UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2001 |
( ) |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________________ to __________________ |
BOISE CASCADE CORPORATION |
Delaware |
82-0100960 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1111 West Jefferson Street |
|
(Address of principal executive officers) |
(Zip 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 ___
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
|
Shares Outstanding |
PART I - FINANCIAL INFORMATION
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
(thousands, except per share data)
ITEM 1. |
FINANCIAL STATEMENTS |
Three Months Ended |
|||||||
_______________________ |
|||||||
2001 |
2000 |
||||||
_________ |
_________ |
||||||
(unaudited) |
|||||||
Revenues |
|||||||
Sales |
$ |
1,901,256 |
$ |
1,995,893 |
|||
_________ |
_________ |
||||||
Costs and expenses |
|||||||
Materials, labor, and other operating expenses |
1,539,598 |
1,581,369 |
|||||
Depreciation, amortization, and cost of company |
|
|
|||||
Selling and distribution expenses |
206,203 |
200,686 |
|||||
General and administrative expenses |
29,678 |
29,036 |
|||||
Other (income) expense, net |
72,319 |
5,154 |
|||||
_________ |
_________ |
||||||
1,921,166 |
1,889,961 |
||||||
_________ |
_________ |
||||||
Equity in net income (loss) of affiliates |
(1,964 |
) |
2,321 |
||||
_________ |
_________ |
||||||
Income (loss) from operations |
(21,874 |
) |
108,253 |
||||
_________ |
_________ |
||||||
Interest expense |
(33,792 |
) |
(36,685 |
) |
|||
Interest income |
420 |
504 |
|||||
Foreign exchange loss |
(2,619 |
) |
(226 |
) |
|||
_________ |
_________ |
||||||
(35,991 |
) |
(36,407 |
) |
||||
_________ |
_________ |
||||||
Income (loss) before income taxes and minority interest |
(57,865 |
) |
71,846 |
||||
Income tax (provision) benefit |
22,259 |
(28,738 |
) |
||||
_________ |
_________ |
||||||
Income (loss) before minority interest |
(35,606 |
) |
43,108 |
||||
Minority interest, net of income tax |
106 |
(3,544 |
) |
||||
_________ |
_________ |
||||||
Net income (loss) |
$ |
(35,500 |
) |
$ |
39,564 |
||
========= |
========= |
||||||
Net income (loss) per common share |
|||||||
Basic |
$ |
(0.68 |
) |
$ |
0.63 |
||
========= |
========= |
||||||
Diluted |
$ |
(0.68 |
) |
$ |
0.60 |
||
========= |
========= |
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
(thousands)
ASSETS
March 31 |
December 31 |
|||||||||||
_________________________ |
___________ |
|||||||||||
2001 |
2000 |
2000 |
||||||||||
_________ |
___________ |
___________ |
||||||||||
(unaudited) |
||||||||||||
Current |
||||||||||||
Cash and cash equivalents |
$ |
66,915 |
$ |
81,933 |
$ |
62,820 |
||||||
Receivables, less allowances |
||||||||||||
of $9,750, $11,196, and $7,607 |
561,334 |
698,454 |
671,793 |
|||||||||
Inventories |
672,087 |
687,997 |
747,829 |
|||||||||
Deferred income tax benefits |
67,080 |
57,276 |
50,924 |
|||||||||
Other |
45,719 |
43,981 |
43,955 |
|||||||||
__________ |
___________ |
___________ |
||||||||||
1,413,135 |
1,569,641 |
1,577,321 |
||||||||||
__________ |
___________ |
___________ |
||||||||||
Property |
||||||||||||
Property and equipment |
||||||||||||
Land and land improvements |
70,054 |
73,049 |
70,551 |
|||||||||
Buildings and improvements |
645,222 |
621,111 |
648,256 |
|||||||||
Machinery and equipment |
4,466,272 |
4,331,169 |
4,447,628 |
|||||||||
__________ |
___________ |
___________ |
||||||||||
5,181,548 |
5,025,329 |
5,166,435 |
||||||||||
Accumulated depreciation |
(2,614,988 |
) |
(2,475,109 |
) |
(2,584,784 |
) |
||||||
__________ |
___________ |
___________ |
||||||||||
2,566,560 |
2,550,220 |
2,581,651 |
||||||||||
Timber, timberlands, and timber deposits |
291,882 |
292,187 |
291,132 |
|||||||||
__________ |
___________ |
___________ |
||||||||||
2,858,442 |
2,842,407 |
2,872,783 |
||||||||||
__________ |
___________ |
___________ |
||||||||||
Goodwill, net of amortization |
||||||||||||
of $52,194, $56,159, and $49,053 |
395,563 |
476,219 |
403,331 |
|||||||||
Investments in equity affiliates |
129,007 |
39,732 |
134,757 |
|||||||||
Other assets |
273,241 |
231,524 |
278,731 |
|||||||||
__________ |
___________ |
___________ |
||||||||||
Total assets |
$ |
5,069,388 |
$ |
5,159,523 |
$ |
5,266,923 |
||||||
========== |
=========== |
=========== |
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
(thousands, except share amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31 |
December 31 |
||||||||||
_______________________ |
___________ |
||||||||||
2001 |
2000 |
2000 |
|||||||||
_________ |
_________ |
___________ |
|||||||||
(unaudited) |
|||||||||||
Current |
|||||||||||
Short-term borrowings |
$ |
6,400 |
$ |
77,752 |
$ |
52,000 |
|||||
Current portion of long-term debt |
36,230 |
22,825 |
41,314 |
||||||||
Income taxes payable |
28,466 |
24,609 |
15,884 |
||||||||
Accounts payable |
536,021 |
600,727 |
596,882 |
||||||||
Accrued liabilities |
|||||||||||
Compensation and benefits |
143,500 |
131,692 |
150,138 |
||||||||
Interest payable |
28,340 |
28,154 |
27,802 |
||||||||
Other |
169,202 |
170,453 |
130,374 |
||||||||
_________ |
_________ |
___________ |
|||||||||
948,159 |
1,056,212 |
1,014,394 |
|||||||||
_________ |
_________ |
___________ |
|||||||||
Debt |
|||||||||||
Long-term debt, less current portion |
1,648,680 |
1,643,943 |
1,714,776 |
||||||||
Guarantee of ESOP debt |
107,911 |
132,809 |
107,911 |
||||||||
_________ |
_________ |
___________ |
|||||||||
1,756,591 |
1,776,752 |
1,822,687 |
|||||||||
_________ |
_________ |
___________ |
|||||||||
Other |
|||||||||||
Deferred income taxes |
362,559 |
317,498 |
383,646 |
||||||||
Other long-term liabilities |
290,278 |
237,281 |
279,755 |
||||||||
_________ |
_________ |
___________ |
|||||||||
652,837 |
554,779 |
663,401 |
|||||||||
_________ |
_________ |
___________ |
|||||||||
Minority interest |
7,984 |
134,705 |
9,469 |
||||||||
_________ |
_________ |
___________ |
|||||||||
Shareholders' equity |
|||||||||||
Preferred stock -- no par value; 10,000,000 shares authorized; |
|||||||||||
Series D ESOP: $.01 stated value; 4,611,843; |
|
|
|
||||||||
Deferred ESOP benefit |
(107,911 |
) |
(132,809 |
) |
(107,911 |
) |
|||||
Common stock -- $2.50 par value; 200,000,000 |
|
|
|
||||||||
Additional paid-in capital |
456,393 |
451,079 |
454,849 |
||||||||
Retained earnings |
1,030,706 |
971,705 |
1,074,228 |
||||||||
Accumulated other comprehensive income (loss) |
(26,380 |
) |
(15,585 |
) |
(18,498 |
) |
|||||
_________ |
_________ |
___________ |
|||||||||
Total shareholders' equity |
1,703,817 |
1,637,075 |
1,756,972 |
||||||||
_________ |
_________ |
___________ |
|||||||||
Total liabilities and shareholders' equity |
$ |
5,069,388 |
$ |
5,159,523 |
$ |
5,266,923 |
|||||
========= |
========= |
=========== |
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(thousands)
Three Months Ended |
|||||||
__________________________ |
|||||||
2001 |
2000 |
||||||
___________ |
___________ |
||||||
(unaudited) |
|||||||
Cash provided by (used for) operations |
|||||||
Net income (loss) |
$ |
(35,500 |
) |
$ |
39,564 |
||
Items in income (loss) not using (providing) cash |
|||||||
Equity in net (income) loss of affiliates |
1,964 |
(2,321 |
) |
||||
Depreciation, amortization, and cost of |
|
|
|||||
Deferred income tax provision (benefit) |
(33,469 |
) |
5,696 |
||||
Minority interest, net of income tax |
(106 |
) |
3,544 |
||||
Restructuring activities |
58,929 |
- |
|||||
Other |
13,490 |
226 |
|||||
Receivables |
(59,553 |
) |
(34,845 |
) |
|||
Inventories |
73,951 |
15,987 |
|||||
Accounts payable and accrued liabilities |
(54,456 |
) |
11,802 |
||||
Current and deferred income taxes |
13,558 |
4,635 |
|||||
Other |
(3,383 |
) |
(2,284 |
) |
|||
___________ |
___________ |
||||||
Cash provided by operations |
48,793 |
115,720 |
|||||
___________ |
___________ |
||||||
Cash provided by (used for) investment |
|||||||
Expenditures for property and equipment |
(65,583 |
) |
(64,934 |
) |
|||
Expenditures for timber and timberlands |
(2,943 |
) |
(1,935 |
) |
|||
Investments in equity affiliates, net |
(435 |
) |
- |
||||
Sale of operating assets |
159,554 |
- |
|||||
Other |
(7,587 |
) |
6,965 |
||||
___________ |
___________ |
||||||
Cash provided by (used for) investment |
83,006 |
(59,904 |
) |
||||
___________ |
___________ |
||||||
Cash provided by (used for) financing |
|||||||
Cash dividends paid |
|||||||
Common stock |
(8,601 |
) |
(8,574 |
) |
|||
Preferred stock |
(44 |
) |
(59 |
) |
|||
___________ |
___________ |
||||||
(8,645 |
) |
(8,633 |
) |
||||
Short-term borrowings |
(45,600 |
) |
5,952 |
||||
Additions to long-term debt |
14,559 |
105,154 |
|||||
Payments of long-term debt |
(85,672 |
) |
(140,894 |
) |
|||
Other |
(2,346 |
) |
(2,397 |
) |
|||
___________ |
___________ |
||||||
Cash used for financing |
(127,704 |
) |
(40,818 |
) |
|||
___________ |
___________ |
||||||
Increase in cash and cash equivalents |
4,095 |
14,998 |
|||||
Balance at beginning of the year |
62,820 |
66,935 |
|||||
___________ |
___________ |
||||||
Balance at March 31 |
$ |
66,915 |
$ |
81,933 |
|||
=========== |
=========== |
The accompanying notes are an integral part of these Financial Statements.
NOTES TO QUARTERLY FINANCIAL STATEMENTS
(1) |
BASIS OF PRESENTATION. We have prepared the quarterly financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Some information and footnote disclosures normally included
in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations. These statements should be read together with the statements and the
accompanying notes included in our 2000 Annual Report. |
(2) |
OTHER (INCOME) EXPENSE, NET. "Other (income) expense, net" includes gains and losses on the sale and disposition of property and other miscellaneous income and expense items. In first quarter 2001, our corporate and other segment recorded a $10.9 million pretax, noncash charge to accrue for a one-time liability related to postretirement benefits for our Northwest hourly paperworkers. These workers have been participating in a multiemployer trust which is converting to a single employer trust. The components of "Other (income) expense, net" in our Statements of Income (Loss) are as follows: |
Three Months Ended |
||||||||
_____________________ |
||||||||
2001 |
2000 |
|||||||
_______ |
_______ |
|||||||
(thousands) |
||||||||
Receivable securitization (Note 5) |
$ |
2,486 |
$ |
1,576 |
||||
Restructuring activities (Note 13) |
58,929 |
- |
||||||
Postretirement benefits |
10,897 |
- |
||||||
Other, net |
7 |
3,578 |
||||||
_______ |
_______ |
|||||||
$ |
72,319 |
$ |
5,154 |
|||||
======= |
======= |
(3) |
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 ended March 31, 2001, the
computation of diluted net loss per share was antidilutive; therefore, the amounts reported for basic and diluted loss were the same. |
Three Months Ended |
|||||||||||||||||
_____________________ |
|||||||||||||||||
2001 |
2000 |
||||||||||||||||
_______ |
_______ |
||||||||||||||||
(thousands) |
|||||||||||||||||
BASIC |
|||||||||||||||||
Net income (loss) as reported |
$ |
(35,500 |
) |
$ |
39,564 |
||||||||||||
Preferred dividends (a) |
(3,262 |
) |
(3,376 |
) |
|||||||||||||
_______ |
_______ |
||||||||||||||||
Basic income (loss) |
$ |
(38,762 |
) |
$ |
36,188 |
||||||||||||
======= |
======= |
||||||||||||||||
Average shares used to determine basic |
|||||||||||||||||
income (loss) per common share |
57,353 |
57,212 |
|||||||||||||||
======= |
======= |
||||||||||||||||
DILUTED |
|||||||||||||||||
Basic income (loss) |
$ |
(38,762 |
) |
$ |
36,188 |
||||||||||||
Preferred dividends eliminated |
- |
3,376 |
|||||||||||||||
Supplemental ESOP contribution |
- |
(2,886 |
) |
||||||||||||||
_______ |
_______ |
||||||||||||||||
Diluted income (loss) (b) |
$ |
(38,762 |
) |
$ |
36,678 |
||||||||||||
======= |
======= |
||||||||||||||||
Average shares used to determine basic |
|
|
|||||||||||||||
Stock options and other |
- |
314 |
|||||||||||||||
Series D Convertible Preferred Stock |
- |
3,972 |
|||||||||||||||
_______ |
_______ |
||||||||||||||||
Average shares used to determine diluted |
|
|
|||||||||||||||
======= |
======= |
(a) |
The dividend attributable to our Series D Convertible Preferred Stock held by our ESOP (employee stock ownership plan) is net of a tax benefit. |
(b) |
Adjustments reducing the net loss to arrive at diluted loss totaling $556,000 in 2001 were excluded because the calculation of diluted loss per share was antidilutive. Also, in 2001, potentially dilutive common shares of 4,185,000 were excluded from average shares because they were antidilutive. |
(4) |
COMPREHENSIVE INCOME (LOSS). Comprehensive income (loss) for the periods include the following: |
Three Months Ended |
||||||||
_____________________ |
||||||||
2001 |
2000 |
|||||||
_______ |
_______ |
|||||||
(thousands) |
||||||||
Net income (loss) |
$ |
(35,500 |
) |
$ |
39,564 |
|||
Other comprehensive income (loss) |
||||||||
Cumulative foreign currency translation |
|
|
|
|
||||
Cash flow hedges, net of income taxes |
(889 |
) |
- |
|||||
|
_______ |
_______ |
||||||
Comprehensive income (loss), net of |
|
|
|
|
|
|||
======= |
======= |
For the three months ended March 31, 2001, reclassifications to earnings from the cash flow hedges were not material. |
(5) |
RECEIVABLES. We have sold fractional ownership interests in a defined pool of trade accounts receivable. At both March 31, 2001 and December 31, 2000, $200 million of sold accounts receivable were excluded from receivables, and at March 31, 2000, $100 million of sold accounts receivable were excluded from receivables in the accompanying Balance Sheets. The portion of fractional ownership interest retained by us is included in accounts receivable in the Balance Sheets. This program consists of a revolving sale of receivables committed to by the purchasers for 364 days and is subject to renewal. Costs related to the program are included in "Other (income) expense, net" in our Statements of Income (Loss). Under the accounts receivable sale agreement, the maximum amount available from time to time is subject to change based on the level of eligible receivables, restrictions on concentrations of receivables, and the historical performance of the receivables we sell. |
(6) |
DEFERRED SOFTWARE COSTS. We defer software costs that benefit future years. These costs are amortized on the straight-line method over the expected life of the software. "Other assets" in the Balance Sheets includes deferred software costs of $63.4 million, $50.3 million, and $59.7 million at March 31, 2001 and 2000, and December 31, 2000. Amortization of deferred software costs totaled $4.6 million and $3.4 million for the three months ended March 31, 2001 and 2000. |
(7) |
INVENTORIES. Inventories include the following: |
March 31 |
December 31 |
||||||||||
_______________________ |
___________ |
||||||||||
2001 |
2000 |
2000 |
|||||||||
________ |
________ |
___________ |
|||||||||
(thousands) |
|||||||||||
Finished goods and work in process |
$ |
535,960 |
$ |
553,227 |
$ |
583,030 |
|||||
Logs |
58,633 |
52,316 |
87,176 |
||||||||
Other raw materials and supplies |
143,688 |
143,220 |
141,888 |
||||||||
LIFO reserve |
(66,194 |
) |
(60,766 |
) |
(64,265 |
) |
|||||
________ |
________ |
___________ |
|||||||||
$ |
672,087 |
$ |
687,997 |
$ |
747,829 |
||||||
======== |
======== |
=========== |
(8) |
INCOME TAXES. Our effective tax benefit rate for the three months ended March 31, 2001, was 38.5%, compared with an effective tax provision rate of 40.0% for the three months ended March 31, 2000. Before
nonroutine items, our estimated annual tax provision rate in 2001 is 41.0%. In 2000, our actual tax provision rate was 39.0%. The changes in our tax rates were due primarily to the sensitivity of the rate to changing income levels and the mix of
domestic and foreign sources of income. |
(9) |
DEBT. We have a revolving credit agreement with 23 major banks that permits us to borrow as much as $600 million at variable interest rates based on the London Interbank Offered Rate (LIBOR). At March 31, 2001,
the rate was 5.4%. When the agreement expires in June 2002, any amount outstanding will be due and payable. The revolving credit agreement contains financial covenants relating to minimum net worth, minimum interest coverage ratios, and ceiling ratios
of debt to capitalization. Under this agreement, the payment of dividends depends on the existence of and the amount of net worth in excess of the defined minimum. Our net worth at March 31, 2001, exceeded the defined minimum by $95.5 million.
At March 31, 2001, there were $470.0 million of borrowings outstanding under this agreement. |
(10) |
BOISE CASCADE OFFICE PRODUCTS CORPORATION. In April 2000, we completed a tender offer for the outstanding common stock of BCOP owned by shareholders other than Boise Cascade Corporation. BCOP once again became a wholly
owned subsidiary of Boise Cascade Corporation. The purchase price, including transaction costs and payments to shareholders and stock option holders, totaled $216.1 million. It was funded by short-term borrowings and by borrowings under our
revolving credit agreement. |
(11) |
BUILDING PRODUCTS ACQUISITION. On June 30, 2000, we acquired Alliance Forest Products-Joists, Inc. (AllJoist). Formerly a subsidiary of Alliance Forest Products, Inc., AllJoist operates a wood I-joist manufacturing plant in
St. Jacques, New Brunswick, Canada. The purchase price was $14.6 million in cash. |
(12) |
FINANCIAL INSTRUMENTS. On January 1, 2001, we adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. Adoption of this statement did not have a
material impact on our results of operations or financial position. |
(13) |
RESTRUCTURING ACTIVITIES. In February 2001, we announced that we will permanently close in mid-2001 our plywood and lumber operations in Emmett, Idaho, and our sawmill in Cascade, Idaho. The closures are due to the steady
decline in federal timber offered for sale. About 375 positions will be eliminated as a result of the closures. In first quarter 2001, we recorded a pretax charge of $54.0 million related to these closures. Sales for our Idaho operations for the
three months ended March 31, 2001 and 2000, were $25.9 million and $31.0 million. Sales for the years ended December 31, 2000 and 1999, were $115.8 million and $138.6 million. Our operating loss for the three months ended
March 31, 2001, was $1.1 million, while our operating income for the three months ended March 31, 2000, was $2.4 million. Operating income for the years ended December 31, 2000 and 1999, was $2.2 million and $15.4 million
. |
Restructuring reserve liability account activity related to these 2001 charges is as follows: |
Asset |
Employee- |
Other |
|
|||||||||
______ |
_________ |
______ |
_______ |
|||||||||
(thousands) |
||||||||||||
2001 expense recorded |
$ |
21,300 |
$ |
15,000 |
$ |
22,600 |
$ |
58,900 |
||||
Assets written down |
(21,300 |
) |
- |
- |
(21,300 |
) |
||||||
Pension liability recorded |
- |
(9,600 |
) |
- |
(9,600 |
) |
||||||
______ |
_________ |
______ |
_______ |
|||||||||
Restructuring reserve at March 31, 2001 |
$ |
- |
$ |
5,400 |
$ |
22,600 |
$ |
28,000 |
||||
====== |
========= |
====== |
======= |
In 1998, we recorded restructuring charges totaling $118.9 million related to the closure of two wood products facilities and companywide cost-reduction and restructuring initiatives. With the exception of a few ongoing severance payments and cleanup costs, this restructuring is completed. Remaining reserves included in "Accrued liabilities, other" at March 31, 2001, totaled $3.4 million, compared with $8.2 million at March 31, 2000, and $3.9 million at December 31, 2000. |
(14) |
RECLASSIFICATIONS. In September 2000, the Emerging Issues Task Force of the Financial Accounting Standards Board issued a consensus on Issue 00-10, Accounting for Shipping and Handling Fees and Costs. This consensus, which became effective and was adopted by us in fourth quarter 2000, requires that amounts billed to customers for shipping be included as a revenue and that amounts paid by us for shipping be included as a cost. To comply with this consensus, r eclassifications were made to increase both "Sales" and "Materials, labor, and other operating expenses" by $49.6 million for the three months ended March 31, 2000. |
(15) |
SEGMENT INFORMATION. There are no differences from our last annual report in our basis of segmentation or in our basis of measurement of segment profit or loss. An analysis of our operations by segment is as follows: |
Income |
||||||||||||
(Loss) |
||||||||||||
Before |
||||||||||||
Sales (a) |
Taxes and |
|||||||||||
_____________________________________ |
Minority |
|||||||||||
Trade |
Intersegment |
Total |
Interest (b) |
|||||||||
____________ |
__________ |
____________ |
____________ |
|||||||||
(thousands) |
||||||||||||
Three Months Ended March 31, 2001 |
||||||||||||
Office products |
$ |
966,206 |
$ |
630 |
$ |
966,836 |
$ |
41,219 |
||||
Building products |
525,860 |
7,393 |
533,253 |
(66,425 |
) (c) |
|||||||
Paper and paper products |
403,253 |
112,991 |
516,244 |
24,676 |
||||||||
Corporate and other |
5,937 |
12,717 |
18,654 |
(23,543 |
) (d) |
|||||||
____________ |
___________ |
____________ |
____________ |
|||||||||
Total |
1,901,256 |
133,731 |
2,034,987 |
(24,073 |
) |
|||||||
Intersegment eliminations |
- |
(133,731 |
) |
(133,731 |
) |
- |
||||||
Interest expense |
- |
- |
- |
(33,792 |
) |
|||||||
____________ |
___________ |
____________ |
____________ |
|||||||||
Consolidated totals |
$ |
1,901,256 |
$ |
- |
$ |
1,901,256 |
$ |
(57,865 |
) |
|||
============ |
=========== |
============ |
============ |
|||||||||
Three Months Ended March 31, 2000 |
||||||||||||
Office products |
$ |
940,947 |
$ |
673 |
$ |
941,620 |
$ |
39,470 |
||||
Building products |
631,698 |
8,377 |
640,075 |
29,185 |
||||||||
Paper and paper products |
416,015 |
104,588 |
520,603 |
48,683 |
||||||||
Corporate and other |
7,233 |
10,696 |
17,929 |
(8,807 |
) |
|||||||
____________ |
___________ |
____________ |
____________ |
|||||||||
Total |
1,995,893 |
124,334 |
2,120,227 |
108,531 |
||||||||
Intersegment eliminations |
- |
(124,334 |
) |
(124,334 |
) |
- |
||||||
Interest expense |
- |
- |
- |
(36,685 |
) |
|||||||
____________ |
___________ |
____________ |
____________ |
|||||||||
Consolidated totals |
$ |
1,995,893 |
$ |
- |
$ |
1,995,893 |
$ |
71,846 |
||||
============ |
=========== |
============ |
============ |
(a) |
Reclassifications were made to the 2000 sales to comply with the Emerging Issues Task Force consensus on Issue 00-10 (see Note 14). |
(b) |
Interest income has been allocated to our segments in the amounts of $420,000 and $504,000 for the three months ended March 31, 2001 and 2000. |
(c) |
Includes a $58.9 million pretax charge related to the closure of two mills in Idaho and a write-off of our investment in assets in Chile (see Note 13). |
(d) |
Includes $10.9 million pretax, noncash charge to accrue for a one-time liability related to postretirement benefits (see Note 2). |
ITEM 2. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
RESULTS OF OPERATIONS
Three Months Ended |
|||||||
______________________________ |
|||||||
2001 |
2000 |
||||||
___________ |
___________ |
||||||
Sales |
$ |
1.9 billion |
$ |
2.0 billion |
|||
Net income (loss) |
$ |
(35.5) million |
$ |
39.6 million |
|||
Net income (loss) per basic share |
$ |
(0.68 |
) |
$ |
0.63 |
||
Net income (loss) per diluted share |
$ |
(0.68 |
) |
$ |
0.60 |
||
Net income before nonroutine items |
$ |
7.1 million |
$ |
39.6 million |
|||
Net income per basic share before nonroutine |
|||||||
items |
$ |
0.07 |
$ |
0.63 |
|||
Net income per diluted share before nonroutine |
|||||||
items |
$ |
0.07 |
$ |
0.60 |
|||
(percentage of sales) |
|||||||
Materials, labor, and other operating expenses |
81.0% |
79.2% |
|||||
Selling and distribution |
10.8% |
10.1% |
|||||
General and administrative expenses |
1.6% |
1.5% |
Nonroutine Items. In February 2001, we announced that we will permanently close in mid-2001 our plywood and lumber operations in Emmett, Idaho, and our sawmill in Cascade, Idaho. In first quarter 2001, we recorded a
pretax charge of $54.0 million related to these closures. In addition, as a result of a decision to stop development of operations in Chile, we wrote off our investment in assets in that country with a pretax charge of $4.9 million. We
recorded both of these charges in our building products segment and in "Other (income) expense, net" in the Statement of Income (Loss). Additional information on these charges is in the Results of Operations for building products.
In first quarter 2001, our corporate and other segment recorded a $10.9 million pretax, noncash charge to accrue for a one-time liability related to postretirement benefits for our Northwest hourly paperworkers. These workers have been
participating in a multiemployer trust which is converting to a single employer trust. This charge was recorded in "Other (income) expense, net" in the Statement of Income (Loss).
The net impact of the nonroutine items in 2001 decreased net income $42.6 million and basic and diluted income per share 75 cents for the three months ended March 31, 2001.
Overview. Sales in the first three months ended March 31, 2001, decreased 5% over the same period in 2000 primarily as a result of substantially lower product prices in our building products segment. This decrease in sales was partially
offset by a 3% increase in office products sales. Same-location sales in office products increased 7%.
In the three months ended March 31, 2001, materials, labor, and other operating expenses increased as a percent of sales, compared with the same period in 2000, because of higher energy and chemical costs in paper and paper products and the reduced
sales caused by lower selling prices in building products. Selling and distribution expense as a percent of sales was higher for the first three months ended March 31, 2001, compared with the same period in 2000, due to a decrease in building
products sales caused by lower selling prices without a corresponding decrease in selling and distribution expenses. General and administrative expenses increased as a percent of sales for the three months ended March 31, 2001, compared with the
same period in 2000, due to the lower sales. See the results of operations by segment for additional detail.
Interest expense was $33.8 million and $36.7 million for the three months ended March 31, 2001 and 2000. The variance was due to lower debt levels and interest rates.
Foreign exchange loss was $2.6 million, compared to $0.2 million for the three months ended
March 31, 2001 and 2000. The increase in foreign exchange loss in first quarter 2001, compared to first quarter 2000, arose primarily from translation adjustments related to assets denominated in Canadian and New Zealand dollars from our
recently acquired operations in those countries.
Our effective tax benefit rate for the three months ended March 31, 2001, was 38.5%, compared with an effective tax provision rate of 40.0% for the three months ended March 31, 2000. Before the nonroutine items, our estimated annual tax
provision rate in 2001 is 41.0%. In 2000, our actual tax provision rate was 39.0%. The changes in our tax rates were due primarily to the sensitivity of the rate to changing income levels and the mix of domestic and foreign sources of income.
Primarily as a result of lower building products selling prices and higher energy and chemical costs in our paper products business, net income before nonroutine items for the first three months of 2001 decreased 82% from the first three months in 2000.
OFFICE PRODUCTS DISTRIBUTION
Three Months Ended |
|||||||
_______________________________ |
|||||||
2001 |
2000 |
||||||
___________ |
___________ |
||||||
Sales |
$ |
966.8 million |
$ |
941.6 million |
|||
Segment income |
$ |
41.2 million |
$ |
39.5 million |
|||
(percentage of sales) |
|||||||
Gross profit |
23.7% |
24.5% |
|||||
Operating expenses |
19.5% |
20.3% |
|||||
Operating profit |
4.3% |
4.2% |
Acquisitions and Divestitures. In April 2000, we completed a tender offer for the outstanding common stock of Boise Cascade Corporation (BCOP) owned by shareholders other than Boise Cascade Corporation. BCOP once again became a wholly owned
subsidiary of Boise Cascade Corporation. The purchase price, including transaction costs and payments to shareholders and stock option holders, totaled $216.1 million. It was funded by short-term borrowings and by borrowings under our revolving
credit agreement.
On September 28, 2000, BCOP sold its European operations to Guilbert S.A. of France for $335.3 million. After debt repayments of $17.2 million, we received $158.5 million in 2000 and a final payment, net of forward exchange
contracts, of $159.6 million in early January 2001. Sales for the operations sold for the three months ended March 31, 2000, totaled $91.2 million.
BCOP also formed a joint venture with Guilbert to provide service for both companies' multinational customers. Through the joint venture, BCOP serves Guilbert customers in North America, Australia, and New Zealand, and Guilbert serves BCOP customers in
Europe and the Middle East.
On October 6, 2000, BCOP acquired Blue Star Business Supplies Group of US Office Products (Blue Star), a distributor of office and educational supplies in Australia and New Zealand, for $114.7 million in cash and the recording of
$13.2 million in estimated acquisition liabilities. The acquisition liabilities include $4.7 million for termination benefits to be paid to about 380 employees at acquired facilities and $3.9 million for closure costs at six acquired
locations, primarily in Australia. Through March 31, 2001, there have been no significant charges against these reserves. Blue Star had sales of approximately $300 million for its fiscal year ended April 29, 2000.
BUILDING PRODUCTS
Three Months Ended |
|||||||
_________________________________ |
|||||||
2001 |
2000 |
||||||
_____________ |
_____________ |
||||||
Sales |
$ |
533.3 |
million |
$ |
640.1 |
million |
|
Segment income (loss) |
$ |
(66.4 |
) million |
$ |
29.2 |
million |
|
Segment income (loss) before nonroutine items |
$ |
(7.5 |
) million |
$ |
29.2 |
million |
|
Sales Volumes |
|||||||
Plywood (1,000 sq. ft. 3/8" basis) |
462,791 |
460,651 |
|||||
OSB (1,000 sq. ft. 3/8" basis) (a) |
99,733 |
101,439 |
|||||
Lumber (1,000 board ft.) |
93,242 |
124,564 |
|||||
LVL (100 cubic ft.) |
15,400 |
15,811 |
|||||
I-joists (1,000 equivalent lineal ft.) |
33,487 |
28,842 |
|||||
Particleboard (1,000 sq. ft. 3/4" basis) |
47,953 |
47,214 |
|||||
Building materials distribution (millions of sales dollars) |
$ |
341 |
$ |
401 |
|||
Average Net Selling Prices (b) |
|||||||
Plywood (1,000 sq. ft. 3/8" basis) |
$ |
214 |
$ |
244 |
|||
OSB (1,000 sq. ft. 3/8" basis) |
108 |
214 |
|||||
Lumber (1,000 board ft.) |
425 |
530 |
|||||
LVL (100 cubic ft.) |
1,526 |
1,550 |
|||||
I-joists (1,000 equivalent lineal ft.) |
907 |
983 |
|||||
Particleboard (1,000 sq. ft. 3/4" basis) |
253 |
299 |
|||||
|
Restructuring reserve liability account activity related to these 2001 charges is as follows: |
Asset |
Employee- |
Other |
|
|||||||||
______ |
_________ |
______ |
_______ |
|||||||||
(thousands) |
||||||||||||
2001 expense recorded |
$ |
21,300 |
$ |
15,000 |
$ |
22,600 |
$ |
58,900 |
||||
Assets written down |
(21,300 |
) |
- |
- |
(21,300 |
) |
||||||
Pension liability recorded |
- |
(9,600 |
) |
- |
(9,600 |
) |
||||||
______ |
_________ |
______ |
_______ |
|||||||||
Restructuring reserve at March 31, 2001 |
$ |
- |
$ |
5,400 |
$ |
22,600 |
$ |
28,000 |
||||
======= |
========= |
====== |
======= |
On a pro forma basis, if the AllJoist acquisition had occurred on January 1, 2000, sales for the first three months of 2000 would have increased by $4.8 million, while net income and diluted earnings per share would not have materially
changed. This unaudited pro forma financial information does not necessarily represent what would have occurred if the acquisition had taken place on the dates assumed.
Operating Results Before Nonroutine Items. The decrease in sales for the three months ended March 31, 2001, compared with the same period in 2000, is the result of significantly weaker wood product prices. Average plywood, oriented strand
board, and lumber prices were 12%, 50%, and 20% lower, respectively. Low product prices also had a negative impact on our building materials distribution sales, which declined 15%, compared with first quarter 2000. Reduced segment income in 2001,
compared with 2000, was due to the lower selling prices. Costs were about flat period to period with favorable wood costs offsetting increased conversion and distribution costs.
PAPER AND PAPER PRODUCTS
Three Months Ended |
|||||
____________________________ |
|||||
2001 |
2000 |
||||
___________ |
___________ |
||||
Sales |
$ |
516.2 million |
$ |
520.6 million |
|
Segment income |
$ |
24.7 million |
$ |
48.7 million |
|
Sales Volumes |
|||||
(thousands of short tons) |
|||||
Uncoated free sheet |
368 |
363 |
|||
Containerboard |
158 |
165 |
|||
Newsprint |
103 |
108 |
|||
Other |
35 |
39 |
|||
_____ |
_____ |
||||
Total |
664 |
675 |
|||
===== |
===== |
||||
Average Net Selling Prices (a) |
|||||
(per short ton) |
|||||
Uncoated free sheet |
$ |
759 |
$ |
770 |
|
Containerboard |
390 |
370 |
|||
Newsprint |
511 |
408 |
FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis includes forward-looking statements. Actual results may differ materially from those expressed in or implied by the statements. Factors that could cause actual results to differ from projected results include, among
other things, changes in general economic conditions, both domestically and abroad; changes in foreign and domestic competition; changes in production capacity across paper and wood products markets; fluctuations in energy, chemical, and other raw
material costs; the impact of industry consolidation; the impact of environmental regulations on our capital expenditures; fluctuations in foreign exchange rates; the impact of adverse weather on our operations; our ability to maintain cost structure
improvements; the level of housing starts and remodeling activities; the occurrence of natural disasters such as fire and windstorm; and other factors included in our other filings with the Securities and Exchange Commission.
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Changes in interest and currency rates expose the company to financial market risk. Our debt is predominantly fixed-rate. We experience only modest changes in interest expense when market interest rates change. Most foreign currency transactions have been conducted in local currencies, limiting our exposure to changes in currency rates. Consequently, our market risk-sensitive instruments do not subject us to material market risk exposure. Changes in our debt and continued international expansion could increase these risks. To manage volatility relating to these exposures, we may enter into various derivative transactions, such as interest rate swaps, rate hedge agreements, and forward exchange contracts. We do not use derivative financial instruments for trading purposes
.
PART II - OTHER INFORMATION
ITEM 1. |
LEGAL PROCEEDINGS |
ITEM 2. |
CHANGES IN SECURITIES |
None. |
ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES |
None. |
ITEM 4. |
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
We held our annual shareholders meeting on April 19, 2001. A total of 61,989,988 shares of common and preferred stock were outstanding and entitled to vote at the meeting. Of the total outstanding, 55,660,895 shares were represented at the meeting.
Shareholders cast votes for election of the following directors whose terms expire in 2004:
In Favor |
Withheld |
Not Voted |
||||
___________ |
____________ |
____________ |
||||
Phillip J. Carroll |
44,486,133 |
11,174,762 |
- |
|||
Claire S. Farley |
53,435,605 |
2,225,290 |
- |
|||
Rakesh Gangwal |
53,409,622 |
2,251,273 |
- |
|||
Gary G. Michael |
53,450,110 |
2,210,785 |
- |
|||
A. William Reynolds |
53,390,682 |
2,270,213 |
- |
ITEM 5. |
OTHER INFORMATION |
On May 1, 2001, we established a systematic procedure for the company to repurchase shares of its common stock from shareholders who own a small number of shares. We intend for this plan to comply with the requirements of SEC Rule 10b5-1. Shareholders who own less than 100 shares can have their shares repurchased by the company on the 10th of each month (or the next trading day). The shares repurchased are retired and restored to the status of authorized but unissued shares. |
ITEM 6. |
EXHIBITS AND REPORTS ON FORM 8-K |
(a) |
Exhibits. |
(b) |
Reports on Form 8-K. |
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 CORPORATION |
||
|
Date: May 11, 2001 |
BOISE CASCADE CORPORATION
INDEX TO EXHIBITS
Filed With the Quarterly Report on Form 10-Q
for the Quarter Ended March 31, 2001
Number |
Description |
Page Number |
____________ |
______________________________________________ |
____________ |
11 |
Computation of Per Share Earnings |
25 |
12.1 |
Ratio of Earnings to Fixed Charges |
26 |
12.2 |
Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements |
|
EXHIBIT 11
BOISE CASCADE CORPORATION
Computation of Per Share Earnings
Three Months Ended |
|||||||
_____________________________ |
|||||||
2001 |
2000 |
||||||
_______ |
_______ |
||||||
(thousands, except per share amounts) |
|||||||
Basic |
|||||||
Net income (loss) as reported |
$ |
(35,500 |
) |
$ |
39,564 |
||
Preferred dividends (a) |
(3,262 |
) |
(3,376 |
) |
|||
_______ |
_______ |
||||||
Basic income (loss) |
$ |
(38,762 |
) |
$ |
36,188 |
||
======= |
======= |
||||||
Average shares used to determine basic income (loss) per common share |
57,353 |
57,212 |
|||||
======= |
======= |
||||||
Basic income (loss) per common share |
$ |
(0.68 |
) |
$ |
0.63 |
||
======= |
======= |
||||||
Diluted |
|||||||
Basic income (loss) |
$ |
(38,762 |
) |
$ |
36,188 |
||
Preferred dividends eliminated |
3,262 |
3,376 |
|||||
Supplemental ESOP contribution |
(2,706 |
) |
(2,886 |
) |
|||
_______ |
_______ |
||||||
Diluted income (loss) |
$ |
(38,206 |
) |
$ |
36,678 |
||
======= |
======= |
||||||
Average shares used to determine basic income (loss) per common share |
57,353 |
57,212 |
|||||
Stock options and other |
442 |
314 |
|||||
Series D Convertible Preferred Stock |
3,743 |
3,972 |
|||||
_______ |
_______ |
||||||
Average shares used to determine diluted income (loss) per common share |
61,538 |
61,498 |
|||||
======= |
======= |
||||||
Diluted income (loss) per common share (b) |
$ |
(0.62 |
) |
$ |
0.60 |
||
======= |
======= |
(a) |
The dividend attributable to our Series D Convertible Preferred Stock held by our ESOP (employee stock ownership plan) is net of a tax benefit. |
|
(b) |
Because the computation of diluted loss per common share was antidilutive, diluted loss per common share reported for the three months ended March 31, 2001, was the same as basic loss per common share. |
EXHIBIT 12.1
BOISE CASCADE CORPORATION AND SUBSIDIARIES
Ratio of Earnings to Fixed Charges
Three Months Ended |
|||||||||||||||||||||||
Year Ended December 31 |
March 31 |
||||||||||||||||||||||
____________________________________________ |
_________________ |
||||||||||||||||||||||
1996 |
1997 |
1998 |
1999 |
2000 |
2000 |
2001 |
|||||||||||||||||
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
(thousands) |
|||||||||||||||||||||||
Interest costs |
$ |
128,360 |
$ |
137,350 |
$ |
159,870 |
$ |
146,124 |
$ |
152,322 |
$ |
36,984 |
$ |
34,094 |
|||||||||
Guarantee of interest on ESOP debt |
17,874 |
16,341 |
14,671 |
12,856 |
10,880 |
2,797 |
2,272 |
||||||||||||||||
Interest capitalized during the period |
17,778 |
10,575 |
1,341 |
238 |
1,458 |
125 |
287 |
||||||||||||||||
Interest factor related to noncapitalized leases (a) |
12,982 |
11,931 |
11,308 |
13,065 |
13,394 |
3,033 |
3,192 |
||||||||||||||||
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
Total fixed charges |
$ |
176,994 |
$ |
176,197 |
$ |
187,190 |
$ |
172,283 |
$ |
178,054 |
$ |
42,939 |
$ |
39,845 |
|||||||||
======= |
======= |
======= |
======= |
======= |
======= |
======= |
|||||||||||||||||
Income (loss) before income taxes, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Undistributed (earnings) losses of less than 50% |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total fixed charges |
176,994 |
176,197 |
187,190 |
172,283 |
178,054 |
42,939 |
39,845 |
||||||||||||||||
Less: Interest capitalized |
(17,778 |
) |
(10,575 |
) |
(1,341 |
) |
(238 |
) |
(1,458 |
) |
(125 |
) |
(287 |
) |
|||||||||
Guarantee of interest on ESOP debt |
(17,874 |
) |
(16,341 |
) |
(14,671 |
) |
(12,856 |
) |
(10,880 |
) |
(2,797 |
) |
(2,272 |
) |
|||||||||
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
Total earnings (losses) before fixed charges |
$ |
171,392 |
$ |
125,531 |
$ |
158,091 |
$ |
509,014 |
$ |
461,986 |
$ |
109,542 |
$ |
(18,615 |
) |
||||||||
======= |
======= |
======= |
======= |
======= |
======= |
======= |
|||||||||||||||||
Ratio of earnings to fixed charges |
- |
- |
- |
2.95 |
2.59 |
2.55 |
- |
||||||||||||||||
Excess of fixed charges over earnings before |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Interest expense for operating leases with terms of one year or longer is based on an imputed interest rate for each lease. |
EXHIBIT 12.2
BOISE CASCADE CORPORATION AND SUBSIDIARIES
Ratio of Earnings to Combined Fixed Charges
and Preferred Dividend Requirements
Three Months Ended |
|||||||||||||||||||||||
Year Ended December 31 |
March 31 |
||||||||||||||||||||||
____________________________________________ |
________________ |
||||||||||||||||||||||
1996 |
1997 |
1998 |
1999 |
2000 |
2000 |
2001 |
|||||||||||||||||
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
(thousands) |
|||||||||||||||||||||||
Interest costs |
$ |
128,360 |
$ |
137,350 |
$ |
159,870 |
$ |
146,124 |
$ |
152,322 |
$ |
36,984 |
$ |
34,094 |
|||||||||
Interest capitalized during the period |
17,778 |
10,575 |
1,341 |
238 |
1,458 |
125 |
287 |
||||||||||||||||
Interest factor related to noncapitalized leases (a) |
12,982 |
11,931 |
11,308 |
13,065 |
13,394 |
3,033 |
3,192 |
||||||||||||||||
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
Total fixed charges |
159,120 |
159,856 |
172,519 |
159,427 |
167,174 |
40,142 |
37,573 |
||||||||||||||||
Preferred stock dividend requirements -- pretax |
65,207 |
44,686 |
19,940 |
17,129 |
16,019 |
8,091 |
7,634 |
||||||||||||||||
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
Combined fixed charges and preferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
======= |
======= |
======= |
======= |
======= |
======= |
======= |
|||||||||||||||||
Income (loss) before income taxes, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Undistributed (earnings) losses of less than 50% |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total fixed charges |
159,120 |
159,856 |
172,519 |
159,427 |
167,174 |
40,142 |
37,573 |
||||||||||||||||
Less interest capitalized |
(17,778 |
) |
(10,575 |
) |
(1,341 |
) |
(238 |
) |
(1,458 |
) |
(125 |
) |
(287 |
) |
|||||||||
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
Total earnings (losses) before fixed charges |
$ |
171,392 |
$ |
125,531 |
$ |
158,091 |
$ |
509,014 |
$ |
461,986 |
$ |
109,542 |
$ |
(18,615 |
) |
||||||||
======= |
======= |
======= |
======= |
======= |
======= |
======= |
|||||||||||||||||
Ratio of earnings to combined fixed charges and |
|
|
|
|
|
|
|
||||||||||||||||
Excess of combined fixed charges and preferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Interest expense for operating leases with terms of one year or longer is based on an imputed interest rate for each lease. |