Boise Announces 2006 Financial Results



    BOISE, Idaho, March 1 /CNW/ -- Boise Cascade Holdings, LLC today reported
net income of $71.6 million (including $3.7 million of income for special
items) for 2006, compared with net income of $121.4 million (including $22.0
million of expense for special items) for 2005.  Income from operations for
2006 was $183.4 million, compared to $272.7 million in 2005.  Boise also
reported net income for the fourth quarter 2006 of $3.1 million, compared to
$42.6 million for the same period in 2005.  Income from operations for the
fourth quarter 2006 was $29.8 million, compared with $34.2 million for the
same period in 2005.

    "In 2006, we had a cyclical shift in our markets with improved paper
markets but an unprecedented contraction in building materials," said Tom
Stephens, chairman and chief executive officer.  "We did continue to reinvest
to grow the value of our company through several projects.  We launched a
project to give the number three paper machine at our mill in Wallula,
Washington, the capability to produce label and release grades; we broke
ground for a new Building Materials Distribution center in Milton, Florida;
and we increased our containerboard integration by purchasing converting
capacity.  Our Building Materials Distribution and Wood Products businesses
weathered the sharp downturn in the housing market during the second half of
the year relatively well, due to our product mix and the right reaction to a
falling market by the organization operating those businesses.  At the same
time, we continued our fundamental strategy of optimizing cash flow and paying
down debt."



    
                               FINANCIAL HIGHLIGHTS
                                 ($ in millions)

                                                               Year Ended
                                                               December 31
                              4Q 2006   4Q 2005   3Q 2006    2006      2005
    Sales                    $1,269.5  $1,424.3  $1,480.3  $5,779.9  $5,907.4
    Income from operations      $29.8     $34.2     $63.1    $183.4    $272.7
    Net income                   $3.1     $42.6     $34.9     $71.6    $121.4
    EBITDA(a)                   $69.4     $67.3    $102.3    $339.1    $401.2

    Special items included
     in net income and
     EBITDA:

    Gain for changes in
     retiree healthcare           $--      $9.9       $--      $3.7      $9.9
    Write-off of costs in
     connection with               --        --        --        --      (3.6)
     cancelled IPO                 --        --        --        --      (3.6)
    Increase in EBITDA             --       9.9        --       3.7       6.3

    Additional special items
     included in net income
     but not included in
     EBITDA:

    Change in fair value of
     interest rate swaps           --        --        --        --       9.9
    Write-off of deferred
     financing costs               --        --        --        --     (43.0)
    Net tax benefit of
     rescinding C corporation
     status                        --      37.3        --        --       4.8
                                   --      37.3        --        --     (28.3)
    Increase (decrease) in
     net income                   $--     $47.2       $--      $3.7    $(22.0)

    (a)  For reconciliation of net income to EBITDA, see "Segment Information"
         in the financial section.
    

    At December 31, 2006, our net debt was $1.2 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 Corp., which was repaid in
February 2005.  Net debt includes long- and short-term debt owed to third
parties, less cash and cash equivalents.

    
    Sales
    
    Sales for the year 2006 were $5.8 billion, compared to $5.9 billion in
2005.  Year-over-year sales were lower in both the Building Materials
Distribution and Wood Products segments due primarily to the slowdown in the
housing market, which contributed to lower commodity sales prices and lower
engineered wood products (EWP) sales volumes from our Wood Products segment.
Sales increased in our Paper segment due primarily to increases in prices for
both commodity and specialty & premium paper grades.  The increase in
Packaging & Newsprint segment sales was driven primarily by the acquisition of
Central Texas Corrugated (CTC) in February 2006, coupled with higher prices,
which was offset, in part, by the adoption of Emerging Issues Task Force
(EITF) 04-13, which changed our accounting for containerboard trade sales. Had
EITF 04-13 been in effect in 2005, it would have reduced sales $76.1 million
and would have reduced material, labor, and other operating expenses by about
the same amount.
    Fourth quarter 2006 sales were $1.3 billion, compared to $1.4 billion for
the same period of 2005.  Comparing the fourth quarter 2006 to the same period
of 2005, Building Materials Distribution segment sales decreased 16% due to
lower sales volumes and lower commodity sales prices.  Wood Products segment
sales were down 23% due primarily to lower plywood prices, coupled with lower
sales volumes of laminated veneer lumber (LVL), I-joists, and plywood, which
were down 19%, 28%, and 7%, respectively.  Paper segment sales were up 3% over
the same period in 2005 due to higher sales prices, offset in part, by lower
sales volumes.  Packaging & Newsprint segment sales increased 2% due to the
acquisition of CTC and higher sales prices, offset in part, by the impact of
EITF 04-13.

    
    Income From Operations
    
    Income from operations decreased 33% in 2006 to $183.4 million from
$272.7 million in 2005.  Segment income decreased in both Building Materials
Distribution and Wood Products driven by softer housing markets, and segment
income increased in both Paper and Packaging & Newsprint as sales prices rose
in those businesses.
    Comparing fourth quarter 2006 with fourth quarter 2005, segment income in
Building Materials Distribution decreased $8.0 million, from $20.1 million in
2005 to $12.1 million, due primarily to lower sales volumes and lower
commodity sales prices.  Segment income in Wood Products decreased $24.6
million, from $20.2 million of income in 2005 to a loss of $4.4 million, due
primarily to lower plywood sales prices, coupled with lower engineered wood
products and plywood sales volumes and higher per-unit conversion costs,
offset in part, by lower wood costs.  Paper segment income increased $26.2
million from a loss of $7.9 million in 2005 to $18.3 million of income in
2006, due to higher sales prices and lower energy costs, offset in part, by
higher fiber and chemical costs as well as higher manufacturing costs.  During
the fourth quarter 2006, our pulp sales volumes were 15,000 tons lower than in
the same quarter of 2005.  We elected to reduce pulp production at our mill in
St. Helens, Oregon, because of difficulty sourcing an adequate volume of wood
chips at acceptable prices.  Packaging & Newsprint segment income increased
$10.6 million, from $3.0 million a year ago to $13.6 million, due primarily to
increased prices for linerboard.  These improvements were offset, in part, by
higher fiber and manufacturing costs.

    
    About Boise Cascade
    
    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 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 March 1,
2007, at 11:00 am Eastern, during which 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 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 in the News & Events section of Boise's
website until March 28, 2007.

    
    Forward-Looking Statements
    
    This news release may contain statements that are "forward looking" with
Private Securities Litigation Reform Act of 1995.  These statements speak only
as of the date of this press release.  While they are based on the current
expectations and beliefs of management, they are subject to a number of
uncertainties and assumptions that could cause actual results to differ from
the expectations expressed in this release.



    
                        Boise Cascade Holdings, L.L.C.
                      Consolidated Statements of Income
                          (unaudited, in thousands)

                                                   Three Months Ended
                                              December 31        September 30,
                                           2006        2005           2006
    Sales
    Trade                               $1,118,483  $1,287,700     $1,332,187
    Related parties                        150,984     136,565        148,159
                                         1,269,467   1,424,265      1,480,346
    Costs and expenses
    Materials, labor, and other
     operating expenses                  1,103,276   1,276,281      1,286,763
    Depreciation, amortization, and
     depletion                              40,921      33,433         39,274
    Selling and distribution expenses       69,397      68,125         71,555
    General and administrative expenses     21,019      21,631         19,725
    Other (income) expense, net              5,086      (9,440)(a)       (105)
                                         1,239,699   1,390,030      1,417,212

    Income from operations                  29,768      34,235         63,134

    Foreign exchange loss                   (1,249)       (338)           (89)
    Interest expense                       (25,218)    (28,845)       (28,400)
    Interest income                          1,334       1,240            909
                                           (25,133)    (27,943)       (27,580)

    Income before income taxes               4,635       6,292         35,554
    Income tax (provision) benefit (b)      (1,492)     36,331           (616)
    Net income                              $3,143     $42,623        $34,938



                             Segment Information
                          (unaudited, in thousands)

                                                   Three Months Ended
                                               December 31       September 30,
                                            2006        2005           2006
    Segment sales
    Building Materials Distribution       $599,119    $717,424       $756,608
    Wood Products                          229,447     298,410        299,131
    Paper                                  369,170     357,098        373,458
    Packaging & Newsprint                  190,144     186,501        206,797
    Intersegment eliminations and other   (118,413)   (135,168)      (155,648)
                                        $1,269,467  $1,424,265     $1,480,346

    Segment income (loss)
    Building Materials Distribution        $12,088     $20,076        $19,354
    Wood Products                           (4,388)     20,205          5,606
    Paper                                   18,313      (7,883)        30,822
    Packaging & Newsprint                   13,573       2,978         15,523
    Corporate and Other                    (11,067)     (1,479)(a)     (8,260)
                                            28,519      33,897         63,045

    Interest expense                       (25,218)    (28,845)       (28,400)
    Interest income                          1,334       1,240            909
    Income before income taxes              $4,635      $6,292        $35,554

    EBITDA (h)
    Building Materials Distribution        $14,201     $22,457        $21,720
    Wood Products                            3,183      26,395         12,671
    Paper                                   34,863       5,965         46,533
    Packaging & Newsprint                   26,861      12,476         28,293
    Corporate and Other                     (9,668)         37 (a)     (6,898)
                                           $69,440     $67,330       $102,319



                        Boise Cascade Holdings, L.L.C.
                      Consolidated Statements of Income
                                (in thousands)

                                               Year Ended December 31
                                                2006            2005
    Sales
    Trade                                   $5,203,952       $5,345,106
    Related parties                            575,913          562,338
                                             5,779,865        5,907,444
    Costs and expenses
    Materials, labor, and other operating
     expenses                                5,063,041        5,155,112
    Fiber costs from related parties                --           17,609
    Depreciation, amortization, and
     depletion                                 155,311          128,826
    Selling and distribution expenses          283,636          264,072
    General and administrative expenses         88,364           74,732
    Other (income) expense, net                  6,089(c)(d)     (5,592)(a)(e)
                                             5,596,441        5,634,759

    Income from operations                     183,424          272,685

    Foreign exchange gain (loss)                   401             (340)
    Change in fair value of interest rate
     swaps                                          --            9,886(f)
    Interest expense                           (112,404)       (166,344)(g)
    Interest income                               3,781           3,391
                                               (108,222)       (153,407)

    Income before income taxes                   75,202         119,278
    Income tax (provision) benefit (b)           (3,631)          2,089
    Net income                                  $71,571        $121,367



                             Segment Information
                                (in thousands)

                                            Year Ended December 31
                                             2006             2005
    Segment sales
    Building Materials Distribution       $2,950,273       $3,052,316
    Wood Products                          1,155,873        1,294,390
    Paper                                  1,494,687        1,417,813
    Packaging & Newsprint                    766,537          731,559
    Intersegment eliminations and other     (587,505)        (588,634)
                                          $5,779,865       $5,907,444

    Segment income (loss)
    Building Materials Distribution          $75,343          $99,917
    Wood Products                             37,231(d)       119,356
    Paper                                     63,080           58,570
    Packaging & Newsprint                     45,259           23,840
    Corporate and Other                      (37,088)(c)(d)   (29,338)(a)(e)
                                             183,825          272,345

    Change in fair value of interest rate
     swaps                                        --            9,886 (f)
    Interest expense                        (112,404)        (166,344)(g)
    Interest income                            3,781            3,391
    Income before income taxes               $75,202         $119,278

    EBITDA (h)
    Building Materials Distribution          $84,574         $108,983
    Wood Products                             64,854 (d)      142,397
    Paper                                    125,411          112,602
    Packaging & Newsprint                     96,074           61,018
    Corporate and Other                      (31,777)(c)(d)   (23,829)(a)(e)
                                            $339,136         $401,171



    Summary Notes to Consolidated Statements of Income and Segment Information
    

    The Consolidated Statements of Income, 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 2006 Annual Report on Form 10-K.  The 2006
Annual Report on Form 10-K will be available in March 2007. Net income for all
periods presented involved estimates and accruals.

    
    (a)  Includes a $9.9 million gain for changes to our retiree healthcare
         programs.

    (b)  In May 2005, we converted to a C corporation from a limited liability
         company and in December 2005, we rescinded our conversion to a
         C corporation.  The three months ended December 31, 2005, includes a
         $37.3 million net tax benefit recorded as a result of rescinding our
         C corporation status, which was partially offset by income tax
         expense recognized by our taxable subsidiaries.

         Except for our separate subsidiaries that are taxed as corporations,
         tax expenses and benefits related to the three months ended
         September 30, 2006, and December 31, 2006, and the years ended
         December 31, 2006 and 2005, were recognized by the members of the
         limited liability company.

         During the period we were a C corporation, we recorded approximately
         $4.8 million of deferred tax liabilities related to our cash flow
         hedges, with the offset to other comprehensive income in our
         Consolidated Balance Sheet.  As described above, in connection with
         converting back to a limited liability company, we reversed the
         income tax expense and deferred taxes recorded while we were a
         corporate entity.  The reversal of the deferred tax liabilities
         related to our cash flow hedges resulted in a $4.8 million income tax
         benefit for the year ended December 31, 2005, that was partially
         offset by income tax expense recognized by our taxable subsidiaries.
         The $4.8 million recorded in "Other comprehensive income" is
         recognized as income tax expense as the hedges expire.

    (c)  Includes a $3.7 million gain for changes in our retiree healthcare
         programs.

    (d)  Includes $4.5 million of special project costs, of which $3.0 million
         is recorded in Corporate and Other and $1.5 million in Wood Products.

    (e)  Includes $3.6 million of expense for the write-off of costs incurred
         in connection with the canceled initial public offering.

    (f)  Represents the change in the fair value of interest rate swaps
         related to our amended and restated senior credit facilities.

    (g)  Includes the write-off of $43.0 million of deferred financing costs
         resulting from the repayment of the Tranche B term loan.

    (h)  EBITDA represents income before interest (interest expense, interest
         income, and changes in fair value of interest rate swaps), income
         taxes, and depreciation, amortization, and depletion.  The following
         table reconciles net income to EBITDA for the three months ended
         December 31, 2006 and 2005, and September 30, 2006:



                                                   Three Months Ended

                                              December 31        September 30,
                                             2006      2005           2006
                                               (unaudited, in thousands)

    Net income                              $3,143   $42,623(a)      $34,938
    Interest expense                        25,218    28,845          28,400
    Interest income                         (1,334)   (1,240)           (909)
    Income tax provision (benefit) (b)       1,492   (36,331)            616
    Depreciation, amortization, and
     depletion                              40,921    33,433          39,274
    EBITDA                                 $69,440   $67,330        $102,319


    

    The following table reconciles net income to EBITDA for the years ended
December 31, 2006 and 2005:
    
                                                Year Ended December 31
                                                2006            2005
                                                   (in thousands)

    Net income                               $71,571(c)(d)   $121,367(a)(e)
    Change in fair value of interest rate
     swaps                                        --           (9,886)(f)
    Interest expense                         112,404          166,344(g)
    Interest income                           (3,781)          (3,391)
    Income tax provision (benefit) (b)         3,631           (2,089)
    Depreciation, amortization, and
     depletion                               155,311          128,826
    EBITDA                                  $339,136         $401,171



                        Boise Cascade Holdings, L.L.C.
                         Consolidated Balance Sheets
                                (in thousands)

                                                         December 31
                                                    2006              2005
    ASSETS

    Current
    Cash and cash equivalents                      $45,169           $88,171
    Receivables
       Trade, less allowances of $1,734
        and $1,947                                 327,138           338,821
       Related parties                              37,986            43,010
       Other                                        19,027            20,980
    Inventories                                    640,826           633,783
    Other                                           13,027            10,694
                                                 1,083,173         1,135,459

    Property
    Property and equipment, net                  1,462,315         1,497,054
    Fiber farms and deposits                        40,492            52,236
                                                 1,502,807         1,549,290

    Deferred financing costs                        31,474            37,778
    Goodwill                                        21,846            15,101
    Intangible assets                               37,507            31,804
    Other assets                                    28,390            44,231
    Total assets                                $2,705,197        $2,813,663



                        Boise Cascade Holdings, L.L.C.
                   Consolidated Balance Sheets (continued)
                   (in thousands, except for equity units)

                                                         December 31
                                                    2006             2005
    LIABILITIES AND CAPITAL

    Current
    Short-term borrowings                           $3,200               $--
    Accounts payable                               341,201           383,207
    Accrued liabilities
       Compensation and benefits                    93,287           106,289
       Interest payable                             11,847            10,630
       Other                                        54,600            46,244
                                                   504,135           546,370
    Debt
    Long-term debt                               1,213,900         1,365,800
    Note payable to related party, net                  --           270,854
                                                 1,213,900         1,636,654
    Other
    Compensation and benefits                      111,676           121,269
    Other long-term liabilities                     36,642            31,937
                                                   148,318           153,206

    Redeemable equity units
    Series B equity units - 17,107,889
     units and 17,296,624 units outstanding         17,477             9,508
    Series C equity units - 39,576,540
     units and 32,173,830 units outstanding          6,434             2,904
                                                    23,911            12,412
    Commitments and contingent liabilities

    Capital
    Series A equity units - no par value;
     66,000,000 units authorized and outstanding    78,290            39,885
    Series B equity units - no par value;
     550,000,000 units and 549,000,000 units
     authorized; 530,356,601 units and
     530,356,601 units outstanding                 724,988           417,601
    Series C equity units - no par value;
     44,000,000 units and 38,165,775 units
     authorized                                     11,655             7,535
    Total capital                                  814,933           465,021

    Total liabilities and capital               $2,705,197        $2,813,663



                        Boise Cascade Holdings, L.L.C.
                    Consolidated Statements of Cash Flows
                                (in thousands)

                                                    Year Ended December 31
                                                    2006              2005
    Cash provided by (used for) operations
    Net income                                    $71,571           $121,367
    Items in net income not using
     (providing) cash
       Depreciation, depletion, and
        amortization of deferred financing
        costs and other costs                     157,312            178,677
       Related-party interest expense              14,070             18,909
       Deferred income taxes                          968             (4,788)
       Pension and other postretirement
        benefit expense                            27,447             28,681
       Gain on changes in retiree
        healthcare programs                        (3,741)            (9,900)
       Change in fair value of interest
        rate swaps                                     --             (9,886)
       Management equity units expense              3,514              2,904
       Loss on sales of assets                      3,311                 --
       Other                                        2,990              2,365
    Decrease (increase) in working capital,
     net of acquisitions
       Receivables                                 23,558            (61,415)
       Inventories                                 (4,813)           (38,942)
       Accounts payable and accrued
        liabilities                               (25,103)            95,897
    Pension and other postretirement
     benefit payments                             (20,736)           (11,073)
    Current and deferred income taxes               4,385             (4,466)
    Other                                          (1,055)            (1,591)
       Cash provided by operations                253,678            306,739

    Cash provided by (used for) investment
    Expenditures for property and equipment      (153,524)          (170,282)
    Acquisition of businesses and facilities      (42,609)                --
    Sales of assets                                43,487             18,536
    Repayment of note receivable from
     related party, net                               -              157,509
    Other                                           1,908              3,654
       Cash provided by (used for) investment    (150,738)             9,417

    Cash provided by (used for) financing
    Issuances of long-term debt                   373,300            920,000
    Payments of long-term debt                   (525,200)        (1,534,200)
    Note payable to related party, net           (283,847)           250,272
    Tax distributions to members                  (19,269)           (23,143)
    Proceeds from changes to interest
     rate swaps                                    25,620                 --
    Capital contributions from members            280,366                 --
    Net repurchases of equity units                   (89)              (746)
    Other                                           3,177             (3,513)
       Cash used for financing                   (145,942)          (391,330)

    Decrease in cash and cash equivalents         (43,002)           (75,174)

    Balance at beginning of the year               88,171            163,345

    Balance at end of the year                    $45,169            $88,171

    




For further information:

For further information: Media, Mike Moser, +1-208-384-6016, or cell, 
+1-208-867-4346, or Investor Relations, Rob McNutt, +1-208-384-7023, both of 
Boise Cascade Holdings, LLC Web Site: http://www.bc.com

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BOISE CASCADE HOLDINGS, LLC

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