-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ABurDhivHm5v0ezV4FYqwUlwM8tkp/OlyNM+jtt7rIra0uKzNaaGyadE17txbQEm Au5oDkdVi7XpIYLK7gusrQ== 0001104659-04-005137.txt : 20040219 0001104659-04-005137.hdr.sgml : 20040219 20040219131213 ACCESSION NUMBER: 0001104659-04-005137 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040219 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOISE CASCADE CORP CENTRAL INDEX KEY: 0000012978 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PAPER AND PAPER PRODUCTS [5110] IRS NUMBER: 820100960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05057 FILM NUMBER: 04615456 BUSINESS ADDRESS: STREET 1: 1111 WEST JEFFERSON STREET STREET 2: P O BOX 50 CITY: BOISE STATE: ID ZIP: 83728-0001 BUSINESS PHONE: 2083846161 8-K/A 1 a04-2663_18ka.htm 8-K/A

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.   20549

 

FORM 8-K/A

Amendment No. 1

 

CURRENT REPORT

 

 

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

 

 

 

Date of Report:
Date of Earliest Event Reported:

 

 

February 19, 2004
February 19, 2004

 

BOISE CASCADE CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

 

1-5057

 

82-0100960

(State or other jurisdiction of
incorporation or organization)

 

(Commission File
Number)

 

(I.R.S. Employer
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)

 

 

 

Item 7.

 

Financial Statements and Exhibits

(c)

 

Exhibits.

 

 

 

 

 

Exhibit 99

 

Boise Cascade Corporation Fourth Quarter 2003 Fact Book (Revised)

 

Item 12.

 

Results of Operations and Financial Condition.

 

This current report on Form 8-K/A is being filed to amend the current report on Form 8-K originally dated February 17, 2004, in order to revise the “Financial Highlights” and “Consolidated Balance Sheets” pages contained in Exhibit 99 to the Form 8-K.  The revisions represent a reclassification between shareholders’ equity and deferred income taxes related to the tax effect on the foreign currency translation adjustment in accumulated other comprehensive loss.

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

BOISE CASCADE CORPORATION

 

 

 

 

By

 /s/ Karen E. Gowland

 

 

 

 Karen E. Gowland

 

 

 Vice President and Corporate Secretary

Date:  February 19, 2004

 

 

 

2

 

EXHIBIT INDEX

 

 

Number

 

Description

 

 

 

99

 

Boise Cascade Corporation Fourth Quarter 2003 Fact Book (Revised)

 

3

 EX-99 3 a04-2663_1ex99.htm EX-99

Exhibit 99

 

 

 

 

Fourth Quarter 2003 Fact Book

 

 

For additional information, contact:

 

Vince Hannity

Vice President, Corporate Communications

and Investor Relations

1111 West Jefferson Street

P.O. Box 50

Boise, ID 83728

Phone:  208 384 6390

 

Visit Boise’s website at www.bc.com

 

 

Fourth Quarter and Full Year 2003 Operating Highlights

 

Boise reported net income of $6.9 million, or 5¢ per diluted share, in fourth quarter 2003.  Before a special item for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington, and the net impact of the OfficeMax acquisition, Boise’s net income in the fourth quarter was $18.3 million, or 24¢ per diluted share.  By comparison, Boise reported net income of $6.2 million, or 5¢ per diluted share, in fourth quarter 2002 and $30.0 million, or 43¢ per diluted share, in third quarter 2003 before a one-time tax benefit related to a favorable tax ruling, net of changes in other tax items.  A schedule in the Notes to Consolidated Financial Statements at the end of this Fact Book reconciles special items and the impact of the OfficeMax acquisition with reported financial results.

 

For full year 2003, net income was $8.3 million, or a loss of 8¢ per diluted share.  Before special items and the net impact of the OfficeMax acquisition, Boise posted net income of $31.8 million, or 32¢ per diluted share.  In 2002, before a special item, net income was $7.3 million, or a loss of 10¢ per diluted share.

 

Sales in fourth quarter 2003 were $2.4 billion, 31% higher than sales in fourth quarter 2002.  Sales for full year 2003 were $8.2 billion, an 11% increase over sales in 2002.  Sales increases were mostly due to strong prices for wood products and growth in Boise Office Solutions, including the OfficeMax acquisition.  Excluding the impact of the OfficeMax acquisition, sales increased 14% and 7% for the fourth quarter and full year, respectively.

 

Boise Office Solutions:  On December 9, 2003, Boise acquired OfficeMax, Inc.  Following that acquisition, the company began reporting two segments, Contract and Retail, within our Boise Office Solutions business.  For fourth quarter 2003, the Boise Office Solutions business reported operating income of $40.0 million, compared with $32.4 million in fourth quarter 2002 and $31.0 million in third quarter 2003.  For full year 2003, the business reported operating income of $115.5 million, compared with $123.0 million in 2002.  Before special items and the net impact of the OfficeMax acquisition, Boise Office Solutions earned $36.9 million in fourth quarter 2003 and $121.6 million for full year 2003.

 

Sales of $1.2 billion in fourth quarter 2003 were 38% higher than sales in fourth quarter 2002 and 34% higher than in third quarter 2003, primarily due to the OfficeMax acquisition.  Full-year sales of $4.0 billion were 14% higher than in 2002.  Sales of Boise’s office papers increased 4% to 568,000 tons.

 

Boise Office Solutions, Contract:  Operating income reported for fourth quarter 2003 was $33.9 million, compared with $32.4 million in fourth quarter 2002 and $31.0 million in third quarter 2003.  For full year 2003, operating income was $109.4 million, compared with $123.0 million in 2002.  Before special items and the impact of the OfficeMax acquisition, operating income for fourth quarter 2003 was $36.9 million and for full year 2003 was $121.6 million.

 

Sales of $965 million in fourth quarter 2003 were 6% higher than sales in fourth quarter 2002 and 3% higher than in third quarter 2003.  Full-year sales of $3.7 billion were 6% higher than 2002 sales.  Excluding special items and the impact of the OfficeMax acquisition, the fourth-quarter operating margin was 3.9%, up from 3.6% in the fourth quarter a year ago and 3.3% in the third quarter.  The full-year operating margin, before special items and the impact of the OfficeMax acquisition, was 3.3%, compared with 3.5% in 2002.

 

 

Boise Office Solutions, Retail:  Boise began reporting this segment on December 10, 2003.  For 17 selling days in fourth quarter 2003, the segment recorded sales of $283 million, operating income of $6.1 million, and an operating margin of 2.2%.

 

Boise Building Solutions:  Operating income of $37.6 million compares with operating income of $2.3 million in fourth quarter 2002 and $56.4 million in third quarter 2003.  Operating income for full year 2003 was $95.4 million, compared with $39.7 million in 2002.  In December 2003, we recorded a $14.7 million pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington.  Before this item, we reported operating income of $52.3 million in fourth quarter 2003 and $110.1 million for full year 2003.

 

Sales of $776 million in the fourth quarter were 37% higher than in the year-ago fourth quarter.  Building materials distribution sales rose 42% from fourth quarter 2002, while sales of engineered wood products increased 31%.  Segment sales in the fourth quarter declined 6% from third quarter 2003, reflecting seasonal volume decreases.  Distribution sales fell 9% from third quarter 2003, and sales of engineered wood products declined 17%.  Full-year sales rose 16%.  Sales increased 21% in building materials distribution and 20% in engineered wood products because of strong demand and high product prices.

 

Boise Paper Solutions:  The segment reported an operating loss of $14.4 million, compared with operating income of $23.4 million in fourth quarter 2002 and $200,000 in third quarter 2003.  For full year 2003, the operating loss was $13.9 million, compared with income of $38.6 million in 2002.  Weak fourth-quarter results were primarily due to lower product prices than in comparison periods.  The full-year unfavorable comparison was due to higher unit costs and reduced sales volumes.

 

Sales decreased 1% in fourth quarter 2003, compared with fourth quarter 2002, and 5% from third quarter 2003 levels.  Full year 2003 sales decreased 1% from 2002 sales.  Average net selling prices for Boise’s paper products declined 6%, compared with the fourth quarter a year ago, and 3%, compared with third quarter 2003.  For the full year, average product prices were slightly higher than 2002 levels.  Unit volumes rose 6% from the year-ago fourth quarter but declined slightly from third quarter 2003.  For the full year, unit sales volumes declined 2% from 2002 volumes.  Boise took about 58,000 tons of market-related curtailment, mostly in uncoated free sheet, during the fourth quarter and 197,000 tons of market-related curtailment during full year 2003.  Fourth-quarter unit manufacturing costs were flat with those of comparison periods.  Full year 2003 costs were 2% higher than in 2002, primarily because of higher fiber and chemical costs.

 

 

Financial Highlights Boise and Subsidiaries

 

 

 

 

 

 

 

 

 

2003

 

 

 

2000

 

2001

 

2002

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

Year

 

 

 

(millions, except per-share amounts)

 

Sales and Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

7,806.7

 

$

7,422.2

 

$

7,412.3

 

$

1,853.2

 

$

1,929.0

 

$

2,110.6

 

$

2,352.3

 

$

8,245.1

 

Income from operations

 

444.0

 

81.1

 

118.3

 

1.7

 

22.7

 

76.7

 

46.7

 

147.8

 

Net income (loss) before cumulative effect of accounting changes

 

$

178.6

 

$

(42.5

)

$

11.3

 

$

(18.7

)

$

(4.0

)

$

32.9

 

$

6.9

 

$

17.1

 

Cumulative effect of accounting changes, net of income tax

 

—

 

—

 

—

 

(8.8

)

—

 

—

 

—

 

(8.8

)

Net income (loss)

 

$

178.6

 

$

(42.5

)

$

11.3

 

$

(27.5

)

$

(4.0

)

$

32.9

 

$

6.9

 

$

8.3

 

Net income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted before cumulative effect of accounting changes

 

$

2.73

 

$

(.96

)

$

(.03

)

$

(.38

)

$

(.12

)

$

.48

 

$

.05

 

$

.07

 

Cumulative effect of accounting changes

 

—

 

—

 

—

 

(.15

)

—

 

—

 

—

 

(.15

)

Diluted

 

$

2.73

 

$

(.96

)

$

(.03

)

$

(.53

)

$

(.12

)

$

.48

 

$

.05

 

$

(.08

)

Cash dividends paid per common share

 

$

.60

 

$

.60

 

$

.60

 

$

.15

 

$

.15

 

$

.15

 

$

.15

 

$

.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Condition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

485.8

 

380.0

 

266.2

 

48.5

 

69.4

 

44.5

 

1,471.9

 

1,634.3

 

Total assets

 

5,266.9

 

4,934.0

 

4,947.4

 

4,970.9

 

4,989.9

 

5,066.8

 

7,376.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, less current portion

 

$

1,714.8

 

$

1,062.9

 

$

1,387.4

 

$

1,472.7

 

$

1,494.4

 

$

1,517.1

 

$

1,999.9

 

 

 

Current portion of long-term debt and short-term borrowings

 

93.3

 

440.0

 

153.7

 

105.5

 

76.5

 

85.1

 

88.2

 

 

 

Adjustable conversion-rate equity security units

 

—

 

172.5

 

172.5

 

172.5

 

172.5

 

172.5

 

172.5

 

 

 

Guarantee of ESOP debt

 

107.9

 

80.9

 

51.4

 

51.4

 

40.5

 

40.5

 

19.1

 

 

 

Total debt

 

$

1,916.0

 

$

1,756.3

 

$

1,765.0

 

$

1,802.1

 

$

1,783.9

 

$

1,815.2

 

$

2,279.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

$

1,757.0

 

$

1,578.4

 

$

1,399.5

 

$

1,372.1

 

$

1,384.2

 

$

1,411.4

 

$

2,323.6

 

 

 

Shareholders’ equity per common share

 

$

28.85

 

$

25.10

 

$

21.59

 

$

21.17

 

$

21.23

 

$

21.26

 

$

24.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on sales

 

2.3

%

(.6

)%

.2

%

(1.5

)%

(.2

)%

1.6

%

.3

%

.1

%

Debt to equity

 

1.09:1

 

1.11:1

 

1.26:1

 

1.31:1

 

1.29:1

 

1.29:1

 

.98:1

 

 

 

Debt to total capitalization

 

52.0

%

52.7

%

55.8

%

56.8

%

56.3

%

56.3

%

49.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax (provision) benefit rate

 

(39.0

)%

12.1

%

192.8

%

36.2

%

36.6

%

(27.6

)%

(27.7

)%

(11.5

)%

Number of common shares outstanding at the end of the period (thousands)

 

57,337

 

58,062

 

58,284

 

58,292

 

58,314

 

59,549

 

87,137

 

 

 

Average number of common shares (thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

57,288

 

57,680

 

58,216

 

58,289

 

58,300

 

58,411

 

65,313

 

60,093

 

Diluted(1)

 

61,413

 

61,797

 

62,090

 

61,880

 

61,844

 

62,697

 

70,205

 

64,180

 

Common stock price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High

 

$

43.94

 

$

38.00

 

$

38.81

 

$

28.15

 

$

26.30

 

$

29.20

 

$

32.89

 

 

 

Low

 

$

21.75

 

$

26.99

 

$

19.61

 

$

20.72

 

$

21.48

 

$

21.48

 

$

26.96

 

 

 

Close

 

$

33.63

 

$

34.01

 

$

25.22

 

$

21.85

 

$

23.90

 

$

27.60

 

$

32.86

 

 

 

 

(1)          For the first and second quarters of 2003 and the years ended December 31, 2001, 2002, and 2003, the computation of diluted net loss per share was antidilutive; accordingly, diluted net loss per share was calculated using the average basic shares outstanding.

 

 

Summary of Operations Boise and Subsidiaries

 

 

 

2002

 

Quarterly Results by Segment (Unaudited)(1)

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

Year

 

 

 

(millions, except per-share amounts)

 

Sales by Segment

 

 

 

 

 

 

 

 

 

 

 

Boise Office Solutions, Contract

 

$

884.5

 

$

855.5

 

$

899.9

 

$

905.9

 

$

3,545.8

 

Boise Office Solutions, Retail

 

—

 

—

 

—

 

—

 

—

 

 

 

884.5

 

855.5

 

899.9

 

905.9

 

3,545.8

 

Boise Building Solutions

 

560.2

 

669.9

 

671.5

 

568.2

 

2,469.7

 

Boise Paper Solutions

 

456.0

 

481.6

 

485.2

 

455.3

 

1,878.0

 

Other

 

18.3

 

19.4

 

19.4

 

18.9

 

76.0

 

 

 

1,919.0

 

2,026.4

 

2,075.9

 

1,948.3

 

7,969.5

 

Intersegment eliminations

 

(130.8

)

(138.4

)

(140.7

)

(147.4

)

(557.2

)

Trade sales

 

$

1,788.2

 

$

1,888.0

 

$

1,935.3

 

$

1,800.8

 

$

7,412.3

 

Income (Loss) by Segment

 

 

 

 

 

 

 

 

 

 

 

Boise Office Solutions, Contract

 

$

37.4

 

$

23.4

 

$

29.8

 

$

32.4

 

$

123.0

 

Boise Office Solutions, Retail

 

—

 

—

 

—

 

—

 

—

 

 

 

37.4

 

23.4

 

29.8

 

32.4

 

123.0

 

Boise Building Solutions

 

8.8

 

14.0

 

14.5

 

2.3

 

39.7

 

Boise Paper Solutions

 

(10.8

)

8.8

 

17.2

 

23.4

 

38.6

 

Corporate and Other

 

(12.8

)

(37.9

)

(15.9

)

(15.3

)

(81.8

)

 

 

22.6

 

8.4

 

45.6

 

42.9

 

119.5

 

Interest expense

 

(33.3

)

(33.3

)

(32.1

)

(33.0

)

(131.7

)

Income (loss) before income taxes

 

(10.7

)

(24.9

)

13.5

 

9.9

 

(12.2

)

Income tax (provision) benefit

 

4.1

 

28.2

 

(5.0

)

(3.7

)

23.5

 

Net income (loss)

 

$

(6.6

)

$

3.2

 

$

8.5

 

$

6.2

 

$

11.3

 

Net income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

(.17

)

$

.00

 

$

.09

 

$

.05

 

$

(.03

)

 

 

 

2003

 

 

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

Year

 

 

 

(millions, except per-share amounts)

 

Sales by Segment

 

 

 

 

 

 

 

 

 

 

 

Boise Office Solutions, Contract

 

$

938.3

 

$

904.9

 

$

934.1

 

$

964.7

 

$

3,741.9

 

Boise Office Solutions, Retail

 

—

 

—

 

—

 

283.2

 

283.2

 

 

 

938.3

 

904.9

 

934.1

 

1,247.9

 

4,025.1

 

Boise Building Solutions

 

574.6

 

692.8

 

828.1

 

776.3

 

2,871.9

 

Boise Paper Solutions

 

468.2

 

459.4

 

474.2

 

450.9

 

1,852.6

 

Other

 

19.4

 

18.8

 

20.6

 

19.1

 

77.9

 

 

 

2,000.5

 

2,075.9

 

2,256.9

 

2,494.2

 

8,827.5

 

Intersegment eliminations

 

(147.3

)

(146.9

)

(146.3

)

(141.8

)

(582.4

)

Trade sales

 

$

1,853.2

 

$

1,929.0

 

$

2,110.6

 

$

2,352.3

 

$

8,245.1

 

Income (Loss) by Segment

 

 

 

 

 

 

 

 

 

 

 

Boise Office Solutions, Contract

 

$

20.7

 

$

23.9

 

$

31.0

 

$

33.9

 

$

109.4

 

Boise Office Solutions, Retail

 

—

 

—

 

—

 

6.1

 

6.1

 

 

 

20.7

 

23.9

 

31.0

 

40.0

 

115.5

 

Boise Building Solutions

 

(8.5

)

9.8

 

56.4

 

37.6

 

95.4

 

Boise Paper Solutions

 

(0.7

)

1.0

 

0.2

 

(14.4

)

(13.9

)

Corporate and Other

 

(8.7

)

(9.9

)

(10.5

)

(16.1

)

(45.2

)

 

 

2.8

 

24.9

 

77.1

 

47.1

 

151.8

 

Interest expense

 

(32.2

)

(31.1

)

(31.7

)

(37.6

)

(132.5

)

Income (loss) before income taxes and cumulative effect of accounting changes

 

(29.4

)

(6.2

)

45.4

 

9.5

 

19.3

 

Income tax (provision) benefit

 

10.7

 

2.3

 

(12.5

)

(2.6

)

(2.2

)

Income (loss) before cumulative effect of accounting changes

 

(18.7

)

(4.0

)

32.9

 

6.9

 

17.1

 

Cumulative effect of accounting changes, net of income tax

 

(8.8

)

—

 

—

 

—

 

(8.8

)

Net income (loss)

 

$

(27.5

)

$

(4.0

)

$

32.9

 

$

6.9

 

$

8.3

 

Net income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) before cumulative effect of accounting changes

 

$

(.38

)

$

(.12

)

$

.48

 

$

.05

 

$

.07

 

Cumulative effect of accounting changes

 

(.15

)

—

 

—

 

—

 

(.15

)

Diluted

 

$

(.53

)

$

(.12

)

$

.48

 

$

.05

 

$

(.08

)

 

(1) Columns may not add due to rounding.

 

 

Statistical Review / 2002

 

 

 

2002

 

 

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

Boise Office Solutions

 

 

 

 

 

 

 

 

 

 

 

Sales by Product Line (millions)

 

 

 

 

 

 

 

 

 

 

 

Office supplies and paper

 

$

549

 

$

531

 

$

545

 

$

556

 

$

2,181

 

Technology products

 

250

 

245

 

263

 

264

 

1,022

 

Office furniture

 

85

 

80

 

92

 

86

 

343

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by Geography (millions)

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

686

 

$

665

 

$

707

 

$

701

 

$

2,759

 

International

 

198

 

191

 

193

 

205

 

787

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Growth

 

 

 

 

 

 

 

 

 

 

 

Sales growth

 

(9

)%

(1

)%

6

%

6

%

0

%

Same-location sales growth

 

(8

)%

(1

)%

6

%

5

%

0

%

 

 

 

 

 

 

 

 

 

 

 

 

Margins (percentage of sales)

 

 

 

 

 

 

 

 

 

 

 

Gross profit margin

 

23.6

%

23.1

%

22.4

%

23.5

%

23.1

%

Operating profit

 

4.2

%

2.7

%

3.3

%

3.6

%

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Boise Building Solutions

 

 

 

 

 

 

 

 

 

 

 

Sales Volumes

 

 

 

 

 

 

 

 

 

 

 

Plywood (thousand square feet) (3/8” basis)

 

440,525

 

462,648

 

460,952

 

424,078

 

1,788,203

 

OSB (thousand square feet) (3/8” basis) (1)

 

100,161

 

98,273

 

107,176

 

111,076

 

416,686

 

Particleboard (thousand square feet) (3/4” basis)

 

49,749

 

51,182

 

47,617

 

40,675

 

189,223

 

Lumber (thousand board feet)

 

95,911

 

108,455

 

99,858

 

91,057

 

395,281

 

LVL (hundred cubic feet)

 

17,895

 

20,844

 

20,879

 

17,925

 

77,543

 

I-joists (thousand equivalent lineal feet)

 

34,995

 

47,102

 

46,954

 

36,714

 

165,765

 

Engineered wood products (millions)

 

$

60

 

$

76

 

$

77

 

$

61

 

$

274

 

Building materials distribution (millions)

 

$

375

 

$

464

 

$

470

 

$

387

 

$

1,696

 

 

(1)  Represents 100% of the sales volume of Voyageur Panel, of which we own 47%.

 

Selected Prices (average net selling prices)

 

 

 

 

 

 

 

 

 

 

 

Plywood (thousand square feet) (3/8” basis)

 

$

231

 

$

238

 

$

227

 

$

220

 

$

229

 

OSB (thousand square feet) (3/8” basis)

 

131

 

136

 

127

 

128

 

130

 

Particleboard (thousand square feet) (3/4” basis)

 

230

 

248

 

254

 

223

 

239

 

Lumber (thousand board feet)

 

481

 

465

 

470

 

446

 

466

 

LVL (hundred cubic feet)

 

1,491

 

1,485

 

1,498

 

1,454

 

1,483

 

I-joists (thousand equivalent lineal feet)

 

896

 

886

 

890

 

872

 

886

 

 

 

 

 

 

 

 

 

 

 

 

 

Boise Paper Solutions

 

 

 

 

 

 

 

 

 

 

 

Sales Volumes (thousands of short tons)

 

 

 

 

 

 

 

 

 

 

 

Uncoated free sheet

 

355

 

370

 

364

 

336

 

1,425

 

Containerboard

 

160

 

167

 

168

 

159

 

654

 

Newsprint

 

84

 

111

 

110

 

101

 

406

 

Other

 

49

 

62

 

37

 

31

 

179

 

 

 

648

 

710

 

679

 

627

 

2,664

 

 

 

 

 

 

 

 

 

 

 

 

 

Corrugated containers (millions of square feet)

 

1,061

 

1,065

 

1,205

 

1,132

 

4,463

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Prices (average net selling prices per short ton)

 

 

 

 

 

 

 

 

 

 

 

Uncoated free sheet

 

$

712

 

$

712

 

$

722

 

$

746

 

$

722

 

Containerboard

 

327

 

332

 

351

 

361

 

343

 

Newsprint

 

368

 

349

 

367

 

371

 

363

 

 

 

Statistical Review / 2003

 

 

 

2003

 

 

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

Year

 

Boise Office Solutions, Contract

 

 

 

 

 

 

 

 

 

 

 

Sales by Product Line (millions)

 

 

 

 

 

 

 

 

 

 

 

Office supplies and paper

 

$

567

 

$

539

 

$

555

 

$

572

 

$

2,233

 

Technology products

 

277

 

275

 

280

 

293

 

1,125

 

Office furniture

 

94

 

91

 

99

 

100

 

384

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by Geography (millions)

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

709

 

$

682

 

$

712

 

$

720

 

$

2,823

 

International

 

229

 

223

 

222

 

245

 

919

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Growth

 

 

 

 

 

 

 

 

 

 

 

Sales growth

 

6

%

6

%

4

%

6

%

6

%

Same-location sales growth

 

6

%

6

%

4

%

4

%

5

%

 

 

 

 

 

 

 

 

 

 

 

 

Margins (percentage of sales)

 

 

 

 

 

 

 

 

 

 

 

Gross profit margin

 

23.8

%

23.8

%

24.2

%

25.4

%

24.3

%

Operating profit

 

2.2

%

2.6

%

3.3

%

3.5

%

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Boise Office Solutions, Retail

 

 

 

 

 

 

 

 

 

 

 

Sales by Product Line (millions)

 

 

 

 

 

 

 

 

 

 

 

Office supplies and paper

 

$

—

 

$

—

 

$

—

 

$

92

 

$

92

 

Technology products

 

—

 

—

 

—

 

161

 

161

 

Office furniture

 

—

 

—

 

—

 

30

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by Geography (millions)

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

—

 

$

—

 

$

—

 

$

283

 

$

283

 

International

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Margins (percentage of sales)

 

 

 

 

 

 

 

 

 

 

 

Gross profit margin

 

—

 

—

 

—

 

24.5

%

24.5

%

Operating profit

 

—

 

—

 

—

 

2.2

%

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Boise Building Solutions

 

 

 

 

 

 

 

 

 

 

 

Sales Volumes

 

 

 

 

 

 

 

 

 

 

 

Plywood (thousand square feet) (3/8” basis)

 

466,537

 

476,896

 

499,323

 

447,724

 

1,890,480

 

OSB (thousand square feet) (3/8” basis) (1)

 

106,581

 

112,652

 

111,775

 

101,388

 

432,396

 

Particleboard (thousand square feet) (3/4” basis)

 

41,192

 

38,609

 

36,524

 

36,296

 

152,621

 

Lumber (thousand board feet)

 

93,524

 

93,113

 

90,522

 

86,895

 

364,054

 

LVL (hundred cubic feet)

 

20,685

 

25,063

 

28,431

 

24,115

 

98,294

 

I-joists (thousand equivalent lineal feet)

 

40,534

 

53,271

 

60,275

 

45,869

 

199,949

 

Engineered wood products (millions)

 

$

68

 

$

85

 

$

96

 

$

80

 

$

329

 

Building materials distribution (millions)

 

$

391

 

$

505

 

$

603

 

$

549

 

$

2,048

 

 

(1)  Represents 100% of the sales volume of Voyageur Panel, of which we own 47%.

 

Selected Prices (average net selling prices)

 

 

 

 

 

 

 

 

 

 

 

Plywood (thousand square feet) (3/8” basis)

 

$

220

 

$

228

 

$

291

 

$

334

 

$

267

 

OSB (thousand square feet) (3/8” basis)

 

141

 

165

 

258

 

309

 

217

 

Particleboard (thousand square feet) (3/4” basis)

 

219

 

230

 

243

 

254

 

236

 

Lumber (thousand board feet)

 

412

 

400

 

446

 

468

 

431

 

LVL (hundred cubic feet)

 

1,453

 

1,447

 

1,440

 

1,516

 

1,463

 

I-joists (thousand equivalent lineal feet)

 

867

 

861

 

865

 

905

 

874

 

 

 

 

 

 

 

 

 

 

 

 

 

Boise Paper Solutions

 

 

 

 

 

 

 

 

 

 

 

Sales Volumes (thousands of short tons)

 

 

 

 

 

 

 

 

 

 

 

Uncoated free sheet

 

353

 

351

 

353

 

339

 

1,396

 

Containerboard

 

158

 

154

 

170

 

168

 

650

 

Newsprint

 

106

 

89

 

101

 

120

 

416

 

Other

 

33

 

31

 

47

 

35

 

146

 

 

 

650

 

625

 

671

 

662

 

2,608

 

 

 

 

 

 

 

 

 

 

 

 

 

Corrugated containers (millions of square feet)

 

1,122

 

1,151

 

1,204

 

1,114

 

4,591

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Prices (average net selling prices per short ton)

 

 

 

 

 

 

 

 

 

 

 

Uncoated free sheet

 

$

747

 

$

734

 

$

713

 

$

690

 

$

721

 

Containerboard

 

341

 

347

 

342

 

319

 

337

 

Newsprint

 

374

 

399

 

412

 

405

 

397

 

 

 

Consolidated Statements of Income (Unaudited) Boise and Subsidiaries

 

 

 

Three Months Ended
December 31

 

Year Ended
December 31

 

 

 

2003

 

2002

 

2003

 

2002

 

 

 

(thousands, except per-share amounts)

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

2,352,318

 

$

1,800,848

 

$

8,245,146

 

$

7,412,329

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

Materials, labor, and other operating expenses

 

1,863,666

 

1,438,211

 

6,653,109

 

6,013,613

 

Depreciation, amortization, and cost of company timber harvested

 

81,001

 

77,203

 

308,332

 

306,973

 

Selling and distribution expenses

 

294,090

 

201,976

 

950,129

 

785,883

 

General and administrative expenses

 

49,540

 

39,264

 

158,786

 

154,284

 

Other (income) expense, net

 

21,666

 

1,627

 

35,787

 

30,842

 

 

 

2,309,963

 

1,758,281

 

8,106,143

 

7,291,595

 

 

 

 

 

 

 

 

 

 

 

Equity in net income (loss) of affiliates

 

4,369

 

(81

)

8,822

 

(2,435

)

 

 

 

 

 

 

 

 

 

 

Income from operations

 

46,724

 

42,486

 

147,825

 

118,299

 

Interest expense

 

(37,634

)

(33,016

)

(132,545

)

(131,713

)

Interest income

 

533

 

185

 

1,186

 

1,525

 

Foreign exchange gain (loss)

 

(118

)

203

 

2,831

 

(325

)

 

 

(37,219

)

(32,628

)

(128,528

)

(130,513

)

Income (loss) before income taxes and cumulative effect of accounting changes

 

9,505

 

9,858

 

19,297

 

(12,214

)

Income tax (provision) benefit

 

(2,637

)

(3,651

)

(2,222

)

23,554

 

Income before cumulative effect of accounting changes

 

6,868

 

6,207

 

17,075

 

11,340

 

Cumulative effect of accounting changes, net of income tax

 

—

 

—

 

(8,803

)

—

 

Net income

 

6,868

 

6,207

 

8,272

 

11,340

 

Preferred dividends

 

(3,317

)

(3,289

)

(13,061

)

(13,101

)

Net income (loss) applicable to common shareholders

 

$

3,551

 

$

2,918

 

$

(4,789

)

$

(1,761

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

 

 

 

 

 

 

 

 

Diluted before cumulative effect of accounting changes

 

$

0.05

 

$

0.05

 

$

0.07

 

$

(0.03

)

Cumulative effect of accounting changes, net of income tax

 

—

 

—

 

(0.15

)

—

 

Diluted

 

$

0.05

 

$

0.05

 

$

(0.08

)

$

(0.03

)

 

 

 

 

 

 

 

 

 

 

Segment Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment sales

 

 

 

 

 

 

 

 

 

Boise Office Solutions, Contract

 

$

964,655

 

$

905,898

 

$

3,741,913

 

$

3,545,772

 

Boise Office Solutions, Retail

 

283,153

 

—

 

283,153

 

—

 

 

 

1,247,808

 

905,898

 

4,025,066

 

3,545,772

 

Boise Building Solutions

 

776,324

 

568,163

 

2,871,908

 

2,469,683

 

Boise Paper Solutions

 

450,868

 

455,302

 

1,852,624

 

1,878,003

 

Intersegment eliminations and other

 

(122,682

)

(128,515

)

(504,452

)

(481,129

)

 

 

$

2,352,318

 

$

1,800,848

 

$

8,245,146

 

$

7,412,329

 

Segment income (loss)

 

 

 

 

 

 

 

 

 

Boise Office Solutions, Contract

 

$

33,857

 

$

32,401

 

$

109,373

 

$

123,004

 

Boise Office Solutions, Retail

 

6,125

 

—

 

6,125

 

—

 

 

 

39,982

 

32,401

 

115,498

 

123,004

 

Boise Building Solutions

 

37,630

 

2,328

 

95,442

 

39,669

 

Boise Paper Solutions

 

(14,408

)

23,396

 

(13,879

)

38,572

 

Corporate and Other

 

(16,065

)

(15,251

)

(45,219

)

(81,746

)

 

 

47,139

 

42,874

 

151,842

 

119,499

 

Interest expense

 

(37,634

)

(33,016

)

(132,545

)

(131,713

)

Income (loss) before income taxes and cumulative effect of accounting changes

 

$

9,505

 

$

9,858

 

$

19,297

 

$

(12,214

)

 

 

Consolidated Balance Sheets (Unaudited) Boise and Subsidiaries

 

 

 

December 31

 

 

 

2003

 

2002

 

 

 

(thousands, except
share amounts)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

Cash and cash equivalents

 

$

124,879

 

$

65,152

 

Receivables, less allowances of $10,865 and $13,111

 

574,219

 

423,976

 

Inventories

 

1,609,811

 

717,966

 

Deferred income taxes

 

132,235

 

52,131

 

Other

 

60,148

 

36,524

 

 

 

2,501,292

 

1,295,749

 

Property

 

 

 

 

 

Property and equipment

 

 

 

 

 

Land and land improvements

 

87,703

 

70,731

 

Buildings and improvements

 

890,871

 

709,127

 

Machinery and equipment

 

4,905,012

 

4,678,112

 

 

 

5,883,586

 

5,457,970

 

Accumulated depreciation

 

(3,058,527

)

(2,915,940

)

 

 

2,825,059

 

2,542,030

 

Timber, timberlands, and timber deposits

 

330,667

 

328,720

 

 

 

3,155,726

 

2,870,750

 

Goodwill

 

1,107,292

 

400,541

 

Intangible assets, net

 

218,196

 

24,629

 

Investments in equity affiliates

 

44,335

 

35,641

 

Other assets

 

349,318

 

320,090

 

Total assets

 

$

7,376,159

 

$

4,947,400

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

Short-term borrowings

 

$

5,188

 

$

28,000

 

Current portion of long-term debt

 

83,016

 

125,651

 

Income taxes payable

 

694

 

9,512

 

Accounts payable

 

1,255,303

 

519,596

 

Accrued liabilities

 

 

 

 

 

Compensation and benefits

 

317,934

 

218,085

 

Interest payable

 

34,130

 

29,928

 

Other

 

280,646

 

122,832

 

 

 

1,976,911

 

1,053,604

 

Debt

 

 

 

 

 

Long-term debt, less current portion

 

1,999,876

 

1,387,398

 

Adjustable conversion-rate equity security units

 

172,500

 

172,500

 

Guarantee of ESOP debt

 

19,087

 

51,448

 

 

 

2,191,463

 

1,611,346

 

Other

 

 

 

 

 

Deferred income taxes

 

43,311

 

165,357

 

Compensation and benefits

 

564,331

 

667,694

 

Other long-term liabilities

 

256,355

 

49,868

 

 

 

863,997

 

882,919

 

 

 

 

 

 

 

Minority interest

 

20,154

 

—

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Preferred stock – no par value; 10,000,000 shares authorized;
Series D ESOP:  $.01 stated value; 4,117,827 and 4,280,615 shares outstanding

 

185,302

 

192,628

 

Deferred ESOP benefit

 

(19,087

)

(51,448

)

Common stock – $2.50 par value; 200,000,000 shares authorized;
87,137,306 and 58,283,719 shares outstanding

 

214,805

 

145,709

 

Additional paid-in capital

 

1,228,694

 

474,533

 

Retained earnings

 

907,738

 

952,215

 

Accumulated other comprehensive loss

 

(193,818

)

(314,106

)

Total shareholders’ equity

 

2,323,634

 

1,399,531

 

Total liabilities and shareholders’ equity

 

$

7,376,159

 

$

4,947,400

 

 

 

Consolidated Statements of Cash Flows (Unaudited) Boise and Subsidiaries

 

 

 

Year Ended
December 31

 

 

 

2003

 

2002

 

 

 

(thousands)

 

Cash provided by (used for) operations

 

 

 

 

 

Net income

 

$

8,272

 

$

11,340

 

Items in net income not using (providing) cash

 

 

 

 

 

Equity in net (income) loss of affiliates

 

(8,822

)

2,435

 

Depreciation, amortization, and cost of company timber harvested

 

308,332

 

306,973

 

Deferred income tax benefit

 

(19,024

)

(34,966

)

Pension and other postretirement benefits expense

 

84,760

 

37,701

 

Cumulative effect of accounting changes, net of income tax

 

8,803

 

—

 

Restructuring activities

 

(806

)

(750

)

Write-down and sale of assets

 

14,699

 

23,646

 

Other

 

3,630

 

(1,063

)

Decrease (increase) in working capital, net of acquisitions

 

 

 

 

 

Receivables

 

(22,170

)

6,909

 

Inventories

 

72,600

 

(61,579

)

Accounts payable and accrued liabilities

 

(62,481

)

8,951

 

Current and deferred income taxes

 

(22,604

)

28,132

 

Pension and other postretirement benefits payments

 

(94,811

)

(57,775

)

Other

 

65,010

 

38,525

 

Cash provided by operations

 

335,388

 

308,479

 

 

 

 

 

 

 

Cash provided by (used for) investment

 

 

 

 

 

Expenditures for property and equipment

 

(217,504

)

(218,961

)

Expenditures for timber and timberlands

 

(10,256

)

(18,184

)

Investments in equity affiliates

 

127

 

225

 

Acquisition of businesses and facilities, net of cash acquired

 

(432,571

)

(7,171

)

Other

 

(24,103

)

(34,548

)

Cash used for investment

 

(684,307

)

(278,639

)

 

 

 

 

 

 

Cash provided by (used for) financing

 

 

 

 

 

Cash dividends paid

 

 

 

 

 

Common stock

 

(35,001

)

(34,917

)

Preferred stock

 

(13,864

)

(14,548

)

 

 

(48,865

)

(49,465

)

Short-term borrowings

 

(22,812

)

(20,700

)

Additions to long-term debt

 

735,712

 

232,181

 

Payments of long-term debt

 

(246,589

)

(176,964

)

Other

 

(8,800

)

(6,442

)

Cash provided by (used for) financing

 

408,646

 

(21,390

)

 

 

 

 

 

 

Increase in cash and cash equivalents

 

59,727

 

8,450

 

Balance at beginning of year

 

65,152

 

56,702

 

Balance at end of year

 

$

124,879

 

$

65,152

 

 

 

Notes to Quarterly Financial Statements Boise and Subsidiaries

 

(1)                                 Financial Information.  In December 2003, we acquired OfficeMax, Inc. (see Note 2).  After the acquisition, we began reporting our office products business as two segments, Contract and Retail, within Boise Office Solutions, our office products distribution business.  Taken together, the two segments make up our Boise Office Solutions business.  Accordingly, in December 2003, we began operating our business using five (rather than four) reportable segments:  Boise Office Solutions, Contract; Boise Office Solutions, Retail; Boise Building Solutions; Boise Paper Solutions; and Corporate and Other.

 

The consolidated financial statements include the accounts of the company and all subsidiaries after elimination of intercompany balances and transactions.  The results of OfficeMax’s operations are included after December 9, 2003.  Our Boise Office Solutions, Contract; Boise Building Solutions; Boise Paper Solutions; and Corporate and Other segments have a December 31 calendar year-end.  Our Boise Office Solutions, Retail, segment maintains a fiscal year that ends on the last Saturday in December, which in 2003 was December 27.  We consolidate the fiscal-year results of Boise Office Solutions, Retail, with the calendar-year results of our other segments.

 

The Consolidated Statements of Income (Loss) and Segment Information are unaudited statements, which do not include all Notes to Consolidated Financial Statements, and should be read in conjunction with the company’s 2003 Annual Report on Form 10-K.  The 2003 Annual Report on Form 10-K will be available in March 2004.  Net income (loss) for all periods presented involved estimates and accruals.

 

Certain amounts in prior years’ financial statements have been reclassified to conform with the current year’s presentation.  These reclassifications did not affect net income (loss).

 

(2)                                 Acquisition of OfficeMax.  On December 9, 2003, we completed our acquisition of OfficeMax, Inc.  OfficeMax is now a wholly owned subsidiary of Boise Cascade Corporation.  OfficeMax has operations in the United States, Puerto Rico, the U.S. Virgin Islands, and Mexico.  In addition to assuming $81.6 million of OfficeMax’s debt and incurring approximately $20.0 million of transaction costs, we paid OfficeMax shareholders $1.3 billion for the acquisition, paying 60% of the purchase price in Boise common stock and 40% in cash.  OfficeMax shareholders had the opportunity to elect to receive cash or stock for their OfficeMax shares.  Each shareholder’s election was subject to proration depending on the elections of all OfficeMax shareholders.  As a result of this proration, OfficeMax shareholders electing Boise stock received approximately .230419 share of Boise stock and $3.1746 in cash for each of their OfficeMax shares.  Fractional shares were paid in cash.  OfficeMax shareholders who elected cash or had no consideration preference, as well as those shareholders who made no effective election, received $9.333 in cash for each of their OfficeMax shares.  After the proration, the $1.3 billion paid to OfficeMax shareholders consisted primarily of $486.7 million in cash and the issuance of 27.3 million of Boise common shares valued at $808.2 million.  The value of the common shares issued was determined based on the average market price of our common shares over a ten-day trading period before the acquisition closed on December 9, 2003.

 

(3)                                 Reconciliation of Net Income (Loss) and Diluted Income (Loss) Per Share Before Special Items, the Impact of the OfficeMax Acquisition, and the Cumulative Effect of Accounting Changes.  We evaluate our results of operations both before and after special gains and losses.  We believe our presentation of financial measures before special items enhances our investors’ overall understanding of our recurring operational performance.  Specifically, we believe the results before special items provide useful information to both investors and management by excluding gains and losses that are not indicative of our core operating results.  In addition, in order to provide a meaningful comparison to the prior year and prior quarters, we have excluded the impacts of the OfficeMax acquisition.

 

There were no special items during the three months ended December 31, 2002.  In the following tables, we reconcile our financial measures before special items and the impacts of the OfficeMax acquisition to our reported financial results for the three months ended December 31, 2003, and September 30, 2003, and the years ended December 31, 2003 and 2002 (see Notes 4, 5, and 6).

 

 

 

 

Three Months Ended

 

 

 

December 31, 2003

 

September 30, 2003

 

 

 

As
Reported

 

Special
Items and
OfficeMax

 

Before
Special
Items and
OfficeMax

 

As
Reported

 

Special
Items

 

Before
Special
Items

 

 

 

(millions, except per-share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boise Office Solutions, Contract

 

$

33.9

 

$

3.0

 

$

36.9

 

$

31.0

 

$

—

 

$

31.0

 

Boise Office Solutions, Retail

 

6.1

 

(6.1

)

—

 

—

 

—

 

—

 

 

 

40.0

 

(3.1

)

36.9

 

31.0

 

—

 

31.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boise Building Solutions

 

37.6

 

14.7

 

52.3

 

56.4

 

—

 

56.4

 

Boise Paper Solutions

 

(14.4

)

—

 

(14.4

)

0.2

 

—

 

0.2

 

Corporate and Other

 

(16.1

)

2.3

 

(13.8

)

(10.5

)

—

 

(10.5

)

 

 

47.1

 

13.9

 

61.0

 

77.1

 

—

 

77.1

 

Interest expense

 

(37.6

)

4.9

 

(32.7

)

(31.7

)

—

 

(31.7

)

Income before income taxes

 

9.5

 

18.8

 

28.3

 

45.4

 

—

 

45.4

 

Income tax provision

 

(2.6

)

(7.4

)

(10.0

)

(12.5

)

(2.9

)

(15.4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

6.9

 

$

11.4

 

18.3

 

32.9

 

$

(2.9

)

30.0

 

Preferred dividends or supplemental ESOP contribution

 

(3.0

)

 

 

(3.0

)

(2.9

)

 

 

(2.9

)

Diluted income

 

$

3.9

 

 

 

$

15.3

 

$

30.0

 

 

 

$

27.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares used to determine diluted income per common share

 

70.2

 

 

 

63.4

(a)

62.7

 

 

 

62.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted before cumulative effect of accounting changes

 

$

0.05

 

 

 

$

0.24

 

$

0.48

 

 

 

$

0.43

 

Cumulative effect of accounting changes

 

—

 

 

 

—

 

—

 

 

 

—

 

Diluted

 

$

0.05

 

 

 

$

0.24

 

$

0.48

 

 

 

$

0.43

 

 

(a)     Adjusted to exclude the weighted-average number of Boise common shares issued to OfficeMax shareholders electing stock (see Note 2).

 

 

 

 

Year Ended December 31

 

 

 

2003

 

2002

 

 

 

As
Reported

 

Special
Items and
OfficeMax

 

Before
Special
Items and
OfficeMax

 

As
Reported

 

Special
Items

 

Before
Special
Items

 

 

 

(millions, except per-share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boise Office Solutions, Contract

 

$

109.4

 

$

12.2

 

$

121.6

 

$

123.0

 

$

—

 

$

123.0

 

Boise Office Solutions, Retail

 

6.1

 

(6.1

)

—

 

—

 

—

 

—

 

 

 

115.5

 

6.1

 

121.6

 

123.0

 

—

 

123.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boise Building Solutions

 

95.4

 

14.7

 

110.1

 

39.7

 

—

 

39.7

 

Boise Paper Solutions

 

(13.9

)

0.2

 

(13.7

)

38.6

 

—

 

38.6

 

Corporate and Other

 

(45.2

)

3.0

 

(42.2

)

(81.8

)

23.6

 

(58.2

)

 

 

151.8

 

24.0

 

175.8

 

119.5

 

23.6

 

143.1

 

Interest expense

 

(132.5

)

4.9

 

(127.6

)

(131.7

)

—

 

(131.7

)

Income (loss) before income taxes and cumulative effect of accounting changes

 

19.3

 

28.9

 

48.2

 

(12.2

)

23.6

 

11.4

 

Income tax (provision) benefit

 

(2.2

)

(14.2

)

(16.4

)

23.5

 

(27.6

)

(4.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before cumulative effect of accounting changes

 

17.1

 

14.7

 

31.8

 

11.3

 

(4.0

)

7.3

 

Cumulative effect of accounting changes, net of income tax

 

(8.8

)

8.8

 

—

 

—

 

—

 

—

 

Net income

 

8.3

 

$

23.5

 

31.8

 

11.3

 

$

(4.0

)

7.3

 

Preferred dividends or supplemental ESOP contribution

 

(13.1

)

 

 

(11.8

)

(13.1

)

 

 

(13.1

)

Diluted income

 

$

(4.8

)

 

 

$

20.0

 

$

(1.8

)

 

 

$

(5.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares used to determine diluted income (loss) per common share

 

60.1

 

 

 

62.5

(a)

58.2

 

 

 

58.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted before cumulative effect of accounting changes

 

$

0.07

 

 

 

$

0.32

 

$

(0.03

)

 

 

$

(0.10

)

Cumulative effect of accounting changes

 

(0.15

)

 

 

—

 

—

 

 

 

—

 

Diluted

 

$

(0.08

)

 

 

$

0.32

 

$

(0.03

)

 

 

$

(0.10

)

 

(a)     Adjusted to exclude the weighted-average number of Boise common shares issued to OfficeMax shareholders electing stock (see Note 2).

 

(4)         2003 Special Items and Impact of the OfficeMax Acquisition.

 

First Quarter

 

In first quarter 2003, we announced the termination of approximately 550 employees and recorded a pretax charge of $10.1 million for employee-related costs in “Other (income) expense, net” in the Consolidated Statement of Income.  We recorded these costs in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 112, Employers’ Accounting for Postemployment Benefits.  We recorded $9.2 million in the Boise Office Solutions, Contract, segment, $0.2 million in the Boise Paper Solutions segment, and $0.7 million in our Corporate and Other segment.  Employee-related costs are primarily for severance payments, most of which were paid in 2003 with the remainder to be paid in 2004.  This special item decreased net income $6.1 million, after taxes, for the year ended December 31, 2003.

 

 

Third Quarter

 

During third quarter 2003, we recorded a net $2.9 million, one-time tax benefit related to a favorable tax ruling, net of changes in other tax items.

 

Fourth Quarter

 

In December 2003, we recorded a $14.7 million pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington.  We also recorded $5.7 million of tax benefits associated with the write-down.  The write-down resulted from our internal review of the operations and indications of current market value.  We recorded the write-down in our Boise Building Solutions segment in “Other (income) expense, net,” and the tax benefits are included in “Income tax (provision) benefit” in the Consolidated Statements of Income for the three and 12 months ended December 31, 2003.  This special item decreased net income $9.0 million, after taxes, for the three and 12 months ended December 31, 2003.

 

To present a meaningful comparison to prior periods, we also excluded both the income related to the former OfficeMax operations for the period from December 10, 2003, through December 27, 2003, and costs, including incremental interest expense, directly related to the acquisition.  The net impact of these items reduced pretax income $4.1 million, or $2.5 million after taxes, for the three and 12 months ended December 31, 2003.

 

(5)         2002 Special Items.  In December 2001, we wrote down our 29% investment in IdentityNow by $54.3 million to its estimated fair value of $25 million and recorded $4.6 million of tax benefits associated with the write-down.  In May 2002, we sold all of the stock of our wholly owned subsidiary that held our investment in IdentityNow.  In second quarter 2002, we recorded a $23.6 million pretax loss related to this sale in our Corporate and Other segment and in “Other (income) expense, net” in the Statement of Income.  We also recorded $27.6 million of tax benefits associated with this sale and our previous write-down in “Income tax (provision) benefit.”  For the year ended December 31, 2002, this transaction resulted in a net after-tax gain of $4 million, or 7 cents per basic and diluted share.

 

(6)         Cumulative Effect of Accounting Changes.  Effective January 1, 2003, we adopted the provisions of SFAS No. 143, Accounting for Asset Retirement Obligations, which affects the way we account for landfill closure costs.  This statement requires us to record an asset and a liability (discounted) for estimated closure and closed-site monitoring costs and to depreciate the asset over the landfill’s expected useful life.  Previously, we accrued for the closure costs over the life of the landfill and expensed monitoring costs as incurred.  On January 1, 2003, we recorded a one-time after-tax charge of $4.1 million, or 7 cents per share, as a cumulative-effect adjustment for the difference between the amounts recognized in our consolidated financial statements prior to the adoption of this statement and the amount recognized after adopting the provisions of SFAS No. 143.

 

Effective January 1, 2003, we adopted an accounting change for vendor allowances to comply with the guidelines issued by the Financial Accounting Standards Board’s (FASB) Emerging Issues Task Force (EITF) 02-16, Accounting by a Customer (Including a Reseller) for Certain Consideration Received From a Vendor.  Under EITF 02-16, consideration received from a vendor is presumed to be a reduction of the cost of the vendor’s products or services, unless it is for a specific incremental cost to sell the product.  As a result, for the three months ended September 30 and December 31, 2003, and the year ended December 31, 2003, approximately $10 million, $14 million, and $45 million of vendor allowances reduced “Materials, labor, and other operating expenses” that would have previously been recognized primarily as a reduction of “Selling and distribution expenses.”  In accordance with the provisions of EITF 02-16, prior-period financial statements have not been reclassified to conform with the current year’s presentation.

 

In addition, under the new guidance, vendor allowances reside in inventory with the product and are recognized when the product is sold, changing the timing of our recognition of these items.  For the year ended December 31, 2003, this change resulted in a one-time, noncash, after-tax charge of $4.7 million, or 8 cents per share.

 

(7)         Income Taxes.  Our effective tax provision rate for the year ended December 31, 2003, was 11.5%, compared with an effective tax benefit rate of 192.8% for the year ended December 31, 2002.  Before the special items and the impacts of the OfficeMax acquisition discussed in Notes 2, 4, and 5 above, our estimated tax provision rates for the years ended December 31, 2003 and 2002, were 34% and 36%.  The difference between the estimated tax provision rates before special items was due to the sensitivity of the rate to changing income levels and the mix of domestic and foreign sources of income.

 

(8)   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 December 31, 2002, and the years ended December 31, 2003 and 2002, the computation of diluted income (loss) per share was antidilutive; therefore, amounts reported for basic and diluted income (loss) were the same.

 

 

 

 

Three Months Ended

 

 

 

December 31

 

September 30,

 

 

 

2003

 

2002

 

2003

 

 

 

(thousands, except per-share amounts)

 

BASIC

 

 

 

 

 

 

 

Net income

 

$

6,868

 

$

6,207

 

$

32,884

 

Preferred dividends

 

(3,317

)

(3,289

)

(3,191

)

Basic income

 

$

3,551

 

$

2,918

 

$

29,693

 

 

 

 

 

 

 

 

 

Average shares used to determine basic income per common share

 

65,313

 

58,283

 

58,411

 

 

 

 

 

 

 

 

 

Basic income per common share

 

$

0.05

 

$

0.05

 

$

0.51

 

 

 

 

 

 

 

 

 

DILUTED

 

 

 

 

 

 

 

Basic income

 

$

3,551

 

$

2,918

 

$

29,693

 

Preferred dividends eliminated

 

3,317

 

—

 

3,191

 

Supplemental ESOP contribution

 

(3,007

)

—

 

(2,891

)

Diluted income

 

$

3,861

 

$

2,918

 

$

29,993

 

 

 

 

 

 

 

 

 

Average shares used to determine basic income per common share

 

65,313

 

58,283

 

58,411

 

Stock options and other

 

1,582

 

—

 

956

 

Series D Convertible Preferred Stock

 

3,310

 

—

 

3,330

 

 

 

 

 

 

 

 

 

Average shares used to determine diluted income per common share

 

70,205

 

58,283

 

62,697

 

 

 

 

 

 

 

 

 

Diluted income per common share

 

$

0.05

 

$

0.05

 

$

0.48

 

 

 

 

Year Ended December 31

 

 

 

2003

 

2002

 

 

 

(thousands,
except per-share amounts)

 

BASIC AND DILUTED

 

 

 

 

 

Income before cumulative effect of accounting changes

 

$

17,075

 

$

11,340

 

Preferred dividends (a)

 

(13,061

)

(13,101

)

Basic and diluted income (loss) before cumulative effect of accounting changes

 

4,014

 

(1,761

)

Cumulative effect of accounting changes, net of income tax

 

(8,803

)

—

 

Basic and diluted loss

 

$

(4,789

)

$

(1,761

)

 

 

 

 

 

 

Average shares used to determine basic and diluted income (loss) per common share

 

60,093

 

58,216

 

 

 

 

 

 

 

Basic and diluted income (loss) per common share before cumulative effect of accounting changes

 

$

0.07

 

$

(0.03

)

Cumulative effect of accounting changes

 

(0.15

)

—

 

Basic and diluted loss per common share

 

$

(0.08

)

$

(0.03

)

 

(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.

 

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