Acquisitions

On September 30, 2013, our wholly owned subsidiary, Boise Cascade Wood Products, L.L.C., completed the acquisition of 100% of the outstanding limited liability company interests of both Chester Wood Products LLC and Moncure Plywood LLC (Wood Resources LLC Southeast Operations) for an aggregate purchase price of $102.0 million, subject to post-closing adjustments based upon a working capital target (Acquisition). Of the purchase price, $5.1 million was placed into escrow at closing to satisfy any claims for indemnification, 50% of which is eligible to be released after one year with the balance released after two years (assuming no pending claims). We financed the Acquisition with $77.0 million of cash on hand and a $25.0 million draw under our revolving credit facility. We also incurred acquisition-related costs of $0.5 million, which are recorded in "General and administrative expenses" in our Consolidated Statement of Operations.

These facilities will complement our existing Wood Products business and enable us to better serve our customers in the eastern and southeastern United States. Revenues and earnings from the businesses will be reported as part of the Wood Products segment beginning in fourth quarter 2013.

Goodwill represents the excess of the purchase price and related costs over the fair value of the net tangible and intangible assets of businesses acquired. The primary qualitative factor that contributed to the recognition of goodwill relates to obtaining future customers. All of the goodwill was assigned to the Wood Products segment and is deductible for U.S. income tax purposes.

The Acquisition purchase price allocations are preliminary and subject to post-closing adjustments. The following table summarizes the allocations of the purchase price to the assets acquired and liabilities assumed, based on our current estimates of the fair value at the date of the Acquisition (dollars in thousands):



	Acquisition Date Fair Value

Accounts receivable	$	7,735
Inventories	6,934
Prepaid expenses and other	22
Property and equipment	84,988
Timber deposits	164
Intangible assets:
Customer relationships	1,400
Goodwill	8,307
Assets acquired	109,550

Accounts payable and accrued liabilities	7,534
Other long-term liabilities	14
Liabilities assumed	7,548

Net assets acquired	$	102,002

Pro Forma Financial Information

The following pro forma financial information presents the combined results of operations as if the Wood Resources LLC Southeast Operations had been combined with us on January 1, 2012. The pro forma financial information also gives effect to the issuance of $50 million in aggregate principal amount of our 6.375% senior notes due November 1, 2020 (Senior Notes) on August 15, 2013, and the $25.0 million borrowed under our revolving credit facility to partially finance the Acquisition, as if such transactions had occurred on January 1, 2012. The pro forma results are intended for information purposes only and do not purport to represent what the combined companies' results of operations would actually have been had the related transactions in fact occurred on January 1, 2012. They also do not reflect any cost savings, operating synergies, or revenue enhancements that we may achieve or the costs necessary to achieve those cost savings, operating synergies, revenue enhancements, or integration efforts.



	Pro Forma
	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
	(unaudited, thousands)
Sales	$	911,481	$	795,924	$	2,581,828	$	2,178,986
Net income (a)(b)	17,639		24,493		114,254		43,432

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(a)	The pro forma financial information for three and nine months ended September 30, 2013 was adjusted to exclude $0.5 million of acquisition-related costs for legal, accounting, and other advisory-related services and $0.9 million of secondary offering expenses.


(b)	The nine months ended September 30, 2013 includes a $68.7 million income tax benefit associated with the recording of net deferred tax assets upon our conversion to a corporation in connection with our initial public offering.

On October 1, 2013, we entered into a supplemental indenture to add Chester Wood Products LLC and Moncure Plywood LLC as guarantors of the Senior Notes and our revolving credit facility. For additional information, see Note 15, Consolidating Guarantor and Nonguarantor Financial Information.