EXHIBIT 99.1
Boise Cascade | 
|
Investor Relations |
1111 West Jefferson Street PO Box 50 Boise, ID 83728 |
T 208 384 7023 F 208 384 4913 |
News Release
Media Contact | Investor Relations Contact |
Mike Moser | Rob McNutt |
Office 208 384 6016 Cell 208 867 4346 | Office 208 384 7023 |
For Immediate Release: August 3, 2006
BOISE ANNOUNCES SECOND QUARTER 2006 FINANCIAL RESULTS
BOISE, Idaho – Boise Cascade Holdings, L.L.C., today reported second quarter 2006 income from operations of $60.1 million, compared with $30.5 million for the first quarter of 2006. In second quarter 2005, Boise reported income from operations of $77.4 million.
Second quarter 2006 net income was $33.4 million, compared with $0.1 million in the first quarter of 2006, which included $2.1 million of income for special items. This compares with a net loss of $14.5 million for the same period a year ago, which included $51.9 million of loss for special items.
“We continue to track well with our plans,” said Tom Stephens, chairman and chief executive officer. “Our Paper business continues to make progress in growing sales of higher value specialty and premium papers while taking advantage of strengthening commodity markets through our relationship with OfficeMax. Our Packaging & Newsprint business is well positioned to take advantage of the strengthening packaging markets, and our recent acquisition of Central Texas Corrugated (CTC) is adding very significant results. While housing markets are softening, our Building Materials Distribution business continued to grow and is improving their product mix. While our Wood Products business experienced lower commodity prices, the conversion of more of our veneer into engineered wood has mitigated the impact of commodity price declines.”
-more-
FINANCIAL HIGHLIGHTS
($ in millions)
| | 2Q 2006 | | 2Q 2005 | | 1Q 2006 | |
Sales | | $ | 1,559.8 | | $ | 1,494.6 | | $ | 1,470.3 | |
Income from operations | | $ | 60.1 | | $ | 77.4 | | $ | 30.5 | |
Net income (loss) | | $ | 33.4 | | $ | (14.5 | ) | $ | 0.1 | |
EBITDA | | $ | 99.9 | | $ | 108.8 | | $ | 67.5 | |
| | | | | | | |
Special items included in net income (loss) and EBITDA: | | | | | | | |
| | | | | | | |
Gain for changes in retiree healthcare programs | | $ | — | | $ | — | | $ | 3.7 | |
Loss on sale of headquarters building | | (0.1 | ) | — | | (1.6 | ) |
Withdrawn IPO costs | | — | | (3.6 | ) | — | |
Increase (decrease) in EBITDA | | (0.1 | ) | (3.6 | ) | 2.1 | |
| | | | | | | |
Additional special items included in net income (loss) but not included in EBITDA: | | | | | | | |
| | | | | | | |
Write-off of deferred financing costs | | — | | (43.0 | ) | — | |
Change in fair value of interest rate swaps | | — | | (5.3 | ) | — | |
| | — | | (48.3 | ) | — | |
Increase (decrease) in net income (loss) | | $ | (0.1 | ) | $ | (51.9 | ) | $ | 2.1 | |
At June 30, 2006, the company’s net debt was $1.3 billion. The aggregate leveraged buyout debt at October 29, 2004, was $3.2 billion, including $1.2 billion of debt incurred by Boise Land & Timber Corporation, which was repaid in February 2005. Net debt includes long- and short-term debt owed to third parties, less cash and cash equivalents. It excludes a $279 million note payable to a related party.
Sales
Sales in second quarter 2006 were $1.6 billion, compared with $1.5 billion in both the first quarter of 2006 and the second quarter of 2005.
Comparing second quarter 2006 with the same period a year ago, Building Materials Distribution sales increased 5%, due primarily to increased sales volumes. Wood Products sales were down 6% relative to the same period in 2005, due primarily to lower plywood and engineered wood products prices. This decrease was offset, in part, by improved particleboard prices. Paper sales increased 8%, due
2
primarily to improved pricing for commodity papers and increased sales volumes of specialty and premium papers offset, in part, by a modest decrease in commodity sales volumes. Packaging & Newsprint sales increased 14%, due primarily to improved newsprint pricing coupled with the addition of CTC, which we purchased in February. These increases were offset, in part, by the adoption of a new accounting standard that related to containerboard trade sales. In January 2006, we adopted Emerging Issues Task Force 04-13, Accounting for Purchases and Sales of Inventory with the Same Counterparty. Had this consensus been in effect in 2005, it would have reduced sales $19.6 million for the three months ended June 30, 2005, and would have reduced materials, labor, and other operating expenses by about the same amount.
Income From Operations
Income from operations decreased $17.3 million to $60.1 million in second quarter 2006, compared with $77.4 million in the same period a year ago. Income from operations in first quarter 2006 was $30.5 million.
Comparing second quarter 2006 with second quarter 2005, segment income in Building Materials Distribution increased $4.3 million, from $21.0 million a year ago to $25.3 million, due primarily to increased sales volumes and a better product mix offset, in part, by lower commodity margins and higher operating costs. Segment income in Wood Products declined $14.1 million, from $31.3 million a year ago to $17.2 million, due primarily to lower plywood and EWP prices that were lower due to product mix, coupled with higher delivered-log costs. The negative impacts on segment income were offset, in part, by improved particleboard prices. Segment income in Paper decreased $10.6 million, from $27.1 million a year ago to $16.5 million, due primarily to increases in energy, chemical, and fiber costs offset, in part, by higher uncoated free sheet prices. Segment income in Packaging & Newsprint increased $3.7 million, from $10.1 million a year ago to $13.8 million, due primarily to improved prices for newsprint and the addition of CTC offset, in part, by higher energy, chemical, and fiber costs.
About Boise
Boise, headquartered in Boise, Idaho, manufactures engineered wood products, plywood, lumber, and particleboard and distributes a broad line of building materials, including wood products manufactured by the company. Boise also manufactures a wide range of specialty and premium papers, including imaging papers for the office and home and papers for pressure sensitive applications, as well as printing
3
and converting papers, containerboard and corrugated boxes, newsprint, and market pulp. Visit Boise’s website at www.bc.com.
Webcast and Conference Call
Boise will host an audiovisual webcast and conference call on Thursday, August 3, 2006, at 11:00 a.m. Eastern, at which time we will review the company’s recent performance. You can join the webcast through the Boise website. Go to http://www.bc.com and click on the link to the webcast under the News & Events heading. Slides will be posted 20 minutes before the beginning of 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 in News & Events (link in the About Boise section) of Boise’s website. A replay of the conference call will be available from August 3 at 12:00 noon Eastern through September 3 at 11:59 p.m. Playback numbers are (800) 642-1687 for U.S. calls and (706) 645-9291 for international calls, and the passcode will be 2917443.
Forward-Looking Statements
This news release includes forward-looking statements, and they are subject to a number of risks and uncertainties that could cause our results to differ materially from our expectations. For a discussion of other risks and uncertainties regarding our operational and financial performance, please refer to our filings with the SEC.
4
Boise Cascade Holdings, L.L.C.
Consolidated Statements of Income (Loss)
(unaudited, in thousands)
| | Three Months Ended | |
| | June 30 | | March 31, | |
| | 2006 | | 2005 | | 2006 | |
Sales | | | | | | | |
Trade | | $ | 1,415,784 | | $ | 1,352,466 | | $ | 1,337,498 | |
Related parties | | 144,005 | | 142,145 | | 132,765 | |
| | 1,559,789 | | 1,494,611 | | 1,470,263 | |
Costs and expenses | | | | | | | |
Materials, labor, and other operating expenses | | 1,360,280 | | 1,299,409 | | 1,312,722 | |
Depreciation, amortization, and depletion | | 38,459 | | 31,712 | | 36,657 | |
Selling and distribution expenses | | 71,607 | | 64,426 | | 71,077 | |
General and administrative expenses | | 26,158 | | 18,036 | | 21,462 | |
Other (income) expense, net | | 3,233 | | 3,661 | (a) | (2,125 | ) (b) |
| | 1,499,737 | | 1,417,244 | | 1,439,793 | |
| | | | | | | |
Income from operations | | 60,052 | | 77,367 | | 30,470 | |
| | | | | | | |
Foreign exchange gain (loss) | | 1,360 | | (248 | ) | 379 | |
Change in fair value of interest rate swaps | | — | | (5,314 | ) (c) | — | |
Interest expense | | (28,610 | ) | (74,365 | ) (d) | (30,176 | ) |
Interest income | | 934 | | 434 | | 604 | |
| | (26,316 | ) | (79,493 | ) | (29,193 | ) |
| | | | | | | |
Income (loss) before income taxes | | 33,736 | | (2,126 | ) | 1,277 | |
Income tax provision | | (305 | ) (e) | (12,343 | ) (e) | (1,218 | ) (e) |
Net income (loss) | | $ | 33,431 | | $ | (14,469 | ) | $ | 59 | |
5
Segment Information
(unaudited, in thousands)
| | Three Months Ended | |
| | June 30 | | March 31, | |
| | 2006 | | 2005 | | 2006 | |
Segment sales | | | | | | | |
Building Materials Distribution | | $ | 832,700 | | $ | 796,026 | | $ | 761,846 | |
Wood Products | | 314,656 | | 334,978 | | 312,639 | |
Paper | | 381,695 | | 352,729 | | 370,364 | |
Packaging & Newsprint | | 190,809 | | 167,810 | | 178,787 | |
Intersegment eliminations and other | | (160,071 | ) | (156,932 | ) | (153,373 | ) |
| | $ | 1,559,789 | | $ | 1,494,611 | | $ | 1,470,263 | |
Segment income (loss) | | | | | | | |
Building Materials Distribution | | $ | 25,310 | | $ | 21,046 | | $ | 18,591 | |
Wood Products | | 17,190 | | 31,311 | | 18,823 | |
Paper | | 16,513 | | 27,145 | | (2,568 | ) |
Packaging & Newsprint | | 13,843 | | 10,105 | | 2,320 | |
Corporate and Other | | (11,444 | ) | (12,488 | ) (a) | (6,317 | ) (b) |
| | 61,412 | | 77,119 | | 30,849 | |
| | | | | | | |
Change in fair value of interest rate swaps | | — | | (5,314 | ) (c) | — | |
Interest expense | | (28,610 | ) | (74,365 | ) (d) | (30,176 | ) |
Interest income | | 934 | | 434 | | 604 | |
Income (loss) before income taxes | | $ | 33,736 | | $ | (2,126 | ) | $ | 1,277 | |
| | | | | | | |
EBITDA (f) | | | | | | | |
Building Materials Distribution | | $ | 27,714 | | $ | 23,347 | | $ | 20,939 | |
Wood Products | | 23,860 | | 36,661 | | 25,140 | |
Paper | | 31,966 | | 40,450 | | 12,049 | |
Packaging & Newsprint | | 26,528 | | 19,346 | | 14,392 | |
Corporate and Other | | (10,197 | ) | (10,973 | ) (a) | (5,014 | ) (b) |
| | $ | 99,871 | | $ | 108,831 | | $ | 67,506 | |
6
Boise Cascade Holdings, L.L.C.
Consolidated Statements of Income
(unaudited, in thousands)
| | Six Months Ended
June 30 | |
| | 2006 | | 2005 | |
Sales | | | | | |
Trade | | $ | 2,753,282 | | $ | 2,634,401 | |
Related parties | | 276,770 | | 292,481 | |
| | 3,030,052 | | 2,926,882 | |
Costs and expenses | | | | | |
Materials, labor, and other operating expenses | | 2,673,002 | | 2,520,067 | |
Fiber costs from related parties | | — | | 17,609 | |
Depreciation, amortization, and depletion | | 75,116 | | 62,349 | |
Selling and distribution expenses | | 142,684 | | 126,762 | |
General and administrative expenses | | 47,620 | | 37,240 | |
Other (income) expense, net | | 1,108 | (b) | 3,788 | (a) |
| | 2,939,530 | | 2,767,815 | |
| | | | | |
Income from operations | | 90,522 | | 159,067 | |
| | | | | |
Foreign exchange gain (loss) | | 1,739 | | (1,041 | ) |
Change in fair value of interest rate swaps | | — | | 9,886 | (c) |
Interest expense | | (58,786 | ) | (106,444 | ) (d) |
Interest income | | 1,538 | | 1,784 | |
| | (55,509 | ) | (95,815 | ) |
| | | | | |
Income before income taxes | | 35,013 | | 63,252 | |
Income tax provision | | (1,523 | ) (e) | (12,982 | ) (e) |
Net income | | $ | 33,490 | | $ | 50,270 | |
7
Segment Information
(unaudited, in thousands)
| | Six Months Ended
June 30 | |
| | 2006 | | 2005 | |
Segment sales | | | | | |
Building Materials Distribution | | $ | 1,594,546 | | $ | 1,492,185 | |
Wood Products | | 627,295 | | 657,413 | |
Paper | | 752,059 | | 710,580 | |
Packaging & Newsprint | | 369,596 | | 361,557 | |
Intersegment eliminations and other | | (313,444 | ) | (294,853 | ) |
| | $ | 3,030,052 | | $ | 2,926,882 | |
Segment income (loss) | | | | | |
Building Materials Distribution | | $ | 43,901 | | $ | 45,414 | |
Wood Products | | 36,013 | | 64,419 | |
Paper | | 13,945 | | 56,376 | |
Packaging & Newsprint | | 16,163 | | 14,573 | |
Corporate and Other | | (17,761 | ) (b) | (22,756 | ) (a) |
| | 92,261 | | 158,026 | |
| | | | | |
Change in fair value of interest rate swaps | | — | | 9,886 | (c) |
Interest expense | | (58,786 | ) | (106,444 | ) (d) |
Interest income | | 1,538 | | 1,784 | |
Income before income taxes | | $ | 35,013 | | $ | 63,252 | |
| | | | | |
EBITDA (f) | | | | | |
Building Materials Distribution | | $ | 48,653 | | $ | 49,719 | |
Wood Products | | 49,000 | | 75,021 | |
Paper | | 44,015 | | 82,713 | |
Packaging & Newsprint | | 40,920 | | 33,023 | |
Corporate and Other | | (15,211 | ) (b) | (20,101 | ) (a) |
| | $ | 167,377 | | $ | 220,375 | |
8
Summary Notes to Consolidated Statements of Income (Loss) and Segment Information
The Consolidated Statements of Income (Loss), Consolidated Balance Sheets, Consolidated Statements of Cash Flows, and Segment Information do not include all Notes to Consolidated Financial Statements and should be read in conjunction with the company’s 2005 Annual Report on Form 10-K. Net income for all periods presented involved estimates and accruals.
(a) Includes $3.6 million for the write-off of costs incurred in connection with the canceled initial public offering.
(b) Includes a $3.7 million gain for changes in our retiree healthcare programs at our St. Helens, Oregon, pulp and paper mill and our Salem, Oregon, converting operations.
Includes approximately $1.7 million loss related to the sale of our headquarters building in Boise, Idaho. In connection with the sale, we entered into an operating lease to lease back 65% of the building over a staggered lease term of ten to 12 years.
(c) Represents the change in the fair value of interest rate swaps related to our amended and restated senior credit facilities.
(d) Includes the write-off of $43.0 million of deferred financing costs resulting from the repayment of the Tranche B term loan.
(e) On May 9, 2005, we converted to a corporation from a limited liability company, and in December 2005, we rescinded our conversion to a C corporation. Except for our separate subsidiaries that are taxed as a corporation, tax expenses and benefits related to operations prior to May 9, 2005, and all of 2006 were recognized by the partners of the limited liability company. For the period of May 9 through June 30, 2005, we recorded income tax expense at an estimated annual effective tax provision rate of 41%. The effect of establishing deferred taxes upon conversion to a corporation was not material to income tax expense.
(f) EBITDA represents income before interest (interest expense, interest income, and change in fair value of interest rate swaps), income taxes, and depreciation, amortization, and depletion. The following table reconciles net income (loss) to EBITDA for the three months ended June 30, 2006 and 2005, and March 31, 2006:
| | Three Months Ended | |
| | June 30 | | March 31, | |
| | 2006 | | 2005 | | 2006 | |
| | (unaudited, in thousands) | |
| | | |
Net income (loss) | | $ | 33,431 | | $ | (14,469 | ) | $ | 59 | |
Change in fair value of interest rate swaps | | — | | 5,314 | | — | |
Interest expense | | 28,610 | | 74,365 | | 30,176 | |
Interest income | | (934 | ) | (434 | ) | (604 | ) |
Income tax provision | | 305 | | 12,343 | | 1,218 | |
Depreciation, amortization, and depletion | | 38,459 | | 31,712 | | 36,657 | |
EBITDA | | $ | 99,871 | | $ | 108,831 | | $ | 67,506 | |
The following table reconciles net income to EBITDA for the six months ended June 30, 2006 and 2005.
| | Six Months Ended | |
| | June 30 | |
| | 2006 | | 2005 | |
| | (unaudited, in thousands) | |
| | | |
Net income | | $ | 33,490 | | $ | 50,270 | |
Change in fair value of interest rate swaps | | — | | (9,886 | ) |
Interest expense | | 58,786 | | 106,444 | |
Interest income | | (1,538 | ) | (1,784 | ) |
Income tax provision | | 1,523 | | 12,982 | |
Depreciation, amortization, and depletion | | 75,116 | | 62,349 | |
EBITDA | | $ | 167,377 | | $ | 220,375 | |
9
