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 $103.0 million, including a post-closing adjustment of $1.0 million based upon a working capital target (the 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 $78.0 million of cash on hand and a $25.0 million draw under our revolving credit facility. We also incurred acquisition-related costs of $1.1 million, which are recorded in "General and administrative expenses" in our Consolidated Statements of Operations.

These facilities complement our existing Wood Products business and enable us to better serve our customers in the eastern and southeastern United States. Sales, including sales to our Building Materials Distribution segment, and income from operations from these businesses of $34.6 million and $2.3 million, respectively, were reported as part of the Wood Products segment for 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 following table summarizes the final allocations of the purchase price to the assets acquired and liabilities assumed, based on our estimates of the fair value at the date of the Acquisition (dollars in thousands):



	Acquisition Date Fair Value

Accounts receivable	$	7,752
Inventories	6,594
Prepaid expenses and other	22
Property and equipment	84,988
Timber deposits	164
Intangible assets:
Customer relationships	1,400
Goodwill	9,653
Assets acquired	110,573

Accounts payable and accrued liabilities	7,530
Other long-term liabilities	14
Liabilities assumed	7,544

Net assets acquired	$	103,029

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 $50.0 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
	Year Ended December 31
	2013		2012
	(unaudited, thousands, except per-share data)
Sales	$	3,380,195	$	2,905,380
Net income (a)(b)	$	124,709	$	44,656
Net income per common share - Basic and Diluted	$	3.10	$	1.50

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(a)	The pro forma financial information for the year ended December 31, 2013, was adjusted to exclude $1.1 million of acquisition-related costs for legal, accounting, and other advisory-related services and $1.2 million of secondary offering expenses.


(b)	The year ended December 31, 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 18, Consolidating Guarantor and Nonguarantor Financial Information.