Boise Cascade Holdings Reports First Quarter 2009 Financial Results



    BOISE, Idaho, May 7 /CNW/ -- Boise Cascade Holdings, L.L.C. (BC Holdings
or Company) announced a net loss of $88.2 million for the quarter ended March
31, 2009.  Approximately $40.0 million of the quarterly loss was related to
noncash charges associated with the Company's equity investment in Boise Inc.

    In first quarter 2009, BC Holdings' building products subsidiary, Boise
Cascade, L.L.C., reported negative earnings before interest, taxes,
depreciation, and amortization ("EBITDA") of $31.3 million, which included the
negative impact of $5.0 million of expenses related to the indefinite
curtailment of its La Grande, Oregon, lumber operation.  The Company finished
first quarter with $189.5 million of cash after making pension plan
contributions totaling $25.0 million, tax distributions of $9.9 million, open
market note repurchases of $5.6 million, and payments under deferred
compensation agreements for employees terminated in connection with the sale
of our paper businesses of $2.5 million.  The individual segment results are
discussed in more detail below.

    "We took a number of difficult actions this quarter in response to the
very weak end-product demand and the uncertainty as to the timing and strength
of a recovery in new residential construction.  The steps taken this quarter
included completing the closure of our White City, Oregon, plywood operation;
announcing the indefinite curtailment of our La Grande, Oregon, lumber
operation; curtailing indefinitely our plywood production in Oakdale,
Louisiana; freezing salaries; suspending the 401(k) match for our salaried
employees; freezing our salaried pension plan effective at the end of this
year; and reducing capital spending for 2009 to a range of $20 to $25 million.
 These actions are all aimed at reducing our cash usage and preserving our
good liquidity position," remarked Duane McDougall, chairman and chief
executive officer.
    

    First Quarter Segment Results
    
    U.S. housing starts declined 50% in the first quarter, dropping from an
annualized rate of 1.05 million in the first quarter 2008 to 0.52 million in
the first quarter 2009.  In the first quarter, turmoil in financial markets,
continuing foreclosures, elevated inventories of unsold homes, falling median
home prices, rising unemployment, and low consumer confidence all contributed
to a weak demand environment for the building products we manufacture and
distribute.

    Sales in our Building Materials Distribution ("BMD") business during the
first quarter were $335.0 million, compared with $503.9 million in first
quarter 2008 and $411.5 million in fourth quarter 2008.  Compared with first
quarter 2008, the 34% decline in sales resulted primarily from a 33% decline
in product volumes sold.  EBITDA generated by BMD declined from positive $0.7
million in first quarter 2008 to negative $6.6 million in first quarter 2009. 
BMD's lower sales activity resulted in fewer gross margin dollars being
generated to cover cash operating costs, such as occupancy, payroll, and
delivery; however, almost half of the gross profit decline compared to first
quarter 2008 was offset by cost and efficiency improvements made over the last
year.

    Sales in our Wood Products segment during the first quarter were $116.5
million, compared with $198.7 million in first quarter 2008 and $156.0 million
in fourth quarter 2008.  Compared with first quarter 2008, sales of engineered
wood products, plywood, and lumber declined due to lower volumes and prices. 
Particleboard sales declined as reduced volumes were only modestly offset by
higher prices.  First quarter EBITDA for Wood Products was negative $28.6
million, down $19.0 million from the $9.6 million of negative EBITDA reported
in first quarter 2008.  The decrease in EBITDA was driven principally by
pricing declines.  The first quarter 2009 negative EBITDA included $5.0
million of expenses associated with our plan to indefinitely curtail our La
Grande, Oregon, lumber mill this summer.  We have been taking rolling
curtailments at all of our other Wood Products operations to maintain
appropriate inventory levels, while trying to minimize the negative impact
these curtailments have on our employees and our operating results.
    

    Outlook
    
    We expect end product demand to remain weak when compared to normal
historical demand levels.  We believe single-family housing starts are
unlikely to show any significant rebound during 2009 absent a change in the
mortgage markets, improved consumer confidence, and a reduction in
foreclosures and housing vacancy rates.  Industry product sales volumes are
likely to remain depressed and commodity wood product prices will largely
depend on operating rates.  We expect to manage our production levels to our
sales demand, which will likely cause us to operate our facilities well below
their capacity.
    

    About Boise Cascade
    
    BC Holdings is a privately held company headquartered in Boise, Idaho. 
Our wholly owned subsidiary, Boise Cascade, L.L.C., is a leading U.S.
wholesale distributor of building products and one of the largest producers of
engineered wood products and plywood in North America.  At March 31, 2009, we
also owned approximately 47.6% of Boise Inc., a publicly traded North American
paper and packaging producer listed on the New York Stock Exchange.  For more
information, please visit our website at www.bc.com.
    

    Webcast and Conference Call
    
    BC Holdings will host a webcast and conference call on Thursday, May 7,
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 Cascade website.  Go
to www.bc.com and click on the link to the webcast under the News & Events
heading.  Please go to the website at least 15 minutes before the start of the
webcast to register.  To join the conference call, dial 800-374-0165
(international callers should dial 706-902-1407) at least 10 minutes before
the start of the call.

    The archived webcast will be available in the News & Events section of
Boise Cascade's website.  A replay of the conference call will be available
from Thursday, May 7, at 2:00 p.m. Eastern through Friday, May 15, at 11:59
p.m. Eastern.  Playback numbers are 800-642-1687 for U.S. calls and
706-645-9291 for international calls, and the passcode will be 95298165.
    

    Basis of Presentation
    
    We present our consolidated financial statements in accordance with U.S.
generally accepted accounting principles (GAAP).  Our earnings release also
supplements the GAAP presentations by reflecting EBITDA.  EBITDA represents
income (loss) before interest (interest expense, interest income, and change
in fair value of interest rate swaps), income taxes, and depreciation,
amortization, and depletion.  EBITDA is the primary measure used by our chief
operating decision makers to evaluate segment operating performance and to
decide how to allocate resources to segments.  We believe EBITDA is useful to
investors because it provides a means to evaluate the operating performance of
our segments and our company on an ongoing basis using criteria that are used
by our internal decision makers and because it is frequently used by investors
and other interested parties in the evaluation of companies.  We believe
EBITDA is a meaningful measure because it presents a transparent view of our
recurring operating performance and allows management to readily view
operating trends, perform analytical comparisons, and identify strategies to
improve operating performance.  For example, we believe that the inclusion of
items such as taxes, interest expense, and interest income distorts
management's ability to assess and view the core operating trends in our
segments.  EBITDA, however, is not a measure of our liquidity or financial
performance under GAAP and should not be considered as an alternative to net
income (loss), income (loss) from operations, or any other performance measure
derived in accordance with GAAP or as an alternative to cash flow from
operating activities as a measure of our liquidity.  The use of EBITDA instead
of net income (loss) or segment income (loss) has limitations as an analytical
tool, including the inability to determine profitability; the exclusion of
interest expense, interest income, change in the fair value of interest rate
swaps, and associated significant cash requirements; and the exclusion of
depreciation, amortization, and depletion.  Management compensates for these
limitations by relying on our GAAP results.  Our measures of EBITDA are not
necessarily comparable to other similarly titled captions of other companies
due to potential inconsistencies in the methods of calculation.
    

    Forward-Looking Statements
    
    This news release contains statements that are "forward looking" within
the 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 Loss
                                (unaudited, in thousands)
    

    
                                                  Three Months Ended
                                              March 31          December 31,
                                          2009       2008 (b)       2008
    Sales
    Trade                              $407,724      $880,800     $501,169
    Related parties                       5,703        95,782       15,433
                                        413,427       976,582      516,602
    Costs and expenses
    Materials, labor, and other
     operating expenses                 381,071       880,658      462,162
    Materials, labor, and other
     operating expenses
     from related parties                12,290         6,180       21,792
    Depreciation, amortization, and
     depletion (c)                       11,119        10,035        8,788
    Selling and distribution expenses    45,241        63,365       48,043
    General and administrative
     expenses                             6,925        14,653        6,786
    General and administrative
     expenses from related party          2,433           977        2,133
    Gain (loss) on sale of Paper and
     Packaging & Newsprint assets (a)         -        (8,063)          81
    Other (income) expense, net (c)       2,681          (942)       6,709
                                        461,760       966,863      556,494
    

    Income (loss) from operations       (48,333)        9,719      (39,892)

    
    Equity in net income (loss) of
     affiliate                            3,005        (8,552)       3,921
    Impairment of investment in equity
     affiliate (e)                      (43,039)            -            -
    Foreign exchange loss                  (332)         (613)      (1,702)
    Change in fair value of contingent
     value rights (f)                       194        (4,773)       1,296
    Change in fair value of interest
     rate swaps (g)                           -        (6,284)           -
    Gain on repurchase of long-term
     debt (d)                             6,026             -            -
    Interest expense                     (5,616)      (15,381)      (6,242)
    Interest income                         397         2,601        1,062
                                        (39,365)      (33,002)      (1,665)
    

    
    Loss before income taxes            (87,698)      (23,283)     (41,557)
    Income tax (provision) benefit         (483)       (1,155)       1,053
    Net loss                           $(88,181)     $(24,438)    $(40,504)

    

    
                                 Segment Information
                              (unaudited, in thousands)
    

    
                                            Three Months Ended
                                      March 31                 December 31,
                                2009             2008 (b)          2008
    Segment sales
    Building Materials
     Distribution            $335,022            $503,884        $411,472
    Wood Products             116,479             198,733         156,037
    Paper (b)                       -             253,508               -
    Packaging & Newsprint (b)       -             113,485               -
    Intersegment
     eliminations and other   (38,074)            (93,028)        (50,907)
                             $413,427            $976,582        $516,602
    

    
    Segment income (loss)
    Building Materials
     Distribution             $(8,544)            $(1,209)        $(4,833)
    Wood Products (c)         (37,631)            (17,100)        (31,488)
    Paper (b)                       -              20,718               -
    Packaging & Newsprint (b)       -               5,685               -
    Corporate and Other (a)    (2,490)              1,012          (5,273)
                              (48,665)              9,106         (41,594)
    

    
    Equity in net income
     (loss) of affiliate        3,005              (8,552)          3,921
    Impairment of investment
     in equity affiliate (e)  (43,039)                  -               -
    Change in fair value of
     contingent value
     rights (f)                   194              (4,773)          1,296
    Change in fair value of
     interest rate swaps (g)        -              (6,284)              -
    Gain on repurchase of
     long-term debt (d)          6,026                   -               -
    Interest expense           (5,616)            (15,381)         (6,242)
    Interest income               397               2,601           1,062
    Loss before income
     taxes                   $(87,698)           $(23,283)       $(41,557)
    

    
    EBITDA (h)
    Building Materials
     Distribution             $(6,611)               $714         $(2,913)
    Wood Products             (28,559)             (9,566)        (24,708)
    Paper                           -              21,066               -
    Packaging & Newsprint           -               5,738               -
    Corporate and Other        (2,376)              1,189          (5,185)
    Equity in net income
     (loss) of affiliate        3,005              (8,552)          3,921
    Impairment of investment
     in equity affiliate (e)  (43,039)                  -               -
    Change in fair value of
     contingent value
    rights (f)                    194              (4,773)          1,296
    Gain on repurchase of
     long-term debt (d)         6,026                   -               -
                             $(71,360)             $5,816        $(27,589)



    

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

    
                                                  March 31,       December 31,
                                                    2009             2008
    ASSETS
    

    
    Current
    Cash and cash equivalents                     $189,544          $275,803
    Receivables
      Trade, less allowances of $2,124 and
       $1,843                                      106,750            78,393
      Related parties                                1,497             3,112
      Other                                          4,370             5,907
    Inventories                                    265,249           279,023
    Prepaid expenses and other                       3,613             1,296
                                                   571,023           643,534
    Property
    Property and equipment, net                    282,985           291,999
    Timber deposits                                  8,510             8,632
                                                   291,495           300,631
    

    
    Investment in equity affiliate                  22,622            20,985
    Deferred financing costs                         7,318             7,862
    Goodwill                                        12,170            12,170
    Intangible assets, net                           9,143             9,248
    Other assets                                     6,259             6,009
    Total assets                                  $920,030        $1,000,439

    

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

    
                                                        March 31, December 31,
                                                          2009        2008
    LIABILITIES AND CAPITAL
    

    
    Current
    Accounts payable
      Trade                                              $83,100    $69,478
      Related parties                                      2,931      2,195
    Accrued liabilities
      Compensation and benefits                           32,487     38,228
      Interest payable                                     7,756      3,930
      Other                                               15,028     30,893
                                                         141,302    144,724
    Debt
    Long-term debt                                       303,146    315,000
    

    
    Other
    Compensation and benefits                            120,754    172,275
    Other long-term liabilities                           11,304     12,125
                                                         132,058    184,400
    Redeemable equity units
    Series B equity units - 2,914,840 and 2,920,574
     units outstanding                                     2,915      2,920
    Series C equity units - 19,945,724 and
     11,016,668 units outstanding                          3,514      3,037
                                                           6,429      5,957
    Commitments and contingent liabilities
    

    
    Capital
    Series A equity units - no par value; 66,000,000
     Units authorized and outstanding                     83,588     81,967
    Series B equity units - no par value;
     550,000,000 units authorized
       and 532,414,853 units outstanding                 253,507    268,391
    Series C equity units - no par value; 44,000,000
     units authorized
       and 11,183,000 units outstanding                        -          -
    Total capital                                        337,095    350,358
    Total liabilities and capital                       $920,030 $1,000,439



    

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

    
                                                      Three Months Ended
                                                           March 31
                                                   2009                2008
    Cash provided by (used for) operations
    Net loss                                    $(88,181)           $(24,438)
    Items in net loss not using (providing)
     cash
       Equity in net (income) loss of
        affiliate                                 (3,005)              8,552
       Impairment of investment in equity
        affiliate                                 43,039                   -
       Depreciation, depletion, and
        amortization of deferred financing
        costs and other                           11,462              10,378
       Related-party interest income                   -                (986)
       Pension and other postretirement
        benefit expense                            4,939               5,007
       Change in fair value of contingent
        value rights                                (194)              4,773
       Change in fair value of interest rate
        swaps                                          -               6,284
       Management equity units expense,              778                 347
        net of expense related to the Sale
       Gain on repurchase of long-term debt       (6,026)                  -
       Gain on sale of assets, net                   (82)            (10,972)
       Facility closure and curtailment costs      2,754                   -
       Other                                         332                 633
    Decrease (increase) in working capital,
     net of dispositions
       Receivables                               (25,800)            (75,192)
       Inventories                                13,174              12,765
       Prepaid expenses and other                 (1,357)             (1,646)
       Accounts payable and accrued
        liabilities                                7,826              21,143
    Pension and other postretirement
     benefit payments                            (25,045)            (20,716)
    Current and deferred income taxes                476               1,403
    Other                                         (1,826)               (155)
       Cash used for operations                  (66,736)            (62,820)
    

    
    Cash provided by (used for) investment
    Proceeds from sale of assets, net of
     cash contributed                                137           1,227,327
    Expenditures for property and equipment       (4,229)            (18,219)
    Increase in restricted cash                        -            (183,290)
    Other                                            101              (1,019)
       Cash provided by (used for) investment     (3,991)          1,024,799
    

    
    Cash provided by (used for) financing
    Issuances of long-term debt                        -             229,224
    Payments of long-term debt                    (5,627)           (925,563)
    Short-term borrowings                              -             (10,500)
    Tax distributions to members                  (9,897)           (127,342)
    Repurchase of management equity units             (8)            (18,289)
    Cash paid for termination of interest
     rate swaps                                        -             (11,918)
    Other                                              -              (4,114)
       Cash used for financing                   (15,532)           (868,502)
    

    
    Increase (decrease) in cash and cash
     equivalents                                 (86,259)             93,477
    

    Balance at beginning of the period           275,803              57,623

    
    Balance at end of the period                $189,544            $151,100


    Summary Notes to Consolidated Financial Statements and Segment Information

    
    The Consolidated Statements of 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 2008 Annual Report on Form 10-K and the
company's Quarterly Report on Form 10Q for the period ended March 31, 2009. 
Net loss for all periods presented involved estimates and accruals.


    
    (a)  In connection with the sale of our Paper and Packaging & Newsprint
         assets, and most of our Corporate and Other assets (the Sale), to
         Boise Inc. (formerly Aldabra 2 Acquisition Corp.), we recorded
         $8.1 million of income and $(0.1) million of expense in "Gain (loss)
         on sale of Paper and Packaging & Newsprint assets" in the Corporate
         and Other segment in our Consolidated Statements of Loss during the
         three months ended March 31, 2008 and December 31, 2008.  For more
         information related to the Sale, see the Notes to Consolidated
         Financial Statements in our Form 10-K for the year ended December 31,
         2008.
    

    
    (b)  The equity interest that we own in Boise Inc. represents a
         significant continuing involvement as defined in Statement of
         Financial Accounting Standards No. 144, Accounting for the Impairment
         or Disposal of Long-lived Assets.  As a result, the Paper and
         Packaging & Newsprint segment results are included in continuing
         operations through February 21, 2008.
    

    
    (c)  In first quarter 2009, we committed to indefinitely curtailing the
         lumber manufacturing facility in LaGrande, Oregon, and we recorded
         $4.4 million of expense in "Other (income) expense, net" in the Wood
         Products segment in our Consolidated Statement of Loss.  In addition,
         we recorded $2.5 million of accelerated depreciation in
         "Depreciation, amortization, and depletion" and $0.6 million of
         expenses in "Materials, labor, and other operating expenses" in the
         Wood Products segment in our Consolidated Statement of Loss.
    

    
         In 2008, we permanently closed our veneer operation in St. Helens,
         Oregon, and in December 2008, we committed to the March 2009 closure
         of the plywood manufacturing facility in White City, Oregon.  For
         these items, we recorded $7.3 million of expense in "Other (income)
         expense, net" in the Wood Products segment in our Consolidated
         Statement of Loss for the three months ended December 31, 2008.
    

    
    (d)  For the three months ended March 31, 2009, we recorded a $6.0 million
         net gain on the repurchase of $11.9 million of senior subordinated
         notes.
    

    
    (e)  On March 31, 2009, we concluded that our investment in Boise Inc. met
         the definition of other than temporarily impaired as defined in APB
         Opinion No. 18, The Equity Method of Accounting for Investments in 
         Common Stock.  Accordingly, we recorded a $43.0 million charge in
         "Impairment of investment in equity affiliate" in our Consolidated
         Statement of Loss for the three months ended March 31, 2009.  This
         charge reflects the decrease in the fair value of the investment
         below its carrying value.  The fair value of our investment in Boise
         Inc. was calculated based on the number of Boise Inc. shares we own,
         37.1 million shares, and Boise Inc.'s stock price on March 31, 2009,
         of $0.61.  For more information, see the Notes to Unaudited Quarterly
         Consolidated Financial Statements in our Form 10-Q for the period
         ended March 31, 2009.
    

    
    (f)  During the three months ended March 31, 2009 and 2008, and December
         31, 2008, we recorded $0.2 million, $(4.8) million, and $1.3 million
         of income (expense) related to the fair value of the contingent value
         rights (CVRs) that we and Terrapin Partners Venture Partnership
         granted to certain Boise Inc. investors.  During the three months
         ended March 31, 2009, we settled our obligation related to the CVRs
         using 0.8 million Boise Inc. shares.  For more information related to
         the CVRs, see the Notes to Unaudited Quarterly Consolidated Financial
         Statements in our Form 10Q for the period ended March 31, 2009.
    

    
    (g)  The three months ended March 31, 2008, included $6.3 million of
         expense related to changes in the fair value of our interest rate
         swaps, which were terminated in February 2008.
    

    
    (h)  EBITDA represents income (loss) 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 BC Holdings, L.L.C., net loss to BC
         Holdings, L.L.C., EBITDA and Boise Cascade, L.L.C., EBITDA for the
         three months ended March 31, 2009 and 2008, and December 31, 2008:



    

    
                                                  Three Months Ended
                                               March 31           December 31,
                                        2009             2008         2008
                                              (unaudited, in thousands)
    

    
    BC Holdings, L.L.C., net loss    $(88,181)        $(24,438)     $(40,504)
    Change in fair value of interest
     rate swaps (f)                         -            6,284             -
    Interest expense                    5,616           15,381         6,242
    Interest income                      (397)          (2,601)       (1,062)
    Income tax provision                  483            1,155        (1,053)
    Depreciation, amortization, and
     depletion (c)                     11,119           10,035         8,788
    BC Holdings, L.L.C., EBITDA       (71,360)           5,816       (27,589)
    Equity in net (income) loss of
     affiliate (a)                     (3,005)           8,552        (3,921)
    Impairment of investment in
     equity affiliate (e)              43,039                -             -
    Boise Cascade, L.L.C., EBITDA    $(31,326)         $14,368      $(31,510)



    




For further information:

For further information: Wayne Rancourt of Boise Cascade,
+1-208-384-6073 Web Site: http://www.bc.com

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