payable and accrued liabilities.

The increase in receivables in 2020 primarily reflects increased sales of approximately 55%, comparing sales for the month of December 2020 with sales for the month of December 2019.

Inventories increased in 2020 primarily due to an increase in finished goods inventory in our BMD segment.

However, inventories in our Wood Products segment decreased in 2020 due to strong product demand, lower log inventory, and reduced production levels as a result of periodic short-term disruptions at many

locations due to COVID-19.

The decrease in working capital in 2019 was primarily attributable to decreased inventories and higher accounts payable.

Inventories decreased in 2019, particularly in our BMD segment, as a result of weaker commodity pricing during the period.

The increase in accounts payable and accrued liabilities in 2020 was greater than the 2019 increase, reflecting the increase in inventories as of December 31, 2020, and higher incentive compensation accruals.

• A $76.5 million increase in cash paid for income taxes, net of refunds.

During 2020, cash paid for taxes, net of refunds received was $75.1 million, compared to income tax refunds received, net of taxes paid of $1.4 million in 2019.

The increase in cash paid for income taxes is primarily due to an increase in income from operations.

• An increase in cash contributions to our pension plans of $7.5 million.

During 2020, we used $12.8 million of cash to make pension contributions, compared with $5.2 million during 2019.

2019 Compared With 2018

In 2019, our operating activities generated $245.6 million of cash, compared with $163.6 million in 2018.

The $82.0 million increase in cash provided by operations in 2019 relates primarily to the following:

• A $47.4 million decrease in working capital during 2019, compared with a $41.7 million increase in working capital during 2018.

2 unchanged sentences

The decrease in inventories provided $40.2 million of cash during 2019, compared with a use of cash of $64.2 million in the same period a year ago.

Inventories decreased during 2019 as inventory in our Building Materials Distribution segment did not increase at the same rate as the comparative prior year period as a result of weaker commodity pricing in 2019.

Inventories decreased during 2019 as inventory in our BMD segment did not increase at the same rate as the comparative prior year period as a result of weaker commodity pricing in 2019.

In addition, inventory levels at the end of 2018 were seasonally higher than normal with slower sales in the second half of 2018 due to slower housing activity and concerns regarding further commodity price declines impacting our customers purchasing patterns.

The increase in accounts payable and accrued liabilities provided $5.2 million of cash during 2019, compared with a use of cash of $14.5 million in the same period a year ago.

The increase in working capital in 2018 was primarily attributable to higher inventories and a decrease in

accounts payable and accrued liabilities, offset partially by a decrease in receivables.

The increase in working capital in 2018 was primarily attributable to higher inventories and a decrease in accounts payable and accrued liabilities, offset partially by a decrease in receivables.

As discussed above, inventories increased in 2018 primarily due to an increase in finished goods inventory in our BMD segment.

8 unchanged sentences

See "Operating Results" above for a discussion on our results for 2019 and 2018.

2018 Compared With 2017

In 2018, our operating activities generated $163.6 million of cash, compared with $151.6 million in 2017.

The $12.0 million increase in cash provided by operations in 2018 relates primarily to the following:

An improvement in cash generated by our Wood Products operations.

Although operating income in our Wood Products segment decreased $63.7 million, the 2018 results include approximately $90 million of non-cash charges, discussed above.

See "Operating Results" above for a discussion on our results for 2018.

A $21.6 million decrease in cash paid for income taxes, net of refunds.

The decrease in cash paid for income taxes is primarily due to a decrease in income from operations and a reduction in the federal income tax rate.

A $41.7 million increase in working capital during 2018, compared with a $17.8 million increase in working capital during 2017.

The increase in working capital in 2018 was primarily attributable to higher inventories and a decrease in accounts payable and accrued liabilities, offset partially by a decrease in receivables.

Inventories increased in 2018 primarily due to an increase in finished goods inventory in our BMD segment.

The decrease in receivables and increase in inventory in 2018 primarily reflects decreased sales of approximately 12%, comparing sales for the month of December 2018 with sales for the month of December 2017.

Accounts payable and accrued liabilities decreased in 2018 primarily due to lower inventory purchases in our BMD segment in December 2018, compared with December 2017.

The increase in working capital in 2017 was primarily attributable to higher receivables and inventories, offset partially by an increase in accounts payable and accrued liabilities.

The increase in receivables in 2017 primarily reflects increased sales of approximately 18%, comparing sales for the month of December 2017 with sales for the month of December 2016.

Inventories increased in 2017 primarily due to an increase in finished goods inventory in our BMD segment.

The increase in accounts payable and accrued liabilities in 2017 was greater than the 2016 increase, reflecting the increase in inventories as of December 31, 2017, and higher incentive compensation accruals.

An increase in cash contributions to our pension plans of $23.9 million.

During 2018, we used $26.1 million of cash to make pension contributions, compared with $2.2 million during 2017.

Investment Activities

2 unchanged sentences

Quality and efficiency projects include quality improvements, modernization, energy, and cost-saving projects.

Purchases of property and equipment included approximately $2 million for environmental compliance in 2019 and we expect to spend approximately $2 million in 2020 .

Included in our 2020 capital spending is the log utilization center improvement project at our plywood and veneer facility in Florien, Louisiana, BMD's door shop expansion in Dallas, Texas, the purchase and improvement of a BMD property in Gallatin, Tennessee, that expands our service capabilities in the Nashville market, and the purchase of a previously leased BMD property in Woodinville, Washington.

Purchases of property and equipment also included approximately $1 million for environmental compliance in 2020, and we expect to spend approximately $2 million in environmental compliance related spending in 2021.

We expect capital expenditures in 2021 to total approximately $80 million to $90 million.

We expect our capital spending in 2021 will be for business improvement and quality/efficiency projects, replacement projects, and ongoing environmental compliance.

This level of capital expenditures could increase or decrease as a result of a number of factors, including acquisitions, efforts to accelerate organic growth, exercise of lease purchase options, our financial results, future economic conditions, and timing of equipment purchases.

During the year ended December 31, 2019, we used approximately $82.7 million of cash for purchases of property and equipment, which included business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.

Quality and efficiency projects include quality improvements, modernization, energy, and cost-saving projects.

In 2019, purchases of property and equipment included approximately $2 million for environmental compliance.

In addition, we used $15.7 million for the acquisition of a wholesale building materials distribution location in Birmingham, Alabama.

2 unchanged sentences

Financial Statements and Supplementary Data" of this Form 10-K.

Excluding potential acquisitions, we expect capital expenditures in 2020 to total approximately $85 million to $95 million.

This level of capital expenditures could increase or decrease as a result of a number of factors, including our financial results, future economic conditions, and timing of equipment purchases.

We expect our capital spending in 2020 will be for business improvement and quality/efficiency projects, replacement projects, and ongoing environmental compliance.

This includes spending to expand our veneer production capabilities at our Florien, Louisiana facility.

During the year ended December 31, 2018, we used approximately $80.0 million of cash for purchases of property and equipment, which included business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.

5 unchanged sentences

Financial Statements and Supplementary Data" of this Form 10-K.

During the year ended December 31, 2017, we used approximately $75.5 million of cash for purchases of property and equipment, which included business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.

Quality and efficiency projects include quality improvements, modernization, energy, and cost-saving projects.

In 2017, purchases of property and equipment included approximately $2 million for environmental compliance.

For the year ended December 31, 2017, we received asset sales proceeds of $2.5 million, primarily from the sale of machinery and equipment in our Wood Products segment.

Financing Activities

During 2019 , our financing activities used $58.0 million of cash, including $54.0 million for common stock dividend payments and $3.6 million of tax withholding payments on stock-based awards.

During 2020, our financing activities used $95.7 million of cash.

On July 27, 2020, we issued $400 million of 2030 Notes.

With proceeds from the 2030 Notes issuance, we retired our $350 million of 2024 Notes and paid-off our American AgCredit term loan of $45.0 million.

In connection with the retirement of the 2024 Notes, we made debt extinguishment premium payments of $10.8 million.

During 2020, our financing activities also used $79.2 million for common stock dividend payments, $6.2 million for financing costs related to the 2030 Notes, and $3.3 million of tax withholding payments on stock-based awards.

See "Dividends on Common Stock" below for further discussion of common stock dividend payments.

During 2020, we did not borrow under our revolving credit facility, and therefore have no borrowings outstanding on the facility as of December 31, 2020.

On March 13, 2020, we negotiated an extension of our $350 million revolving credit agreement and our related $50 million term loan.

As of December 31, 2020, we have no debt maturities prior to 2025.

During 2019, our financing activities used $58.0 million of cash, including $54.0 million for common stock dividend payments and $3.6 million of tax withholding payments on stock-based awards.

During 2019, we borrowed $5.5 million under our revolving credit facility to fund intra-month working capital needs, which were subsequently repaid during the same period with cash on hand.

3 unchanged sentences

At December 31, 2018, we had no borrowings outstanding under the revolving credit facility.

During 2017, our financing activities used $5.2 million of cash, primarily from tax withholding payments on stock-based awards of $2.9 million and common stock dividend payments of $2.7 million.

During 2017, we borrowed $410.4 million under our revolving credit facility to fund intra-month working capital needs, which were subsequently repaid during the same period with cash on hand.

At December 31, 2017, we had no borrowings outstanding under the revolving credit facility.

Debt Structure

For information related to our debt transactions and debt structure, see Note 10, Debt, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Dividends on Common Stock

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

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.

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 10, Debt , of the Notes to Consolidated Financial Statements in "Item 8.

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 and the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.

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 10, Debt, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

5 unchanged sentences

Financial Statements and Supplementary Data" of this Form 10-K.

Debt Structure

For information related to our debt structure, see Note 10, Debt , of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Contractual Obligations

5 unchanged sentences

Payments Due by Period

2021 2022-2023 2024-2025 Thereafter Total

Long-term debt (a) $ — $ — $ 50.0 $ 400.0 $ 450.0

Interest (b) 20.0 39.9 39.6 97.5 197.0

Operating leases (c) 13.6 25.1 20.6 25.5 84.9

2 unchanged sentences

Raw materials (d) 41.6 75.1 49.0 48.7 214.4

Other 3.2 2.3 0.2 — 5.7

Other long-term liabilities reflected on our Balance Sheet (e)

Compensation and benefits, including pension funding obligations (f) 7.9 4.2 4.2 15.9 32.2

Other 2.9 3.7 1.8 6.8 15.2

$ 93.1 $ 158.2 $ 173.0 $ 632.2 $ 1,056.6

These borrowings are further explained in Note 10, Debt , of the Notes to Consolidated Financial Statements in "Item 8.

_______________________________________

(a) These borrowings are further explained in Note 10, Debt, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

The table assumes our long-term debt is held to maturity.

Amounts represent estimated interest payments on the 2024 Notes, ABL Term Loan, and Term Loan as of December 31, 2019 , assuming these instruments are held to maturity.

Unused commitment fees and letter of credit fees payable under the Revolving

Credit Facility are excluded from the table above.

(b) Amounts represent estimated interest payments on the 2030 Notes and ABL Term Loan as of December 31, 2020, assuming these instruments are held to maturity.

Unused commitment fees and letter of credit fees payable under the Revolving Credit Facility are excluded from the table above.

In addition, we have excluded our interest rate swaps from interest in the table above.

1 unchanged sentence

Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.

We enter into operating and finance leases in the normal course of business.

We lease a portion of our distribution centers as well as other property and equipment under operating and finance leases.

2 unchanged sentences

Our operating and finance lease obligations could change based on whether we actually exercise these renewal options and/or if we entered into additional lease agreements.

Excludes the minimum lease commitment amount for operating leases signed but not yet commenced as of December 31, 2019 of $3.9 million .

Amounts exclude the minimum lease commitment for leases signed but not yet commenced as of December 31, 2020 of $7.3 million.

For more information, see Note 11, Leases, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Amounts represent contracts to purchase approximately $170 million of logs, approximately $48 million of which will be purchased pursuant to fixed-price contracts and approximately $122 million of which will be purchased pursuant to variable-price contracts.

(d) Amounts represent contracts to purchase approximately $214 million of logs, approximately $35 million of which will be purchased pursuant to fixed-price contracts and approximately $179 million of which will be purchased pursuant to variable-price contracts.

The $179 million is estimated using current contractual index pricing, but actual prices depend on future market prices.

3 unchanged sentences

Except for deposits required pursuant to log supply contracts, these obligations are not recorded in our consolidated financial statements until contract payment terms take effect.

Long-term deferred income tax liabilities and unrecognized tax benefits are excluded from this table, because the timing of future cash outflows related to these items are uncertain.

(e) Long-term deferred income tax liabilities and unrecognized tax benefits are excluded from this table, because the timing of future cash outflows related to these items are uncertain.

For more information, see Note 4, Income Taxes, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Amounts consist of our pension and deferred compensation liabilities, including the current portion of those obligations of $3.0 million.

Actuarially determined liabilities related to pension benefits are recorded based on estimates and assumptions.

Key factors used in developing estimates of these liabilities include assumptions related to discount rates, expected rate of compensation increases, retirement and mortality rates, and other factors.

Changes in estimates and assumptions related to the measurement of funded status could have a material impact on the amount reported.

In the table above, we allocated our pension obligations by year based on the future required minimum pension contributions, as determined by our actuaries.

(f) Amounts consist of our non-qualified pension and deferred compensation liabilities, including the current portion of those obligations of $6.3 million.

Off-Balance Sheet Arrangements

6 unchanged sentences

Seasonal changes in levels of building activity affect our building products businesses, which are dependent on housing starts, repair-and-remodeling activities, and light commercial construction activities.

We typically report lower sales in the first and fourth quarters due to the impact of poor weather on the construction market, and we generally have higher sales in the second and third quarters, reflecting an increase in construction due to more favorable weather conditions.

We typically report lower sales volumes in the first and fourth quarters due to the impact of poor weather on the construction market, and we generally have higher sales volumes in the second and third quarters, reflecting an increase in construction due to more favorable weather conditions.

We typically have higher working capital in the first and second quarters in preparation and response to the building season.

2 unchanged sentences

In the normal course of business, we are exposed to financial risks such as changes in commodity prices, interest rates, and foreign currency exchange rates.

In 2019 , 2018 , and 2017 , we did not use derivative instruments to manage these risks, except for interest rate swaps entered into in 2016 as discussed below.

In 2020, 2019, and 2018, we did not use derivative instruments to manage these risks, except for interest rate swaps as discussed below.

Commodity Price Risk

6 unchanged sentences

Interest Rate Risk

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 December 31, 2019 , we had $95.0 million of variable-rate debt outstanding.

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 December 31, 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 10, Debt, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

During the year ended December 31, 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.

To meet this objective, in 2016 we entered into receive-variable, pay-fixed interest rate swaps to change the variable-rate cash flow exposure to fixed-rate cash flows.

To meet this objective, we enter into receive-variable, pay-fixed interest rate swaps to change the variable-rate cash flow exposure to fixed-rate cash flows.

In accordance with our risk management strategy, we actively monitor our interest rate exposure and use derivative instruments from time to time to manage the related risk.

On February 16, 2016 and March 31, 2016, we entered into interest rate swap agreements with notional principal amounts of $50.0 million and $75.0 million, respectively, to offset risks associated with the variability in cash flows relating to interest payments that are based on one-month LIBOR.

We do not speculate using derivative instruments.

At December 31, 2019 and 2018 , the notional principal amount of our interest rate swap agreements was $95.0 million after liquidating $30.0 million of the interest rate swap with original notional principal amount of $75.0 million in November 2018.

Under the interest rate swaps, we receive 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.

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 the Consolidated Statements of Operations rather than through other comprehensive income.

At December 31, 2019 and 2018 , we recorded long-term assets of $0.8 million and $3.8 million , respectively, in "Other assets" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreements.

At December 31, 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 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 second quarter 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 December 31, 2020, we recorded a long-term liability of $0.6 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.

Foreign Currency Risk

5 unchanged sentences

For obligations with variable interest rate sensitivity, the table sets forth payout amounts based on December 31, 2020 rates and does not attempt to project future rates.

Other instruments subject to market risk, such as obligations for pension plans and other postretirement benefits, are not reflected in the table.

December 31, 2020

2021 2022 2023 2024 2025 There-

after Total Fair

(millions, other than percentages)

1 unchanged sentence

Fixed-rate debt payments (a)

Senior Notes $ — $ — $ — $ — $ — $ 400.0 $ 400.0 $ 432.0

Average interest rates — — — — — 4.875 % 4.875 % —

Variable-rate debt payments (a)

Term Loan $ — $ — $ — $ — $ 50.0 $ — $ 50.0 $ 50.0

Average interest rates — — — — 0.9 % — 0.9 % —

_______________________________________

These obligations are further explained in Note 10, Debt , of the Notes to Consolidated Financial Statements in "Item 8.

(a) These obligations are further explained in Note 10, Debt, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

The table assumes our long-term debt is held to maturity.

We estimated the fair value using quoted market prices of our debt in inactive markets.

(b) We estimated the fair value using quoted market prices of our debt in inactive markets.

The table below provides information as of December 31, 2020, about our interest rate swaps.

3 unchanged sentences

December 31, 2020

2021 2022 2023 2024 2025 There-

after Total Fair

(millions, other than percentages)

Interest rate swaps

Variable to fixed notional amount

Average pay rate (a)

Average receive rate (b)

Variable to fixed notional amount (a) $ — $ 50.0 $ — $ — $ 50.0 $ — $ 50.0 $ (0.6)

Average pay rate (b) — 1.0 % — — 0.4 % — 0.7 % —

Average receive rate (c) — 0.2 % — — 0.2 % — 0.2 % —

_______________________________________

Represents the weighted average actual fixed interest rate payable on our interest rate swaps.

Represents the weighted average variable interest rate receivable on our interest rate swaps at December 31, 2019 .

(a) We have one interest rate swap with a notional principal amount of $50.0 million that expires in February 2022 (Initial Swap).

Another forward interest rate swap agreement commences on the expiration date of the Initial Swap and expires in June 2025.

(b) Represents the weighted average actual fixed interest rate payable on our interest rate swaps.

Environmental

18 unchanged sentences

In recent years, various legislative and regulatory proposals to restrict emissions of greenhouse gases (GHG), such as CO2, have been under consideration in state legislative bodies and the Environmental Protection Agency (EPA).

In 2019, the EPA issued the Affordable Clean Energy (ACE) Rule which regulates GHG from electric utilities.

The ACE rule directs states to develop and implement GHG emission reductions at electric utilities, although it does not set mandatory GHG reduction targets.

Although ACE will not directly affect our operations, it may increase energy costs.

There are currently no specific regulations that require wood products plants to reduce GHG emissions, and the current EPA administration has not announced plans to develop such federal regulations.

These proposals have included regulations to reduce GHG emissions from new and existing electric utilities, which may result in increased electricity and natural gas costs to our businesses.

There are currently no specific regulations that require our wood

products plants to reduce GHG emissions, and the current EPA administration has not announced plans to develop such federal regulations.

States are taking various positions on climate change regulation.

For example, Oregon and Washington are considering legislation and/or regulations to reduce GHG emissions that may impact our operations by increasing energy costs.

For example, Oregon and Washington are considering legislation and/or regulations to reduce GHG emissions that may impact our operations by increasing natural gas, transportation fuel, and/or electricity costs.

Our manufacturing operations in these states derive a significant amount of their energy from biomass, although neither state currently plans to regulate biogenic CO2 emissions.

5 unchanged sentences

From time to time, legislative bodies and environmental regulatory agencies may promulgate new regulatory programs imposing significant incremental operating costs or capital costs on us.

In 2016, our facilities began complying with the final Boiler MACT regulations, which regulate emissions of hazardous air pollutants from industrial boilers and process heaters.

As a result of court decisions, the EPA must revise the emission limits established for certain boiler categories, including biomass stoker boilers that we operate at several locations.

The EPA must also revise mercury and hydrochloric acid limits for all solid fuel boilers.

We expect our boilers will meet the new limits based on preliminary information from the EPA.

However, the EPA has not yet adopted the new limits and our boilers may yet require additional controls.

The EPA is expected to propose the new limits in first or second quarter 2020.

The new limits could require changes to our compliance strategies and therefore could result in additional operating or capital expenditures to be in compliance with the revised regulations.

However, at this time, we are unable to predict the impact to our business due to the uncertainty.

In 2016, our facilities began complying with the final Boiler Maximum Achievable Control Technology (MACT) regulations, which regulate emissions of hazardous air pollutants from industrial boilers and process heaters.

Following litigation of the standards, in 2020 the EPA proposed more stringent MACT emission standards for several types of boilers, including boilers common to our facilities.

The EPA has not finalized those standards and therefore, remain subject to change.

We expect our facilities will meet the proposed limits, although certain of our boilers may yet require additional improvements to ensure compliance.

We continue to monitor and evaluate the EPA’s revisions to the Boiler MACT emission limits.

Some of our wood products facilities are subject to the Plywood and Composite Wood Products (PCWP) MACT standards, and they have complied with these standards since 2007 or 2008.

The EPA has initiated the Risk and Technology Review (RTR) for PCWP sources as required by law for every MACT source category.

The EPA is under a court-ordered deadline to complete this RTR rulemaking by June 2020.

On September 6, 2019, the EPA published proposed PCWP MACT RTR rules.

Based on the proposed rule, we would not be required to implement any new emission controls at our mills.

We expect minor changes to certain compliance and reporting obligations although these changes are not expected to create significant cost burden or compliance risks to our mills.

The EPA will propose additional PCWP MACT rules in the future which may establish emission limits or work practice requirements for additional emission sources, such as lumber kilns, plywood presses, saws, and sanders, at wood products manufacturing mills.

Some of our wood products facilities are subject to the Plywood and Composite Wood Products (PCWP) MACT standards for hazardous air pollutants, and they have complied with these standards since 2007 or 2008.

In 2020, the EPA completed the Risk and Technology Review (RTR) for PCWP MACT standards.

The EPA published the PCWP MACT RTR Rule on August 13, 2020, which concluded additional controls were not required for PCWP sources.

However, the RTR Rule did not address certain remanded sources, including plywood presses, lumber kilns, and various other emission sources at wood products manufacturing mills.

Furthermore, soon after publication of the RTR Rule, an environmental organization filed a petition for reconsideration which the EPA has granted.

The EPA expects to begin working on the reconsideration and the remanded sources in 2021, but it may take the EPA two to three years to complete a final rule.

It is expected that manufacturing facilities subject to the PCWP MACT standards would have three years after rule promulgation to comply with the revised rule.

However, at this time we are unable to predict the impact to our business due to the potential revisions to this rule.

The Oregon Environmental Quality Commission adopted the Oregon Department of Environmental Quality (ODEQ) proposed Cleaner Air Oregon (CAO) rules in November 2017.

These rules regulate air toxic emissions for our manufacturing facilities located in Oregon.

At this time we are unable to predict the impact to our business due to the potential revisions to this rule.

The Oregon Department of Environmental Quality (ODEQ) Cleaner Air Oregon (CAO) rules regulate toxic air emissions from manufacturing facilities located in Oregon.

The rules are risk-based, and in March 2019, the ODEQ released their prioritization list establishing which facilities within the state likely pose the greatest risk to their communities based on emissions inventories that facilities submitted to the ODEQ.

The ODEQ established four risk groups.

None of our mills were identified in the first risk group, although our Medford Plywood Mill was identified in the second group.

The second group is expected to be selected into the program in the next one to three years.

Our other mills were identified in the third and fourth groups and will likely be selected several years from now.

None of our mills were identified in the first tier risk group, although our Medford plywood mill was identified in the second tier group.

The second group is expected to be selected into the program in 2021 or 2022.

Our other mills were identified in the third and fourth tier groups and will likely be selected several years from now.

When selected into the program, the facilities may incur expenses to evaluate the risk to the public and may be required to incur additional operating or capital expenditures to mitigate any significant risk.

We are developing a compliance strategy for Medford Plywood, but cannot predict the impact on that operation at this time.

We are developing a strategy for our Medford plywood mill but cannot predict the impact on that operation at this time.

Furthermore, the ODEQ is currently considering revisions to the CAO rules and released draft rules on January 20, 2021.

Although we are still evaluating effect of the draft rules on our business, we may be required to incur additional costs and/or accelerate the timing of compliance by our facilities.

The Regional Haze Rule, promulgated by the EPA, sets standards for visual air clarity in "Federal Class I" areas such as national parks and wilderness areas.

In 2020, the ODEQ required our Medford and Elgin plywood mills to submit a cost/benefit analysis of emission controls that would reduce pollution at the mills associated with regional haze.

In January 2021 both facilities received a preliminary determination from the ODEQ that additional controls would “likely” be required for the facilities’ boilers.

We are currently evaluating the preliminary determination from the ODEQ and assessing the need for additional emission controls.

At our Elgin plywood facility, our ongoing ability to use waste and storm water has been modified by the ODEQ.

The new constraints create uncertainty around the future operations at the site.

In late 2020, we reduced our purchases of logs for the

Elgin operation considering the uncertainty created by the change in environmental constraints.

As a result, we expect to operate with rolling curtailments in the first half of 2021, as we manage environmental permits, log supply availability, operating costs, and other factors influencing operations.

Critical Accounting Estimates

6 unchanged sentences

EWP Rebates and Allowances

We provide EWP rebates at various stages of the supply chain (including distributors, retail lumberyards, and professional builders) as a means to increase sales.

We provide EWP rebates at various stages of the supply chain (including distributors, retail lumberyards, and homebuilders) as a means to increase sales.

EWP rebates are based on the volume of purchases (measured in dollars or units), among other factors such as customer loyalty, conversion, and commitment incentives, as well as temporary protection from price increases.

EWP rebate estimates are based on the expected amount to be paid and are recorded as a decrease in "Sales" as revenue is recognized.

The estimate of EWP rebates is inherently difficult due to information limitations as the products transition beyond our wholesale customers and through the supply chain to professional builders.

The estimate of EWP rebates is inherently difficult due to the time lag of information and it is challenging to estimate sales subject to rebate as the products transition beyond our wholesale customers and through the supply chain to homebuilders.

In addition, some EWP rebate accruals are estimated based on achievement of tiered sales levels, which require management to forecast sales throughout the supply chain, using incentive terms that vary at each level.

Information that we consider to estimate sales activity at retail lumberyards and professional homebuilders includes historical sales information, sales projections, publicly available information of housing starts by homebuilder, residential development audits, and economic forecasts of new residential construction, among other economic data.

Information that we consider when estimating sales activity at retail lumberyards and homebuilders includes historical sales information, sales projections, publicly available information of housing starts by homebuilder, residential development audits, and economic forecasts of new residential construction, among other economic data.

We update these forecasts on a regular basis.

11 unchanged sentences

Estimates of future cash flows may change based on overall economic conditions, the cost and availability of wood fiber, environmental requirements, capital spending, and other strategic management decisions.

Future events or circumstances such as declines in single-family housing starts, sustained periods of weak commodity prices, loss of key customers, capacity additions by competitors, changes in the competitive position of our products, or changes in raw materials or manufacturing costs that lead us to believe the long-lived asset will no longer provide a sufficient return on investment, could prompt decisions to invest capital differently than expected, sell facilities, or to curtail operations.

Future events or circumstances such as sustained negative economic impact of the COVID-19 pandemic, declines in single-family housing starts, environmental regulations or restrictions, sustained periods of weak commodity prices, loss of key customers, capacity additions by competitors, changes in the competitive position of our products, or changes in raw materials or manufacturing costs that lead us to believe the long-lived asset will no longer provide a sufficient return on investment, could prompt decisions to invest capital differently than expected, sell facilities, or to curtail operations.

Any of these factors, among others, could result in non-cash impairment or accelerated depreciation charges in the future with respect to long-lived assets, which could have a material impact on our results of operations in the period in which an impairment is recognized.

Due to the numerous variables associated with our judgments and assumptions relating to the valuation of assets and the effects of changes on these valuations, the timing, precision, and reliability of our estimates are subject to uncertainty.

Due to the numerous variables associated with our judgments and assumptions relating to the valuation of assets and the effects of changes

on these valuations, the timing, precision, and reliability of our estimates are subject to uncertainty.

As additional information becomes known, we may change our estimates.

3 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis