BOISE CASCADE CORP - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(X)	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

( )	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to __________________

Commission File Number: 1-5057

BOISE CASCADE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

82-0100960

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1111 West Jefferson Street
P.O. Box 50
Boise, Idaho

83728

(Address of principal executive officers) (208) 384-6161 (Registrant's telephone number, including area code)	(Zip Code)

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 Exchange Act of 1934 during the preceding 12 months (or for such 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.

Class
Common Stock, $2.50 par value

Shares Outstanding
as of October 31, 2002
58,282,458

PART I - FINANCIAL INFORMATION
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME
(thousands, except per-share amounts)

ITEM 1.

FINANCIAL STATEMENTS

	Three Months Ended September 30
	_______________________
	2002			2001
	_________			_________
	(unaudited)
Revenues
Sales	$	1,935,231		$	1,874,436
	_________			_________
Costs and expenses
Materials, labor, and other operating expenses		1,574,391			1,522,915
Depreciation, amortization, and cost of company timber harvested		78,346			72,048
Selling and distribution expenses		197,135			189,106
General and administrative expenses		39,151			34,126
Other (income) expense, net		(74	)		3,635
	_________			_________
		1,888,949			1,821,830
	_________			_________
Equity in net loss of affiliates		(299	)		(1,504	)
	_________			_________
Income from operations		45,983			51,102
	_________			_________

Interest expense		(28,731	)		(31,592	)
Interest income		285			451
Foreign exchange loss		(671	)		(859	)
	_________			_________
		(29,117	)		(32,000	)
	_________			_________
Income before income taxes and minority interest		16,866			19,102
Income tax provision		(6,324	)		(4,122	)
	_________			_________
Income before minority interest		10,542			14,980
Minority interest, net of income tax		(2,032	)		-
	_________			_________
Net income		8,510			14,980
Preferred dividends		(3,262	)		(3,138	)
	_________			_________

Net income applicable to common shareholders	$	5,248		$	11,842
	=========			=========
Net income per common share
Basic		$0.09			$0.21
	=====			=====
Diluted		$0.09			$0.20
	=====			=====

See accompanying notes to financial statements.

PART I - FINANCIAL INFORMATION
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
(thousands, except per-share amounts)

	Nine Months Ended September 30
	_______________________
	2002			2001
	_________			_________
	(unaudited)
Revenues
Sales	$	5,611,481		$	5,665,475
	_________			_________
Costs and expenses
Materials, labor, and other operating expenses		4,575,402			4,574,236
Depreciation, amortization, and cost of company timber harvested		229,770			220,169
Selling and distribution expenses		583,907			597,417
General and administrative expenses		115,020			96,115
Other (income) expense, net		29,215			77,349
	_________			_________
		5,533,314			5,565,286
	_________			_________
Equity in net loss of affiliates		(2,354	)		(5,527	)
	_________			_________
Income from operations		75,813			94,662
	_________			_________

Interest expense		(88,789	)		(97,878	)
Interest income		1,340			1,618
Foreign exchange loss		(528	)		(3,183	)
	_________			_________
		(87,977	)		(99,443	)
	_________			_________
Loss before income taxes and minority interest		(12,164	)		(4,781	)
Income tax benefit		23,342			3,745
	_________			_________
Income (loss) before minority interest		11,178			(1,036	)
Minority interest, net of income tax		(6,045	)		195
	_________			_________
Net income (loss)		5,133			(841	)
Preferred dividends		(9,812	)		(9,604	)
	_________			_________

Net loss applicable to common shareholders	$	(4,679	)	$	(10,445	)
	=========			=========
Net loss per common share
Basic		$(0.08	)		$(0.18	)
	=====			=====
Diluted		$(0.08	)		$(0.18	)
	=====			=====

See accompanying notes to financial statements.

BOISE CASCADE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
(thousands)

ASSETS

	September 30						December 31
	_________________________						___________
	2002				2001		2001
	_________			___________			___________
	(unaudited)
Current
Cash and cash equivalents	$	89,529		$	69,894		$	56,702
Receivables, less allowances
of $12,695, $10,190, and $11,534		525,733			528,537			424,722
Inventories		618,371			627,365			652,953
Deferred income tax benefits		70,505			65,104			65,004
Other		36,575			32,502			45,646
	__________			___________			___________
		1,340,713			1,323,402			1,245,027
	__________			___________			___________
Property
Property and equipment
Land and land improvements		69,795			65,344			68,482
Buildings and improvements		701,042			661,818			675,905
Machinery and equipment		4,649,969			4,559,945			4,606,102
	__________			___________			___________
		5,420,806			5,287,107			5,350,489
Accumulated depreciation		(2,877,880	)		(2,698,252	)		(2,742,650	)
	__________			___________			___________
		2,542,926			2,588,855			2,607,839
Timber, timberlands, and timber deposits		314,100			295,313			322,132
	__________			___________			___________
		2,857,026			2,884,168			2,929,971
	__________			___________			___________
Goodwill, net of amortization of
$56,910, $54,115, and $56,910		396,296			405,613			385,185
Investments in equity affiliates		35,911			119,966			62,162
Other assets		351,401			295,134			311,623
	__________			___________			___________
Total assets	$	4,981,347		$	5,028,283		$	4,933,968
	==========			===========			===========

See accompanying notes to financial statements.

BOISE CASCADE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
(thousands, except per-share amounts)

LIABILITIES AND SHAREHOLDERS' EQUITY

	September 30						December 31
	_______________________						___________
	2002			2001			2001
	_________			_________			___________
	(unaudited)
Current
Short-term borrowings	$	37,100		$	51,600		$	48,700
Current portion of long-term debt		90,654			575,735			391,379
Income taxes payable		-			9,128			-
Accounts payable		527,472			514,364			503,402
Accrued liabilities
Compensation and benefits		221,213			156,392			151,094
Interest payable		26,027			27,617			25,510
Other		146,865			156,680			145,866
	_________			_________			___________
		1,049,331			1,491,516			1,265,951
	_________			_________			___________
Debt
Long-term debt, less current portion		1,402,873			1,038,369			1,062,866
Guarantee of ESOP debt		71,184			99,415			80,889
	_________			_________			___________
		1,474,057			1,137,784			1,143,755
	_________			_________			___________
Other
Deferred income taxes		301,040			377,462			308,305
Other long-term liabilities		411,635			282,764			465,104
	_________			_________			___________
		712,675			660,226			773,409
	_________			_________			___________
Minority interest
Company-obligated mandatorily redeemable securities of subsidiary trust holding solely debentures of parent	172,500			- -			172,500
	_________			_________			___________
Commitments and contingencies

Shareholders' equity
Preferred stock -- no par value; 10,000,000 shares authorized;
Series D ESOP: $.01 stated value; 4,326,841, 4,507,459, and 4,480,580 shares outstanding		194,708			202,836			201,626
Deferred ESOP benefit		(71,184	)		(99,415	)		(80,889	)
Common stock -- $2.50 par value; 200,000,000 shares authorized; 58,282,573, 58,027,779, and 58,061,762 shares outstanding		145,706			145,069			145,154
Additional paid-in capital		472,944			474,175			466,952
Retained earnings		964,388			1,045,823			985,311
Accumulated other comprehensive income (loss)		(133,778	)		(29,731	)		(139,801	)
	_________			_________			___________
Total shareholders' equity		1,572,784			1,738,757			1,578,353
	_________			_________			___________
Total liabilities and shareholders' equity	$	4,981,347		$	5,028,283		$	4,933,968
	=========			=========			===========

See accompanying notes to financial statements.

BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(thousands)

	Nine Months Ended September 30
	____________________________
	2002			2001
	___________			___________
	(unaudited)
Cash provided by (used for) operations
Net income (loss)	$	5,133		$	(841	)
Items in net income (loss) not using (providing) cash
Equity in net loss of affiliates		2,354			5,527
Depreciation, amortization, and cost of company timber harvested		229,770			220,169
Deferred income tax benefit		(28,910	)		(11,680	)
Minority interest, net of income tax		-			(195	)
Restructuring activities		(750	)		57,929
Write-down of assets		23,646			-
Other		(860	)		14,054
Receivables		(73,225	)		(25,703	)
Inventories		34,722			118,672
Accounts payable and accrued liabilities		28,881			(95,981	)
Current and deferred income taxes		(9,413	)		(6,183	)
Other		11,815			(2,347	)
	___________			___________
Cash provided by operations		223,163			273,421
	___________			___________
Cash provided by (used for) investment
Expenditures for property and equipment		(147,265	)		(219,317	)
Expenditures for timber and timberlands		(7,001	)		(11,102	)
Investments in equity affiliates		-			(783	)
Purchases of facilities		(1,406	)		(4,655	)
Sales of assets		-			160,984
Other		(20,394	)		(28,212	)
	___________			___________
Cash used for investment		(176,066	)		(103,085	)
	___________			___________
Cash provided by (used for) financing
Cash dividends paid
Common stock		(26,175	)		(25,842	)
Preferred stock		(7,383	)		(7,709	)
	___________			___________
		(33,558	)		(33,551	)

Short-term borrowings		(11,600	)		(400	)
Additions to long-term debt		232,139			14,559
Payments of long-term debt		(196,644	)		(156,664	)
Other		(4,607	)		12,794
	___________			___________
Cash used for financing		(14,270	)		(163,262	)
	___________			___________

Increase in cash and cash equivalents		32,827			7,074
Balance at beginning of the year		56,702			62,820
	___________			___________
Balance at September 30	$	89,529		$	69,894
	===========			===========

See accompanying notes to financial statements.

NOTES TO QUARTERLY FINANCIAL STATEMENTS (unaudited)

(1)

BASIS OF PRESENTATION. We have prepared the quarterly financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Some information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations. These statements should be read together with the statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2001.

The quarterly financial statements have not been audited by independent public accountants, but in the opinion of management, all adjustments necessary to present fairly the results for the periods presented have been included. Net income (loss) for the three and nine months ended September 30, 2002 and 2001, involved estimates and accruals. Actual results may vary from those estimates. Except as may be disclosed within these "Notes to Quarterly Financial Statements," the adjustments made were of a normal, recurring nature. Quarterly results are not necessarily indicative of results that may be expected for the year.

(2)

NET INCOME (LOSS) PER COMMON SHARE. Net income (loss) per common share was determined by dividing net income (loss), as adjusted, by applicable shares outstanding. For the nine months ended September 30, 2002 and 2001, the computation of diluted net income (loss) per share was antidilutive; therefore, the amounts reported for basic and diluted loss were the same.

Three Months Ended
September 30

Nine Months Ended
September 30

__________________

__________________

2002

2001

   2002

   2001

_______

_______

_______

_______

(thousands, except per-share amounts)

BASIC

Net income (loss)

$

8,510

$

14,980

$

5,133

$

(841

)

Preferred dividends (a)

(3,262

)

(3,138

)

(9,812

)

(9,604

)

_______

_______

_______

_______

Basic income (loss)

$

5,248

$

11,842

$

(4,679

)

$

(10,445

)

=======

=======

=======

=======

Average shares used to determine basic
   income (loss) per common share

58,269

57,831

58,194

57,558

=======

=======

=======

=======

Basic income (loss) per common share

$

0.09

$

0.21

$

(0.08

)

$

(0.18

)

=======

=======

=======

=======

DILUTED

Basic income (loss)

$

5,248

$

11,842

$

(4,679

)

$

(10,445

)

Preferred dividends eliminated

3,262

3,138

-

-

Supplemental ESOP contribution

(2,925

)

(2,580

)

-

-

_______

_______

_______

_______

Diluted income (loss) (b)

$

5,585

$

12,400

$

(4,679

)

$

(10,445

)

=======

=======

=======

=======

Average shares used to determine basic

   income (loss) per common share

58,269

57,831

58,194

57,558

Stock options and other

239

484

-

-

Series D Convertible Preferred Stock

3,499

3,644

-

-

_______

_______

_______

_______

Average shares used to determine diluted    income (loss) per common share (b)(c)

62,007

61,959

58,194

57,558

=======

=======

=======

=======

Diluted income (loss) per common share

$

0.09

$

0.20

$

(0.08

)

$

(0.18

)

=======

=======

=======

=======

(a)

The dividend attributable to our Series D Convertible Preferred Stock held by our ESOP (employee stock ownership plan) is net of a tax benefit.

(b)

Adjustments totaling $1.0 million and $1.7 million for the nine months ended September 30, 2002 and 2001, which would have reduced the basic loss to arrive at diluted loss, were excluded because the calculation of diluted loss per share was antidilutive. Also, for the nine months ended September 30, 2002 and 2001, potentially dilutive common shares of 4.0 million and 4.2 million were excluded from average shares because they were antidilutive.

(c)

Options to purchase 6.6 million and 2.8 million shares of common stock were outstanding during the three months ended September 30, 2002 and 2001, but were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the average market price of the common shares. Forward contracts to purchase 5.4 million shares of common stock were outstanding during the three months ended September 30, 2002, but were not included in the computation of diluted earnings per share because the conversion price was greater than the market price of the common shares. These forward contracts are related to our adjustable conversion-rate equity security units. No similar forward purchase contracts were outstanding for the three months ended September 30, 2001.

Options to purchase 4.6 million and 2.4 million shares of common stock were outstanding during the nine months ended September 30, 2002 and 2001, but were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the average market price of the common shares. Forward contracts to purchase 5.1 million shares of common stock were outstanding during the nine months ended September 30, 2002, but were not included in the computation of diluted earnings per share because the conversion price was greater than the market price of the common shares. These forward contracts are related to our adjustable conversion-rate equity security units. No similar forward purchase contracts were outstanding for the nine months ended September 30, 2001.

(3)

OTHER (INCOME) EXPENSE, NET. "Other (income) expense, net" includes nonroutine and miscellaneous income and expense items. In third quarter 2002, our Boise Office Solutions segment reversed $1.4 million of reserves for potential claims rising from the sale in 2000 of our European office products operations. Under the terms of the sale, claims may no longer be submitted.

In first quarter 2001, our Corporate and Other segment included a $10.9 million pretax, noncash charge to accrue for a one-time liability related to postretirement benefits for our Northwest hourly paperworkers. These workers participated in a multiemployer trust that converted to a single employer trust. The components of "Other (income) expense, net" in our Statements of Income (Loss) are as follows:

Three Months Ended

Nine Months Ended

September 30

September 30

______________________

_________________

2002

2001

2002

2001

________

________

_______

_______

(thousands)

Sales of receivables (Note 6)

$

1,178

$

2,047

$

3,350

$

7,011

Sale of European operations

(1,388

)

-

(1,388

)

-

Sale of investment in IdentityNow
(Note 11)

- -

- -

23,646

- -

Restructuring activities (Note 13)

(750

)

(1,000

)

(750

)

57,929

Postretirement benefits

-

-

-

10,871

Other, net

886

2,588

4,357

1,538

______

________

_______

_______

$

(74

)

$

3,635

$

29,215

$

77,349

========

========

=======

=======

(4)

INCOME TAXES. Our effective tax benefit rate for the nine months ended September 30, 2002, was 191.9%, compared with an effective tax benefit rate of 78.3% for the nine months ended September 30, 2001. The increase in our 2002 estimated tax benefit rate, compared with 2001, is due to the tax benefit recorded for the sale of IdentityNow (see Note 11). Before nonroutine items, our estimated effective tax provision rate for the nine months ended September 30, 2002, was 37.5%. Before nonroutine items, our annual tax provision rate in 2001 was 34%. The increase in our estimated 2002 tax provision rate, before nonroutine items, compared with our 2001 annual tax provision rate, before nonroutine items, was due primarily to our charitable donation in 2001 of surplus property in Vancouver, Washington, for which we received a tax benefit. Changes in our tax rates were also due to the sensitivity of the rate to changing income levels and the mix of domestic and foreig n sources of income.

For the three and nine months ended September 30, 2002, we paid income taxes, net of refunds received, of $1.0 million and $8.2 million. We paid $8.1 million and $18.7 million for the same periods in 2001.

(5)

COMPREHENSIVE INCOME (LOSS). Comprehensive income (loss) for the periods include the following:

   Three Months Ended
  September 30

Nine Months Ended
September 30

________________

____________________

   2002

  2001

2002

2001

______

_______

_______

_______

(thousands)

Net income (loss)

$   8,510

$

14,980

$

5,133

$

(841

)

Other comprehensive income (loss)

   Cumulative foreign currency translation
      adjustment, net of income taxes

(6,113

)

(4,651

)

6,694

(8,672

)

   Cash flow hedges, net of income taxes

15

(1,651

)

(671

)

(2,561

)

______

______

______

_______

Comprehensive income (loss), net of
   income taxes

$   2,412

$

8,678

$

11,156

$

(12,074

)

======

=======

=======

=======

(6)

RECEIVABLES. We have sold fractional ownership interests in a defined pool of trade accounts receivable. At September 30, 2002 and 2001, and December 31, 2001, $200 million of sold accounts receivable were excluded from "Receivables" in the accompanying Balance Sheets. The portion of fractional ownership interest retained by us is included in accounts receivable in the Balance Sheets. This program consists of a revolving sale of receivables committed to by the purchasers for 364 days and is subject to renewal. Costs related to the program are included in "Other (income) expense, net" in the Statements of Income (Loss). Under the accounts receivable sale agreement, the maximum amount available from time to time is subject to change based on the level of eligible receivables, restrictions on concentrations of receivables, and the historical performance of the receivables we sell.

(7)

INVENTORIES. Inventories include the following:

September 30

December 31

_________________________

___________

2002

2001

2001

________

________

___________

(thousands)

Finished goods and work in process

$

478,839

$

512,013

$

507,223

Logs

49,264

38,150

62,390

Other raw materials and supplies

141,423

140,443

135,796

LIFO reserve

(51,155

)

(63,241

)

(52,456

)

________

________

___________

$

618,371

$

627,365

$

652,953

========

========

===========

(8)

DEFERRED SOFTWARE COSTS. We defer costs for software intended for internal use that benefit future years. These costs are amortized on the straight-line method over the expected life of the software. "Other assets" in the Balance Sheets includes deferred software costs of $66.2 million, $65.8 million, and $67.8 million at September 30, 2002 and 2001, and December 31, 2001. Amortization of deferred software costs totaled $5.6 million and $15.4 million for the three and nine months ended September 30, 2002, and $5.5 million and $14.9 million for the three and nine months ended September 30, 2001.

(9)

DEBT. In March 2002, we entered into a three-year, unsecured revolving credit agreement with 14 major financial institutions. The agreement permits us to borrow as much as $560 million at variable interest rates based on either the London Interbank Offered Rate (LIBOR) or the prime rate. The borrowing capacity under the agreement can be expanded to a maximum of $600 million. The revolving credit agreement replaces a similar agreement that was to expire in June 2002. Borrowings of $180 million under the old agreement were repaid. Borrowings under the new agreement were $230 million at September 30, 2002. At September 30, 2002, our borrowing rate under the agreement was 2.8%. We have entered into interest rate swaps related to $150 million of these borrowings, which gave us an effective interest rate for outstanding borrowings under the revolving credit agreement of 4.8% at September 30, 2002. The revolving credit ag reement contains customary conditions to borrowing, including compliance with financial covenants relating to minimum net worth, minimum interest coverage ratio, and ceiling ratio of debt to capitalization. Under this agreement, the payment of dividends depends on the existence and amount of net worth in excess of the defined minimum. Our net worth at September 30, 2002, exceeded the defined minimum by $289.4 million. When the agreement expires in June 2005, any amount outstanding will be due and payable.

In January 2002, we sold $150 million of 7.5% notes due in 2008. We used proceeds from this sale to reduce amounts outstanding under our revolving credit agreement and short-term debt.

In June 2002, we retired our $125 million 9.85% notes.

At September 30, 2002 and 2001, we had $37.1 million and $51.6 million of short-term borrowings outstanding. The maximum amounts of combined short-term borrowings outstanding during the nine months ended September 30, 2002 and 2001, were $304.5 million and $126.9 million. The average amounts of short-term borrowings outstanding during the nine months ended September 30, 2002 and 2001, were $52.3 million and $55.1 million. The average interest rates for these borrowings were 2.5% for 2002 and 5.0% for 2001.

At September 30, 2002, we had $193 million of unused borrowing capacity registered with the SEC for additional debt securities. In addition, a registration statement filed with the SEC covering $500 million in universal shelf capacity became effective in April 2002. Under this registration statement, we may offer and sell in one or more offerings common stock, preferred stock, debt securities, warrants, and/or purchase contracts.

Cash payments for interest, net of interest capitalized, were $31.8 million and $88.3 million for the three and nine months ended September 30, 2002, and $28.7 million and $98.1 million for the three and nine months ended September 30, 2001.

(10)

FINANCIAL INSTRUMENTS. In March 2002, we entered into an interest rate swap with a notional amount of $50 million. This swap converts $50 million of fixed-rate $150 million 7.05% debentures to variable-rate debt based on six-month LIBOR plus approximately 2.2%. The effective interest rate at September 30, 2002, was 4.3%. The swap expires in May 2005. This swap is designated as a fair value hedge of a proportionate amount of the fixed-rate debentures. The swap and the proportionate amount of debentures are marked to market, with changes in the fair value of the instruments recorded in income (loss). These swaps were fully effective in hedging the changes in fair value; accordingly, changes in the fair value of these instruments had no net impact on our reported income (loss) in the current periods.

In January and August 2002, we entered into swaps for electricity that convert 40 and 36 megawatts of usage in the Northwest to a fixed rate. The swaps expire at the end of 2002 and 2003, respectively. In January 2002, we also entered into natural gas swaps that convert 6,000 MMBtu per day of natural gas usage to a fixed price. These swaps expire in March 2003. These swaps are designated as cash flow hedges. Accordingly, the changes in fair value of these swaps, net of taxes, are recorded in "Accumulated other comprehensive income (loss)" in our Balance Sheets.

Our forward exchange contracts with a notional amount of 160 million New Zealand dollars matured in February 2002 and were not renewed. Valuation gains and losses on these contracts were recognized in income (loss) as they occurred.

We are exposed to modest credit-related risks in the event of nonperformance by counterparties to our swaps. However, we do not expect the counterparties, which are all major institutions, to fail to meet their obligations.

(11)

INVESTMENTS IN EQUITY AFFILIATES. In December 2001, we wrote down our 29% investment in IdentityNow, a promotional products company that we accounted for under the equity method, by $54.3 million to its estimated fair value of $25 million. On May 10, 2002, we sold all the stock of our wholly owned subsidiary that held our investment in IdentityNow. We recorded a $23.6 million loss related to this sale in our Corporate and Other segment and in "Other (income) expense, net" in the Statement of Income for the nine months ended September 30, 2002. We also recorded $27.6 million of now-realizable tax benefits associated with this sale and our previous write-down. For the nine months ended September 30, 2002, this transaction resulted in a net after-tax gain of $4 million, or 7 cents per basic and diluted share.

(12)

GOODWILL AND INTANGIBLE ASSETS. Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and intangible assets of businesses acquired. Effective January 1, 2002, we adopted the provisions of the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. This statement requires us to assess our acquired goodwill for impairment annually. We completed our initial assessment, in accordance with the provisions of the standard, in second quarter 2002, and there was no impairment.

We stopped amortizing goodwill January 1, 2002. Goodwill amortization for the three and nine months ended September 30, 2001, was $2.2 million and $6.4 million after tax, or 4 cents and 12 cents per basic and diluted share. Changes in the carrying amount of goodwill by segment are as follows:

Boise
Office Solutions

Boise
Building Solutions

Total

______________

________________

____________

(thousands)

Balance at December 31, 2001

$

373,545

$

11,640

$

385,185

Goodwill acquired during year

4,303

-

4,303

Effect of foreign translation

7,206

(1

)

7,205

Purchase price adjustments

(397

)

-

(397

)

_____________

_______________

___________

Balance at September 30, 2002

$

384,657

$

11,639

$

396,296

==============

================

============

Acquired intangible assets are recorded in "Other assets" in the accompanying Balance Sheets and totaled $22.9 million and $5.6 million at September 30, 2002 and 2001, and $23.1 million at December 31, 2001.

Intangible assets represent the values assigned to customer lists and relationships, noncompete agreements, and exclusive distribution rights of businesses acquired. Intangible assets are amortized on a straight-line basis over their expected useful lives, which range from three years to 20 years. Intangible assets at September 30, 2002, consisted of the following:

Gross Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

______________

______________

____________

(thousands)

Customer lists and relationships

$

23,876

$

(3,916

)

$

19,960

Noncompete agreements

4,523

(3,721

)

802

Exclusive distribution rights

2,413

(262

)

2,151

______________

______________

____________

$

30,812

$

(7,899

)

$

22,913

==============

==============

============

Intangible asset amortization expense totaled $0.8 million and $2.4 million for the three and nine months ended September 30, 2002, and $0.5 million and $1.4 million for the three and nine months ended September 30, 2001. The estimated amortization expense is $2.5 million, $2.1 million, $2.1 million, $2.0 million, and $2.0 million in 2003, 2004, 2005, 2006, and 2007, respectively.

(13)

RESTRUCTURING ACTIVITIES. In February 2001, we announced the permanent closure of our plywood and lumber operations in Emmett, Idaho, and our sawmill in Cascade, Idaho, due to the significant decline in federal timber offered for sale. We completed these closures in second quarter 2001, and 373 positions were eliminated. In first quarter 2001, we recorded a pretax charge of $54.0 million related to these closures. Sales for our Idaho operations for the nine months ended September 30, 2001, were $59.4 million. Our operating loss for the nine months ended September 30, 2001, was $5.5 million.

In first quarter 2001, we wrote off our investment in assets in Chile with a pretax charge of $4.9 million. We recorded both of these charges in our Boise Building Solutions segment and in "Other (income) expense, net" in the Statement of Loss for the nine months ended September 30, 2001.

Restructuring reserve liability account activity related to these 2001 charges is as follows:

Asset
Write-
Downs

Employee-
Related
Costs

Other
Exit
Costs

Total

_______

_________

_______

_______

(thousands)

2001 expense recorded

$

21,300

$

15,000

$

22,600

$

58,900

Assets written down

(21,300

)

-

-

(21,300

)

Pension liability recorded

-

(9,600

)

-

(9,600

)

Charges against reserve

-

(5,000

)

(10,100

)

(15,100

)

_______

_________

_______

_______

Restructuring reserve at December 31, 2001

-

400

12,500

12,900

Proceeds from sales of assets

-

-

1,500

1,500

Charges against reserve

-

(300

)

(6,200

)

(6,500

)

_______

_________

_______

_______

Restructuring reserve at September 30, 2002

$

-

$

100
$

7,800

$

7,900

=======

=========

=======

=======

Asset write-downs were for plant and equipment at the closed Idaho facilities and the write-off of our equity investment in and related receivables from a joint venture in Chile. Employee-related costs include pension curtailment costs from the shutdowns of the Idaho facilities and severance costs. Other exit costs include tear-down and environmental cleanup costs related to the Idaho facilities and reserves for contractual obligations with no future benefit. The restructuring reserve liabilities are included in "Accrued liabilities, other" in the accompanying Balance Sheets.

(14)

NEW ACCOUNTING STANDARDS. In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Under the new statement, we will record both an initial asset and a liability for estimated costs of legal obligations associated with the retirement of long-lived assets. The initial asset will be depreciated over the expected useful life of the asset. This statement will change our accounting for landfill closure costs. We currently accrue the estimated costs of closure over the expected useful life of the landfill. These costs have not been material in any individual year. We are assessing the impact of this statement on our results of operations and financial position. This statement must be adopted by January 1, 2003.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. We adopted this statement January 1, 2002. It had no impact on our results of operations or financial position.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This statement addresses financial reporting and accounting for exit and disposal costs. When we adopt this statement January 1, 2003, it will have no effect on our results of operations or financial position.

(15)

SEGMENT INFORMATION. Other than the recording of the pretax loss related to the sale of our investment in IdentityNow in our Corporate and Other segment, there are no differences from our last annual report in our basis of segmentation or in our basis of measurement of segment profit or loss. The December 2001 write-down of our investment in IdentityNow was recorded in the Boise Office Solutions segment. In 2002, we determined that this sale and the prior write-down in December 2001 of our investment in IdentityNow should be recorded in the Corporate and Other segment in order to reflect our management of the disposal of this investment. We will conform our 2001 segment presentation to the new basis. An analysis of our operations by segment is as follows:

									Income
									(Loss)
									Before
	Sales								Taxes and
	______________________________________								Minority
	Trade		Intersegment			Total			Interest (a)
	____________		___________			____________			____________
	(thousands)

Three Months Ended September 30, 2002
Boise Office Solutions	$	899,321	$	562		$	899,883		$	29,783
Boise Building Solutions		666,005		5,472			671,477			14,515
Boise Paper Solutions		363,720		121,435			485,155			17,171
Corporate and Other		6,185		13,200			19,385			(15,872	)
	____________		___________			____________			____________
		1,935,231		140,669			2,075,900			45,597
Intersegment eliminations		-		(140,669	)		(140,669	)		-
Interest expense		-		-			-			(28,731	)
	____________		___________			____________			____________
	$	1,935,231	$	-		$	1,935,231		$	16,866
	============		===========			============			============

Three Months Ended September 30, 2001
Boise Office Solutions	$	847,608	$	534		$	848,142		$	36,951
Boise Building Solutions		639,706		6,735			646,441			14,192
Boise Paper Solutions		381,806		104,270			486,076			15,271
Corporate and Other		5,316		12,861			18,177			(15,720	)
	____________		___________			____________			____________
		1,874,436		124,400			1,998,836			50,694
Intersegment eliminations		-		(124,400	)		(124,400	)		-
Interest expense		-		-			-			(31,592	)
	____________		___________			____________			____________
	$	1,874,436	$	-		$	1,874,436		$	19,102
	============		===========			============			============

(a)

Interest income has been allocated to our segments in the amount of $0.3 million and $0.5 million for the three-month periods ended September 30, 2002 and 2001, respectively.

									Income
									(Loss)
									Before
	Sales								Taxes and
	______________________________________								Minority
	Trade		Intersegment			Total			Interest (a)
	____________		___________			____________			____________
	(thousands)

Nine Months Ended September 30, 2002
Boise Office Solutions	$	2,637,963	$	1,911		$	2,639,874		$	90,603
Boise Building Solutions		1,884,269		17,251			1,901,520			37,341
Boise Paper Solutions		1,071,239		351,462			1,422,701			15,176
Corporate and Other		18,010		39,165			57,175			(66,495	) (b)
	____________		___________			____________			____________
		5,611,481		409,789			6,021,270			76,625
Intersegment eliminations		-		(409,789	)		(409,789	)		-
Interest expense		-		-			-			(88,789	)
	____________		___________			____________			____________
	$	5,611,481	$	-		$	5,611,481		$	(12,164	)
	============		===========			============			============

Nine Months Ended September 30, 2001
Boise Office Solutions	$	2,677,903	$	1,750		$	2,679,653		$	106,792
Boise Building Solutions		1,829,027		21,439			1,850,466			(27,794	) (c)
Boise Paper Solutions		1,141,506		326,810			1,468,316			64,464
Corporate and Other		17,039		38,148			55,187			(50,365	) (d)
	____________		___________			____________			____________
		5,665,475		388,147			6,053,622			93,097
Intersegment eliminations		-		(388,147	)		(388,147	)		-
Interest expense		-		-			-			(97,878	)
	____________		___________			____________			____________
	$	5,665,475	$	-		$	5,665,475		$	(4,781	)
	============		===========			============			============

(a)

Interest income has been allocated to our segments in the amounts of $1.3 million and $1.6 million for the nine months ended September 30, 2002 and 2001, respectively.

(b)

Includes a pretax loss of $23.6 million related to the sale of our investment in IdentityNow (see Note 11).

(c)

Includes a pretax charge of $58.9 million related to the closure of two Idaho facilities and the write-off of our assets in Chile (see Note 13).

(d)

Includes a pretax charge of $10.9 million to accrue for a one-time liability related to postretirement benefits for our Northwest hourly paperworkers (see Note 3).

(16)

LEGAL PROCEEDINGS, COMMITMENTS, AND CONTINGENCIES. We have been notified that we are a "potentially responsible party" under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) or similar federal and state laws, or have received a claim from a private party, with respect to 21 active sites where hazardous substances or other contaminants are or may be located. In most cases, we are one of many potentially responsible parties, and our alleged contribution to these sites is relatively minor. For sites where a range of potential liability can be determined, we have established appropriate reserves. We believe we have minimal or no responsibility with regard to several other sites. We cannot predict with certainty the total response and remedial costs, our share of the total costs, the extent to which contributions will be available from other parties, or the amount of time necessary to complete the cleanups. Based on our investigations , our experience with respect to cleanup of hazardous substances, the fact that expenditures will, in many cases, be incurred over extended periods of time, and the number of solvent potentially responsible parties, we do not presently believe that the known actual and potential response costs will, in the aggregate, materially affect our financial position or results of operations.

In March 2002, Boise entered into a consent decree, filed in the U.S. District Court in Oregon, to resolve Notices of Violation issued by the U.S. EPA in March 2000 and March 2001, alleging violations of air emission permits and the New Source Review/Prevention of Significant Deterioration program at seven of our plywood plants and one particleboard plant for the period 1979 through 1998. The consent decree was entered by the court and became final in May 2002. As part of the consent decree, we agreed to install additional air pollution controls and implement supplemental environmental projects at several facilities. We expect to implement these controls and projects over the next several years at a capital cost of approximately $14.9 million. We will depreciate these additions to property, plant, and equipment over their expected useful lives. Additionally, a $4.35 million civil penalty was paid in June 2002. The company had previously established reserves for this penalty.

Over the past several years, and continuing in the third quarter of 2002, we have been named a defendant in a number of cases where the plaintiffs allege asbestos-related injuries from exposure to asbestos products or exposure to asbestos while working at a job site. The claims vary widely and often are not specific about the plaintiff's contacts with us or with our facilities. None of the claims seek damages from us individually, and we are generally one of numerous defendants. Most of the cases filed against us have been voluntarily dismissed, although we have settled some cases for a nominal amount. The settlements we have paid have been covered largely by insurance, and we believe any future settlements or judgments would be similarly covered. To date, no asbestos case against us has gone to trial, and the nature of these cases makes any prediction as to the outcome of pending litigation inherently subjective. At this time, however, we believe our involvement in asbestos litigation is not material to either our financial position or our results of operations.

We are involved in other litigation and administrative proceedings primarily arising in the normal course of our business. In the opinion of management, our recovery, if any, or our liability, if any, under these pending litigation or administrative proceedings would not materially affect our financial position or results of operations.

We are required to make minimum contributions to our pension plans and, in some years, we make additional discretionary contributions. For 2002, the required minimum contribution was $1 million. In third quarter 2002, we made cash contributions to our pension plans totaling $48 million, compared with $17.7 million in third quarter 2001. In 2003, the required minimum contribution to our pension plans is estimated to be approximately $26 million. However, we expect to make contributions to the plans of approximately $80 million to $120 million during the course of the year. See "Critical Accounting Policies" for further information.

Over the past several years, the amount of timber available for commercial harvest in the United States has declined significantly due to environmental litigation and changes in government policy. As a result, we cannot accurately predict future log supply. Additional curtailments or closures of our wood products manufacturing facilities are possible.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

	Three Months Ended September 30				Nine Months Ended September 30
	__________________________				__________________________
		2002		2001		2002			2001
	___________		___________		___________			___________

Sales	$	1.9 billion	$	1.9 billion	$	5.6 billion		$	5.7 billion
Net income (loss)	$	8.5 million	$	15.0 million	$	5.1 million		$	(0.8) million
Net income (loss) per basic share		$0.09		$0.21		$(0.08	)		$(0.18	)
Net income (loss) per diluted share		$0.09		$0.20		$(0.08	)		$(0.18	)
Net income before nonroutine items	$	8.5 million	$	12.2 million	$	1.1 million		$	41.8 million
Net income (loss) per basic share before nonroutine items		$0.09		$0.16		$(0.15	)		$0.56
Net income (loss) per diluted share before nonroutine items		$0.09		$0.16		$(0.15	)		$0.55

	(percentage of sales)

Materials, labor, and other operating expenses		81.4%		81.2%		81.5%			80.7%
Selling and distribution expenses		10.2%		10.1%		10.4%			10.5%
General and administrative expenses		2.0%		1.8%		2.0%			1.7%

Nonroutine Items. In December 2001, we wrote down our 29% investment in IdentityNow, a promotional products company that we accounted for under the equity method, by $54.3 million to its estimated fair value of $25 million. On May 10, 2002, we sold all the stock of our wholly owned subsidiary that held our investment in IdentityNow. We recorded a $23.6 million loss related to this sale in our Corporate and Other segment and in "Other (income) expense, net" in the Statement of Income for the nine months ended September 30, 2002. We also recorded $27.6 million of now-realizable tax benefits associated with this sale and our previous write-down. For the nine months ended September 30, 2002, this transaction resulted in a net after tax gain of $4 million, or 7 cents per basic and diluted share.

In February 2001, we announced the permanent closure of our plywood and lumber operations in Emmett, Idaho, and our sawmill in Cascade, Idaho, due to the significant decline in federal timber offered for sale. We completed these closures in second quarter 2001. In first quarter 2001, we recorded a pretax charge of $54.0 million related to these closures. In addition, in first quarter 2001, we wrote off our investment in assets in Chile with a pretax charge of $4.9 million. We recorded both of these charges in our Boise Building Solutions segment and in "Other (income) expense, net" in the Statement of Loss for the nine months ended September 30, 2001. Additional information on these charges is in the results of operations for Boise Building Solutions.

In first quarter 2001, our Corporate and Other segment included a $10.9 million pretax, noncash charge to accrue for a one-time liability related to postretirement benefits for our Northwest hourly paperworkers. These workers participated in a multiemployer trust that converted to a single employer trust. This charge was recorded in "Other (income) expense, net" in the Statement of Loss for the nine months ended September 30, 2001.

The net impact of the nonroutine items in 2001 decreased net income $42.6 million and basic and diluted income per share 74 cents and 73 cents, respectively, for the nine months ended September 30, 2001.

Overview Before Nonroutine Items. Total sales for the three months ended September 30, 2002, increased slightly, compared with sales in the same period in 2001. Sales and same-location sales in Boise Office Solutions increased 6%. This was primarily the result of sales to new customers. Sales in Boise Building Solutions increased 4% due to higher unit sale volumes and stronger sales in engineered wood products and building materials distribution. Sales in Boise Paper Solutions were flat.

Total sales for the nine months ended September 30, 2002, decreased, compared with sales in the same period in 2001, due to lower product prices in Boise Paper Solutions and reduced demand in Boise Office Solutions, partially offset by increased sales in engineered wood products and building materials distribution in Boise Building Solutions. Sales decreased 3% in our paper business and 1% in our office products business, while sales in our building products business increased 3%.

Materials, labor, and other operating expenses increased as a percent of sales for the three and nine months ended September 30, 2002, due to increased sales of lower-margin products in Boise Office Solutions and lower weighted average paper prices in Boise Paper Solutions, partially offset by increased sales volumes and lower manufacturing costs in our paper business and favorable wood costs in our building products business. Selling and distribution expenses as a percent of sales were relatively flat for the three and nine months ended September 30, 2002, compared with the same period in 2001, due primarily to cost control efforts in Boise Office Solutions. General and administrative expenses increased as a percent of sales for the three and nine months ended September 30, 2002, compared with the same period in 2001, due to higher compensation and benefits costs.

In accordance with new accounting standards, we stopped amortizing goodwill January 1, 2002. Amortization of goodwill for the three and nine months ended September 30, 2001, was $2.2 million and $6.4 million after tax, or 4 cents and 12 cents per basic and diluted share.

See the results of operations by segment for additional detail.

Interest expense was $28.7 million and $31.6 million for the three months ended September 30, 2002 and 2001, and $88.8 million and $97.9 million for the nine months ended September 30, 2002 and 2001. The variances were mainly due to decreases in our debt levels and, to a lesser degree, changes in interest rates.

Our effective tax benefit rate for the nine months ended September 30, 2002, was 191.9%, compared with an effective tax benefit rate of 78.3% for the nine months ended September 30, 2001. The increase in our 2002 estimated tax benefit rate, compared with 2001, is due to the tax benefit recorded for the sale of IdentityNow discussed above. Before nonroutine items, our estimated effective tax provision rate for the nine months ended September 30, 2002, was 37.5%. Before nonroutine items, our annual tax provision rate in 2001 was 34.0%. The increase in our estimated 2002 tax provision rate, before nonroutine items, compared with our 2001 annual tax provision rate, before nonroutine items, was due primarily to our charitable donation in 2001 of surplus property in Vancouver, Washington, for which we received a tax benefit. Changes in our tax rates were also due to lower income levels and the mix of domestic and foreign sources of income.

BOISE OFFICE SOLUTIONS

	Three Months Ended September 30				Nine Months Ended September 30
	___________________________				___________________________
		2002		2001		2002		2001
	___________		___________		____________		____________

Sales	$	899.9 million	$	848.1 million	$	2,639.9 million	$	2,679.7 million
Segment income	$	29.8 million	$	37.0 million	$	90.6 million	$	106.8 million

	(percentage of sales)

Gross profit		22.4%		24.1%		23.0%		24.0%
Operating expenses		19.0%		19.7%		19.6%		20.0%
Operating profit		3.3%		4.4%		3.4%		4.0%

Operating Results. Both total sales and same-location sales increased 6% for the three months ended September 30, 2002, compared with the same period in 2001. U.S. sales of paper, technology, furniture, and office supplies increased 14%, 11%, 1%, and 3%, respectively. These sale increases resulted primarily from the addition of new customers.

For the nine months ended September 30, 2002, total sales and same-location sales decreased 1% and 2%, respectively. The decrease in sales is primarily the result of a sluggish U.S. economy. Customers have been more cost-conscious about their office and furniture products purchases, and with widespread white-collar layoffs, our customers are consuming fewer office products year over year.

For the three and nine months ended September 30, 2002, segment income and operating profit as a percent of sales decreased from the same periods in 2001, due primarily to lower gross profit margins. For the three months ended September 30, 2002, our gross profit margins decreased as U.S. sales of higher-margin furniture and office supplies grew more slowly than sales of lower-margin paper and technology products. The margins on the sales of paper products also decreased, as we lagged passing on increased paper costs to our customers. Likewise, for the nine months ended September 30, 2002, U.S. sales of higher-margin furniture and office supplies decreased, while lower-margin paper and technology product sales increased, compared with the year-earlier period. Comparing our quarter-over-quarter and year-over-year results, our operating expenses as a percent of net sales decreased, primarily as a result of cost controls and, to a lesser extent, the elimination of amortization of goodwill, which ceased January 1, 2002.

BOISE BUILDING SOLUTIONS

	Three Months Ended September 30						Nine Months Ended September 30
	__________________________						___________________________
	2002			2001			2002			2001
	____________			____________			_____________			_____________

Sales	$	671.5 million		$	646.4 million		$	1,901.5 million		$	1,850.5 million
Segment income (loss)	$	14.5 million		$	14.2 million		$	37.3 million		$	(27.8) million
Segment income before
nonroutine items	$	14.5 million		$	14.2 million		$	37.3 million		$	31.1 million

Sales Volumes
Plywood (1,000 sq. ft. 3/8" basis)			460,952			453,769		1,364,125			1,388,221
OSB (1,000 sq. ft. 3/8" basis) (a)			107,176			90,259			305,610			280,884
Lumber (1,000 board ft.)			99,858			93,968			304,224			304,338
LVL (100 cubic ft.)			20,879			18,016			59,618			52,170
I-joists (1,000 equivalent lineal ft.)			46,954			41,924			129,051			123,805
Particleboard (1,000 sq. ft. 3/4" basis)			47,617			49,518			148,548			147,847
Building materials distribution
(sales dollars)	$	470 million		$	443 million		$	1,309 million		$	1,237 million

Average Net Selling Prices (b)
Plywood (1,000 sq. ft. 3/8" basis)	$		227	$		247	$		232	$		238
OSB (1,000 sq. ft. 3/8" basis)			127			142			131			132
Lumber (1,000 board ft.)			470			459			472			444
LVL (100 cubic ft.)			1,498			1,471			1,491			1,509
I-joists (1,000 equivalent lineal ft.)			890			900			890			898
Particleboard (1,000 sq. ft. 3/4" basis)			254			245			244			250

(a) Includes 100% of the sales of Voyageur Panel, of which we own 47%.

(b) Gross invoice price less trade discounts and freight costs.

Nonroutine Items. In February 2001, we announced the permanent closure of our plywood and lumber operations in Emmett, Idaho, and our sawmill in Cascade, Idaho, due to the significant decline in federal timber offered for sale. We completed these closures in second quarter 2001, and 373 positions were eliminated. In first quarter 2001, we recorded a pretax charge of $54.0 million related to these closures. Sales for our Idaho operations for the nine months ended September 30, 2001, were $59.4 million. Our operating loss for the nine months ended September 30, 2001, was $5.5 million.

In addition, in first quarter 2001, we wrote off our investment in assets in Chile with a pretax charge of $4.9 million. We recorded both of these charges in our Boise Building Solutions segment and in "Other (income) expense, net" in the Statement of Loss for the nine months ended September 30, 2001.

Restructuring reserve liability account activity related to these 2001 charges is as follows:

	Asset Write- Downs			Employee- Related Costs			Other Exit Costs			Total
	_______			_________			_______			_______
	(thousands)

2001 expense recorded	$	21,300		$	15,000		$	22,600		$	58,900
Assets written down		(21,300	)		-			-			(21,300	)
Pension liability recorded		-			(9,600	)		-			(9,600	)
Charges against reserve		-			(5,000	)		(10,100	)		(15,100	)
	_______			_________			_______			_______
Restructuring reserve at December 31, 2001		-			400			12,500			12,900
Proceeds from sales of assets		-			-			1,500			1,500
Charges against reserve		-			(300	)		(6,200	)		(6,500	)
	_______			_________			_______			_______

Restructuring reserve at September 30, 2002	$	-		$	100		$	7,800		$	7,900
	=======			=========			=======			=======

Asset write-downs were for plant and equipment at the closed Idaho facilities and the write-off of our equity investment in and related receivables from a joint venture in Chile. Employee-related costs include pension curtailment costs from the shutdowns of the Idaho facilities and severance costs. Other exit costs include tear-down and environmental cleanup costs related to the Idaho facilities and reserves for contractual obligations with no future benefit. We estimate that approximately $2.0 million of the remaining reserve balance will be spent in 2002, with the rest spent in 2003. The restructuring reserve liabilities are included in "Accrued liabilities, other" in the accompanying Balance Sheets.

Operating Results Before Nonroutine Items. The increase in sales in both periods of 2002, compared with 2001, was primarily due to stronger sales in engineered wood products and building materials distribution. Third-quarter sales were also favorably impacted by increased unit sales volumes. In third quarter 2002, sales of engineered wood products increased 17%, while year-to-date sales of engineered wood products increased 9%. Third-quarter and year-to-date building materials distribution sales increased 6%, while physical volumes increased 10% and 3%, respectively. Third-quarter oriented strand board, plywood, and lumber sales volumes were 19%, 2%, and 6% higher than a year ago. Year-to-date oriented strand board unit sales volume increased 9%, plywood unit sales volume decreased 2%, and lumber unit sales volumes were flat. These sales increases were partially offset by decreased plywood and oriented strand board prices in both periods of 2002, compared with 2001. Third quarter average pl ywood and oriented strand board prices declined 8% and 11%, respectively, while year-over-year average plywood and oriented strand board prices declined 3% and 1%, respectively. Average prices for our mix of lumber products, which is mostly ponderosa pine appearance and industrial grades, increased 2% and 6% for the three and nine months ended September 30, 2002, compared with the same periods in 2001.

Segment income for the three and nine months ended September 30, 2002, increased from the same periods in 2001, due to the increased sales of engineered wood products and building materials distribution discussed above and favorable wood costs. Third quarter 2002 was also favorably affected by the increased unit sales volumes discussed above.

BOISE PAPER SOLUTIONS

	Three Months Ended September 30				Nine Months Ended September 30
	________________________				_________________________
		2002		2001		2002		2001
	___________		___________		___________		____________

Sales	$	485.2 million	$	486.1 million	$	1,422.7 million	$	1,468.3 million
Segment income (loss)	$	17.2 million	$	15.3 million	$	15.2 million	$	64.5 million

Sales Volumes
(thousands of short tons)
Uncoated free sheet		364		336		1,089		1,032
Containerboard		168		172		495		479
Newsprint		110		101		305		280
Other		37		45		148		116
		_____		_____		_____		_____
		679		654		2,037		1,907
		=====		=====		=====		=====
Average Net Selling Prices (a)
(per short ton)
Uncoated free sheet	$	722	$	736	$	715	$	752
Containerboard		351		376		337		383
Newsprint		367		485		361		502

(a) Gross invoice price less trade discounts and freight cost.

Operating Results. Boise Paper Solutions sales were flat for the three months ended September 30, 2002, compared with the same period in 2001. Weighted average paper prices declined on average $33 per ton, or 6%. The price decrease was offset by a 4% increase in unit sales volume. The 3% decrease in sales for the nine months ended September 30, 2002, compared with the same period in 2001, was the result of a 9% decrease in weighted average net selling prices, partially offset by a 7% increase in unit sales volume. During third quarter 2002, we took approximately 16,000 tons of market-related curtailment, compared with 47,000 tons during third quarter 2001, and 108,000 tons for the nine months ended September 30, 2002 and 2001.

The 12% increase in segment income for the three months ended September 30, 2002, compared with the same period in 2001, was due to the increased sales volume discussed above and a 4% decrease in unit manufacturing costs. Fixed and variable manufacturing costs decreased 2% and 7%, respectively. The largest cost improvements resulted from falling energy and chemical costs. These favorable results were partially offset by the 6% decline in weighted average paper prices. Segment income decreased 76% for the nine months ended September 30, 2002, compared with the same period in 2001, due to lower weighted average paper prices. The lower weighted average paper prices were partially offset by the increased unit sales volume and lower unit manufacturing costs discussed above. Year-to-date unit manufacturing costs decreased 5%, compared with the prior year. The largest cost improvements year-to-date resulted from falling fiber and energy costs.

FINANCIAL CONDITION AND LIQUIDITY

Operating Activities. For the first nine months of 2002, operations provided $223.2 million in cash, compared with $273.4 million for the same period in 2001. For the nine months ended September 30, 2002, net income items provided $230.4 million of cash, and unfavorable changes in working capital items used $7.2 million. For the first nine months of 2001, net income items provided $284.9 million of cash, and unfavorable working capital items used $11.5 million.

We are required to make minimum contributions to our pension plans and, in some years, we make additional discretionary contributions. For 2002, the required minimum contribution was $1 million. In third quarter 2002, we made cash contributions to our pension plans totaling $48 million, compared with $17.7 million in third quarter 2001. In 2003, the required minimum contribution to our pension plans is estimated to be approximately $26 million. However, we expect to make contributions to the plans of approximately $80 million to $120 million during the course of the year. See "Critical Accounting Policies" for further information.

Our current ratio was 1.28:1 at September 30, 2002, and 0.89:1 at September 30, 2001, compared with 0.98:1 at December 31, 2001. The change in the current ratio is primarily the result of the reclassification of our revolving credit debt to long-term debt with the signing of a new agreement that expires in 2005.

Investing Activities. Cash expenditures for property and equipment, timber and timberlands, and investments in equity affiliates totaled $154.3 million for the first nine months of 2002 and $231.2 million for the same period in 2001. In 2001, we received a final payment, net of forward exchange contracts, of $159.6 million for the note receivable from the sale of our European office products operations, which we used to reduce debt. As a result, net cash used for investment was $176.1 million for the first nine months of 2002 and $103.1 million for the same period in 2001.

We expect our capital investment in 2002 to be $250 million to $270 million, excluding acquisitions. These amounts include approximately $20 million for our environmental compliance program. In 2001, we began construction of a new facility in Elma, Washington, to manufacture wood-plastic composite building products. The total cost of this facility is expected to be approximately $93 million. We have spent $82 million to date. The balance will be spent by the end of first quarter 2003, when start-up is scheduled to begin.

In October 2002, we acquired assets of Mendocino Forest Products Company, LLC, relating to the wholesale building products distribution and reload operation in Riverside, California, for $6.1 million.

The balance of our capital spending will be for quality and efficiency projects, replacement, and modest purchases of timber and timberlands.

Financing Activities. Cash used for financing was $14.3 million for the first nine months of 2002 and $163.3 million for the first nine months of 2001. Dividend payments totaled $33.6 million for the first nine months of 2002 and 2001. In both years, our quarterly dividend was 15 cents per common share.

Changes in short-term borrowings represent net changes in notes payable. Additions to long-term debt for the nine months ended September 30, 2002, included $150 million of 7.5% notes due in 2008, a $20 million floating-rate term loan, and $62 million in medium-term notes. Payments of long-term debt in this period included $125 million of 9.85% notes, $32.5 million for industrial revenue bonds, a net $20 million under our revolving credit agreement, repayment of $15.5 million of bank debt for our Australian operations, and repayment of $2.3 million of medium-term notes. Additions to long-term debt for the nine months ended September 30, 2001, included $14.6 million of bank debt for our Australian operations. Payments of long-term debt in this period included $125.0 million under our revolving credit agreement and repayment of $30.0 million of medium-term notes.

At September 30, 2002 and 2001, we had $1.6 billion and $1.8 billion of debt outstanding. At December 31, 2001, we had $1.6 billion of debt outstanding. Our debt-to-equity ratio was 1.02:1 at September 30, 2002 and 2001. Our debt-to-equity ratio was 1.00:1 at December 31, 2001.

In March 2002, we entered into a three-year, unsecured revolving credit agreement with 14 major financial institutions. The agreement permits us to borrow as much as $560 million at variable interest rates based on either the London Interbank Offered Rate (LIBOR) or the prime rate. The borrowing capacity under the agreement can be expanded to a maximum of $600 million. The revolving credit agreement replaces a similar agreement that was to expire in June 2002. Borrowings of $180 million under the old agreement were repaid. Borrowings under the new agreement were $230 million at September 30, 2002. At September 30, 2002, our borrowing rate under the agreement was 2.8%. We have entered into interest rate swaps related to $150 million of these borrowings, which gave us an effective interest rate for outstanding borrowings under the revolving credit agreement of 4.8% at September 30, 2002. The revolving credit agreement contains customary conditions to borrowing, i ncluding compliance with financial covenants relating to minimum net worth, minimum interest coverage ratio, and ceiling ratio of debt to capitalization. Under this agreement, the payment of dividends depends on the existence and amount of net worth in excess of the defined minimum. Our net worth at September 30, 2002, exceeded the defined minimum by $289.4 million. When the agreement expires in June 2005, any amount outstanding will be due and payable.

In March 2002, we entered into an interest rate swap with a notional amount of $50 million with respect to $50 million of fixed-rate $150 million 7.05% debentures. This swap converts $50 million of this fixed-rate debt to variable-rate debt based on six-month LIBOR plus approximately 2.2%. At September 30, 2002, the interest rate was 4.3%. This swap expires in May 2005.

In January 2002, we sold $150 million of 7.5% notes due in 2008. We used proceeds from this sale to reduce amounts outstanding under our revolving credit agreement and short-term debt.

At September 30, 2002 and 2001, we had $37.1 million and $51.6 million of short-term borrowings outstanding. The maximum amounts of combined short-term borrowings outstanding during the nine months ended September 30, 2002 and 2001, were $304.5 million and $126.9 million. The average amounts of short-term borrowings outstanding during the nine months ended September 30, 2002 and 2001, were $52.3 million and $55.1 million. The average interest rates for these borrowings were 2.5% for 2002 and 5.0% for 2001.

At September 30, 2002, we had $193 million of unused borrowing capacity registered with the SEC for additional debt securities. In addition, a registration statement filed with the SEC covering $500 million in universal shelf capacity became effective in April 2002. Under this registration statement, we may offer and sell in one or more offerings common stock, preferred stock, debt securities, warrants, and/or purchase contracts.

Additional information about our credit agreements and debt is in Note 9 accompanying our financial statements.

Our cash requirements going forward will be funded through a combination of cash flow from operations, borrowings under our existing credit facilities, issuance of new debt or equity securities, and possible sales of assets.

We believe inflation has not had a material effect on our financial condition or results of operations; however, there can be no assurance that we will not be affected by inflation in the future. Our overall sales are not subject to significant seasonal variations.

NEW ACCOUNTING STANDARDS

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. The provisions of Statement No. 141 became effective July 1, 2001. The provisions of Statement No. 142 became effective January 1, 2002. Statement No. 141 had little impact on us. We have used the purchase method to account for recent acquisitions, which is continued under the new standard. Statement No. 142 requires us to assess our acquired goodwill for impairment annually. We completed our initial assessment, in accordance with the provisions of the standard, in second quarter 2002, and there was no impairment. Also in accordance with the provisions of this standard, we stopped amortizing goodwill January 1, 2002. Amortization of goodwill for the nine months ended September 30, 2001, increased net loss for that period $6.4 million, or 12 cents per basic and diluted share.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Under the new statement, we will record both an initial asset and a liability for estimated costs of legal obligations associated with the retirement of long-lived assets. The initial asset will be depreciated over the expected useful life of the asset. This statement will change our accounting for landfill closure costs. We currently accrue the estimated costs of closure over the expected useful life of the landfill. These costs have not been material in any individual year. We are assessing the impact of this statement on our results of operations and financial position. This statement must be adopted January 1, 2003.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. We adopted this statement January 1, 2002. It had no impact on our results of operations or financial position.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This statement addresses financial reporting and accounting for exit and disposal costs. When we adopt this statement on January 1, 2003, it will have no effect on our results of operations or financial position.

TIMBER SUPPLY AND ENVIRONMENTAL ISSUES

For information on timber supply and environmental issues, see our Annual Report on Form 10-K for the year ended December 31, 2001, Exhibit 13.1, Financial Review.

CRITICAL ACCOUNTING POLICIES

For information on critical accounting policies, see our Annual Report on Form 10-K for the year ended December 31, 2001, our quarterly reports on Form 10-Q for the quarters ended March 31 and June 30, 2002, Exhibit 13.1, Financial Review, and the information described below.

Pensions. Most of our United States employees are covered by noncontributory defined benefit pension plans. We account for these costs in accordance with SFAS No. 87, Employer's Accounting for Pensions. That statement requires us to calculate our pension expense and liabilities using actuarial assumptions, including a discount rate assumption and a long-term asset return assumption. For 2002, our discount rate assumption is 7.25%, and our long-term asset return assumption is 9.25%, approximately equal to our long-term historical returns. Using these assumptions, we estimate that our 2002 pension expense will be approximately $32 million, following $11.1 million of expense in 2001. If weak equity market performance continues in 2002, inflation remains low, and we decrease our long-term asset return assumption for 2003 to 8.5%, we would expect our 2003 expense to increase to approximately $75 million to $85 million.

Plan contributions include required minimums and, in some years, additional discretionary amounts. For 2002, the required minimum contribution was $1 million. In third quarter 2002, we made cash contributions to our pension plans totaling $48 million, compared with $17.7 million in third quarter 2001. In 2003, the required minimum contribution to our pension plans is estimated to be approximately $26 million. However, we expect to make contributions to the plans of approximately $80 million to $120 million during the course of the year.

The amount of required minimum pension liability is determined based on the value of plan assets in comparison to the plans' accrued benefit obligation. Because of a negative return on plan assets in 2001, our minimum liability increased significantly, resulting in a decrease of $109.4 million in shareholders' equity in "Accumulated other comprehensive income (loss)." This adjustment to the minimum pension liability was a noncash charge and did not affect net income in 2001. Assuming that U.S. equity markets remain weak and that we reduce our discount rate assumption for 2003, we would expect to record an additional increase in our minimum pension liability and a net-of-tax decrease of $180 million to $220 million in shareholders' equity on December 31, 2002. Again, these adjustments will be noncash charges and will not affect net income in 2002.

OUTLOOK

Assuming that the U.S. economy continues to strengthen, however slowly, Boise's financial performance should continue to improve.

In the near term, year-over-year same-store sales comparisons in Boise Office Solutions have turned positive and should continue to be positive as the economy strengthens and purchases of furniture and office supplies increase. We've added sales staff and reduced operating staff in order to grow sales and control costs at the same time. Assuming our sales mix doesn't change, we expect operating margins to range between 3% and 4% in the fourth quarter.

In Boise Building Solutions, we're heading into the slower time of the year with oversupplied markets. As a result, we expect weaker product prices, lower volumes, and higher manufacturing costs. Boise Building Solutions' financial performance will decline in the fourth quarter from the third-quarter level.

Boise Paper Solutions should post stronger results in the fourth quarter because of gradually tightening uncoated free sheet markets, positive benefits of price increases implemented throughout the third quarter in containerboard and newsprint, and our continued focus on reducing costs.

FORWARD-LOOKING STATEMENTS

Management's Discussion and Analysis of Financial Condition and Results of Operations, including the Outlook section, includes statements concerning our expectations about our future events and performance. These are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The accuracy of these statements is subject to a number of risks, uncertainties, and assumptions that may cause our actual results to differ materially from our expectations. Factors that could cause actual results to differ from our expectations include, among other things:

the activity of our competitors and the impact of such activity on production capacity and customer demand across pulp, paper, and wood products markets;

changes in the general economic conditions, including the level of interest rates and housing starts;

changes in foreign economies and competition, which tends to effect the level of imports and exports of paper and wood products;

market demand for our products, which may be tied to the relative strength of various business segments - for instance, the level of white-collar employment may affect customer demand for office supplies, technology products, and furniture;

the performance of our manufacturing operations and the amount of capital required to maintain these operations;

changes in the banking markets, which can impact the cost of our financing activities;

variations in the performance of the financial markets, which could cause us to re-evaluate the assumptions we use in determining pension plan funding requirements and our contributions to those plans;

the effect of forestry, land use, environmental, and other governmental laws and regulations, and the impact of these regulations on our cost structure;

changes in the price or availability of raw materials, including energy; and

fires, floods, and other catastrophic events beyond our control.

We cannot determine which, if any, of these factors might affect the expectations we have made in this filing. We undertake no obligation to update any of the forward-looking statements within this filing after the date of this report.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Changes in interest and currency rates expose the company to financial market risk. Our debt is predominantly fixed-rate. We experience only modest changes in interest expense when market interest rates change. Most foreign currency transactions are conducted in local currencies, limiting our exposure to changes in currency rates. Consequently, our market risk-sensitive instruments do not subject us to material market risk exposure. Changes in our debt structure and international expansion could increase these risks. To manage volatility relating to these exposures, we may enter into various derivative transactions, such as interest rate swaps, rate hedge agreements, forward purchase contracts, and forward exchange contracts. We do not use derivative financial instruments for trading purposes.

In March 2002, we entered into an interest rate swap with a notional amount of $50 million. This swap converts $50 million of fixed-rate $150 million 7.05% debentures to variable-rate debt based on six-month LIBOR plus approximately 2.2%. The effective interest rate at September 30, 2002, was 4.3%. The swap expires in May 2005. This swap is designated as a fair value hedge of a proportionate amount of the fixed-rate debentures. The swap and the proportionate amount of debentures are marked to market, with changes in the fair value of the instruments recorded in income (loss). These swaps were fully effective in hedging the changes in fair value; accordingly, changes in the fair value of these instruments had no net impact on our reported loss in the current period.

In January and August 2002, we entered into swaps for electricity that convert 40 and 36 megawatts of usage in the Northwest to a fixed rate. The swaps expire at the end of 2002 and 2003, respectively. In January 2002, we also entered into natural gas swaps that convert 6,000 MMBtu per day of natural gas usage to a fixed price. These swaps expire in March 2003. These swaps are designated as cash flow hedges. Accordingly, the changes in fair value of these swaps, net of taxes, are recorded in "Accumulated other comprehensive income (loss)" in our Balance Sheets.

Our forward exchange contracts with a notional amount of 160 million New Zealand dollars matured in February 2002 and were not renewed. Valuation gains and losses on these contracts were recognized in income (loss) as they occurred.

We are exposed to modest credit-related risks in the event of nonperformance by counterparties to our swaps. However, we do not expect the counterparties, which are all major institutions, to fail to meet their obligations.

ITEM 4.

CONTROLS AND PROCEDURES

(a)

Within ninety days prior to filing this report, the chief executive officer and chief financial officer directed and supervised an evaluation of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934. The evaluation was conducted to determine whether the company's disclosure controls and procedures were effective in bringing material information about the company to the attention of senior management. Based on that evaluation, our chief executive officer and chief financial officer concluded that the company's disclosure controls and procedures are effective in alerting them in a timely manner to material information that the company is required to disclose in its filings with the Securities and Exchange Commission.

(b)	Since our evaluation, we have made no significant changes in the design or operation of our internal controls. Likewise, we have not taken corrective actions or made changes to other factors that could significantly affect the design or operation of these controls.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

See our Annual Report on Form 10-K for the year ended December 31, 2001, and our quarterly report on Form 10-Q for the quarter ended June 30, 2002, for information concerning other legal proceedings.

ITEM 2.

CHANGES IN SECURITIES

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.

OTHER INFORMATION

Our SEC filings are available online at www.bc.com, Investor Relations, SEC filings.

ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K

(a)

Exhibits.

Required exhibits are listed in the Index to Exhibits and are incorporated by reference.

(b)

Reports on Form 8-K.

None.

SIGNATURES

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.

		BOISE CASCADE CORPORATION
		/s/ Thomas E. Carlile _________________________________ Thomas E. Carlile Vice President and Controller (As Duly Authorized Officer and Chief Accounting Officer)

Date: November 12, 2002

CERTIFICATION PURSUANT TO RULE 13a-14 PROMULGATED
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, George J. Harad, chief executive officer of Boise Cascade Corporation, certify that:

I have reviewed this quarterly report on Form 10-Q of Boise Cascade Corporation;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002

/s/ George J. Harad
_______________________________

George J. Harad
Chief Executive Officer

CERTIFICATION PURSUANT TO RULE 13a-14 PROMULGATED
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Theodore Crumley, chief financial officer of Boise Cascade Corporation, certify that:

I have reviewed this quarterly report on Form 10-Q of Boise Cascade Corporation;

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

Date: November 12, 2002

/s/ Theodore Crumley
_______________________________

Theodore Crumley
Chief Financial Officer

BOISE CASCADE CORPORATION
INDEX TO EXHIBITS
Filed With the Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 2002

Number

Description

Page
Number

Computation of Per-Share Earnings

12.1

Ratio of Earnings to Fixed Charges

12.2

Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements

Certification of Chief Executive Officer and Chief Financial Officer of Boise Cascade Corporation

	Three Months Ended September 30						Nine Months Ended September 30
		__________________					__________________
	2002				2001		2002			2001
		_______			_______		_______			_______
		(thousands, except per-share amounts)
BASIC

Net income (loss)	$	8,510		$	14,980		$	5,133		$	(841	)
Preferred dividends (a)		(3,262	)		(3,138	)		(9,812	)		(9,604	)
		_______			_______		_______			_______
Basic income (loss)	$	5,248		$	11,842		$	(4,679	)	$	(10,445	)
		=======			=======		=======			=======

Average shares used to determine basic income (loss) per common share		58,269			57,831			58,194			57,558
		=======			=======		=======			=======
Basic income (loss) per common share	$	0.09		$	0.21		$	(0.08	)	$	(0.18	)
		=======			=======		=======			=======
DILUTED

Basic income (loss)	$	5,248		$	11,842		$	(4,679	)	$	(10,445	)
Preferred dividends eliminated		3,262			3,138			-			-
Supplemental ESOP contribution		(2,925	)		(2,580	)		-			-
		_______			_______		_______			_______

Diluted income (loss) (b)	$	5,585		$	12,400		$	(4,679	)	$	(10,445	)
		=======			=======		=======			=======
Average shares used to determine basic
income (loss) per common share		58,269			57,831			58,194			57,558
Stock options and other		239			484			-			-
Series D Convertible Preferred Stock		3,499			3,644			-			-
		_______			_______		_______			_______
Average shares used to determine diluted income (loss) per common share (b)(c)		62,007			61,959			58,194			57,558
		=======			=======		=======			=======
Diluted income (loss) per common share	$	0.09		$	0.20		$	(0.08	)	$	(0.18	)
		=======			=======		=======			=======

		Three Months Ended						Nine Months Ended
		September 30						September 30
	______________________							_________________
		2002			2001			2002			2001
	________				________			_______			_______
		(thousands)

Sales of receivables (Note 6)	$	1,178		$		2,047		$	3,350		$	7,011
Sale of European operations		(1,388	)			-			(1,388	)		-
Sale of investment in IdentityNow (Note 11)		- -				- -			23,646			- -
Restructuring activities (Note 13)		(750	)			(1,000	)		(750	)		57,929
Postretirement benefits		-				-			-			10,871
Other, net		886				2,588			4,357			1,538
	______			________				_______			_______
	$	(74	)	$		3,635		$	29,215		$	77,349

	========			========				=======			=======

		Three Months Ended September 30					Nine Months Ended September 30
		________________					____________________
		2002		2001			2002				2001
		______		_______			_______				_______
		(thousands)

Net income (loss)		$ 8,510	$		14,980		$	5,133		$		(841	)
Other comprehensive income (loss)
Cumulative foreign currency translation adjustment, net of income taxes		(6,113	)		(4,651	)		6,694				(8,672	)
Cash flow hedges, net of income taxes		15			(1,651	)		(671	)			(2,561	)
		______	______				______			_______
Comprehensive income (loss), net of income taxes		$ 2,412	$		8,678		$	11,156		$		(12,074	)
	======		=======				=======			=======

	Boise Office Solutions			Boise Building Solutions			Total
	______________			________________			____________
	(thousands)

Balance at December 31, 2001	$	373,545		$	11,640		$	385,185
Goodwill acquired during year		4,303			-			4,303
Effect of foreign translation		7,206			(1	)		7,205
Purchase price adjustments	(397		)	-			(397		)
	_____________			_______________			___________
Balance at September 30, 2002	$	384,657		$	11,639		$	396,296
	==============			================			============

		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	______________		______________			____________
		(thousands)

Customer lists and relationships	$	23,876	$	(3,916	)	$	19,960
Noncompete agreements		4,523		(3,721	)		802
Exclusive distribution rights		2,413		(262	)		2,151
	______________		______________			____________
	$	30,812	$	(7,899	)	$	22,913
	==============		==============			============


	/s/ George J. Harad _______________________________
	George J. Harad Chief Executive Officer


	/s/ Theodore Crumley _______________________________
	Theodore Crumley Chief Financial Officer