-----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, WRTLDyaM8WW+3pBTnWuw57CjRiDlxVeNyHW0fzWed7yY0ycXzauR7AJOPu3PLpZ4 y8B9y3aDGWVkJcLRBGa/+Q== 0001047469-98-014966.txt : 19980415 0001047469-98-014966.hdr.sgml : 19980415 ACCESSION NUMBER: 0001047469-98-014966 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19980103 FILED AS OF DATE: 19980414 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TJ INTERNATIONAL INC CENTRAL INDEX KEY: 0000099974 STANDARD INDUSTRIAL CLASSIFICATION: MILLWOOD, VENEER, PLYWOOD & STRUCTURAL WOOD MEMBERS [2430] IRS NUMBER: 820250992 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-07469 FILM NUMBER: 98593398 BUSINESS ADDRESS: STREET 1: 200E MALLARD DRIVE CITY: BOISE STATE: ID ZIP: 83706 BUSINESS PHONE: 2083643300 MAIL ADDRESS: STREET 1: 200E MALLARD DRIVE CITY: BOISE STATE: ID ZIP: 83706 FORMER COMPANY: FORMER CONFORMED NAME: TRUS JOIST CORP DATE OF NAME CHANGE: 19880927 10-K405/A 1 10-K405/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A AMENDMENT NO. 2 /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended January 3, 1998 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from________to________ Commission File Number 0-7469 TJ INTERNATIONAL, INC. - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 82-0250992 - -------------------------------- ------------------------------------ (State of incorporation) (IRS employer identification number) 200 EAST MALLARD DRIVE, BOISE, IDAHO 83706 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (208) 364-3300 -------------- Securities registered pursuant to Section 12(b) of the Act: None. Securities registered pursuant to Section 12(g) of the Act: Common Stock ($1.00 par value) ------------------------------ (Title of Class) 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of the close of business on March 30, 1998 was $432,034,000. The number of outstanding shares of the registrant's common stock ($1.00 par value), as of March 30, 1998 was 17,003,765, Excluding 888,782 shares held as treasury stock. Documents incorporated by reference: Listed hereunder the following documents if incorporated by reference, and the Parts of this Form 10-K into which the document is incorporated: The registrant's definitive proxy statement for use in connection with the annual meeting of stockholders scheduled to be held on May 27, 1998, portions of which are incorporated by reference into Part III of this Form 10-K. 1 Explanatory Note This Form 10-K/A Amendment No. 2 amends the Registrant's Form 10-K filed with the Commission on April 3, 1998 (the "Original Filing") and the Amendment to Form 10-K on Form 10-K/A filed with the Commission on April 8, 1998 (the "Amendment Filing"). The Amendment Filing made no substantive changes to the Original Filing, but added signatures to and corrected minor typographical errors in the Original Filing. However, the Amendment Filing was incomplete as an amendment under Rule 12b-15. This Form 10-K/A Amendment No. 2 is meant to replace the Original Filing and the Amendment Filing. Attached as Annex A to this Form 10-K/A Amendment No. 2 is the complete conformed text of the Original Filing and the corrections contained in the Amendment Filing. 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 an authorized representative on April 10, 1998. TJ INTERNATIONAL, INC., Registrant By /s/ Valerie A. Heusinkveld ------------------------------------------ Valerie A. Heusinkveld -- Vice President, Finance and Chief Financial Officer 2 ANNEX A FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from_________to________ Commission File Number 0-7469 TJ INTERNATIONAL, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 82-0250992 - ----------------------------- ------------------------- (State of incorporation) (IRS employer identification number) 200 EAST MALLARD DRIVE, BOISE, IDAHO 83706 - ---------------------------------------- -------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (208) 364-3300 --------------- Securities registered pursuant to Section 12(b) of the Act: None. Securities registered pursuant to Section 12(g) of the Act: Common Stock ($1.00 par value) ------------------------------ (Title of Class) The registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of the close of business on March 30, 1998 was $432,034,000. The number of outstanding shares of the registrant's common stock ($1.00 par value), as of March 30, 1998 was 17,003,765, Excluding 888,782 shares held as treasury stock. Documents incorporated by reference: Listed hereunder the following documents if incorporated by reference, and the Parts of this Form 10-K into which the document is incorporated: The registrant's definitive proxy statement scheduled for use in connection with the annual meeting of stockholders to be held on May 27, 1998, portions of which are incorporated by reference into Part III of this Form 10-K. EXHIBIT INDEX ON PAGE 26 1 PART I ITEM 1. BUSINESS ITEM 1(a). General Development of Business RECENT DEVELOPMENTS 1997 Financial Results TJ International, Inc., (the Company) is the 51 percent owner and managing partner of Trus Joist MacMillan a Limited Partnership (TJM), the world's leading manufacture and marketer of engineered lumber products. Substantially all of the Company's operating assets are held and revenue generated by TJM. MacMillan Bloedel Limited (MB) owns a 49 percent interest in TJM. The Company achieved record sales in 1997, due to the continued acceptance of engineered lumber products as a substitute for solid-sawn lumber in the marketplace. This continued acceptance was due to a combination of factors, including the Company's on-going education efforts in the building community, the adoption of engineered lumber products as the product of choice in many regional markets, and the development and introduction of new products. The Company experienced an increase in sales of $129 million in 1997, compared to 1996. Resulting in a 22.4% percent increase in sales in a year when North American housing starts were essentially flat comparing 1997 to 1996. Market prices for certain traditional solid-sawn lumber products, which represent the primary competitor of engineered lumber products began 1997 at near two-year high levels, but declined during the second half of the year. The declines were particularly sharp in West Coast species, such as Douglas Fir. In 1997, the Company's key benchmark of residential product sale per North American housing start rose 19 percent to $344 per start from the $289 per start of 1996. Income from continuing operations improved as a percent of sales primarily as a result of lower costs for oriented strand board (OSB) and veneer; increased prices for TimberStrand-Registered Trademark- LSL stemming from a product mix shift to higher margin products; and increased operating efficiencies and lower costs at many of the Company's manufacturing facilities. Selling expenses as a percentage of sales declined in 1997 to 10 percent, compared to 10.6 percent in 1996. General and Administrative expenses as a percent of sales increased in 1997 to 5.2 percent, from 4.6 percent in 1996. This increase was primarily the result of increased investments in business support software, which will provide the infrastructure for future growth increased research and development expenses to improve the Company's TimberStrand-Registered Trademark- LSL technology, and other costs necessary to support the growth of the Company. Net income from continuing operations increased $11.4 million to $27.5 million in 1997. Income from continuing operations per diluted share increased from $0.82 in 1996 to $1.44 in 1997. Sales for the fourth quarter of 1997 were $173.7 million, compared to $131.4 million in the fourth quarter of 1996, a 32.2 percent increase. Income from continuing operations improved to $6 million or $.31 per diluted share in the fourth quarter of 1997, compared to $4.1 million, or $.21 per diluted share in the fourth quarter of 1996. 3 Market Developments The Company believes that its engineered lumber products offer advantages in both performance and cost effectiveness over solid-sawn lumber and that such products are achieving increased market acceptance in residential construction. In 1997, the Company's residential product sales per North American housing start rose 19 percent to $344 per start from the $289 per start of 1996. 1997 marked the 15th consecutive year that the Company has increased sales per North American housing start in the key residential construction market. The Company's engineered lumber sales, per North American housing start have increased from $20 per start in 1983 to $344 per start in 1997, an increase of 1620 percent, with an annual compounded growth rate of 23 percent. Prices for solid-sawn lumber, which remains the Company's main competition, varied in 1997 from region to region. Prices for 2" x 10" green 14' Douglas fir lumber decreased 36% during 1997 from $475 per thousand board feet at the beginning of 1997 to $350 per thousand board feet at the end of 1997. Prices for southern yellow pine (SYP) 2" x 10", kiln dried 14' increased 12% during 1997 from $520 per thousand board feet at the beginning of 1997 to $580 per thousand at the end of 1997. Wide dimension lumber remains the primary competition to the Company's engineered lumber products. Company Strategy The Company's primary objective remains increasing market penetration for its engineered lumber products. The Company believes that its fundamentals remain strong: builders continue to make the switch to engineered lumber products, which they are using in more applications on each project; consumer confidence and employment rates are high, so housing starts should remain at favorable levels; and the Company believes that it is well positioned with manufacturing, sales, marketing, and distribution to continue to grow its business. The Company also believes that regional fundamentals which have driven the Company's growth over the past several years remain in place, including the declining availability of high-quality, large diameter timber, the superior performance of engineered lumber products, and the Company's continuing transition to proprietary, lower-cost technologies. In addition, the Company continues to enjoy strong brand name recognition, supported by an extensive North American distribution network. Most importantly, the Company believes there continues to be growth in market acceptance of engineered lumber products. The Company's strategy, which is composed of two key elements, is focused on continuing its historic dominance in the engineered lumber industry-- a dominance which is reflected in an estimated market share of approximately 60 percent for engineered lumber products sold in North America. The Company's strategy includes the following: 1. Low-cost Proprietary Technologies and Industry Leading Production Capacity. The Company intends to pursue the advantages of its technological leadership. The Company believes its technologies in engineered lumber enable it to use smaller logs and to make more efficient use of wood fiber than the current sawmill production of solid-sawn structural lumber. The Company also intends to capitalize on its proprietary technologies--Parallam-Registered Trademark- PSL and TimberStrand-Registered Trademark- LSL which allow the Company to manufacture engineered lumber from non-traditional tree species such as aspen and poplar. These species are lower in cost, more abundant and less 4 environmentally sensitive than traditional fir and pine species. The Company believes it is well positioned to benefit from the increasing scarcity and associated higher prices of the high quality, large diameter logs utilized to make the solid-sawn structural lumber products with which its products compete. The Company completed in 1997 its most recent capital expansion program, which is a new TJI-Registered Trademark--joist manufacturing plant at its East Kentucky facility that utilizes TimberStrand-Registered Trademark- LSL for flange material. The Company also began construction in 1997 of a Microllam-Registered Trademark- LVL plant in Evergreen, Alabama, which eventually may include the construction of a Parallam-Registered Trademark- PSL plant on the same site allowing the Company to take advantage of the synergies of the two technologies. These expansion projects are intended to enhance the Company's leading position in engineered lumber products. Through the expansion and addition of the new production facilities the Company believes it will maintain its approximate 60 percent share of the engineered lumber industry's capacity. The Company is examining potential sites for an additional combination Microllam-Registered Trademark- LVL and Parallam-Registered Trademark- PSL plant or a third TimberStrand-Registered Trademark- LSL plant. Commitment to this new capacity is contingent upon continued market demand and acceptance of engineered lumber products. The Company believes that the housing construction industry is undergoing a transition toward increased use of engineered lumber for structural building material, as wide-dimension commodity lumber generally increases in price and decreases in quality. The Company believes its capacity expansion plans are appropriate because its proprietary technology plants are expected to give the Company a significant cost, wood source, and product breadth and flexibility advantage which the Company believes will further strengthen its market leading position. The Company also believes that its recent capital expansion is prudent given the demand for these new technology products and competition in these markets that the Company expects will develop over time. However, there can be no assurance that the market for engineered lumber products will increase, that markets for new products will develop, or that the expected cost advantages will be realized. The Company has financed its capital expansion program through several sources, including a portion of the proceeds from the sale of common stock of the Company in 1993, equity contributions by TJM's limited partner, the proceeds of bond offerings in 1994, 1995, 1996, and 1997 and internally generated funds. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." 2. A System of Integrated Components and Services and Value-Added Marketing. The Company intends to focus future marketing efforts on a system of integrated components, rather than individual products. The Company is currently analyzing, investigating, and developing the FrameWorks-Registered Trademark- Building System, which will represent a complete system in engineered lumber to build the entire structural frame of a home. The FrameWorks-Registered Trademark- Building System is expected to include roof, wall, stair, floor and other structural systems, enhancing the overall performance of the home, which the Company believes will be a benefit to architects, builders, dealers and homebuyers. The Company believes it has a competitive advantage over other engineered lumber producers in that it offers a complete support and service system for its products, 5 including (i) a system performance guarantee for the lifetime of the home; (ii) the largest technical service support, and sales force in the industry; (iii) engineering assistance and performance recommendations; and (iv) computer-generated framing plans and materials specifications from its TJ-Xpert-TM- software, which gives the Company the ability to optimize design on a house-by-house basis. The Company will continue its emphasis on a broad and aggressive North American distribution network, emphasizing product availability and value-added services. The Company believes that its partnership with MacMillan Bloedel Limited and strategic alliances with Weyerhaeuser Company and other regional distributors and retailers offer it a significant advantage in the distribution of its engineered lumber products. The Company believes that its extensive product lines, highly-skilled, service- oriented sales force, and its extensive distribution network provide an unparalleled opportunity to meet the modern demands of the building community and the discriminating homeowner. Divestiture of Window Business The Company completed the sale of its windows division during the third quarter of 1996. The divestiture will allow the Company to focus all of its resources on the engineered lumber business. ITEM 1(b). Financial Information About the Company's Industry Segments. The Company divested of its window operations segment in 1996. Accordingly, these operations have been reflected as discontinued operations in the Company's financial statements for all years presented. ITEM 1(c). Narrative Description of Business. BUSINESS GENERAL The Company is the leading manufacturer and marketer of engineered lumber products in the world. Engineered lumber products are high quality substitutes for solid sawn structural lumber historically obtained from the logging of older, large diameter trees. The Company utilizes advanced technology to manufacture engineered lumber at fifteen facilities located in the United States and Canada, and estimates that its market share is approximately 60 percent for engineered lumber products sold in North America. Strategy. The Company is the leading manufacturer and marketer of value-added specialty building products to the residential and light commercial construction industry. The Company believes it is well positioned to benefit from the increasing scarcity and associated higher prices of the high quality, large diameter logs historically utilized to make the sawn structural lumber products with which the Company's products compete. A Company objective is to increase the product acceptance of its engineered lumber products and to strengthen its market leadership in these products. To increase product acceptance, the Company's selling efforts highlight product advantages including consistent quality, superior strength, 6 relatively light weight and ease of installation targeted at end users such as architects and contractors. The Company seeks to strengthen its leading market position through (i) competitive pricing; (ii) value-added marketing of technical support and services; (iii) maintenance of industry production capacity dominance through the construction of new engineered lumber manufacturing facilities, the expansion of existing plants and the construction of other facilities as market conditions warrant; (iv) the ongoing development of proprietary technologies including processes utilizing relatively low-cost wood fiber from tree species, such as aspen and yellow poplar, (v) the promotion of a complete system of structural frame components rather than individual products; and (vi) reliance on an extensive North American distribution network, including its partnership with MacMillan Bloedel Limited and strategic alliances with the Weyerhaeuser Company and other regional distributors and retailers. Timber Supply. In general, the supply of large diameter logs suitable for wide dimension lumber has declined over the past several years in the Pacific Northwest. In addition, environmental pressures have greatly slowed the harvest of the remaining timber supply. The Company believes that the combined effect of reduced supply and more restrictive environmental regulation on federally-owned timberlands will continue to reduce the volume of high grade timber available from this source. Most of the Company's technologies can use wood fiber from trees that were previously not suitable for the manufacture of structural lumber, and this allows the Company to access the current inventory of wood fiber in North America. This wood fiber differs from that in the past, primarily in the species and size of the trees available for harvest. Much of today's potential wood fiber supply consists of smaller second growth logs or is found in the interior forests of Appalachia, the upper Midwest and the Canadian interior forests. These forests include fast-growing, abundant and competitively priced species of trees such as aspen and poplar. These trees are not regarded as sufficiently large, straight, or strong enough to be sawn into structural lumber. The Company's new technologies now allow the use of these species for high grade structural products. The Company will continue to use substantial volumes of Douglas fir in the West and southern yellow pine wood fiber in the South at its existing LVL plants from the available supply of mature trees or smaller second growth logs. Unlike many of its principal competitors in engineered lumber, the Company does not currently own any timberlands or significant amounts of standing timber. The Company buys its raw materials on contract both from small independent suppliers and larger integrated forest products companies. In addition, a portion of its wood raw materials are purchased on the spot market. The reduced supplies could result in more volatile wood markets. The Company has experienced and believes it may continue to experience volatility in its quarter-to-quarter results due to raw material price volatility. However, the Company believes it will be able to satisfy its needs for raw materials and it is not currently aware of any potential shortages for its longer-term requirements. The Company is increasingly purchasing standing timber tracts, to be processed at the Company's facilities in place of veneer purchased from other producers. The Company believes that it has significant competitive advantages over companies marketing traditional sawn lumber products in an environment of reduced timber supply because its engineered lumber technologies are able to utilize non-traditional sources of wood fiber, which are both more abundant and less expensive. 7 ENGINEERED LUMBER PRODUCTS OVERVIEW. The Company believes that the housing construction industry is undergoing a transition in its use of structural building materials as solid-sawn structural lumber increases in price and decreases in quality. Engineered lumber is enjoying increased market acceptance and is displacing solid-sawn structural lumber. This transition is driven by the changing composition of the North American timberlands, both in terms of regional log supply restrictions and the type and size of logs currently available for use as raw material. The availability of timber from federally-owned forests in the Pacific Northwest has been greatly restricted, and the size of an average sawlog has decreased to the point where it is often too small to produce significant quantities of high grade, wide-dimension structural lumber. TECHNOLOGY. The Company is the industry leader in developing and commercializing proprietary technologies that enable the manufacture of engineered lumber products from wood that has been regarded as not sufficiently large, strong, straight, or free of defects to be sawn into structural lumber. The following table outlines the principal features of the Company's technologies:
TECHNOLOGY RAW MATERIAL MAXIMUM SIZE PRODUCTION FACILITIES - ---------------------- -------------------------------- -------------------- -------------------------------- Microllam-Registered Rectangular high-grade 80 feet long by Buckhannon, West Virginia Trademark- LVL veneer 4 feet wide by Eugene, Oregon 3 1/2 inches thick Junction City, Oregon Natchitoches, Louisiana Valdosta, Georgia Parallam-Registered Irregular veneer from first 66 feet long by Buckhannon, West Virginia Trademark- PSL and last peels of the log 20 inches wide by Colbert, Georgia 11 inches thick Vancouver, British Columbia TimberStrand-Registered Strands of pulpwood up to 48 feet long by Deerwood, Minnesota Trademark- LSL 12 inches long 8 feet wide by Hazard, Kentucky 5 1/2 inches thick
The Company's three engineered lumber technologies are: laminated veneer lumber, or LVL, the oldest and most commercialized of the technologies; parallel strand lumber, or PSL, first introduced in the mid-1980's in Canada; and laminated strand lumber, or LSL, a new technology introduced in the fall of 1991. Both PSL and LSL are proprietary to the Company, while equipment to produce LVL is now available from several machinery manufacturers and is utilized by an increasing number of forest products manufacturers. The Company believes its LVL manufacturing process, however, enjoys several advantages which make this process cost-competitive compared to the commercially available alternatives. 8 Although the Company has been issued and has applied for a number of patents on its current processes, the Company believes that its technological competitiveness also comes from its continued innovation and technical expertise in this industry. The Company will, however, continue to assert its legal rights wherever appropriate. LAMINATED VENEER LUMBER (LVL): LVL uses thin sheets of veneer peeled from a log. Each sheet is carefully dried and individually graded using ultrasonic measurements to determine its strength characteristics. Sheets are then placed in specific sequence and location within the product to maximize the stronger veneer grades and randomize wood defects, such as knots. This engineered configuration of veneers is then laminated with adhesives under heat and pressure to form a piece of wood in widths of 24 inches or 48 inches, thicknesses from 3/4 inches to 3 1/2 inches, and up to 80 feet in length. PARALLEL STRAND LUMBER (PSL): This technology, which is proprietary to the Company, starts with sheets of thin veneer peeled from a log. These are then clipped into strands, which are up to eight feet long and 5/8 inches wide. The ability to use this very narrow strand allows a significantly higher percentage of the log to be manufactured into a value-added product. The strand is then coated with adhesive. The next step in the process employs a pressing system in which microwaves are used to cure the adhesives and form a large block, or billet, of engineered lumber measuring up to 11 inches by 20 inches and 66 feet long. The Company's PSL process is protected in the U.S. and in 15 other countries. These patents provide protection through 2008. The Company believes that the combination of the PSL and LVL technologies in a single manufacturing facility, such as its Buckhannon, West Virginia plant, will allow it to be among the most efficient converters of wood fiber to a high value product. See "Recent Developments--Company Strategy" above. LAMINATED STRAND LUMBER (LSL): The Company's other proprietary engineered lumber technology, LSL, begins with small-diameter, 8-foot-long logs such as aspen and poplar. These are species traditionally used in lower value applications such as pulp logs, and are therefore substantially less expensive than traditional sources of solid-sawn lumber. These logs are flaked into strands 12 inches long, which are then treated with an adhesive. The strands are put into a steam-injection press that significantly densifies the wood and creates boards up to 48 feet long, up to 5 1/2 inches thick, and 8 feet wide. The Company's LSL process is protected in the U.S. and in 24 other countries. In addition, one patent is pending approval. These patents provide protection through 2010. PRODUCTS: The Company produces the broadest line of structural engineered lumber building products in the industry, possesses certain exclusive product technologies, and believes it enjoys a reputation for superior quality and service. The table on the following page lists the Company's products, the technology utilized, product size, and end use of such products. 9 TJ INTERNATIONAL ENGINEERED LUMBER PRODUCTS
RESIDENTIAL ENGINEERED LUMBER PRODUCT PRODUCTS TECHNOLOGY SIZE END USE - --------------------------- --------------------------- --------------------------- --------------------------- TJI-Registered Trademark- Microllam-Registered 9 1/2" to 16" deep Residential construction - -joists Trademark- LVL or Width from 1 1/2" to floor and roof joists. TimberStrand-Registered 3 1/2" Substitutes for traditional Trademark- LSL on the top Up to 80' long 2x10 and 2x12 sawn lumber and bottom with enhanced systems. composite panel webs in the middle Rim joists TimberStrand-Registered 1 1/2" thick Residential construction Trademark- LSL 9 1/2" to 16" deep frames in perimeter of floor. 17' to 48' long Substitutes for laterally ripped plywood and/or 2x10 and 2x12 sawn lumber. Wall Framing TimberStrand-Registered 2" x 4" and 2" x 6" Designed for residential and Trademark- LSL dimensions light-commercial 14' to 22' long construction. Substitutes for traditional sawn lumber in wall framing applications. Headers, beams, and Microllam-Registered 1 3/4" to 7 1/4" thick Residential construction. columns Trademark- LVL 9 1/2" to 18" deep Ranges from main carrying Parallam-Registered Up to 80' long beam in home to support Trademark- PSL structures above a window TimberStrand-Registered or door (header). Trademark- LSL Substitutes for traditional 2x10 and 2x12 sawn lumber, glulam and steel beams. COMMERCIAL PRODUCTS - --------------------------- Open-web truss Microllam-Registered 14" to 114" deep Roof support structure in Trademark- or strength- Spans lengths up to light commercial buildings. rated lumber on the top and 120' long bottom with tubular steel webs in the middle TJI-Registered Microllam-Registered 2.3" to 4.65" thick Roof structure for smaller Trademark- roof truss Trademark- LVL 4 1/2" to 37.1" deep commercial buildings. series Up to 80' long INDUSTRIAL PRODUCTS - --------------------------- 10 Window and door core TimberStrand-Registered Various Substitutes for finger- material Trademark- LSL jointed Ponderosa pine lumber in the manufacture of wood windows and doors. Concrete forming and Microllam-Registered 1 1/2" to 5 1/4" thick Support members in the shoring support members Trademark- LVL 6 1/2" to 20" deep structure into which wet Parallam-Registered Up to 80' long concrete is poured in both Trademark- residential and commercial buildings. Substitutes for 2x10, 2x12, 4x4 and larger sawn lumber and for aluminum form support systems. Scaffold plank Microllam-Registered 1 1/2" to 2 1/2" thick Decking material in scaffold Trademark- LVL 9" to 11 3/4" wide frames. Substitutes for high Up to 80' long strength rated 2x6 and 2x8 sawn lumber.
The Company continues to explore the development of new and improved engineered lumber products which have superior performance and quality characteristics relative to traditional solid-sawn lumber. The Company has developed and has increased manufacturing and marketing of a TJI-Registered Trademark--joist utilizing TimberStrand-Registered Trademark- LSL as the flange material. The Company has an aggressive R&D program that focuses on new product development that has a targeted effort to develop further TimberStrand-Registered Trademark- LSL products as well as a solid floor joist targeted at the multi-family construction market and other structural and industrial products, including long-length garage door headers. The Company owns a number of registered and non-registered trademarks for its promotional literature and engineered lumber products. The Company believes that its engineered lumber trademarks, and in particular, its Silent Floor-Registered Trademark- brand of residential structural products, have achieved significant name recognition in the engineered lumber industry. MARKETS. The Company's engineered lumber is sold primarily to four markets. The largest market is the new construction residential housing market, which includes single-family detached homes, apartments, condominiums, townhouses, and manufactured housing. Industrial uses are another market and include core components for the millwork and furniture industry, scaffold plank, and concrete forming and shoring products. The third market is light-commercial construction, which includes structures such as warehouses, schools, gymnasiums, shopping centers, and low-rise office buildings. International markets consist of sales outside of North America with products going into new construction residential housing, manufactured housing, and OEM applications. SALES, MARKETING, AND DISTRIBUTION. The Company's engineered lumber products are sold through its network of wholesale lumber distributors, including MacMillan Bloedel Building Materials Distribution Centers, the Weyerhaeuser Building Materials Customer Service Centers, and a number of other distributors. In addition, the Company sells directly to stocking retail lumber dealers in the United States and 11 Canada. This distribution network broadens the Company's market to include an extensive range of smaller lumber dealers and outlets. The Company believes this distribution network gives it the broadest and deepest reach into the market of any engineered lumber producer. Since July 1993, the Company has operated under an arrangement with the Weyerhaeuser Building Material Distribution Division, pursuant to which the Weyerhaeuser customer service centers in the United States and Canada distribute the Company's engineered lumber products. In addition, Weyerhaeuser has assumed an expanded role as a supplier of veneer and oriented strand board to certain of the Company's manufacturing facilities. The Company believes this arrangement has enhanced the visibility and sales of its products. The Company employs the engineered lumber industry's largest sales force consisting of approximately 165 technical sales representatives who market the Company's products directly to architects, project engineers, contractors, developers, independent lumber dealers, national wholesale building material suppliers, and industrial users. This enables the Company to better educate and assist customers in the use of engineered lumber and simultaneously helps create demand, further enabling the Company to differentiate its products from those of its competitors. The Company's products are supported by numerous advanced computer-assisted software packages. For residential construction, the Company's proprietary TJ-Xpert-TM- software, which is receiving increasing acceptance by builders, translates a builder's blueprints into a complete framing plan for a structural system using engineered lumber products. The Company also has sales offices and representatives in Japan, Australia, France, the United Kingdom, Germany, Belgium, and the Middle East. While not currently comprising a significant portion of the Company's business, the Company believes these markets present future growth opportunities for its products. COMPETITION. Solid-sawn lumber products produced in traditional sawmills remain the primary competition for the Company's engineered lumber products. The Company's competition in the growing engineered lumber industry includes large competitors producing LVL and I-joists in several plants across North America, and others that are manufacturing wood I-joists only. Competition is expected to continue to increase as a number of the Company's competitors, including Louisiana-Pacific Corporation, Boise Cascade Corporation, Union Camp, and Willamette Industries have undertaken capacity expansion plans in the LVL and I-joist business. In particular, competition may emerge or increase from established wood products companies that now sell primarily traditional wood products. A number of existing competitors such as Louisiana-Pacific Corporation, Boise Cascade Corporation, Willamette Industries, Union Camp, and Georgia-Pacific Corporation, own a significant portion of their own raw materials and generally have greater financial resources than the Company. The Company believes that the principal competitive factors in the market for engineered lumber are product quality, customer support, distribution capabilities, and price. The Company believes its broader product line, based in part on its proprietary technologies PSL and LSL lumber, provide an important competitive 12 advantage over its competition. In addition, the Company believes it enjoys a leadership position in terms of brand name recognition, value-added services to builders, an aggressive and broad distribution network and a wide selection of products which have received building code approval in substantially all markets. The Company has adopted a policy of protecting market share by aggressively managing any price differentials between its products and those of its engineered lumber competitors. Other building materials, including steel, plastic, brick, and cement, are alternative basic materials for construction. However, these materials may not readily lend themselves to traditional residential framing methods or tools and have certain inherent manufacturing and performance deficiencies. BACKLOG The Company's order backlog at January 3, 1998 was approximately $41 million compared to approximately $31 million at December 28, 1996. Some portion of the current order backlog will probably not be filled due to extended deliveries or cancellations. In addition, lead times of orders can vary significantly from quarter to quarter and year to year. Accordingly, the Company's backlog on a particular date may not be representative of the level of future sales. EMPLOYEES As of January 3, 1998, the Company employed a total of approximately 3,592 employees in its engineered lumber operations. ENVIRONMENTAL MATTERS The Company is subject to various federal, state, provincial, and local environmental laws and regulations, particularly relating to air and water quality and the storage, handling, and disposal of various materials and substances used in the Company's plants and processes. Permits are required for certain of the Company's operations, and these permits are subject to revocation, modification, and renewal by issuing authorities. Governmental authorities have the power to enforce compliance with their regulations, and violations may result in the payment of fines or the entry of injunctions, or both. The Company believes that it is in material compliance with existing environmental laws and regulations, and that its expenditures in future years for environmental compliance will not have a material adverse effect on its operations. YEAR 2000 COMPUTER ISSUE Virtually all computer systems today were developed using two digits to specify the year. As a result, such computer systems recognize the year 2000 as 00. This issue could cause computer applications to fail or to create incorrect results unless corrective action is taken. The Company is currently implementing, or are planning to implement computer system upgrades that will be completed before the year 2000, which will make these computer systems 2000-compliant. The Company is evaluating what actions will be necessary to make the Company's remaining computer systems year 2000-compliant. The expense associated with these actions is not expected to be material to the Company. 13 FORWARD LOOKING STATEMENTS Forward looking statements include, without limitation, statements regarding the adequacy of the Company's reserves for discontinued operations and expectations of future increases in its product acceptance. Investors are cautioned that forward looking statements are subject to an inherent risk that actual results may vary materially from those described, projected or implied herein. Factors that may result in such variance include changes in interest rates, commodity prices, and other economic conditions; actions by competitors; changing weather conditions and other natural phenomena; actions by government authorities; technological developments; future decisions by management in response to changing conditions; and misjudgments in the course of preparing forward looking statements. ITEM 1(D). FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES. The Company operates manufacturing facilities in two countries, the United States and Canada; and the majority of all sales are made domestically in those countries. In 1997, revenues and identifiable assets attributable to the Canadian operations were less than 10% of the corresponding consolidated amounts. Accordingly, financial information about foreign and domestic operations and export sales is not included herein. ITEM 2. PROPERTIES. Set forth below are the locations of the Company's manufacturing facilities and the technology and/or products produced at such facilities.
ENGINEERED LUMBER TECHNOLOGY PRODUCTS --------------------- ------------- STRUCTURAL PRODUCTS MANUFACTURING LVL PSL LSL I-JOIST - ------------------------------------------------------------------ --- --- --- -------------
14 Buckhannon, West Virginia......................................... X X Chino, California................................................. Claresholm, Alberta............................................... X Colbert, Georgia.................................................. X Deerwood, Minnesota............................................... X Delaware, Ohio.................................................... Eugene, Oregon ................................................... X X Hazard, Kentucky.................................................. X X Hillsboro, Oregon................................................. Junction City, Oregon............................................. X Natchitoches, Louisiana........................................... X X Stayton, Oregon................................................... X X Valdosta, Georgia................................................. X X Vancouver, British Columbia....................................... X Elma, Washington.................................................. * * Evergreen, Alabama **.............................................
STRUCTURAL PRODUCTS MANUFACTURING OPEN WEB TRUSSES - ------------------------------------------------------------------ ----------------------- Buckhannon, West Virginia......................................... Chino, California................................................. X Claresholm, Alberta............................................... X Colbert, Georgia.................................................. Deerwood, Minnesota............................................... Delaware, Ohio.................................................... X Eugene, Oregon.................................................... Hazard, Kentucky.................................................. Hillsboro, Oregon................................................. X Junction City, Oregon............................................. Natchitoches, Louisiana........................................... Stayton, Oregon................................................... Valdosta, Georgia................................................. Vancouver, British Columbia....................................... Elma, Washington.................................................. Evergreen, Alabama **.............................................
- ------------------------ * Produces veneer for LVL and PSL Lumber productions ** Scheduled to begin production late 1998 The Company owns a Boise, Idaho, property of approximately 32 acres of unimproved land. The Company's headquarters staff are located on leased property in Boise, Idaho. The properties at Stayton, Oregon and Natchitoches, Louisiana are subject to mortgages aggregating $16.4 million. Because the costs of these latter properties are financed partially or wholly by Industrial Development Revenue Bonds, record title to a significant portion of the land, buildings, and equipment is being held by the bond-issuing authorities until the bonds are retired. All properties in use or held for future use are considered suitable for the Company's present and future needs and should have adequate capacity for those needs. ITEM 3. LEGAL PROCEEDINGS. No material legal proceedings or claims are pending or known to the Company other than several claims and suits for damages arising in the ordinary conduct of business, resulting primarily from construction accidents and often involving contractors and others as joint defendants. Based on current facts and knowledge, all material liabilities under any of the pending claims and suits would be covered under the Company's liability insurance policies or are otherwise provided for in the Company's financial statements. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 15 ITEM A. Executive Officers of the Registrant. Following is a schedule of names and certain information regarding all of the executive officers of the Company, as of January 3, 1998, each of whose term of office is one year.
NAME AND AGE OFFICE - -------------------------------------------------------- -------------------------------------------------------- Harold E. Thomas, age 71 Chairman of the Board Thomas H. Denig, age 51 President and Chief Executive Officer Robert J. Dingman, age 56 Senior Vice President, Custom Operations Group Randy W. Goruk, age 45 Senior Vice President, North American Residential Operations Group Patrick D. Smith, age 51 Senior Vice President, Manufacturing Operations Group Valerie A. Heusinkveld, age 39 Vice President, Finance and Chief Financial Officer Richard B. Drury, age 48 Secretary and Treasurer Jody B. Olson, age 50 Vice President, Corporate Development Floyd J. Juday, age 54 Vice President, Marketing Services James H. Ware, age 54 Vice President, Technology and Chief Technology Officer
Harold E. Thomas holds a Bachelor of Science Degree in Forestry from the University of Idaho, and worked in sales for lumber mills prior to 1960, when Mr. Thomas and Arthur L. Troutner founded the Company. Mr. Thomas was first elected to the Board of Directors in 1960 and was President of the Company from 1960 to 1971. Mr. Thomas has been Chairman since 1960 and served as Chief Executive Officer from 1971 to 1975 and from 1979 to 1986. Thomas H. Denig was elected President and Chief Executive Officer of TJ International, Inc. in 1995. Mr. Denig was elected Senior Vice President, Structural Operations in 1990. Mr. Denig was also elected President and Chief Executive Officer of Trus Joist MacMillan in 1991, after having served as President of Trus Joist Corporation since 1990. Mr. Denig joined the Company in 1974 as a salesperson and has subsequently served as California South Sales Manager, Microllam-R- Lumber Industrial Sales Manager, National Sales Manager, Western Division Manager, Eastern Division Manager and had been elected Vice President, 16 Eastern Operations in 1985. Mr. Denig is a graduate of Valparaiso University and served as a lieutenant in the U.S. Marine Corp. before joining the Company. Robert J. Dingman was appointed Sr. Vice President, Custom Operations Group for Trus Joist MacMillan, in 1995. Mr. Dingman joined the Company in 1983 as the Southwest Division Manager and has subsequently served as Division Manager, Microllam-R- Lumber Operations and Sr. Vice President, Western Operations. Before joining the Company, Mr. Dingman, a graduate of St. Lawrence University, was Vice President and General Manager of the Architectural Building Products Division of Koppers Company, Inc. Randy W. Goruk was appointed Sr. Vice President, North American Residential Operations Group for Trus Joist MacMillan, in 1995. Mr. Goruk joined the Company in 1974 as a draftsperson and has subsequently served as a salesperson, British Columbia Regional Sales Manager, Canadian Division Sales Manager and Canadian Division Manager, Vice President, Canadian Operations, Vice President, Eastern Operations, and Sr. Vice President, Canadian and Industrial Operations. Mr. Goruk is a graduate of the Northern Alberta Institute of Technology and the University of British Columbia. Patrick D. Smith was appointed Senior Vice President, Manufacturing Operations Group for Trus Joist MacMillan in 1994. Mr. Smith joined the Company in 1984 as the Plant Manager at the Natchitoches, Louisiana plant and has subsequently served as Plant Manager at the Colbert, Georgia plant, General Manager of the Atlantic Coastal Division, and Vice President of Construction. Before joining the Company, Mr. Smith, a graduate at Edinboro University, began a 15 year career with the Koppers Company in their Forest Products Division. He managed three different manufacturing plants and worked in the industrial relations department. Valerie A. Heusinkveld was elected Vice President of Finance and Chief Financial Officer of TJ International, Inc., in 1992. Ms. Heusinkveld is an honors graduate of the University of Idaho and a Certified Public Accountant. Before being named CFO, Ms. Heusinkveld served as Vice President of Finance and Treasurer for Trus Joist MacMillan. Ms. Heusinkveld has also served as controller of Norco Windows Western Operations group and as a corporate accountant and assistant to the Vice President of Finance. Ms. Heusinkveld joined TJ International in 1989 after working for Arthur Andersen & Co. Richard B. Drury was elected Secretary in 1985 and was elected to the additional position of Treasurer in 1991. Mr. Drury is a graduate of Boise State University and a Certified Public Accountant. Prior to joining the Company in 1979, Mr. Drury worked for Arthur Andersen & Co. Jody B. Olson was elected Vice President, Corporate Development in 1987. Previous positions held by Mr. Olson were Microllam-R- Lumber Division Controller; Microllam-R- Lumber Industrial Salesperson and Sales Manager; General Manager of the Company's former trucking subsidiary; Manager, Energy Systems; Assistant to the President, Mergers and Acquisitions; and Manager, Corporate Development. Mr. Olson, who joined the Company in 1979, is a graduate of the University of Idaho and the Lewis and Clark Law School. Floyd J. Juday was appointed Vice President, Marketing for Trus Joist MacMillan in February of 1996, upon joining the Company. Mr. Juday received his 17 undergraduate degree from Western Michigan University, and graduate degree from Indiana University. Before joining the Company, Mr. Juday spent 25 years in the forest products industry with Georgia Pacific and MacMillan Bloedel in various management positions. James H. Ware was appointed Vice President, Engineering and Chief Technology Officer for Trus Joist MacMillan in October of 1995. Dr. Ware joined the Company as Vice President, Research and Development, in February of 1995, after 17 years at Scott Paper Company where his most recent positions were Worldwide Business Applications Leader and Technology Manager for Worldwide Operations. Prior to his career with Scott, Dr. Ware was a Research Scientist at Union Camp Corporation's Princeton Research Center and a faculty member in the School of Engineering at North Carolina State University. Dr. Ware holds BS, MS and Ph.D. degrees in Engineering Mechanics from North Carolina State University. 18 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The approximate number of record holders of the Company's $1.00 par value common stock at March 18, 1998, is set forth below:
(1) (2) Title of Class Number of Record Holders -------------- ------------------------ Common Stock, $1 par value 1,909
There are approximately 14,000 beneficial stockholders. The remainder of this Item 5 is contained in the following sections of the Report at the pages indicated below: "Market and Dividend Information," on page 33 of this Report, to the extent that said section discusses the principal market or markets on which the Company's common stock is being traded; the range of high and low quoted sales prices (closing) for each quarterly period during the past two years; the source of such quotations; and the frequency and amount of any dividends paid during the past two years with respect to such common stock. "Note 3 to the consolidated financial statements," page 41 of this Report, to the extent that said Note describes any restriction on the Company's present or future ability to pay such dividends. ITEMS 6, 7, AND 8. The information called for by Items 6, 7 and 8, inclusive of Part II of this form, is contained in the following sections of this Report at the pages indicated below: CAPTIONS AND PAGES OF THIS REPORT ITEM 6. Selected Financial Data "Selected Financial Data".... 27 ITEM 7. Management's Discussion and "Management's Discussion and Analysis of Financial Analysis".................... 29 Conditions and Results of Operations ITEM 8. Financial Statements and "Consolidated Financial Supplementary Data Statements".................. 35
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Identification of the Company's executive officers is included in Item A (following Item 4) in Part I of this Form 10-K. The balance of this Item 10 is included in the Company's definitive proxy statement, under the caption "Election of Directors;" and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. Item 11 is included in the Company's definitive proxy statement, under the caption "Compensation of Executive Officers," including the sub-caption "Executive Compensation Tables," and is incorporated herein by reference. The subcaptions "Report of the Executive Compensation Committee on Executive Compensation," and "Performance Graph," under the caption "Compensation of Executive Officers" in the Company's definitive proxy statement are not incorporated herein. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Item 12 is included in the company's definitive proxy statement under the caption under the caption "Stock Ownership"; and is incorporated herein by reference. For purposes of calculating the aggregate market value of the voting stock held by non-affiliates as set forth on the cover page of this Form 10-K, the Company has assumed that affiliates are those persons identified in the portion of the definitive proxy statement identified above. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Item 13 is included in Note 9 to the consolidated financial statements, pages 49 of this report. -Registered Trademark---Microllam, Parallam, TimberStrand, TJI, The Silent Floor, FrameWorks are registered trademarks of the Company. (TM)--TJ-Xpert is a trademark of the Company PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) Financial Statements A list of the financial statements included herein is set forth in the Index to Financial Statements, Schedules and Exhibits submitted as a separate section of this Report. (b) Reports on Form 8-K. There have been no Form 8-K filings during the fourth quarter of 1997. (c) Exhibits. The following documents are filed as Exhibits to this Form 10-K: (3) Limited Partnership Agreement between TJ International, Inc. and MacMillan Bloedel of America, Inc. whereby the Partnership was formed. This document was filed as an exhibit to the Company's Form 8-K dated September 30, 1991 and is incorporated herein by reference. Bylaws of Trus Joist Corporation (a Delaware corporation). This document was filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 28, 1991 and is incorporated herein by reference. Amendment to Limited Partnership Agreement effective the beginning of the Company's fiscal year 1993. This document was filed as an exhibit to the Company's Form 10-Q for the quarter ended September 26, 1992 and is incorporated herein by reference. Certificate of Ownership and Merger of TJ Merger Corporation with and into Trus Joist Corporation, whereby the Company changed its name from Trus Joist Corporation to TJ International, Inc. effective September 16, 1988. This document was filed as an exhibit to the Company's Form 10-K for the fiscal year ended January 2, 1993 and is incorporated herein by reference. Amended Certificate of Incorporation of TJ International Inc. This document was filed as an exhibit to the Company's Form 10-Q for the quarter ended July 2, 1994 and is incorporated herein by reference. (4) Second Amendment to Credit Agreement, dated as of November 15, 1996. This document is filed as an exhibit to this Form 10-K for the fiscal year ended December 28, 1996. Amended and Restated Credit Agreement, dated as of May 31, 1995. This document was filed as an exhibit to the Company's Form 10-Q for the quarter ended July 1, 1995 and is incorporate herein by reference. 1992 Stock Option Plan. This document was filed as an exhibit to the Company's Form 10-K for the fiscal year ended January 2, 1993 and is incorporated herein by reference. 1993 Stock Option Plan. This document was filed as an exhibit to the Company's Form 10-Q for the quarter ended July 3, 1993 and is incorporated herein by reference. Amended and Restated Restricted Stock Plan for Non-Employee Directors. This document was filed as an exhibit to the Company's Form 10-Q for the quarter ended July 3, 1993 and is incorporated herein by reference. Rights Agreement, dated as of August 24, 1989, between TJ International, Inc. and West One Bank. These documents were filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31, 1994. 1982 Incentive Stock Option Plan, as amended. These documents were filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31, 1994. 1985 Incentive Stock Option Plan, as amended. These documents were filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31, 1994. 1988 Stock Option Plan, as amended. These documents were filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31, 1994. 1997 Non-Employee Director filed as an exhibit to the Company's form 10-Q for the quarter end June 28, 1997 and is incorporated herein by reference. 1996 Stock Option Plan. This document was filed as an exhibit to the Company's form 10-Q for the quarter ended June 28, 1997 and is incorporated herein by reference. (10) Certificate of Designation, Preferences and Rights of ESOP Convertible Preferred Stock; Stock Purchase Agreement; and ESOP Term Note. These documents were filed as an exhibit to the Company's Form 10-Q for the quarter ended September 29, 1990 and are incorporated herein by reference. Mortgage, Security Interest and Indenture of Trust; Lease Agreement; Guaranty Agreement; Reimbursement Agreement; Remarketing and Interest Services Agreement; pertaining to Stayton, Oregon, plant. These documents were filed as Exhibits to the Company's Form 10-K for the fiscal year ended December 28, 1991 and are incorporated herein by reference. Trust Indenture; Refunding Agreement; Remarketing Agreement; Reimbursement Agreement; Pledge and Security Agreement; pertaining to the Natchitoches, Louisiana, plant. These documents were filed as Exhibits to the Company's Form 10-K for the fiscal year ended January 2, 1993 and are incorporated by reference. Amendment to Reimbursement Agreement; Pledge and Security Agreement; pertaining to the Natchitoches, Louisiana plant. These documents were filed as exhibit to the Company's Form 10-K for the fiscal year ended January 1, 1994 and are incorporated herein by reference. Stock Purchase and Resale Agreement. These documents were filed as an exhibit to the Company's Form 10-K for the fiscal year ended January 1, 1994 and are incorporated herein by reference. Loan Agreement, Trust Indenture and Guaranty pertaining to Hazard, Kentucky, plant. These documents were filed as an exhibit to the Company's Form 10-Q for the quarter ended July 2, 1994 and are incorporated herein by reference. Loan Agreement, Trust Indenture and Guaranty pertaining to the Solid Waste Disposal Revenue bonds, Series 1995 is available to the Commission upon request. Loan Agreement, Loan Agreement, Note, and Guarantee Agreement dated September 30, 1997 pertaining to the $42,600,000 taxable notes. These documents were filed as an exhibit to the Company's Form 10-Q for the quarter ended September 28, 1997 and are incorporated herein by reference. (11) Statement regarding computation of per share earnings. The information required by Exhibit (11) is included under the caption "Net Income Per Share" in Note 1 to the consolidated financial statements, page 42 of this Report. (22) Subsidiaries of the registrant. (24) Consent of independent public accountants to the incorporation of their report dated February 2, 1998, included in this Form 10-K for the year ended January 3, 1998, into TJ International, Inc.'s previously filed Form S-8 Registration Statements as follows: (registration numbers in parentheses). Trus Joist Corporation Employee Stock Ownership Plan (2-96065), Trus Joist Corporation Associates' Stock Purchase Plan, (2-96821), Trus Joist Corporation Key Employees' 1982 Inventive Stock Option Plan with Nonstatutory feature (2-96964), Trus Joist Corporation Employee Stock Ownership Plan ( 33-4704), Trus Joist Corporation Profit Sharing Plan, (33-21870), Trus Joist Corporation Key Employees' 1985 Incentive Stock Option Plan with Nonstatutory Feature, as amended (33-22186), TJ International, Inc. Key Employees' 1988 and 1992 Stock Option Plans (33-54582), TJ International Inc., Key Employees' 1993 Stock Option Plan (333-04713) Associates' Stock Purchase Plan (333-18425) and Leveraged Stock Purchase Plan (333-18427), Key Employees' 1996 Stock Option Plan and Non-Employee Directors 1997 Stock Plan (333-32665). (25) Powers of Attorney. (27) Financial Data Schedule. All other Exhibits are omitted since they are not applicable or not required. ITEM 1: SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. TJ INTERNATIONAL, INC., Registrant By /s/ Thomas H. Denig -------------------------------------------------------- Thomas H. Denig--President, Chief Executive Officer, Director and Attorney-in-Fact for Directors listed below By /s/ Valerie A. Heusinkveld -------------------------------------------------------- Valerie A. Heusinkveld--Vice President, Finance and Chief Financial Officer Each of the above signatures is affixed as of March 18, 1998. Those Directors of TJ International, Inc. listed below executed powers of attorney appointing Thomas H. Denig their attorney-in-fact, empowering him to sign this report on their behalf. Robert B. Findlay J. L. Scott Jerre L. Stead Harold E. Thomas Arthur L. Troutner Joyce A. Godwin Steven C. Wheelwright William J. White SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBITS TO FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended January 3, 1998 Commission File Number 0-7469 TJ INTERNATIONAL, INC. INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT: PAGES IN THIS REPORT --------------------- (1) Financial Statements: Selected Financial Data.......................................................................27 Management's Discussion and Analysis..........................................................29 Market and Dividend Information...............................................................33 Report of Independent Public Accountants......................................................33 Quarterly Financial Data (Unaudited)..........................................................34 Consolidated Balance Sheets at January 3, 1998, December 28, 1996 and December 30, 1995.......35 Consolidated Statements of Income for the three years ended January 3, 1998...................36 Consolidated Statements of Stockholders' Equity for the three years ended January 3, 1998.....37 Consolidated Statements of Cash Flow for the three years ended January 3, 1998................38 Notes to Consolidated Financial Statements....................................................39
THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
PAGES IN THIS REPORT ------------------ (3)Exhibits (21)Subsidiaries of the Registrant............................................................ Document 2 (24)Consent of Independent Public Accountants................................................. Document 3 (25)Powers of Attorney........................................................................ Document 4 (27)Financial Data Schedules for the year ended December 30, 1995, December 28, 1996, and January 3, 1998....................................................................... Document 5
All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto. SELECTED FINANCIAL DATA AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES AND PERCENTAGES The following table summarizes selected financial data for the five fiscal years ended January 3, 1998, and should be read in conjunction with the more-detailed Consolidated Financial Statements included herein.
1997 1996 1995 1994 1993 ---------- ---------- ---------- ---------- ---------- Sales................................................ $ 706,316 $ 577,166 $ 484,845 $ 496,060 $ 436,602 Income from continuing operations.................... 27,525 16,175 9,741 16,250 20,668 Net income (loss).................................... 27,525 16,175 (29,911) 8,848 12,528 Net income from continuing operations per share Basic.............................................. 1.55 0.88 0.52 0.91 1.44 Diluted............................................ 1.44 0.82 0.48 0.83 1.29 Weighted average number of shares outstanding Basic.............................................. 17,156 17,277 17,132 16,848 13,762 Diluted............................................ 18,663 18,853 17,132 18,608 15,529 Cash dividends declared per common share............. $ 0.220 $ 0.220 $ 0.220 $ 0.220 $ 0.215 Working capital, excluding discontinued operations... 219,205 116,862 53,355 98,042 109,503 Total assets......................................... 712,104 599,815 546,310 584,909 421,150 Long-term debt, excluding current portion............ 142,390 88,140 89,440 102,280 23,709 Stockholders' equity................................. 241,412 228,070 210,144 240,558 234,741 Net book value per share............................. 14.16 13.03 12.27 14.22 14.02 Return from continuing operations on average stockholders' equity............................... 11.7% 7.4% 4.3% 3.7% 6.9%
In 1995, net income (loss) includes ($36,191) for the loss on disposal of discontinued operations. All prior periods have been restated for discontinued operations; see footnote 2 for further discussion. FINANCIAL HIGHLIGHTS AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES AND PERCENTAGES
1997 1996 % CHANGE ------------ ------------ --------------- FOR THE TWO YEARS ENDED JANUARY 3, 1998 Sales..................................................................... $ 706,316 $ 577,166 22% Income from operations.................................................... 85,456 54,449 57% Operating margin.......................................................... 12.1% 9.4% Net income................................................................ 27,525 16,175 70% Net income per share Basic................................................................... 1.55 0.88 76% Diluted................................................................. 1.44 0.82 76% Return on average stockholders' equity.................................... 11.7% 7.4% AT THE END OF THE FISCAL YEAR Total assets.............................................................. $ 712,104 $ 599,815 19% Stockholders' equity...................................................... 241,412 228,070 6% Number of shares -- Common stock outstanding.............................. 17,807,142 17,500,896 2% Associates................................................................ 3,592 3,037 18% Share price -- close...................................................... 24.38 22.00 11% Book value per share...................................................... 14.16 13.03 4% Market capitalization..................................................... $ 415,496 $ 385,020 13% FOR THE FOURTH QUARTER OF EACH FISCAL YEAR Sales..................................................................... $ 173,747 $ 131,388 32% Income from operations.................................................... 18,716 12,590 49% Net income................................................................ 6,015 4,089 47% Net income per share Basic................................................................... 0.34 0.22 55% Diluted................................................................. $ 0.31 $ 0.21 48% ------------ ------------ -- ------------ ------------ --
ANALYST REPORTS RECENTLY ISSUED A.G. Edwards & Sons, Inc., St. Louis, MO; CIBC Wood Gundy Securities Inc., Toronto, Canada; CS First Boston Corporation, New York, NY; D.A. Davidson & Co., Portland, OR; Goldman Sachs &Co., New York, NY; Piper Jaffray Inc., Seattle,WA; Ragen Mackenzie Incorporated, Seattle,WA; TD Securities, Inc., Toronto, Ontario; Value Line, Inc., New York, NY MANAGEMENT'S DISCUSSION AND ANALYSIS 1997 Compared to 1996 The Company achieved record sales levels in 1997. Sales increased by $129 million from the prior year. This increase stems primarily from greater acceptance of the Company's engineered lumber products as a substitute for commodity solid-sawn lumber in North American residential construction markets together with very strong growth in commercial construction markets and international markets. In 1997, the Company's sales of products in commercial construction markets increased 35% to $76 million. The growth was primarily a result of intensified sales efforts in established West Coast markets, increased success of marketing to national commercial accounts and the introduction of new products. Sales in international markets grew 44% to $30.4 million in 1997. The largest growth came from sales of TimberStrand-Registered Trademark- lumber products in Japan. Sales per North American housing start rose 19 percent to $344 per start from the $289 per start of 1996. This marks the 15th consecutive year the Company has achieved market penetration growth in the key residential construction market. Nearly every geographic region of the continent showed gains in sales per housing start, with exceptionally strong improvements registered in eastern Canada, the Southwest, and the southern United States. It should be noted that this strong improvement in market penetration occurred in a highly competitive North American housing environment where starts were essentially flat comparing 1997 with 1996. Prices for commodity solid-sawn lumber products, which remain the principal competition for the Company's engineered lumber products, began 1997 at near two-year high levels, but declined in the second half of the year. The declines were particularly sharp in the West Coast species such as Douglas fir. Sales growth resulted primarily from increased unit-volume sales, as prices for the Company's products were on average flat for 1997 compared to 1996. Volume gains were strongest for the Company's new-technology TimberStrand-Registered Trademark- LSL and ParallamO PSL products. Sales for the fourth quarter of 1997 were $173.7 million, compared to $131.4 million in the fourth quarter of 1996, a 32.2 percent increase. This sales growth was primarily unit-volume growth. Unit-selling prices were essentially flat for the fourth quarter 1997 compared to the fourth quarter 1996. Gross margins for the year ended January 3, 1998, were 27.4 percent compared to 24.7 percent for 1996. Margin gains resulted from lower costs for raw materials such as oriented strand board (OSB) and veneer; increased prices for TimberStrand-Registered Trademark- LSL products stemming from a product mix shift to higher value products; and increased operating efficiencies at many of the Company's manufacturing facilities. The Company's newest facility, which manufactures TimberStrand-Registered Trademark- LSL in East Kentucky, continued to improve its performance in 1997. The plant transitioned from losses in the first quarter to profitability in the third quarter of the year. Additionally, in 1997 the Company's other new plant, located in Buckhannon, West Virginia, successfully improved in 1997 to become the Company's low cost producer of Parallam-Registered Trademark- PSL and Microllam-Registered Trademark- LVL. Selling expenses for 1997 increased $9.7 million, from $61.3 million in 1996 to $71 million in 1997, however, they declined as a percentage of sales to 10 percent from 10.6 percent in 1996. Total selling expenses rose because of variable selling expenses and sales commissions resulting from sales growth. Additionally, the Company continues to invest in developing international markets, aggressively bringing innovative products to market and support efforts related to product mix optimization such as literature and training. General and administrative expenses for 1997 increased $10.3 million, from $26.6 million and 4.6 percent as a percentage of sales in 1996, to $36.9 million and 5.2 percent as a percentage of sales in 1997. The largest component of this increase is spending for business support software, which will provide infrastructure for future growth. Additionally, the Company increased research and development expenses to further improve the Company's TimberStrand LSL technology and other costs necessary to support the growth of the Company. Interest expense in 1997 was $6.9 million compared to $6.3 million in 1996. The increase in interest was due to higher debt levels offset somewhat by higher amounts of capitalized interest and lower rates on the variable interest rate debt. Minority interest increased to $39.7 million in 1997 as a result of the increased earnings at the TJM Partnership. 1996 Compared to 1995 The Company achieved record sales levels in 1996 with sales increasing $92 million from the prior year. The increase resulted primarily from growing acceptance of the Company's engineered lumber products as a substitute for commodity solid-sawn lumber. Increasing North American housing starts and rising prices for solid-sawn lumber facilitated this transition. North American housing starts increased nearly 10 percent over 1995 levels. Markets for certain solid-sawn lumber products rose an average of 7 percent over 1995 levels, hitting a two-and-a-half year high in the latter half of 1996. The Company's sales per North American housing start were $289 compared to $263 at year-end 1995, a 10 percent increase. This was the 14th consecutive year the Company achieved market penetration growth in the key residential construction market. The Company had a 21 percent increase in unit-volume sales compared to the prior year. Volume gains were strongest in the Company's new-technology TimberStrand-Registered Trademark- LSL and Parallam-Registered Trademark- PSL products. In particular, new products, such as TimberStrand-Registered Trademark- LSL Wall Framing and Light-Duty Header products and the Parallam-Registered Trademark- PSL Commercial Beam, combined with existing new-technology products, such as TimberStrand-Registered Trademark- LSL Rim Board, window and door parts, and furniture components, to achieve these significant volume increases. Additionally, exports of TimberStrand-Registered Trademark- LSL into Pacific Rim countries, such as Japan, increased 186 percent over their 1995 levels. In 1996, Pacific Rim exports represented in excess of 15 percent of total TimberStrand-Registered Trademark- LSL sales. Sales for the fourth quarter of 1996 were $131.4 million compared to $113.3 million in the fourth quarter of 1995, a 16 percent increase. This increase came from strong volume growth, particularly in the Company's TimberStrand-Registered Trademark- LSL products. Average selling prices also increased in the fourth quarter for all of the Company's product lines over the prior year's levels. Gross margins for the year ended December 28, 1996, were 24.7 percent compared with 22.4 percent in 1995. The margin gains resulted primarily from the improved operating performance at the Company's new combination Microllam-Registered Trademark- LVL and Parallam-Registered Trademark- PSL plant in Buckhannon, West Virginia, and TimberStrand-Registered Trademark- LSL plant in East Kentucky. The combination Microllam-Registered Trademark- LVL and Parallam-Registered Trademark- PSL plant was a solid contributor to Company margins during 1996. Although the Company's TimberStrand LSL plant in East Kentucky was not profitable for the year as a whole, the facility achieved a positive cash flow in the latter part of the third quarter and throughout the fourth quarter. Margins also were aided by a general decline in the cost of certain key raw materials such as OSB and veneer. Selling expenses increased $7.6 million in 1996; however, they declined slightly as a percent of sales compared to the prior year. The overall increase was due to variable selling expenses and commissions. Additionally, the Company continued to invest in developing and bringing new and innovative products to the market place. General and administrative expenses increased $1.9 million from the prior year. This increase was driven by additional research and development expenses and other costs necessary to support the growth of the business. Interest expense was recognized in 1996 due to the end of the construction phase of the two new plants in 1995. Minority interest expense increased $7.6 million from 1995 because of increased earnings at the TJM Partnership. LIQUIDITY AND CAPITAL RESOURCES Cash generated from the operations of the Company's engineered lumber partnership, as measured by net income plus non-cash charges, for depreciation, amortization, and minority interest, was $110 million during 1997, compared to $80 million in 1996. The Company invested $43 million in capital expenditures during 1997, which primarily represented its on-going program for productivity improvements in its manufacturing facilities and an investment in increased production capacity. In 1997 the Company completed construction of a TJI-Registered Trademark- joist manufacturing facility at its East Kentucky location. The new production line will allow the Company to produce TJI-Registered Trademark- joist products, using TimberStrand-Registered Trademark- LSL as the top and bottom flange. Spending in 1997 for this facility was $16.5 million. The Company also began construction of a $45 million Nicrollan-Registered Trademark- lumber and TJI-Registered Trademark- joist facility in Evergreen, Alabama. During 1997 spending for this facility was $3.0 million. The plant is expected to be completed in the fourth quarter of 1998 with production volumes available for the 1999 building season. The Company's Board of Directors authorized the purchase of up to $15 million of the Company's common stock at market prices. The Company purchased $8.3 million of stock during the first quarter and $6.7 million of stock during the second quarter of 1997 completing the stock purchase plan. In addition, the Board of Directors authorized and the Company purchased an additional $1.3 million of stock during the third quarter of 1997. In the fourth quarter of 1997, the Company issued $42.6 million of taxable notes to preserve the Company's ability in the future to issue in the future additional industrial revenue bonds to help finance the East Kentucky TimberStrand-Registered Trademark- LSL plant. The notes are due in a single maturity on November 15, 2001, subject to prepayment at the option of the Company. The notes are unsecured. In addition, during the second quarter of 1997, the Company issued $11.65 million of industrial revenue bonds associated with the construction of the East Kentucky plant. The bonds are due in a single maturity in 2027, with interest payable semi-annually at 6.55 percent. In the second quarter of 1996, the Company issued $5.7 million of industrial revenue bonds related to the construction of the East Kentucky TimberStrand-Registered Trademark- LSL plant. The bonds are due in a single maturity in 2026, with interest payable at 6.8 percent. In the third quarter of 1995, the Company issued $22.5 million of industrial revenue bonds to help finance the construction of the Buckhannon, West Virginia, combination Microllam-Registered Trademark- LVL and Parallam-Registered Trademark- PSL plant. The bonds are due in a single maturity in 2025, with interest payable semi-annually at 7 percent. The Company completed the sale of its window division during the third quarter of 1996. As part of the sale the Company retained certain liabilities regarding warranty obligations. Management believes that existing reserves are adequate to meet all subsequent liabilities that may arise related to the discontinued operations. The Company is evaluating potential sites for an additional combination Microllam-Registered Trademark- LVL and Parallam-Registered Trademark- PSL plant or a third TimberStrand-Registered Trademark- LSL plant, but has not determined when or where to proceed with construction. The Company believes that current cash balances, cash generated from operations, and borrowing under a $150 million Revolving Credit Facility will be sufficient to meet the on-going operating and capital expansion needs of the Company. The Company also believes that additional expanded lines of credit or appropriate long-term capital can be obtained to fund other major capital requirements as they arise, or to fund an acquisition. Substantially all of the Company's operating assets are held, and revenue generated, by its TJM Partnership. The partnership regularly distributes cash to the partners to fund the tax liabilities generated by the partnership at the Company level. All other distribution of cash by the partnership are dependent on the affirmative votes of the representatives of the minority partner. Accordingly, there can be no assurance that such distributions will be approved and thereby be available for the payment of dividends or to fund other operations of the Company. INDUSTRY, COMPETITION, AND CYCLICALITY The Company's engineered lumber products continue to gain acceptance as high-quality alternatives to traditional solid-sawn lumber products. Through the Company's intensive marketing efforts, builders and other wood users increasingly recognize the consistent quality, superior strength, lighter weight, and ease of installation of engineered lumber products. The Company believes this trend will continue well into the future. No other Company possesses the range of engineered lumber products, the levels of service and technical support, or the proprietary, second-generation technologies of TimberStrand-Registered Trademark- LSL or Parallam-Registered Trademark- PSL. There are, however, a number of companies, including several large forest products companies, that now produce look-alike wood I-joist and laminated veneer lumber products. These look-alike products are manufactured using a process similar to the Company's older technologies. The Company believes its network of manufacturing plants and multiple technologies positions it as the low-cost producer of engineered lumber. While competition helps expand the market for engineered wood products, including those manufactured by the Company, it may also make the existing markets more price competitive. Traditional wide-dimension lumber, however, remains the predominant structural framing material used in residential construction and is the primary competitor of the Company's products. Commodity lumber prices historically have been subject to high volatility, and during periods of significant lumber movements the Company's prices have trended in the same direction. The Company's operations are strongly influenced by the cyclicality and seasonality of residential construction. This industry experiences fluctuations resulting from a number of factors, including the state of the economy, consumer confidence, credit availability, interest rates, and weather patterns. Consistent with the seasonal pattern of the construction industry as a whole, the Company's sales have historically been lowest in the first and fourth quarters and highest in the second and third quarter of each year. FORWARD-LOOKING STATEMENTS Forward looking statements include, without limitation, statements regarding the adequacy of the Company's reserves for discontinued operations and expectations of future increases in its product acceptance. Investors are cautioned that forward looking statements are subject to an inherent risk that actual results may vary materially from those described, projected or implied herein. Factors that may result in such variance include changes in interest rates, commodity prices, and other economic conditions; actions by competitors; changing weather conditions and other natural phenomena; actions by government authorities; technological developments; future decisions by management in response to changing conditions; and misjudgments in the course of preparing forward looking statements. MARKET AND DIVIDEND INFORMATION THE COMPANY'S STOCK IS TRADED ON THE OVER-THE-COUNTER MARKET AND IS LISTED WITH THE NATIONAL ASSOCIATION OF SECURITY DEALERS AUTOMATED QUOTATIONS (NASDAQ) UNDER THE SYMBOL TJCO. The high and low quoted sales prices (closing) and dividends paid per common share for each quarterly period during 1997 and 1996 were as follows:
SALES PRICE ---------------------- DIVIDENDS 1997 HIGH LOW PAID - --------------------------------------------------------------------------------- --------- ----------- --------- First............................................................................ $ 23 1/4 $ 18 1/2 $ 0.055 Second........................................................................... 24 3/8 18 7/8 0.055 Third............................................................................ 26 3/4 22 3/8 0.055 Fourth........................................................................... 27 3/16 22 1/4 0.055
SALES PRICE ---------------------- DIVIDENDS 1996 HIGH LOW PAID - --------------------------------------------------------------------------------- --------- ----------- --------- First............................................................................ $ 18 3/4 $ 14 3/4 $ 0.055 Second........................................................................... 19 1/2 15 1/4 0.055 Third............................................................................ 18 15 5/8 0.055 Fourth........................................................................... 22 1/2 17 3/4 0.055
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders of TJ International, Inc.: We have audited the accompanying consolidated balance sheets of TJ International, Inc. (a Delaware corporation) and subsidiaries as of January 3, 1998, December 28, 1996, and December 30, 1995, and the related consolidated statements of income, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of TJ International, Inc. and subsidiaries as of January 3, 1998, December 28, 1996, and December 30, 1995, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Arthur Anderson LLP - ------------------------------ Boise, Idaho. February 2, 1998 UNAUDITED RESULTS OF QUARTERLY OPERATIONS DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES
QUARTER 1997 FIRST SECOND THIRD FOURTH - ----------------------------------------------------------------------------------------------------------------- Sales.......................................................... $ 161,263 $ 185,730 $ 185,576 $ 173,747 Gross profit................................................... 43,340 51,132 52,046 46,766 Net income..................................................... 5,477 7,491 8,542 6,015 Net income per share Basic........................................................ 0.30 0.42 0.48 0.34 Diluted...................................................... 0.28 0.39 0.45 0.31 - ----------------------------------------------------------------------------------------------------------------- 1996 Sales.......................................................... $ 111,157 $ 155,050 $ 179,571 $ 131,388 Gross profit................................................... 21,438 39,585 46,933 34,358 Net income (loss).............................................. (17) 4,468 7,635 4,089 Net income (loss) per share Basic........................................................ (0.01) 0.25 0.43 0.22 Diluted...................................................... (0.01) 0.23 0.40 0.21 - ----------------------------------------------------------------------------------------------------------------- 1995 Sales.......................................................... $ 109,941 $ 123,882 $ 137,759 $ 113,263 Gross profit................................................... 22,884 29,939 30,688 25,147 Income from continuing operations.............................. 1,815 3,047 4,113 766 Loss from discontinued operations.............................. (1,301) (461) (1,699) -- Loss on disposal of discontinued operations.................... -- -- -- (36,191) Net income (loss).............................................. 514 2,586 2,414 (35,425) Net income (loss) per share Income from continuing operations Basic...................................................... 0.09 0.17 0.23 0.03 Diluted.................................................... 0.09 0.15 0.21 0.03 Loss from discontinued operations Basic...................................................... (0.07) (0.03) (0.10) -- Diluted.................................................... (0.07) (0.02) (0.09) -- Loss on disposal of discontinued operations Basic...................................................... -- -- -- (2.11) Diluted.................................................... -- -- -- (2.11) Net income (loss) Basic...................................................... 0.02 0.14 0.13 (2.08) Diluted.................................................... 0.02 0.13 0.12 (2.08)
Per share calculations are based on the average common shares outstanding for each period presented. Accordingly, the total of the per share figures for the quarters may not equal the per share figures reported for the year. CONSOLIDATED BALANCE SHEETS DOLLAR AMOUNTS IN THOUSANDS
JANUARY 3, 1998 DECEMBER 28, 1996 DECEMBER 30, 1995 - ----------------------------------------------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents................................ $ 119,087 $ 36,801 $ 19,715 Marketable securities.................................... 40,751 -- -- Receivables, less allowances of $397, $451, and $384, respectively........................................... 55,369 73,893 28,754 Inventories.............................................. 68,954 51,549 38,560 Deferred income taxes.................................... 3,382 4,985 11,607 Other.................................................... 7,541 4,756 6,036 ---------------------------------------------------- 295,084 171,984 104,672 Property Land..................................................... 11,696 11,698 11,682 Buildings and leasehold improvements..................... 114,496 104,203 99,232 Machinery, equipment, and other.......................... 477,501 450,702 440,634 Accumulated depreciation................................. (223,207) (184,504) (149,069) ---------------------------------------------------- 380,486 382,099 402,479 Goodwill................................................... 19,500 20,540 21,580 Unexpended bond funds...................................... -- -- 117 Deferred income taxes...................................... -- 8,846 5,088 Other assets............................................... 17,034 16,346 12,374 ---------------------------------------------------- $ 712,104 $ 599,815 $ 546,310 ---------------------------------------------------- ---------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable............................................ $ -- $ -- $ 2,994 Current portion of long-term debt........................ -- -- 340 Accounts payable......................................... 25,238 23,113 23,746 Accrued liabilities...................................... 50,641 32,009 24,237 ---------------------------------------------------- 75,879 55,122 51,317 Long-term debt, excluding current portion.................. 142,390 88,140 89,440 Deferred income taxes...................................... 4,363 -- -- Other long-term liabilities................................ 13,973 11,327 8,597 Reserve for discontinued operations........................ 17,482 21,970 5,755 Minority interest in Partnership........................... 216,605 195,186 181,057 Stockholders' equity ESOP Convertible Preferred Stock, issued 1,147,219, 1,162,914, and 1,185,933 shares, respectively.......... 13,535 13,721 13,992 Guaranteed ESOP Benefit.................................. (8,188) (9,204) (10,382) Common stock, issued 17,807,142, 17,500,896,and 17,131,758 shares, respectively................................... 17,807 17,501 17,132 Paid-in capital.......................................... 153,936 145,583 140,384 Retained earnings........................................ 86,116 63,249 51,808 Cumulative translation adjustment........................ (3,805) (2,780) (2,790) Other.................................................... (1,730) -- -- Treasury stock, 761,152, shares, at cost................. (16,259) -- -- ---------------------------------------------------- 241,412 228,070 210,144 ---------------------------------------------------- $ 712,104 $ 599,815 $ 546,310 ---------------------------------------------------- ----------------------------------------------------
The accompanying notes are an integral part of these financial statements. CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE YEARS ENDED JANUARY 3, 1998 (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES)
1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------- Sales........................................................................ $ 706,316 $ 577,166 $ 484,845 ---------------------------------- Costs and expenses Cost of sales.............................................................. 513,032 434,852 376,187 Selling expenses........................................................... 70,957 61,270 53,675 Administrative expenses.................................................... 36,871 26,595 24,641 ---------------------------------- 620,860 522,717 454,503 ---------------------------------- Income from operations....................................................... 85,456 54,449 30,342 Investment income, net....................................................... 5,213 1,593 2,209 Interest expense............................................................. (6,933) (6,328) (631) Minority interest in Partnership............................................. (39,696) (23,956) (16,376) ---------------------------------- Income from continuing operations before income taxes........................ 44,040 25,758 15,544 Income taxes................................................................. 16,515 9,583 5,803 ---------------------------------- Income from continuing operations............................................ 27,525 16,175 9,741 ---------------------------------- Discontinued operations Loss from discontinued operations (net of tax benefit of $2,171)........... -- -- (3,461) Loss on disposal of discontinued operations (net of tax benefit of $23,718)................................................................. -- -- (36,191) ---------------------------------- Net income (loss)............................................................ $ 27,525 $ 16,175 $ (29,911) ---------------------------------- ---------------------------------- Net income (loss) per share Income from continuing operations Basic.................................................................... $ 1.55 $ 0.88 $ 0.52 Diluted.................................................................. $ 1.44 $ 0.82 $ 0.48 Loss from discontinued operations Basic.................................................................... -- -- (0.21) Diluted.................................................................. -- -- (0.17) Loss on disposal of discontinued operations Basic.................................................................... -- -- (2.11) Diluted.................................................................. -- -- (2.11) Net income (loss) ---------------------------------- Basic.................................................................... $ 1.55 $ 0.88 $ (1.80) ---------------------------------- Diluted.................................................................. $ 1.44 $ 0.82 $ (1.80) ---------------------------------- ---------------------------------- Weighted average number of common shares outstanding during the periods Basic...................................................................... 17,156 17,277 17,132 Diluted.................................................................... 18,663 18,853 17,132 ------------------------------ ------------------------------
The accompanying notes are an integral part of these financial statements. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THREE YEARS ENDED JANUARY 3, 1998 (AMOUNTS IN THOUSANDS)
GUARANTEED CUMULATIVE COMMON PREFERRED ESOP COMMON PAID-IN RETAINED TRANSLATION STOCK IN STOCK BENEFIT STOCK CAPITAL EARNINGS ADJUSTMENT TREASURY OTHER ----------- ----------- --------- ---------- ---------- ----------- ---------- --------- Balance, December 31, 1994..... $14,744 $(12,100) $16,916 $138,003 $ 86,355 $(3,360) -- -- Net income (loss).............. -- -- -- -- (29,911) -- -- -- Cash dividends declared: Common stock................. -- -- -- -- (3,754) -- -- -- Preferred stock, net of tax........................ -- -- -- -- (882) -- -- -- Stock options exercised, net of tax.......................... -- -- 178 1,549 -- -- -- -- Other.......................... (752) 1,718 38 832 -- 570 -- -- ----------- ----------- --------- ---------- ---------- ----------- ---------- --------- Balance, December 30, 1995..... 13,992 (10,382) 17,132 140,384 51,808 (2,790) -- -- Net income..................... -- -- -- -- 16,175 -- -- -- Cash dividends declared: Common stock................. -- -- -- -- (3,811) -- -- -- Preferred stock, net of tax........................ -- -- -- -- (923) -- -- -- Stock options exercised, net of tax.......................... -- -- 230 2,968 -- -- -- -- Stock Company Match, 401(k) Contributions................ -- -- 125 2,165 -- -- -- -- Other.......................... (271) 1,178 14 66 -- 10 -- -- ----------- ----------- --------- ---------- ---------- ----------- ---------- --------- Balance, December 28, 1996..... 13,721 (9,204) 17,501 145,583 63,249 (2,780) -- -- Net income..................... -- -- -- -- 27,525 -- -- -- Cash dividends declared: Common stock................. -- -- -- -- (3,759) -- -- -- Preferred stock, net of tax........................ -- -- -- -- (899) -- -- -- Stock options exercised, net of tax.......................... -- -- 148 2,881 -- -- -- -- Stock Company Match, 401(k) Contributions................ -- -- 160 3,460 -- -- -- -- Treasury stock purchased....... -- -- -- -- -- -- (16,259) -- Other.......................... (186) 1,016 (2) 2,012 -- (1,025) -- (1,730) ----------- ----------- --------- ---------- ---------- ----------- ---------- --------- Balance, January 3, 1998....... $13,535 $ (8,188) $17,807 $153,936 $ 86,116 $(3,805) $(16,259) $(1,730)
The accompanying notes are an integral part of these financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED JANUARY 3, 1998 (AMOUNTS IN THOUSANDS) THIS STATEMENT HAS NOT BEEN RESTATED FOR DISCONTINUED OPERATIONS.
1997 1996 1995 ---------- ---------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss).......................................................... $ 27,525 $ 16,175 $ (29,911) Adjustments to reconcile net income (loss) to net cash provided by operating activities Discontinued operations charge........................................... -- -- 36,191 Depreciation and amortization............................................ 42,945 39,591 33,236 Minority interest in Partnership......................................... 39,696 23,956 16,376 Deferred income taxes.................................................... 14,317 9,583 4,433 Other, net............................................................... 3,620 2,290 1,082 Change in working capital items: Receivables.............................................................. 18,524 (45,139) 9,039 Inventories.............................................................. (17,405) (12,989) (1,401) Other current assets..................................................... (2,785) 1,280 118 Accounts payable and accrued liabilities................................. 20,754 3,805 (766) Other, net................................................................. 185 (1,847) (4,205) ---------- ---------- ----------- Net cash provided by operating activities.................................. $ 147,379 $ 36,705 $ 64,192 ---------- ---------- ----------- ---------- ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures....................................................... $ (42,627) $ (19,056) $ (105,672) Proceeds from the sale of discontinued operations.......................... -- 24,035 -- Payments of discontinued operations liabilities............................ (2,460) (10,733) -- Decrease in unexpended bond funds.......................................... -- 117 11,433 Sales (purchases) of marketable securities................................. (40,751) -- 16,084 Other, net................................................................. 1,969 2,357 2,316 ---------- ---------- ----------- Net cash used in investing activities...................................... $ (83,869) $ (3,280) $ (75,839) ---------- ---------- ----------- ---------- ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Cash dividends paid on common stock........................................ $ (3,823) $ (3,791) $ (3,742) Cash dividends paid on preferred stock..................................... (2,473) -- (1,263) Minority partners tax distributions........................................ (13,435) (7,960) (7,522) Net borrowings (repayments) under lines-of-credit.......................... -- (2,994) (759) Proceeds from the issuance of long-term debt............................... 54,250 5,740 22,500 Principal payments of long-term debt....................................... -- (7,380) (35,650) Purchases of treasury stock................................................ (16,259) -- -- Other, net................................................................. 516 46 171 ---------- ---------- ----------- Net cash provided by (used in) financing activities........................ $ 18,776 $ (16,339) $ (26,265) ---------- ---------- ----------- ---------- ---------- ----------- NET CHANGE IN CASH AND CASH EQUIVALENTS Net increase (decrease) in cash and cash equivalents....................... $ 82,286 $ 17,086 $ (37,912) Cash and cash equivalents at beginning of year............................. 36,801 19,715 57,627 ---------- ---------- ----------- Cash and cash equivalents at end of year................................... $ 119,087 $ 36,801 $ 19,715 ---------- ---------- ----------- ---------- ---------- ----------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest, net of amounts capitalized..................................... $ 6,230 $ 6,084 $ 634 Income taxes (refunds), net.............................................. $ (2,961) $ -- $ 1,392 ---------- ---------- ----------- ---------- ---------- -----------
The accompanying notes are an integral part of these financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL The consolidated financial statements include the accounts of TJ International, Inc. (TJI or the Company) and its subsidiaries, including the Company's engineered lumber business, Trus Joist MacMillan a Limited Partnership (TJM). All significant inter-company balances and transactions have been eliminated. Certain components of the accompanying consolidated balance sheets and statements of income require estimates made by management. Actual results could differ from those estimates. PARTNERSHIP On September 29, 1991, the Company and MacMillan Bloedel of America, Inc. (MBA), a wholly owned subsidiary of MacMillan Bloedel Limited (MB), formed TJM. The Company contributed all of its North American engineered lumber technology, manufacturing facilities, and its sales and marketing organization for a 51 percent interest in TJM. MBA and MB contributed all of their North American engineered lumber technology and manufacturing facilities for a 49 percent interest in TJM. The Company, MBA, and MB also contributed all patents and trademarks relating to their respective engineered lumber businesses. Goodwill recognized in the transaction is being amortized using the straight-line method over 25 years. As of January 3, 1998, a total of $6,500,000 of this goodwill has been amortized. Goodwill expense was $1,040,000 each year in 1997, 1996, and 1995. MINORITY INTEREST IN PARTNERSHIP The Company has a 51 percent interest in TJM. Income and losses through January 3, 1998, are allocated on a formula basis as agreed to by the partners and in accordance with the partnership agreement. As a result, the minority owners of the Partnership were allocated $39,696,000 of income in 1997, $23,956,000 of income in 1996, and $16,376,000 of income in 1995. These allocations are reflected as Minority interest in Partnership in the Consolidated Statements of Income. The minority partner's interest in the Partnership-accumulated equity is included in the Consolidated Balance Sheets as Minority interest in Partnership. FISCAL YEAR The Company's 52/53-week fiscal year ends on the Saturday closest to December 31 of each year. The additional week, which occurs approximately every fifth year, does not materially affect the comparability of operations between years. FOREIGN TRANSLATION The accounts of the Company's Canadian subsidiaries are measured using the Canadian dollar as functional currency. These financial statements are translated into U.S. dollars using exchange rates in effect at year-end for assets and liabilities and the average exchange rate during the period for results of operations. The resulting translation adjustment is made directly to the cumulative translation adjustment component of Stockholders' Equity. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES The Company considers cash on hand, cash in banks, and all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. These assets are recorded at cost, which approximates fair value, and totaled $119,087,000 at January 3, 1998, $36,801,000 at December 28, 1996, and $19,715,000 at December 30, 1995. Marketable securities include commercial paper. These securities are recorded at cost, which approximates fair value based on quoted market prices. Substantially all of the Company's operating assets are held by and cash generated through its TJM partnership. At year end 1997, $29,276,000 of the cash and marketable securities was held by TJI and the remaining $130,562,000 was held by TJM. The partnership regularly distributes cash to the partners to fund the tax liabilities generated by the partnership at the Company level. All other distributions of cash by the partnership to its partners are dependent on the affirmative votes of the representatives of the minority partner. Accordingly, there can be no assurance that such distributions will be approved and thereby be available for the payment of dividends or to fund other requirements of TJI including expenses associated with public company costs and payments on liabilities retained after its divestiture of its window segments. INVENTORIES Inventories are valued at the lower of cost or market and include material, labor, and production overhead costs. EXPRESSED IN THOUSANDS
JANUARY 3, 1998 DECEMBER 28, 1996 DECEMBER 30, 1995 -------------- ----------------- ----------------- Finished goods............................................. $ 51,737 $ 38,278 $ 25,882 Raw materials.............................................. 17,217 13,271 14,657 ---------- --------- ----------------- 68,954 51,549 40,539 Reduction to LIFO cost..................................... -- -- (1,979) ---------- --------- ----------------- $ 68,954 $ 51,549 $ 38,560 ---------- --------- ----------------- ---------- --------- -----------------
The Last-In, First-Out (LIFO)method is used in determining the cost of lumber, veneer, Microllam-Registered Trademark- LVL, TJI-Registered Trademark- joists, and open-web trusses. Approximately 39 percent of total inventories at the end of 1997, 49 percent of total inventories at the endof 1996, and 49 percent of total inventories at the end of 1995 were valued using the LIFO method of inventory valuation. The First-In, First-Out (FIFO) method of inventory valuation was used to value all remaining inventory. At January 3, 1998, and December 28, 1996, the LIFO valuation approximated FIFO valuation. PROPERTY Property and equipment are recorded at cost. Additions, betterments, and replacements of major units of property are capitalized. Maintenance, repairs, and minor replacements are expensed as incurred and approximated $29,978,000 in 1997, $26,607,000 in 1996, and $20,377,000 in 1995. The net book value of property sold or retired is removed from the asset and related depreciation accounts, and any resulting gain or loss is included in income. The provision for depreciation on certain Microllam-Registered Trademark- LVL, Parallam-Registered Trademark- PSL, and TimberStrand-Registered Trademark- LSL manufacturing equipment is computed on the units-of-production method. Virtually all other property and equipment is depreciated on the straight-line method. Estimated useful lives of the principal items of property and equipment range from three to 30 years. CAPITALIZED INTEREST The Company capitalizes interest on qualifying assets. Interest expense and income capitalized into property and equipment were as follows: EXPRESSED IN THOUSANDS
1997 1996 1995 --------- ----- --------- Interest expense.......................................................................... $ 487 -- $ 6,838 Interest income........................................................................... -- -- 336
RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred. Research and development costs charged to expense were approximately $3,940,000 in 1997, $3,221,000 in 1996, and $2,262,000 in 1995. DERIVATIVE FINANCIAL INSTRUMENTS TJ International has only limited involvement with derivative financial instruments in the form of infrequent foreign currency forward exchange contracts for the purchase of machinery and equipment, and at January 3, 1998, had no material derivative financial instruments outstanding. RECLASSIFICATIONS Certain reclassifications have been made, none of which affected net income, to conform prior years' information to the current year's presentation. NET INCOME PER SHARE Basic net income (loss) per common share is based on net income (loss) adjusted for preferred stock dividends and related tax benefits divided by the weighted average number of common shares outstanding and weighted average number of common shares outstanding after giving effect to stock options as common stock equivalents. Diluted net income per common share assumes conversion of the Employee Stock Ownership Plan (ESOP) convertible preferred stock (ESOP preferred stock) into common stock at the beginning of the year. Diluted net loss per share for 1995 is the same as basic net loss per share since the effect of the assumed conversion of the ESOP preferred stock is anti-dilutive. Basic and diluted net income were calculated as follows: BASIC AND DILUTED NET INCOME EXPRESSED IN THOUSANDS
1997 1996 1995 --------- --------- ---------- Net income from continuing operations........................................... $ 27,525 $ 16,175 $ 9,741 Preferred stock dividends, net of related tax benefits.......................... (985) (949) (899) --------- --------- --------- Basic net income from continuing operations..................................... 26,540 15,226 8,842 --------- --------- --------- Loss from discontinued operations............................................... -- -- (3,461) Loss from disposal of discontinued operations................................... -- -- (36,191) --------- --------- --------- Basic net income (loss)......................................................... $ 26,540 $ 15,226 $ (30,810) --------- --------- --------- Net income from continuing operations........................................... $ 27,525 $ 16,175 $ 9,741 Additional ESOP contribution payable upon assumed conversion of ESOP preferred stock, net of related tax benefits............................................ (696) (711) (677) --------- --------- --------- Diluted net income (from continuing operations)................................. 26,829 15,464 9,064 --------- --------- --------- Loss from discontinued operations............................................... -- -- (3,461) Loss from disposal of discontinued operations................................... -- -- (36,191) --------- --------- --------- Diluted net income (loss)....................................................... $ 26,829 $ 15,464 $ (30,588) --------- --------- --------- Weighted average shares outstanding Basic shares outstanding........................................................ 17,156 17,277 17,132 Diluted shares outstanding...................................................... 18,663 18,853 18,689 --------- --------- --------- --------- --------- ---------
2. DISCONTINUED OPERATIONS The Company completed its plan to divest of its window segment in 1996. Effective, July 1, 1996, all of the remaining window operation assets owned by the Company's Norco Windows subsidiary were sold to JELD-WEN, Inc. Proceeds from the sale were approximately $24 million. The Company retained all of the operating and contingent liabilities of the window segment, and management believes that existing reserves are adequate to satisfy all of the remaining liabilities. This divestiture allows the Company to devote all of its resources toward its Engineered Lumber segment. All of the Company's window operations have been reflected in the accompanying financial statements as Discontinued Operations for all periods presented. Sales from these discontinued operations were $32,212,000 in 1996 and $95,569,000 in 1995. There have been no allocations of corporate overhead or holding company interest expense to discontinued operations in the accompanying financial statements. The components of net liabilities from discontinued operations included in the Consolidated Balance Sheets are as follows: END OF YEAR:
1997 1996 1995 ---------- ---------- --------- Accounts receivable............................................................. $ -- $ -- $ 6,921 Inventories..................................................................... -- -- 11,488 Property, plant, and equipment.................................................. -- -- 14,108 Accounts payable and accrued liabilities........................................ -- (4,438) (17,981) Other liabilities............................................................... (17,482) (17,532) (20,291) ---------- --------- --------- Net liabilities................................................................. $ (17,482) $ (21,970) $ (5,755) ---------- --------- --------- ---------- --------- ---------
3. DEBT At year-end, the Company has available unsecured, committed lines of credit totaling $13,498,000 with foreign and domestic banks. The interest rate on any loan, determined at the time of the borrowing, would not exceed the lending bank's prevailing prime rate. Arrangements with the domestic banks provide for a commitment fee of .25 percent. At January 3, 1998, and December 28, 1996, there were no borrowings under these agreements. At December 30, 1995, there was $2,994,000 at 6.3 percent borrowed under similar arrangements. The Company has a $150 million Revolving Credit Facility (the "Credit Facility") provided by a syndicate of banks. The Credit Facility provides several interest rate options, none of which exceed prime, and matures on November 15, 2001. At January 3, 1998, there were no borrowings under this facility. In the second quarter of 1997, the Company issued $11,650,000 of industrial revenue bonds associated with the construction of the East Kentucky TimberStrand-Registered Trademark- LSL plant. The bonds are due in a single maturity in 2027, with interest payable semi-annually at a fixed rate of 6.55 percent and are unsecured. In the fourth quarter of 1997, the Company issued $42,600,000 of taxable industrial revenue variable rate bonds to preserve the Company's ability in the future to issue additional industrial revenue bonds to help finance the East Kentucky TimberStrand-Registered Trademark- LSL plant. The notes are due in a single maturity in 2001 subject to prepayment at the option of the Company, and are unsecured. The interest rate at the beginning of each interest period as selected by the Company, is either LIBOR based or prime. During 1996, $5,740,000 of industrial revenue bonds were issued to finance portions of the construction of the TimberStrand-Registered Trademark- LSL plant in East Kentucky. These bonds have a fixed interest rate of 6.8 percent, provide for semi-annual interest payments, with the principal due 2026, and are unsecured. During 1995, $22,500,000 of industrial revenue bonds were issued to finance the construction of a combination Microllam-Registered Trademark- LVL/Parallam-Registered Trademark- PSL manufacturing plant near Buckhannon, West Virginia. These bonds have a fixed interest rate of 7.0 percent, provide for semi-annual interest payments, with the principal due in 2025, and are unsecured. The Company's industrial revenue variable rate demand bonds are secured by the property and equipment acquired with the bond proceeds. At January 3, 1998, the cost of such property and equipment was approximately $16,400,000. These bonds are supported by irrevocable letters of credit. These letters of credit, together with the Company's revolving line of credit, allow the Company to borrow for periods in excess of one year, if drawn upon to repay bondholders. The debt agreements contain various customary financial covenants, all of which the Company is in compliance with at January 3, 1998. Under the most restrictive of these agreements, retained earnings available for cash dividends at January 3, 1998, was $93,171,000. Debt is recorded at cost, net of any discount or premium, which approximates fair market value based on borrowing rates currently available to the Company for debt with similar terms and maturities. Long-term debt consisted of the following: EXPRESSED IN THOUSANDS
JANUARY 3, 1998 DECEMBER 28, 1996 DECEMBER 30, 1995 --------------------- -------------------- --------------------- LONG-TERM DEBT Borrowings under the Credit Facility.................. $ -- $ -- $ -- Industrial revenue bonds, 6.92% weighted average interest rate during 1997, payable in varying amounts from 2024 through 2027...................... 83,390 71,740 73,380 Taxable industrial revenue variable rate bonds, interest rates established at the beginning of each interest period, 6.29% weighted average during 1997, payable in 2001............................... 42,600 -- -- Industrial revenue variable rate demand bonds, interest rates established weekly, 3.96% weighted average during 1997, $10,000,000 payable in 2000, and $6,400,000 payable in 2009..................................... 16,400 16,400 16,400 --------------- ---------------- ---------------- 142,390 88,140 89,780 Less current portion.................................. -- -- (340) --------------- ---------------- ---------------- $142,390 $ 88,140 $ 89,440 --------------- ---------------- ---------------- --------------- ---------------- ----------------
4. ACCRUED LIABILITIES Accrued liabilities consisted of the following:
EXPRESSED IN THOUSANDS JANUARY 3, 1998 DECEMBER 28, 1996 DECEMBER 30, 1995 - ------------------------------------------------------------------------------------------------------------- Salaries, wages, and commissions $ 6,353 $ 4,328 $ 3,092 Retirement plans and other associate benefits 17,854 13,750 10,525 Marketing incentives 17,346 8,216 4,439 Other 9,088 5,715 6,181 - ------------------------------------------------------------------------------------------------------------- $ 50,641 $ 32,009 $ 24,237
5. INCOME TAXES Income tax information has not been restated to exclude discontinued operations in prior years. Income (loss) before income taxes and income taxes (benefits) include the following: EXPRESSED IN THOUSANDS
1997 1996 1995 --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES U.S............................................................................ $ 36,420 $ 23,194 $ 20,947 Canada......................................................................... 7,620 2,564 (5,403) --------- --------- --------- $ 44,040 $ 25,758 $ 15,544 --------- --------- --------- --------- --------- --------- INCOME TAXES (BENEFITS) Current income taxes U.S. federal................................................................... $ 2,027 -- $ 1,370 U.S. state..................................................................... 171 -- -- Canada......................................................................... -- -- -- --------- --------- --------- $ 2,198 -- $ 1,370 --------- --------- --------- --------- --------- --------- Deferred income taxes U.S. federal................................................................... $ 10,156 $ 7,073 $ 5,452 U.S. state..................................................................... 1,113 1,484 993 Canada......................................................................... 3,048 1,026 (2,012) --------- --------- --------- $ 14,317 $ 9,583 $ 4,433 $ 16,515 $ 9,583 $ 5,803 --------- --------- --------- --------- --------- ---------
The Company's effective income tax rate varied from the U.S. federal statutory income tax rate for the following reasons: EXPRESSED IN THOUSANDS
1997 1996 1995 --------- --------- --------- U.S. federal statutory income tax rate........................................... $ 15,414 35.0% 35.0% 35.0% Reversal of excess tax reserves provided in prior years.......................... -- -- (1.8) Foreign income (losses) at different rates....................................... 381 0.9 1.2 (4.5) State income taxes, net of federal effect........................................ 1,598 3.6 4.2 6.6 Other items...................................................................... (878) (2.0) (3.2) 2.0 Effective income tax rate........................................................ $ 16,515 37.5% 37.2% 37.3% --------- --------- --------- --------- --------- --------- --------- ---------
The deferred tax liabilities and assets included in the Consolidated Balance Sheets, computed under Statement No. 109, are comprised of the following: EXPRESSED IN THOUSANDS
JANUARY 3, 1998 DECEMBER 28, 1996 DECEMBER 30, 1995 -------------- ----------------- ----------------- Tax in excess of book depreciation......................... $ (28,555) $ (27,101) $ (18,090) Other...................................................... (5,972) (7,330) (7,851) -------------- ----------------- ----------------- Total deferred tax liabilities............................. (34,527) (34,431) (25,941) Reserves not yet deductible for tax purposes............... 3,360 2,370 1,352 Net operating loss carryforwards........................... 7,252 13,062 5,652 Alternative minimum tax credit carryforward................ 9,126 4,279 5,436 Reserves and operating losses related to discontinued operations............................................... 9,777 19,740 25,889 Other...................................................... 4,031 8,811 4,307 Total deferred tax assets.................................. 33,546 48,262 42,636 $ (981) $ 13,831 $ 16,695 Classified as Deferred income taxes -- current assets.................. $ 3,382 $ 4,985 $ 11,607 Deferred income taxes -- long-term assets (liabilities).. (4,363) 8,846 5,088 $ (981) $ 13,831 $ 16,695 -------------- ----------------- ----------------- -------------- ----------------- -----------------
The Company's alternative minimum tax credits of $9,126,000 at January 3, 1998, are available indefinitely. Net operating loss carryforwards are expected to be fully utilized based on forecasted conditions and various tax planning strategies. 6. RETIREMENT PLANS AND INCENTIVE BONUS PROGRAMS Most of the Company's associates are covered under defined contribution retirement plans and are also participants in the Company's ESOP. Benefits under these plans are limited to each individual's fund balances. In September 1990, the ESOP borrowed $15 million at a 9 percent interest rate from the Company. This term loan matures on March 31, 2011, and has no prepayment penalties. Proceeds from the loan were used by the ESOP to purchase 1,269,842 shares of newly issued ESOP preferred stock from the Company. The ESOP preferred stock is described in Note 7. In connection with the above transactions, the Company has guaranteed that over the term of the loan, it will make sufficient contributions to the ESOP to allow the ESOP to repay the loan to the Company. This guarantee has been recorded as Guaranteed ESOP benefit in Stockholders' Equity. The Company's annual contributions to the ESOP are based on a formula. The contributions, together with all dividends on the ESOP preferred shares, will be used by the ESOP to make the necessary interest payments and any principal prepayments. With each loan payment, a portion of the ESOP preferred stock is released and allocated to the employees' accounts in the ESOP. The Guaranteed ESOP benefit is amortized based on the shares allocated method of calculating expense. The annual expense associated with the ESOP was approximately $783,000 in 1997, $1,022,000 in 1996, and $1,153,000 in 1995. The Company matches certain contributions of participating associates to its retirement plans. Contributions to these plans were approximately $16,902,000 in 1997, $13,445,000 in 1996, and $11,130,000 in 1995, of which approximately 46 percent, 49 percent, and 57 percent, respectively, resulted from contributions made under the compensation reduction agreement provision of the plans. Substantially all of the Company's officers and key employees participate in incentive bonus programs, which are based on formulas aimed at improving returns, sales growth, and profitability. Amounts charged to income under the programs were approximately $3,050,000 in 1997, $2,361,000 in 1996, and $1,259,000 in 1995. 7. STOCKHOLDERS' EQUITY At January 3, 1998, there were 200,000,000 shares of common stock ($1.00 par value) and 10,000,000 shares of preferred stock ($1.00 par value) authorized. In September 1990, the Company issued 1,269,842 shares of $1.00 par value ESOP preferred stock at $11.8125 per share (liquidation preference) to the ESOP. Each share of the ESOP preferred stock is convertible into the Company's common stock at the higher of the liquidation preference or the fair market value of the underlying common stock. The Company has the option to satisfy any conversion in cash, common stock, or any combination thereof. The ESOP preferred stock has voting rights equal to one vote per share and is entitled to preferential dividends of $1.065 per share each year. The ESOP preferred stock is redeemable at the Company's option under certain circumstances. In 1989, the Company issued common stock purchase rights (rights) to each stockholder. The rights are not currently exercisable, but would become exercisable if certain events occurred relating to a person or group acquiring or attempting to acquire 20 percent or more of the outstanding shares of common stock. With certain exceptions, if the Company is thereafter involved in a merger or other business combination, the rights permit each holder, other than the person or group that triggered the rights, to purchase common stock of the surviving company at 50 percent of its market value. The rights expire in September 1999, are non-voting, and may be redeemed by the Company at $0.005 per right. In connection with these rights, the Board has reserved for issuance the same number of shares as are outstanding at any one point in time. Effective April 1996, the Company's Board of Directors (the Board) approved the funding of the Company's 401(k) matching contributions by issuance of authorized but previously unissued common stock. Prior to that date, such matching contributions were made in cash. In 1997, the Company's stockholders approved a new stock-option plan for officers and key employees. Under the terms of this plan, incentive stock options (ISOs) and nonstatutory options (NSOs) may be issued at an exercisable price of not less than the fair market value of the stock on the date of grant. The ISOs become exercisable three years after date of grant and the NSOs in 33.3 percent annual installments commencing one year after date of grant. In order to partially mitigate the potential dilutive effect of this new stock option plan, the Board also authorized a program to repurchase shares of the Company's common stock at market price. During 1997, a total of 761,152 shares were repurchased at $16,259,000. The Company also has four other stock-option plans in effect for officers and key associates. Under the terms of these plans, which have been approved by the Company's stockholders, ISOs may be issued at an exercise price of not less than the fair market value of the stock on the date of grant and NSOs may be issued at a $1.00 exercise price. The ISOs become exercisable three years after date of grant, and, depending upon board determination at the time of grant, the NSO's either become exercisable three years after date of grant or in 20 percent annual installments commencing five years after date of grant. At January 3, 1998, a total of 40,800 ISOs and 1,253,499 NSOs were outstanding and 2,338,000 shares were reserved for issuance under all the stock-option plans. Outstanding options and exercise prices are adjusted to reflect any stock splits and stock dividends. All unexercised options expire 10 years after date of grant. For NSOs, the excess of the fair market value over the exercise price on date of grant is accrued ratably as compensation expense from the date of grant to the exercisable date. No accounting entries are made for ISOs until they are exercised. Total compensation expenses recognized from the Company's various stock option plans were $1,682,000, $1,535,000, and $987,000 in 1997, 1996, and 1995, respectively. Stock-option transactions are summarized as follows:
1997 1996 1995 WTD. AVG. WTD. AVG. SHARES OPTION PRICE SHARES OPTION PRICE SHARES ---------- ------------- ---------- ------------- ---------- STOCK OPTION TRANSACTIONS Number of Option Shares Granted....................................... 49,500 $ 21.13 867,700 $ 16.85 98,400 Exercised..................................... (75,758) 1.63 (230,470) 1.45 (178,418) Cancelled..................................... (14,288) 6.15 (57,947) 0.83 (21,025) ---------- ------------- ---------- ------------- ---------- Outstanding at end of year.................... 1,294,299 12.49 1,334,845 11.49 755,562 Exercisable at end of year.................... 351,237 14.77 132,778 3.62 195,130 Weighted average fair value of options granted (Black-Scholes)............................... $ 8.96 $ 10.31 N/A ---------- ------------- ---------- ------------- ----------
The following table summarizes certain information about stock options outstanding at January 3, 1998:
OUTSTANDING AT WTD. AVG. EXERCISABLE AT JANUARY 3, REMAINING WTD. AVG. JANUARY 3, WTD. AVG. 1998 CONTRACTURAL LIFE OPTION PRICE 1998 OPTION PRICE -------------- ----------------- ------------- -------------- ------------- RANGE OF OPTION PRICES $0.50-- $1.00...................... 539,332 6.3 0.80 88,134 0.59 9.38.............................. 40,800 3.0 9.38 40,800 9.38 $19.00--$24.125.................... 714,167 8.9 21.50 222,303 21.38 -------------- ----------------- ------------- -------------- ------------- 1,294,299 7.7 12.49 351,237 14.77 -------------- ----------------- ------------- -------------- ------------- -------------- ----------------- ------------- -------------- -------------
Effective at the beginning of 1996, the Company adopted SFAS No. 123, which prescribes the accounting for stock-based compensation. Under an election available in the adoption of this statement, the Company continues to account for stock options in accordance with APB No. 25. However, SFAS No. 123 requires the Company to provide certain additional disclosures. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, with the following weighted average assumptions used for grants in 1997 and 1996; risk-free interest rate of 6.5% for both years; vesting discounts of 94% and 93%; and annual stock price volatility of .26 and .27. Had compensation expenses for 1997 and 1996 been determined using the Black-Scholes model, the Company's net income and net income per diluted share would have been reduced by $1,182,000, or $0.063 per share, and $49,000, or $0.002 per share, respectively. 8. LEASES Basic or minimum rental expenses for operating and month-to-month leases amounted to $5,002,000 in 1997, $3,985,000 in 1996, and $2,990,000 in 1995. The Company has various operating leases with initial or remaining terms of more than one year. These leases have minimum lease payment requirements of $2,632,000 in 1998, $1,563,000 in 1999, $1,283,000 in 2000, $858,000 in 2001, and $627,000 in 2002. In addition to minimum rentals, certain lease agreements provide for usage charges and cost-of-living increases. Lease agreements related to real property have fixed-payment terms based upon the lapse of time. Certain lease agreements provide the Company with the option to purchase the leased property at the end of the lease term at approximately fair market value. Additionally, certain lease agreements contain renewal options of up to three years with substantially the same terms. 9. RELATED PARTY TRANSACTIONS TJM sells to MacMillan Bloedel Building Materials (MBBM), a division of MB, on terms comparable to other distributors. Sales to MBBM were $205,500,000, $168,500,000, and $116,900,000, in 1997, 1996, and 1995, respectively. Accounts receivable from MBBM were $17,357,000 at January 3, 1998, $16,658,000 at December 28, 1996, and $7,163,000 at December 30, 1995. Amounts due from MBBM are included in receivables in the accompanying Consolidated Balance Sheets. MB provides certain technological and research assistance and computer services support to TJM. Amounts incurred under this arrangement with MB were $1,922,000, $1,741,000, and $1,658,000 for 1997, 1996, and 1995, respectively. Quarterly, the partnerships make cash distributions to the Partners in lieu of state and federal income taxes. Payments of $13,435,000, $7,960,000, and $7,522,000 were made to MBA in 1997, 1996, and 1995, respectively. Certain employees who perform services for TJM at the former MB facilities remain on the payroll of MB. The Partnership Agreement provides that MB will be reimbursed for its actual payroll and related benefit costs relating to these employees. Payroll reimbursements to MB for 1997, 1996, and 1995 were $5,890,000, $5,756,000, and $4,925,000, respectively. Total payables to MB and MBA for such services and tax distributions at January 3, 1998, December 28, 1996, and December 30, 1995, were $4,590,000, $2,745,000, $844,000, respectively, and are included in accounts payable in the accompanying Consolidated Balance Sheets. 10. SIGNIFICANT CUSTOMERS TJM has a strategic alliance with Weyerhaeuser's Building Materials Distribution Division. The arrangement allows the Partnership to expand its distribution network through the Weyerhaeuser customer service centers. Additionally, there are certain supply agreements, whereby the Partnership procures raw materials such as veneer and oriented strand board (OSB) from Weyerhaeuser. Total sales to Weyerhaeuser for the years ended January 3, 1998, December 28, 1996, and December 30, 1995, were $218,400,000, $188,000,000, and $146,200,000, respectively. EX-21 2 EXHIBIT 21 TJ INTERNATIONAL, INC. SUBSIDIARIES OF THE REGISTRANT The significant subsidiaries of the Company are as follows:
State or Other Percentage Jurisdiction of voting of Incorporation Securities or Organization Owned --------------- ----- Trus Joist MacMillan, A Limited Partnership Delaware 51% Norco, Inc. Wisconsin 100%
(1) The Company has a combined 51% interest in this Partnership. Norco, Inc., a wholly owned subsidiary of TJ International, Inc., owns 49.5% of the Partnership and TJ International owns 1.5% of the Partnership directly. EX-24 3 EXHIBIT 24 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated February 2, 1998, included in this Form 10-K for the year ended January 3, 1998, into TJ International, Inc.'s previously filed Form S-8 registration statement (File No. 2-96065); the registration statement on Form S-8 (File No. 2-96821); the registration statement on form S-8 (File No. 2-96964); the registration statement on Form S-8 (File No. 33-4704); the registration statement on Form S-8 (File No. 33-21870); the registration statement on Form S-8 (File No. 33-22186)); the registration statement on Form S-8 (File No. 33-54582); the registration statement on Form S-8 (File No. 333-04713); the registration statement on Form S-8 (File No. 333-18425); the registration statement on Form S-8 (File No. 333-18427); the registration statement on Form S-8 (File No. 333-32659); and the registration statement on Form S-8 (File No. 333-32665). /s/ ARTHUR ANDERSEN LLP ----------------------- EX-25 4 EXHIBIT 25 SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, Thomas H. Denig, have made, constituted and appointed, and by these presents do make, constitute and appoint either the Chairman of the Board or the President of TJ International, Inc., a Delaware corporation, my true and lawful attorney in my name, place and stead, and for my use and benefit as follows: - For the special purpose of signing the Company's Form 10-K for the fiscal year ended January 3, 1998 to be filed with the Securities and Exchange Commission on or before April 3, 1998, and - For the special purpose of signing all such Forms S-8 as the Company may be required to file pursuant to SEC regulations. and to sign, seal, execute, deliver and acknowledge such instruments in writing of whatever kind and nature as may be necessary or proper in the premises. I HEREBY give and grant unto said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done, as fully to all intents and purposes as I might or could do if personally present, and hereby ratify and confirm all that said attorney shall lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of February, 1998. /s/ Thomas H. Denig ------------------------------------ STATE OF Idaho County of Ada On this 13th day of February, 1998, before me, the undersigned, a Notary Public in and for said State, personally appeared Thomas H. Denig, known to me to be the person whose name is subscribed to the foregoing and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Patricia K. Stiburek ------------------------------------ Notary Public for the State of Idaho Residing at Boise, Idaho SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, Robert B. Findlay, have made, constituted and appointed, and by these presents do make, constitute and appoint either the Chairman of the Board or the President of TJ International, Inc., a Delaware corporation, my true and lawful attorney in my name, place and stead, and for my use and benefit as follows: - For the special purpose of signing the Company's Form 10-K for the fiscal year ended January 3, 1998 to be filed with the Securities and Exchange Commission on or before April 3, 1998, and - For the special purpose of signing all such Forms S-8 as the Company may be required to file pursuant to SEC regulations. and to sign, seal, execute, deliver and acknowledge such instruments in writing of whatever kind and nature as may be necessary or proper in the premises. I HEREBY give and grant unto said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done, as fully to all intents and purposes as I might or could do if personally present, and hereby ratify and confirm all that said attorney shall lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of February, 1998. /s/ Robert B. Findlay ------------------------------------ STATE OF Idaho County of Ada On this 13th day of February, 1998, before me, the undersigned, a Notary Public in and for said State, personally appeared Robert B. Findlay, known to me to be the person whose name is subscribed to the foregoing and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Patricia K. Stiburek ------------------------------------ Notary Public for the State of Idaho Residing at Boise, Idaho SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, Joyce A. Godwin, have made, constituted and appointed, and by these presents do make, constitute and appoint either the Chairman of the Board or the President of TJ International, Inc., a Delaware corporation, my true and lawful attorney in my name, place and stead, and for my use and benefit as follows: - For the special purpose of signing the Company's Form 10-K for the fiscal year ended January 3, 1998 to be filed with the Securities and Exchange Commission on or before April 3, 1998, and - For the special purpose of signing all such Forms S-8 as the Company may be required to file pursuant to SEC regulations. and to sign, seal, execute, deliver and acknowledge such instruments in writing of whatever kind and nature as may be necessary or proper in the premises. I HEREBY give and grant unto said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done, as fully to all intents and purposes as I might or could do if personally present, and hereby ratify and confirm all that said attorney shall lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of February, 1998. /s/ Joyce A. Godwin ------------------------------------ STATE OF Idaho County of Ada On this 13th day of February, 1998, before me, the undersigned, a Notary Public in and for said State, personally appeared Joyce A. Godwin, known to me to be the person whose name is subscribed to the foregoing and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Patricia K. Stiburek ------------------------------------ Notary Public for the State of Idaho Residing at Boise, Idaho SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, J. L. Scott, have made, constituted and appointed, and by these presents do make, constitute and appoint either the Chairman of the Board or the President of TJ International, Inc., a Delaware corporation, my true and lawful attorney in my name, place and stead, and for my use and benefit as follows: - For the special purpose of signing the Company's Form 10-K for the fiscal year ended January 3, 1998 to be filed with the Securities and Exchange Commission on or before April 3, 1998, and - For the special purpose of signing all such Forms S-8 as the Company may be required to file pursuant to SEC regulations. and to sign, seal, execute, deliver and acknowledge such instruments in writing of whatever kind and nature as may be necessary or proper in the premises. I HEREBY give and grant unto said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done, as fully to all intents and purposes as I might or could do if personally present, and hereby ratify and confirm all that said attorney shall lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of February, 1998. /s/ J. L. Scott ------------------------------------ STATE OF Idaho County of Ada On this 13th day of February, 1998, before me, the undersigned, a Notary Public in and for said State, personally appeared J. L. Scott, known to me to be the person whose name is subscribed to the foregoing and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Patricia K. Stiburek ------------------------------------ Notary Public for the State of Idaho Residing at Boise, Idaho SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, Jerre L. Stead, have made, constituted and appointed, and by these presents do make, constitute and appoint either the Chairman of the Board or the President of TJ International, Inc., a Delaware corporation, my true and lawful attorney in my name, place and stead, and for my use and benefit as follows: - For the special purpose of signing the Company's Form 10-K for the fiscal year ended January 3, 1998 to be filed with the Securities and Exchange Commission on or before April 3, 1998, and - For the special purpose of signing all such Forms S-8 as the Company may be required to file pursuant to SEC regulations. and to sign, seal, execute, deliver and acknowledge such instruments in writing of whatever kind and nature as may be necessary or proper in the premises. I HEREBY give and grant unto said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done, as fully to all intents and purposes as I might or could do if personally present, and hereby ratify and confirm all that said attorney shall lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of February, 1998. /s/ Jerre L. Stead ------------------------------------ STATE OF Idaho County of Ada On this 13th day of February, 1998, before me, the undersigned, a Notary Public in and for said State, personally appeared Jerre L. Stead, known to me to be the person whose name is subscribed to the foregoing and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Patricia K. Stiburek ------------------------------------ Notary Public for the State of Idaho Residing at Boise, Idaho SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, Harold E. Thomas, have made, constituted and appointed, and by these presents do make, constitute and appoint either the Chairman of the Board or the President of TJ International, Inc., a Delaware corporation, my true and lawful attorney in my name, place and stead, and for my use and benefit as follows: - For the special purpose of signing the Company's Form 10-K for the fiscal year ended January 3, 1998 to be filed with the Securities and Exchange Commission on or before April 3, 1998, and - For the special purpose of signing all such Forms S-8 as the Company may be required to file pursuant to SEC regulations. and to sign, seal, execute, deliver and acknowledge such instruments in writing of whatever kind and nature as may be necessary or proper in the premises. I HEREBY give and grant unto said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done, as fully to all intents and purposes as I might or could do if personally present, and hereby ratify and confirm all that said attorney shall lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of February, 1998. /s/ Harold E. Thomas ------------------------------------ STATE OF Idaho County of Ada On this 13th day of February, 1998, before me, the undersigned, a Notary Public in and for said State, personally appeared Harold E. Thomas, known to me to be the person whose name is subscribed to the foregoing and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Patricia K. Stiburek ------------------------------------ Notary Public for the State of Idaho Residing at Boise, Idaho SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, Steven C. Wheelwright, have made, constituted and appointed, and by these presents do make, constitute and appoint either the Chairman of the Board or the President of TJ International, Inc., a Delaware corporation, my true and lawful attorney in my name, place and stead, and for my use and benefit as follows: - For the special purpose of signing the Company's Form 10-K for the fiscal year ended January 3, 1998 to be filed with the Securities and Exchange Commission on or before April 3, 1998, and - For the special purpose of signing all such Forms S-8 as the Company may be required to file pursuant to SEC regulations. and to sign, seal, execute, deliver and acknowledge such instruments in writing of whatever kind and nature as may be necessary or proper in the premises. I HEREBY give and grant unto said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done, as fully to all intents and purposes as I might or could do if personally present, and hereby ratify and confirm all that said attorney shall lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of February, 1998. /s/ Steven C. Wheelwright ------------------------------------ STATE OF Idaho County of Ada On this 13th day of February, 1998, before me, the undersigned, a Notary Public in and for said State, personally appeared Steven C. Wheelwright, known to me to be the person whose name is subscribed to the foregoing and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Patricia K. Stiburek ------------------------------------ Notary Public for the State of Idaho Residing at Boise, Idaho SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, William J. White, have made, constituted and appointed, and by these presents do make, constitute and appoint either the Chairman of the Board or the President of TJ International, Inc., a Delaware corporation, my true and lawful attorney in my name, place and stead, and for my use and benefit as follows: - For the special purpose of signing the Company's Form 10-K for the fiscal year ended January 3, 1998 to be filed with the Securities and Exchange Commission on or before April 3, 1998, and - For the special purpose of signing all such Forms S-8 as the Company may be required to file pursuant to SEC regulations. and to sign, seal, execute, deliver and acknowledge such instruments in writing of whatever kind and nature as may be necessary or proper in the premises. I HEREBY give and grant unto said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done, as fully to all intents and purposes as I might or could do if personally present, and hereby ratify and confirm all that said attorney shall lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of February, 1998. /s/ William J. White ------------------------------------ STATE OF Idaho County of Ada On this 13th day of February, 1998, before me, the undersigned, a Notary Public in and for said State, personally appeared William J. White, known to me to be the person whose name is subscribed to the foregoing and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Patricia K. Stiburek ------------------------------------ Notary Public for the State of Idaho Residing at Boise, Idaho SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, Arthur L. Troutner, have made, constituted and appointed, and by these presents do make, constitute and appoint either the Chairman of the Board or the President of TJ International, Inc., a Delaware corporation, my true and lawful attorney in my name, place and stead, and for my use and benefit as follows: - For the special purpose of signing the Company's Form 10-K for the fiscal year ended January 3, 1998 to be filed with the Securities and Exchange Commission on or before April 3, 1998, and - For the special purpose of signing all such Forms S-8 as the Company may be required to file pursuant to SEC regulations. and to sign, seal, execute, deliver and acknowledge such instruments in writing of whatever kind and nature as may be necessary or proper in the premises. I HEREBY give and grant unto said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done, as fully to all intents and purposes as I might or could do if personally present, and hereby ratify and confirm all that said attorney shall lawfully do or cause to be done by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of February, 1998. /s/ Arthur L. Troutner ------------------------------------ STATE OF Idaho County of Ada On this 13th day of February, 1998, before me, the undersigned, a Notary Public in and for said State, personally appeared Arthur L. Troutner, known to me to be the person whose name is subscribed to the foregoing and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Patricia K. Stiburek ------------------------------------- Notary Public for the State of Idaho Residing at Boise, Idaho EX-27 5 EXHIBIT 27
5 THIS DATA SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE TJ INTERNATIONAL, INC. BALANCE SHEET AT JANUARY 3, 1998 AND FROM ITS STATEMENT OF INCOME FOR THE 12 MONTHS ENDED JANUARY 3, 1998. THE INFORMATION PRESENTED IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS JAN-03-1998 DEC-29-1996 JAN-03-1998 119,087 40,751 55,766 397 68,954 295,084 603,693 223,207 712,104 75,879 142,390 0 13,535 17,807 210,070 712,104 706,316 706,316 513,032 513,032 107,828 0 6,933 44,040 16,515 27,525 0 0 0 27,525 1.55 1.44
EX-27.1 6 EXHIBIT 27.1
5 THIS DATA SCHEDULE CONTAINS RESTATED FINANCIAL INFORMATION EXTRACTED FROM THE TJ INTERNATIONAL, INC. BALANCE SHEET AT SEPT. 27, 1997 AND FROM ITS STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPT. 27, 1997. THE INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS JAN-03-1998 DEC-29-1996 SEP-27-1997 96,771 0 78,758 400 54,739 241,313 591,523 212,837 664,764 93,214 99,790 0 13,584 17,765 202,534 664,764 532,569 532,569 386,051 386,051 79,778 0 4,709 34,417 12,907 21,510 0 0 0 21,510 1.19 1.12
EX-27.2 7 EXHIBIT 27.2
5 THIS DATA SCHEDULE CONTAINS RESTATED FINANCIAL INFORMATION EXTRACTED FROM THE TJ INTERNATIONAL, INC. BALANCE SHEET AT JUNE 28, 1997 AND FROM ITS STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 28, 1997. THE INFORMATION PRESENTED IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS JAN-03-1998 DEC-29-1996 JUN-28-1997 70,875 0 82,026 403 51,649 215,687 580,174 202,711 636,846 79,948 99,790 0 13,650 17,707 195,362 636,846 346,993 346,993 252,521 252,521 53,623 0 3,113 20,749 7,781 12,968 0 0 0 12,968 .72 .67
EX-27.3 8 EXHIBIT 27.3
5 THIS DATA SCHEDULE CONTAINS RESTATED FINANCIAL INFORMATION EXTRACTED FROM THE TJ INTERNATIONAL, INC. BALANCE SHEET AT MARCH 29, 1997 AND FROM ITS STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 29, 1997. THE INFORMATION PRESENTED IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JAN-03-1998 DEC-29-1996 MAR-29-1997 21,516 0 104,313 447 51,644 188,571 572,124 192,835 611,273 71,474 88,140 0 13,698 17,654 193,758 611,273 161,263 161,263 117,923 117,923 25,645 0 1,549 8,763 3,286 5,477 0 0 0 5,477 .30 .28
EX-27.4 9 EXHIBIT 27.4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TJ INTERNATIONAL, INC. RESTATED BALANCE SHEET AT JUNE 29, 1996 AND FROM ITS STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-28-1996 DEC-31-1995 JUN-29-1996 20,957 0 52,108 419 43,700 134,775 558,983 165,983 567,586 60,121 95,180 0 13,857 17,277 182,893 567,586 266,207 266,207 205,667 205,667 42,683 0 3,114 7,239 2,787 4,452 0 0 0 4,452 .24 .22
EX-27.5 10 EXHIBIT 27.5
5 THIS DATA SCHEDULE CONTAINS RESTATED FINANCIAL INFORMATION EXTRACTED FROM THE TJ INTERNATIONAL, INC. BALANCE SHEET AT SEPT. 28, 1996 AND FROM ITS STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPT. 28, 1996. THE INFORMATION PRESENTED IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-28-1996 DEC-31-1995 SEP-28-1996 53,091 0 64,338 390 40,450 173,652 561,474 175,299 601,109 88,305 88,140 0 13,772 17,375 190,682 601,109 445,778 445,778 337,822 337,822 66,097 0 4,688 19,493 7,407 12,086 0 0 0 12,086 .67 .62
EX-27.6 11 EXHIBIT 27.6
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TJ INTERNATIONAL, INC. RESTATED BALANCE SHEET AT DEC. 28, 1996 AND FROM ITS STATEMENT OF INCOME FOR THE 12 MONTHS ENDED DEC. 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS DEC-28-1996 DEC-31-1995 DEC-28-1996 36,801 0 74,344 451 51,549 171,984 566,603 184,504 599,815 55,122 88,140 0 13,721 17,501 196,848 599,815 577,166 577,166 434,852 434,852 87,865 0 6,328 25,758 9,583 16,175 0 0 0 16,175 .88 .82
EX-27.7 12 EXHIBIT 27.7
5 THIS DATA SCHEDULE CONTAINS RESTATED FINANCIAL INFORMATION EXTRACTED FROM THE TJ INTERNATIONAL, INC. BALANCE SHEET AT DECEMBER 30, 1995 AND FROM ITS STATEMENT OF INCOME FOR 12 MONTHS ENDED DECEMBER 30, 1995. THE INFORMATION PRESENTED IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS DEC-30-1995 JAN-01-1995 DEC-30-1995 19,715 0 29,138 384 38,560 104,672 551,548 149,069 546,310 51,317 89,440 0 13,992 17,132 179,020 546,310 484,845 484,845 376,187 376,187 78,316 0 631 15,544 5,803 9,741 (39,652) 0 0 (29,911) (1.80) (1.80)
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