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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended | June 30, 2020
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |  |

Commission File Number: 001-35805
Boise Cascade Company
(Exact name of registrant as specified in its charter)

Delaware | 20-1496201
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)

1111 West Jefferson Street Suite 300
Boise, Idaho 83702-5389
(Address of principal executive offices) (Zip Code)
(208) 384-6161
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No x
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, $0.01 par value per share | BCC | New York Stock Exchange

There were 39,196,619 shares of the registrant's common stock, $0.01 par value per share, outstanding on July 24, 2020.

Table of Contents

PART I—FINANCIAL INFORMATION |  |  |  |
Item 1. |  | Financial Statements |  | 1
|  | Condensed Notes to Unaudited Quarterly Consolidated Financial Statements |  | 8
|  | 1. Nature of Operations and Consolidation |  | 8
|  | 2. Summary of Significant Accounting Policies |  | 8
|  | 3. Income Taxes |  | 12
|  | 4. Net Income Per Common Share |  | 12
|  | 5. Curtailment of Manufacturing Facility |  | 13
|  | 6. Debt |  | 13
|  | 7. Leases |  | 16
|  | 8. Retirement and Benefit Plans |  | 18
|  | 9. Stock-Based Compensation |  | 18
|  | 10. Stockholders' Equity |  | 19
|  | 11. Transactions With Related Party |  | 20
|  | 12. Segment Information |  | 21
|  | 13. Commitments, Legal Proceedings and Contingencies, and Guarantees |  | 22
|  | 1 4. Subsequent Events |  | 23
Item 2. |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 24
|  | Understanding Our Financial Information |  | 24
|  | Executive Overview |  | 24
|  | Factors That Affect Our Operating Results and Trends |  | 25
|  | Our Operating Results |  | 27
|  | Liquidity and Capital Resources |  | 31
|  | Contractual Obligations |  | 33
|  | Off-Balance-Sheet Activities |  | 33
|  | Guarantees |  | 33
|  | Seasonal Influences |  | 34
|  | Employees |  | 34
|  | Disclosures of Financial Market Risks |  | 34
|  | Environmental |  | 34
|  | Critical Accounting Estimates |  | 34
|  | New and Recently Adopted Accounting Standards |  | 34
Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk |  | 35
Item 4. |  | Controls and Procedures |  | 35
PART II—OTHER INFORMATION |  |  |  |
Item 1. |  | Legal Proceedings |  | 36
Item 1A. |  | Risk Factors |  | 36
Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds |  | 38
Item 3. |  | Defaults Upon Senior Securities |  | 38
Item 4. |  | Mine Safety Disclosures |  | 38
Item 5. |  | Other Information |  | 38
Item 6. |  | Exhibits |  | 39
|  | Signatures |  | 40

ii

Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Boise Cascade Company
Consolidated Statements of Operations
(unaudited)

| Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |  |
| 2020 |  | 2019 |  | 2020 |  | 2019 |
| (thousands, except per-share data) |  |  |  |  |  |  |
Sales | $ | 1,242,760 |  |  | $ | 1,230,081 |  |  | $ | 2,413,294 |  |  | $ | 2,272,167 |  |
Costs and expenses |  |  |  |  |  |  |  |
Materials, labor, and other operating expenses (excluding depreciation) | 1,048,902 |  |  | 1,049,655 |  |  | 2,041,172 |  |  | 1,947,477 |  |
Depreciation and amortization | 19,899 |  |  | 19,454 |  |  | 55,231 |  |  | 38,671 |  |
Selling and distribution expenses | 103,566 |  |  | 98,866 |  |  | 203,029 |  |  | 185,892 |  |
General and administrative expenses | 18,755 |  |  | 16,786 |  |  | 34,839 |  |  | 33,461 |  |
Loss on curtailment of facility | 38 |  |  | — |  |  | 1,707 |  |  | — |  |
Other (income) expense, net | (170) |  |  | 188 |  |  | (1) |  |  | (120) |  |
| 1,190,990 |  |  | 1,184,949 |  |  | 2,335,977 |  |  | 2,205,381 |  |
Income from operations | 51,770 |  |  | 45,132 |  |  | 77,317 |  |  | 66,786 |  |
Foreign currency exchange gain (loss) | 409 |  |  | 248 |  |  | (464) |  |  | 410 |  |
Pension expense (excluding service costs) | (302) |  |  | (290) |  |  | (689) |  |  | (589) |  |
Interest expense | (6,633) |  |  | (6,486) |  |  | (13,054) |  |  | (12,923) |  |
Interest income | 190 |  |  | 416 |  |  | 845 |  |  | 908 |  |
Change in fair value of interest rate swaps | (514) |  |  | (1,551) |  |  | (2,828) |  |  | (2,534) |  |
| (6,850) |  |  | (7,663) |  |  | (16,190) |  |  | (14,728) |  |
Income before income taxes | 44,920 |  |  | 37,469 |  |  | 61,127 |  |  | 52,058 |  |
Income tax provision | (11,334) |  |  | (9,751) |  |  | (15,341) |  |  | (12,951) |  |
Net income | $ | 33,586 |  |  | $ | 27,718 |  |  | $ | 45,786 |  |  | $ | 39,107 |  |
Weighted average common shares outstanding: |  |  |  |  |  |  |  |
Basic | 39,312 |  |  | 39,087 |  |  | 39,238 |  |  | 38,986 |  |
Diluted | 39,387 |  |  | 39,199 |  |  | 39,381 |  |  | 39,185 |  |
Net income per common share: |  |  |  |  |  |  |  |
Basic | $ | 0.85 |  |  | $ | 0.71 |  |  | $ | 1.17 |  |  | $ | 1.00 |  |
Diluted | $ | 0.85 |  |  | $ | 0.71 |  |  | $ | 1.16 |  |  | $ | 1.00 |  |
Dividends declared per common share | $ | 0.10 |  |  | $ | 0.09 |  |  | $ | 0.20 |  |  | $ | 0.18 |  |

See accompanying condensed notes to unaudited quarterly consolidated financial statements.
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Boise Cascade Company
Consolidated Statements of Comprehensive Income
(unaudited)

| Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (thousands) |  |  |  |  |  |
Net income | $ | 33,586 |  |  | $ | 27,718 |  |  | $ | 45,786 |  |  | $ | 39,107 |
Other comprehensive income (loss), net of tax |  |  |  |  |  |  |
Defined benefit pension plans |  |  |  |  |  |  |
Amortization of actuarial (gain) loss, net of tax of $51, $(11), $102, and $(22), respectively | 150 |  |  | (33) |  |  | 301 |  |  | (65) |
Effect of settlements, net of tax of $—, $—, $22 and $—, respectively | — |  |  | — |  |  | 64 |  |  | — |
Other comprehensive income (loss), net of tax | 150 |  |  | (33) |  |  | 365 |  |  | (65) |
Comprehensive income | $ | 33,736 |  |  | $ | 27,685 |  |  | $ | 46,151 |  |  | $ | 39,042 |

See accompanying condensed notes to unaudited quarterly consolidated financial statements.
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Boise Cascade Company
Consolidated Balance Sheets
(unaudited)

| June 30, 2020 |  | December 31, 2019
| (thousands) |  |
ASSETS |  |  |
Current |  |  |
Cash and cash equivalents | $ | 361,436 |  |  | $ | 285,237 |
Receivables |  |  |
Trade, less allowances of $890 and $591 | 350,673 |  |  | 215,894 |
Related parties | 417 |  |  | 568 |
Other | 9,772 |  |  | 15,184 |
Inventories | 456,129 |  |  | 497,596 |
Prepaid expenses and other | 14,716 |  |  | 8,285 |
Total current assets | 1,193,143 |  |  | 1,022,764 |
Property and equipment, net | 446,773 |  |  | 476,949 |
Operating lease right-of-use assets | 64,676 |  |  | 64,228 |
Finance lease right-of-use assets | 30,101 |  |  | 21,798 |
Timber deposits | 14,212 |  |  | 12,287 |
Goodwill | 60,382 |  |  | 60,382 |
Intangible assets, net | 17,186 |  |  | 17,797 |
Deferred income taxes | 7,620 |  |  | 7,952 |
Other assets | 6,982 |  |  | 9,194 |
Total assets | $ | 1,841,075 |  |  | $ | 1,693,351 |

See accompanying condensed notes to unaudited quarterly consolidated financial statements.
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Boise Cascade Company
Consolidated Balance Sheets (continued)
(unaudited)

| June 30, 2020 |  | December 31, 2019
| (thousands, except per-share data) |  |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |
Current |  |  |
Accounts payable |  |  |
Trade | $ | 320,839 |  |  | $ | 222,930 |
Related parties | 1,835 |  |  | 1,624 |
Accrued liabilities |  |  |
Compensation and benefits | 78,386 |  |  | 83,943 |
Income taxes payable | 7,391 |  |  | — |
Interest payable | 6,696 |  |  | 6,723 |
Other | 70,140 |  |  | 69,772 |
Total current liabilities | 485,287 |  |  | 384,992 |
Debt |  |  |
Long-term debt | 440,178 |  |  | 440,544 |
Other |  |  |
Compensation and benefits | 42,205 |  |  | 45,586 |
Operating lease liabilities, net of current portion | 58,913 |  |  | 58,029 |
Finance lease liabilities, net of current portion | 31,816 |  |  | 23,419 |
Deferred income taxes | 25,333 |  |  | 26,694 |
Other long-term liabilities | 17,635 |  |  | 12,757 |
| 175,902 |  |  | 166,485 |
Commitments and contingent liabilities |  |  |  |  |
Stockholders' equity |  |  |
Preferred stock, $0.01 par value per share; 50,000 shares authorized, no shares issued and outstanding | — |  |  | — |
Common stock, $0.01 par value per share; 300,000 shares authorized, 44,564 and 44,353 shares issued, respectively | 446 |  |  | 444 |
Treasury stock, 5,367 shares at cost | (138,909) |  |  | (138,909) |
Additional paid-in capital | 533,406 |  |  | 533,345 |
Accumulated other comprehensive loss | (49,883) |  |  | (50,248) |
Retained earnings | 394,648 |  |  | 356,698 |
Total stockholders' equity | 739,708 |  |  | 701,330 |
Total liabilities and stockholders' equity | $ | 1,841,075 |  |  | $ | 1,693,351 |

See accompanying condensed notes to unaudited quarterly consolidated financial statements.
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Boise Cascade Company
Consolidated Statements of Cash Flows
(unaudited)

| Six Months Ended June 30 |  |
| 2020 |  | 2019
| (thousands) |  |
Cash provided by (used for) operations |  |  |
Net income | $ | 45,786 |  |  | $ | 39,107 |
Items in net income not using (providing) cash |  |  |
Depreciation and amortization, including deferred financing costs and other | 56,295 |  |  | 39,821 |
Stock-based compensation | 3,345 |  |  | 4,069 |
Pension expense | 1,023 |  |  | 911 |
Deferred income taxes | (1,501) |  |  | 5,629 |
Change in fair value of interest rate swaps | 2,828 |  |  | 2,534 |
Loss on curtailment of facility (excluding severance) | 1,476 |  |  | — |
Other | 164 |  |  | (33) |
Decrease (increase) in working capital, net of acquisitions |  |  |
Receivables | (129,532) |  |  | (93,977) |
Inventories | 41,102 |  |  | 13,324 |
Prepaid expenses and other | (6,989) |  |  | (4,773) |
Accounts payable and accrued liabilities | 95,505 |  |  | 45,355 |
Pension contributions | (1,062) |  |  | (927) |
Income taxes payable | 8,616 |  |  | 16,735 |
Other | 1,220 |  |  | (923) |
Net cash provided by operations | 118,276 |  |  | 66,852 |
Cash provided by (used for) investment |  |  |
Expenditures for property and equipment | (28,849) |  |  | (32,824) |
Acquisitions of businesses and facilities | — |  |  | (15,675) |
Proceeds from sale of facilities | — |  |  | 2,493 |
Proceeds from sales of assets and other | 406 |  |  | 1,395 |
Net cash used for investment | (28,443) |  |  | (44,611) |
Cash provided by (used for) financing |  |  |
Borrowings of long-term debt, including revolving credit facility | — |  |  | 5,500 |
Payments of long-term debt, including revolving credit facility | — |  |  | (5,500) |
Dividends paid on common stock | (8,562) |  |  | (7,562) |
Tax withholding payments on stock-based awards | (3,309) |  |  | (3,574) |
Other | (1,763) |  |  | (369) |
Net cash used for financing | (13,634) |  |  | (11,505) |
Net increase in cash and cash equivalents | 76,199 |  |  | 10,736 |
Balance at beginning of the period | 285,237 |  |  | 191,671 |
Balance at end of the period | $ | 361,436 |  |  | $ | 202,407 |

See accompanying condensed notes to unaudited quarterly consolidated financial statements.
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Boise Cascade Company
Consolidated Statements of Stockholders' Equity
(unaudited)

| Common Stock |  |  |  | Treasury Stock |  |  |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Loss |  | Retained Earnings |  | Total
| Shares |  | Amount |  | Shares |  | Amount |  |  |  |  |  |  |  |
| (thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2019 | 44,353 |  |  | $ | 444 |  |  | 5,367 |  |  | $ | (138,909) |  |  | $ | 533,345 |  |  | $ | (50,248) |  |  | $ | 356,698 |  |  | $ | 701,330 |
Net income |  |  |  |  |  |  |  |  |  |  |  |  | 12,200 |  |  | 12,200 |
Other comprehensive income |  |  |  |  |  |  |  |  |  |  | 215 |  |  |  |  | 215 |
Common stock issued | 211 |  |  | 2 |  |  |  |  |  |  |  |  |  |  |  |  | 2 |
Stock-based compensation |  |  |  |  |  |  |  |  | 1,674 |  |  |  |  |  |  | 1,674 |
Common stock dividends ($0.10 per share) |  |  |  |  |  |  |  |  |  |  |  |  | (3,866) |  |  | (3,866) |
Tax withholding payments on stock-based awards |  |  |  |  |  |  |  |  | (3,309) |  |  |  |  |  |  | (3,309) |
Proceeds from exercise of stock options |  |  |  |  |  |  |  |  | 27 |  |  |  |  |  |  | 27 |
Other |  |  |  |  |  |  |  |  | (2) |  |  |  |  |  |  | (2) |
Balance at March 31, 2020 | 44,564 |  |  | $ | 446 |  |  | 5,367 |  |  | $ | (138,909) |  |  | $ | 531,735 |  |  | $ | (50,033) |  |  | $ | 365,032 |  |  | $ | 708,271 |
Net income |  |  |  |  |  |  |  |  |  |  |  |  | 33,586 |  |  | 33,586 |
Other comprehensive income |  |  |  |  |  |  |  |  |  |  | 150 |  |  |  |  | 150 |
Stock-based compensation |  |  |  |  |  |  |  |  | 1,671 |  |  |  |  |  |  | 1,671 |
Common stock dividends ($0.10 per share) |  |  |  |  |  |  |  |  |  |  |  |  | (3,970) |  |  | (3,970) |
Balance at June 30, 2020 | 44,564 |  |  | $ | 446 |  |  | 5,367 |  |  | $ | (138,909) |  |  | $ | 533,406 |  |  | $ | (49,883) |  |  | $ | 394,648 |  |  | $ | 739,708 |

See accompanying condensed notes to unaudited quarterly consolidated financial statements.
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Boise Cascade Company
Consolidated Statements of Stockholders' Equity (continued)
(unaudited)

| Common Stock |  |  |  | Treasury Stock |  |  |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Loss |  | Retained Earnings |  | Total
| Shares |  | Amount |  | Shares |  | Amount |  |  |  |  |  |  |  |
| (thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2018 | 44,076 |  |  | $ | 441 |  |  | 5,367 |  |  | $ | (138,909) |  |  | $ | 528,654 |  |  | $ | (47,652) |  |  | $ | 330,056 |  |  | $ | 672,590 |
Net income |  |  |  |  |  |  |  |  |  |  |  |  | 11,389 |  |  | 11,389 |
Other comprehensive loss |  |  |  |  |  |  |  |  |  |  | (32) |  |  |  |  | (32) |
Common stock issued | 265 |  |  | 2 |  |  |  |  |  |  |  |  |  |  |  |  | 2 |
Stock-based compensation |  |  |  |  |  |  |  |  | 2,200 |  |  |  |  |  |  | 2,200 |
Common stock dividends ($0.09 per share) |  |  |  |  |  |  |  |  |  |  |  |  | (3,561) |  |  | (3,561) |
Tax withholding payments on stock-based awards |  |  |  |  |  |  |  |  | (3,569) |  |  |  |  |  |  | (3,569) |
Other |  |  |  |  |  |  |  |  | (2) |  |  |  |  |  |  | (2) |
Balance at March 31, 2019 | 44,341 |  |  | $ | 443 |  |  | 5,367 |  |  | $ | (138,909) |  |  | $ | 527,283 |  |  | $ | (47,684) |  |  | $ | 337,884 |  |  | $ | 679,017 |
Net income |  |  |  |  |  |  |  |  |  |  |  |  | 27,718 |  |  | 27,718 |
Other comprehensive loss |  |  |  |  |  |  |  |  |  |  | (33) |  |  |  |  | (33) |
Common stock issued | 1 |  |  | — |  |  |  |  |  |  |  |  |  |  |  |  | — |
Stock-based compensation |  |  |  |  |  |  |  |  | 1,869 |  |  |  |  |  |  | 1,869 |
Common stock dividends ($0.09 per share) |  |  |  |  |  |  |  |  |  |  |  |  | (3,545) |  |  | (3,545) |
Tax withholding payments on stock-based awards |  |  |  |  |  |  |  |  | (5) |  |  |  |  |  |  | (5) |
Balance at June 30, 2019 | 44,342 |  |  | $ | 443 |  |  | 5,367 |  |  | $ | (138,909) |  |  | $ | 529,147 |  |  | $ | (47,717) |  |  | $ | 362,057 |  |  | $ | 705,021 |

See accompanying condensed notes to unaudited quarterly consolidated financial statements.
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Condensed Notes to Unaudited Quarterly Consolidated Financial Statements
1. Nature of Operations and Consolidation
Nature of Operations
Boise Cascade Company is a building products company headquartered in Boise, Idaho. As used in this Form 10-Q, the terms "Boise Cascade," "we," and "our" refer to Boise Cascade Company and its consolidated subsidiaries. We are one of the largest producers of engineered wood products (EWP) and plywood in North America and a leading United States (U.S.) wholesale distributor of building products.
We operate our business using two reportable segments: (1) Wood Products, which primarily manufactures EWP and plywood, and (2) Building Materials Distribution, which is a wholesale distributor of building materials. For more information, see Note 12, Segment Information.
Consolidation
The accompanying quarterly consolidated financial statements have not been audited by an independent registered public accounting firm but, in the opinion of management, include all adjustments necessary to present fairly the financial position, results of operations, cash flows, and stockholders' equity for the interim periods presented. Except as disclosed within these condensed notes to unaudited quarterly consolidated financial statements, the adjustments made were of a normal, recurring nature. Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted. The quarterly consolidated financial statements include the accounts of Boise Cascade and its subsidiaries after elimination of intercompany balances and transactions. Quarterly results are not necessarily indicative of results that may be expected for the full year. These condensed notes to unaudited quarterly consolidated financial statements should be read in conjunction with our 2019 Form 10-K and the other reports we file with the Securities and Exchange Commission (SEC).
2. Summary of Significant Accounting Policies
Accounting Policies
The complete summary of significant accounting policies is included in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2019 Form 10-K.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of accounts receivable, inventories, goodwill, intangible assets, and other long-lived assets; legal contingencies; guarantee obligations; indemnifications; assumptions used in retirement, medical, and workers' compensation benefits; assumptions used in the determination of right-of-use assets and related lease liabilities; stock-based compensation; fair value measurements; income taxes; and vendor and customer rebates, among others. These estimates and assumptions are based on management's best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.
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Revenue Recognition
Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. For revenue disaggregated by major product line for each reportable segment, see Note 12, Segment Information.
Fees for shipping and handling charged to customers for sales transactions are included in "Sales" in our Consolidated Statements of Operations. When control over products has transferred to the customer, we have elected to recognize costs related to shipping and handling as fulfillment costs. For our Wood Products segment, costs related to shipping and handling are included in "Materials, labor, and other operating expenses (excluding depreciation)" in our Consolidated Statements of Operations. In our Wood Products segment, we view our shipping and handling costs as a cost of the manufacturing process and the movement of product to our end customers. For our Building Materials Distribution segment, costs related to shipping and handling of $44.2 million and $43.4 million, for the three months ended June 30, 2020 and 2019, respectively, and $84.9 million and $80.3 million for the six months ended June 30, 2020 and 2019, respectively, are included in "Selling and distribution expenses" in our Consolidated Statements of Operations. In our Building Materials Distribution segment, our activities relate to the purchase and resale of finished product, and excluding shipping and handling costs from “Materials, labor, and other operating expenses (excluding depreciation)” provides us a clearer view of our operating performance and the effectiveness of our sales and purchasing functions.
Customer Rebates and Allowances
Rebates are provided to our customers and our customers' customers based on the volume of their purchases, among other factors such as customer loyalty, conversion, and commitment. We provide the rebates to increase the sell-through of our products. Rebates are generally estimated based on the expected amount to be paid and recorded as a decrease in "Sales." At June 30, 2020, and December 31, 2019, we had $45.4 million and $49.4 million, respectively, of rebates payable to our customers recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets. We adjust our estimate of revenue at the earlier of when the probability of rebates paid changes or when the amounts become fixed. There have not been significant changes to our estimates of rebates, although it is reasonably possible that a change in the estimate may occur.
Vendor Rebates and Allowances
We receive rebates and allowances from our vendors under a number of different programs, including vendor marketing programs. At June 30, 2020, and December 31, 2019, we had $6.9 million and $9.2 million, respectively, of vendor rebates and allowances recorded in "Receivables, Other" on our Consolidated Balance Sheets. Rebates and allowances received from our vendors are recognized as a reduction of "Materials, labor, and other operating expenses (excluding depreciation)" when the product is sold, unless the rebates and allowances are linked to a specific incremental cost to sell a vendor's product. Amounts received from vendors that are linked to specific selling and distribution expenses are recognized as a reduction of "Selling and distribution expenses" in the period the expense is incurred.
Leases
We primarily lease land, building, and equipment under operating and finance leases. We determine if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or upon modification. Substantially all of our leases with initial terms greater than one year are for real estate, including distribution centers, corporate headquarters, land, and other office space. Substantially all of these lease agreements have fixed payment terms based on the passage of time and are recorded in our Building Materials Distribution segment. Many of our leases include fixed escalation clauses, renewal options and/or termination options that are factored into our determination of lease term and lease payments when appropriate. Renewal options generally range from one to ten years with fixed payment terms similar to those in the original lease agreements. Some lease agreements provide us with the option to purchase the leased property at market value. Our lease agreements do not contain any residual value guarantees.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term. The current portion of our operating and finance lease liabilities are recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets.
We use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. In determining our incremental borrowing rates, we
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give consideration to publicly available interest rates for instruments with similar characteristics, including credit rating, term, and collateralization.
For purposes of determining straight-line rent expense, the lease term is calculated from the date we first take possession of the facility, including any periods of free rent and any renewal option periods we are reasonably certain of exercising. Variable lease expense generally includes reimbursement of actual costs for common area maintenance, property taxes, and insurance on leased real estate and are recorded as incurred. Most of our operating lease expense is recorded in "Selling and distribution expenses" in our Consolidated Statements of Operations. In addition, we do not separate lease and non-lease components for all of our leases.
Our short-term leases primarily include equipment rentals with lease terms on a month-to-month basis, which provide for our seasonal needs and flexibility in the use of equipment. Our short-term leases also include certain real estate for which either party has the right to cancel upon providing notice of 30 to 90 days. We do not recognize ROU assets or lease liabilities for short-term leases.
Inventories
Inventories included the following (work in process is not material):

|  | June 30, 2020 |  | December 31, 2019
|  | (thousands) |  |
Finished goods and work in process |  | $ | 383,202 |  |  | $ | 413,020 |
Logs |  | 33,145 |  |  | 45,574 |
Other raw materials and supplies |  | 39,782 |  |  | 39,002 |
|  | $ | 456,129 |  |  | $ | 497,596 |

Property and Equipment
Property and equipment consisted of the following asset classes:

|  | June 30, 2020 |  | December 31, 2019
|  | (thousands) |  |
Land |  | $ | 38,274 |  |  | $ | 39,304 |
Buildings |  | 144,538 |  |  | 140,008 |
Improvements |  | 61,955 |  |  | 61,187 |
Mobile equipment, information technology, and office furniture |  | 171,438 |  |  | 165,445 |
Machinery and equipment |  | 677,307 |  |  | 666,467 |
Construction in progress |  | 30,645 |  |  | 34,846 |
|  | 1,124,157 |  |  | 1,107,257 |
Less accumulated depreciation |  | (677,384) |  |  | (630,308) |
|  | $ | 446,773 |  |  | $ | 476,949 |

Long-Lived Asset Impairment
We review long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of assets may not be recoverable (triggering event). An impairment of long-lived assets exists when the carrying value is not recoverable through future undiscounted cash flows from operations and when the carrying value of an asset or asset group exceeds its fair value. No triggering event was identified during the quarter ended June 30, 2020.
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Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy under GAAP gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine fair value (Level 1). If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, we use quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly (Level 2). If quoted prices for identical or similar assets are not available or are unobservable, we may use internally developed valuation models, whose inputs include bid prices, and third-party valuations utilizing underlying asset assumptions (Level 3).
Financial Instruments
Our financial instruments are cash and cash equivalents, accounts receivable, accounts payable, long-term debt, and interest rate swaps. Our cash is recorded at cost, which approximates fair value, and our cash equivalents are money market funds. As of June 30, 2020, and December 31, 2019, we held $333.9 million and $259.5 million, respectively, in money market funds that are measured at fair value on a recurring basis using Level 1 inputs. The recorded values of accounts receivable and accounts payable approximate fair values based on their short-term nature. At June 30, 2020, and December 31, 2019, the book value of our fixed-rate debt for each period was $350.0 million, and the fair value was estimated to be $353.5 million and $364.7 million, respectively. The difference between the book value and the fair value is derived from the difference between the period-end market interest rate and the stated rate of our fixed-rate, long-term debt. We estimated the fair value of our fixed-rate debt using quoted market prices of our debt in inactive markets (Level 2 inputs). The interest rate on our term loans is based on market conditions such as the London Interbank Offered Rate (LIBOR) or a base rate. Because the interest rate on the term loans is based on current market conditions, we believe that the estimated fair value of the outstanding balance on our term loans approximates book value. As discussed below, we also have interest rate swaps to mitigate our variable interest rate exposure, the fair value of which is measured based on Level 2 inputs.
Interest Rate Risk and Interest Rate Swaps
We are exposed to interest rate risk arising from fluctuations in variable-rate LIBOR on our term loans and when we have loan amounts outstanding on our Revolving Credit Facility. At June 30, 2020, we had $95.0 million of variable-rate debt outstanding based on one-month LIBOR. Our objective is to limit the variability of interest payments on our debt. To meet this objective, we enter into receive-variable, pay-fixed interest rate swaps to change the variable-rate cash flow exposure to fixed-rate cash flows. In accordance with our risk management strategy, we actively monitor our interest rate exposure and use derivative instruments from time to time to manage the related risk. We do not speculate using derivative instruments.
At June 30, 2020, we had four interest rate swap agreements. Under the interest rate swaps, we receive one-month LIBOR-based variable interest rate payments and make fixed interest rate payments, thereby fixing the interest rate on $95.0 million of variable rate debt exposure. Payments on two interest rate swaps, entered into in 2016, with notional principal amounts of $50.0 million and $45.0 million are due on a monthly basis at an annual fixed rate of 1.007% and 1.256%, respectively, and expire in February 2022 and March 2022, respectively (Initial Swaps). During the three months ended June 30, 2020, we entered into two forward interest rate swap agreements which commence on the expiration date of the Initial Swaps. Payments on these two interest rate swaps with notional principal amounts of $50.0 million and $45.0 million will be due on a monthly basis at an annual fixed rate of 0.39% and 0.431%, respectively, and expire in June 2025 and December 2025, respectively.
The interest rate swap agreements were not designated as cash flow hedges, and as a result, all changes in the fair value are recognized in "Change in fair value of interest rate swaps" in our Consolidated Statements of Operations rather than through other comprehensive income. At June 30, 2020, we recorded a long-term liability of $2.0 million in "Other long-term liabilities" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreements. At December 31, 2019, we recorded a long-term asset of $0.8 million in "Other assets" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreements. The swaps were valued based on observable inputs for similar assets and liabilities and other observable inputs for interest rates and yield curves (Level 2 inputs).
Concentration of Credit Risk
We are exposed to credit risk related to customer accounts receivable. In order to manage credit risk, we consider customer concentrations and current economic trends and monitor the creditworthiness of significant customers based on
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ongoing credit evaluations. At June 30, 2020, receivables from two customers accounted for approximately 16% and 13% of total receivables. At December 31, 2019, receivables from these two customers accounted for approximately 14% and 12% of total receivables. No other customer accounted for 10% or more of total receivables.
New and Recently Adopted Accounting Standards
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Our current contracts that reference LIBOR include certain debt instruments and interest rate swaps. The amendments are effective for eligible contract modifications subsequent to March 12, 2020 and through December 31, 2022. The adoption of this standard did not have a material effect on our financial statements, but we will assess any eligible contract modifications in the future.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to reduce complexity in accounting for income taxes. This ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. We currently do not expect the adoption of the guidance to have a material effect on our financial statements, but will continue to monitor the standard through the effective date.
In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU amends ASC 715 to remove disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant related to defined benefit pension and other postretirement plans. The ASU's changes related to disclosures are part of the FASB's disclosure framework project. The updated guidance is effective retrospectively for annual reporting periods ending after December 15, 2020, with early adoption permitted. We are currently evaluating the effects of this ASU on our disclosures in the notes to our financial statements.
There were no other accounting standards recently issued that had or are expected to have a material impact on our consolidated financial statements and associated disclosures.
3. Income Taxes
For the three and six months ended June 30, 2020, we recorded $11.3 million and $15.3 million, respectively, of income tax expense and had an effective rate of 25.2% and 25.1%, respectively. During the three and six months ended June 30, 2020, the primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes. For the three and six months ended June 30, 2019, we recorded $9.8 million and $13.0 million, respectively, of income tax expense and had an effective rate of 26.0% and 24.9%, respectively. During the three and six months ended June 30, 2019, the primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes.
During the six months ended June 30, 2020, cash paid for taxes, net of refunds received were $8.9 million. During the six months ended June 30, 2019, refunds received, net of cash taxes paid, were $10.6 million.
4. Net Income Per Common Share
Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Weighted average common shares outstanding for the basic net income per common share calculation includes certain vested restricted stock units (RSUs) and performance stock units (PSUs) as there are no conditions under which those shares will not be issued. Diluted net income per common share is computed by dividing net income by the combination of the weighted average number of common shares outstanding during the period and other potentially dilutive weighted average common shares. Other potentially dilutive weighted average common shares include the dilutive effect of stock options, RSUs, and PSUs for each period using the treasury stock method. Under the treasury stock method, the exercise price of a share and the amount of compensation expense, if any, for future service that has not yet been recognized are assumed to be used to repurchase shares in the current period.
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The following table sets forth the computation of basic and diluted net income per common share:

| Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (thousands, except per-share data) |  |  |  |  |  |
Net income | $ | 33,586 |  |  | $ | 27,718 |  |  | $ | 45,786 |  |  | $ | 39,107 |
Weighted average common shares outstanding during the period (for basic calculation) | 39,312 |  |  | 39,087 |  |  | 39,238 |  |  | 38,986 |
Dilutive effect of other potential common shares | 75 |  |  | 112 |  |  | 143 |  |  | 199 |
Weighted average common shares and potential common shares (for diluted calculation) | 39,387 |  |  | 39,199 |  |  | 39,381 |  |  | 39,185 |
Net income per common share - Basic | $ | 0.85 |  |  | $ | 0.71 |  |  | $ | 1.17 |  |  | $ | 1.00 |
Net income per common share - Diluted | $ | 0.85 |  |  | $ | 0.71 |  |  | $ | 1.16 |  |  | $ | 1.00 |

The computation of the dilutive effect of other potential common shares excludes stock awards representing 0.1 million and 0.2 million shares of common stock, respectively, in the three months ended June 30, 2020 and 2019, and 0.1 million and 0.2 million of common stock shares, respectively, in the six months ended June 30, 2020 and 2019. Under the treasury stock method, the inclusion of these stock awards would have been antidilutive.
5. Curtailment of Manufacturing Facility
On February 20, 2020, we decided to permanently curtail I-joist production at our Roxboro, North Carolina facility by March 31, 2020. As a result of the curtailment, we recorded $15.0 million of accelerated depreciation during first quarter 2020 to fully depreciate the curtailed I-joist assets. In addition, we recorded $1.7 million of various closure-related costs in "Loss on curtailment of facility" in our Consolidated Statements of Operations.
6. Debt
Long-term debt consisted of the following:

| June 30, 2020 |  | December 31, 2019
| (thousands) |  |
Asset-based revolving credit facility due 2025 | $ | — |  |  | $ | — |
Asset-based credit facility term loan due 2025 | 50,000 |  |  | 50,000 |
Term loan due 2026 | 45,000 |  |  | 45,000 |
5.625% senior notes due 2024 | 350,000 |  |  | 350,000 |
Deferred financing costs | (4,822) |  |  | (4,456) |
Long-term debt | $ | 440,178 |  |  | $ | 440,544 |

Asset-Based Credit Facility
On May 15, 2015, Boise Cascade and its principal operating subsidiaries, Boise Cascade Wood Products, L.L.C., and Boise Cascade Building Materials Distribution, L.L.C., as borrowers, and Boise Cascade Wood Products Holdings Corp., as guarantor, entered into an Amended and Restated Credit Agreement, as amended, (Amended Agreement) with Wells Fargo Capital Finance, LLC, as administrative agent, and the banks named therein as lenders. On March 13, 2020, we entered into the sixth amendment to the Amended Agreement to reduce the maximum amount available for revolving loans from $370 million to $350 million (Revolving Credit Facility) and to extend the maturity date of the Credit Agreement from May 1, 2022, to March 13, 2025. The term loan within the Amended Agreement remains at $50.0 million (ABL Term Loan). Interest on borrowings under our Revolving Credit Facility and ABL Term Loan are payable monthly. Borrowings under the Amended Agreement are constrained by a borrowing base formula dependent upon levels of eligible receivables and inventory reduced by outstanding borrowings and letters of credit (Availability).
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The Amended Agreement is secured by a first-priority security interest in substantially all of our assets, except for property and equipment. The proceeds of borrowings under the agreement are available for working capital and other general corporate purposes.
The Amended Agreement contains customary nonfinancial covenants, including a negative pledge covenant and restrictions on new indebtedness, investments, distributions to equity holders, asset sales, and affiliate transactions, the scope of which are dependent on the Availability existing from time to time. The Amended Agreement also contains a requirement that we meet a 1:1 fixed-charge coverage ratio (FCCR), applicable only if Availability falls below 10% of the aggregate revolving lending commitments, or $35 million. Availability exceeded the minimum threshold amounts required for testing of the FCCR at all times since entering into the Amended Agreement, and Availability at June 30, 2020, was $345.4 million.
The Amended Agreement permits us to pay dividends only if at the time of payment (i) no default has occurred or is continuing (or would result from such payment) under the Amended Agreement, and (ii) pro forma Excess Availability (as defined in the Amended Agreement) is equal to or exceeds 25% of the aggregate Revolver Commitments (as defined in the Amended Agreement) or (iii) (x) pro forma Excess Availability is equal to or exceeds 15% of the aggregate Revolver Commitment and (y) our fixed-charge coverage ratio is greater than or equal to 1:1 on a pro forma basis.
Revolving Credit Facility
Interest rates under the Revolving Credit Facility are based, at our election, on either LIBOR or a base rate, as defined in the Amended Agreement, plus a spread over the index elected that ranges from 1.25% to 1.50% for loans based on LIBOR and from 0.25% to 0.50% for loans based on the base rate. The spread is determined on the basis of a pricing grid that results in a higher spread as average quarterly Availability declines. Letters of credit are subject to a fronting fee payable to the issuing bank and a fee payable to the lenders equal to the LIBOR margin rate. In addition, we are required to pay an unused commitment fee at a rate of 0.25% per annum of the average unused portion of the lending commitments.
At both June 30, 2020, and December 31, 2019, we had no borrowings outstanding under the Revolving Credit Facility and $4.6 million of letters of credit outstanding. These letters of credit and borrowings, if any, reduce Availability under the Revolving Credit Facility by an equivalent amount.
ABL Term Loan
The ABL Term Loan was provided by institutions within the Farm Credit system. Borrowings under the ABL Term Loan may be repaid from time to time at the discretion of the borrowers without premium or penalty. However, any principal amount of ABL Term Loan repaid may not be subsequently re-borrowed.
Interest rates under the ABL Term Loan are based, at our election, on either LIBOR or a base rate, as defined in the Amended Agreement, plus a spread over the index elected that ranges from 1.75% to 2.00% for LIBOR rate loans and from 0.75% to 1.00% for base rate loans, both dependent on the amount of Average Excess Availability (as defined in the Amended Agreement). During the six months ended June 30, 2020, the average interest rate on the ABL Term Loan was approximately 2.75%.
We have received and expect to continue receiving patronage credits under the ABL Term Loan. Patronage credits are distributions of profits from banks in the Farm Credit system, which are cooperatives that are required to distribute profits to their members. Patronage distributions, which are generally made in cash, are received in the year after they are earned. Patronage credits are recorded as a reduction to interest expense in the year earned. After giving effect to expected patronage distributions, the effective average net interest rate on the ABL Term Loan was approximately 1.7% during the six months ended June 30, 2020.
Term Loan
On March 30, 2016 (Closing Date), Boise Cascade and its principal operating subsidiaries, Boise Cascade Wood Products, L.L.C., and Boise Cascade Building Materials Distribution, L.L.C., as borrowers, and the guarantors party thereto, entered into a term loan agreement, as amended, (Term Loan Agreement) with American AgCredit, PCA, as administrative agent and sole lead arranger, and other banks in the Farm Credit system named therein as lenders. The Term Loan Agreement was for a $75.0 million secured term loan (Term Loan). The outstanding principal balance of the Term Loan amortizes and is payable in equal installments of $10 million per year on each of the sixth, seventh, eighth, and ninth anniversaries of the Closing Date, with the remaining principal balance due and payable on March 30, 2026. Interest on our Term Loan is payable monthly.
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In December 2016, we prepaid $30 million of the Term Loan, which became available to reborrow. In November 2018, we terminated the ability to reborrow this prepaid Term Loan. This prepayment of $30 million satisfied our principal obligations due on the sixth, seventh, and eighth anniversaries of the Closing Date.
Pursuant to the Term Loan Agreement, the borrowers are required to maintain, as of the end of any fiscal quarter, a Capitalization Ratio lower than 60%, a Consolidated Net Worth greater than $350 million, and Available Liquidity greater than $100 million (each as defined in the Term Loan Agreement). In addition, under the Term Loan Agreement, and subject to certain exceptions, the borrowers may not, among other things, (i) incur indebtedness, (ii) incur liens, (iii) make junior payments, (iv) make certain investments, and (v) under certain circumstances, make capital expenditures in excess of $50 million during four consecutive quarters. The Term Loan Agreement also includes customary representations of the borrowers and provides for certain events of default customary for similar facilities.
The Term Loan Agreement permits us to pay dividends only if at the time of payment (i) no default has occurred or is continuing (or would result from such payment) under the Term Loan Agreement, and (ii) our interest coverage ratio is greater than or equal to 3:1 at such time or (iii) our fixed-charge coverage ratio is greater than or equal to 1:1.
Interest rates under the Term Loan Agreement are based, at our election, on either the LIBOR or a base rate, as defined in the Term Loan Agreement, plus a spread over the index. The applicable spread for the Term Loan ranges from 1.875% to 2.125% for LIBOR rate loans, and 0.875% to 1.125% for base rate loans, both dependent on our Interest Coverage Ratio (as defined in the Term Loan Agreement). During the six months ended June 30, 2020, the average interest rate on the Term Loan was approximately 2.97%. We have received and expect to continue receiving patronage credits under the Term Loan. After giving effect to expected patronage distributions, the effective average net interest rate on the Term Loan was approximately 2.0%.
The Term Loan is secured by a first priority mortgage on our Thorsby, Alabama, and Roxboro, North Carolina, EWP facilities and a first priority security interest on the equipment and certain tangible personal property located therein.
2024 Notes
On August 29, 2016, Boise Cascade issued $350 million of 5.625% senior notes due September 1, 2024 (2024 Notes), through a private placement that was exempt from the registration requirements of the Securities Act of 1933, as amended (Securities Act). Interest on our 2024 Notes is payable semiannually in arrears on March 1 and September 1. The 2024 Notes are guaranteed by each of our existing and future direct or indirect domestic subsidiaries that is a guarantor under our Amended Agreement.
The 2024 Notes are senior unsecured obligations and rank equally with all of the existing and future senior indebtedness of Boise Cascade Company and of the guarantors, senior to all of their existing and future subordinated indebtedness, effectively subordinated to all of their present and future senior secured indebtedness (including all borrowings with respect to our Amended Agreement to the extent of the value of the assets securing such indebtedness), and structurally subordinated to the indebtedness of any subsidiaries that do not guarantee the 2024 Notes.
The terms of the indenture governing the 2024 Notes, among other things, limit the ability of Boise Cascade and our restricted subsidiaries to: incur additional debt; declare or pay dividends; redeem stock or make other distributions to stockholders; make investments; create liens on assets; consolidate, merge or transfer substantially all of their assets; enter into transactions with affiliates; and sell or transfer certain assets. The indenture governing the 2024 Notes permits us to pay dividends only if at the time of payment (i) no default has occurred or is continuing (or would result from such payment) under the indenture, and (ii) our consolidated leverage ratio is no greater than 3.5:1, or (iii) the dividend, together with other dividends since the issue date, would not exceed our "builder" basket under the indenture. In addition, the indenture includes certain specific baskets for the payment of dividends.
The indenture governing the 2024 Notes provides for customary events of default and remedies.
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2030 Notes
On July 27, 2020, we issued $400 million of 4.875% senior notes due July 1, 2030 (2030 Notes), to repurchase any and all of our 2024 Notes in a cash tender offer, to redeem any 2024 Notes that remain outstanding after the consummation of the tender offer, to pay off our American AgCredit Term Loan of $45.0 million, and to pay related financings fees and expenses. For more information related to these debt transactions, see Note 14, Subsequent Events.
Interest Rate Swaps
For information on interest rate swaps, see Interest Rate Risk and Interest Rate Swaps of Note 2, Summary of Significant Accounting Policies.
Cash Paid for Interest
For both six months ended June 30, 2020 and 2019, cash payments for interest was $11.5 million.
7. Leases
Lease Costs
The components of lease expense were as follows:

| Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (thousands) |  |  |  |  |  |
Operating lease cost | $ | 3,361 |  |  | $ | 3,367 |  |  | $ | 6,707 |  |  | $ | 6,708 |
Finance lease cost |  |  |  |  |  |  |
Amortization of right-of-use assets | 552 |  |  | 385 |  |  | 999 |  |  | 760 |
Interest on lease liabilities | 559 |  |  | 465 |  |  | 1,044 |  |  | 926 |
Variable lease cost | 754 |  |  | 722 |  |  | 1,461 |  |  | 1,341 |
Short-term lease cost | 937 |  |  | 1,075 |  |  | 2,070 |  |  | 2,069 |
Sublease income | (38) |  |  | (172) |  |  | (77) |  |  | (304) |
Total lease cost | $ | 6,125 |  |  | $ | 5,842 |  |  | $ | 12,204 |  |  | $ | 11,500 |

Other Information
Supplemental cash flow information related to leases was as follows:

| Six Months Ended June 30, 2020 |  | Six Months Ended June 30, 2019 |
| (thousands) |  |  |
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |
Operating cash flows from operating leases | $ | 6,588 |  |  | $ | 6,637 |  |
Operating cash flows from finance leases | 1,044 |  |  | 926 |  |
Financing cash flows from finance leases | 591 |  |  | 369 |  |
Right-of-use assets obtained in exchange for lease obligations |  |  |  |
Operating leases | 5,769 |  |  | 1,368 |  |
Finance leases | 9,338 |  |  | 310 |  |

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Other information related to leases was as follows:

| June 30, 2020 |  | December 31, 2019 |  |  |  |
Weighted-average remaining lease term (years) |  |  |  |  |  |  |
Operating leases | 8 |  | 8 |  |  |  |
Finance leases | 16 |  | 14 |  |  |  |
Weighted-average discount rate |  |  |  |  |  |  |
Operating leases | 6.4 | % |  | 6.5 | % |  |  |  |
Finance leases | 7.7 | % |  | 8.5 | % |  |  |  |

As of June 30, 2020, our minimum lease payment requirements for noncancelable operating and finance leases are as follows:

|  | Operating Leases |  | Finance Leases
|  | (thousands) |  |
Remainder of 2020 |  | $ | 6,398 |  |  | $ | 1,908 |
2021 |  | 12,858 |  |  | 3,853 |
2022 |  | 11,937 |  |  | 3,859 |
2023 |  | 11,636 |  |  | 3,898 |
2024 |  | 11,060 |  |  | 3,893 |
Thereafter |  | 34,992 |  |  | 40,967 |
Total future minimum lease payments |  | 88,881 |  |  | 58,378 |
Less: interest |  | (20,924) |  |  | (25,129) |
Total lease obligations |  | 67,957 |  |  | 33,249 |
Less: current obligations |  | (9,044) |  |  | (1,433) |
Long-term lease obligations |  | $ | 58,913 |  |  | $ | 31,816 |

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8. Retirement and Benefit Plans
The following table presents the pension benefit costs:

| Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (thousands) |  |  |  |  |  |
Service cost | $ | 166 |  |  | $ | 161 |  |  | $ | 334 |  |  | $ | 322 |
Interest cost | 1,473 |  |  | 1,809 |  |  | 2,946 |  |  | 3,625 |
Expected return on plan assets | (1,372) |  |  | (1,475) |  |  | (2,746) |  |  | (2,949) |
Amortization of actuarial (gain) loss | 201 |  |  | (44) |  |  | 403 |  |  | (87) |
Plan settlement loss | — |  |  | — |  |  | 86 |  |  | — |
Net periodic benefit expense | $ | 468 |  |  | $ | 451 |  |  | $ | 1,023 |  |  | $ | 911 |

Service cost is recorded in the same income statement line items as other employee compensation costs arising from services rendered, and the other components of net periodic benefit expense are recorded in "Pension expense (excluding service costs)" in our Consolidated Statements of Operations.
We announced to plan participants that we will freeze accrual of all benefits on our qualified defined benefit pension plan (Pension Plan) effective August 31, 2020, as well as our intention to terminate the Pension Plan.
During the six months ended June 30, 2020, we contributed $1.1 million in cash to the pension plans. For the remainder of 2020, we expect to make approximately $13 million in cash contributions to the pension plans, which includes the repurchase of two BMD locations leased from the Pension Plan. For information related to the contribution of properties to our qualified defined benefit pension plan, see Note 12, Retirement and Benefit Plans, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2019 Form 10-K.
9. Stock-Based Compensation
In first quarter 2020 and 2019, we granted two types of stock-based awards under our incentive plan: performance stock units (PSUs) and restricted stock units (RSUs).
PSU and RSU Awards
During the six months ended June 30, 2020, we granted 94,850 PSUs to our officers and other employees, subject to performance and service conditions. For the officers, the number of shares actually awarded will range from 0% and 200% of the target amount, depending upon Boise Cascade's 2020 return on invested capital (ROIC), as approved by our Compensation Committee in accordance with the related grant agreement. For the other employees, the number of shares actually awarded will range from 0% to 200% of the target amount, depending upon Boise Cascade’s 2020 EBITDA, defined as income before interest (interest expense and interest income), income taxes, and depreciation and amortization, determined in accordance with the related grant agreement. Because the ROIC and EBITDA components contain a performance condition, we record compensation expense over the requisite service period based on the most probable number of shares expected to vest.
During the six months ended June 30, 2019, we granted 110,923 PSUs to our officers and other employees, subject to performance and service conditions. During the 2019 performance period, officers and other employees earned 93% and 96%, respectively, of the target based on Boise Cascade’s 2019 ROIC and EBITDA, determined by our Compensation Committee in accordance with the related grant agreement.
The PSUs granted to officers generally vest in a single installment three years from the date of grant, while the PSUs granted to other employees vest in three equal tranches each year after the grant date.
During the six months ended June 30, 2020 and 2019, we granted an aggregate of 125,716 and 166,180 RSUs, respectively, to our officers, other employees, and nonemployee directors with only service conditions. The RSUs granted to officers and other employees vest in three equal tranches each year after the grant date. The RSUs granted to nonemployee directors vest over a one year period.
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We based the fair value of PSU and RSU awards on the closing market price of our common stock on the grant date. During the six months ended June 30, 2020 and 2019, the total fair value of PSUs and RSUs vested was $11.1 million and $11.4 million, respectively.
The following summarizes the activity of our PSUs and RSUs awarded under our incentive plan for the six months ended June 30, 2020:

| PSUs |  |  |  | RSUs |  |
| Number of shares |  | Weighted Average Grant-Date Fair Value |  | Number of shares |  | Weighted Average Grant-Date Fair Value
Outstanding, December 31, 2019 | 295,347 |  |  | $ | 31.09 |  |  | 257,564 |  |  | $ | 31.14 |
Granted | 94,850 |  |  | 36.45 |  |  | 125,716 |  |  | 36.45 |
Performance condition adjustment (a) | (6,989) |  |  | 29.48 |  |  | — |  |  | — |
Vested | (162,622) |  |  | 28.93 |  |  | (143,807) |  |  | 30.88 |
Forfeited | (24,246) |  |  | 32.57 |  |  | (26,707) |  |  | 32.82 |
Outstanding, June 30, 2020 | 196,340 |  |  | $ | 35.34 |  |  | 212,766 |  |  | $ | 34.24 |

_______________________________
(a) Represents total PSUs forfeited during the six months ended June 30, 2020 related to the 2019 performance condition adjustment described above.
Compensation Expense
We record compensation expense over the awards' vesting period and account for share-based award forfeitures as they occur, rather than making estimates of future forfeitures. Any shares not vested are forfeited. We recognize stock awards with only service conditions on a straight-line basis over the requisite service period. Most of our share-based compensation expense was recorded in "General and administrative expenses" in our Consolidated Statements of Operations. Total stock-based compensation recognized from PSUs and RSUs, net of forfeitures, was as follows:

| Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (thousands) |  |  |  |  |  |
PSUs | $ | 691 |  |  | $ | 736 |  |  | $ | 1,301 |  |  | $ | 1,715 |
RSUs | 980 |  |  | 1,133 |  |  | 2,044 |  |  | 2,354 |
Total | $ | 1,671 |  |  | $ | 1,869 |  |  | $ | 3,345 |  |  | $ | 4,069 |

The related tax benefit for the six months ended June 30, 2020 and 2019, was $0.8 million and $1.0 million, respectively. As of June 30, 2020, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $9.8 million. This expense is expected to be recognized over a weighted-average period of 2.0 years.
10. Stockholders' Equity
Dividends
On November 14, 2017, we announced that our board of directors approved a dividend policy to pay quarterly cash dividends to holders of our common stock. For more information regarding our dividend declarations and payments made during each of the six months ended June 30, 2020 and 2019, see "Common stock dividends" on our Consolidated Statements of Stockholders' Equity.
On July 30, 2020, our board of directors declared a dividend of $0.10 per share on our common stock, payable on September 15, 2020, to stockholders of record on September 1, 2020. For a description of the restrictions in our asset-based credit facility, Term Loan, and the indenture governing our senior notes on our ability to pay dividends, see Note 6, Debt.
Future quarterly dividend declarations, including amount per share, record date and payment date, will be made at the discretion of our board of directors and will depend upon, among other things, legal capital requirements and surplus, our future
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operations and earnings, general financial condition, contractual obligations, restrictions imposed by our asset-based credit facility, term loan, and the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.
Accumulated Other Comprehensive Loss
The following table details the changes in accumulated other comprehensive loss for the three and six months ended June 30, 2020 and 2019:

| Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (thousands) |  |  |  |  |  |
Beginning balance, net of taxes | $ | (50,033) |  |  | $ | (47,684) |  |  | $ | (50,248) |  |  | $ | (47,652) |
Amortization of actuarial (gain) loss, before taxes (a) | 201 |  |  | (44) |  |  | 403 |  |  | (87) |
Effect of settlements, before taxes (a) | — |  |  | — |  |  | 86 |  |  | — |
Income taxes | (51) |  |  | 11 |  |  | (124) |  |  | 22 |
Ending balance, net of taxes | $ | (49,883) |  |  | $ | (47,717) |  |  | $ | (49,883) |  |  | $ | (47,717) |

___________________________________
(a) Represents amounts reclassified from accumulated other comprehensive loss. These amounts are included in the computation of net periodic pension cost. For additional information, see Note 8, Retirement and Benefit Plans.
11. Transactions With Related Party
Louisiana Timber Procurement Company, L.L.C. (LTP) is an unconsolidated variable-interest entity that is 50% owned by us and 50% owned by Packaging Corporation of America (PCA). LTP procures sawtimber, pulpwood, residual chips, and other residual wood fiber to meet the wood and fiber requirements of us and PCA in Louisiana. We are not the primary beneficiary of LTP as we do not have power to direct the activities that most significantly affect the economic performance of LTP. Accordingly, we do not consolidate LTP's results in our financial statements.
Sales
Related-party sales to LTP from our Wood Products segment in our Consolidated Statements of Operations were $2.5 million and $4.3 million, respectively, during the three months ended June 30, 2020 and 2019, and $6.8 million and $8.8 million, respectively, during the six months ended June 30, 2020 and 2019. These sales are recorded in "Sales" in our Consolidated Statements of Operations.
Costs and Expenses
Related-party wood fiber purchases from LTP were $13.8 million and $21.4 million, respectively, during the three months ended June 30, 2020 and 2019, and $36.4 million and $41.4 million, respectively, during the six months ended June 30, 2020 and 2019. These costs are recorded in "Materials, labor, and other operating expenses (excluding depreciation)" in our Consolidated Statements of Operations.
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12. Segment Information
We operate our business using two reportable segments: Wood Products and Building Materials Distribution. Unallocated corporate costs are presented as reconciling items to arrive at operating income. There are no differences in our basis of measurement of segment profit or loss from those disclosed in Note 17, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2019 Form 10-K.
Wood Products and Building Materials Distribution segment sales to external customers, including related parties, by product line are as follows:

|  | Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |
|  | 2020 |  | 2019 |  | 2020 |  | 2019
|  | (millions) |  |  |  |  |  |
Wood Products (a) |  |  |  |  |  |  |  |
LVL |  | $ | 5.3 |  |  | $ | 12.0 |  |  | $ | 11.3 |  |  | $ | 23.9 |
I-joists |  | 2.6 |  |  | 8.0 |  |  | 7.1 |  |  | 13.3 |
Other engineered wood products |  | 5.2 |  |  | 8.6 |  |  | 11.6 |  |  | 14.3 |
Plywood and veneer |  | 65.2 |  |  | 63.5 |  |  | 129.0 |  |  | 130.9 |
Lumber |  | 12.3 |  |  | 14.0 |  |  | 24.6 |  |  | 27.2 |
Byproducts |  | 15.7 |  |  | 18.0 |  |  | 36.4 |  |  | 38.0 |
Other |  | 2.2 |  |  | 8.6 |  |  | 9.0 |  |  | 19.4 |
|  | 108.5 |  |  | 132.7 |  |  | 229.0 |  |  | 267.1 |
Building Materials Distribution |  |  |  |  |  |  |  |
Commodity |  | 490.0 |  |  | 450.7 |  |  | 930.1 |  |  | 849.0 |
General line |  | 448.1 |  |  | 429.6 |  |  | 845.6 |  |  | 753.1 |
Engineered wood products |  | 196.2 |  |  | 217.2 |  |  | 408.6 |  |  | 403.0 |
|  | 1,134.3 |  |  | 1,097.4 |  |  | 2,184.3 |  |  | 2,005.1 |
|  | $ | 1,242.8 |  |  | $ | 1,230.1 |  |  | $ | 2,413.3 |  |  | $ | 2,272.2 |

___________________________________
(a)Amounts represent sales to external customers. Sales are calculated after intersegment sales eliminations to our Building Materials Distribution segment, as well as the cost of EWP rebates and sales allowances provided at various stages of the supply chain (including distributors, retail lumberyards, and professional builders). For the six months ended June 30, 2020, approximately 80% of Wood Products' EWP sales volumes were to our Building Materials Distribution segment.
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An analysis of our operations by segment is as follows:

| Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (thousands) |  |  |  |  |  |
Net sales by segment |  |  |  |  |  |  |
Wood Products | $ | 281,505 |  |  | $ | 334,256 |  |  | $ | 601,566 |  |  | $ | 653,779 |
Building Materials Distribution | 1,134,260 |  |  | 1,097,421 |  |  | 2,184,257 |  |  | 2,005,129 |
Intersegment eliminations (a) | (173,005) |  |  | (201,596) |  |  | (372,529) |  |  | (386,741) |
Total net sales | $ | 1,242,760 |  |  | $ | 1,230,081 |  |  | $ | 2,413,294 |  |  | $ | 2,272,167 |
Segment operating income |  |  |  |  |  |  |
Wood Products (b) | $ | 17,074 |  |  | $ | 18,908 |  |  | $ | 20,837 |  |  | $ | 30,538 |
Building Materials Distribution | 43,210 |  |  | 33,800 |  |  | 72,512 |  |  | 51,317 |
Total segment operating income | 60,284 |  |  | 52,708 |  |  | 93,349 |  |  | 81,855 |
Unallocated corporate costs | (8,514) |  |  | (7,576) |  |  | (16,032) |  |  | (15,069) |
Income from operations | $ | 51,770 |  |  | $ | 45,132 |  |  | $ | 77,317 |  |  | $ | 66,786 |

___________________________________
(a) Primarily represents intersegment sales from our Wood Products segment to our Building Materials Distribution segment.
(b) Wood Products segment operating income for the six months ended June 30, 2020, includes $15.0 million of accelerated depreciation and $1.7 million of other closure-related costs due to the permanent curtailment of I-joist production at our Roxboro, North Carolina facility. For more information, see Note 5, Curtailment of Manufacturing Facility.
13. Commitments, Legal Proceedings and Contingencies, and Guarantees
Commitments
We are a party to a number of long-term log supply agreements that are discussed in Note 18, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2019 Form 10-K. In addition, we have purchase obligations for goods and services, capital expenditures, and raw materials entered into in the normal course of business. As of June 30, 2020, there have been no material changes to the above commitments disclosed in the 2019 Form 10-K.
Legal Proceedings and Contingencies
We are a party to legal proceedings that arise in the ordinary course of our business, including commercial liability claims, premises claims, environmental claims, and employment-related claims, among others. As of the date of this filing, we believe it is not reasonably possible that any of the legal actions against us will, individually or in the aggregate, have a material adverse effect on our financial position, results of operations, or cash flows.
Guarantees
We provide guarantees, indemnifications, and assurances to others. Note 18, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2019 Form 10-K describes the nature of our guarantees, including the approximate terms of the guarantees, how the guarantees arose, the events or circumstances that would require us to perform under the guarantees, and the maximum potential undiscounted amounts of future payments we could be required to make. As of June 30, 2020, there have been no material changes to the guarantees disclosed in the 2019 Form 10-K.
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14. Subsequent Events
On July 27, 2020, we issued $400 million of 4.875% senior notes due July 1, 2030 (2030 Notes), to fund the repurchase of any and all of our 2024 Notes in a cash tender offer, to redeem any 2024 Notes that remain outstanding after the consummation of the tender offer, to pay off our American AgCredit Term Loan of $45.0 million, and to pay related financing fees and expenses. In connection with the repurchase and redemption of our 2024 Notes, we expect to recognize a pre-tax loss on extinguishment of debt of approximately $14.0 million during the third quarter of 2020, including $11.0 million of repurchase and redemption premiums and $3.0 million for the write-off of unamortized deferred financing costs.
The 2030 Notes are exempt from the registration requirements of the Securities Act and mature on July 1, 2030, with interest payable semiannually in arrears on January 1 and July 1, commencing on January 1, 2021. The 2030 Notes are guaranteed by each of our existing and future direct or indirect domestic subsidiaries that is a guarantor under our Amended Agreement.
The 2030 Notes are senior unsecured obligations and rank equally with all of the existing and future senior indebtedness of Boise Cascade Company and of the guarantors, senior to all of their existing and future subordinated indebtedness, effectively subordinated to all of their present and future senior secured indebtedness (including all borrowings with respect to our Amended Agreement to the extent of the value of the assets securing such indebtedness), and structurally subordinated to the indebtedness of any subsidiaries that do not guarantee the 2030 Notes.
The terms of the indenture governing the 2030 Notes, among other things, limit the ability of Boise Cascade and our restricted subsidiaries to: incur additional debt; declare or pay dividends; redeem stock or make other distributions to stockholders; make investments; create liens on assets; consolidate, merge or transfer substantially all of their assets; enter into transactions with affiliates; and sell or transfer certain assets.
The indenture governing the 2030 Notes provides for customary events of default and remedies.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Understanding Our Financial Information
This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes in "Item 1. Financial Statements" of this Form 10-Q, as well as our 2019 Form 10-K. The following discussion includes statements regarding our expectations with respect to our future performance, liquidity, and capital resources. Such statements, along with any other nonhistorical statements in the discussion, are forward-looking. These forward-looking statements include, without limitation, any statement that may predict, indicate, or imply future results, performance, or achievements and may contain the words "may," "will," "expect," "believe," "should," "plan," "anticipate," and other similar expressions. All of these forward-looking statements are based on estimates and assumptions made by our management that, although believed by us to be reasonable, are inherently uncertain. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Item 1A. Risk Factors" in our 2019 Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission (SEC). We do not assume an obligation to update any forward-looking statement. Our future actual results may differ materially from those contained in or implied by any of the forward-looking statements in this Form 10-Q.
Background
Boise Cascade Company is a building products company headquartered in Boise, Idaho. As used in this Form 10-Q, the terms "Boise Cascade," "we," and "our" refer to Boise Cascade Company and its consolidated subsidiaries. Boise Cascade is a large, vertically-integrated wood products manufacturer and building materials distributor. We have two reportable segments: (i) Wood Products, which primarily manufactures engineered wood products (EWP) and plywood; and (ii) Building Materials Distribution (BMD), which is a wholesale distributor of building materials. Demand for the products we manufacture, as well as the products we purchase and distribute, is closely correlated with new residential construction in the U.S. To a lesser extent, demand for our products correlates with residential repair-and-remodeling activity and light commercial construction. For more information, see Note 12, Segment Information, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
Executive Overview
We recorded income from operations of $51.8 million during the three months ended June 30, 2020, compared with income from operations of $45.1 million during the three months ended June 30, 2019. In our Wood Products segment, income decreased $1.8 million to $17.1 million for the three months ended June 30, 2020, from $18.9 million for the three months ended June 30, 2019. The decrease in segment income was due primarily to lower sales volumes and prices of EWP, as well as lower lumber sales prices. These decreases were offset partially by higher plywood sales prices and lower wood fiber costs. In our Building Materials Distribution segment, income increased $9.4 million to $43.2 million for the three months ended June 30, 2020, from $33.8 million for the three months ended June 30, 2019, driven primarily by a gross margin increase of $16.3 million, resulting from improved gross margins on commodity products compared with second quarter 2019. This improvement was offset partially by increased selling and distribution expenses and general and administrative expenses of $5.0 million and $1.2 million, respectively. These changes are discussed further in "Our Operating Results" below.
We ended second quarter 2020 with $361.4 million of cash and cash equivalents and $345.4 million of undrawn committed bank line availability, for total available liquidity of $706.8 million. We had $440.2 million of outstanding debt at June 30, 2020. In addition, on July 27, 2020, we issued $400 million of 4.875% senior notes to fund the redemption of our $350 million aggregate principal amount of 5.625% senior notes due 2024 (2024 Notes), to pay off our American AgCredit Term Loan of $45.0 million, and to pay related financing fees and expenses. We generated $76.2 million of cash during the six months ended June 30, 2020, as cash provided by operations was offset by capital spending, dividends paid on our common stock, and tax withholding payments on stock-based awards. A further description of our cash sources and uses for the six month comparative periods are discussed further in "Liquidity and Capital Resources" below.
In response to rapidly evolving market conditions and economic uncertainties surrounding the impact of COVID-19, our Wood Products segment implemented certain production changes early in the second quarter, including temporary curtailments and reduced operating schedules at essentially all of our manufacturing facilities, to respond to weaker anticipated demand for the products we manufacture. Activity through the building products supply chain was weak early in the second quarter in response to COVID-19 uncertainties, including shelter-in-place orders in effect in many states, guidelines limiting
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activity for non-essential businesses, and other rules that limited the number of trade workers that can be on a residential construction site at one time. As restrictions were loosened or rescinded, construction activity resumed mid-quarter and continued at a robust pace through the end of the quarter. Our BMD warehouse sales were particularly strong as our retail lumberyard customers are relying on our broad base of inventory and high service levels to minimize their working capital investment given COVID-19 related uncertainties and elevated commodity product prices. In addition, we have had strong demand from our home center customers in response to elevated repair and remodel and "do-it-yourself" activity as people are spending more time at home during the pandemic.
As we begin the third quarter, Wood Products is in the process of attempting to restore production rates to pre-COVID-19 levels in response to strong end-product demand. However, we continue to experience periodic short-term disruptions at many locations due to COVID-19. In addition, we expect activity levels across our distribution network to continue to vary widely as COVID-19 impacts geographies across the U.S. to differing degrees, and federal, state, or local restrictions are implemented or rescinded. To date, we have not experienced significant supply chain disruptions that would limit our ability to meet customer delivery commitments or source the necessary raw materials and finished goods needed by our operations. We continue to conduct business with modifications to mill and distribution center housekeeping and cleanliness protocols, employee travel, employee work locations, and virtualization or cancellation of certain sales and marketing events, among other modifications. In addition, we continue to actively monitor evolving developments and may take actions that alter our business operations as may be required by federal, state, or local authorities, or that we determine are in the best interests of our employees, customers, suppliers, communities, and stockholders.
As of July 2020, the Blue Chip Economic Indicators consensus forecast for 2020 and 2021 single- and multi-family housing starts in the U.S. were 1.19 million and 1.27 million units, respectively, compared with actual housing starts of 1.29 million in 2019, as reported by the U.S. Census Bureau. Although we believe that current U.S. demographics support a higher level of housing starts, the impacts of COVID-19 on residential construction are uncertain. In particular, the economic consequences of COVID-19 may adversely affect the pace of household formation rates and residential repair-and-remodeling activity due to high unemployment rates, lower wages, reduced consumer confidence, prospective home buyers' lack of ability to view homes in person, homebuyers' access to and cost of financing, and housing affordability, as well as other factors. Beyond economic uncertainties, the pandemic may improve the demand for single-family residential construction as homeowners consider a transition to less densely populated geographies. Furthermore, with homeowners spending more time at home, repair and remodel spending may continue to strengthen as homeowners invest in existing homes.
Increased construction activity in May and June of 2020, when coupled with second quarter capacity curtailments of commodity products across the industry, have created supply/demand imbalances in the marketplace. As such, order files at the manufacturing level have extended, and composite lumber and panel prices at the end of the second quarter were 30-40% above price realizations early in the quarter. We anticipate that commodity products pricing in the third quarter of 2020 will be subject to price volatility that will be dependent on the impact of COVID-19 on residential construction, capacity restoration and industry operating rates, net import and export activity, transportation constraints or disruptions, inventory levels in various distribution channels, and seasonal demand patterns.
Factors That Affect Our Operating Results and Trends
Our results of operations and financial performance are influenced by a variety of factors, including the following:
•the duration and magnitude of impacts of the COVID-19 pandemic;
•the commodity nature of our products and their price movements, which are driven largely by industry capacity and operating rates, industry cycles that affect supply and demand, and net import and export activity;
•general economic conditions, including but not limited to housing starts, repair-and-remodeling activity, light commercial construction, inventory levels of new and existing homes for sale, foreclosure rates, interest rates, unemployment rates, household formation rates, prospective home buyers' access to and cost of financing, and housing affordability, that ultimately affect demand for our products;
•labor disruptions, shortages of skilled and technical labor, or increased labor costs;
•impairment of our long-lived assets, goodwill, and/or intangible assets;
•the highly competitive nature of our industry;
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•the need to successfully formulate and implement succession plans for key members of our management team;
•material disruptions and/or major equipment failure at our manufacturing facilities;
•disruptions to information systems used to process and store customer, employee, and vendor information, as well as the technology that manages our operations and other business processes;
•concentration of our sales among a relatively small group of customers, as well as the financial condition and creditworthiness of our customers;
•product shortages, loss of key suppliers, and our dependence on third-party suppliers and manufacturers;
•cost and availability of raw materials, including wood fiber and glues and resins;
•cost of compliance with government regulations, in particular environmental regulations;
•our ability to successfully and efficiently complete and integrate acquisitions;
•declines in demand for our products due to competing technologies or materials, as well as changes in building code provisions;
•substantial ongoing capital investment costs, including those associated with recent acquisitions, and the difficulty in offsetting fixed costs related to those investments;
•the cost and availability of third-party transportation services used to deliver the goods we manufacture and distribute, as well as our raw materials;
•exposure to product liability, product warranty, casualty, construction defect, and other claims;
•the impact of actuarial assumptions, investment return on pension assets, and regulatory activity on pension costs and pension funding requirements,
•our indebtedness, including the possibility that we may not generate sufficient cash flows from operations or that future borrowings may not be available in amounts sufficient to fulfill our debt obligations and fund other liquidity needs;
•change in interest rate of our debt;
•restrictive covenants contained in our debt agreements;
•fluctuations in the market for our equity; and
•the other factors described in "Item 1A. Risk Factors" in our 2019 Form 10-K.
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Our Operating Results
The following tables set forth our operating results in dollars and as a percentage of sales for the three and six months ended June 30, 2020 and 2019:

| Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (millions) |  |  |  |  |  |
Sales | $ | 1,242.8 |  |  | $ | 1,230.1 |  |  | $ | 2,413.3 |  |  | $ | 2,272.2 |
Costs and expenses |  |  |  |  |  |  |
Materials, labor, and other operating expenses (excluding depreciation) | 1,048.9 |  |  | 1,049.7 |  |  | 2,041.2 |  |  | 1,947.5 |
Depreciation and amortization | 19.9 |  |  | 19.5 |  |  | 55.2 |  |  | 38.7 |
Selling and distribution expenses | 103.6 |  |  | 98.9 |  |  | 203.0 |  |  | 185.9 |
General and administrative expenses | 18.8 |  |  | 16.8 |  |  | 34.8 |  |  | 33.5 |
Loss on curtailment of facility | — |  |  | — |  |  | 1.7 |  |  | — |
Other (income) expense, net | (0.2) |  |  | 0.2 |  |  | — |  |  | (0.1) |
| 1,191.0 |  |  | 1,184.9 |  |  | 2,336.0 |  |  | 2,205.4 |
Income from operations | $ | 51.8 |  |  | $ | 45.1 |  |  | $ | 77.3 |  |  | $ | 66.8 |
| (percentage of sales) |  |  |  |  |  |
Sales | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | %
Costs and expenses |  |  |  |  |  |  |
Materials, labor, and other operating expenses (excluding depreciation) | 84.4 | % |  | 85.3 | % |  | 84.6 | % |  | 85.7 | %
Depreciation and amortization | 1.6 |  |  | 1.6 |  |  | 2.3 |  |  | 1.7 |
Selling and distribution expenses | 8.3 |  |  | 8.0 |  |  | 8.4 |  |  | 8.2 |
General and administrative expenses | 1.5 |  |  | 1.4 |  |  | 1.4 |  |  | 1.5 |
Loss on curtailment of facility | — |  |  | — |  |  | 0.1 |  |  | — |
Other (income) expense, net | — |  |  | — |  |  | — |  |  | — |
| 95.8 | % |  | 96.3 | % |  | 96.8 | % |  | 97.1 | %
Income from operations | 4.2 | % |  | 3.7 | % |  | 3.2 | % |  | 2.9 | %

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Sales Volumes and Prices
Set forth below are historical U.S. housing starts data, segment sales volumes and average net selling prices for the principal products sold by our Wood Products segment, and sales mix and gross margin information for our Building Materials Distribution segment for the three and six months ended June 30, 2020 and 2019.

| Three Months Ended June 30 |  |  |  | Six Months Ended June 30 |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (thousands) |  |  |  |  |  |
U.S. Housing Starts (a) |  |  |  |  |  |  |
Single-family | 210.6 |  |  | 242.1 |  |  | 425.0 |  |  | 430.7 |
Multi-family | 79.3 |  |  | 107.7 |  |  | 194.1 |  |  | 184.3 |
| 289.9 |  |  | 349.8 |  |  | 619.1 |  |  | 615.0 |
| (thousands) |  |  |  |  |  |
Segment Sales |  |  |  |  |  |  |
Wood Products | $ | 281,505 |  |  | $ | 334,256 |  |  | $ | 601,566 |  |  | $ | 653,779 |
Building Materials Distribution | 1,134,260 |  |  | 1,097,421 |  |  | 2,184,257 |  |  | 2,005,129 |
Intersegment eliminations | (173,005) |  |  | (201,596) |  |  | (372,529) |  |  | (386,741) |
Total sales | $ | 1,242,760 |  |  | $ | 1,230,081 |  |  | $ | 2,413,294 |  |  | $ | 2,272,167 |
Wood Products | (millions) |  |  |  |  |  |
Sales Volumes |  |  |  |  |  |  |
Laminated veneer lumber (LVL) (cubic feet) | 3.8 |  |  | 4.6 |  |  | 8.5 |  |  | 9.0 |
I-joists (equivalent lineal feet) | 50 |  |  | 60 |  |  | 109 |  |  | 113 |
Plywood (sq. ft.) (3/8" basis) | 314 |  |  | 343 |  |  | 632 |  |  | 679 |
Wood Products | (dollars per unit) |  |  |  |  |  |
Average Net Selling Prices |  |  |  |  |  |  |
Laminated veneer lumber (LVL) (cubic foot) | $ | 18.36 |  |  | $ | 18.70 |  |  | $ | 18.44 |  |  | $ | 18.78 |
I-joists (1,000 equivalent lineal feet) | 1,260 |  |  | 1,279 |  |  | 1,268 |  |  | 1,273 |
Plywood (1,000 sq. ft.) (3/8" basis) | 287 |  |  | 272 |  |  | 277 |  |  | 279 |
| (percentage of Building Materials Distribution sales) |  |  |  |  |  |
Building Materials Distribution |  |  |  |  |  |  |
Product Line Sales |  |  |  |  |  |  |
Commodity | 43.2 | % |  | 41.0 | % |  | 42.6 | % |  | 42.3 | %
General line | 39.5 | % |  | 39.2 | % |  | 38.7 | % |  | 37.6 | %
Engineered wood | 17.3 | % |  | 19.8 | % |  | 18.7 | % |  | 20.1 | %
Gross margin percentage (b) | 13.4 | % |  | 12.4 | % |  | 13.0 | % |  | 12.1 | %

_______________________________________
(a) Actual U.S. housing starts data reported by the U.S. Census Bureau.
(b) We define gross margin as "Sales" less "Materials, labor, and other operating expenses (excluding depreciation)." Substantially all costs included in "Materials, labor, and other operating expenses (excluding depreciation)" for our Building Materials Distribution segment are for inventory purchased for resale. Gross margin percentage is gross margin as a percentage of segment sales.
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Sales
For the three months ended June 30, 2020, total sales increased $12.7 million, or 1%, to $1,242.8 million from $1,230.1 million during the three months ended June 30, 2019. For the six months ended June 30, 2020, total sales increased by $141.1 million, or 6%, to $2,413.3 million from $2,272.2 million for the same period in the prior year. As described below, the increase in sales was driven by the changes in sales prices and volumes for the products we manufacture and distribute with single-family residential construction activity being the key demand driver of our sales. In second quarter 2020, U.S. housing starts decreased 17%, with single-family starts down 13% from the same period in 2019. On a year-to-date basis through June 2020, total and single-family housing starts were relatively flat compared with the same period in 2019. Average composite lumber and average composite panel prices for the three months ended June 30, 2020, were 18% and 14% higher, respectively, than in the same period in the prior year, as reflected by Random Lengths composite lumber and panel pricing. For the six months ended June 30, 2020, average composite lumber and average composite panel prices were 15% and 8% higher, respectively, compared with the same period in the prior year.
Wood Products. Sales, including sales to our BMD segment, decreased $52.8 million, or 16%, to $281.5 million for the three months ended June 30, 2020, from $334.3 million for the three months ended June 30, 2019. The decrease in sales was driven primarily by lower sales volumes for I-joists and LVL of 18% and 16%, respectively, resulting in decreased sales of $13.9 million and $14.0 million, respectively. In addition, sales volumes for plywood decreased 8%, resulting in decreased sales of $7.9 million. Lumber, LVL, and I-joists net sales prices decreased 16%, 2% and 1%, respectively, resulting in decreased sales of $2.2 million, $1.3 million, and $1.0 million, respectively. These decreases were offset partially by increases in sales prices for plywood of 6%, resulting in increased sales of $4.8 million.
For the six months ended June 30, 2020, sales, including sales to our BMD segment, decreased $52.2 million, or 8%, to $601.6 million from $653.8 million for the same period in the prior year. The decrease in sales was driven primarily by decreases in sales volumes and prices for plywood of 7% and 1%, respectively, resulting in decreased sales of $13.2 million and $1.4 million, respectively. Excluding the impact of the Moncure plywood mill that was sold in first quarter 2019, plywood volumes decreased 5%. In addition, sales volumes for LVL and I-joists decreased 5% and 3%, respectively, resulting in decreased sales of $7.6 million and $4.5 million, respectively. LVL net sales prices decreased 2% resulting in decreased sales of $2.9 million, while I-joists net sales prices were relatively flat compared with the prior year period. In addition, lumber sales prices decreased 18%, resulting in decreased sales of $5.2 million.
Building Materials Distribution. Sales increased $36.8 million, or 3%, to $1,134.3 million for the three months ended June 30, 2020, from $1,097.4 million for the three months ended June 30, 2019. Compared with the same quarter in the prior year, the overall increase in sales was driven by a sales price increase of 4%, offset partially by a sales volume decrease of 1%. By product line, commodity sales increased 9%, or $39.3 million; general line product sales increased 4%, or $18.5 million; and sales of EWP (substantially all of which are sourced through our Wood Products segment) decreased 10%, or $21.0 million.
During the six months ended June 30, 2020, sales increased $179.1 million, or 9%, to $2,184.3 million from $2,005.1 million for the same period in the prior year. Compared with the same period in the prior year, the overall increase in sales was driven by sales volume and sales price increases of 6% and 3%, respectively. By product line, commodity sales increased 10%, or $81.1 million; general line product sales increased 12%, or $92.4 million; and sales of EWP increased 1%, or $5.6 million.
Costs and Expenses
Materials, labor, and other operating expenses (excluding depreciation) decreased $0.8 million to $1,048.9 million for the three months ended June 30, 2020, compared with $1,049.7 million during the same period in the prior year. In our Wood Products segment, materials, labor, and other operating expenses decreased, due to lower sales volumes and slightly lower log costs, offset partially by higher per-unit costs of OSB (used in the manufacture of I-joists) of 26%, compared with second quarter 2019. Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment decreased by 150 basis points, which was primarily due to lower manufacturing and wood fiber costs. In BMD, materials, labor, and other operating expenses increased, driven by higher purchased materials costs as a result of higher commodity prices. However, the BMD segment MLO rate improved 100 basis points compared with the second quarter 2019 due primarily to improved gross margin percentages for our commodity product sales, driven by an increasing commodity price environment during the second quarter 2020.
For the six months ended June 30, 2020, materials, labor, and other operating expenses (excluding depreciation), increased $93.7 million or 5%, to $2,041.2 million, compared with $1,947.5 million in the same period in the prior year. In our Wood Products segment, the decrease in materials, labor, and other operating expenses was primarily driven by lower sales volumes and slightly lower log costs, offset partially by higher per-unit costs of OSB of 17%, compared with the first half of
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2019. The MLO rate in our Wood Products segment decreased by 220 basis points, which was primarily due to lower manufacturing and wood fiber costs. In BMD, the increase in materials, labor, and other operating expenses was driven by higher purchased materials costs as a result of higher sales volumes and higher commodity prices, compared with the first half of 2019. However, the BMD segment MLO rate improved 90 basis points compared with the first half of 2019 due primarily to improved gross margin percentages for our commodity product sales, driven by an increasing commodity price environment during most of the first half of 2020. In addition, BMD sold a greater mix of general line products, which have higher gross margins than commodity products.
Depreciation and amortization expenses increased $0.4 million, or 2%, to $19.9 million for the three months ended June 30, 2020, compared with $19.5 million during the same period in the prior year. For the six months ended June 30, 2020, these expenses increased $16.6 million, or 43%, to $55.2 million, compared with $38.7 million in the same period in the prior year. The increase was due primarily to recording accelerated depreciation of $15.0 million in first quarter 2020 to fully depreciate the curtailed I-joist production assets at our Roxboro, North Carolina facility, as well as incremental depreciation on capital expenditures. For additional information, see Note 5, Curtailment of Manufacturing Facility, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
Selling and distribution expenses increased $4.7 million, or 5%, to $103.6 million for the three months ended June 30, 2020, compared with $98.9 million during the same period in the prior year, due primarily to higher employee-related expenses of $6.3 million, offset partially by lower travel and entertainment expenses of $2.0 million. For the six months ended June 30, 2020, selling and distribution expenses increased $17.1 million, or 9%, to $203.0 million, compared with $185.9 million during the same period in 2019, due primarily to higher employee-related expenses and shipping and handling costs of $13.6 million and $1.1 million, respectively.
General and administrative expenses increased $2.0 million, or 12%, to $18.8 million for the three months ended June 30, 2020, compared with $16.8 million for the same period in the prior year. For the six months ended June 30, 2020, general and administrative expenses increased $1.4 million, or 4%, to $34.8 million, compared with $33.5 million during the same period in 2019. The increases for both periods were primarily a result of higher employee-related expenses, offset partially by lower discretionary expenses, including travel and entertainment expenses and professional fees.
For the six months ended June 30, 2020, loss on curtailment of facility was $1.7 million, representing various closure-related costs from the permanent curtailment of I-joist production at our Roxboro, North Carolina facility. For additional information, see Note 5, Curtailment of Manufacturing Facility, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
Income From Operations
Income from operations increased $6.6 million to $51.8 million for the three months ended June 30, 2020, compared with $45.1 million for the three months ended June 30, 2019. Income from operations increased $10.5 million to $77.3 million for the six months ended June 30, 2020, compared with $66.8 million for the six months ended June 30, 2019.
Wood Products. Segment income decreased $1.8 million to $17.1 million for the three months ended June 30, 2020, compared with $18.9 million for the three months ended June 30, 2019. The decrease in segment income was due primarily to lower sales volumes and prices of EWP, as well as lower lumber sales prices. These decreases were offset partially by higher plywood sales prices and lower wood fiber costs.
For the six months ended June 30, 2020, segment income decreased $9.7 million to $20.8 million from $30.5 million for the six months ended June 30, 2019. The decrease in segment income was due primarily to accelerated depreciation of $15.0 million and other closure-related costs of $1.7 million at our Roxboro, North Carolina facility, as well as lower EWP, plywood, and lumber prices. These decreases were offset partially by lower manufacturing and wood fiber costs.
Building Materials Distribution. Segment income increased $9.4 million to $43.2 million for the three months ended June 30, 2020, from $33.8 million for the three months ended June 30, 2019. The increase in segment income was driven primarily by a gross margin increase of $16.3 million, resulting from improved gross margins on commodity products compared with second quarter 2019. This improvement was offset partially by increased selling and distribution expenses and general and administrative expenses of $5.0 million and $1.2 million, respectively.
For the six months ended June 30, 2020, segment income increased $21.2 million to $72.5 million from $51.3 million for the six months ended June 30, 2019. The increase in segment income was driven primarily by a gross margin increase of $41.0 million resulting from improved gross margins on commodity products and higher sales of general line products
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compared with the first half of 2019. This improvement was offset partially by increased selling and distribution expenses and general and administrative expenses of $17.2 million and $1.7 million, respectively.
Corporate. Unallocated corporate expenses increased $0.9 million to $8.5 million from $7.6 million for the three months ended June 30, 2020, compared with the same period in the prior year. For the six months ended June 30, 2020, unallocated corporate expenses increased $1.0 million to $16.0 million from $15.1 million for the six months ended June 30, 2019. The increases for both periods were due primarily to higher employee-related expenses, including incentive compensation.
Other
Change in fair value of interest rate swaps. For information related to our interest rate swaps, see the discussion under "Interest Rate Risk and Interest Rate Swaps" of Note 2, Summary of Significant Accounting Policies, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
Income Tax Provision
For the three and six months ended June 30, 2020, we recorded $11.3 million and $15.3 million, respectively, of income tax expense and had an effective rate of 25.2% and 25.1%, respectively. During the three and six months ended June 30, 2020, the primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes. For the three and six months ended June 30, 2019, we recorded $9.8 million and $13.0 million, respectively, of income tax expense and had an effective rate of 26.0% and 24.9%, respectively. During the three and six months ended June 30, 2019, the primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes.
Liquidity and Capital Resources
We ended second quarter 2020 with $361.4 million of cash and cash equivalents and $440.2 million of debt. At June 30, 2020, we had $706.8 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability). We generated $76.2 million of cash during the six months ended June 30, 2020, as cash provided by operations was offset partially by capital spending, dividends paid on our common stock, and tax withholding payments on stock-based awards. Further descriptions of our cash sources and uses for the six month comparative periods are noted below.
On July 27, 2020, we issued $400 million of 4.875% senior notes due July 1, 2030 (2030 Notes) to fund the redemption of our 2024 Notes, to pay off our American AgCredit Term Loan of $45.0 million, and to pay related financing fees and expenses. For more information related to these debt transactions, see the discussion in Note 14, Subsequent Events of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
In response to the uncertainty of the impacts of COVID-19, we have reduced our planned capital spending for 2020 from our previously expected range of $85-to-$95 million to $50-to-$70 million. We have also reduced discretionary spending and have identified other cash saving measures that may be implemented in the near term, the timing and extent of which will depend upon the depth and duration of COVID-19 and its impact on our operating results.
Although significant uncertainty remains regarding the impact of COVID-19 on our operating results and cash flows for the remainder of 2020 and into 2021, we believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, funding of acquisitions, lease obligations, working capital, pension contributions, and to pay cash dividends to holders of our common stock over the next 12 months. We expect to fund our seasonal and intra-month working capital requirements in the remainder of 2020 from cash on hand and, if necessary, borrowings under our revolving credit facility.
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Sources and Uses of Cash
We generate cash primarily from sales of our products, as well as short-term and long-term borrowings. Our primary uses of cash are for expenses related to the manufacture and distribution of building products, including inventory purchased for resale, wood fiber, labor, energy, and glues and resins. In addition to paying for ongoing operating costs, we use cash to invest in our business, service our debt and pension obligations, pay dividends, repurchase our common stock, and meet our contractual obligations and commercial commitments. Below is a discussion of our sources and uses of cash for operating activities, investing activities, and financing activities.

| Six Months Ended June 30 |  |
| 2020 |  | 2019
| (thousands) |  |
Net cash provided by operations | $ | 118,276 |  |  | $ | 66,852 |
Net cash used for investment | (28,443) |  |  | (44,611) |
Net cash used for financing | (13,634) |  |  | (11,505) |

Operating Activities
For the six months ended June 30, 2020, our operating activities generated $118.3 million of cash, compared with $66.9 million of cash generated in the same period in 2019. The $51.4 million increase in cash provided by operations was due primarily to a decrease in working capital of $0.1 million during the six months ended June 30, 2020, compared with a $40.1 million increase for the same period in the prior year. In addition, cash provided by operations increased due to an improvement in income from operations. See "Our Operating Results" in this Management's Discussion and Analysis of Financial Condition and Results of Operations for more information related to factors affecting our operating results. These increases were offset partially by cash paid for taxes, net of refunds received, of $8.9 million during the six months ended June 30, 2020, compared with refunds received, net of cash taxes paid, of $10.6 million in the same period a year ago.
The change in working capital during both periods was primarily attributable to higher receivables, offset by higher accounts payable and decreased inventories. The increases in receivables in both periods primarily reflect increased sales of approximately 47% and 38%, comparing sales for the months of June 2020 and 2019 with sales for the months of December 2019 and 2018, respectively. The increase in accounts payable and accrued liabilities provided $95.5 million of cash during the six months ended June 30, 2020, compared with $45.4 million in the same period a year ago. During both periods, extended terms offered by major vendors to our Building Materials Distribution segment and seasonally higher purchasing activity contributed to the increase in accounts payable. This increase in accounts payable was offset partially by decreases in accrued liabilities, most notably annual employee incentive compensation payouts made during both periods. During the six months ended June 30, 2020, distribution inventories decreased due to stronger than expected demand and higher inventory turns, while manufacturing inventories decreased due to reduced production levels in response to lower market demand. Both businesses have continued to manage their inventory levels in response to the volatility in demand caused by the COVID-19 pandemic. During the six months ended June 30, 2019, inventories decreased, as inventory in our Building Materials Distribution segment did not increase at the same rate as the comparative prior year period as a result of weak commodity pricing in the first six months of 2019, and as inventory levels at the end of 2018 were seasonally higher than normal with slower sales in the second half of 2018 due to slower housing activity and declining commodity prices.
Investment Activities
During the six months ended June 30, 2020 and 2019, we used $28.8 million and $32.8 million, respectively, of cash for purchases of property and equipment, including business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance. In addition, during the six months ended June 30, 2019, we used $15.7 million for acquisitions, offset partially by asset sale proceeds of $2.5 million from the sale of a hardwood plywood facility located in Moncure, North Carolina.
Excluding acquisitions, we expect capital expenditures in 2020 to total approximately $50 million to $70 million. Included in our 2020 capital spending is the completion of the log utilization center improvement project at our plywood and veneer facility in Florien, Louisiana, as well as BMD's door shop expansion in Dallas, Texas. This level of capital expenditures could increase or decrease as a result of a number of factors, including our financial results and future economic conditions.
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Financing Activities
During the six months ended June 30, 2020, our financing activities used $13.6 million of cash, including $8.6 million for common stock dividend payments and $3.3 million of tax withholding payments on stock-based awards. During the six months ended June 30, 2020, we did not borrow under our revolving credit facility, and therefore have no borrowings outstanding on the facility as of June 30, 2020.
During the six months ended June 30, 2019, our financing activities used $11.5 million of cash, including $7.6 million for common stock dividend payments and $3.6 million of tax withholding payments on stock-based awards. During the six months ended June 30, 2019, we also borrowed $5.5 million under our revolving credit facility to fund intra-month working capital needs, which were subsequently repaid during the same period with cash at hand.
On March 13, 2020, we negotiated an extension of our $350 million revolving credit agreement and our related $50 million term loan. As of June 30, 2020, we have no debt maturities prior to 2024.
Future quarterly dividend declarations, including amount per share, record date and payment date, will be made at the discretion of our board of directors and will depend upon, among other things, legal capital requirements and surplus, our future operations and earnings, general financial condition, contractual obligations, restrictions imposed by our asset-based credit facility, term loan, and the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.
For more information related to our debt structure and dividend policy, see the discussion in Note 6, Debt, and Note 10, Stockholders' Equity, respectively, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
Contractual Obligations
For information about contractual obligations, see Contractual Obligations in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2019 Form 10-K. As of June 30, 2020, there have been no material changes in contractual obligations outside the ordinary course of business since December 31, 2019, except for on March 13, 2020, we extended the maturity date of our asset-based revolving credit facility and related $50 million term loan to March 13, 2025 and decreased the maximum amount available under our revolving credit facility from $370 million to $350 million.
Subsequent to June 30, 2020, we issued $400 million of 4.875% senior notes to fund the redemption of our $350 million of 5.625% senior notes due 2024 and to pay off our American AgCredit Term Loan of $45.0 million. In addition, we announced to plan participants that we will freeze accrual of all benefits on our qualified defined benefit pension plan (Pension Plan) effective August 31, 2020, as well as our intention to terminate the Pension Plan (Plan Termination). As part of the Plan Termination process, we expect to repurchase two BMD locations leased from the Pension Plan for approximately $12 million, and we do not expect the Plan Termination to result in a meaningful amount of additional cash contributions to the Pension Plan. We intend to enter into an agreement with an insurance company to transfer all remaining assets and liabilities in the Pension Plan as soon as practicable. For more information, see Note 6, Debt, Note 8, Retirement and Benefit Plans, and Note 14, Subsequent Events, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
Off-Balance-Sheet Activities
At June 30, 2020, and December 31, 2019, we had no material off-balance-sheet arrangements with unconsolidated entities.
Guarantees
Note 10, Debt, and Note 18, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2019 Form 10-K describe the nature of our guarantees, including the approximate terms of the guarantees, how the guarantees arose, the events or circumstances that would require us to perform under the guarantees, and the maximum potential undiscounted amounts of future payments we could be required to make. As of June 30, 2020, there have been no material changes to the guarantees disclosed in our 2019 Form 10-K.
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Seasonal Influences
We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors. These seasonal factors are common in the building products industry. Seasonal changes in levels of building activity affect our building products businesses, which are dependent on housing starts, repair-and-remodeling activities, and light commercial construction activities. We typically report lower sales in the first and fourth quarters due to the impact of poor weather on the construction market, and we generally have higher sales in the second and third quarters, reflecting an increase in construction due to more favorable weather conditions. We typically have higher working capital in the first and second quarters in preparation and response to the building season. Seasonally cold weather increases costs, especially energy consumption costs, at most of our manufacturing facilities.
Employees
As of July 26, 2020, we had approximately 5,780 employees. Approximately 22% of these employees work pursuant to collective bargaining agreements. As of July 26, 2020, we had ten collective bargaining agreements. Five agreements, covering approximately 460 employees at our Elgin plywood plant, Kettle Falls plywood plant, and Woodinville BMD facility, expired on May 31, 2020, but the terms and conditions of those agreements remain in effect pending negotiation of new agreements. We may not be able to renew these agreements or may renew them on terms that are less favorable to us than the current agreements. In addition, an agreement covering approximately 20 employees at our Billings BMD facility is set to expire on March 31, 2021, and two agreements covering approximately 670 employees at our Oakdale and Florien plywood plants are set to expire on July 15, 2021. If any of these agreements are not renewed or extended upon their termination, we could experience a material labor disruption, strike, or significantly increased labor costs at one or more of our facilities, either in the course of negotiations of a labor agreement or otherwise. Labor disruptions or shortages could prevent us from meeting customer demands or result in increased costs, thereby reducing our sales and profitability.
Disclosures of Financial Market Risks
In the normal course of business, we are exposed to financial risks such as changes in commodity prices, interest rates, and foreign currency exchange rates. As of June 30, 2020, there have been no material changes to financial market risks disclosed in our 2019 Form 10-K.
Environmental
As of June 30, 2020, there have been no material changes to environmental issues disclosed in our 2019 Form 10-K. For additional information, see Environmental in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2019 Form 10-K.
Critical Accounting Estimates
Critical accounting estimates are those that are most important to the portrayal of our financial condition and results. These estimates require management's most difficult, subjective, or complex judgments, often as a result of the need to estimate matters that are inherently uncertain. We review the development, selection, and disclosure of our critical accounting estimates with the Audit Committee of our board of directors. For information about critical accounting estimates, see Critical Accounting Estimates in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2019 Form 10-K. At June 30, 2020, there have been no material changes to our critical accounting estimates from those disclosed in our 2019 Form 10-K.
New and Recently Adopted Accounting Standards
For information related to new and recently adopted accounting standards, see "New and Recently Adopted Accounting Standards" in Note 2, Summary of Significant Accounting Policies, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" in this Form 10-Q.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information relating to quantitative and qualitative disclosures about market risk, see the discussion under "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" and under the headings "Disclosures of Financial Market Risks" and "Financial Instruments" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2019 Form 10-K. As of June 30, 2020, there have been no material changes in our exposure to market risk from those disclosed in our 2019 Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain "disclosure controls and procedures," as defined in Rule 13a-15(e) under the Exchange Act. We have designed these controls and procedures to reasonably assure that information required to be disclosed in our reports filed or submitted under the Exchange Act, such as this Form 10-Q, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. We have also designed our disclosure controls to provide reasonable assurance that such information is accumulated and communicated to our senior management, including our chief executive officer (CEO) and our chief financial officer (CFO), as appropriate, to allow them to make timely decisions regarding our required disclosures. Based on an evaluation of our disclosure controls and procedures, our CEO and CFO have concluded that as of June 30, 2020, our disclosure controls and procedures were effective in meeting the objectives for which they were designed.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are a party to legal proceedings that arise in the ordinary course of our business, including commercial liability claims, premises claims, environmental claims, and employment-related claims, among others. As of the date of this filing, we believe it is not reasonably possible that any of the legal actions against us will, individually or in the aggregate, have a material adverse effect on our financial position, results of operations, or cash flows.
ITEM 1A. RISK FACTORS
This report on Form 10-Q contains forward-looking statements. Statements that are not historical or current facts, including statements about our expectations, anticipated financial results, projected capital expenditures, and future business prospects, are forward-looking statements. You can identify these statements by our use of words such as "may," "will," "expect," "believe," "should," "plan," "anticipate," and other similar expressions. You can find examples of these statements throughout this report, including "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations." We cannot guarantee that our actual results will be consistent with the forward-looking statements we make in this report. You should review carefully the risk factors listed in "Item 1A. Risk Factors" in our 2019 Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission and the risk factors below related to the impact of COVID-19. We do not assume an obligation to update any forward-looking statement.
The full effect of the COVID-19 pandemic on our business is currently unknown but it may adversely affect our business and operating results.
The full impacts of the global emergence of COVID-19 on our business and financial results remain unknown. We are conducting business with modifications to our manufacturing production levels, mill and distribution center housekeeping and cleanliness protocols, employee travel, employee work locations, and virtualization or cancellation of certain sales and marketing events, among other modifications. Companies and various governmental agencies have taken precautionary and preemptive actions to address COVID-19, and further actions may yet be taken that alter our normal business operations as well as those in our industry. The U.S. Department of Homeland Security (DHS) has continued to designate the forest products industry, and thereby wood products manufacturing and building materials distribution, as part of the Essential Critical Infrastructure Workforce. However, state and local agencies are not mandated to follow the DHS designations, and in certain geographies across the U.S., additional restrictions have been imposed that further limit or preclude residential construction activity. All of our manufacturing and distribution facilities are operating, but we have experienced periodic disruptions at many locations due to COVID-19. We may be required to implement temporary curtailments and to operate both manufacturing and distribution facilities at reduced levels, which would result in negative impacts on our business, financial condition, results of operations, and cash flows. We continue to actively monitor evolving developments and may take actions that alter our business operations as may be required by federal, state or local authorities, or that we determine are in the best interests of our associates, customers, suppliers, and stockholders.
A material disruption at one of our manufacturing facilities could prevent us from meeting customer demand, including the demand from our Building Materials Distribution business, reduce our sales, and/or negatively affect our financial results.
Any of our manufacturing facilities, or any of our machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including but not limited to:
• labor difficulties, including the inability to staff our facilities due to the COVID-19 outbreak;
•equipment failure, particularly a press at one of our major EWP production facilities;
• fires, floods, earthquakes, hurricanes, or other catastrophes;
• unscheduled maintenance outages;
• utility, information technology, telephonic, and transportation infrastructure disruptions;
• other operational problems; or
• ecoterrorism or threats of ecoterrorism.
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Any downtime or facility damage could prevent us from meeting customer demand for our products and/or require us to make unplanned capital expenditures. If our machines or facilities were to incur significant downtime, our ability to satisfy customer requirements would be impaired, resulting in lower sales and net income.
Because approximately 60% of our Wood Products sales in 2019 were to our Building Materials Distribution business, a material disruption at our Wood Products facilities would also negatively affect our Building Materials Distribution business. We are therefore exposed to a larger extent to the risk of disruption to our Wood Products manufacturing facilities due to our vertical integration and the resulting impact on our Building Materials Distribution business.
In addition, a number of our suppliers are subject to the manufacturing facility disruption risks noted above. Our suppliers' inability to produce the necessary raw materials for our manufacturing processes or supply the finished goods that we distribute through our Building Materials Distribution segment would adversely affect our results of operations, cash flows, and financial position.
Our long-lived assets, goodwill, and/or intangible assets may become impaired, which may require us to record non-cash impairment charges that could have a material impact on our results of operations.
We review the carrying value of long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We also test goodwill in each of our reporting units and intangible assets with indefinite lives for impairment annually in the fourth quarter or sooner if events or changes in circumstances indicate that the carrying value of the asset may exceed fair value. To the extent that long-lived assets, goodwill, and/or intangible assets do not provide the future economic benefit we expect, it may result in non-cash impairment or accelerated depreciation charges. These non-cash impairments or accelerated depreciation charges could have a material impact on our results of operations in the period in which these charges are recognized.
Future events or circumstances such as sustained negative economic impact of the COVID-19 pandemic, declines in single-family housing starts, sustained periods of weak commodity prices, loss of key customers, capacity additions by competitors, changes in the competitive position of our products, or changes in raw materials or manufacturing costs that lead us to believe the long-lived asset will no longer provide a sufficient return on investment, could prompt decisions to invest capital differently than expected, sell facilities, or to curtail operations. Any of these factors, among others, could result in non-cash impairment or accelerated depreciation charges in the future with respect to the book value of certain assets and past investments we have made.
Adverse market conditions, including the inability of our customers to conduct operations due to the COVID-19 pandemic, may increase the credit risk from our customers.
Our Building Materials Distribution and Wood Products segments extend credit to numerous customers who are generally susceptible to the same economic business risks as we are, including the COVID-19 pandemic outbreak. Unfavorable market conditions or the inability of our customers to conduct operations due to the COVID-19 pandemic could result in financial failures of one or more of our significant customers. Furthermore, we may not necessarily be aware of any deterioration in our customers' financial position. If our customers' financial positions become impaired, our ability to fully collect receivables from such customers could be impaired and negatively affect our operating results, cash flow, and liquidity.
Product shortages, loss of key suppliers, and our dependence on third-party suppliers and manufacturers could affect our financial health.
Our ability to offer a wide variety of products to our Building Materials Distribution customers is dependent upon our ability to obtain adequate product supply from manufacturers and other suppliers. In most instances, the commodity products we sell are obtainable from various sources and in sufficient quantities with our customers purchasing decision focused primarily on price and availability. In the case of the general line and EWP products that we distribute, brand preference and product performance characteristics can have a high degree of influence on our customers purchasing decision. Supply chains, including key products purchased from our suppliers, may be disrupted during a pandemic outbreak such as COVID-19. In addition, although we have agreements in place with many of our suppliers, such agreements are generally terminable by either party on relatively short notice. The loss of, or a substantial decrease in the availability of, products from our suppliers or the loss of key supplier arrangements could adversely impact our financial condition, operating results, and cash flows.
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Our manufacturing operations may have difficulty obtaining wood fiber at favorable prices or at all.
Wood fiber is our principal raw material, which accounted for approximately 40% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2019. Our primary source of wood fiber is logs. Log prices have been historically cyclical in response to changes in domestic and foreign demand and supply. Availability of harvested logs and fiber may be limited by pandemics, fire, insect infestation, disease, ice storms, windstorms, hurricanes, flooding, and other natural and man-made causes, thereby reducing supply and increasing prices. Sustained periods of high log costs may impair the cost competitiveness of our manufacturing facilities.
We also purchase OSB, which is used as the vertical web to assemble I-joists, from a supplier with multiple locations throughout North America. OSB accounted for approximately 5% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2019. Wood fiber also includes, to a lesser extent than OSB, lumber purchased from third parties for I-joist production at our Canadian EWP facility and for production at our laminated beam plant in Idaho. Availability of these supplies may be limited due to the inability of our vendors to conduct operations due to the COVID-19 pandemic.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
Filed With the Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2020

Number |  | Description
31.1 |  | CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 |  | CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 |  | CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 |  | CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS |  | Inline XBRL Instance Document
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | BOISE CASCADE COMPANY
|  | /s/ Kelly E. Hibbs
|  | Kelly E. Hibbs Vice President and Controller
|  | (As Duly Authorized Officer and Chief Accounting Officer)

Date: July 31, 2020
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