Segment Information

As of January 1, 2017, we operate our business using two reportable segments: Wood Products and Building Materials Distribution. 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.

Prior to January 1, 2017, we operated our business using three reportable segments: Wood Products, Building Materials Distribution, and Corporate and Other. This change is based on Corporate and Other no longer earning revenue as of January 1, 2017 and thus no longer meeting the definition of a reportable segment. Corporate results are now presented as reconciling items to arrive at total net sales and operating income. Corresponding information for the years ended December 31, 2016 and 2015, has been revised to conform with current presentation.

Our Wood Products segment manufactures 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. In addition, we manufacture structural, appearance, and industrial plywood panels. 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 2017, approximately 52% 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, home improvement centers, and specialty distributors that then sell the products to the final end customers, who are typically professional builders, independent contractors, and homeowners engaged in residential construction projects.

Unallocated corporate costs include corporate support staff services, related assets and liabilities, and pension plan activity. Support services include, but are not limited to, information technology, human resources, finance, accounting, and legal functions. Specified expenses are allocated to the segments. For many of these allocated expenses, the related assets and liabilities remain in corporate.

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

For the years ended December 31, 2017, 2016, and 2015, no customers accounted for 10% or more of total sales. Sales to foreign unaffiliated customers were approximately $94 million, $71 million, and $85 million, respectively, for the years ended December 31, 2017, 2016, and 2015.

At December 31, 2017, 2016, and 2015, and for the years then ended, long-lived assets located in foreign countries and net sales originating in foreign countries were not material.

Wood Products and Building Materials Distribution segment sales to external customers, including related parties, by product line are as follows:



	Year Ended December 31
	2017		2016		2015
	(millions)
Wood Products
Engineered wood products	$	102.7	$	154.4	$	127.2
Plywood and veneer	324.4		316.8		385.5
Lumber	87.6		87.2		96.5
Byproducts	53.2		56.0		62.0
Particleboard	46.0		49.3		51.6
Other	44.4		19.9		19.5
	658.3		683.6		742.3

Building Materials Distribution
Commodity	1,808.2		1,503.0		1,343.4
General line	1,269.5		1,141.9		1,037.8
Engineered wood products	696.0		582.3		509.9
	3,773.7		3,227.2		2,891.1
	$	4,432.0	$	3,910.8	$	3,633.4

An analysis of our operations by segment is as follows:



	Year Ended December 31
	2017			2016			2015
	(thousands)
Net sales by segment
Wood Products	$	1,373,760		$	1,280,415		$	1,282,113
Building Materials Distribution	3,773,810			3,227,207			2,891,302
Intersegment eliminations and other (a)	(715,579		)	(596,407		)	(540,000		)
Total net sales	$	4,431,991		$	3,911,215		$	3,633,415

Segment operating income
Wood Products	$	53,629		$	25,929		$	64,221
Building Materials Distribution	116,760			84,359			60,751
Total segment operating income	170,389			110,288			124,972
Unallocated corporate costs	(29,236		)	(30,710		)	(21,783		)
Income from operations	$	141,153		$	79,578		$	103,189

Depreciation and amortization
Wood Products	$	63,115		$	57,521		$	43,272
Building Materials Distribution	15,504			13,762			11,937
Corporate	1,760			1,564			369
Total depreciation and amortization	$	80,379		$	72,847		$	55,578

Capital expenditures
Wood Products (b)	$	54,600		$	282,403		$	68,757
Building Materials Distribution	19,301			15,846			14,509
Corporate	1,549			1,234			4,260
Total capital expenditures	$	75,450		$	299,483		$	87,526

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(a)	Primarily represents intersegment sales from our Wood Products segment to our Building Materials Distribution segment.


(b)	Capital spending in 2016 for Wood Products includes $215.9 million for the acquisition of two EWP facilities.