~~The accompanying condensed notes are an integral part of these consolidated financial statements.~~

CLEARWATER PAPER CORPORATION

Consolidated Statements of Stockholders’ Equity

~~Unaudited (In thousands)~~(Unaudited)


	Common Stock					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(In millions, except share amounts which are in thousands)	Shares	Amount
Balance at December 31, 2018	16,482	$	—	$	6.4	$	487.3	$	(67.3)	$	426.4
Net income	—	—		—		3.8		—		3.8
Stock-based compensation expense	—	—		1.2		—		—		1.2
Issuance of shares under stock plans, net	33	—		(0.4)		—		—		(0.4)
Pension and other postretirement employee benefit plans, net of tax of $0.5	—	—		—		—		1.2		1.2
Balance at March 31, 2019	16,515	$	—	$	7.2	$	491.1	$	(66.1)	$	432.2
Net loss	—	—		—		(0.4)		—		(0.4)
Stock-based compensation expense	—	—		1.2		—		—		1.2
Pension and other postretirement employee benefit plans, net of tax of $0.5	—	—		—		—		1.3		1.3
Balance at June 30, 2019	16,515	$	—	$	8.4	$	490.7	$	(64.8)	$	434.3

Common Stock Additional Paid-In Capital
Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Stockholders'
Equity
Shares Amount
Balance at December 31, 2017 16,448
$ 2
$ 1,161
$ 618,254
$ (43,983 ) $ 575,434
Net earnings —
—
—
2,600
—
2,600
Performance share, restricted stock unit, and stock option awards 13
—
1,267
—
—
1,267
Reclassification of the income tax effects of the Tax Cuts and Jobs Act —
—
—
12,852
(12,852 ) —
Pension and other postretirement employee benefit plans, net
  of tax of $507
—
—
—
—
1,419
1,419
Balance at March 31, 2018 16,461
$ 2
$ 2,428
$ 633,706
$ (55,416 ) $ 580,720
Net earnings —
—
—
6,961
—
6,961
Performance share, restricted stock unit, and stock option awards —
—
1,552
—
1,552
Pension and other postretirement employee benefit plans, net
  of tax of $477
—
—
—
1,336
1,336
Balance at June 30, 2018 16,461
$ 2
$ 3,980
$ 640,667
$ (54,080 ) $ 590,569
Net earnings —
—
—
34,444
—
34,444
Performance share, restricted stock unit, and stock option awards —
—
1,734
—
1,734
Pension and other postretirement employee benefit plans, net
  of tax of $492
—
—
—
1,378
1,378
Balance at September 30, 2018 16,461
$ 2
$ 5,714
$ 675,111
$ (52,702 ) $ 628,125

CLEARWATER PAPER CORPORATION

Consolidated Statements of Stockholders’ Equity

~~Unaudited (In thousands)~~(Unaudited)


	Common Stock					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(In millions, except share amounts which are in thousands)	Shares	Amount
Balance at December 31, 2019	16,515	$	—	$	9.8	$	481.7	$	(59.5)	$	432.0
Net income	—	—		—		10.3		—		10.3
Stock-based compensation expense	—	—		1.3		—		—		1.3
Issuance of shares under stock plans, net	54	—		(0.7)		—		—		(0.7)
Pension and other postretirement employee benefit plans,  net of tax of $0.6	—	—		—		—		1.8		1.8
Balance at March 31, 2020	16,569	$	—	$	10.4	$	492.1	$	(57.7)	$	444.8
Net income	—	—		—		22.8		—		22.8
Stock-based compensation expense	—	—		1.4		—				1.4
Issuance of shares under stock plans, net	2	—		—		—		—		—
Pension and other postretirement employee benefit plans,  net of tax of $0.6	—	—		—		—		1.8		1.8
Balance at June 30, 2020	16,571	$	—	$	11.8	$	514.8	$	(55.8)	$	470.8

See accompanying Notes to the Consolidated Financial Statements.

Common Stock Additional Paid-In Capital
Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Stockholders'
Equity
Shares Amount
Balance at December 31, 2018 16,482
$ 2
$ 6,403
$ 487,339
$ (67,348 ) $ 426,396
Net earnings —
—
—
3,837
—
3,837
Performance share, restricted stock unit, and stock option awards 33
—
772
—
—
772
Pension and other postretirement employee benefit plans,
net of tax of $442 —
—
—
—
1,239
1,239
Balance at March 31, 2019 16,515
$ 2
$ 7,175
$ 491,176
$ (66,109 ) $ 432,244
Net loss —
—
—
(424 ) —
(424 )
Performance share, restricted stock unit, and stock option awards —
—
1,211
—
—
1,211
Pension and other postretirement employee benefit plans,
net of tax of $475 —
—
—
—
1,334
1,334
Balance at June 30, 2019 16,515
$ 2
$ 8,386
$ 490,752
$ (64,775 ) $ 434,365
Net loss —
—
—
(10,973 ) —
(10,973 )
Performance share, restricted stock unit, and stock option awards —
—
467
—
—
467
Pension and other postretirement employee benefit plans,
net of tax of $459 —
—
—
—
1,286
1,286
Balance at September 30, 2019 16,515
$ 2
$ 8,853
$ 479,779
$ (63,489 ) $ 425,145

~~The accompanying condensed notes are an integral part of these consolidated financial statements.~~

Clearwater Paper Corporation

~~Condensed~~ Notes to Consolidated Financial Statements

~~Unaudited~~(Unaudited)

NOTE 1 ~~Nature of Operations and Basis of Presentation~~

~~GENERAL~~

Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, bleached paperboard and pulp at manufacturing facilities across the nation. The company is a premier supplier of private label tissue to major retailers and wholesale distributors, including grocery, drug, mass merchants and discount stores. In addition, the company produces bleached paperboard used by quality-conscious printers and packaging converters, and offers services that include custom sheeting, slitting and cutting. Clearwater Paper's employees build shareholder value by developing strong customer relationships through quality and service.

~~FINANCIAL STATEMENT PREPARATION AND~~BASIS OF PRESENTATION

The accompanying Consolidated Balance Sheets at September 30, 2019 and December 31, 2018, and the related Consolidated Statements of Operations, Comprehensive Income and Stockholders' Equity for the three and nine months ended September 30, 2019 and 2018, and Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018,unaudited consolidated financial statements have been prepared in ~~conformity~~accordance with ~~accounting principles generally accepted~~the instructions to Form 10-Q and, in the ~~United States~~opinion of ~~America, or GAAP. We believe that~~management, include all adjustments (consisting of normal recurring adjustments) necessary ~~for a fair presentation of~~to present fairly, in all material respects, the consolidated financial position, results of operations, stockholders' equity and cash flows for us and our subsidiaries for the interim periods ~~presented have been included. The results~~presented. Results of operations for ~~any~~ interim ~~period~~periods are not necessarily indicative of ~~the~~ results ~~of operations~~ to be expected for ~~the full~~an entire year.

~~This Quarterly Report on Form 10-Q~~ These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2018, as filed with~~2019. All dollar amounts are shown in millions, except per share.

NOTE 2 RECENTLY ADOPTED AND NEW ACCOUNTING STANDARDS

Recently Adopted Accounting Standards

In March 2020, the ~~Securities and Exchange Commission, or~~ SEC ~~on March 18, 2019. Certain 2018 amounts have been reclassified to conform to the 2019 presentation.~~

~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~SIGNIFICANT ESTIMATES~~

~~The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions~~issued a final rule that ~~affect the reported amounts of assets and liabilities,~~amended the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. Significant areas that may require the use of estimates and measurement of uncertainty include determination of net realizable value for deferred tax assets, uncertain income tax positions, assessment of impairment of long-lived assets and goodwill, assessment of environmental matters, equity-based compensation and pension and postretirement obligation assumptions. Actual results could differ from those estimates and assumptions.

~~CASH, CASH EQUIVALENTS AND RESTRICTED CASH~~

We consider all highly liquid instruments with maturities of three months or less at date of purchase to be cash equivalents. Cash that is held by a third party and has restrictions on its availability to us is classified as restricted cash. The following table provides details of cash, cash equivalents and restricted cash reported on the Consolidated Balance Sheets and Consolidatedrequirements under SEC Regulation S-X Rule 3-10, Financial Statements of ~~Cash Flows.~~

(In thousands) September 30, 2019 December 31, 2018 September 30, 2018
Cash and cash equivalents $ 7,815
$ 22,484
$ 76,150
Restricted cash 1,440
—
1,080
Restricted cash included in other assets, net 1,040
2,463
2,457
Total cash, cash equivalents and restricted cash shown in the
Consolidated Statements of Cash Flows
$ 10,295
$ 24,947
$ 79,687

~~PROPERTY, PLANT AND EQUIPMENT~~

~~Property, plant~~Guarantors and ~~equipment are stated at cost, including any interest costs capitalized, less accumulated depreciation. Depreciation~~Issuers of ~~buildings, equipment and other depreciable assets~~Guaranteed Securities Registered or Being Registered. The final rule is ~~determined using the straight-line method. Assets we acquire through business combinations have estimated lives that are typically shorter than the assets we construct or buy new.~~

For the nine months ended September 30, 2019, we capitalized $4.9 million of interest expense associated with the construction of a paper machine at our Shelby, North Carolina consumer products facility and $0.8 million of interest expense associated with the construction of a continuous pulp digester at our Lewiston, Idaho pulp and paperboard facility. For the nine months ended September 30, 2018, we capitalized $5.1 million of interest expense associated with the Shelby paper machine and $0.9 million of interest expense associated with the continuous pulp digester project.

We review the carrying amount of long-lived assets with definite lives that are held-for-use and evaluate them for recoverability whenever events or changes in circumstances indicate that we may be unable to recover the carrying amount of the assets.

~~LEASES~~

All significant lease arrangements are generally recognized at lease commencement. Operating lease right-of-use, or ROU, assets and lease liabilities are recognized at commencement. An ROU asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (short-term leases), and we recognize lease expense for these leases as incurred over the lease term.

ROU assets represent our right to use an underlying asset during the reasonably certain lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease ROU assets and liabilities are recognized at commencement date based on the ~~present value~~premise that the primary source of ~~lease payments over~~information that investors in guaranteed debt rely on is the ~~lease term. We primarily use our incremental borrowing rate, which~~consolidated financial statements of the parent company. The final rule replaces the previous requirement to provide separate condensed consolidating financial information of the guarantors. The final rule is ~~updated quarterly, based~~effective for filings on ~~the information available at commencement date, in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments related to initial direct cost~~or after January 4, 2021, and ~~prepayments and excludes lease incentives. Refer to Note 4, "Leases," for additional information.~~

~~REVENUE RECOGNITION~~

~~We enter into contracts that can include various combinations of tissue and paperboard products, which are generally distinct and accounted for as separate performance obligations.~~

~~Revenue~~early adoption is recognized at a point in time upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when title and the risk of loss have passed. Revenue is recognized at shipment for sales when shipping terms are free on board, or FOB, shipping point. For sales where shipping terms are FOB destination, revenue is recognized when the goods are received by the customer. Revenue from both domestic and foreign sales of our products can involve shipping terms of either FOB shipping point or FOB destination or other shipping terms, depending upon the sales agreement with the customer.permitted. We have elected to treat shipping and handling costs for FOB shipping point contracts as a fulfillment cost, not as a separate performance obligation. No revenue is recognized over time. We typically expense incremental direct costs of obtaining a contract (sales commissions) when incurred becauseearly adopt this rule which resulted in the amortization period is generally 12 months or less. We have also elected to use the practical expedient to not disclose unsatisfied or partially satisfied performance obligations as we have no unsatisfied contracts where the remaining portions are expected to be satisfied in a period greater than one year.

We provide for trade promotions, customer cash discounts, customer returns and other deductions as reductions to net sales, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Returns and credits are estimated at contract inception and updated at the end of each reporting period as additional information becomes available. Revenue net of returns and credits is only recognized to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Significant judgment is required to determine the most probable amount of variable consideration to apply as a reduction to net sales. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

~~Payment terms and conditions vary by contract. Terms generally include a requirement of payment within 30 days, and do not include a significant financing component.~~

Trade accounts receivable are reported within Receivables, net, and are stated at the amount we expect to collect. Trade accounts receivable were $156.3 million and $142.8 million at September 30, 2019 and December 31, 2018, respectively. Trade accounts receivable do not bear interest. The allowance for doubtful accounts is our best estimateremoval of the losses we expect will result from the inability of our customers to make required payments. We generally determine the allowance based on a combination of actual historical write-off experience and an analysis of specific customer accounts. As of September 30, 2019 and December 31, 2018, we had allowances for doubtful accounts of $1.4 million and $1.5 million, respectively.supplemental guarantor financial information footnote.

~~Refer to Note 14, "Segment Information," for further information, including the disaggregation of revenue by segment, primary geographical market, and major product type.~~

~~ACCOUNTS RECEIVABLE ARRANGEMENTS~~

We had an Account Purchase Agreement ("APA") to sell, on a revolving and discounted basis, certain trade accounts receivable balances to an unrelated third-party financial institution. Under the APA, the maximum amount of receivables that could be sold and outstanding was $30.0 million. We retained no interest in the receivables sold under the APA, however, we did have servicing responsibilities for the sold receivables, such as collection. The fair value of the servicing arrangement was not material to our financial statements.

As of September 30, 2019, all amounts collected from customers under the APA had been remitted to the third-party financial institution. At December 31, 2018, we had collected $4.9 million of cash from customers that had not yet been remitted to the third-party financial institution.

During the third quarter of 2019, we entered into an uncommitted supply-chain financing program with a global financial institution under which trade accounts receivable with a large customer may be acquired, without recourse, by the financial institution at a discounted rate. Available capacity under this program is dependent on the level of our trade accounts receivable with this customer and the financial institution’s willingness to purchase such receivables. We have no servicing responsibilities under this agreement.

Receivables sold are de-recognized from our Consolidated Balance Sheet. As of September 30, 2019, we had no sold receivables outstanding being serviced by us. For the nine months ended September 30, 2019, we sold $159.3 million of receivables. The proceeds from these sales of receivables are included within the "Changes in working capital, net" line within operating activities of our Consolidated Statements of Cash Flows. For the nine months ended September 30, 2019, factoring expense on the sale of receivables was $0.7 million, which is included in the "Interest expense, net" line in the Consolidated Statement of Operations. For the nine months ended September 30, 2018, factoring expense was $0.1 million.

~~ACCOUNTS PAYABLE ARRANGEMENTS~~

We have entered into supply-chain financing programs with financial intermediaries, which provide certain of our vendors the option to be paid by the financial intermediaries on our trade payables earlier than the due date on the applicable invoice. When a vendor receives an early payment from a financial intermediary on a trade payable for which it invoiced us, we pay that financial intermediary the face amount of the invoice on the regularly scheduled due date. If we reimburse these vendors for certain fees they may incur in connection with receiving an early payment on an invoice, the amount of such invoice that would have otherwise been included in our trade payables is included in our short-term debt. As of December 31, 2018, $20.8 million was included in “Short-term debt” on our Consolidated Balance Sheets related to invoices for which we had reimbursed our vendors’ fees. There were no such amounts as of September 30, 2019.

~~DERIVATIVES~~

We had no activity during the three and nine months ended September 30, 2019 and 2018 that required hedge or derivative accounting treatment. To help mitigate our exposure to market risk for changes in utility commodity pricing, we use firm price contracts to supply a portion of the natural gas requirements for our manufacturing facilities, which were reported through "Cost of sales" on our Consolidated Statements of Operations. As of September 30, 2019, these contracts covered approximately 47% of our expected average monthly natural gas requirements for the remainder of 2019, and a lesser amount for 2020. These contracts qualify for treatment as “normal purchases or normal sales” under authoritative guidance and thus required no mark-to-market adjustment.

~~NOTE 2 Recently Adopted and~~ New Accounting Standards

~~RECENTLY ADOPTED ACCOUNTING STANDARDS~~

~~On January 1, 2019, we adopted ASU 2016-02,~~ ~~Leases (Topic 842)~~, and subsequent ASUs related to Topic 842. The new guidance increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The adoption of Topic 842 had a material impact on our Consolidated Balance Sheet due to the recognition of right-of-use assets of approximately $83 million and lease liabilities of approximately $88 million as of January 1, 2019. The difference between these lease assets and lease liabilities represents deferred rent balances that were reclassified on the balance sheet. The adoption of Topic 842 did not have a material impact on our Consolidated Statement of Operations or our Consolidated Statement of Cash Flows. We will continue to report periods prior to January 1, 2019 under prior guidance as outlined in Accounting Standards Codification Topic 840, "~~Leases". Refer to Note 4, "Leases", for further discussion.~~

~~NEW ACCOUNTING STANDARDS~~

In ~~August 2018,~~March 2020, the FASB issued ASU ~~2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)~~2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU ~~requires capitalization of~~provides practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain ~~implementation costs incurred in a cloud computing arrangement that is a service contract.~~criteria are met. This ASU is ~~effective for fiscal years beginning after December 15, 2019 and for interim periods therein, with early adoption permitted. We do not believe this ASU will have a material impact on~~applicable to our ~~consolidated financial statements.~~

~~In August 2018, the FASB issued ASU 2018-14,~~ ~~Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)~~, which modifies the disclosure requirements for defined benefit and other postretirement plans. This ASU eliminates certain disclosures associated with accumulated other comprehensive income, plan assets, related parties and the effects of interest rate basis point changes on assumed health care costs, with other disclosures being added to address significant gains and losses related to changes in benefit obligations. This ASU also clarifies disclosure requirements for projected benefit and accumulated benefit obligations.contracts that reference LIBOR. The amendments inmay be applied through December 31, 2022. We will apply this ~~ASU are effective for fiscal years ending after December 15, 2020, with early adoption permitted~~guidance to transactions and ~~adoption on a retrospective basis for all periods presented required. We are currently assessing the timing~~modifications of ~~our adoption of this ASU and do not believe it will have a material impact on our consolidated financial statements beyond updating footnote disclosures.~~

these arrangements. We reviewed all other new accounting pronouncements issued in the period and concluded that they are not applicable or not material to our business.

NOTE 3 ~~Inventories & Property, Plant and Equipment~~FAIR VALUE MEASUREMENTS

~~Inventories at the balance sheet dates consist of:~~

(In thousands) September 30, 2019 December 31, 2018
Pulp, paperboard and tissue products $ 166,063
$ 159,499
Materials and supplies 93,965
86,892
Logs, pulpwood, chips and sawdust 22,367
19,853
$ 282,395
$ 266,244

~~Property, Plant and Equipment at the balance sheet dates consist of:~~

(In thousands) September 30, 2019 December 31, 2018
Machinery and equipment $ 2,341,596
$ 2,161,306
Buildings and improvements 479,359
381,071
Land improvements 95,914
84,525
Office and other equipment 52,491
49,980
Land 10,756
10,756
Construction in progress 58,348
273,291
$ 3,038,464
$ 2,960,929
Less accumulated depreciation and amortization (1,764,990 ) (1,691,658 )
$ 1,273,474
$ 1,269,271

~~NOTE 4 Leases~~

~~Our adoption of ASU 2016-02,~~ ~~Leases (Topic 842), and subsequent ASUs related to Topic 842, requires us to recognize substantially all leases~~Carrying amounts reported on the balance sheet asfor cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. We estimated the Senior Notes due 2023 and 2025 to have a ~~ROU asset~~total fair market value of $576.6 million and ~~a corresponding lease liability. The new guidance also requires additional disclosures as detailed below.~~$574.0 million at June 30, 2020 and December 31, 2019 based upon market quotations. We ~~adopted this standard on~~estimated the ~~effective date~~fair value of ~~January 1, 2019~~the Term Loan to be $236.9 million and used this effective date as the date of initial application. Under this application method, we were not required to restate prior period financial information or provide Topic 842 disclosures for prior periods. We elected the ‘package of practical expedients’ which permitted us to not reassess our prior conclusions related to lease identification, lease classification$300.0 million at June 30, 2020 and initial direct costs, as well as the practical expedient to not reassess certain land easements. We did not elect the use of hindsight. We combine ROU asset amortization and the change in the lease liability in the same line item on the Consolidated Statements of Cash Flows.December 31, 2019.

NOTE 4 RECEIVABLES

Receivables consist of:


	June 30, 2020		December 31, 2019
Trade accounts receivable	$	168.8	$	157.0
Allowance for current expected credit losses	(1.7)		(1.5)
Taxes receivable	23.4		0.3
Interest receivable	—		1.0
Other	1.4		2.6
	$	191.9	$	159.4

NOTE 5 INVENTORIES

Inventories consist of:


	June 30, 2020		December 31, 2019
Logs, pulpwood, chips and sawdust	$	11.8	$	19.4
Materials and supplies	92.6		93.1
Pulp, paperboard and tissue products	130.9		168.9
	$	235.3	$	281.4

NOTE 6 LEASES

We have operating leases for manufacturing, office, warehouse and distribution space, paperboard sheeting and chipping facilities, equipment and vehicles. We also have finance leases related to our North Carolina converting and manufacturing facilities, as well as for certain office and other equipment. We determine if a contract is a lease at the inception of the arrangement. We review all options to extend, terminate or purchase the ROU assets, and when reasonably certain to exercise, we include the option in the determination of the lease term and lease liability. Our leases have remaining lease terms from less than one year to ~~twelve~~eleven years years, and some of our leases include one or more options to renew.

Lease ROU assets and liabilities are recognized at the commencement date of the lease. Lease ROU assets and liabilities are measured based on the present value of lease payments over the lease term and are reduced by any lease incentives received. When readily determinable, we use the implicit rate in determining the present value of lease payments. When leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date, including the lease term.

Short-term leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term. As of September 30, 2019, our short-term leases were not material. Certain of our leases contain lease and non-lease components that are treated as a single lease component. Our variable lease costs consist primarily of taxes, insurance and common area maintenance. For the three and nine months ended September 30, 2019, sublease income was immaterial to the financial statements.

The tables below present financial information associated with our leases. This information is only presented as of, and for the three and six months ended, September 30, 2019. As noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.

~~LEASE EXPENSE~~


	Three Months Ended		Nine Months Ended
(In thousands)	September 30, 2019
Lease expense					Lease expense	Three Months Ended June 30,						Six Months Ended June 30,
						2020		2019		2020		2019
Operating lease costs	$	4,062	$	11,071	Operating lease costs	$	3.9	$	3.5	$	7.8	$	7.0

Finance lease costs:					Finance lease costs:
Amortization of right-of-use assets	395		1,273		Amortization of right-of-use assets	0.4		0.5		0.9		0.9
Interest on lease liabilities	466		1,405		Interest on lease liabilities	0.4		0.5		0.9		0.9
Total finance lease costs	861		2,678		Total finance lease costs	0.9		0.9		1.8		1.8

Variable lease costs	290		846		Variable lease costs	0.4		0.3		0.8		0.6

Total lease costs	$	5,213	$	14,595	Total lease costs	$	5.2	$	4.8	$	10.4	$	9.4


Supplemental cash flow information	Six Months Ended June 30,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	8.8	$	8.1
Operating cash flows from finance leases	0.9		0.9
Financing cash flows from finance leases	0.7		0.6

Non-cash amounts for lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	1.7	$	0.9
Finance leases	0.3		0.5


Supplemental balance sheet information
	Classification	June 30, 2020		December 31, 2019
Lease ROU Assets
Operating lease assets	Operating lease right-of-use assets	$	68.2	$	73.1
Finance lease assets	Property, plant and equipment, net	26.7		26.5
Accumulated depreciation		(11.8)		(11.1)
Total lease ROU assets		$	83.1	$	88.5

Lease Liabilities
Current operating lease liabilities	Other accrued liabilities	$	14.5	$	13.9
Current finance lease liabilities	Short-term debt	1.6		1.4
Total current lease liabilities		16.1		15.3

Non-current operating lease liabilities	Long-term operating lease liabilities	60.1		65.6
Non-current finance lease liabilities	Long-term debt	20.0		20.6
Total non-current lease liabilities		80.1		86.2

Total operating lease liabilities		74.6		79.5
Total finance lease liabilities		21.6		22.0
Total lease liabilities		$	96.2	$	101.5

~~SUPPLEMENTAL CASH FLOW INFORMATION~~

Nine Months Ended
(In thousands) September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 12,635
Operating cash flows from finance leases 1,405
Financing cash flows from finance leases 1,023

Non-cash amounts for lease liabilities arising from obtaining right-of-use assets:
Operating leases $ 973
Finance leases 493

~~SUPPLEMENTAL BALANCE SHEET INFORMATION~~

(In thousands) Classification September 30, 2019
Lease ROU Assets
Operating lease assets Operating lease right-of-use assets $ 74,503
Finance lease assets Property, plant and equipment, net 15,837
Total lease ROU assets $ 90,340

Lease Liabilities
Current operating lease liabilities Accounts payable and accrued liabilities $ 13,200
Current finance lease liabilities Accounts payable and accrued liabilities 1,398
Total current lease liabilities 14,598

Non-current operating lease liabilities Operating lease liabilities 66,571
Non-current finance lease liabilities Other long-term obligations 20,929
Total non-current lease liabilities 87,500

Total operating lease liabilities 79,771
Total finance lease liabilities 22,327
Total lease liabilities $ 102,098

~~LEASE TERM AND DISCOUNT RATE~~



	~~September 30, 2019~~
~~Weighted average remaining lease term (years)~~
~~Operating leases~~	~~6.9~~
~~Finance leases~~	~~10.9~~

~~Weighted average discount rate~~
~~Operating leases~~	~~4.9~~	%
~~Finance leases~~	~~8.3~~	%

~~MATURITY OF LEASE LIABILITIES~~

~~As of September 30, 2019, our future maturities of lease liabilities were as follows:~~

(In thousands) Operating Finance
2019 $ 3,964
$ 774
2020 16,727
3,175
2021 16,019
3,220
2022 15,081
3,128
2023 9,413
2,897
Thereafter 33,661
21,468
Total lease payments $ 94,865
$ 34,662
Less interest portion (15,094 ) (12,335 )
Total $ 79,771
$ 22,327

~~As of December 31, 2018, as previously disclosed in our 2018 Annual Report on Form 10-K, and under the previous lease accounting standard, we had future minimum lease payments as follows:~~

(In thousands) Operating Capital
2019 $ 12,038
$ 3,093
2020 11,421
3,062
2021 10,424
3,112
2022 9,489
3,019
2023 7,163
2,789
Thereafter 24,276
21,710
Total future minimum lease payments $ 74,811
$ 36,785
Less interest portion (13,887 )
Present value of future minimum lease payments $ 22,898

~~NOTE 5 Intangible Assets~~

~~Intangible assets at the balance sheet dates comprise the following:~~

September 30, 2019
(Dollars in thousands, lives in years)
Weighted Average Useful
Life

Historical
Cost

Accumulated
Amortization

Net
Balance
Customer relationships 9.4 $ 56,453
$ (39,995 ) $ 16,458
Trade names and trademarks 7.4 6,786
(4,800 ) 1,986
Other intangibles 6.0 572
(291 ) 281
$ 63,811
$ (45,086 ) $ 18,725

December 31, 2018
(Dollars in thousands, lives in years)
Weighted Average Useful
Life

Historical
Cost

Accumulated
Amortization

Net
Balance
Customer relationships 9.4 $ 56,453
$ (35,469 ) $ 20,984
Trade names and trademarks 7.4 6,786
(4,029 ) 2,757
Other intangibles 6.0 572
(233 ) 339
$ 63,811
$ (39,731 ) $ 24,080

~~As of September 30, 2019, estimated future annual amortization is as follows:~~

(In thousands)
For the Years Ending
December 31,
2019 $ 1,785
2020 3,246
2021 2,917
2022 2,217
2023 2,140
Thereafter 6,420
Total $ 18,725

For the three months ended September 30, 2019 and 2018, intangible assets amortization expense was $1.8 million and $1.9 million, respectively. For the nine months ended September 30, 2019 and 2018, intangible assets amortization expense was $5.4 million and $5.8 million, respectively.

~~NOTE 6 Income Taxes~~

Consistent with authoritative guidance, our estimated annual effective tax rate is used to allocate expected annual income tax expense to interim periods. The rate is the ratio of estimated annual income tax expense to estimated pre-tax ordinary income, and excludes "discrete items," which are significant, unusual or infrequent items reported separately net of their related tax effect. The estimated annual effective tax rate is applied to the current interim period's ordinary income to determine the income tax expense allocated to the interim period. The income tax effects of discrete items are then determined separately and recognized in the interim period in which the income or expense items arise.

Our estimated annual effective tax rate for the third quarter of 2019 is approximately 34%, compared with approximately 32% for the comparable interim period in 2018. The annual effective tax rate in 2019 is subject to variation due to several factors, including variability in pre-tax income (or loss), forecasted pre-tax income (or loss), changes in business practices, changes in tax credits and tax law developments. The rate in 2018 reflected the Federal rate reduction enacted by the Tax Cuts and Jobs Act offset by an increase in the rate due to basis differences associated with the goodwill written-off as part of the sale of our Ladysmith facility.

NOTE 7 ~~Accounts Payable and Accrued Liabilities~~DEBT

~~Accounts payable and accrued liabilities at the balance sheet dates consist~~Long-term debt consists of:


		June 30, 2020										December 31, 2019
	Interest Rate at June 30, 2020	Principal		Unamortized Debt Costs		Total		Principal		Unamortized Debt Costs		Total
Term loan maturing 2026, variable interest rate	4.3%	$	239.3	$	(3.8)	$	235.4	$	300.0	$	(5.1)	$	294.9
2013 Notes, maturing 2023, fixed interest rate	4.5%	275.0		(1.2)		273.8		275.0		(1.5)		273.5
2014 Notes, maturing 2025, fixed interest rate	5.4%	300.0		(1.3)		298.7		300.0		(1.5)		298.5
ABL Credit Agreement, variable interest rate	3.3%	—		—		—		13.5		—		13.5
Finance leases		21.6		—		21.6		22.0		—		22.0
Total debt		835.9		(6.4)		829.5		910.5		(8.1)		902.4
Less: current portion		(1.6)		—		(1.6)		(17.9)		—		(17.9)
Net long-term portion		$	834.2	$	(6.4)	$	827.9	$	892.6	$	(8.1)	$	884.5

(In thousands) September 30, 2019 December 31, 2018
Trade accounts payable $ 141,458
$ 228,059
Accrued wages, salaries and employee benefits 37,395
41,426
Lease liabilities 14,598
—
Accrued taxes other than income taxes payable 7,037
6,243
Accrued utilities 6,707
6,934
Accrued discounts and allowances 6,502
8,143
Accrued interest 5,322
14,672
Accrued account purchase agreement liabilities —
4,885
Other 10,544
10,670
$ 229,563
$ 321,032

~~NOTE 8 Debt~~

~~CREDIT AGREEMENTS~~

On July 26, 2019, we entered into credit agreements with several lenders and JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent, which included (a) a $300 million Term Loan Credit Agreement (the “Term Loan Credit Agreement”) and (b) a $250 million asset based lending, or ABL, Credit Agreement (the "Term Loan Credit Agreement" and "ABL Credit Agreement" collectively the "Credit Agreements"). At ~~closing, the Term Loan Credit Agreement was fully advanced and $58.0 million was~~

drawn under the ABL Credit Agreement, proceeds of which were used to refinance and terminate our: (a) $200 million credit agreement dated October 31, 2016, as amended, with Wells Fargo Bank, National Association, ("Wells Fargo") as administrative agent, and the lenders party thereto, of which $135.0 million was outstanding and b) the $200 million credit agreement dated October 31, 2016, as amended, with Northwest Farm Credit Services, PCA, ("Farm Credit") as administrative agent, and the lenders party thereto, of which $200.0 million was outstanding (the "Prior Credit Agreements"); pay fees and expenses in connection with the Credit Agreements; and for working capital purposes.

~~In conjunction with the termination of the Prior Credit Agreements, of which the $200 million credit agreement with Wells Fargo was treated as a modification under Topic 470, "Debt"~~, debt extinguishment costs, consisting of $1.7 million in breakage fees and $1.1 million in unamortized debt issuance costs, were written-off as debt retirement costs during the three months ended SeptemberJune 30, 2019. Unamortized debt issuance costs of $1.6 million, related to the debt modification, are being amortized over the remaining term of the ABL Credit Agreement. We incurred debt issuance costs of $7.1 million, which are allocated and amortized over the respective terms of the Credit Agreements.

~~As of September 30, 2019, there was $300.0 million outstanding under our Term Loan and $58.0 million outstanding under our ABL Credit Agreement.~~

The borrowings outstanding under the Prior Credit Agreements as of December 31, 2018 consisted of a combination of short-term floating base rate and LIBOR rate loans, which were classified as current liabilities in our Consolidated Balance Sheet, and $100.0 million of borrowings with a three-year fixed interest rate that was included in “Long-term debt” in our Consolidated Balance Sheet.

The Credit Agreements contain certain customary representations, warranties, and affirmative and negative covenants of us and our subsidiaries that restrict us and our subsidiaries’ ability to take certain actions, including, incurrence of indebtedness, creation of liens, mergers or consolidations, dispositions of assets, repurchase or redemption of capital stock and certain types of indebtedness, making certain investments, entering into certain transactions with affiliates or changing the nature of our business. At September 30, 2019,2020, we were in compliance with covenants in our various credit agreements. The maturities of our Term loan and our ABL Credit Agreement are subject to the refinancing of our 2013 Notes. If the 2013 Notes are not refinanced 91 days before their maturity, the ABL Credit ~~Agreements.~~Agreement and Term Loan Credit Agreement will become due.

Term Loan Credit Agreement

The Term Loan Credit Agreement matures on July 26, 2026. We are required to repay the aggregate outstanding principal amount in quarterly installments ~~on the last day of each March, June, September and December, commencing March 31, 2020, and ending with the last such day to occur prior to the maturity date,~~ in an aggregate amount for each such date equal to the aggregate principal amount of the initial loan amount (as such amount may be adjusted pursuant to the prepayment provisions of the Term Loan Credit Agreement) multiplied by 0.25%. In the second quarter, we made a voluntary prepayment of $60 million. This prepayment was applied against our quarterly required installments through 2026.

In addition, we must make mandatory prepayments of principal under the Term Loan Credit Agreement upon the occurrence of certain specified events, including certain asset sales (subject to customary reinvestment rights), debt issuances not permitted under the Term Loan Credit Agreement, and based on a percentage, which may vary from ~~50%~~0% to 0%50% depending on our secured leverage ratio, of annual ~~excess cash flows~~Excess Cash Flows in excess of certain threshold amounts, less any voluntary prepayments under the Term Loan Credit Agreement. Any remaining outstanding principal balance under the Term Loan Credit Agreement is repayable on the maturity date. Amounts repaid or prepaid by us with respect to the loans under the Term Loan Credit Agreement cannot be reborrowed. We may, at our option, prepay any borrowings under the Term Loan Credit Agreement, in whole or in part, at any time and from time to time without premium or penalty (except in certain circumstances).

We may add one or more incremental term loan facilities to the Term Loan Credit Agreement, subject to obtaining commitments from any participating lenders and certain other conditions, in an amount not to exceed (1) $100 million, plus (2) the amount of all voluntary prepayments of the Term Loan Credit Agreement (other than prepayments funded with long-term indebtedness), plus (3) an additional amount, so long as after giving effect to the incurrence of such additional amount, our pro forma first lien secured leverage ratio would not exceed ~~2.00~~2.00x to ~~1.00.~~1.00x. At June 30, 2020 our pro forma first lien secured ratio was 0.97x. Under the Term Loan Credit Agreement, loans generally may bear interest based on LIBOR or an annual base rate, as applicable, plus, in each case, an applicable ~~margin, when~~margin. When our leverage ratio is (i) less than or equal to 4.25 to 1.00, ofthe margin is 3.00% per annum in the case of LIBOR loans and of 2.00% per annum in the case of annual base rate loans and (ii) greater than 4.25 to 1.00, ofthe margin is 3.25% per annum in the case of LIBOR loans and of 2.25% per annum in the case of annual base rate loans. At ~~September~~June 30, ~~2019,~~2020, our leverage ratio was 3.59x and therefore our applicable margin on LIBOR loans was ~~3.25%~~3.00%.

ABL Credit Agreement

The ABL Credit Agreement matures on July 26, 2024 and includes a $250 million revolving loan commitment, subject to borrowing base limitations based on a percentage of applicable eligible receivables and eligible inventory. UpBased upon our Consolidated Balance Sheet as of June 30, 2020, our borrowings supported up to ~~$15~~$220.6 million availability under the line of ~~the ABL Credit Agreement is available for the issuance of~~which we utilized $4.4 million, no borrowings outstanding and $4.4 million under letters of ~~credit, of which $5.5 million was utilized at September 30, 2019.~~credit. We may, at our option, prepay any borrowings under the ABL Credit Agreement, in whole or in part, at any time and from time to time without premium or penalty (except in certain circumstances). Borrowings under the ABL Credit Agreement are also subject to mandatory prepayment in certain circumstances, including in the event that borrowings exceed applicable borrowing base limits. We may also increase commitments under the ABL Credit Agreement in an aggregate principal amount of up to $100 million, subject to obtaining commitments from any participating lenders and certain other conditions.

Under the ABL Credit Agreement, loans may bear interest based on LIBOR or an annual base rate, as applicable, plus, in each case, an applicable margin that is based on availability (as determined under the ABL Credit Agreement) that may vary from 1.25% per annum to 1.75% per annum in the case of LIBOR loans and 0.25% per annum to 0.75% per annum in the case of annual base rate loans. In addition, a commitment fee based on unused availability is also payable which may vary from 0.25% per annum to 0.375% per annum. From July 26, 2019 through September 30, 2019, our weighted average interest rate was 3.8%. At September 30, 2019, we were able to borrow with an applicable margin of 1.25% on LIBOR loans and our commitment fee rate was 0.375%.

The ABL Credit Agreement also contains a financial covenant, which requires us to maintain a consolidated fixed charge coverage ratio of not less than 1.10 to 1.00, provided that the financial covenant under the ABL Credit Agreement is only applicable when unused availability falls below $25 million. As of June 30, 2020, our fixed charge coverage ratio was approximately 1.50x which included the impact of our voluntary debt prepayments. Our ability to utilize our ABL Credit Agreement could be limited in the future by our bond indentures which have limitations on liens.

NOTE 8 INCOME TAXES

For interim periods, accounting standards require that income tax expense be determined by applying the estimated annual effective income tax rate to year-to-date results, unless this method does not result in a ~~certain threshold.~~reliable estimate of year-to-date income tax expense. Each period, the income tax accrual is adjusted to the latest estimate and the difference from the previously accrued year-to-date balance is adjusted to the current quarter.

For the first six months of 2020, our income tax expense reflects a rate of 11% as compared to rate of 54% in the comparable period of 2019. For the first six months of 2020, the primary differences between the U.S. federal income tax rate of 21% and the effective rate of 11% relates to the effect of tax credits and a $7.1 million benefit from the provisions of the Coronavirus Aid, Relief, and Economic Security Act. For the first six months of 2019, the primary differences between the U.S. federal income tax rate of 21% and the effective rate of 54% relates to the effect of tax credits and non-deductible compensation expense.

NOTE 9 ~~Other Long-Term Obligations~~OTHER OPERATING CHARGES

~~Other long-term obligations at~~The major components of “Other operating charges, net” in the ~~balance sheet dates consist of:~~Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019 are reflected in the table below and described in the paragraphs following the table:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Reorganization expenses	$	0.6	$	0.1	$	3.4	$	0.1
Union settlement	—		—		6.6		—
Gain on divested assets	—		—		(1.4)		—
Directors' equity-based compensation expense (benefit)	1.9		—		2.1		(0.3)
Other	0.5		0.3		0.8		0.4
	$	3.0	$	0.4	$	11.5	$	0.1

2020

During the second quarter of 2020, we recorded $3.0 million of expenses in "Other operating charges, net." The components of the expenses include:

•expenses of $0.6 million related to reorganization expenses (primarily related to corporate expenses), and

•expense of $1.9 million relating to directors' equity based compensation.

During the first quarter of 2020, we recorded $8.5 million of expenses in "Other operating charges, net." The components of the expenses include:

•expenses of $2.8 million related to reorganization expenses (primarily related to corporate expenses),

(In thousands) September 30, 2019 December 31, 2018
Finance lease obligations, net of current portion $ 20,929
$ 21,589
Deferred compensation 4,471
2,585
Deferred proceeds 3,955
4,511
Other 4,635
10,292
$ 33,990
$ 38,977
•expenses of $6.6 million associated with union settlement retroactive wage payments ($2.6 million associated with Consumer Products and $4.0 million associated with Paperboard segments),

•gain of $1.4 million associated with the Ladysmith Consumer Products facility sale escrow release, and

•expense of $0.2 million relating to directors' equity based compensation.

NOTE 10 ~~Pension~~NON-OPERATING INCOME (EXPENSE)

The components of “Non-operating expense” in the Consolidated Statements of Operations for the three and ~~Other Postretirement Employee Benefit Plans~~six months ended June 30, 2020 and 2019 are reflected in the table below:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Interest expense	$	(11.5)	$	(12.7)	$	(23.7)	$	(24.6)
Capitalized interest	—		2.0		—		5.4
Amortization of debt issuance costs	(0.5)		(0.4)		(1.1)		(0.9)
Interest income	—		0.3		—		0.7
Interest expense, net	(12.0)		(10.9)		(24.9)		(19.4)

Debt retirement costs	(1.0)		—		(1.0)		—
Non-operating pension and other postretirement employee benefits income (expense)	(2.0)		(1.5)		(3.8)		(2.8)
Total non-operating expense	$	(14.9)	$	(12.4)	$	(29.6)	$	(22.2)

NOTE 11 PENSION AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS

The following table details the components of net periodic cost of our company-sponsored pension and other postretirement employee benefit ~~or OPEB,~~ plans for the periods presented:


														Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended September 30,
(In thousands)	2019			2018			2019			2018
	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
Pension Benefit Plans													Pension Benefit Plans	2020		2019		2020		2019
Service cost	$	609		$	447		$	23		$	34		Service cost	$	0.6	$	0.7	$	1.2	$	1.2
Interest cost	3,110			3,005			700			609			Interest cost	2.6		3.1		5.2		6.2
Expected return on plan assets	(4,134		)	(4,250		)	—			—			Expected return on plan assets	(3.7)		(4.1)		(7.5)		(8.3)
Amortization of prior service credit	—			—			—			(419		)
Amortization of actuarial loss (gain)	1,844			2,515			(99		)	(226		)	Amortization of actuarial loss (gain)	2.5		1.8		5.0		3.7
Net periodic cost (benefit)	$	1,429		$	1,717		$	624		$	(2	)
Net periodic cost													Net periodic cost	$	2.0	$	1.4	$	3.9	$	2.9

Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
Pension Benefit Plans
Other Postretirement
Employee Benefit Plans
Service cost $ 1,828
$ 1,342
$ 68
$ 102
Interest cost 9,333
9,015
2,099
1,827
Expected return on plan assets (12,401 ) (12,751 ) —
—
Amortization of prior service credit —
—
—
(1,257 )
Amortization of actuarial loss (gain) 5,529
7,543
(294 ) (677 )
Net periodic cost (benefit) $ 4,289
$ 5,149
$ 1,873
$ (5 )


	Three Months Ended June 30,						Six Months Ended June 30,
Other Postretirement Employee Benefit Plans	2020		2019		2020		2019
Service cost	$	—	$	—	$	—	$	—
Interest cost	$	0.6	$	0.8	$	1.1	$	1.4

Amortization of actuarial loss (gain)	—		—		—		(0.2)
Net periodic cost	$	0.6	$	0.8	$	1.2	$	1.2

~~During the nine months ended September 30, 2019 and 2018, we made no contributions to our qualified pension plans. We do not expect, nor are we required, to make contributions in~~ ~~2019~~.

During the nine months ended September 30, 2019, we made contributions of $0.3 million to our company-sponsored non-qualified pension plan. We estimate contributions will total $0.4 million in 2019. We do not anticipate funding our OPEB plans in ~~2019~~ ~~except to pay benefit costs as incurred during the year by plan participants.~~

We record the service component of net periodic cost (benefit) as part of "Cost of sales" and "Selling, general, and administrative expenses," while the non-service components of net periodic cost (benefit) are recorded to ~~"Non-operating pension and other postretirement benefit costs (income)"~~"Other non-operating expense" on our Consolidated Statements of Operations. For the three and six months ended June 30, 2020, we recorded $0.4 million and $0.7 million to "Cost of sales" and $0.2 million and $0.5 million to "Selling, general, and administrative expenses". For the three and six months ended June 30, 2019, we recorded $0.4 million and $0.8 million to "Cost of sales" and $0.3 million and $0.5 million to "Selling, general, and administrative expenses".

NOTE ~~11 Earnings~~12 ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss, net of tax, is comprised of the following:


	Pension Plan Adjustments		Other Post Retirement Employee Benefit Plan Adjustments		Total
Balance at December 31, 2018	$	(83.0)	$	15.7	$	(67.3)

Amounts reclassified from accumulated other comprehensive loss	2.7		(0.1)		2.5
Other comprehensive income, net of tax	2.7		(0.1)		2.5
Balance at June 30, 2019	$	(80.3)	$	15.6	$	(64.8)

Balance at December 31, 2019	$	(67.8)	$	8.3	$	(59.5)

Amounts reclassified from accumulated other comprehensive loss	3.7		—		3.7
Other comprehensive income, net of tax	3.7		—		3.7
Balance at June 30, 2020	$	(64.1)	$	8.3	$	(55.8)

NOTE 13 STOCKHOLDERS' EQUITY

Common Stock Plans

We have stock-based compensation plans under which restricted stock awards and stock options are granted according to time or performance vesting requirements. At June 30, 2020, approximately 1.3 million shares were available for future issuance under our current plan.


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Total stock-based compensation expense (selling, general and administrative and other operating charges, net)	$	3.4	$	1.2	$	4.8	$	2.1
Income tax benefit related to stock-based compensation	$	0.9	$	0.3	$	1.3	$	0.5
Impact on cash flow due to taxes paid related to net share settlement of equity awards	$	—	$	—	$	0.7	$	0.4

At June 30, 2020, $12.2 million of compensation cost related to unvested restricted stock units, performance awards and stock options attributable to future service had not yet been recognized.

During the first six months ended June 30, 2020, we granted 371,267 restricted stock units (time vesting) at an average grant date fair value of $23.18 per ~~Share~~share and 120,382 restricted stock units (performance vesting) at an average grant date fair value of $27.67.

NOTE 14 EARNINGS PER SHARE

Basic income (loss) ~~earnings~~ per share is based on the weighted-average number of shares of common stock outstanding. Diluted ~~earnings~~income (loss) per share is based upon the weighted-average number of shares of common stock outstanding plus all potentially dilutive securities that were assumed to be converted into common shares at the beginning of the period under the treasury stock method. ~~This method requires the effect of potentially dilutive~~


	Three Months Ended June 30,			Six Months Ended June 30,
(In thousands)	2020	2019	2020	2019
Basic weighted-average common shares outstanding¹	16,594	16,539	16,575	16,528
Incremental shares due to:
Stock-based awards	92	—	70	24
Diluted weighted-average common shares outstanding	16,686	16,539	16,644	16,552

¹Basic weighted-average common shares outstanding includes restricted stock ~~equivalents be~~unit awards that are fully vested, but are deferred for future issuance.

Anti-dilutive shares excluded from the calculation ~~of diluted earnings per share for the periods in which net losses are reported because the effect is anti-dilutive.~~

~~The following table reconciles the number of common shares used in calculating the basic and diluted net earnings per share:~~

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Basic weighted-average
common shares outstanding¹
16,538,569
16,486,935
16,531,195
16,492,843
Incremental shares due to:
Restricted stock units —
22,461
—
27,893
Performance shares —
54,253
—
52,508
Stock options —
—
—
60
Diluted weighted-average
common shares outstanding
16,538,569
16,563,649
16,531,195
16,573,304

Basic net (loss) earnings per common share $ (0.66 ) $ 2.09
$ (0.46 ) $ 2.67
Diluted net (loss) earnings per common share (0.66 ) 2.08
(0.46 ) 2.66

Anti-dilutive shares excluded from calculation 1,060,643
985,312
1,040,544
935,037


¹	~~Basic weighted-average common shares outstanding includes restricted stock unit awards that are fully vested, but are deferred for future issuance.~~

~~NOTE 12 Equity-Based Compensation~~

We recognize equity-based compensation expense for all equity-based payment awards made to employees and directors, including restricted stock units, or RSUs, performance shares and stock options, based on estimated fair values.

~~EMPLOYEE AWARDS~~

~~Employee equity-based compensation expense (income) was recognized as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
Restricted stock units $ 794
$ 595
$ 1,975
$ 1,599
Performance shares (682 ) 499
(164 ) 1,409
Stock options 357
639
1,047
1,767
Total employee equity-based compensation expense $ 469
$ 1,733
$ 2,858
$ 4,775

As provided in the Clearwater Paper Corporation 2017 Stock Incentive Plan, the performance measure used to determine the number of performance shares ultimately issuable for performance shares granted in 2019 is a free cash flow performance measure for 70% of the performance share awards. For the remaining 30% of the grants, a return on invested capital measure is used. The combined performance of these measures is then subject to an adjustment (increase or decrease) of up to 25% based on our total shareholder return, or TSR, compared to the TSR performance of a selected index. The number of performance shares actually issued, as a percentage of the amount subject to the performance share award, could range from 0%-200%. Throughout the service periods we assess the probability of achieving the performance conditions for our applicable performance share grants, and expense is recognized based on the probable outcomes.

~~During the nine months ended September 30, 2019, 47,504 RSUs~~ were settled and distributed. After adjusting for minimum tax withholdings, a net 32,992 shares were issued. In connection with the issued RSUs, the minimum tax withholding payments made during the nine months ended September 30, 2019 totaled $0.4 million.

During the nine months ended September 30, 2019, we had 75,223 stock option awards expire with a weighted-average exercise price of $51.69. At September 30, 2019, we had 515,438 stock option awards that were exercisable with a weighted-average exercise price of $51.19.

~~The following table summarizes the number of share-based awards granted under the Clearwater Paper Corporation 2017 Stock Incentive Plan during the nine months ended~~ ~~September 30, 2019~~ ~~and the grant-date fair value of the awards:~~

Nine Months Ended
September 30, 2019
Number of
Shares Subject to Award Weighted-Average Fair
Value of Award Per Share
Restricted stock units 137,037
$ 26.61
Performance shares 151,664
26.60

~~DIRECTOR AWARDS~~

Annually, each outside member of our Board of Directors receives deferred equity-based awards that are measured in units of our common stock and ultimately settled in cash at the time of payment. Accordingly, the compensation expense associated with these awards is subject to fluctuations each quarter based on mark-to-market adjustments at each reporting period in line with changes in the market price of our common stock. As a result of the mark-to-market adjustment, we recorded director equity-based compensation expense of $0.40.7 million and ~~$0.8~~1.1 million for the three months ended ~~September~~June 30, 2020 and 2019 and ~~2018, respectively. For~~0.8 million and 1.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018, we recorded director equity-based compensation expense~~2019.

NOTE 15 SEGMENT INFORMATION

We operate in two segments: Consumer Products and Paperboard. Our business units have been aggregated into these two segments based upon the similarity of ~~$0.1 million~~economic characteristics, customers and ~~a benefit~~distribution methods. Our results of ~~$1.9 million, respectively.~~

Asoperations are summarized below for each of ~~September 30, 2019,~~these segments separately. Segment information was prepared in accordance with the ~~liability amounts associated with director equity-based compensation~~same accounting principles as those described in Note 1 of the Notes to the consolidated financial statements included in ~~"Other long-term obligations"~~our Annual Report on Form 10-K for the ~~accompanying Consolidated Balance Sheet were $2.2 million. At~~year ended December 31, 2018, the liability amounts associated with director equity-based compensation included in "Other long-term obligations" and "Accounts payable and accrued liabilities" totaled $0.8 million and $1.3 million, respectively.2019.


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Segment net sales:
Consumer Products	$	275.1	$	224.3	$	540.8	$	447.7
Paperboard	205.4		227.7		417.6		433.1
Total segment net sales	$	480.5	$	452.0	$	958.4	$	880.8

Operating income (loss):
Consumer Products	$	36.6	$	(5.1)	$	50.9	$	(3.9)
Paperboard	32.2		33.6		58.7		63.0
Corporate	(17.6)		(12.7)		(31.1)		(29.3)
Other operating charges, net	(3.0)		(0.4)		(11.5)		(0.1)
Income from operations	$	48.1	$	15.3	$	67.0	$	29.7

~~NOTE 13 Fair Value Measurements~~

~~The estimated fair values of our financial instruments at the dates presented below are as follows:~~


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Major products:
Paperboard	$	204.1	$	226.2	$	415.1	$	429.2
Retail tissue	260.4		210.5		508.4		415.1
Non-retail tissue	10.2		12.3		24.1		30.7
Other	5.8		3.0		10.7		5.8
Total net sales	$	480.5	$	452.0	$	958.4	$	880.8

September 30, December 31,
2019 2018
Carrying Fair Carrying Fair
(In thousands) Amount Value Amount Value
Cash, cash equivalents and restricted cash (Level 1) $ 10,295
$ 10,295
$ 24,947
$ 24,947
Short-term borrowings under revolving credit agreements (Level 2) 58,000
58,000
100,000
99,909
Other short-term debt (Level 1) —
—
20,833
20,833
Long-term debt (Level 2) 875,000
863,340
675,000
612,546

Accounting guidance establishes a framework for measuring the fair value of financial instruments, providing a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities, or “Level 1” measurements, followed by quoted prices of similar assets or observable market data considering the assets' underlying maturities, or “Level 2” measurements, and the lowest priority to unobservable inputs, or “Level 3” measurements.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used should seek to maximize the use of observable inputs and minimize the use of unobservable inputs.

~~Cash, cash equivalents and restricted cash, borrowings under the revolving credit agreements, other short-term debt and long-term debt are the only items measured at fair value on a recurring basis.~~

~~For cash, cash equivalents, restricted cash and any revolving line of credit borrowings, the carrying amount approximates fair value due to the short-term nature of these financial instruments.~~

The fair value of our long-term debt is estimated based upon quoted market prices for similar debt issues or estimated based on average market prices for comparable debt when there is no quoted market price.

~~We do not have any financial assets measured at fair value on a nonrecurring basis.~~

~~NOTE 14 Segment Information~~

~~Our reportable segments are described below.~~

~~CONSUMER PRODUCTS~~

Our Consumer Products segment manufactures and sells a complete line of at-home tissue products, or retail products, and away-from-home tissue products, or non-retail products, and parent rolls. Retail products include bath, paper towels, facial and napkin product categories. Non-retail products include conventional one and two-ply bath tissue, two-ply paper towels, some facial tissue product categories, hard wound towels and dispenser napkins sold to customers with commercial and industrial tissue needs. Each category is further distinguished according to quality segments: ultra, premium, value and economy.

~~PULP and PAPERBOARD~~

Our Pulp and Paperboard segment manufactures and markets solid bleached sulfate paperboard for the high-end segment of the packaging industry as well as offers custom sheeting, slitting and cutting of paperboard. Our overall production consists primarily of folding carton, liquid packaging, cup and plate products and commercial printing grades. The majority of our Pulp and Paperboard customers are packaging converters, folding carton converters, merchants and commercial printers.

~~The table below presents information about our reportable segments:~~

Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands) 2019 2018 2019 2018
Segment net sales:
Consumer Products $ 228,544
$ 211,642
$ 676,220
$ 672,069
Pulp and Paperboard 216,644
214,818
649,740
623,442
Total segment net sales $ 445,188
$ 426,460
$ 1,325,960
$ 1,295,511

Earnings (loss) before income taxes:
Consumer Products¹
$ (4,438 ) $ (1,269 ) $ (8,300 ) $ (3,244 )
Gain on divested assets —
22,944
—
22,944
Pulp and Paperboard¹
17,098
38,280
80,073
98,626
12,660
59,955
71,773
118,326
Corporate¹
(15,120 ) (13,055 ) (44,530 ) (41,506 )
(Loss) income from operations (2,460 ) 46,900
27,243
76,820
Interest expense, net (13,077 ) (7,547 ) (32,477 ) (23,290 )
Debt retirement costs (2,725 ) —
(2,725 ) —
Non-operating pension and other postretirement benefit costs (1,421 ) (1,234 ) (4,266 ) (3,700 )
(Loss) earnings before income taxes $ (19,683 ) $ 38,119
$ (12,225 ) $ 49,830

Depreciation and amortization:
Consumer Products $ 19,025
$ 14,447
$ 51,227
$ 42,964
Pulp and Paperboard 11,168
9,316
30,144
28,106
Corporate 1,797
1,579
4,972
4,616
Total depreciation and amortization $ 31,990
$ 25,342
$ 86,343
$ 75,686


¹			Income (loss) from operations for the Consumer Products, Pulp and Paperboard and Corporate segments for the nine months ended September 30, 2018 include $1.7 million, $0.5 million and $4.2 million, respectively, of expenses associated with our selling, general and administrative cost control measures.

For the nine months ended September 30, 2019, no customer accounted for more than 10% of our total company net sales. For the nine months ended September 30, 2018, one customer in our Consumer Products segment, the Kroger Company, accounted for approximately 11.9% of our total company net sales.

~~Net sales, classified by the major geographic areas in which our customers are located and by major products, were as follows:~~

Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands) 2019 2018 2019 2018
Primary geographical markets:
United States $ 424,743
$ 404,593
$ 1,270,944
$ 1,237,644
Other countries 20,445
21,867
55,016
57,867
Total net sales $ 445,188
$ 426,460
$ 1,325,960
$ 1,295,511

Major products:
Paperboard $ 215,370
$ 214,818
$ 644,565
$ 623,442
Retail tissue 215,255
183,948
630,354
601,557
Non-retail tissue 12,421
27,624
43,153
68,348
Other 2,142
70
7,888
2,164
Total net sales $ 445,188
$ 426,460
$ 1,325,960
$ 1,295,511

~~NOTE 15 Supplemental Guarantor Financial Information~~

All of our subsidiaries that are 100% directly or indirectly owned by Clearwater Paper, guarantee our $275 million aggregate principal amount of 4.5% senior notes issued in January 2013 and due 2023, which we refer to as the 2013 Notes, on a full and unconditional, and joint and several basis. There are no significant restrictions on the ability of the guarantor subsidiaries to make distributions to Clearwater Paper, the issuer of the 2013 Notes. The following tables present the results of operations, financial position and cash flows of Clearwater Paper and its subsidiaries, the guarantor subsidiaries, and the eliminations necessary to arrive at the information for Clearwater Paper on a consolidated basis.