Segment Information

We operate our business using three reportable segments: Wood Products, Building Materials Distribution, and Corporate and Other. These segments represent distinct businesses that are managed separately because of differing products and services. Each of these businesses requires distinct operating and marketing strategies. Management reviews the performance of the company based on these segments.

Our Wood Products segment manufactures structural, appearance, and industrial plywood panels. In addition, we manufacture engineered wood products (EWP), consisting of laminated veneer lumber (LVL), I-joists, and laminated beams, which are structural products used in applications where extra strength and consistent quality are required, such as headers and beams. LVL is also used in the manufacture of I-joists, which are assembled by combining a vertical web of oriented strand board (OSB) with top and bottom LVL or solid wood flanges. We also produce ponderosa pine lumber, studs, and particleboard. Our wood products are used primarily in new residential construction, residential repair-and-remodeling markets, and light commercial construction. The majority of our wood products are sold to leading wholesalers (including our Building Materials Distribution segment), home improvement centers, retail lumberyards, and industrial converters. During 2015, approximately 42% of Wood Products' overall sales were to our Building Materials Distribution segment.

Our Building Materials Distribution segment is a leading national stocking wholesale distributor of building materials. We distribute a broad line of building materials, including EWP, OSB, plywood, lumber, and general line items such as siding, metal products, insulation, roofing, and composite decking. Except for EWP, we purchase most of these building materials from third-party suppliers and market them primarily to retail lumberyards and home improvement centers that then sell the products to the final end customers, who are typically professional builders, independent contractors, and homeowners engaged in residential construction projects.

Our Corporate and Other segment includes corporate support staff services, related assets and liabilities, pension plan activity, and foreign currency exchange gains and losses. These support services include, but are not limited to, finance, accounting, legal, information technology, and human resource functions. We historically purchased many of these services from PCA, under an Outsourcing Services Agreement, under which PCA provided a number of corporate staff services to us. See Note 12, Outsourcing Services Agreement, for more information.

The segments' profits and losses are measured on operating profits and losses before interest expense and interest income. Specified expenses are allocated to the segments. For many of these allocated expenses, the related assets and liabilities remain in the Corporate and Other segment.

The segments follow the accounting principles described in Note 2, Summary of Significant Accounting Policies.

For the years ended December 31, 2015 and 2014, no customers accounted for 10% or more of total sales. For the year ended December 31, 2013, sales to one customer accounted for $350.9 million or approximately 10% of total sales. Sales to this customer were recorded in our Building Materials Distribution and our Wood Products segments.

Sales to foreign unaffiliated customers were $84.9 million, $76.2 million, and $87.2 million for the years ended December 31, 2015, 2014, and 2013, respectively.

At December 31, 2015, 2014, and 2013, and for the years then ended, long-lived assets located in foreign countries and net sales originating in foreign countries were not material.

Segment sales to external customers, including related parties, by product line are as follows:



	Year Ended December 31
	2015		2014		2013
	(millions)
Wood Products
Plywood and veneer	$	385.5	$	413.6	$	367.8
Engineered wood products	127.2		125.9		104.4
Lumber	96.5		113.7		97.3
Byproducts	62.0		56.1		42.5
Particleboard	51.6		52.3		40.2
Other	19.5		25.7		21.7
	742.3		787.2		674.0

Building Materials Distribution
Commodity	1,343.4		1,376.1		1,333.2
General line	1,037.8		937.3		857.9
Engineered wood products	509.9		473.1		408.4
	2,891.1		2,786.5		2,599.5
	$	3,633.4	$	3,573.7	$	3,273.5

An analysis of our operations by segment is as follows:



									Income
									(Loss)
									Before
	Sales								Income			Depreciation					Capital
			Inter-						Taxes			and		EBITDA			Expendi-
	Trade		segment			Total			(c)			Amortization		(b) (c)			tures		Assets
	(millions)
Year Ended December 31, 2015
Wood Products	$	742.3	$	539.8		$	1,282.1		$	64.2		$	43.3	$	107.5		$	68.8	$	556.0
Building Materials Distribution	2,891.1		0.2			2,891.3			60.8			11.9		72.7			14.5		506.3
Corporate and Other	—		—			—			(22.1		)	0.4		(21.7		)	4.3		186.3
Intersegment eliminations	—		(540.0		)	(540.0		)	—			—		—			—		—
	$	3,633.4	$	—		$	3,633.4		102.9			$	55.6	$	158.5		$	87.5	$	1,248.6
Interest expense									(22.5		)
Interest income									0.3
									$	80.7



									Income
									(Loss)
									Before
	Sales								Income			Depreciation					Capital
			Inter-						Taxes			and		EBITDA			Expendi-
	Trade		segment			Total			(c)			Amortization		(b) (c)			tures		Assets
	(millions)
Year Ended December 31, 2014
Wood Products	$	787.2	$	529.8		$	1,317.0		$	108.4		$	41.5	$	149.8		$	40.3	$	533.1
Building Materials Distribution	2,786.5		0.1			2,786.7			56.7			9.8		66.5			20.3		483.6
Corporate and Other	—		—			—			(19.9		)	0.2		(19.8		)	0.6		196.7
Intersegment eliminations	—		(529.9		)	(529.9		)	—			—		—			—		—
	$	3,573.7	$	—		$	3,573.7		145.1			$	51.4	$	196.6		$	61.2	$	1,213.3
Interest expense									(22.0		)
Interest income									0.2
									$	123.3



									Income
									(Loss)
									Before								Capital
	Sales								Income			Depreciation					Expendi-
			Inter-						Taxes			and		EBITDA			tures
	Trade		segment			Total			(c)			Amortization		(b) (c)			(a)		Assets
	(millions)
Year Ended December 31, 2013
Wood Products	$	674.0	$	460.1		$	1,134.1		$	77.7		$	28.7	$	106.3		$	133.6	$	514.5
Building Materials Distribution	2,599.5		0.1			2,599.6			39.9			9.2		49.2			14.7		456.1
Corporate and Other	—		—			—			(19.3		)	0.1		(19.1		)	0.5		125.2
Intersegment eliminations	—		(460.2		)	(460.2		)	—			—		—			—		—
	$	3,273.5	$	—		$	3,273.5		98.3			$	38.0	$	136.4		$	148.8	$	1,095.9
Interest expense									(20.4		)
Interest income									0.2
									$	78.1

___________________________________


(a)	Capital spending in 2013 for Wood Products includes $103.0 million for the acquisition of two plywood manufacturing facilities in the Carolinas.

(b)

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:



	Year Ended December 31
	2015			2014			2013
	(millions)
Net income ⁽¹⁾	$	52.2		$	80.0		$	116.9
Interest expense	22.5			22.0			20.4
Interest income	(0.3		)	(0.2		)	(0.2		)
Income tax provision (benefit) ⁽¹⁾	28.5			43.3			(38.8		)
Depreciation and amortization	55.6			51.4			38.0
EBITDA	$	158.5		$	196.6		$	136.4

_______________________________________


(1)	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.

(c)

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 year ended December 31, 2014, pension expense of $0.4 million and $0.3 million, respectively, was recorded in the Wood Products and Building Materials Distribution segments compared with $7.6 million and $3.1 million, respectively, of pension expense in 2013.