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F O R M 10 - Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the Quarterly Period Ended March 31, 1995
( ) Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the Transition Period From ___________ to _____________
Commission file number 1-5057
BOISE CASCADE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 82-0100960
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1111 West Jefferson
P.O. Box 50
Boise, Idaho 83728-0001
(Address of principal executive offices) (Zip Code)
(208) 384-6161
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding
Class as of April 30, 1995
Common stock, $2.50 par value 47,109,687
PART I - FINANCIAL INFORMATION
Quarterly Financial Statements
STATEMENTS OF INCOME (LOSS) (Unaudited)
BOISE CASCADE CORPORATION AND SUBSIDIARIES
Three Months Ended March 31
1995 1994
(expressed in thousands)
Revenues
Sales $1,222,960 $ 941,300
Other income, net 1,870 5,110
__________ __________
1,224,830 946,410
__________ __________
Costs and expenses
Materials, labor, and other operating
expenses 942,520 826,500
Depreciation and cost of company timber
harvested 60,390 58,170
Selling and administrative expenses 97,820 74,180
__________ __________
1,100,730 958,850
__________ __________
Equity in net income (loss) of affiliates 5,570 (7,540)
__________ __________
Income (loss) from operations 129,670 (19,980)
__________ __________
Interest expense (37,230) (34,940)
Interest income 310 400
Foreign exchange loss - (1,530)
__________ __________
(36,920) (36,070)
__________ __________
Income (loss) before income taxes 92,750 (56,050)
Income tax provision (benefit) 35,710 (18,450)
__________ __________
Net income (loss) $ 57,040 $ (37,600)
Net income (loss) per common share
Primary $ .93 $(1.35)
Fully diluted $ .85 $(1.35)
Dividends declared per common share $ .15 $ .15
The accompanying notes are an integral part of these Financial Statements.
SEGMENT INFORMATION (Unaudited)
BOISE CASCADE CORPORATION AND SUBSIDIARIES
Three Months Ended March 31
1995 1994
(expressed in thousands)
Segment sales
Paper and paper products $ 593,920 $ 399,992
Office products 303,287 190,926
Building products 393,438 394,809
Intersegment eliminations and other (67,685) (44,427)
__________ __________
$1,222,960 $ 941,300
Segment operating income (loss)
Paper and paper products $ 97,998 $ (53,537)
Office products 12,563 10,945
Building products 23,484 35,043
Equity in net income (loss) of
affiliates 5,570 (7,540)
Corporate and other (9,945) (4,891)
__________ __________
Income (loss) from operations $ 129,670 $ (19,980)
The accompanying notes are an integral part of these Financial Statements.
BALANCE SHEETS (Unaudited)
BOISE CASCADE CORPORATION AND SUBSIDIARIES
March 31 December 31
1995 1994 1994
ASSETS (expressed in thousands)
Current
Cash and cash items $ 29,601 $ 24,910 $ 22,447
Short-term investments at cost,
which approximates market 5,972 6,499 7,007
__________ __________ __________
35,573 31,409 29,454
Receivables, less allowances of
$2,048,000, $1,803,000, and
$1,987,000 444,481 373,797 405,661
Inventories 396,922 384,633 423,589
Deferred income tax benefits 63,231 38,289 42,487
Other 17,824 12,577 17,073
__________ __________ __________
958,031 840,705 918,264
__________ __________ __________
Property
Property and equipment
Land and land improvements 38,282 37,751 37,775
Buildings and improvements 442,168 425,914 439,936
Machinery and equipment 4,111,682 3,978,426 4,078,302
__________ __________ __________
4,592,132 4,442,091 4,556,013
Accumulated depreciation (2,103,772) (1,927,812) (2,062,106)
__________ __________ __________
2,488,360 2,514,279 2,493,907
Timber, timberlands, and timber
deposits 399,636 375,727 397,721
__________ __________ __________
2,887,996 2,890,006 2,891,628
__________ __________ __________
Investments in equity affiliates 211,796 307,604 204,498
Other assets 285,277 215,407 279,687
__________ __________ __________
Total assets $4,343,100 $4,253,722 $4,294,077
The accompanying notes are an integral part of these Financial Statements.
BALANCE SHEETS (Unaudited)
BOISE CASCADE CORPORATION AND SUBSIDIARIES
March 31 December 31
1995 1994 1994
LIABILITIES AND SHAREHOLDERS' EQUITY (expressed in thousands)
Current
Notes payable $ 66,000 $ 19,000 $ 56,000
Current portion of long-term debt 37,188 218,955 58,534
Accounts payable 312,159 246,092 306,848
Accrued liabilities
Compensation and benefits 108,663 95,749 107,866
Interest payable 29,986 30,260 36,043
Other 105,625 97,801 92,552
__________ _________ __________
659,621 707,857 657,843
__________ __________ __________
Debt
Long-term debt, less current
portion 1,578,914 1,464,810 1,625,148
Guarantee of ESOP debt 230,956 246,856 230,956
__________ __________ __________
1,809,870 1,711,666 1,856,104
__________ __________ __________
Other
Deferred income taxes 188,948 123,984 137,260
Other long-term liabilities 279,778 262,716 278,012
__________ __________ __________
468,726 386,700 415,272
__________ __________ __________
Shareholders' equity
Preferred stock -- no par value;
10,000,000 shares authorized;
Series D ESOP: $.01 stated
value; 6,208,880, 6,381,129,
and 6,294,891 shares outstanding 279,400 287,151 283,270
Deferred ESOP benefit (230,956) (246,856) (230,956)
Series E: $.01 stated value;
862,500 shares outstanding
at March 31 and December 31,
1994 - 191,466 191,466
Series F: $.01 stated value;
115,000 shares outstanding
in each period 111,043 111,043 111,043
Series G: $.01 stated value;
862,500 shares outstanding
in each period 176,404 176,404 176,404
Common stock -- $2.50 par value;
200,000,000 shares authorized;
47,037,155, 38,033,681, and
38,284,186 shares outstanding 117,593 95,084 95,710
Additional paid-in capital 172,782 - -
Retained earnings 778,617 833,207 737,921
__________ __________ __________
Total shareholders' equity 1,404,883 1,447,499 1,364,858
__________ __________ __________
Total liabilities and shareholders'
equity $4,343,100 $4,253,722 $4,294,077
The accompanying notes are an integral part of these Financial Statements.
STATEMENTS OF CASH FLOWS (Unaudited)
BOISE CASCADE CORPORATION AND SUBSIDIARIES
Three Months Ended March 31
1995 1994
(expressed in thousands)
Cash provided by (used for) operations
Net income (loss) $ 57,040 $ (37,600)
Items in income (loss) not using
(providing) cash
Equity in net (income) loss of affiliates (5,570) 7,540
Depreciation and cost of company timber
harvested 60,390 58,170
Deferred income tax provision (benefit) 33,627 (18,450)
Amortization and other 3,218 3,804
Receivables (36,997) (22,593)
Inventories 27,053 31,590
Accounts payable and accrued liabilities 1,827 (8,718)
Current and deferred income taxes 2,411 1,278
Other 2,106 3,532
__________ __________
Cash provided by operations 145,105 18,553
__________ __________
Cash used for investment
Expenditures for property and equipment (53,968) (38,578)
Expenditures for timber and timberlands (2,166) (2,160)
Investments in equity affiliates - (2,398)
Purchase of facilities (3,289) (7,122)
Other (6,638) (7,211)
__________ __________
Cash used for investment (66,061) (57,469)
__________ __________
Cash provided by (used for) financing
Cash dividends paid
Common stock (5,743) (5,698)
Preferred stock (9,969) (9,969)
__________ __________
(15,712) (15,667)
Notes payable 10,000 (12,000)
Additions to long-term debt - 95,716
Payments of long-term debt (67,580) (20,484)
Other 367 331
__________ __________
Cash provided by (used for) financing (72,925) 47,896
__________ __________
Increase in cash and short-term investments 6,119 8,980
Balance at beginning of the year 29,454 22,429
__________ __________
Balance at March 31 $ 35,573 $ 31,409
The accompanying notes are an integral part of these Financial Statements.
Notes to Quarterly Financial Statements (Unaudited)
(1) BASIS OF PRESENTATION. The quarterly financial statements have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. These
statements should be read together with the statements and the accom-
panying notes included in the Company's 1994 Annual Report.
The quarterly financial statements have not been audited by indepen-
dent public accountants, but in the opinion of management, all
adjustments necessary to present fairly the results for the periods
have been included. The net income (loss) for the three months ended
March 31, 1995 and 1994, was subject to seasonal variations and
necessarily involved estimates and accruals. Except as may be
disclosed within these "Notes to Quarterly Financial Statements," the
adjustments made were of a normal, recurring nature. Quarterly
results are not necessarily indicative of results that may be
expected for the year.
(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 ended March 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 three-month periods ended March 31, 1995 and 1994, primary
average shares include only 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
16,263,000 at March 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.
Three Months Ended March 31
1995 1994
(expressed in thousands)
Net income (loss) as reported $ 57,040 $ (37,600)
Preferred dividends (6,418) (13,648)
_________ _________
Primary income (loss) 50,622 (51,248)
Assumed conversions:
Preferred dividends eliminated 3,715 10,945
Interest on 7% debentures eliminated 849 860
Supplemental ESOP contribution (3,175) (3,144)
_________ _________
Fully diluted income (loss) $ 52,011 $ (42,587)
Average number of common shares
Primary 54,356 38,020
Fully diluted 61,257 61,249
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.
(3) INVENTORIES. Inventories include the following:
March 31 December 31
1995 1994 1994
(expressed in thousands)
Finished goods and work in process $266,560 $255,596 $256,732
Logs 52,137 65,596 107,095
Other raw materials and supplies 168,772 148,776 147,211
LIFO reserve (90,547) (85,335) (87,449)
________ ________ ________
$396,922 $384,633 $423,589
(4) INCOME TAXES. The components of the net deferred tax liability on the
Company's Balance Sheet were determined as follows:
March 31 December 31
1995 1994 1994
Assets Liabil. Assets Liabil. Assets Liabil.
(expressed in millions)
Operating loss
carryover $157.9 $ - $171.3 $ - $200.5 $ -
Employee benefits 107.8 16.4 110.3 10.2 106.2 17.8
Property and equipment
and timber and
timberlands 80.3 534.7 87.8 507.0 81.6 531.4
Alternative minimum tax 82.1 - 79.8 - 79.6 -
Tax credit carryovers 35.0 - 35.3 - 35.7 -
Reserves 14.1 2.1 10.7 1.6 14.6 2.0
Inventories 10.1 .2 9.8 .4 10.1 .2
State income taxes - 33.4 4.2 29.7 - 33.4
Deferred charges .2 7.4 .3 12.8 .2 7.9
Differences in basis
of nonconsolidated
entities 11.3 18.8 - 18.9 11.5 28.5
Other 12.1 23.6 11.5 26.1 10.3 23.9
______ ______ ______ ______ ______ ______
$510.9 $636.6 $521.0 $606.7 $550.3 $645.1
The estimated tax provision rate for the first three months of 1995 was
38.5%, compared with a tax benefit rate of 32.9% for the same period in
the prior year. The change in the rate is primarily due to increased
income from the Company's U.S. operations.
(5) DEBT. At March 31, 1995, the Company had a $650 million revolving
credit agreement with a group of banks. Borrowing under the agreement
was $205 million.
(6) SERIES E PREFERRED STOCK. On January 15, 1995, the Company's Series E
preferred stock converted to 8,625,000 shares of common stock.
(7) INVESTMENTS IN EQUITY AFFILIATES. The Company's principal equity
affiliate is Rainy River Forest Products Inc. ("Rainy River"). The
Company has a 59.66% equity interest and a 49% voting interest. Rainy
River is accounted for on the equity method. Other investments include
a 30% interest in Rumford Cogeneration Company Limited Partnership and a
50% interest in the general partnership of Pine City Fiber Company.
SUMMARIZED FINANCIAL INFORMATION
Three Months Ended March 31
1995 1994
(expressed in thousands)
Sales $196,220 $105,495
Gross profit (loss) 27,163 (8,863)
Net income (loss) 11,314 (13,356)
Management's Discussion and Analysis of Financial Condition and Results of
Operations
First Quarter of 1995, Compared With First Quarter of 1994
Boise Cascade Corporation's net income for the first quarter of 1995 was
$57 million, compared with a net loss of $37.6 million for the first quarter
of 1994. Primary earnings per common share for the first quarter of 1995 were
93 cents, and fully diluted earnings per share were 85 cents. For the same
quarter in 1994, primary and fully diluted loss per share was $1.35.
Sales for the first quarter of 1995 were $1.2 billion, compared with
$941 million in the first quarter of last year.
In October 1994, the Company's Canadian subsidiary, Rainy River Forest
Products Inc. ("Rainy River"), completed the sale of units of common stock and
debentures in an initial public offering. Boise Cascade holds approximately
60% of Rainy River's economic equity and 49% of its voting equity. Rainy
River was accounted for on the equity method retroactive to January 1, 1994,
in the Company's consolidated financial statements.
The Company's paper segment reported operating income of $98 million in the
first quarter of 1995, compared with an operating loss of $53.5 million in the
first quarter of 1994. This significant improvement is primarily attributable
to surging markets for pulp and paper, which have resulted in significantly
increased pulp and paper prices. Average weighted prices rose $231 per ton
between the first quarter of 1994 and 1995. Uncoated freesheet and
containerboard rose approximately 50% between those quarters. Newsprint and
coated paper prices rose an average of 36%, while market pulp prices increased
over 100%.
Manufacturing costs per ton increased modestly between the comparison
quarters. The increase was due in part to higher purchased pulp and wood
fiber prices.
Paper segment sales rose 48% to $594 million in the first quarter of 1995,
primarily due to the increased prices. Sales volumes for the first quarter of
1995 were 739,000 tons, compared with 722,000 tons in the first quarter of
1994.
Income in the office products segment improved in the first quarter of 1995 to
$12.6 million, compared with $10.9 million in the prior-year quarter. Total
sales rose 59% to $303 million, largely as a result of acquisitions and
internal expansion. Same-location sales increased 25%, primarily because of
increased national accounts business and rising paper prices and volume.
Building products operating income declined from $35 million for the year-ago
first quarter to $23.5 million. Contributing to the decline in income were
higher delivered-log costs and a slowdown in construction, which lessened
demand for wood products and caused a decline in lumber prices. Relative to
the year-ago quarter, average prices for lumber declined 15%, while plywood
prices increased 8%. Unit sales volume for lumber increased 6%, while plywood
sales volume was flat. The segment's results continued to be enhanced by a
contribution from its growing engineered wood products business.
Sales for the building products segment were flat for the comparison quarters.
Interest expense was $37.2 million in the first quarter of 1995, compared with
$34.9 million in the same period last year. The increase is primarily due to
higher interest rates on borrowings under the Company's revolving credit
agreement. The Company's debt is predominantly fixed rate. Consequently,
when there are changes in short-term market interest rates, the Company
experiences only modest changes in interest expense.
Total long- and short-term debt outstanding was $1.9 billion at both March 31,
1995 and 1994, and $2.0 billion at December 31, 1994.
Financial Condition
At March 31, 1995, the Company had working capital of $298 million. Working
capital was $133 million at March 31, 1994, and $260 million at December 31,
1994. Cash provided by operations was $145 million for the first three months
of 1995, compared with $19 million for the same period in 1994.
The Company's revolving credit agreement requires the Company to maintain a
minimum amount of net worth and not to exceed a maximum ratio of debt to net
worth. The Company's net worth at March 31, 1995, exceeded the defined
minimum amount by $70 million. The payment of dividends by the Company is
dependent upon the existence of and the amount of net worth in excess of the
defined minimum under this agreement. The Company is also required to
maintain a defined minimum interest coverage in each successive four-quarter
period, which the Company met at March 31, 1995.
Capital expenditures, including purchases of facilities, for the first three
months of 1995 and 1994 were $59 million and $48 million. Capital
expenditures for the year ended December 31, 1994, were $272 million, which
included purchases of facilities and the assumption of related long-term debt.
An expanded discussion and analysis of financial condition is presented on
pages 19 and 20 of the Company's 1994 Annual Report under the captions
"Financial Condition" and "Capital Investment."
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the registrant's annual report on Form 10-K for the year
ended December 31, 1994, for information concerning certain legal proceedings.
Item 2. Changes in Securities
On January 15, 1995, the Company's Series E preferred stock converted to
8,625,000 shares of common stock.
The payment of dividends by the Company is dependent upon the existence of and
the amount of net worth in excess of the defined minimum under the Company's
revolving credit agreement. At March 31, 1995, under this agreement, the
Company's net worth exceeded the defined minimum amount by $69,972,000.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
SALE OF MINORITY INTEREST IN BOISE CASCADE OFFICE PRODUCTS CORPORATION. In
April 1995, the Company's wholly owned subsidiary, Boise Cascade Office
Products Corporation ("BCOP"), completed the initial public offerings of
5,318,750 shares of common stock at a price of $25 per share. After the
offerings, the Company owns 82.7% of the outstanding BCOP common stock. The
net proceeds of the offerings to BCOP were approximately $123,076,000, of
which approximately $101,859,000 was indirectly (through retention of accounts
receivable and a small dividend payment) available to the Company for general
corporate purposes. The remainder of the proceeds were retained by BCOP for
its general corporate purposes.
Boise Cascade will record a pretax gain of approximately $60 million in the
second quarter of 1995 from the offerings.
BCOP has entered into a $225 million revolving credit agreement with a
syndicate of banks. The agreement has a term of four years and provides for
variable rates of interest based on customary indexes. The revolving credit
agreement will be available for general corporate purposes, including to
finance its growth, and contains customary restrictive financial and other
covenants. At March 31, 1995, there were no borrowings under the agreement.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
A list of the exhibits required to be filed as part of this report
is set forth in the Index to Exhibits, which immediately precedes
such exhibits, and is incorporated herein by this reference.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
March 31, 1995.
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
As Duly Authorized Officer and
Chief Accounting Officer: /s/Tom E. Carlile
Tom E. Carlile
Vice President and Controller
Date: May 11, 1995
BOISE CASCADE CORPORATION
INDEX TO EXHIBITS
Filed With the Quarterly Report on Form 10-Q
for the Quarter Ended March 31, 1995
Number Description Page Number
12 Ratio of Earnings to Fixed Charges __
27 Financial Data Schedule __