Boise Announces Second Quarter 2007 Financial Results



    BOISE, Idaho, Aug. 14 /CNW/ -- Boise Cascade Holdings, L.L.C. today
reported net income of $28.9 million for the second quarter 2007, compared
with net income of $31.2 million for the second quarter 2006 and $10.5 million
for the first quarter 2007.  Income from operations for the second quarter
2007 was $48.6 million, compared with $57.8 million in the same period of 2006
and $33.3 million for the first quarter 2007.
    "The second quarter results continued to show the strength of our
business model in our building products segments, which continued to perform
well in a very difficult market environment," said Tom Stephens, chairman and
chief executive officer.  "Our Building Materials Distribution and Wood
Products businesses were both solidly profitable despite the continued
challenges in the housing market.  Our Paper business earnings were negatively
impacted by planned outages at three of our four white paper mills, and our
Packaging & Newsprint business operating performance was negatively impacted
by lower newsprint prices coupled with high fiber costs.  On the strategic
front, we successfully completed the enhancements to our fine paper machine in
Wallula, Washington, to allow it to produce both pressure-sensitive papers as
well as its historical mix of commodity papers.  We have shipped product to
customers for qualification, and initial reports are positive."



    
                              FINANCIAL HIGHLIGHTS
                                 ($ in millions)
    

    
                                           2Q 2007     2Q 2006     1Q 2007
    Sales                                 $1,448.4    $1,559.8    $1,321.0
    Income from operations                   $48.6       $57.8       $33.3
    Net income                               $28.9       $31.2       $10.5
    EBITDA(a)                                $91.4       $97.6       $73.9
    

    
    (a)  For reconciliation of net income to EBITDA, see "Segment
    Information" in the financial section.
    Sales
    
    Sales for the second quarter 2007 were $1.4 billion, compared to $1.6
billion in the second quarter 2006 and $1.3 billion in the first quarter 2007.
Year-over-year sales were lower in both our Building Materials Distribution
and Wood Products segments offset, in part, by sales increases in both our
Paper and Packaging & Newsprint segments.
    Comparing the second quarter 2007 to the same period of 2006, Building
Materials Distribution segment sales decreased 13% due to lower sales volumes
and lower commodity sales prices.  Wood Products segment sales were down 11%
due primarily to lower sales volumes and prices for engineered wood and
plywood and lower sales prices for lumber.  Paper segment sales were up 5%
over the same period in 2006 due to higher sales prices offset, in part, by
lower sales volumes for many of our paper grades.  Packaging & Newsprint
segment sales increased 1% due to higher corrugated container and sheet and
linerboard sales prices offset, in part, by lower newsprint prices.
    
    Income From Operations
    
    Income from operations decreased 16% in the second quarter 2007 to $48.6
million from $57.8 million in second quarter 2006.  Segment income decreased
in both Building Materials Distribution and Wood Products driven by softer
housing markets.  Segment income decreased in Paper due primarily to planned
shutdowns.  Packaging & Newsprint segment income decreased primarily due to
softer newsprint markets and tight fiber markets.
    Comparing second quarter 2007 with second quarter 2006, segment income in
Building Materials Distribution decreased $4.9 million, from $25.3 million in
2006 to $20.4 million, due primarily to lower sales volumes and lower
commodity sales prices offset, in part, by lower purchased materials costs.
Segment income in Wood Products decreased $1.5 million, from $17.2 million in
the second quarter 2006 to $15.7 million in the second quarter 2007, due
primarily to lower sales prices, coupled with higher conversion costs, offset
in part, by lower wood costs.  Paper segment income decreased $1.5 million,
from $14.7 million in second quarter 2006 to $13.2 million in second quarter
2007, due primarily to higher costs related to planned outages for maintenance
and capital projects and lower sales volumes offset, in part, by higher sales
prices.  Packaging & Newsprint segment income decreased $11.1 million, from
$13.4 million in second quarter 2006 to $2.3 million, due primarily to lower
newsprint prices, coupled with higher fiber costs, offset in part, by higher
linerboard and corrugated container and sheet prices.
    
    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
http://www.bc.com.
    
    Webcast and Conference Call
    
    Boise will host an audiovisual webcast and conference call on Wednesday,
August 15, 2007, 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 15 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 15 at 12:00 noon Eastern through September 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 10972623.
    
    Basis of Presentation
    
    We present our consolidated financial statements in accordance with
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 tax provision (benefit), 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 with substantial financial leverage.  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, which represent significant and unavoidable
operating costs, given the level of our indebtedness and the capital
expenditures needed to maintain our businesses.  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 may contain 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 Income
                          (unaudited, in thousands)
    

    
                                                    Three Months Ended
                                                June 30           March 31,
                                           2007         2006(a)     2007
    Sales
    Trade                             $1,288,921     $1,415,784  $1,163,173
    Related parties                      159,477        144,005     157,795
                                       1,448,398      1,559,789   1,320,968
    Costs and expenses
    Materials, labor, and other
     operating expenses                1,270,294      1,362,517   1,156,899
    Depreciation, amortization, and
     depletion                            40,722         38,459      40,360
    Selling and distribution expenses     73,620         71,607      68,408
    General and administrative expenses   20,210         26,158      19,495
    Other (income) expense, net           (5,091)(b)      3,233       2,546
                                       1,399,755      1,501,974   1,287,708
    

    Income from operations                48,643         57,815      33,260

    
    Foreign exchange gain                  2,020          1,360         242
    Change in fair value of interest
     rate swaps(c)                         5,395            -           -
    Interest expense(d)                  (24,352)       (28,610)    (22,343)
    Interest income                          642            934         601
                                         (16,295)       (26,316)    (21,500)
    

    
    Income before income taxes            32,348         31,499      11,760
    Income tax provision                  (3,450)          (305)     (1,223)
    Net income                           $28,898        $31,194     $10,537
    



    
                             Segment Information
                          (unaudited, in thousands)
    

    
                                                     Three Months Ended
                                                 June 30           March 31,
                                           2007         2006(a)      2007
    Segment sales
    Building Materials Distribution     $723,732       $832,700    $608,658
    Wood Products                        278,658        314,656     253,923
    Paper                                401,098        381,695     395,034
    Packaging & Newsprint                192,933        190,809     193,972
    Intersegment eliminations
     and other                          (148,023)      (160,071)   (130,619)
                                      $1,448,398     $1,559,789  $1,320,968
    

    
    Segment income (loss)
    Building Materials Distribution      $20,386        $25,310     $10,455
    Wood Products                         15,740         17,190       3,709
    Paper                                 13,198         14,736      18,026
    Packaging & Newsprint                  2,337         13,383       8,083
    Corporate and Other                     (998)(b)    (11,444)     (6,771)
                                          50,663         59,175      33,502
    

    
    Change in fair value of interest
     rate swaps(c)                         5,395            --         --
    Interest expense(d)                  (24,352)       (28,610)    (22,343)
    Interest income                          642            934         601
    Income before income taxes           $32,348        $31,499     $11,760
    

    
    EBITDA(e)
    Building Materials Distribution      $22,246        $27,714     $12,331
    Wood Products                         23,309         23,860      10,993
    Paper                                 29,311         30,189      34,599
    Packaging & Newsprint                 16,228         26,068      21,495
    Corporate and Other                      291(b)     (10,197)     (5,556)
                                         $91,385        $97,634     $73,862
    



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

    
                                                 Six Months Ended
                                                     June 30
                                              2007            2006(a)
    Sales
    Trade                                 $2,452,094        $2,753,282
    Related parties                          317,272           276,770
                                           2,769,366         3,030,052
    Costs and expenses
    Materials, labor, and other operating
     expenses                              2,427,193         2,673,329
    Depreciation, amortization, and
     depletion                                81,082            75,116
    Selling and distribution expenses        142,028           142,684
    General and administrative expenses       39,705            47,620
    Other (income) expense, net               (2,545)(b)         1,108(b)
                                           2,687,463         2,939,857
    

    Income from operations                    81,903            90,195

    
    Foreign exchange gain                      2,262             1,739
    Change in fair value of interest rate
     swaps(c)                                  5,395              --
    Interest expense(d)                      (46,695)          (58,786)
    Interest income                            1,243             1,538
                                             (37,795)          (55,509)
    

    
    Income before income taxes                44,108            34,686
    Income tax provision                      (4,673)           (1,523)
    Net income                               $39,435           $33,163
    



    
                             Segment Information
                          (unaudited, in thousands)
    

    
                                                 Six Months Ended
                                                     June 30
                                              2007            2006(a)
    Segment sales
    Building Materials Distribution       $1,332,390        $1,594,546
    Wood Products                            532,581           627,295
    Paper                                    796,132           752,059
    Packaging & Newsprint                    386,905           369,596
    Intersegment eliminations and other     (278,642)         (313,444)
                                          $2,769,366        $3,030,052
    

    
    Segment income (loss)
    Building Materials Distribution          $30,841           $43,901
    Wood Products                             19,449            36,013
    Paper                                     31,224            15,529
    Packaging & Newsprint                     10,420            14,252
    Corporate and Other                       (7,769)(b)       (17,761)(b)
                                              84,165            91,934
    

    
    Change in fair value of interest rate
     swaps(c)                                  5,395                --
    Interest expense(d)                      (46,695)          (58,786)
    Interest income                            1,243             1,538
    Income before income taxes               $44,108           $34,686
    

    
    EBITDA(e)
    Building Materials Distribution          $34,577           $48,653
    Wood Products                             34,302            49,000
    Paper                                     63,910            45,599
    Packaging & Newsprint                     37,723            39,009
    Corporate and Other                       (5,265)(b)       (15,211)(b)
                                            $165,247          $167,050
    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.  Net income
for all periods presented involved estimates and accruals.

    
    (a) In January 2007, we adopted Financial Accounting Standards Board Staff
        Position (FSP) No. AUG AIR-1, Accounting for Planned Major Maintenance
        Activities.  Prior to adopting this FSP, we charged planned shutdown
        maintenance costs in our Paper and Packaging & Newsprint segments to
        income (loss) ratably over the year.  The FSP prohibits this and as a
        result, we recast our 2006 interim financial information using the
        direct expense method.  The FSP increases the volatility of earnings
        in the period a planned shutdown occurs, but it has no impact on our
        annual results of operations.  For the three and six months ended June
        30, 2006, income increased (decreased) by the following amounts:
    


    
                                            Three Months        Six Months
                                                Ended             Ended
                                                     June 30, 2006
                                               (unaudited, in thousands)
    

    
    Paper                                       $(1,777)           $1,584
    Packaging & Newsprint                          (460)           (1,911)
                                                $(2,237)            $(327)
    



    
    (b) The three and six months ended June 30, 2007, includes a $4.4 million
        gain for changes in our retiree healthcare programs. The six months
        ended June 30, 2006, includes a $3.7 million gain for changes in our
        retiree healthcare programs.
    

    
    (c) Includes the change in the fair value of interest rate swaps related
        to the anticipated repayment of our senior unsecured floating-rate
        notes, when they become callable at par in October 2007.
    

    
    (d) The three and six months ended June 30, 2007, includes the write-off
        of $1.8 million of deferred financing costs resulting from the
        repayment of our Tranche D term loan and reduction in borrowing
        capacity under our revolving credit facility.
    

    
    (e) 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 to EBITDA for the three months ended June
        30, 2007 and 2006, and March 31, 2007:
    



    
                                                  Three Months Ended
                                                 June 30           March 31,
                                            2007        2006(a)      2007
                                              (unaudited, in thousands)
    

    
    Net income                            $28,898(b)    $31,194    $10,537
    Change in fair value of interest rate
     swaps(c)                              (5,395)          --        --
    Interest expense(d)                    24,352        28,610     22,343
    Interest income                          (642)         (934)      (601)
    Income tax provision                    3,450           305      1,223
    Depreciation, amortization, and
     depletion                             40,722        38,459     40,360
    EBITDA                                $91,385       $97,634    $73,862
    



    The following table reconciles net income to EBITDA for the six months
ended June 30, 2007 and 2006.

    
                                                 Six Months Ended
                                                     June 30
                                              2007            2006(a)
                                             (unaudited, in thousands)
    

    
    Net income                              $39,435(b)        $33,163(b)
    Change in fair value of interest rate
     swaps(c)                                (5,395)              --
    Interest expense(d)                      46,695            58,786
    Interest income                          (1,243)           (1,538)
    Income tax provision                      4,673             1,523
    Depreciation, amortization, and
     depletion                               81,082            75,116
    EBITDA                                 $165,247          $167,050
    



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

    
                                              June 30,        December 31,
                                                2007              2006
    ASSETS
    

    
    Current
    Cash and cash equivalents                 $74,837           $45,169
    Receivables
       Trade, less allowances of $1,525
        and $1,734                            397,196           327,138
       Related parties                         47,376            37,986
       Other                                   12,522            19,027
    Inventories                               638,029           640,826
    Other                                      17,540            13,027
                                            1,187,500         1,083,173
    Property
    Property and equipment, net             1,472,888         1,462,315
    Fiber farms and timber deposits            42,509            40,492
                                            1,515,397         1,502,807
    

    
    Deferred financing costs                   29,195            31,474
    Goodwill                                   21,846            21,846
    Intangible assets, net                     35,168            37,507
    Other assets                               26,497            28,390
    Total assets                           $2,815,603        $2,705,197
    



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

    
                                              June 30,        December 31,
                                                2007              2006
    LIABILITIES AND CAPITAL
    

    
    Current
    Short-term borrowings                       $--              $3,200
    Current portion of long-term debt          5,250                --
    Accounts payable                         386,310            341,201
    Accrued liabilities
      Compensation and benefits               82,901             93,287
      Interest payable                        11,785             11,847
      Other                                   45,578             54,600
                                             531,824            504,135
    Debt
    Long-term debt, less current portion   1,238,438          1,213,900
    

    
    Other
    Compensation and benefits                126,344            111,676
    Other long-term liabilities               38,465             36,642
                                             164,809            148,318
    Redeemable equity units
    Series B equity units - 16,995,889
     and 17,107,889 units outstanding         17,365             17,477
    Series C equity units - 39,527,950
     and 39,576,540 units outstanding          7,984              6,434
                                              25,349             23,911
    Commitments and contingent
     liabilities
    

    
    Capital
    Series A equity units - no par value;
     66,000,000 and 66,000,000
       units authorized and outstanding       75,421             78,290
    Series B equity units - no par value;
     550,000,000 and 550,000,000
       units authorized; 530,356,601 and
       530,356,601 units outstanding         765,681            724,988
    Series C equity units - no par value;
     44,000,000 and 44,000,000
       units authorized                       14,081             11,655
    Total capital                            855,183            814,933
    Total liabilities and capital         $2,815,603         $2,705,197
    



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

    
                                                  Six Months Ended
                                                       June 30
                                                2007              2006
    Cash provided by (used for)
     operations
    Net income                                $39,435           $33,163
    Items in net income not using
     (providing) cash
       Depreciation, depletion, and
        amortization of deferred
         financing costs and other             82,260            77,567
       Related-party interest expense             --              8,922
       Deferred income taxes                    1,913              --
       Pension and other postretirement
        benefit expense                        12,538            13,977
       Gain on changes in retiree
        healthcare programs                    (4,367)           (3,741)
       Change in fair value of interest
        rate swaps                             (5,395)             --
       Management equity units expense          1,550             1,965
       Other                                   (2,319)              (90)
    Decrease (increase) in working
     capital, net of acquisitions
      Receivables                             (73,658)          (69,188)
      Inventories                                (365)          (18,820)
      Prepaid expenses                         (1,456)           (2,465)
      Accounts payable and accrued
       liabilities                             22,336            36,498
    Pension and other postretirement
     benefit payments                            (524)             (463)
    Current and deferred income taxes           1,712             4,263
    Other                                       3,959             1,484
      Cash provided by operations              77,619            83,072
    

    
    Cash provided by (used for)
     investment
    Expenditures for property and
     equipment                                (89,913)          (71,344)
    Acquisitions of businesses and
     facilities                                   --            (42,549)
    Sales of assets                            16,903            27,744
    Other                                       1,291             1,737
      Cash used for investment                (71,719)          (84,412)
    

    
    Cash provided by (used for) financing
    Issuances of long-term debt               705,000           238,300
    Payments of long-term debt               (675,212)         (259,100)
    Short-term borrowings                      (3,200)             --
    Note payable to related party, net            --             (1,139)
    Proceeds from changes to interest
     rate swaps                                 2,848            25,620
    Tax distributions to members               (2,753)          (10,725)
    Other                                      (2,915)              132
      Cash provided by (used for)
       financing                               23,768            (6,912)
    

    
    Increase (decrease) in cash and cash
     equivalents                               29,668            (8,252)
    

    Balance at beginning of the period         45,169            88,171

    Balance at end of the period              $74,837           $79,919




For further information:

For further information: Investors, Rob McNutt of Boise Cascade
Holdings,  L.L.C., +1-208-384-7023 Web Site: http://www.bc.com

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BOISE CASCADE HOLDINGS, L.L.C.

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