UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 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, 1999
( ) 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 Street
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, 1999
Common stock, $2.50 par value 56,525,108
PART I - FINANCIAL INFORMATION
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
(expressed in thousands, except per share data)
Item 1. Financial Statements
Three Months Ended
March 31
________________________
1999 1998
__________ __________
(unaudited)
Sales $1,611,153 $1,489,500
__________ __________
Costs and expenses
Materials, labor, and other operating expenses 1,253,623 1,172,920
Depreciation, amortization, and cost of company
timber harvested 69,035 70,280
Selling and distribution expenses 182,896 161,700
General and administrative expenses 29,986 36,590
Other (income) expense, net 1,967 340
__________ __________
1,537,507 1,441,830
__________ __________
Equity in net income (loss) of affiliates 746 (3,540)
__________ __________
Income from operations 74,392 44,130
__________ __________
Interest expense (37,117) (40,100)
Interest income 616 600
Foreign exchange gain (loss) 44 (50)
__________ __________
(36,457) (39,550)
__________ __________
Income before income taxes, minority interest,
and cumulative effect of accounting change 37,935 4,580
Income tax provision (15,743) (1,900)
__________ __________
Income before minority interest and
cumulative effect of accounting change 22,192 2,680
Minority interest, net of income tax (3,339) (3,130)
__________ __________
Income (loss) before cumulative effect of
accounting change 18,853 (450)
Cumulative effect of accounting change, net
of income tax - (8,590)
__________ __________
Net income (loss) $ 18,853 $ (9,040)
========== ==========
Net income (loss) per common share
Basic net income (loss) before cumulative
effect of accounting change $ .27 $ (.17)
Cumulative effect of accounting change - (.15)
__________ __________
Basic net income (loss) $ .27 $ (.32)
========== ==========
Diluted net income (loss) before cumulative
effect of accounting change $ .26 $ (.17)
Cumulative effect of accounting change - (.15)
__________ __________
Diluted net income (loss) $ .26 $ (.32)
========== ==========
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
(expressed in thousands)
ASSETS
March 31 December 31
_______________________ ___________
1999 1998 1998
__________ __________ ___________
(unaudited)
Current
Cash $ 48,526 $ 86,002 $ 66,469
Cash equivalents 8,349 8,840 7,899
__________ __________ __________
56,875 94,842 74,368
Receivables, less allowances
of $10,411, $8,874, and $10,933 592,746 630,448 526,359
Inventories 561,490 614,772 625,218
Deferred income tax benefits 88,802 59,459 92,426
Other 70,535 27,223 50,035
__________ __________ __________
1,370,448 1,426,744 1,368,406
__________ __________ __________
Property
Property and equipment
Land and land improvements 62,732 55,445 63,307
Buildings and improvements 583,003 559,732 575,509
Machinery and equipment 4,106,202 4,145,749 4,082,724
__________ __________ __________
4,751,937 4,760,926 4,721,540
Accumulated depreciation (2,197,160) (2,130,519) (2,150,385)
__________ __________ __________
2,554,777 2,630,407 2,571,155
Timber, timberlands, and
timber deposits 270,028 276,670 270,570
__________ __________ __________
2,824,805 2,907,077 2,841,725
__________ __________ __________
Goodwill, net of amortization
of $41,112, $27,733, and $37,327 493,114 446,646 501,691
Investments in equity affiliates 31,923 30,520 27,162
Other assets 229,394 225,935 227,715
__________ __________ __________
Total assets $4,949,684 $5,036,922 $4,966,699
========== ========== ==========
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
(expressed in thousands, except share amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31 December 31
_______________________ ___________
1999 1998 1998
__________ __________ ___________
(unaudited)
Current
Short-term borrowings $ 164,935 $ 211,900 $ 129,512
Current portion of long-term debt 122,285 52,839 161,473
Income taxes payable 1,560 - -
Accounts payable 486,527 495,831 499,489
Accrued liabilities
Compensation and benefits 124,046 121,001 130,480
Interest payable 32,653 35,526 36,166
Other 218,082 159,995 172,980
__________ __________ __________
1,150,088 1,077,092 1,130,100
__________ __________ __________
Debt
Long-term debt, less current
portion 1,548,027 1,742,492 1,578,136
Guarantee of ESOP debt 155,731 176,823 155,731
__________ __________ __________
1,703,758 1,919,315 1,733,867
__________ __________ __________
Other
Deferred income taxes 253,999 229,542 255,660
Other long-term liabilities 296,299 223,972 301,920
__________ __________ __________
550,298 453,514 557,580
__________ __________ __________
Minority interest 120,092 109,462 116,753
__________ __________ __________
Shareholders' equity
Preferred stock -- no par value;
10,000,000 shares authorized;
Series D ESOP: $.01 stated
value; 5,236,527; 5,521,442;
and 5,356,648 shares
outstanding 235,644 248,465 241,049
Deferred ESOP benefit (155,731) (176,823) (155,731)
Common stock -- $2.50 par value;
200,000,000 shares authorized;
56,391,396; 56,277,831; and
56,338,426 shares outstanding 140,978 140,695 140,846
Additional paid-in capital 422,291 418,316 420,890
Retained earnings 796,767 853,781 788,918
Accumulated other comprehensive
income (loss) (14,501) (6,895) (7,573)
__________ __________ __________
Total shareholders' equity 1,425,448 1,477,539 1,428,399
__________ __________ __________
Total liabilities and shareholders'
equity $4,949,684 $5,036,922 $4,966,699
========== ========== ==========
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(expressed in thousands)
Three Months Ended
March 31
________________________
1999 1998
_________ _________
(unaudited)
Cash provided by (used for) operations
Net income (loss) $ 18,853 $ (9,040)
Cumulative effect of accounting change, net of
income tax - 8,590
Items in net income (loss) not using
(providing) cash
Equity in net (income) loss of affiliates (746) 3,540
Depreciation, amortization, and cost of company
timber harvested 69,035 70,280
Deferred income tax provision (benefit) 12,163 (1,811)
Minority interest, net of income tax 3,339 3,130
Other 41 (1,139)
Receivables (66,387) (58,485)
Inventories 64,349 19,707
Accounts payable and accrued liabilities 13,389 35,463
Current and deferred income taxes (7,645) (955)
Other (10,363) 12,576
_________ _________
Cash provided by operations 96,028 81,856
_________ _________
Cash provided by (used for) investment
Expenditures for property and equipment (48,380) (62,548)
Expenditures for timber and timberlands (392) (2,751)
Purchases of assets (6,328) (4,042)
Other (12,510) (10,884)
_________ _________
Cash used for investment (67,610) (80,225)
_________ _________
Cash provided by (used for) financing
Cash dividends paid
Common stock (8,451) (8,433)
Preferred stock (80) (3,722)
_________ _________
(8,531) (12,155)
Short-term borrowings 35,423 117,100
Additions to long-term debt 105,921 90,000
Payments of long-term debt (174,673) (50,246)
Series F Preferred Stock redemption - (115,001)
Other (4,051) (73)
_________ _________
Cash provided by (used for) financing (45,911) 29,625
_________ _________
Increase (decrease) in cash and cash equivalents (17,493) 31,256
Balance at beginning of the year 74,368 63,586
_________ _________
Balance at March 31 $ 56,875 $ 94,842
========= =========
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. 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 accompanying notes included
in our 1998 Annual Report.
The quarterly financial statements have not been audited by independent
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,
1999 and 1998, 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,
1998, the computation of diluted net loss per share was antidilutive;
therefore, amounts reported for basic and diluted loss were the same.
Three Months Ended
March 31
___________________
1999 1998
________ ________
(expressed in
thousands)
BASIC
Net income (loss) as reported before cumulative
effect of accounting change $ 18,853 $ (450)
Preferred dividends(a) (3,490) (5,061)
Excess of Series F Preferred Stock redemption
price over carrying value(b) - (3,958)
________ ________
Basic income (loss) before cumulative effect of
accounting change 15,363 (9,469)
Cumulative effect of accounting change, net of
income tax - (8,590)
________ ________
Basic income (loss) $ 15,363 $(18,059)
======== ========
Average shares outstanding used to determine
basic income (loss) per common share 56,369 56,242
======== ========
DILUTED
Basic income (loss) before cumulative effect of
accounting change $ 15,363 $ (9,469)
Preferred dividends eliminated 3,490 -
Supplemental ESOP contribution (2,983) -
________ ________
Diluted income (loss) before cumulative effect of
accounting change 15,870 (9,469)
Cumulative effect of accounting change, net of
income tax - (8,590)
________ ________
Diluted income (loss) $ 15,870 $(18,059)
======== ========
Average shares outstanding used to determine basic
income (loss) per common share 56,369 56,242
Stock options, net 235 -
Series D convertible preferred stock 4,276 -
________ ________
Average shares used to determine diluted income
(loss) per common share 60,880 56,242
======== ========
(a) Dividend attributable to our Series D convertible preferred stock held
by our ESOP (Employee Stock Ownership Plan) is net of a tax benefit.
(b) First quarter 1998 loss per share included a negative seven cents
related to the redemption of the Series F Preferred Stock. The loss
for the quarter used in the calculation of loss per share was increased
by the excess of the amount paid to redeem the preferred stock over its
carrying value.
(3) COMPREHENSIVE INCOME (LOSS). Comprehensive income (loss) for the
periods include the following:
Three Months Ended
March 31
____________________
1999 1998
________ ________
(expressed in
thousands)
Net income (loss) $ 18,853 $ (9,040)
Other comprehensive income (loss)
Cumulative foreign currency translation
adjustment, net of income taxes (6,928) 1,715
________ ________
Comprehensive income (loss), net of income taxes $ 11,925 $ (7,325)
======== ========
(4) RECEIVABLES. In late September 1998, we sold fractional ownership
interests in a defined pool of trade accounts receivable. At March 31,
1999, and December 31, 1998, $100 million and $79 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. The
increase in sold accounts receivable over the amount at December 31,
1998, also represents an increase in cash provided by operations for
the three months ended March 31, 1999. This program represents 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 the 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.
(5) DEFERRED SOFTWARE COSTS. We defer certain software costs that benefit
future years. These costs are amortized on the straight-line method
over a maximum of five years or the expected life of the software,
whichever is less. "Other assets" in the balance sheets includes
deferred software costs of $48.2 million, $33.0 million, and
$47.1 million at March 31, 1999 and 1998, and December 31, 1998.
AICPA Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," became effective
beginning in 1999. We account for software costs in accordance with
this statement. The implementation of this statement had no financial
statement impact on us.
(6) INVENTORIES. Inventories include the following:
March 31 December 31
__________________ ___________
1999 1998 1998
________ ________ ___________
(expressed in thousands)
Finished goods and work in process $437,340 $474,285 $456,577
Logs 46,760 66,062 87,688
Other raw materials and supplies 141,350 152,198 145,319
LIFO reserve (63,960) (77,773) (64,366)
________ ________ ________
$561,490 $614,772 $625,218
======== ======== ========
(7) CUMULATIVE EFFECT OF ACCOUNTING CHANGE. As of January 1, 1998, we
adopted the provisions of a new accounting standard, AICPA Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities," which
required the write-off of previously capitalized preoperating costs.
Adoption of this standard resulted in a charge for the cumulative
effect of accounting change, net of tax, of $8.6 million, or 15 cents
per basic and diluted loss per share, for the three months ended
March 31, 1998.
(8) INCOME TAXES. We used an estimated annual tax rate of 41.5% for the
three months ended March 31, 1999 and 1998. In 1998, our actual annual
tax benefit rate was 12.5%. Excluding nonroutine items in 1998, the
tax provision rate would have been 44%. Our tax rate is subject to
fluctuations due primarily to the sensitivity of the rate to low income
levels, the impact of nonroutine items, and the mix of income sources.
For the three months ended March 31, 1999, we paid income taxes, net of
refunds received, of $5.5 million. We paid $2.4 million for the same
period in 1998.
(9) DEBT. At March 31, 1999, we had a revolving credit agreement with a
group of banks that permits us to borrow as much as $600 million at
variable interest rates based on customary indices. This agreement
expires in June 2002. 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 is dependent upon the
existence of and the amount of net worth in excess of the defined
minimum. Our net worth at March 31, 1999, exceeded the defined
minimum by $109 million. At March 31, 1999, there were $160 million of
borrowings outstanding under this agreement.
Our majority-owned subsidiary, Boise Cascade Office Products
Corporation ("BCOP"), has a $450 million revolving credit agreement
with a group of banks that expires in June 2001 and provides variable
interest rates based on customary indices. The BCOP revolving credit
facility contains customary restrictive financial and other covenants,
including a negative pledge and covenants specifying a minimum fixed
charge coverage ratio and a maximum leverage ratio. BCOP may, subject
to the covenants contained in the credit agreement and to market
conditions, raise additional funds through the agreement and through
other external debt or equity financings in the future. Borrowings
under BCOP's agreement were $165 million at March 31, 1999.
In October 1998, we entered into an interest rate swap with a notional
amount of $75,000,000 and an effective fixed rate of 5.1% with respect
to $75,000,000 of our revolving credit agreement borrowings. BCOP also
entered into an interest rate swap with a notional amount of
$25,000,000 and an effective fixed interest rate of 5.0% with respect
to $25,000,000 of their revolving credit agreement borrowings. Both
swaps expire in 2000. We are exposed to credit-related gains or losses
in the event of nonperformance by counterparties to these swaps;
however, we do not expect any counterparties to fail to meet their
obligations.
Also at March 31, 1999, we had $104.3 million of short-term borrowings
outstanding and BCOP had $60.6 million of short-term borrowings
outstanding. At March 31, 1998, we had $138.1 million short-term
borrowings outstanding, while BCOP had $73.8 million of short-term
borrowings outstanding. The maximum amount of short-term borrowings
outstanding during the three months ended March 31, 1999 and 1998, was
$293.3 million and $275.3 million. The average amount of short-term
borrowings outstanding during the three months ended March 31, 1999 and
1998, was $177.6 million and $198.9 million. The average interest rate
for these borrowings was 5.4% for 1999 and 5.9% for 1998.
At March 31, 1999, we had $430.0 million and BCOP had $150.0 million of
unused borrowing capacity registered with the Securities and Exchange
Commission for additional debt securities.
In March 1999, we filed a registration statement covering $300 million
in universal shelf capacity with the Securities and Exchange
Commission. This filing is still under review by the Securities and
Exchange Commission. Once approved, we may offer and sell in one or
more offerings common stock, preferred stock, debt securities,
warrants, and purchase contracts.
Cash payments for interest, net of interest capitalized, were
$40.6 million and $43.7 million for the three months ended March 31,
1999 and 1998.
(10) BOISE CASCADE OFFICE PRODUCTS CORPORATION. During the first three
months of 1999, BCOP completed one acquisition, and during the first
three months of 1998, BCOP completed two acquisitions, all of which
were accounted for under the purchase method of accounting.
Accordingly, the purchase prices were allocated to the assets acquired
and liabilities assumed based upon their estimated fair values. The
initial purchase price allocations may be adjusted within one year of
the date of purchase for changes in estimates of the fair values of
assets and liabilities. Such adjustments are not expected to be
significant to our results of operations or our financial position.
The excess of the purchase price over the estimated fair value of the
net assets acquired was recorded as goodwill and is being amortized
over 40 years. The results of operations of the acquired businesses
are included in our operations subsequent to the dates of acquisition.
On January 11, 1999, BCOP acquired the office supply business of
Wallace Computer Services, based in Lisle, Illinois. This transaction
was completed for cash of $6.3 million and the recording of
$0.2 million of acquisition liabilities.
On January 12, 1998, BCOP acquired the direct marketing business of
Fidelity Direct, based in Minneapolis, Minnesota. On February 28,
1998, BCOP acquired the direct marketing business of Sistemas
Kalamazoo, based in Spain. These transactions were completed
for cash of $4.0 million, debt assumed of $0.2 million, and the
recording of $3.8 million of acquisition liabilities.
Unaudited pro forma results of operations reflecting the above
acquisitions would have been as follows. If the 1999 acquisition had
occurred on January 1, 1999, there would be no significant change in
the results of operations for the first three months of 1999. If the
1999 and 1998 acquisitions had occurred on January 1, 1998, sales for
the first three months of 1998 would have increased by $12 million, net
loss and basic and diluted loss per share would have been unchanged.
This unaudited pro forma financial information does not necessarily
represent the actual results of operations that would have occurred if
the acquisitions had taken place on the dates assumed.
(11) NEW ACCOUNTING STANDARDS. In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement establishes
accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. This Statement is effective for
fiscal years beginning after June 15, 1999. We plan to adopt this
Statement in the first quarter of 2000. We are in the process of
reviewing this new standard. Adoption of this Statement is not
expected to have a significant impact on our results of operations or
financial position.
(12) RESTRUCTURING ACTIVITIES. Late in the second quarter of 1998, we
adopted a plan to restructure our wood products manufacturing business
by permanently closing four facilities, including sawmills in Elgin,
Oregon; Horseshoe Bend, Idaho; and Fisher, Louisiana; and a plywood
plant in Yakima, Washington. These closures are due to poor financial
results and a decrease in wood supply. The Horseshoe Bend and Fisher
sawmills have closed. These closures resulted in the termination of
182 employees. Our current plans are to close the Elgin sawmill and
Yakima plywood plant in 1999. However, based on recent changes in wood
supply and costs, product prices, and plant operations, we are
evaluating whether these facilities should continue to operate past
1999. Approximately 312 employees would be affected by the closure of
the Elgin and Yakima facilities. These two facilities had sales of
$13,871,000 and $11,545,000 for the three months ended March 31, 1999
and 1998. These facilities had operating income of $3,248,000 for the
three months ended March 31, 1999, and an operating loss of $2,210,000
for the three months ended March 31, 1998. The Horseshoe Bend and
Fisher sawmills had sales of $10,050,000 and an operating loss of
$1,920,000 for the three months ended March 31, 1998.
The assets still to be shut down were written down to zero, their
estimated net realizable value at the then expected date of closure. Had
we continued to depreciate these assets, first quarter 1999 operating
expense would have increased approximately $1,000,000.
Restructuring activities related to these second quarter 1998 charges
through March 31, 1999, are as follows:
Asset Employee- Other
Write- Related Exit
Downs Costs Costs Total
________ ________ ________ ________
(expressed in thousands)
1998 expense recorded $ 27,200 $ 14,000 $ 20,700 $ 61,900
Assets written down (27,200) - - (27,200)
Pension liability recorded - (1,300) - (1,300)
Charges against reserve - (4,200) (1,400) (5,600)
________ ________ ________ ________
Restructuring reserve at
March 31, 1999 $ - $ 8,500 $ 19,300 $ 27,800
======== ======== ======== ========
Also in the second quarter of 1998, our Paper and Paper Products
segment recorded a pretax charge related to the revaluation of paper-
related assets. Included in the revaluation was the $8 million write-
down to zero of our investment in a now terminated joint venture in
China that produced carbonless paper. Also written-down by
approximately $5 million were the fixed assets of a small corrugating
facility that was sold in March 1999 for its approximate remaining book
value. We also wrote off $6 million in an investment in a bankrupt
joint venture and miscellaneous equipment that had no future value.
In the fourth quarter of 1998, we announced a company-wide cost-
reduction initiative and the restructuring of certain operations.
Specific actions include the elimination of job positions in our
manufacturing businesses and Boise headquarters through a combination
of early retirements, layoffs, and attrition. Our paper research and
development facility in Portland, Oregon, will close by June 1999.
BCOP will close eight facilities in the United Kingdom and integrate
selected functions of the operations with their other United Kingdom
operations. These BCOP closures are expected to be completed during
the first half of 1999 and will result in work force reductions of
approximately 140 employees. BCOP also dissolved an unprofitable joint
venture in Germany.
Restructuring activities related to these fourth quarter 1998 charges
through March 31, 1999, are as follows:
Asset Employee- Other
Write- Related Exit
Downs Costs Costs Total
_______ _______ _______ _______
(expressed in thousands)
OFFICE PRODUCTS
1998 expense recorded $ 300 $ 1,400 $ 9,400 $11,100
Assets written down (300) - - (300)
Charges against reserve - (600) (4,000) (4,600)
_______ _______ _______ _______
Restructuring reserve at
March 31, 1999 $ - $ 800 $ 5,400 $ 6,200
======= ======= ======= =======
BUILDING PRODUCTS
1998 expense recorded $ - $ 2,800 $ - $ 2,800
Pension liability recorded - (2,200) - (2,200)
Charges against reserve - - - -
_______ _______ _______ _______
Restructuring reserve at
March 31, 1999 $ - $ 600 $ - $ 600
======= ======= ======= =======
PAPER AND PAPER PRODUCTS
1998 expense recorded $ 7,200 $11,300 $ - $18,500
Assets written down (7,200) - - (7,200)
Pension liability recorded - (4,500) - (4,500)
Charges against reserve - (2,600) - (2,600)
_______ _______ _______ _______
Restructuring reserve at
March 31, 1999 $ - $ 4,200 $ - $ 4,200
======= ======= ======= =======
CORPORATE AND OTHER
1998 expense recorded $ - $ 9,600 $ 400 $10,000
Pension liability recorded - (7,600) - (7,600)
Reclass from other accounts - 500 - 500
Charges against reserve - (400) (100) (500)
_______ _______ _______ _______
Restructuring reserve at
March 31, 1999 $ - $ 2,100 $ 300 $ 2,400
======= ======= ======= =======
The estimated number of employees impacted by the 1998 restructuring
activities described above and the number who have left the company as
of March 31, 1999, are as follows:
Employees To Employees
Be Terminated Terminated
_____________ __________
Second Quarter 1998
Building products 494 182
Fourth Quarter 1998
Office products 140 89
Building products 40 13
Paper and paper products 212 95
Corporate and other 92 21
____ ____
Total 978 400
==== ====
In addition to the employees discussed above, we expect to eliminate up
to another 100 positions by not filling already vacant positions or
through normal attrition. No reserves were established related to
these job eliminations.
(13) 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
Taxes,
Minority
Interest,
and Cumu-
Sales lative
______________________________ Effect of
Inter- Accounting
Trade Segment Total Change (a)
Three Months Ended ________ _______ ________ _______
March 31, 1999 (expressed in millions)
Office products $ 848.3 $ .1 $ 848.4 $ 38.7
Building products 436.6 6.9 443.5 40.3
Paper and paper products 319.9 79.5 399.4 4.8
Corporate and other 6.4 14.2 20.6 (8.8)
________ _______ ________ _______
Total 1,611.2 100.7 1,711.9 75.0
Intersegment eliminations - (100.7) (100.7) -
Interest expense - - - (37.1)
________ _______ ________ _______
Consolidated Totals $1,611.2 $ - $1,611.2 $ 37.9
======== ======= ======== =======
Three Months Ended
March 31, 1998
Office products $ 759.4 $ .4 $ 759.8 $ 36.5
Building products 358.1 10.6 368.7 (.2)
Paper and paper products 367.1 91.2 458.3 20.6
Corporate and other 4.9 15.0 19.9 (12.2)
________ _______ ________ _______
Total 1,489.5 117.2 1,606.7 44.7
Intersegment eliminations - (117.2) (117.2) -
Interest expense - - - (40.1)
________ _______ ________ _______
Consolidated Totals $1,489.5 $ - $1,489.5 $ 4.6
======== ======= ======== =======
(a) Interest income has been allocated to our segments in the amounts of
$616,000 for the three months ended March 31, 1999, and $600,000 for
the three months ended March 31, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Our net income for the first quarter of 1999 was $18.9 million, compared
with a net loss of $9.0 million for the first quarter of 1998. Basic income
per common share for the first quarter of 1999 was 27 cents and diluted
income per common share was 26 cents. For the same quarter in 1998, basic
and diluted loss per common share were 32 cents. Sales for the first
quarter of 1999 were $1.6 billion and $1.5 billion in first quarter of 1998.
First quarter 1998 results included two nonroutine items as discussed below.
As of January 1, 1998, we adopted the provisions of a new accounting
standard, AICPA Statement of Position 98-5, "Reporting on the Costs of
Start-up Activities." This statement required the write-off of previously
capitalized preoperating costs, which resulted in an after-tax charge of
$8.6 million, or 15 cents per basic and diluted share. Also included in
1998 earnings per share is a negative seven cents per basic and diluted
share related to the redemption of our Series F preferred stock.
We estimate that our restructuring and cost saving initiatives announced in
fourth quarter 1998 increased pretax income approximately $10 million.
These savings included approximately $9 million in the Paper and Paper
Products segment and $1 million in our Corporate functions. See Note 12 in
the Notes to Quarterly Financial Statements for additional information on
our 1998 restructuring activities.
Operating income in the Office Products segment in the first quarter of 1999
was $38.7 million, compared to $36.5 million in the first quarter of 1998.
Net sales in the first quarter of 1999 increased 12% to $848.4 million,
compared with $759.8 million in the first quarter of 1998. The growth in
sales resulted primarily from same-location sales growth and acquisitions.
Same-location sales increased 8% in the first quarter of 1999, compared with
the first quarter of 1998. Excluding the negative impact of paper price
changes and foreign currency changes, same-location sales increased 10%.
Cost of sales, which includes the cost of merchandise sold, the cost to
deliver products to customers, and the occupancy costs of our facilities,
increased to $629.3 million in the first quarter of 1999, which was 74.2% of
net sales. This compares with $564.2 million reported in the same period of
the prior year, which represented 74.3% of net sales. Gross profit as a
percentage of net sales was 25.8% and 25.7% for the first quarters of 1999
and 1998. BCOP's operating expenses were 21.3% of net sales in the first
quarter of 1999, compared with 21.0% in the first quarter of 1998. The
increase in the first quarter of 1999 was due, in part, to additional
payroll associated with the expansion of our U.S. sales force and support of
our growth initiatives.
Our Building Products segment had operating income of $40.3 million in the
first quarter of 1999 compared to an operating loss of $0.2 million for
first quarter 1998. Sales increased 20% to $443.5 million compared to
$368.7 million a year ago. The increase is due to improved sales prices,
very strong structural panel markets, over a 70% increase in engineered wood
products sales, significant sales growth in building materials distribution,
and an improved product mix through a reduction in commodity lumber volume.
The increase in operating income was also due to lower wood and conversion
costs. Average oriented strand board prices increased 28%, average plywood
prices increased 18%, and average lumber prices increased 3% in the first
quarter of 1999, compared with year-ago levels. These increases were offset
by 4% lower average particleboard prices and 1% lower average laminated
veneer lumber prices. Average I-joist prices were about flat. Plywood
sales volume was down 62.1 million square feet, lumber was down 18.6 million
board feet, laminated veneer lumber was up 0.6 million cubic feet, I-joist
was up 11.9 million equivalent lineal feet, and particleboard was down
1.5 million square feet. Building materials distribution sales increased from
$167.7 million to $224.2 million, or 34% in the first quarter 1999, compared
with first quarter 1998. The increase in distribution sales was due both to
higher prices and increased market share.
Our Paper and Paper Products segment reported operating income of
$4.8 million in the first quarter of 1999. In the first quarter of 1998,
this segment recorded operating income of $20.6 million. Sales decreased
13% to $399.4 million in the first quarter of 1999 from $458.3 million in
the first quarter of 1998. Performance decreased year over year primarily
because of lower average prices for all of our paper grades in first quarter
of 1999, compared with the first quarter of 1998. Uncoated free sheet
prices decreased 12%, containerboard prices decreased 15%, newsprint prices
decreased 5%, and pulp prices decreased 10%. Sales volume for the first
quarter of 1999 decreased 18,000 tons to 634,000 tons, compared with 652,000
tons in first quarter 1998. Uncoated free sheet volumes decreased by 7,000
tons, containerboard sales volumes decreased by 8,000 tons, and newsprint
volumes decreased by 9,000 tons. These decreases were offset by a 6,000-ton
sales volume increase in pulp. Paper segment manufacturing costs per ton in
the first quarter of 1999 were 6% lower than in the comparison quarter. The
decrease was due to decreased fiber costs and lower fixed manufacturing costs.
On an overall basis, materials, labor, and other operating expenses declined
to 77.8% of sales for the three months ended March 31, 1999, compared to
78.7% of sales for the same period in 1998. The improvement is primarily
due to the increased sales prices which increases sales without a
corresponding increase in costs, and reduced wood and conversion costs in
our Building Products segment. Selling and distribution expenses as a
percent of sales were 11.4% of sales for the three months ended March 31,
1999, compared to 10.9% of sales for the three months ended March 31, 1998.
This higher percentage is due primarily to the increasing Office Products
sales which have higher associated selling and distribution costs. General
and administrative expenses have decreased as a percentage of sales to 1.9%
in first quarter 1999 compared to 2.5% in first quarter 1998. This decrease
is due in part to our cost reduction efforts as well as leveraging fixed
costs over higher sales.
Interest expense was $37.1 million in the first quarter of 1999, compared
with $40.1 million in the same period last year. The decrease was due
primarily to slightly lower debt levels and lower effective interest rates.
We used an estimated annual tax provision rate of 41.5% for the three months
ended March 31, 1999 and 1998. In 1998, our actual annual tax benefit rate
was 12.5%. Excluding nonroutine items in 1998, the tax provision rate would
have been 44%. Our tax rate is subject to fluctuations due primarily to the
sensitivity of the rate to low income levels, the impact of nonroutine
items, and the mix of income sources.
FINANCIAL CONDITION AND LIQUIDITY
Operating Activities. Cash provided by operations was $96.0 million for the
first three months of 1999, compared with $81.9 million for the same period
in 1998. The increase in 1999 was due to improved operating results offset
in part by uses of cash for working capital items. Also in September 1998,
we sold fractional ownership interests in a defined pool of trade accounts
receivable. At March 31, 1999, $100 million of the sold accounts receivable
were excluded from receivables in the balance sheet. This is an increase of
$21 million from the December 31, 1998, balance of $79 million. This
increase represents an increase in cash provided by operations. Our working
capital ratio was 1.19:1 at March 31, 1999, compared with 1.32:1 at
March 31, 1998. Our working capital ratio was 1.21:1 at December 31, 1998.
Investing Activities. Total capital investment for the first three months
of 1999 and 1998 was $55.3 million and $73.1 million. Amounts include
acquisitions made by BCOP through assumption of debt and recording of
liabilities. Cash used for investment was $67.6 million and $80.2 million
for the first three months of 1999 and 1998. Cash expenditures for property
and equipment, and timber and timberlands, totaled $48.8 million and
$65.3 million for the first three months of 1999 and 1998. This reduction
reflects our focus on reducing our overall level of capital spending. Cash
purchases of assets, primarily due to BCOP's expansion program, totaled
$6.3 million for the first three months of 1999 and $4.0 million for the
first three months of 1998.
Financing Activities. Cash used for financing was $45.9 million for the
first three months of 1999. Cash provided by financing was $29.6 million
for the first three months of 1998. Dividend payments totaled $8.5 million
and $12.2 million for the first three months of 1999 and 1998. The decrease
is due to the redemption of our Series F preferred stock in February 1998.
In both years, our quarterly dividend was 15 cents per common share. For
the first three months of 1999, short-term borrowings, primarily notes
payable and commercial paper, increased $35.5 million compared with an
increase of $117.0 million for the first three months of 1998. The increase
in short-term borrowings in first quarter 1998 was used to fund the
redemption of the Series F preferred stock for $115 million in cash. At
March 31, 1999, we had $104.3 million of short-term borrowings outstanding,
and BCOP had $60.6 million of short-term borrowings outstanding. At
March 31, 1998, we had $138.1 million of short-term borrowings outstanding,
while BCOP had $73.8 million of short-term borrowings outstanding. At
December 31, 1998, we had $57.4 million of short-term borrowings
outstanding, while BCOP had $72.1 million of short-term borrowings
outstanding. Long-term debt decreased $68.8 million in the first three
months of 1999 and increased $39.8 million in the first three months of
1998. In February 1999, we redeemed our $100 million, 9.875% notes.
At March 31, 1999 and 1998, we had $2.0 billion and $2.2 billion of debt
outstanding. At December 31, 1998, we had $2.0 billion of debt outstanding.
Our debt-to-equity ratio was 1.40:1 and 1.48:1 at March 31, 1999 and 1998.
Our debt-to-equity ratio was 1.42:1 at December 31, 1998.
Our debt and debt-to-equity ratio include the guarantee by the company of
the remaining $155.7 million of debt incurred by the trustee of our
leveraged Employee Stock Ownership Plan. While that guarantee has a
negative impact on our debt-to-equity ratio, it has virtually no effect on
our cash coverage ratios or on other measures of our financial strength.
We have a revolving credit agreement with a group of banks that permits us
to borrow as much as $600 million based on customary indices. As of
March 31, 1999, borrowings under the agreement totaled $160 million. When
the agreement expires in June 2002, any amount outstanding will be due and
payable. In October 1998, we entered into an interest rate swap with a
notional amount of $75 million that expires in 2000. This swap results in
an effective fixed interest rate with respect to $75 million of our
revolving credit agreement borrowings. The payment of dividends is
dependent on the existence of and the amount of net worth in excess of the
defined minimum under the agreement. As of March 31, 1999, we were in
compliance with our debt covenants, and our net worth exceeded the defined
minimum by $109 million.
BCOP has a $450 million revolving credit agreement with a group of banks
that expires in June 2001 and provides variable interest rates based on
customary indices. In October 1998, BCOP entered into an interest rate swap
with a notional amount of $25 million that expires in 2000. This swap
results in an effective fixed interest rate with respect to $25 million of
BCOP's revolving credit agreement borrowings. As of March 31, 1999, BCOP
had outstanding borrowings of $165 million under this agreement and was in
compliance with its debt covenants.
At March 31, 1999, we had $430.0 million and BCOP had $150.0 million of
unused borrowing capacity registered with the Securities and Exchange
Commission.
In March 1999, we filed a registration statement covering $300 million in
universal shelf capacity with the Securities and Exchange Commission. This
filing is still under review by the Securities and Exchange Commission.
Once approved, we may offer and sell in one or more offerings common stock,
preferred stock, debt securities, warrants, and purchase contracts.
We expect the restructuring programs announced in 1998 to be cash flow
positive in 1999. We estimate that the programs will require cash outlays
before any savings of approximately $23 million in 1999. These expected
cash payments in 1999 include $13 million for employee-related costs,
$10 million for other exit costs including $7 million for lease and other
contract terminations, and $2 million for tear-down and environmental costs.
We spent approximately $4 million in first quarter 1999, including
$3 million for employee-related costs and $1 million for lease and other
contract terminations. Cash requirements related to our restructuring in
2000 and beyond are expected to total $17 million with most of that
occurring in 2000 or early 2001. This and our other cash requirements will
be funded through a combination of cash flows from operations, borrowings
under our existing credit facilities, and issuance of new debt or equity
securities.
Our results of operations are not materially effected by seasonal sales
variances or inflation.
MARKET CONDITIONS
The strong first quarter results by our building products business should
continue through the year. We expect to grow office products distribution
sales and income at double digit rates. This is a reflection of the better
overall performance and strengthening margins in the first quarter, which
will continue and benefit future results.
It appears that the negative pressures from global economic turmoil which
have had a negative impact on the paper business in the last few quarters
may be waning or at least have stopped getting worse. Although business
conditions in paper will continue to be challenging during the first half of
this year, markets should gradually strengthen. Demand is on the upswing,
and prices in some grades have started to rise as global markets for our key
paper grades, uncoated free sheet and containerboard, work their way through
the oversupply of pulp and paper caused by the Asian economic turmoil. We
continue to have confidence in the long-term prospects in our paper
business. Very little new capacity is being planned or constructed anywhere
in the world. As global demand begins to recover, perhaps in the second
half of 1999, we expect supply-and-demand balances in our paper businesses
to tighten considerably.
NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
Statement establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either an
asset or liability measured at its fair value. We plan to adopt this
Statement in the first quarter of 2000. We are in the process of reviewing
this new standard. Adoption of this Statement is not expected to have a
significant impact on our results of operations or financial position.
TIMBER SUPPLY
In recent years, the amount of timber available for commercial harvest in
the United States has declined due to environmental litigation, changes in
government policy, and other factors. More constraints on available timber
supply may be imposed. As a result, we cannot accurately predict future log
supply. In 1998, we closed sawmills in Fisher, Louisiana, and Horseshoe
Bend, Idaho, partly because of reductions in timber supply and consequent
increases in timber costs. Additional curtailments or closures of our wood
products manufacturing facilities are possible.
YEAR 2000 COMPUTER ISSUE
Over the last two years, we have been replacing many of our business
computer systems to realize cost savings and process improvements. These
replacements, all of which are year 2000-compliant, will be completed before
the year 2000. Many of the costs associated with these replacements have
been and will be deferred and amortized over approximately five years. (See
Note 5 in the Notes to Financial Statements.) A year 2000 compliance
assessment was completed in 1998. Many of the existing systems were found
to be compliant. We have begun appropriate modifications of the
noncompliant systems. We expect to complete all necessary changes before
year-end 1999.
We are currently surveying our critical suppliers and customers to determine
whether critical processes may be impacted by a lack of year 2000
compliance. Most of our critical suppliers and customers have confirmed
that they are or have plans to be compliant by year-end 1999.
Incremental costs to make our systems compliant are expected to range from
$10 million to $13 million. These costs are being expensed as incurred.
Approximately $6.4 million had been spent through March 31, 1999.
The most reasonably likely worst-case scenario of failure by us or our
suppliers or customers to be year 2000-compliant would be a temporary
slowdown of manufacturing operations at one or more of our locations and a
temporary inability to process orders and billings in a timely manner and to
deliver products to our customers in a timely manner. We are currently
developing contingency options in the event that critical systems or
suppliers encounter unforeseen year 2000 problems. Those contingency
options will be completed by mid-1999.
Our discussion of the year 2000 computer issue contains forward-looking
information. We believe that our critical computer systems will be year
2000-compliant and that the costs to achieve compliance will not materially
affect our financial condition, operating results, or cash flows.
Nevertheless, factors that could cause actual results to differ from our
expectations include the successful implementation of year 2000 initiatives
by our customers and suppliers, changes in the availability and costs of
resources to implement year 2000 changes, and our ability to successfully
identify and correct all systems affected by the year 2000 issue.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis includes forward-looking
statements. Because these forward-looking statements include risks and
uncertainties, actual results may differ materially from those expressed in
or implied by the statements. Factors that could cause actual results to
differ include, among other things, changes in domestic or foreign
competition; the severity and longevity of global economic disruptions;
increases in capacity through construction of new manufacturing facilities
or conversion of older facilities to produce competitive products; changes
in production capacity across paper and wood products markets; variations in
demand for our products; changes in our cost for or the availability of raw
materials, particularly market pulp and wood; the cost of compliance with
new environmental laws and regulations; the pace and the success of
acquisitions; changes in same-location sales; cost structure improvements;
the ability to implement operating strategies and integration plans and
realize cost savings and efficiencies; fluctuations in foreign currency
exchange rates; fluctuations in paper prices; the success and integration of
new initiatives and acquisitions; the successful integration of systems; the
success of computer-based system enhancements; and general economic
conditions.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Changes in interest rates 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 the 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 our 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.
Interest rate swaps and rate hedge agreements are used to hedge underlying
debt obligations or anticipated transactions. For qualifying hedges, the
interest rate differential is reflected as an adjustment to interest expense
over the life of the swap or underlying debt. Gains and losses related to
qualifying hedges of foreign currency firm commitments and anticipated
transactions are deferred and are recognized in income or as adjustments of
carrying amounts when the hedged transaction occurs. All other forward
exchange contracts are marked to market, and unrealized gains and losses are
included in current period net income. We had no material changes in market
risk since December 31, 1998. We had no material exposure to losses from
derivative financial instruments held at March 31, 1999. We do not use
derivative financial instruments for trading purposes.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to our annual report on Form 10-K for the year ended
December 31, 1998, for information concerning 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 15, 1999. A total of
61,700,220 shares of common and preferred stock were outstanding and
entitled to vote at the meeting. Of the total outstanding, 54,965,083
shares were represented at the meeting.
Shareholders cast votes for election of the following directors whose terms
expire in 2002:
In Favor Withheld Not Voted
___________ _________ _________
Robert K. Jaedicke 54,191,902 773,181 -
Paul J. Phoenix 54,274,707 690,376 -
Francesca Ruiz de Luzuriaga 54,214,534 750,549 -
Frank A. Shrontz 54,274,355 690,728 -
Ward W. Woods, Jr. 53,753,082 1,212,001 -
___________ _________
270,708,580 4,116,835
Continuing in office are Anne L. Armstrong, Philip J. Carroll, Rakesh
Gangwal, Gary G. Michael, and A. William Reynolds, whose terms expire in
2001, and Edward E. Hagenlocker, George J. Harad, Donald S. Macdonald, and
Jane E. Shaw, whose terms expire in 2000.
The shareholders also ratified the appointment of Arthur Andersen LLP as our
independent auditor for the year 1999 with 54,394,291 votes cast for,
341,001 against, and 229,791 abstained.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Required exhibits are listed in the Index to Exhibits and are
incorporated by reference.
(b) Reports on Form 8-K.
No Form 8-Ks were filed during the first quarter of 1999.
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 13, 1999
BOISE CASCADE CORPORATION
INDEX TO EXHIBITS
Filed With the Quarterly Report on Form 10-Q
for the Quarter Ended March 31, 1999
Number Description Page Number
______ ___________ ___________
11 Computation of Per Share Earnings
12 Ratio of Earnings to Fixed Charges
12A Ratio of Earnings to Combined Fixed
Charges and Preferred Dividend Requirements
27 Financial Data Schedule
EXHIBIT 11
Boise Cascade Corporation
Computation of Per Share Earnings
Three Months Ended
March 31
_______________________
1999 1998
_________ _________
(expressed in thousands,
except per share amounts)
Net income (loss) as reported, before cumulative
effect of accounting change $ 18,853 $ (450)
Preferred dividends (3,490) (5,061)
Excess of Series F Preferred Stock redemption
price over carrying value - (3,958)
_________ _________
Basic income (loss) before cumulative effect of
accounting change 15,363 (9,469)
Cumulative effect of accounting change - (8,590)
_________ _________
Basic income (loss) $ 15,363 $ (18,059)
========= =========
Basic income (loss) before cumulative effect of
accounting change $ 15,363 $ (9,469)
Preferred dividends eliminated 3,490 3,620
Supplemental ESOP contribution (2,983) (3,094)
_________ _________
Diluted income (loss) before cumulative effect of
accounting change 15,870 (8,943)
Cumulative effect of accounting change - (8,590)
_________ _________
Diluted income (loss) $ 15,870 $ (17,533)
========= =========
Average shares outstanding used to determine
basic income (loss) per common share 56,369 56,242
Stock options, net 235 242
Series D convertible preferred stock 4,276 4,461
_________ _________
Average shares used to determine diluted
income (loss) per common share 60,880 60,945
========= =========
Net income (loss) per common share
Basic income (loss) before cumulative affect of
accounting change $ .27 $ (.17)
Cumulative affect of accounting change - (.15)
______ ______
Basic net income (loss) per common share $ .27 $ (.32)
====== ======
Diluted income (loss) before cumulative effect of
accounting change $ .26 $ (.15)(1)
Cumulative affect of accounting change - (.14)(1)
______ ______
Diluted net income (loss) per common share $ .26 $ (.29)(1)
====== ======
(1) Because the computation of diluted loss per common share was antidilutive,
the diluted loss per common share reported for the three months ended
March 1, 1998, was the same as basic loss per common share.
EXHIBIT 12
BOISE CASCADE CORPORATION AND SUBSIDIARIES
Ratio of Earnings to Fixed Charges
Three Months
Year Ended December 31 Ended March 31
_________________________________________________________ ______________________
1994 1995 1996 1997 1998 1998 1999
_________ _________ _________ _________ _________ _________ _________
(dollar amounts expressed in thousands)
Interest costs $ 169,170 $ 154,469 $ 146,234 $ 153,691 $ 174,541 $ 43,824 $ 40,869
Interest capitalized
during the period 1,630 3,549 17,778 10,575 1,341 68 61
Interest factor related to
noncapitalized leases(1) 9,161 8,600 12,982 11,931 11,308 2,851 2,998
_________ _________ _________ _________ _________ _________ _________
Total fixed charges $ 179,961 $ 166,618 $ 176,994 $ 176,197 $ 187,190 $ 46,743 $ 43,928
Income (loss) before
income taxes, minority
interest, and cumulative
effect of accounting change $ (64,750) $ 589,410 $ 31,340 $ (28,930) $ (21,278) $ 4,580 $ 37,935
Undistributed (earnings)
losses of less than 50%
owned persons, net of
distributions received (1,110) (36,861) (1,290) 5,180 3,791 3,540 (746)
Total fixed charges 179,961 166,618 176,994 176,197 187,190 46,743 43,928
Less: Interest capitalized (1,630) (3,549) (17,778) (10,575) (1,341) (68) (61)
Guarantee of interest
on ESOP debt (20,717) (19,339) (17,874) (16,341) (14,671) (3,724) (3,279)
_________ _________ _________ _________ _________ _________ _________
Total earnings
before fixed charges $ 91,754 $ 696,279 $ 171,392 $ 125,531 $ 153,691 $ 51,071 $ 77,777
Ratio of earnings to
fixed charges - 4.18 - - - 1.09 1.77
Excess of fixed charges over
earnings before fixed charges $ 88,207 $ - $ 5,602 $ 50,666 $ 33,499 - -
(1) Interest expense for operating leases with terms of one year or longer is based on an imputed interest rate for each lease.
EXHIBIT 12A
BOISE CASCADE CORPORATION AND SUBSIDIARIES
Ratio of Earnings to Combined Fixed Charges
and Preferred Dividend Requirements
Three Months
Year Ended December 31 Ended March 31
_________________________________________________________ ______________________
1994 1995 1996 1997 1998 1998 1999
_________ _________ _________ _________ _________ _________ _________
(dollar amounts expressed in thousands)
Interest costs $ 169,170 $ 154,469 $ 146,234 $ 153,691 $ 174,541 $ 43,824 $ 40,869
Interest capitalized during the period 1,630 3,549 17,778 10,575 1,341 68 61
Interest factor related to
noncapitalized leases(1) 9,161 8,600 12,982 11,931 11,308 2,851 2,998
Preferred stock dividend
requirements - pretax 81,876 59,850 65,207 44,686 19,940 25,930 8,754
_________ _________ _________ _________ _________ _________ _________
Combined fixed charges and
preferred dividend requirements $ 261,837 $ 226,468 $ 242,201 $ 220,883 $ 207,130 $ 72,673 $ 52,682
Income (loss) before income taxes,
minority interest, and cumulative
effect of accounting change $ (64,750) $ 589,410 $ 31,340 $ (28,930) $ (21,278) $ 4,580 $ 37,935
Undistributed (earnings) losses of
less than 50% owned persons, net of
distributions received (1,110) (36,861) (1,290) 5,180 3,791 3,540 (746)
Combined fixed charges and preferred
dividend requirements 261,837 226,468 242,201 220,883 207,130 72,673 52,682
Less: Interest capitalized (1,630) (3,549) (17,778) (10,575) (1,341) (68) (61)
Guarantee of interest on ESOP debt (20,717) (19,339) (17,874) (16,341) (14,671) (3,724) (3,279)
_________ _________ _________ _________ _________ _________ _________
Total earnings before combined fixed
charges and preferred dividend
requirements $ 173,630 $ 756,129 $ 236,599 $ 170,217 $ 173,631 $ 77,001 $ 86,531
Ratio of earnings to combined fixed
charges and preferred dividend
requirements - 3.34 - - - 1.06 1.64
Excess of combined fixed charges and
preferred dividend requirements over
earnings before combined fixed
charges and preferred dividend
requirements $ 88,207 $ - $ 5,602 $ 50,666 $ 33,499 - -
(1) Interest expense for operating leases with terms of one year or longer is based on an imputed interest rate for each lease.
5
1,000
3-MOS
DEC-31-1999
MAR-31-1999
48,526
8,349
592,746
10,411
561,490
1,370,448
5,021,965
2,197,160
4,949,684
1,150,088
1,703,758
0
235,644
140,978
1,048,826
4,949,684
1,611,153
1,611,153
1,322,658
1,537,507
0
0
37,117
37,935
(15,743)
18,853
0
0
0
18,853
.27
.26
