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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 17, 1996
Boise Cascade Corporation
(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-5057 82-0100960
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification No.)
1111 W. Jefferson Street, Boise, Idaho 83728
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (208)384-6161
Item 5. Other Events.
The Company issued a news release on January 17, 1996,
to announce its operating results for the fourth quarter and full
year of 1995. A copy of the news release is filed as Exhibit 99.
Item 7. Financial Statements and Exhibits.
Exhibit 12 Ratio of earnings to fixed charges
Exhibit 99 News release issued by the Company on
January 17, 1996, related to its fourth-
quarter and full-year (1995) results of
operations
SIGNATURE
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 hereunto duly authorized.
BOISE CASCADE CORPORATION
/s/ IRVING LITTMAN
Irving Littman
Vice President and Treasurer
Date: January 17, 1996
Exhibit Index
Exhibit No. Description Page
12 Ratio of Earnings to Fixed Charges
99 News Release Issued by Boise Cascade
Corporation on January 17, 1996
EXHIBIT NO. 99
News Release Issued By Boise Cascade Corporation
on January 17, 1996
Contact:
Robert B. Hayes
(Office) (208) 384-7675
(Home) (208) 345-9863
FOR IMMEDIATE RELEASE: January 17, 1996
Boise Cascade Posts Record Net Income in 1995
***
Good Year Expected in 1996
BOISE, Idaho -- Boise Cascade Corporation (NYSE:BCC)
today reported that net income for the fourth quarter of
1995 was $70.4 million, or $1.07 per fully diluted share.
This compares with net income of $25.9 million, or 32 cents
per fully diluted share, for the fourth quarter of 1994.
Results for the fourth quarter of 1995 include a pretax
charge of $74.9 million, or 76 cents per fully diluted
share, attributed primarily to the revaluation of certain
paper-related assets to their fair value and a pretax gain
of $68.9 million, or 70 cents per fully diluted share, from
the sale of the company's remaining interest in Rainy River
Forest Products Inc. Sales in the fourth quarter of 1995
were $1.2 billion, compared with $1.1 billion in the fourth
quarter of 1994.
Net income for all of 1995 was a record $351.9 million,
or $5.39 per fully diluted share. Excluding nonrecurring
gains and charges in both years, the company earned
$336.8 million, or $5.14 per fully diluted share, in 1995,
compared with a loss of $35.6 million, or $2.37 per fully
diluted share, in 1994. Full-year sales were $5.1 billion
in 1995 and $4.1 billion in 1994.
Boise Cascade's Chairman of the Board and Chief
Executive Officer George J. Harad described 1995 as a year
of "significant accomplishments" for the company. In
addition to being more profitable than at any time in its
39-year history, Harad noted that Boise Cascade reduced debt
by approximately $354 million, facilitated the growth of
Boise Cascade Office Products Corporation (NYSE:BOP) through
an initial public offering, sharpened the product focus of
its paper business, expanded its engineered wood products
business, and began the repurchase of 4.3 million shares of
common stock or common stock equivalents. Late in 1995, the
company also announced plans to form a joint venture with
Brazilian papermaker Suzano de Papel e Celulose to build an
additional uncoated free sheet paper machine at Boise
Cascade's complex in Jackson, Alabama. "These actions and
others," Harad said, "are aimed at enhancing the value of
Boise Cascade to our shareholders."
Review of Operations
Operating income for the company's paper business was
$41.7 million in the fourth quarter of 1995, compared with
$43.2 million in the fourth quarter of 1994 and $164 million
in the third quarter of 1995. Results for the most recent
quarter include a pretax charge of $74.9 million stemming
largely from the revaluation of assets at the company's pulp
and paper mill in Vancouver, Washington. A study is
currently underway to determine the mill's ultimate
operating configuration. Results for the quarter also
include the negative financial impact of approximately
63,000 tons of market-related downtime taken in response to
excessive customer inventories. Higher-than-normal
inventories of uncoated free sheet papers, Boise Cascade's
most important grade, developed during the first half of
1995, as customers sought to hedge against rapidly rising
prices. Since then, sales of uncoated free sheet papers
have slowed, as customers work off their unusually large
inventories.
Operating income for the company's office products
distribution business was $24.6 million in the fourth
quarter of 1995, compared with $10.3 million in the fourth
quarter of 1994 and $21.2 million in the third quarter of
1995. The business's strategy to grow rapidly and
profitably through internal expansion and acquisitions
resulted in higher total sales and same-location sales, as
well as improved profit margins in the fourth quarter of
1995. Excluding acquisitions made since September 30, 1994,
sales increased 25% in the fourth quarter of 1995, compared
with sales in the fourth quarter of 1994.
Operating income for the company's building products
business was $13.3 million in the fourth quarter of 1995,
compared with $37.7 million in the fourth quarter a year ago
and $29.6 million in the third quarter of 1995. Results for
the fourth quarter of 1995 reflect further deterioration in
prices for lumber, which is in oversupply due largely to
imports from Canada. Prices also fell for plywood, which is
facing increasing competition from other panel products.
Outlook
Boise Cascade said it expects that paper inventories
will normalize as the year progresses, setting the stage for
the resumption of higher levels of production and firmer
pricing. The office products distribution business should
continue to perform very well. Wood products markets are
expected to remain sluggish, unless shipments of lumber from
Canada diminish in response to a trade agreement now under
discussion between the U.S. and Canadian governments.
Overall, given modest growth in the U.S. and world
economies, the company said it expects a good performance in
1996, though less than 1995's record results.
Boise Cascade Corporation is an integrated paper and
forest products company headquartered in Boise, Idaho, with
operations located primarily in the United States. The
company manufactures and distributes paper and paper
products, office products, and building products and owns
and manages timberland to support these operations.
# # #
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME (1)
(Unaudited)
(In thousands, except per share data)
Three months ended December 31 1995 1994
Revenues
Sales $1,241,960 $1,108,880
Other income (expense), net 750 (5,570)
Subtotal 1,242,710 1,103,310
Costs and expenses
Materials, labor, and other
operating expenses 923,070 877,340
Depreciation and cost of company
timber harvested 58,170 60,050
Selling and administrative expenses 121,110 89,870
Subtotal 1,102,350 1,027,260
Equity in net income of affiliates 6,760 1,230
Income from operations 147,120 77,280
Interest expense (29,750) (37,770)
Interest income 760 900
Foreign exchange loss (320) -
Gain on subsidiary's issuance
of stock 110 -
Subtotal (29,200) (36,870)
Income before income taxes
and minority interest 117,920 40,410
Income tax provision 44,770 14,550
Income before minority interest 73,150 25,860
Minority interest, net of income tax (2,730) -
Net income $ 70,420 $ 25,860
Net income per common share (2)
Primary $ 1.15 $ .32
Fully diluted $ 1.07 $ .32
SEGMENT INFORMATION (1)
Segment sales
Paper and paper products $ 590,413 $ 523,687
Office products 374,911 259,081
Building products 368,264 391,872
Intersegment eliminations and other (91,628) (65,760)
Total $1,241,960 $1,108,880
Segment operating income
Paper and paper products $ 41,709 $ 43,154
Office products 24,615 10,278
Building products 13,267 37,710
Equity in net income of affiliates 6,760 1,230
Corporate and other 60,769 (15,092)
Income from operations $ 147,120 $ 77,280
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME (LOSS) (1)
(Unaudited)
(In thousands, except per share data)
Year ended December 31 1995 1994
Revenues
Sales $5,074,230 $4,140,390
Other income (expense), net (16,560) 1,360
Subtotal 5,057,670 4,141,750
Costs and expenses
Materials, labor, and other
operating expenses 3,764,960 3,453,730
Depreciation and cost of company
timber harvested 240,920 236,430
Selling and administrative expenses 436,260 336,970
Subtotal 4,442,140 4,027,130
Equity in net income (loss)
of affiliates 40,070 (22,930)
Income from operations 655,600 91,690
Interest expense (135,130) (147,800)
Interest income 2,970 1,690
Foreign exchange loss (300) (130)
Gain (loss) on subsidiaries'
issuance of stock 66,270 (10,200)
Subtotal (66,190) (156,440)
Income (loss) before income taxes
and minority interest 589,410 (64,750)
Income tax provision (benefit) 231,290 (2,140)
Income (loss) before minority interest 358,120 (62,610)
Minority interest, net of income tax (6,260) -
Net income (loss) $ 351,860 $ (62,610)
Net income (loss) per common share (2)
Primary $ 5.93 $(3.08)
Fully diluted $ 5.39 $(3.08)
SEGMENT INFORMATION (1)
Segment sales
Paper and paper products $2,518,173 $1,794,898
Office products 1,315,953 908,520
Building products 1,575,420 1,653,425
Intersegment eliminations and other (335,316) (216,453)
Total $5,074,230 $4,140,390
Segment operating income (loss)
Paper and paper products $ 435,988 $ (38,473)
Office products 72,055 42,008
Building products 89,178 150,978
Equity in net income (loss) of
affiliates 40,070 (22,930)
Corporate and other 18,309 (39,893)
Income from operations $ 655,600 $ 91,690
(1) FINANCIAL HIGHLIGHTS. The Statements of Income
(Loss) and Segment Information are unaudited statements
which do not include all Notes to Financial Statements and
should be read in conjunction with the 1995 Annual Report
of the Company. The 1995 Annual Report will be available
in March 1996. The net income for the three months ended
December 31, 1995 and 1994, was subject to seasonal varia-
tions and necessarily involved adjustments to estimates
made at interim periods for accruals and allocations.
In the fourth quarter of 1995, the Company adopted
Financial Accounting Standards Board Statement 121, a new
standard on accounting for the impairment of long-lived
assets. As a result of an evaluation of its paper
strategies, a decision was made to reconfigure the
Vancouver, Washington, pulp and paper mill and reduce,
over time, its production. In the fourth quarter of 1995,
the Company's paper and paper products segment recorded a
charge of approximately $74,900,000 before taxes, or
76 cents per fully diluted share. Most of this charge is
related to the write-down of certain of the mill's assets
under the provisions of the new accounting standard.
In October 1994, Rainy River Forest Products Inc. ("Rainy
River"), the Company's former Canadian subsidiary,
completed an initial public offering of units of its
equity and debt securities. As a result of the offering,
the Company owned 49% of the outstanding voting common
shares and 60% of the total equity of Rainy River. Rainy
River was accounted for on the equity method retroactive
to January 1, 1994, in the Company's consolidated
financial statements. Rainy River's results of operations
were included in "Equity in net income (loss) of
affiliates." Rainy River owned and operated the Company's
former newsprint mill in Kenora, Ontario, Canada, an
uncoated groundwood paper mill in Fort Frances, Ontario,
Canada, and a newsprint mill in West Tacoma, Washington.
The equity securities were sold at a premium to the net
book value of the Canadian company, but the translation
into U.S. dollars and other costs of the transaction
resulted in a charge to the Company of $10,200,000 before
taxes, or 18 cents per fully diluted common share, in the
third quarter 1994. Also in the third quarter of 1994,
recognition by the Company of a noncash charge for U.S.
taxes on previously undistributed Canadian earnings
amounted to $20,200,000, or 53 cents per fully diluted
common share.
In November 1995, the Company divested its remaining
interest in Rainy River through Rainy River's merger with
Stone-Consolidated Corporation, and received cash of
approximately $183,000,000 and Stone-Consolidated stock.
At December 31, 1995, the Company held approximately
6,600,000 shares of Stone-Consolidated common stock,
representing approximately 6.4% of Stone-Consolidated's
outstanding common stock. In addition, the Company held
approximately 2,800,000 shares of Stone-Consolidated's
redeemable preferred stock. The Company accounts for its
holdings in Stone-Consolidated on the cost method. The
Company will use the proceeds from this transaction to
reduce debt, make capital investments, and enhance share-
holder returns. In the fourth quarter of 1995, the
Company recorded a pretax gain of approximately
$68,900,000, or 70 cents per fully diluted share, for the
sale of its remaining interest in Rainy River.
The net effect in the fourth quarter of 1995 of the gain
on the sale of the Company's interest in Rainy River and
the charge recorded in the paper and paper products
segment decreased net income approximately $3,700,000 and
fully diluted earnings per share six cents for the
quarter.
In the second quarter of 1995, the Company provided
$32,500,000 of income taxes, or 53 cents per fully diluted
share, for the tax effect of the difference in the book
and tax bases of its stock ownership in Rainy River.
In April 1995, the Company's wholly owned subsidiary,
Boise Cascade Office Products Corporation ("BCOP"),
completed the initial public offering of 5,318,750 shares
of common stock at a price of $25 per share. After the
offering, the Company owned 82.7% of the outstanding BCOP
common stock. The net proceeds of the offering to BCOP
were approximately $123,076,000, of which approximately
$101,859,000 was indirectly available to the Company for
general corporate purposes. The remainder of the proceeds
were retained by BCOP for its general corporate purposes.
From the BCOP offering, the Company recorded a gain of
approximately $60,000,000, or 98 cents per fully diluted
share, in the second quarter of 1995. In the third
quarter of 1995, BCOP issued 445,305 shares of its stock
to effect various acquisitions. As a result of these
share issuances, the Company recorded a gain of
$6,160,000, or 10 cents per fully diluted share. In
accordance with SFAS 109, Accounting for Income Taxes,
income taxes were not provided on the gains. At
December 31, 1995, the Company owns 81.5% of the
outstanding BCOP common stock.
Also, in the second quarter of 1995, the Company
established reserves for the write-down of certain assets
in its paper and paper products segment to their net
realizable value with a pretax charge of $19,000,000 or
19 cents per fully diluted share. The Company also added
to its existing reserves $5,000,000 before taxes, or
5 cents per fully diluted share, for environmental and
other contingencies.
The net effect of the gain on the sale of the Company's
interest in Rainy River, the fourth quarter charge
recorded in the paper and paper products segment, the
gains on the issuance of BCOP stock, the tax provision for
Rainy River, and the establishment of the above second
quarter reserves increased net income $15,100,000 and
fully diluted earnings per share 25 cents for the year
ended December 31, 1995.
The effective tax provision rate for 1995, before any
effects of the unusual items described above, was 38%
compared with a tax benefit rate of 34.5% for 1994. The
change in the rate is primarily due to increased income
from the Company's U.S. operations.
(2) NET INCOME (LOSS) PER COMMON SHARE. Net income
(loss) per common share was determined by dividing net
income (loss), as adjusted, by applicable shares
outstanding. For the three months and year ended
December 31, 1994, the computation of fully diluted net
loss per share was antidilutive; therefore, the amounts
reported for primary and fully diluted loss were the same.
For the year ended December 31, 1995 and 1994, primary
average shares included common shares outstanding, and if
dilutive, common stock equivalents attributable to stock
options, Series E conversion preferred stock prior to
converting to shares of the Company's common stock on
January 15, 1995, and Series G conversion preferred stock.
Excluded common equivalent shares were 16,391,000 at
December 31, 1994. In addition to common and common
equivalent shares, fully diluted average shares include
common shares that would be issuable upon conversion of
the Company's other convertible securities.
Year Ended December 31
1995 1994
(expressed in thousands)
Net income (loss) as reported $ 351,860 $ (62,610)
Preferred dividends (25,550) (54,586)
__________ __________
Primary income (loss) 326,310 (117,196)
Assumed conversions:
Preferred dividends eliminated 14,740 43,776
Interest on 7 percent
debentures eliminated 2,501 3,439
Supplemental ESOP contribution (12,599) (12,573)
__________ __________
Fully diluted income (loss) $ 330,952 $ (82,554)
Average number of common shares
Primary 55,028 38,110
Fully diluted 61,351 61,407
Primary income excludes, and the loss includes, the
aggregate amount of dividends on the Company's preferred
stock. The dividend attributable to the Company's
Series D convertible preferred stock held by the Company's
ESOP (employee stock ownership plan) is net of a tax
benefit. To determine the fully diluted income (loss),
dividends on convertible preferred stock and interest, net
of any applicable taxes, have been added back to primary
income (loss) to reflect assumed conversions. The fully
diluted income was reduced by and the loss was increased
by the after-tax amount of additional contributions that
the Company would be required to make to its ESOP if the
Series D ESOP preferred shares were converted to common
stock.