BOISE, Idaho, Oct. 21 /PRNewswire-FirstCall/ -- Boise Cascade Corporation
(NYSE: BCC) today reported third-quarter net income of $32.9 million, or
48 cents per diluted share, compared with net income of $8.5 million, or
9 cents per diluted share, in third quarter 2002. Before nonroutine items,
the results were $30.0 million, or 43 cents per diluted share. Included in
net income for the quarter is a net $2.9 million one-time tax benefit, or
5 cents per share, related to a favorable tax court ruling. A reconciliation
of this item to our reported financial performance is included in the notes to
the consolidated financial statements. In second quarter 2003, Boise reported
a net loss of $3.9 million, or 12 cents per diluted share.
FINANCIAL HIGHLIGHTS
($ in millions, except per-share amounts)
3Q 3Q 2Q
2003 2002 2003
Sales $2,111 $1,935 $1,929
Net income (loss) $32.9 $8.5 $(3.9)
Net income (loss) per diluted share $0.48 $0.09 $(0.12)
BEFORE NONROUTINE ITEMS
Net income (loss) $30.0 $8.5 $(3.9)
Net income (loss) per diluted share $0.43 $0.09 $(0.12)
Sales in third quarter 2003 increased 9% to $2.11 billion, compared with
$1.94 billion in the third quarter a year ago. Sales in second quarter 2003
were $1.93 billion.
Boise Office Solutions
($ in millions)
3Q 3Q 2Q
2003 2002 2003
Sales $934 $900 $905
Operating income $31.0 $29.8 $23.9
Operating income in Boise Office Solutions in the third quarter was
$31.0 million, up from $29.8 million in the same quarter a year ago and from
$23.9 million in second quarter. Segment sales, income, and operating margin
increased sequentially in the third quarter. The operating margin was 3.3% in
the third quarter of both years and 2.6% in second quarter 2003.
Third quarter 2003 sales, as well as sales for locations operating in both
periods, increased 4% year over year to $934 million. Sales of office
supplies and paper rose 2%, technology products and furniture sales both
increased 7%. Excluding foreign exchange gains, third-quarter sales were flat
with those of a year ago. Boise's office papers sold through Boise Office
Solutions increased 2% to 142,000 tons, compared with a year ago. Compared
with second quarter 2003, total sales and same-location sales in the third
quarter increased 3%.
Boise Building Solutions
($ in millions)
3Q 3Q 2Q
2003 2002 2003
Sales $828 $671 $693
Operating income $56.4 $14.5 $9.8
Boise Building Solutions reported operating income of $56.4 million in the
third quarter 2003, compared with $14.5 million in the same quarter a year ago
and $9.8 million in second quarter 2003. The combination of high housing
starts, a compressed building season, low inventories, and other factors led
to sharp increases in wood product prices in the third-quarter.
Relative to third quarter 2002, average plywood prices increased 28%;
lumber prices declined 5%. Plywood unit sales volume rose 8% year over year,
while lumber volume declined 9%. Sales of engineered wood products grew 25%,
compared with third quarter 2002. Building materials distribution sales
increased 28% year over year.
Relative to second quarter 2003, average plywood and lumber prices
increased 28% and 12%, respectively. Unit sales volumes were 5% higher in
plywood but decreased 3% in lumber. Engineered wood products sales increased
13% from the previous quarter. Building materials distribution sales
increased 19% from second quarter 2003.
Boise Paper Solutions
($ in millions)
3Q 3Q 2Q
2003 2002 2003
Sales $474 $485 $459
Operating income $0.2 $17.2 $1.0
Operating income in Boise Paper Solutions was $200,000 in third quarter
2003, compared with $17.2 million in the same quarter a year ago and
$1.0 million in second quarter 2003. Average paper prices were flat with
year-ago prices. Results were lower than those of a year ago because of lower
unit sales volume and increased unit manufacturing costs. Combined energy and
chemical unit costs were 5% higher than a year ago. Fiber costs rose 7%.
Relative to second quarter 2003, modestly lower average product prices
were offset by higher volumes and lower unit costs. Boise took approximately
32,000 tons of market-related curtailment in the third quarter, compared with
16,000 tons in the year-ago third quarter and 67,000 tons in second quarter
2003.
OUTLOOK
"In the fourth quarter of 2003, we expect year-over-year same-location
sales in Boise Office Solutions to remain positive, and operating income in
that business to be similar to third-quarter performance," said George J.
Harad, chairman and chief executive officer. "We expect building products
markets to weaken seasonally and Boise Building Solutions to post lower income
in the fourth quarter than in the third quarter. Finally, in our paper
business, we expect market conditions to continue to be lackluster. Boise
Paper Solutions performance in the fourth quarter is likely to be similar to
that of the third quarter."
Boise delivers office, building, and paper solutions that help our
customers manage productive offices and construct well-built homes -- two of
the most important activities in our society. Boise's 24,000 employees help
people work more efficiently, build more effectively, and create new ways to
meet business challenges. Boise also provides constructive solutions for
environmental conservation by managing natural resources for the benefit of
future generations. Boise posted sales of $7.4 billion in 2002. Visit the
Boise website at http://www.bc.com .
WEBCAST AND CONFERENCE CALL
Boise will host an audiovisual webcast and conference call on Tuesday,
October 21, 2003, at noon Eastern Daylight Time, at which we will review the
company's recent performance and discuss the outlook for our businesses. You
can join the webcast through the Boise website. Go to http://www.bc.com , and click
on Investor Relations to find the link to the webcast. Please go to the
website at least 15 minutes before the start of the webcast to register and to
download and install any necessary audio software. To join the conference
call, dial (800) 374-0165 -- international callers should dial (706) 634-0995
-- at least 10 minutes before the start of the call. The archived webcast
will be available on the Presentations page of the Investor Relations section
of Boise's website.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements. Statements that
are not historical or current facts, including statements about our
expectations, are forward-looking statements. These statements include the
words "expect," "should," "is likely," or similar expressions. These forward-
looking statements cover our anticipated financial results and future business
prospects. Forward-looking statements involve inherent risks and uncertainties
that could cause actual results to differ materially from those projected.
Those risks and uncertainties include, in addition to those contained in our
filings with the SEC: i) general economic or industry conditions could be less
favorable than expected, resulting in a decrease in the demand for our
products or an increase in our costs; ii) competitive pressures, including
changes in foreign and domestic production capacity, could change and affect
our profitability particularly in our commodity paper and wood products
businesses; iii) extreme weather or other natural disasters, such as fire,
could impact our financial results, particularly our cost structure; and
iv) our announced acquisition of OfficeMax and exploration of strategic
alternatives for our other businesses could impact customer demand, increase
our cost of procuring financing, or create other impacts on our financial
results. Forward-looking statements speak only as of the date of this
release. We undertake no obligation to update them in light of new
information.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
(thousands, except per-share amounts)
Three Months Ended
September 30 June 30,
2003 2002 2003
Sales $2,110,601 $1,935,231 $1,928,984
Costs and expenses
Materials, labor, and other
operating expenses 1,695,809 1,574,391 1,578,445
Depreciation, amortization, and
cost of company timber harvested 78,019 78,346 73,730
Selling and distribution expenses 224,405 197,135 217,472
General and administrative expenses 38,576 39,151 35,297
Other (income) expense, net 1,133 (74) 1,836
2,037,942 1,888,949 1,906,780
Equity in net income (loss) of
affiliates 4,038 (299) 474
Income from operations 76,697 45,983 22,678
Interest expense (31,657) (28,731) (27,753)
Interest income 221 285 318
Foreign exchange gain (loss) 133 (671) 1,860
(31,303) (29,117) (25,575)
Income (loss) before income taxes
and minority interest 45,394 16,866 (2,897)
Income tax (provision) benefit (12,510) (6,324) 985
Income (loss) before minority interest 32,884 10,542 (1,912)
Minority interest, net of income tax -- (2,032) (2,022)
Net income (loss) 32,884 8,510 (3,934)
Preferred dividends (3,191) (3,262) (3,287)
Net income (loss) applicable to common
shareholders $29,693 $5,248 $(7,221)
Net income (loss) per common share
Basic $0.51 $0.09 $(0.12)
Diluted $0.48 $0.09 $(0.12)
SEGMENT INFORMATION
Three Months Ended
September 30 June 30,
2003 2002 2003
(thousands)
Segment sales
Boise Office Solutions $934,050 $899,883 $904,929
Boise Building Solutions 828,097 671,477 692,843
Boise Paper Solutions 474,167 485,155 459,376
Intersegment eliminations and other (125,713) (121,284) (128,164)
$2,110,601 $1,935,231 $1,928,984
Segment income (loss)
Boise Office Solutions $30,961 $29,783 $23,883
Boise Building Solutions 56,445 14,515 9,820
Boise Paper Solutions 191 17,171 1,023
Corporate and Other (10,546) (15,872) (9,870)
77,051 45,597 24,856
Interest expense (31,657) (28,731) (27,753)
Income (loss) before income taxes and
minority interest $45,394 $16,866 $(2,897)
BOISE CASCADE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(thousands, except per-share amounts)
Nine Months Ended September 30
2003 2002
Sales $5,892,828 $5,611,481
Costs and expenses
Materials, labor, and other operating
expenses 4,789,443 4,575,402
Depreciation, amortization, and
cost of company timber harvested 227,331 229,770
Selling and distribution expenses 656,039 583,907
General and administrative expenses 109,246 115,020
Other (income) expense, net 14,121 29,215
5,796,180 5,533,314
Equity in net income (loss) of
affiliates 4,453 (2,354)
Income from operations 101,101 75,813
Interest expense (88,290) (88,789)
Interest income 653 1,340
Foreign exchange gain (loss) 2,949 (528)
(84,688) (87,977)
Income (loss) before income taxes,
minority interest, and cumulative
effect of accounting changes 16,413 (12,164)
Income tax (provision) benefit (2,161) 23,342
Income before minority interest and
cumulative effect of accounting changes 14,252 11,178
Minority interest, net of income tax (4,045) (6,045)
Income before cumulative effect
of accounting changes 10,207 5,133
Cumulative effect of accounting
changes, net of income tax (8,803) --
Net income 1,404 5,133
Preferred dividends (9,744) (9,812)
Net loss applicable to common
shareholders $(8,340) $(4,679)
Net income (loss) per common share
Basic and diluted before cumulative
effect of accounting changes $0.01 $(0.08)
Cumulative effect of accounting
changes (0.15) --
Basic and diluted $(0.14) $(0.08)
SEGMENT INFORMATION(1)
Nine Months Ended September 30
2003 2002
(thousands)
Segment sales
Boise Office Solutions $2,777,258 $2,639,874
Boise Building Solutions 2,095,584 1,901,520
Boise Paper Solutions 1,401,756 1,422,701
Intersegment eliminations and other (381,770) (352,614)
$5,892,828 $5,611,481
Segment income (loss)
Boise Office Solutions $75,516 $90,603
Boise Building Solutions 57,812 37,341
Boise Paper Solutions 529 15,176
Corporate and Other (29,154) (66,495)
104,703 76,625
Interest expense (88,290) (88,789)
Income (loss) before income taxes,
minority interest, and cumulative
effect of accounting changes $16,413 $(12,164)
Before nonroutine items
Segment income (loss)
Boise Office Solutions $84,739 $90,603
Boise Building Solutions 57,812 37,341
Boise Paper Solutions 730 15,176
Corporate and Other (28,464) (42,849)
114,817 100,271
Interest expense (88,290) (88,789)
Income before income taxes,
minority interest, and cumulative
effect of accounting changes $26,527 $11,482
(1) Financial Information
The Consolidated Statements of Income (Loss) and Segment Information
are unaudited statements, which do not include all Notes to
Consolidated Financial Statements, and should be read in conjunction
with the company's 2002 Annual Report on Form 10-K. In all periods
presented, net income (loss) involved estimates and accruals.
(2) Reconciliation of Net Income (Loss) and Diluted Income (Loss)
Per Share Before Nonroutine Items and Cumulative Effect of Accounting
Changes
We evaluate our results of operations both before and after
nonroutine gains and losses. We believe our presentation of
financial measures before nonroutine items enhances our investors'
overall understanding of our recurring operational performance and
our prospects for the future. Specifically, we believe the results
before nonroutine items provide useful information to both investors
and management by excluding gains and losses that are not indicative
of our core operating results.
There were no nonroutine items during the three months ended
June 30, 2003, or September 30, 2002. In the following table, we
reconcile our financial measures before nonroutine items to our
reported financial results for the three months ended September 30,
2003, and the nine months ended September 30, 2003 and 2002 (see
Notes 3, 4, and 5).
Three Months Ended
September 30, 2003
Before
Non- Non-
As routine routine
Reported Items Items
(millions, except per-share amounts)
Boise Office Solutions $31.0 $-- $31.0
Boise Building Solutions 56.4 -- 56.4
Boise Paper Solutions 0.2 -- 0.2
Corporate and Other (10.5) -- (10.5)
77.1 -- 77.1
Interest expense (31.7) -- (31.7)
Income (loss) before income
taxes, minority interest, and
cumulative effect
of accounting changes 45.4 -- 45.4
Income tax (provision) benefit (12.5) (2.9) (15.4)
Income before minority
interest and cumulative
effect of accounting changes 32.9 (2.9) 30.0
Minority interest, net of
income tax -- -- --
Income before cumulative
effect of accounting changes 32.9 (2.9) 30.0
Cumulative effect of accounting
changes, net of income tax -- -- --
Net income $32.9 $(2.9) $30.0
Net income (loss) per common
share (a)
Diluted before cumulative
effect of accounting changes $0.48 $(0.05) $0.43
Cumulative effect of accounting
changes -- -- --
Diluted $0.48 $(0.05) $0.43
(a) Calculated using 62.7 million, 58.3 million, and 58.2 million average
diluted shares outstanding for the three months ended September 30,
2003 and the nine months ended September 30, 2003, and 2002
(see Note 7).
Nine Months Ended
September 30, 2003
Before
Non- Non-
As routine routine
Reported Items Items
(millions, except per-share amounts)
Boise Office Solutions $75.5 $9.2 $84.7
Boise Building Solutions 57.8 -- 57.8
Boise Paper Solutions 0.5 0.2 0.7
Corporate and Other (29.1) 0.7 (28.4)
104.7 10.1 114.8
Interest expense (88.3) -- (88.3)
Income (loss) before income
taxes, minority interest, and
cumulative effect
of accounting changes 16.4 10.1 26.5
Income tax (provision) benefit (2.2) (6.8) (9.0)
Income before minority
interest and cumulative
effect of accounting changes 14.2 3.3 17.5
Minority interest, net of income tax (4.0) -- (4.0)
Income before cumulative
effect of accounting changes 10.2 3.3 13.5
Cumulative effect of accounting
changes, net of income tax (8.8) 8.8 --
Net income $1.4 $12.1 $13.5
Net income (loss) per common
share (a)
Diluted before cumulative
effect of accounting changes $0.01 $0.06 $0.07
Cumulative effect of accounting
changes (0.15) 0.15 --
Diluted $(0.14) $0.21 $0.07
(a) Calculated using 62.7 million, 58.3 million, and 58.2 million average
diluted shares outstanding for the three months ended September 30,
2003 and the nine months ended September 30, 2003, and 2002
(see Note 7).
Nine Months Ended
September 30, 2002
Before
Non- Non-
As routine routine
Reported Items Items
(millions, except per-share amounts)
Boise Office Solutions $90.6 $-- $90.6
Boise Building Solutions 37.3 -- 37.3
Boise Paper Solutions 15.2 -- 15.2
Corporate and Other (66.5) 23.6 (42.9)
76.6 23.6 100.2
Interest expense (88.8) -- (88.8)
Income (loss) before income
taxes, minority interest, and
cumulative effect
of accounting changes (12.2) 23.6 11.4
Income tax (provision) benefit 23.3 (27.6) (4.3)
Income before minority
interest and cumulative
effect of accounting changes 11.1 (4.0) 7.1
Minority interest, net of income tax (6.0) -- (6.0)
Income before cumulative
effect of accounting changes 5.1 (4.0) 1.1
Cumulative effect of accounting
changes, net of income tax -- -- --
Net income $5.1 $(4.0) $1.1
Net income (loss) per common
share (a)
Diluted before cumulative
effect of accounting changes $(0.08) $(0.07) $(0.15)
Cumulative effect of accounting
changes -- -- --
Diluted $(0.08) $(0.07) $(0.15)
(a) Calculated using 62.7 million, 58.3 million, and 58.2 million average
diluted shares outstanding for the three months ended September 30,
2003 and the nine months ended September 30, 2003, and 2002
(see Note 7).
(3) 2003 Nonroutine Items
In March 2003, we announced measures to reduce 2003 operating costs
by approximately $45 million, net of severance costs, and to hold
capital spending to approximately $245 million, before acquisitions.
We took these actions because of continued economic weakness, higher
pension costs, higher energy costs, business disruptions from severe
winter weather in the eastern United States, and global political
uncertainty. We are reducing operating costs by freezing salaries,
severely restricting hiring, reducing discretionary spending at all
levels of the company, and eliminating about 700 job positions. We
will eliminate these positions by terminating approximately 550
employees and leaving vacant positions unfilled. At September 30,
2003, we had terminated about 460 employees, and we expect most of
the remaining employees to be terminated during fourth quarter 2003.
Under our severance policy, in first quarter 2003, we recorded a
pretax charge of $10.1 million for employee-related costs in "Other
(income) expense, net" in the Consolidated Statement of Income for
the nine months ended September 30, 2003. We recorded these costs in
accordance with the provisions of Statement of Financial Accounting
Standards (SFAS) No. 112, Employers' Accounting for Postemployment
Benefits. We recorded $9.2 million in Boise Office Solutions,
$0.2 million in Boise Paper Solutions, and $0.7 million in our
Corporate and Other segment. Employee-related costs are primarily
for severance payments, most of which will be paid in 2003 with the
remainder in 2004. This nonroutine item decreased net income
$6.1 million and diluted income per share 11 cents for the nine
months ended September 30, 2003.
During third quarter 2003, we recorded a net $2.9 million, or 5 cents
per diluted share, one-time tax benefit related to a favorable tax
court ruling.
For the nine months ended September 30, 2003, these nonroutine items
decreased net income $3.3 million or 6 cents per diluted share.
(4) 2002 Nonroutine Item
In December 2001, we wrote down our 29% investment in IdentityNow by
$54.3 million to its estimated fair value of $25 million and recorded
$4.6 million of tax benefits associated with the write-down. In May
2002, we sold all of the stock of our wholly owned subsidiary that
held our investment in IdentityNow. In second quarter 2002, we
recorded a $23.6 million pretax loss related to this sale in our
Corporate and Other segment and in "Other (income) expense, net" in
the Statement of Income for the nine months ended September 30, 2002.
We also recorded $27.6 million of tax benefits associated with this
sale and our previous write-down in "Income tax (provision) benefit."
For the nine months ended September 30, 2002, this transaction
resulted in a net after-tax gain of $4 million, or 7 cents per basic
and diluted share.
(5) Cumulative Effect of Accounting Changes
Effective January 1, 2003, we adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement Obligations, which affects the way we account for landfill
closure costs. This statement requires us to record an asset and a
liability (discounted) for estimated closure and closed-site
monitoring costs and to depreciate the asset over the landfill's
expected useful life. Previously, we accrued for the closure costs
over the life of the landfill and expensed monitoring costs as
incurred. On January 1, 2003, we recorded a one-time after-tax
charge of $4.1 million, or 7 cents per share, as a cumulative-effect
adjustment for the difference between the amounts recognized in our
consolidated financial statements prior to the adoption of this
statement and the amount recognized after adopting the provisions of
SFAS No. 143.
Effective January 1, 2003, we adopted an accounting change for vendor
allowances to comply with the guidelines issued by the Financial
Accounting Standards Board's (FASB) Emerging Issues Task Force (EITF)
02-16, Accounting by a Reseller for Cash Consideration Received From
a Vendor. Under EITF 02-16, consideration received from a vendor is
presumed to be a reduction of the cost of the vendor's products or
services, unless it is for a specific incremental cost to sell the
product. As a result, for the three months ended June 30, and
September 30, 2003, and the nine months ended September 30, 2003,
approximately $11 million, $10 million, and $31 million of vendor
allowances reduced "Materials, labor, and other operating expenses"
that would have previously been recognized primarily as a reduction
of "Selling and distribution expenses." In accordance with the
provisions of EITF 02-16, prior-period financial statements have not
been reclassified to conform with the current year's presentation.
In addition, under the new guidance, vendor allowances reside in
inventory with the product and are recognized when the product is
sold, changing the timing of our recognition of these items. For the
nine months ended September 30, 2003, this change resulted in a
one-time, noncash, after-tax charge of $4.7 million, or 8 cents
per share.
(6) Income Taxes
Our effective tax provision rate for the nine months ended
September 30, 2003, was 13.2%, compared with an effective tax benefit
rate of 191.9% for the nine months ended September 30, 2002. Before
the nonroutine items discussed in Notes 3 and 4 above, our estimated
tax provision rates for the nine months ended September 30, 2003 and
2002, were 34.0% and 37.5%. The difference between the estimated tax
provision rates, before nonroutine items, was due to the sensitivity
of the rate to changing income levels and the mix of domestic and
foreign sources of income.
(7) Net Income (Loss) Per Common Share
Net income (loss) per common share was determined by dividing net
income (loss), as adjusted, by applicable shares outstanding. For
the three months ended June 30, 2003, and the nine months ended
September 30, 2003, and 2002, the computation of diluted loss per
share was antidilutive; therefore, amounts reported for basic and
diluted loss were the same.
Three Months Ended
September 30 June 30,
2003 2002 2003
(thousands, except per-share amounts)
BASIC
Net income (loss) $32,884 $8,510 $(3,934)
Preferred dividends (3,191) (3,262) (3,287)
Basic income (loss) $29,693 $5,248 $(7,221)
Average shares used to determine
basic income (loss) per common share 58,411 58,269 58,300
Basic income (loss) per common share $0.51 $0.09 $(0.12)
DILUTED
Basic income (loss) $29,693 $5,248 $(7,221)
Preferred dividends eliminated 3,191 3,262 --
Supplemental ESOP contribution (2,891) (2,925) --
Diluted income (loss) $29,993 $5,585 $(7,221)
Average shares used to determine
basic income (loss) per common share 58,411 58,269 58,300
Stock options and other 956 239 --
Series D Convertible Preferred Stock 3,330 3,499 --
Average shares used to determine
diluted income (loss) per common
share 62,697 62,007 58,300
Diluted income (loss) per common
share $0.48 $0.09 $(0.12)
Nine Months Ended September 30
2003 2002
(thousands, except per-share amounts)
Income before cumulative effect
of accounting changes $10,207 $5,133
Preferred dividends (a) (9,744) (9,812)
Basic and diluted income (loss)
before cumulative effect of
accounting changes 463 (4,679)
Cumulative effect of accounting
changes, net of income tax (8,803) --
Basic and diluted loss $(8,340) $(4,679)
Average shares used to determine
basic and diluted loss per common
share 58,334 58,194
Basic and diluted income (loss)
per common share before cumulative
effect of accounting changes $0.01 $(0.08)
Cumulative effect of accounting
changes (0.15) --
Basic and diluted loss per common
share $(0.14) $(0.08)
(a) The dividend attributable to our Series D Convertible Preferred Stock
held by our ESOP (employee stock ownership plan) is net of a tax
benefit.
SOURCE Boise Cascade Corporation
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Related links:
http://www.bc.com
Company News On-Call:
http://www.prnewswire.com/comp/115342.html
CONTACT:
Media, Ralph Poore, +1-208-384-7294, or home
+1-208-331-2023, or Investors, Vincent Hannity, +1-208-384-6390,
or cell +1-208-890-6385, both of Boise Cascade Corporation
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