SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For Quarter Ended APRIL 1, 1995 Commission file number 0-7469
TJ INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 82-0250992
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 E. Mallard Drive
BOISE, IDAHO 83706
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (208) 364-3300
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
and Exchange Act of 1934 during the preceding 12 months (or for each
shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
APRIL 28, 1995. 16,930,202 SHARES OF $1 PAR VALUE COMMON STOCK.
EXHIBIT INDEX ON PAGE 14
TJ INTERNATIONAL, INC.
PART I. FINANCIAL INFORMATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. In the opinion of management, all
adjustments necessary to present fairly the results for the periods presented
have been included therein. The adjustments made were of a normal, recurring
nature. Certain information and footnote disclosure normally included in
financial statements have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is recommended that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the company's latest annual report
on Form 10-K.
The results of operations for the fiscal quarter ended April 1, 1995 are not
necessarily indicative of the results that might be expected for the fiscal year
ending December 30, 1995.
TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
APRIL 1, DECEMBER 31, APRIL 2,
1995 1994 1994
------------ ------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 25,815 $ 57,627 $ 33,885
Marketable securities 20,561 16,084 7,004
Receivables, less allowances of
$1,119,000, $1,066,000 and $502,000 41,300 49,157 39,443
Inventories 65,573 56,612 75,574
Other 10,991 8,967 12,150
------------ ------------ ------------
164,240 188,447 168,056
Property
Property and equipment 526,773 488,841 382,769
Less - accumulated depreciation (145,362) (137,384) (124,493)
------------ ------------ ------------
381,411 351,457 258,276
Goodwill 48,447 48,889 23,400
Unexpended bond funds 6,784 11,550 --
Other assets 15,735 14,134 9,277
------------ ------------ ------------
$616,617 $614,477 $459,009
------------ ------------ ------------
------------ ------------ ------------
Liabilities and stockholders' equity
Current liabilities
Notes payable $ -- $ 3,753 $ 1,180
Current portion of long-term debt 320 570 1,914
Accounts payable 36,926 29,497 33,132
Accrued liabilities 25,909 28,550 23,196
------------ ------------ ------------
63,155 62,370 59,402
Long-term debt, excluding current portion 102,478 102,499 30,350
Deferred income taxes 8,091 8,092 7,465
Other long-term liabilities 11,808 11,777 14,055
Minority interest in partnerships 190,619 189,181 111,691
Stockholders' equity
ESOP Convertible Preferred Stock, $1.00 par
value, authorized 10,000,000 shares,
issued 1,247,837, 1,249,582 and 1,257,286 14,723 14,744 14,835
Guaranteed ESOP benefit (11,766) (12,100) (12,390)
Common stock, $1.00 par value, authorized
200,000,000 shares, issued
16,930,202, 16,915,536 and 15,796,318 16,930 16,916 16,796
Paid-in capital 138,132 138,003 136,246
Retained earnings 85,703 86,355 83,544
Cumulative translation adjustments (3,256) (3,360) (2,985)
------------ ------------ ------------
240,466 240,558 236,046
------------ ------------ ------------
$616,617 $614,477 $459,009
------------ ------------ ------------
------------ ------------ ------------
TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(AMOUNTS IN THOUSANDS
EXCEPT PER SHARE FIGURES)
FOR THE FISCAL
QUARTER ENDED
----------------------------------
APRIL 1, APRIL 2,
1995 1994
--------------- --------------
Sales $129,100 $135,048
--------------- --------------
Costs and expenses
Cost of sales 103,243 99,328
Selling expenses 14,009 15,613
Administrative expenses 9,627 8,198
--------------- --------------
126,879 123,139
--------------- --------------
Income from operations 2,221 11,909
Investment income, net 927 541
Interest expense --- ---
Minority interest in partnerships (2,509) (7,960)
--------------- --------------
Income before income taxes 639 4,490
Income taxes 125 1,931
--------------- --------------
Net income $514 $2,559
--------------- --------------
--------------- --------------
Net income per common share
Primary $0.02 $0.13
--------------- --------------
--------------- --------------
Fully Diluted $0.02 $0.13
--------------- --------------
--------------- --------------
Dividends declared per common share $0.055 $0.055
--------------- --------------
--------------- --------------
Weighted average number of common shares
outstanding during the periods
Primary 17,397 17,350
--------------- --------------
--------------- --------------
Fully diluted 18,656 18,617
--------------- --------------
--------------- --------------
TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL QUARTER ENDED
APRIL 1, 1995 AND APRIL 2, 1994
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
APRIL 1, APRIL 2,
1995 1994
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net income $ 514 $ 2,559
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 7,863 6,898
Minority interest in partnerships 2,509 7,960
Other, net 179 --
Change in working capital items:
Receivables (4,602) 6,266
Inventories (8,961) (22,493)
Other current assets (2,024) (2,999)
Accounts payable and accrued liabilities 5,738 3,332
Other, net (1,041) (2,725)
------------ ------------
Net cash flow provided (used) in operating
activites $ 175 $ (1,202)
------------ ------------
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Capital expenditures $ (39,000) $ (26,868)
Purchase of marketable securities (4,477) --
Decrease in unexpended bond funds 4,766 --
Proceeds from notes receivable 11,998 --
Other, net 419 926
------------ ------------
Net cash used in investing activities $ (26,294) $ (25,942)
------------ ------------
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Cash dividends paid on common stock $ (931) $ (921)
Minority partners tax distributions (762) (2,231)
Net repayments under lines of credit (3,753) (2,847)
Principal payments of long-term debt (250) (200)
Other, net 3 260
------------ ------------
Net cash used by financing
activities $ (5,693) $ (5,939)
------------ ------------
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS
- ---------------------------------------
Net decrease in cash and cash
equivalents $ (31,812) $ (33,083)
Cash and cash equivalents at beginning
of year 57,627 66,968
------------ ------------
Cash and cash equivalents at end of period $ 25,815 $ 33,885
------------ ------------
------------ ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
- -------------------------------------------------
Cash paid during the period for:
Interest, net amounts capitalized $ -- $ --
Income taxes, net 650 1,166
TJ INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
INVENTORIES
Inventories consisted of the following:
(amounts in thousands)
April 1, Dec. 31, April 2,
1995 1994 1994
------- ------- -------
Finished goods $34,100 $27,512 $39,266
Raw materials and
work-in-progress 35,587 34,363 40,673
------- ------- -------
69,687 61,875 79,939
Reduction to LIFO cost (4,114) (5,263) (4,365)
------- ------- -------
$65,573 $56,612 $75,574
------- ------- -------
------- ------- -------
The determination of inventory under the LIFO method can be made only at the end
of each fiscal year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations must necessarily be based on the
company's estimates of expected year-end inventory levels and costs. Since
these estimates are subject to many forces beyond the company's control, interim
results could possibly be affected by the final year-end LIFO inventory
valuation.
RECLASSIFICATIONS:
Certain reclassifications have been made, none of which affected net income, to
conform prior year's information to the current year's presentation.
NET INCOME PER COMMON SHARE:
Primary net income per common share is based on net income adjusted for
preferred stock dividends and related tax benefits divided by the weighted
average number of common shares outstanding after giving effect to stock options
as common stock equivalents. Fully diluted net income per common share assumes
conversion of the ESOP convertible preferred stock into common stock at the date
of issuance.
Primary net income and fully diluted net income was calculated as follows:
For the fiscal
quarter ended
------------------
April 1, April 2,
1995 1994
------------------
PRIMARY NET INCOME
- ------------------
Net income as
reported $ 514 $ 2,559
Preferred stock dividends, net
of related tax benefits (236) (233)
------- -------
Primary net income $ 278 $ 2,326
------- -------
------- -------
FULLY DILUTED NET INCOME (LOSS)
Net income as
reported $ 514 $ 2,559
Additional ESOP contribution
payable upon assumed
conversion of ESOP
preferred stock, net of
related tax benefits (183) (180)
------- -------
Fully diluted net income $ 331 $ 2,379
------- -------
INDUSTRY SEGMENTS
The Company classifies its manufactured products into two core business units:
engineered lumber products and window operations. Summary financial information
by business unit is as follows:
(amounts in thousands)
FOR THE FISCAL QUARTER ENDED
Engineered Window
Lumber Operations Other Consolidated
---------- ---------- ----- ------------
April 1, 1995
Sales to unaffiliated customers $109,940 $ 19,160 $ --- $129,100
Income (loss) from operations 5,114 (2,319) (574) 2,221
April 2, 1994
Sales to unaffiliated customers $118,229 $ 16,819 $ --- $135,048
Income (loss) from operations $ 16,537 $ (4,165) $(463) $ 11,909
TJ INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE FISCAL QUARTER ENDED APRIL 1, 1995
OPERATING RESULTS
The following comments discuss material variations in the results of operations
for the comparative periods presented in the condensed consolidated statements
of income.
SALES
The company's sales by quarter during the current year and for the preceding
four years are as follows:
SALES BY QUARTER
----------------
(AMOUNTS IN THOUSANDS)
QUARTER 1995 1994 1993 1992 1991
- ------- -------- -------- -------- -------- --------
First $129,100 $135,048 $114,111 $ 75,561 $ 45,330
Second ======== 163,484 139,639 111,024 79,679
Third 171,715 152,729 113,512 84,838
Fourth 148,629 144,725 100,383 73,363
-------- -------- -------- --------
$618,876 $551,204 $400,480 $283,210
======== ======== ======== ========
GENERAL
The company's operations are strongly influenced by the cyclicality and
seasonality of residential housing 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. The seasonality of this industry, which is particularly pronounced in
the colder climates of the Northern, Mid-Western, and Rocky Mountain regions of
the United States, has an especially significant impact on the company's window
operations which are predominantly located in these regions. As a result of
this seasonal patterns, the company's sales have historically tended to be
lowest in the first and fourth quarters and highest in the second and third
quarters of each year.
The company's engineered lumber products continue to gain market acceptance as
high-quality substitutes for large-dimension structural lumber. Through the
company's marketing efforts, builders and other wood users are recognizing the
consistent quality, superior strength, lighter weight, and ease of installation
of engineered lumber products. The Company believes that 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, nor the second generation technologies of
TimberStrand [REGISTERED TRADEMARK] laminated strand lumber (LSL) or Parallam
[REGISTERED TRADEMARK] parallel strand lumber (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 (LVL) products.
Several of these companies have announced capacity expansions. These look-alike
products are manufactured using processes similar to the company's oldest
generation technologies.
The Company believes its network of manufacturing plants and multiple
technologies position it as the low-cost producer of engineered lumber, While
competition helps expand the market for engineered lumber including those
manufactured by the Company, it may also make the existing markets more price
competitive. It is likely these trends of increased price competition for
traditional engineered lumber products will continue for the foreseeable future.
The company's window and door products compete in the marketplace by striving to
provide reliable product quality and high levels of service through locally
tailored distribution channels. The marketing strategy involves establishing
strong regional customer bases through superior products and personal service.
The Company presently intends to sell or otherwise divest of its interest in the
window and door business depending on available opportunities.
FIRST QUARTER OF 1995 COMPARED WITH THE FIRST QUARTER OF 1994
Sales for the first quarter of 1995 decreased $5.9 million or 4% from the
comparable period in 1994. The first quarter 1995 sales were achieved in a
market environment of lower housing starts and lower lumber prices as compared
to the first quarter 1994. In addition, the quarter was influenced by the
continuing reluctance of the company's distribution customers to accumulate
inventory in anticipation of the spring building season. Despite the soft
market environment of the first quarter, unit volume sales of the company's
engineered lumber products increased approximately 2% from the volumes sold in
the first quarter of 1994.
Sales of the company's engineered lumber products decreased 7% to $109.9
million, as compared to $118.2 million in the first quarter of 1994. Prices for
engineered lumber products were on average approximately 9% lower in the first
quarter of 1995 as compared to the first quarter of 1994. The price reductions
continue the company's strategy of maintaining competitively priced products.
Prices of commodity lumber, which remains the primary competition for the
company's products were down as much as 30% in this year's first quarter as
compared to the near record higher levels of last year's first quarter.
Additionally, the Company continues to experience price competition from
competitor's look-alike products. Unit volumes sold increased 2% in the first
quarter as compared to 1994. Unit volume growth was led by the company's new
technology, TimberStrand-Registered Trademark- LSL products.
A number of factors combined to pressure margins, which declined to 20.0% as
compared to 26.4% for the same period in 1994. The sales price pressures
discussed previously, combined with increased raw material costs adversely
impacted margins. In addition, the Company incurred approximately $1.6 million
of start-up expenses at its Kentucky TimberStrand-Registered Trademark- LSL and
West Virginia combination Parallam-Registered Trademark- PSL and Microllam
- -Registered Trademark- LVL plants. The company's Deerwood TimberStrand
- -Registered Trademark- LSL plant in Deerwood, Minnesota saw continued
improvement in both lower unit costs and higher sales realizations.
Window and door sales in the quarter were $19.1 million as compared to $16.8
million in the first quarter of 1994. The operating loss was reduced from $4.2
million in 1994 to $2.3 million in the first quarter of 1995. The positive
improvements reflect the sale of the company's Canadian window business at the
end of 1994 and combining its remaining window business, Norco Windows, Inc.
with SealRite Windows and Oldach Windows to form Outlook Window Partnership.
The Company owns a 64% interest in Outlook. However, in accordance with the
terms of the Partnership Agreement which specifies the Company will be allocated
any loss by Norco in 1995, all the first quarter loss by Norco was recorded by
the Company.
Selling expenses decreased in absolute dollars and as a percent of sales. This
decrease was primarily from lower variable selling expenses on lower sales
combined with a reduction in window selling expenses.
Administrative expenses increased in absolute dollars and as a percentage of
sales. The increase reflects the company's investment in information systems
and management resources to accommodate the company's growth and to properly
support the developing technologies.
The $5.5 million decrease in minority interest from $8.0 million to $2.5 million
reflects, first, the decline in operating income at the engineered lumber
partnership and secondly, the allocation of 64% of the remaining losses incurred
by the Outlook Windows business.
LIQUIDITY AND CAPITAL RESOURCES
APRIL 1, 1995 COMPARED TO DECEMBER 31, 1994
Working capital decreased $25 million during the three months ended April 1,
1995. The decrease, was due primarily to payments for the continuing
construction of the company's two new technology plants. Additionally a source
of cash came from the partial collection of the note receivable from Anderson
Windows for the sale of the company's Canadian subsidiaries in 1994.
APRIL 1, 1995 COMPARED TO APRIL 2, 1994
Working capital declined slightly from $108.7 million at April 2, 1994 to $101.0
million at April 1, 1995. The decrease between periods is largely due to lower
inventory levels. While the Company plans an accumulation of inventory through
the first quarter of each year to meet the higher demand in the summer months,
the 1994 levels were all-time highs for the Company.
The company's' Board of Directors approved a capacity expansion program in 1993
that includes construction of a plant near Hazard, Kentucky, that will
manufacture TimberStrand-Registered Trademark- LSL. Construction commenced in
the fall of 1993, and when the plant is completed, expenditures are expected to
be just over $100 million. In addition, the company's Board of Directors
approved construction of a plant that will manufacture both Microllam-TM-
LVL and Parallam-Registered Trademark- PSL near Buckhannon, West Virginia, at
an expected cost of approximately $85 million. Construction on this plant
commenced in the second quarter of 1994. The Company has spent $140 million on
these projects to date and expects to spend the balance during the remainder of
1995. The Company is evaluating potential sites for a third TimberStrand
- -Registered Trademark- LSL plant, or an additional combination Microllam-TM-
LVL and Parallam-Registered Trademark- PSL plant, but has not determined
whether or when to proceed with that plant.
MacMillan Bloedel's Board of Directors authorized a $49 million capital
contribution to the TJM Partnership in light of the capacity expansion program.
The entire amount was contributed by December 1994.
During the second quarter of 1994, the Company issued $43.5 million of
industrial revenue bonds to finance construction of the Hazard, Kentucky,
TimberStrand[REGISTERED TRADEMARK] LSL plant. The bonds are due in a single
maturity in 2024, with interest payable semi-annually at 7 percent. Remaining
proceeds from this bond issue are recorded as unexpended bond funds.
The Company believes that current cash balances, cash generated from operation,
and borrowing under a $75 million Revolving Credit Facility will be sufficient
to meet the company's working capital expansion program approved by the Board of
Directors and to fund anticipated start-up losses at its Hazard and Buckhannon
plants. The Company also believes that additional or expanded lines of credit
or appropriate long-term capital can be obtained to fund other 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 partnerships. Distributions of cash by the partnerships to the
Company require either a super majority or unanimous consent of the
partnerships' Management Boards, with include members of both the Company and
its partners. Accordingly, there can be no assurance that distributions will be
approved for the payment of
dividends, to fund the company's expenses not incurred by the partnerships'
operations, or for other purposes.
Microllam-TM- is a trademark of Trus Joist MacMillan a Limited Partnership,
Boise, Idaho
Parallam-Registered Trademark- and TimberStrand-Registered Trademark- are
registered trademarks of Trus Joist MacMillan a Limited Partnership, Boise,
Idaho
TJ INTERNATIONAL, INC.
PART II
OTHER INFORMATION
Item 6.EXHIBITS AND REPORTS ON FORM 8-K
(a) Filed as an exhibit to this report is the following:
(27) Financial Data Schedule
(b) The Company filed a current report dated January 4, 1995 on
Form 8-K. In that report, the Company disclosed, under "Item 6,
Other Events" that Thomas H. Denig would replace current President
and CEO, Walter C. Minnick.
TJ INTERNATIONAL INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TJ INTERNATIONAL, INC.
/s/ VALERIE A. HEUSIKVELD
-------------------------------------------------
Valerie A. Heusinkveld
Vice President, Finance & Chief
Financial Officer
Date: May 16, 1995
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS TO FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL QUARTER ENDED APRIL 1, 1995 COMMISSION FILE NUMBER 0-7469
TJ INTERNATIONAL, INC.
EXHIBIT INDEX
Exhibits Page
- -------- ----
(27) Financial Data Schedule Document 2