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Segment Information
 6 Months Ended
Jun. 30, 2015
Segment Reporting [Abstract]  
Segment Information
Segment Information
 
We operate our business using three reportable segments: Wood Products, Building Materials Distribution, and Corporate and Other. There are no differences in our basis of measurement of segment profit or loss from those disclosed in Note 15, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2014 Form 10-K, except as discussed below.
 
An analysis of our operations by segment is as follows: 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
 
 
(Loss)
 
 
 
 
 
 
 
 
 
 
 
 
Before
 
 
 
 
 
 
Sales
 
Income
 
Depreciation
 
 
 
 
 
 
Inter-
 
 
 
Taxes
 
and
 
EBITDA
 
 
Trade
 
segment
 
Total
 
(b)
 
Amortization
 
(a) (b)
 
 
(millions)
Three Months Ended June 30, 2015
 
 

 
 

 
 

 
 

 
 

Wood Products
 
$
193.5

 
$
146.4

 
$
339.9

 
$
23.7

 
$
10.3

 
$
34.1

Building Materials Distribution
 
761.9

 
0.2

 
762.1

 
19.6

 
2.9

 
22.5

Corporate and Other
 
—

 
—

 
—

 
(5.9
)
 
0.1

 
(5.8
)
Intersegment eliminations
 
—

 
(146.6
)
 
(146.6
)
 
—

 
—

 
—

 
 
$
955.4

 
$
—

 
$
955.4

 
37.4

 
$
13.3

 
$
50.7

Interest expense
 
 
 
 
 
 
 
(5.6
)
 
 
 


Interest income
 
 
 
 
 
 
 
0.1

 
 
 


 
 

 


 


 
$
31.9

 


 
 

 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
 
 
(Loss)
 
 
 
 
 
 
 
 
 
 
 
 
Before
 
 
 
 
 
 
Sales
 
Income
 
Depreciation
 
 
 
 
 
 
Inter-
 
 
 
Taxes
 
and
 
EBITDA
 
 
Trade
 
segment
 
Total
 
(b)
 
Amortization
 
(a) (b)
 
 
(millions)
Three Months Ended June 30, 2014
 
 

 
 

 
 

 
 

 
 

Wood Products
 
$
202.9

 
$
148.1

 
$
351.0

 
$
31.2

 
$
10.0

 
$
41.3

Building Materials Distribution
 
758.3

 
0.1

 
758.4

 
19.4

 
2.4

 
21.8

Corporate and Other
 
—

 
—

 
—

 
(4.4
)
 
—

 
(4.4
)
Intersegment eliminations
 
—

 
(148.2
)
 
(148.2
)
 
—

 
—

 
—

 
 
$
961.2

 
$
—

 
$
961.2

 
46.2

 
$
12.5

 
$
58.7

Interest expense
 
 
 
 
 
 
 
(5.5
)
 
 
 
 
Interest income
 
 
 
 
 
 
 
0.1

 
 
 
 
 
 


 


 


 
$
40.7

 


 
 

 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
 
 
(Loss)
 
 
 
 
 
 
 
 
 
 
 
 
Before
 
 
 
 
 
 
Sales
 
Income
 
Depreciation
 
 
 
 
 
 
Inter-
 
 
 
Taxes
 
and
 
EBITDA
 
 
Trade
 
segment
 
Total
 
(b)
 
Amortization
 
(a) (b)
 
 
(millions)
Six Months Ended June 30, 2015
 
 

 
 

 
 

 
 

 
 

Wood Products
 
$
380.5

 
$
268.7

 
$
649.2

 
$
44.6

 
$
21.1

 
$
65.7

Building Materials Distribution
 
1,384.8

 
0.2

 
1,385.0

 
22.9

 
5.6

 
28.5

Corporate and Other
 
—

 
—

 
—

 
(12.5
)
 
0.1

 
(12.4
)
Intersegment eliminations
 
—

 
(268.9
)
 
(268.9
)
 
—

 
—

 
—

 
 
$
1,765.3

 
$
—

 
$
1,765.3

 
55.0

 
$
26.9

 
$
81.8

Interest expense
 
 
 
 
 
 
 
(11.1
)
 
 
 
 
Interest income
 
 
 
 
 
 
 
0.1

 
 
 
 
 
 
 
 
 
 
 
 
$
44.1

 
 
 
 

 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
 
 
(Loss)
 
 
 
 
 
 
 
 
 
 
 
 
Before
 
 
 
 
 
 
Sales
 
Income
 
Depreciation
 
 
 
 
 
 
Inter-
 
 
 
Taxes
 
and
 
EBITDA
 
 
Trade
 
segment
 
Total
 
(b)
 
Amortization
 
(a) (b)
 
 
(millions)
Six Months Ended June 30, 2014
 
 

 
 

 
 

 
 

 
 

Wood Products
 
$
384.5

 
$
259.7

 
$
644.3

 
$
44.3

 
$
20.0

 
$
64.3

Building Materials Distribution
 
1,343.8

 
0.1

 
1,343.9

 
25.3

 
4.7

 
30.0

Corporate and Other
 
—

 
—

 
—

 
(8.9
)
 
0.1

 
(8.8
)
Intersegment eliminations
 
—

 
(259.8
)
 
(259.8
)
 
—

 
—

 
—

 
 
$
1,728.4

 
$
—

 
$
1,728.4

 
60.6

 
$
24.8

 
$
85.4

Interest expense
 
 
 
 
 
 
 
(11.0
)
 
 
 
 
Interest income
 
 
 
 
 
 
 
0.1

 
 
 
 
 
 
 
 
 
 
 
 
$
49.7

 
 
 
 

__________________ 

(a)
EBITDA is defined as income (loss) before interest (interest expense and interest income), income taxes, and depreciation and amortization. EBITDA is the primary measure used by our chief operating decision maker to evaluate segment operating performance and to decide how to allocate resources to segments. We believe EBITDA is useful to investors because it provides a means to evaluate the operating performance of our segments and our company on an ongoing basis using criteria that are used by our internal decision makers and because it is frequently used by investors and other interested parties when comparing companies in our industry that have different financing and capital structures and/or tax rates. We believe EBITDA is a meaningful measure because it presents a transparent view of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons, and identify strategies to improve operating performance. EBITDA, however, is not a measure of our liquidity or financial performance under generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income (loss), income (loss) from operations, or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. The use of EBITDA instead of net income (loss) or segment income (loss) has limitations as an analytical tool, including the inability to determine profitability; the exclusion of interest expense, interest income, and associated significant cash requirements; and the exclusion of depreciation and amortization, which represent unavoidable operating costs. Management compensates for the limitations of EBITDA by relying on our GAAP results. Our measure of EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.

The following is a reconciliation of net income to EBITDA for the consolidated company:
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
2015
 
2014
 
2015
 
2014
 
(millions)
Net income
$
20.2

 
$
26.4

 
$
27.8

 
$
32.0

Interest expense
5.6

 
5.5

 
11.1

 
11.0

Interest income
(0.1
)
 
(0.1
)
 
(0.1
)
 
(0.1
)
Income tax provision
11.6

 
14.3

 
16.2

 
17.7

Depreciation and amortization
13.3

 
12.5

 
26.9

 
24.8

EBITDA
$
50.7

 
$
58.7

 
$
81.8

 
$
85.4



(b)
Prior to first quarter 2015, pension expense (which is primarily comprised of interest cost, expected return on plan assets, and amortization of actuarial losses) was recorded in each of our segments based on the associated individual employee roles and responsibilities. However, pension benefits are frozen for most employees and only a small number of hourly employees continue to accrue benefits. Therefore, management believes that recording pension expense in the Corporate and Other segment provides a clearer view of segment operating performance. In first quarter 2015, we made a change in our segment measurement method by recording all pension expense to the Corporate and Other segment. This change in measurement only impacts our segment disclosures, and thus it has no impact on our overall consolidated financial statements. Historical segment income (loss) and EBITDA have not been recast in the table above. For the three and six months ended June 30, 2014, less than $0.1 million and $0.2 million, respectively, of pension expense was recorded in each of the Wood Products and Building Materials Distribution segments.