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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10 - K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number 1-5057
A Delaware BOISE CASCADE CORPORATION I.R.S. Employer
Corporation 1111 West Jefferson Street Identification
P.O. Box 50 No. 82-0100960
Boise, Idaho 83728-0001
(208)384-6161
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $2.50 par value New York, Chicago, and
Pacific Stock Exchanges
American & Foreign Power Company Inc.
Debentures, 5% Series due 2030 New York Stock Exchange
Common Stock Purchase Rights New York, Chicago, and
Pacific Stock Exchanges
$2.35 Depositary Shares, evidenced by
Depositary Receipts for Series F,
Cumulative Preferred Stock New York Stock Exchange
$1.58 Depositary Shares, evidenced by
Depositary Receipts for Series G,
Conversion Preferred Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Cumulative Preferred Stock, Series F
Conversion Preferred Stock, Series G
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [ ].
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the price at which the stock was sold as
of the close of business on February 28, 1997: $1,888,287,211
Indicate the number of shares outstanding of each of the registrant's classes
of common stock as of the latest practicable date.
Shares Outstanding
Class as of February 28, 1997
Common Stock, $2.50 par value 48,521,410
Documents incorporated by reference
1. The registrant's annual report for the fiscal year ended December 31,
1996, portions of which are incorporated by reference into Parts I,
II, and IV of this Form 10-K, and
2. Portions of the registrant's proxy statement relating to its 1997
annual meeting of shareholders to be held on April 18, 1997 ("the
Company's proxy statement"), are incorporated by reference
into Part III of this Form 10-K.
BOISE CASCADE CORPORATION
TABLE OF CONTENTS
PART I
Item Page
1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Submission of Matters to a Vote of Security Holders . . . . . . . . .
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . .
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . .
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . .
8. Financial Statements and Supplementary Data . . . . . . . . . . . . .
9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . .
PART III
10. Directors and Executive Officers of the Registrant. . . . . . . . . .
11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . .
12. Security Ownership of Certain Beneficial Owners and
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Certain Relationships and Related Transactions. . . . . . . . . . . .
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I
Item 1. Business
As used in this annual report, the term "Company" includes Boise
Cascade Corporation and its consolidated subsidiaries and predecessors.
The terms "Boise Cascade" and "Company" refer, unless the context otherwise
requires, to Boise Cascade Corporation and its consolidated subsidiaries.
Boise Cascade Corporation is an integrated paper and forest products
company headquartered in Boise, Idaho, with domestic and international
operations. The Company manufactures and distributes paper and wood
products, distributes office products and building materials, and owns and
manages 2.4 million acres of timberland. The Company was incorporated
under the laws of Delaware in 1931 under the name Boise Payette Lumber
Company of Delaware, as a successor to an Idaho corporation formed in 1913;
in 1957, its name was changed to its present form.
The Company is a participant with equity affiliates in connection
with certain of its businesses. The Company's principal investments in
affiliates include a 47% interest in Voyageur Panel and a 25% interest in
Ponderosa Fibres of Washington. (See Note 8 of the Notes to Financial
Statements of the Company's 1996 Annual Report. This information is
incorporated herein by reference.)
Financial information pertaining to each of the Company's industry
segments and to each of its geographic areas for the years 1996, 1995, and
1994 is presented in Note 10, "Segment Information," of the Notes to
Financial Statements of the Company's 1996 Annual Report and is
incorporated herein by reference.
The Company's sales and income are affected by the industry supply of
product relative to the level of demand and by changing economic conditions
in the markets it serves. Demand for paper and paper products and for
office products correlates closely with real growth in the gross domestic
product. Paper and paper products operations are also affected by demand
in international markets and by inventory levels of users of these
products. The Company's building products businesses are dependent on
repair-and-remodel activity, housing starts, and commercial and industrial
building, which in turn are influenced by the availability and cost of
mortgage funds. Declines in building activity that may occur during winter
affect the Company's building products businesses. In addition, energy and
some operating costs may increase at facilities affected by cold weather.
However, seasonal influences are generally not significant.
The management practices followed by the Company with respect to
working capital conform to those of the paper and forest products industry
and common business practice in the United States.
The Company engages in acquisition discussions with other companies
and makes acquisitions from time to time. It is the Company's policy to
review its operations periodically and to dispose of assets which fail to
meet its criteria for return on investment or which cease to warrant
retention for other reasons. (See Notes 1, 6, and 8 of the Notes to
Financial Statements of the Company's 1996 Annual Report. This information
is incorporated herein by reference.)
Paper and Paper Products
The products manufactured by the Company, made both from virgin and
recycled fibers, include uncoated business, printing, forms, and converting
papers; newsprint; containerboard; and market pulp. These products are
available for sale to the related paper markets, and certain of these
products are sold through the Company's office products distribution
operations. In addition, containerboard is used by the Company in the
manufacture of corrugated containers.
In November 1996, the Company completed the sale of its coated
publication paper business to The Mead Corporation. (See Note 1 of the
Notes to Financial Statements of the Company's 1996 Annual Report. This
information is incorporated herein by reference.)
The Company is a major North American pulp and paper producer with
five paper mills. The total annual practical capacity of the mills was
approximately 2.6 million tons at December 31, 1996. The Company's
products are sold to distributors and industrial customers primarily by its
own sales personnel.
The Company's paper mills are supplied with pulp principally from the
Company's own integrated pulp mills. Pulp mills in the Northwest manu-
facture chemical pulp primarily from wood waste produced as a byproduct of
wood products manufacturing. Pulp mills in the Midwest and South
manufacture chemical, thermomechanical, and groundwood pulp mainly from
pulpwood logs and, to some extent, from purchased wood waste and pulp from
deinked recycled fiber. Wood waste is provided by Company sawmills and
plywood mills in the Northwest and, to a lesser extent, in the South, and
the remainder is purchased from outside sources.
In October 1994, Rainy River Forest Products Inc. ("Rainy River"),
the Company's former Canadian subsidiary, completed an initial public
offering of units of its equity and debt securities. As a result of the
offering, the Company owned 49% of the outstanding voting common shares and
60% of the total equity of Rainy River. Rainy River was accounted for on
the equity method retroactive to January 1, 1994, in the Company's
consolidated financial statements, and its results of operations were
included in "Equity in net income (loss) of affiliates."
In November 1995, the Company divested its remaining interest in
Rainy River through Rainy River's merger with Stone-Consolidated
Corporation and received cash of approximately $183,482,000 and Stone-
Consolidated stock. The Company used the proceeds from this transaction to
reduce debt. In 1996, the Company sold the Stone-Consolidated stock for
$133,628,000. (See Note 8 of the Notes to Financial Statements of the
Company's 1996 Annual Report. This information is incorporated herein by
reference.)
The Company currently manufactures corrugated containers at
seven plants, which have annual practical capacity of approximately
4.8 billion square feet. The containers produced at the Company's plants
are used to package fresh fruit and vegetables, processed food, beverages,
and many other industrial and consumer products. The Company sells its
corrugated containers primarily through its own sales personnel.
The Company also has a wave flute facility which became operational
in 1996. Wave flute is a substitute for many standard corrugated products.
When at capacity, the facility will be capable of producing approximately
700 million square feet annually.
The following table sets forth sales volumes of paper and paper
products for the years indicated:
1996 1995 1994 1993 1992
Paper (thousands of short tons)
Uncoated free sheet 1,167 1,177 1,271 1,215 1,110
Containerboard 563 602 595 559 560
Newsprint(1) 411 416 415 860 831
Market pulp 230 217 212 205 260
Discontinued grades(1) 260 428 447 717 716
______ ______ ______ ______ ______
2,631 2,840 2,940 3,556 3,477
(millions of square feet)
Corrugated Containers(2) 3,201 3,114 3,237 2,961 4,715
(1) Newsprint for 1996, 1995, and 1994 excludes production from Rainy
River, which was reported on the equity method from January 1, 1994,
through November 1, 1995. On November 1, 1995, Rainy River merged
with Stone-Consolidated Corporation. The Company's coated
publication paper business was sold November 1, 1996.
(2) In mid-1992, the Company sold 11 of its corrugated container plants.
Office Products
In April 1995, the Company's wholly owned subsidiary, Boise Cascade
Office Products Corporation ("BCOP"), completed an initial public offering
of 10,637,500 shares of common stock at a price of $12.50 per share (after
giving effect to a two-for-one stock split in the form of a dividend in May
1996). After the offering, the Company owned 82.7% of BCOP's outstanding
common stock. At December 31, 1996, the Company owned approximately 80.9%
of BCOP's outstanding common stock. (See Note 6 of the Notes to Financial
Statements of the Company's 1996 Annual Report. This information is
incorporated herein by reference.)
BCOP distributes a broad line of items for the office, including
office and computer supplies and furniture, paper products, and promotional
products. All of the products sold by this segment are purchased from
other manufacturers or from industry wholesalers, except copier and similar
papers which are sourced primarily from Boise Cascade's paper operations.
BCOP sells these office products directly to corporate, government, and
other offices in the United States, Canada, and Australia, as well as to
individuals, home offices, and small- and medium-sized offices in the
United States and the United Kingdom.
Customers with multisite locations across the country are often
serviced via national contracts that provide consistent pricing and product
offerings and, if desired, summary billings, usage reporting, and other
special services. At February 28, 1997, BCOP operated 65 distribution
centers. During 1996, BCOP completed acquisitions of 19 businesses located
in Australia, Canada, Maine, Michigan, New Mexico, Oklahoma, Oregon,
Tennessee, Vermont, Washington, and Wisconsin. BCOP also operates four
retail office supply stores in Hawaii and approximately 70 retail stores in
Canada.
The following table sets forth sales dollars for BCOP for the years
indicated:
1996 1995 1994 1993 1992(1)
Sales (millions) $1,986 $1,316 $ 909 $ 683 $ 672
(1) Early in 1992, BCOP sold essentially all of its wholesale office
products distribution operations, enabling it to focus on the
consumer channel.
Building Products
The Company is a major producer of lumber, plywood, and
particleboard, together with a variety of specialty wood products. The
Company also manufactures engineered wood products consisting of laminated
veneer lumber (LVL), which is a high-strength engineered structural lumber
product, and wood I-joists that incorporate the LVL technology. Most of
the Company's production is sold to independent wholesalers and dealers and
through the Company's own wholesale building materials distribution
outlets. The Company's wood products are used primarily in housing,
industrial construction, and a variety of manufactured products. Wood
products manufacturing sales for 1996, 1995, and 1994 were $867 million,
$977 million, and $997 million.
The following table sets forth annual practical capacities of the
Company's wood products facilities as of December 31, 1996:
Number of
Mills Practical Capacity
(millions)
Plywood 12 1,970 square feet (3/8" basis)
Lumber 11 705 board feet
Particleboard 1 196 square feet (3/4" basis)
Engineered Wood Products(1)(2) 2 10.4 cubic feet
(1) In late 1996, the Company completed construction of an LVL plant in
Alexandria, Louisiana. When fully operational, the plant will have
4.4 million cubic feet of annual capacity.
(2) In 1995, the Company formed a joint venture to build an oriented
strand board (OSB) plant in Barwick, Ontario, Canada. The Company
owns 47% of the joint venture. The plant, with 400 million square
feet of annual capacity, will begin production in 1997.
The Company operates 14 wholesale building materials distribution
facilities. In 1996, the Company acquired facilities in Oklahoma and Texas
and started up a facility in New Mexico. These operations market a wide
range of building materials, including lumber, plywood, particleboard,
engineered wood products, paneling, molding, windows, doors, builders'
hardware, and related products. These products are distributed to retail
lumber dealers, home centers specializing in the do-it-yourself market, and
industrial customers. A portion (approximately 30% in 1996) of the wood
products required by the Company's Building Materials Distribution Division
is provided by the Company's manufacturing facilities, and the balance is
purchased from outside sources.
The following table sets forth sales volumes of wood products and
sales dollars for engineered wood products and the building materials
distribution business for the years indicated:
1996 1995 1994 1993 1992
(millions)
Plywood (square feet - 3/8" basis) 1,873 1,865 1,894 1,760 1,788
Lumber (board feet) 692 711 754 760 805
Particleboard (square feet - 3/4" basis) 195 196 194 182 186
LVL (cubic feet) 2.2 1.8 1.4 1.1 .9
I-joists (eq. lineal feet) 74 61 55 49 34
Building materials distribution
(sales dollars) $690 $598 $657 $590 $447
Timber Resources
Boise Cascade owns and manages approximately 2.4 million acres of
timberland in North America. The amount of timber harvested each year by
the Company from its timber resources, compared with the amount it
purchases from outside sources, varies according to the price and supply of
timber for sale on the open market and according to what the Company deems
to be in the interest of sound management of its timberlands. During 1996,
the Company's mills processed approximately 1.1 billion board feet of
sawtimber and 1.4 million cords of pulpwood; 33% of the sawtimber and 41%
of the pulpwood were harvested from the Company's timber resources, and the
balance was acquired from various private and government sources.
Approximately 78% of the 805,000 bone-dry units of hardwood and softwood
chips consumed by the Company's Northwest pulp and paper mills in 1996 were
provided from a whole-log chipping facility and the Company's Northwest
wood products manufacturing facilities as residuals from the processing of
solid wood products. Of the 672,000 bone-dry units of residual chips used
in the South, 39% were provided by the Company's Southern wood products
manufacturing facilities.
At December 31, 1996, the acreages of owned or controlled timber
resources by geographic area and the approximate percentages of total fiber
requirements available from the Company's respective timber resources in
these areas and from the residuals from processed purchased logs are shown
in the following table:
Northwest Midwest South Total
(thousands of acres)
Fee 1,328 308 419 2,055
Leases and contracts 51 - 290 341
______ ______ ______ ______
Total 1,379(1) 308(2) 709(3) 2,396(4)
Approximate percentage of total
fiber requirements available
from: (5)
Owned and controlled timber
resources 21% 23% 25% 23%
Residuals from processed
purchased logs 14 - 6 9
______ ______ ______ ______
Total 35% 23% 31% 32%
(1) Principally sawtimber.
(2) Principally pulpwood.
(3) Sawtimber and pulpwood.
(4) On December 31, 1996, the Company's inventory of merchantable
sawtimber was approximately 7.6 billion board feet, and its inventory
of pulpwood was approximately 7.6 million cords.
(5) Assumes harvesting of Company-owned and controlled timber resources
on a sustained timber yield basis and operation of the Company's
paper and wood products manufacturing facilities at practical
capacity. Percentages shown represent weighted average consumption
on a cubic volume basis.
Long-term leases generally provide the Company with timber harvesting
rights and carry with them the responsibility for management of the
timberlands. The average remaining life of all leases and contracts is in
excess of 40 years. In addition, the Company has an option to purchase
approximately 203,000 acres of timberland it currently has under leases and
contracts in the South.
The Company seeks to maximize the utilization of its timberlands
through efficient management so that the timberlands will provide a
continuous supply of wood for future needs. Site preparation, planting,
fertilizing, thinning, and logging techniques are continually improved
through a variety of methods, including genetic research and
computerization.
The Company assumes substantially all risks of loss from fire and
other casualties on all the standing timber it owns, as do most owners of
timber tracts in the U.S.
Additional information pertaining to the Company's timber resources
is presented under the caption "Timber Supply" of the Financial Review of
the Company's 1996 Annual Report. This information is incorporated herein
by reference.
Competition
The markets served by the Company are highly competitive, with a
number of substantial companies operating in each. The Company competes in
its markets principally through price, service, quality, and value-added
products and services.
Environmental Issues
The Company's discussion of environmental issues is presented under
the caption "Environmental Issues" of the Financial Review of the Company's
1996 Annual Report. This information is incorporated herein by reference.
Employees
As of December 31, 1996, the Company and its subsidiaries had 19,976
employees, 6,280 of whom were covered under collective bargaining
agreements. Major negotiations concluded in 1996 included a new five-year
contract expiring in 2001 at the Company's wood products facilities in
Oakdale, Louisiana; Florein, Louisiana; and Fisher, Louisiana.
No major negotiations are scheduled for 1997.
Identification of Executive Officers
Information with respect to the Company's executive officers is set
forth in Item 10 of this Form 10-K and is incorporated into this Part I by
reference.
Capital Investment
The Company's capital expenditures in 1996 were $832 million,
compared with $428 million in 1995 and $272 million in 1994. Details of
1996 spending by segment and by type are as follows:
Replacement,
Quality/ Timber and Environmental,
Expansion Efficiency(1)Timberlands and Other Total
(expressed in millions)
Paper and paper products$ 301 $ 81 $ - $ 88 $ 470
Office products(2) 227 20 - 18 265
Building products 54 15 - 16 85
Timber and timberlands - - 6 - 6
Other 1 - - 5 6
_____ _____ _____ _____ _____
Total $ 583 $ 116 $ 6 $ 127 $ 832
(1) Quality and efficiency projects include quality improvements,
modernization, energy, and cost-saving projects.
(2) Capital expenditures include acquisitions made by BCOP through the
issuance of common stock and the recording of liabilities.
The level of capital investment in 1997 is expected to be about
$350 million, excluding acquisitions, and will be allocated to cost-saving,
modernization, expansion, replacement, maintenance, environmental, and safety
projects.
Energy
The paper and paper products segment is the Company's primary energy
user. Self-generated energy sources in this segment, such as wood wastes,
pulping liquors, and hydroelectric power, provided 53% of total 1996 energy
requirements, compared with 52% in 1995 and 59% in 1994. The energy
requirements fulfilled by purchased sources in 1996 were as follows: natural
gas, 25%; electricity, 11%; residual fuel oil, 4%; and other sources, 7%.
Item 2. Properties
The Company owns substantially all of its nonoffice products operating
facilities. Regular maintenance, renewal, and new construction programs have
preserved the operating suitability and adequacy of those properties. The
majority of the office products facilities are rented under operating leases.
The Company owns substantially all equipment used in its facilities.
Following is a list of the Company's facilities by segment as of
December 31, 1996, except for Office Products which is as of February 28, 1997.
Information concerning timber resources is presented in Item 1 of this
Form 10-K.
Paper and Paper Products
5 pulp and paper mills located in Alabama, Louisiana, Minnesota, Oregon, and
Washington. In 1996, the Company sold its mill in Rumford, Maine.
6 regional service centers located in California, Georgia, Illinois,
New Jersey, Oregon, and Texas.
2 converting facilities located in Oregon and Washington. In 1996, the
Company completed the reconfiguration of its Vancouver, Washington, mill by
shutting down the mill and operating it as a paper converting facility.
7 corrugated container plants located in Idaho (2), Nevada, Oregon, Utah,
and Washington (2).
1 wave flute facility located in California.
Office Products
65 distribution centers located in Arizona, Australia (8), California (2),
Canada (9), Colorado, Connecticut, Delaware, Florida (3), Georgia, Hawaii,
Idaho, Illinois, Kentucky, Maine, Maryland, Massachusetts, Michigan (3),
Minnesota, Missouri (2), Montana, Nevada (2), New Jersey, New Mexico,
New York, Ohio (2), Oklahoma, Oregon (2), Pennsylvania (2), South Carolina,
Tennessee, Texas (2), United Kingdom, Utah, Vermont, Virginia,
Washington (3), and Wisconsin.
Approximately 74 retail outlets located in Canada and Hawaii.
Building Products
11 sawmills located in Alabama, Idaho (2), Louisiana, Oregon (4), and
Washington (3).
12 plywood and veneer plants located in Idaho, Louisiana (2), Oregon (7),
and Washington (2).
1 particleboard plant located in Oregon.
2 engineered wood products plants located in Louisiana and Oregon.
1 wood beam plant located in Idaho.
14 wholesale building materials units located in Arizona, Colorado (2),
Idaho (2), Montana, New Mexico, Oklahoma, Texas, Utah, and Washington (4).
Item 3. Legal Proceedings
The Company has been notified that it is a "potentially responsible
party" under the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA) or similar federal and state laws with respect to a
number of sites where hazardous substances or other contaminants are
located. In 1993, the Company filed a lawsuit in State District Court in
Boise, Idaho, against its current and previous insurance carriers seeking
insurance coverage for response costs the Company has incurred or may incur
at these sites. The Company has settled with all carriers except the
insolvent London market carriers, where settlement negotiations are
underway. Payment from the last defendants in the lawsuit has been
received, and the Company filed a motion to dismiss the case in its entirety
on December 26, 1996. This does not affect proceedings against the
insolvent London carriers because they were not defendants in the case due
to their insolvency. The Company cannot predict with certainty the total
response and remedial costs, the Company's 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. However, based on the
Company's investigations, the Company's 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, the Company does not presently believe that
the known actual and potential response costs will, in the aggregate, have a
material adverse effect on its financial condition or the results of
operations.
On March 12, 1996, a lawsuit purporting to be a nationwide class
action was filed against the Company in the Fourth Judicial District Court,
Ada County, Idaho. This lawsuit alleges, among other allegations, that
hardboard siding manufactured by the Company, which was used as exterior
cladding for buildings, was inherently defective. The purported class,
which has not been certified, is alleged to consist of all owners of
buildings or structures in the United States on which hardboard siding
manufactured by the Company is installed. The Complaint seeks, among other
items, to declare the Company financially responsible for the repair and
replacement of all such siding, to make restitution to the class members,
and to award each class member compensatory and punitive damages. The
Company discontinued manufacturing the hardboard siding product which is the
subject of this litigation in 1984. The Company believes that there are
valid factual and legal defenses to this case and will vigorously defend all
claims asserted by the Plaintiffs.
The Company is presently negotiating a consent decree, which will
probably be signed in the first quarter of 1997, with the U.S. Environmental
Protection Agency, Region IV, to implement a remedy for environmental
contamination at the THAN National Priorities List Site near Albany,
Georgia. The total remedial cost is estimated at $2.5 million, of which 80-
85% will be the Company's approximate share.
In August 1996, the Company paid $280,000 to the City of Salem,
Oregon, as final settlement of the Company's share of environmental costs
arising at the former Salem pulp and paper mill.
The Company is involved in other litigation and administrative
proceedings arising in the normal course of its business. In the opinion of
management, the Company's recovery, if any, or the Company's liability, if
any, under any pending litigation or administrative proceeding, including
those described in the preceding paragraphs, would not materially affect its
financial condition or operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of shareholders during the
fourth quarter of 1996.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The Company's common stock is listed on the New York, the Chicago, and
the Pacific Stock Exchanges. The high and low sales prices for the
Company's common stock, as well as the frequency and amount of dividends
paid on such stock, is included in Note 11, "Quarterly Results of Operations
(unaudited)," of the Notes to Financial Statements in the Company's 1996
Annual Report. Additional information concerning dividends on common stock
is presented under the caption "Dividends" of the Financial Review section
of the Company's 1996 Annual Report, and information concerning restrictions
on the payments of dividends is included in Note 3, "Debt," of the Notes to
Financial Statements in the Company's 1996 Annual Report. The approximate
number of common shareholders, based upon actual record holders at year-end,
is presented under the caption "Financial Highlights" of the Company's 1996
Annual Report. The information under these captions is incorporated herein
by reference.
Shareholder Rights Plan
Pursuant to the shareholder rights plan adopted in December 1988 and
as amended in September 1990, holders of common stock received a
distribution of one right for each common share held. The rights become
exercisable ten days after a person or group acquires 15% of the Company's
outstanding voting securities or ten business days after a person or group
commences or announces an intention to commence a tender or exchange offer
that could result in the acquisition of 15% of these securities. If a
person acquires 15% or more of the Company's outstanding voting securities,
on the tenth day thereafter, unless this time period is extended by the
board of directors, each right would, subject to certain adjustments and
alternatives, entitle the rightholder to purchase common stock of the
Company or the acquiring company having a market value of twice the $175
exercise price of the right (except that the acquiring person or group and
other related holders would not be able to purchase common stock of the
Company on these terms). The rights are nonvoting, may be redeemed by the
Company at a price of 1 cent per right at any time prior to the tenth day
after an individual or group acquires 15% of the Company's voting stock,
unless extended, and expire in 1998. Additional details are set forth in
the Amended and Restated Rights Agreement filed with the Securities and
Exchange Commission as Exhibit 1 in the Company's Form 8-K dated
September 25, 1990.
Item 6. Selected Financial Data
The following table sets forth selected financial data of the Company
for the years indicated and should be read in conjunction with the
disclosures in Item 7 and Item 8 of this Form 10-K:
1996 1995 1994 1993 1992
(expressed in millions, except
per-common-share amounts)
Assets
Current assets $1,355 $1,313 $ 918 $ 887 $ 866
Property and equipment, net 2,554 2,604 2,494 3,010 3,067
Other 802 739 882 616 627
______ ______ ______ ______ ______
$4,711 $4,656 $4,294 $4,513 $4,560
Liabilities and
Shareholders' Equity
Current liabilities $ 933 $ 770 $ 658 $ 688 $ 750
Long-term debt, less
current portion 1,330 1,365 1,625 1,593 1,680
Guarantee of ESOP debt 196 214 231 247 262
Minority interest 82 68 - - -
Other 490 545 415 480 510
Shareholders' equity 1,680 1,694 1,365 1,505 1,358
______ ______ ______ ______ ______
$4,711 $4,656 $4,294 $4,513 $4,560
Net sales $5,108 $5,074 $4,140 $3,958 $3,716
Income (loss) before accounting
change 9 352 (63) (77) (154)
Net income (loss) 9 352 (63) (77) (227)
Net income (loss) per common share
Primary
Income (loss) before
accounting change $ (.63) $ 5.93 $(3.08) $(3.17) $(4.79)
Effect of net accounting
change (1) - - - - (1.94)
______ ______ ______ ______ ______
$ (.63) $ 5.93 $(3.08) $(3.17) $(6.73)
Fully diluted (2)
Income (loss) before
accounting change $ (.63) $ 5.39 $(3.08) $(3.17) $(4.79)
Effect of net accounting
change (1) - - - - (1.94)
______ ______ ______ ______ ______
$ (.63) $ 5.39 $(3.08) $(3.17) $(6.73)
Cash dividends declared
per common share $ .60 $ .60 $ .60 $ .60 $ .60
(1) Consists of a one-time noncash charge of $73 million, or $1.94 per
share, for the adoption of Financial Accounting Standards Board
requirements to accrue postretirement benefits other than pensions.
(2) The computation of fully diluted net loss per common share was
antidilutive in the years 1996, 1994, 1993, and 1992; therefore, the
amounts reported for primary and fully diluted loss per share are the
same.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Management's discussion and analysis of financial condition and results
of operations are presented under the caption "Financial Review" of the
Company's 1996 Annual Report and are incorporated herein by reference.
On March 11, 1997, the Company signed a new revolving credit agreement
with a group of banks. The new agreement allows the Company to borrow as
much as $600 million at variable interest rates based on customary indices,
and expires in June 2002. The revolving credit agreement contains financial
covenants relating to minimum net worth, minimum interest coverage ratios,
and ceiling ratios of debt to capitalization. The new agreement replaces
the Company's previous $600 million revolving credit agreement that would
have expired in June 2000.
Item 8. Financial Statements and Supplementary Data
The Company's consolidated financial statements and related notes,
together with the report of the independent public accountants, are presented
in the Company's 1996 Annual Report and are incorporated herein by reference.
Selected quarterly financial data is presented in Note 11, "Quarterly Results
of Operations (unaudited)," of the Notes to Financial Statements in the
Company's 1996 Annual Report and is incorporated herein by reference.
The consolidated income statement for the three months ended
December 31, 1996, is presented in the Company's Fact Book for the fourth
quarter of 1996 and is incorporated herein by reference.
The 10.125% Notes issued in December 1990, the 9.85% Notes issued in
June 1990, the 9.9% Notes issued in March 1990, and the 9.45% Debentures
issued in October 1989 each contain a provision under which in the event of
the occurrence of both a designated event, as defined, and a rating decline,
as defined, the holders of these securities may require the Company to redeem
the securities.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors
The directors and nominees for directors of the Company are presented
under the caption "Election of Directors" in the Company's proxy statement.
This information is incorporated herein by reference.
Executive Officers as of February 28, 1997
Date First
Elected as
Name Age Position or Office an Officer
George J. Harad(1) 52 Chairman of the Board and
Chief Executive Officer 5/11/82
Peter G. Danis Jr.(2) 65 Executive Vice President 7/26/77
Theodore Crumley 51 Senior Vice President and
Chief Financial Officer 5/10/90
A. Ben Groce 55 Senior Vice President 2/8/91
John W. Holleran 42 Senior Vice President and
General Counsel 7/30/91
Terry R. Lock 55 Senior Vice President 2/17/77
Richard B. Parrish 58 Senior Vice President 2/27/80
N. David Spence 61 Senior Vice President 12/8/87
A. James Balkins III 44 Vice President and
Corporate Secretary 9/5/91
J. Ray Barbee 49 Vice President 9/26/89
Stanley R. Bell 50 Vice President 9/25/90
John C. Bender 56 Vice President 2/13/90
Charles D. Blencke 53 Vice President 12/11/92
Tom E. Carlile 45 Vice President and
Controller 2/4/94
J. Michael Gwartney 56 Vice President 4/25/89
Vincent T. Hannity 52 Vice President 7/26/96
H. John Leusner 61 Vice President 12/11/92
Irving Littman 56 Vice President and
Treasurer 11/1/84
Jeffrey G. Lowe 55 Vice President 12/11/92
Christopher C. Milliken(3) 51 Vice President 2/3/95
Carol B. Moerdyk(4) 46 Vice President 5/10/90
Terry M. Plummer 43 Vice President 9/28/95
J. Kirk Sullivan 61 Vice President 9/30/81
Gary M. Watson 49 Vice President 2/5/93
(1) Chairman of the Board, Boise Cascade Office Products Corporation
(2) President and Chief Executive Officer, Boise Cascade Office Products
Corporation
(3) Senior Vice President, Operations, Boise Cascade Office Products
Corporation
(4) Senior Vice President, Chief Financial Officer and Treasurer, Boise
Cascade Office Products Corporation
All of the officers named above, except Gary M. Watson, have been
employees of the Company or one of its subsidiaries for at least five years.
Mr. Watson joined the Company in 1992 as director of its Paper Research and
Development Center in Portland, Oregon.
Alice E. Hennessey, senior vice president, retired from her position
with the Company effective August 1, 1996. Gary M. Curtis, vice president,
resigned from his position with the Company effective November 1, 1996.
Donald F. Smith, vice president, retired from his position with the Company
effective December 31, 1996. D. Ray Ryden, vice president, retired from his
position with the Company effective February 28, 1997.
John W. Holleran was elected senior vice president and general counsel
in July 1996. In 1976, Mr. Holleran received a B.A. degree in Political
Science and Sociology from Gonzaga University. In 1979, he received his
J.D. from the Gonzaga University School of Law. In 1990, Mr. Holleran
attended the Stanford Executive Program at Stanford University. He joined
the Company's legal department in 1979.
Vincent T. Hannity was elected a vice president in July 1996. In
1967, Mr. Hannity received a B.A. degree from Gonzaga University. In 1989,
he attended the Stanford University Executive Program. Mr. Hannity joined
the Company in 1981. Mr. Hannity's current position is Vice President of
Corporate Communications and Investor Relations.
Item 11. Executive Compensation
Information concerning compensation of the Company's executive
officers for the year ended December 31, 1996, is presented under the
caption "Compensation Tables" in the Company's proxy statement. This
information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Information concerning the security ownership of certain benefi-
cial owners as of December 31, 1996, is set forth under the
caption "Beneficial Ownership" in the Company's proxy statement
and is incorporated herein by reference.
(b) Information concerning security ownership of management as of
December 31, 1995, is set forth under the caption "Security
Ownership of Directors and Executive Officers" in the Company's
proxy statement and is incorporated herein by reference.
(c) Information concerning compliance with Section 16 of the
Securities and Exchange Act of 1934 is set forth under the
caption "Section 16(a) Beneficial Ownership Reporting Compliance"
in the Company's proxy statement and is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
Information concerning certain relationships and related
transactions during 1996 is set forth under the caption "Consulting and
Legal Services" in the Company's proxy statement and is incorporated herein
by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as a part of this Form 10-K for
the Company:
(1) Financial Statements
(i) The Income Statement for the three months ended
December 31, 1996, is incorporated herein by
reference from the Company's Fact Book for the
fourth quarter of 1996.
(ii) The Financial Statements, the Notes to Financial
Statements, and the Report of Independent Public
Accountants listed below are incorporated herein by
reference from the Company's 1996 Annual Report.
- Balance Sheets as of December 31, 1996 and
1995.
- Statements of Income (Loss) for the years ended
December 31, 1996, 1995, and 1994.
- Statements of Cash Flows for the years ended
December 31, 1996, 1995, and 1994.
- Statements of Shareholders' Equity for the
years ended December 31, 1996, 1995, and 1994.
- Notes to Financial Statements.
- Report of Independent Public Accountants.
(2) Financial Statement Schedules.
None required.
(3) Exhibits.
A list of the exhibits required to be filed as part of
this report is set forth in the Index to Exhibits, which
immediately precedes such exhibits, and is incorporated
herein by reference.
(b) Reports on Form 8-K.
No Form 8-K's were filed during the fourth quarter of 1996.
(c) Exhibits.
See Index to Exhibits.
For the purpose of complying with the rules governing Form S-8 under
the Securities Act of 1933, the undersigned registrant hereby
undertakes as follows, which undertaking shall be incorporated by
reference into registrant's Registration Statements on Form S-8 Nos.
33-28595 (filed May 8, 1989), 33-21964 (filed June 6, 1988), 33-31642
(filed November 7, 1989), 33-45675 (filed February 12, 1992), 33-62263
(filed August 31, 1995), and 333-22707 (filed March 4, 1997).
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By George J. Harad
George J. Harad
Chairman of the Board and
Chief Executive Officer
Dated: March 17, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 17, 1997.
Signature Capacity
(i) Principal Executive Officer:
George J. Harad Chairman of the Board and
George J. Harad Chief Executive Officer
(ii) Principal Financial Officer:
Theodore Crumley Senior Vice President and
Theodore Crumley Chief Financial Officer
(iii) Principal Accounting Officer:
Tom E. Carlile Vice President
Tom E. Carlile and Controller
(iv) Directors:
George J. Harad Paul J. Phoenix
George J. Harad Paul J. Phoenix
Anne L. Armstrong A. William Reynolds
Anne L. Armstrong A. William Reynolds
Robert E. Coleman Jane E. Shaw
Robert E. Coleman Jane E. Shaw
Robert K. Jaedicke Frank A. Shrontz
Robert K. Jaedicke Frank A. Shrontz
Donald S. Macdonald Edson W. Spencer
Donald S. Macdonald Edson W. Spencer
James A. McClure Ward W. Woods, Jr.
James A. McClure Ward W. Woods, Jr.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we consent to the incorporation of
our report dated January 28, 1997, included or incorporated by reference in
this Form 10-K for the year ended December 31, 1996, into Boise Cascade
Corporation's previously filed post-effective amendment No. 1 to Form S-8
registration statement (File No. 33-28595); post-effective amendment No. 1 to
Form S-8 registration statement (File No. 33-21964); the registration
statement on Form S-8 (File No. 33-31642); the registration statement on
Form S-8 (File No. 33-45675); the registration statement on Form S-3
(File No. 33-54533); the registration statement on Form S-3
(File No. 33-55396); the registration statement on Form S-8
(File No. 33-62263); and the registration statement on Form S-8 (File
No. 333-22707).
ARTHUR ANDERSEN LLP
Boise, Idaho
March 17, 1997
BOISE CASCADE CORPORATION
INDEX TO EXHIBITS
Filed with the Annual Report
on Form 10-K for the
Year Ended December 31, 1996
Page
Number Description Number
2 (1) Acquisition Agreement Among Boise Cascade Corporation,
Oxford Paper Company, Mead Oxford Corporation, and
The Mead Corporation, dated September 28, 1996 -
3.1 (2) Restated Certificate of Incorporation, as restated to date -
3.2 (3) Bylaws, as amended, September 29, 1994 -
4.1 (4) Trust Indenture between Boise Cascade Corporation and
Morgan Guaranty Trust Company of New York, Trustee,
dated October 1, 1985, as amended -
4.2 1997 Revolving Credit Agreement -- $600,000,000, dated
as of March 11, 1997
4.3 (5) Shareholder Rights Plan, as amended September 25, 1990 -
9 Inapplicable -
10.1 (6) Key Executive Performance Plan for Executive Officers,
as amended through December 7, 1995 -
10.2 (6) 1986 Executive Officer Deferred Compensation Plan,
as amended through December 7, 1995 -
10.3 (7) 1983 Board of Directors Deferred Compensation Plan,
as amended through July 26, 1996 -
10.4 (6) 1982 Executive Officer Deferred Compensation Plan,
as amended through December 7, 1995 -
10.5 (8) Executive Officer Severance Pay Policy -
10.6 (6) Supplemental Early Retirement Plan for Executive Officers,
as amended through December 7, 1995 -
10.7 (9) Boise Cascade Corporation Supplemental Pension Plan,
effective as of January 1, 1994 -
10.8 (7) 1987 Board of Directors Deferred Compensation Plan,
as amended through July 26, 1996 -
10.9 (7) 1984 Key Executive Stock Option Plan and Form of Agreement,
as amended through July 25, 1996 -
10.10 (8) Executive Officer Group Life Insurance Plan description -
10.11 (6) Executive Officer 1980 Split-Dollar Life Insurance Plan,
as amended through December 7, 1995 -
10.12 (6) Forms of Agreements with Executive Officers, as amended
through December 7, 1995 -
10.13 Supplemental Health Care Plan for Executive Officers,
as revised July 31, 1996
10.14 (8) Nonbusiness Use of Corporate Aircraft Policy, as amended -
10.15 (8) Executive Officer Financial Counseling Program description -
10.16 (8) Family Travel Program description -
10.17 (8) Form of Directors' Indemnification Agreement -
10.18 Deferred Compensation and Benefits Trust, as amended and
restated as of December 13, 1996
10.19 (6) Director Stock Compensation Plan, as amended through
December 7, 1995 -
10.20 (6) Boise Cascade Corporation Director Stock Option Plan,
as amended through December 7, 1995 -
10.21 (6) 1995 Executive Officer Deferred Compensation Plan,
effective January 1, 1996 -
10.22 (6) 1995 Board of Directors Deferred Compensation Plan,
effective January 1, 1996 -
10.23 (6) Boise Cascade Corporation 1995 Split-Dollar Life Insurance
Plan, as amended through December 7, 1995 -
10.24 1996 and 1997 Performance Criteria for the Key Executive
Performance Plan for Executive Officers
11 Computation of Per Share Earnings
12 Ratio of Earnings to Fixed Charges
13.1 Incorporated sections of the Boise Cascade Corporation
1996 Annual Report
13.2 Incorporated sections of the Boise Cascade Corporation
Fact Book for the fourth quarter of 1996
16 Inapplicable -
18 Inapplicable -
21 Significant subsidiaries of the registrant
22 Inapplicable -
23 Consent of Arthur Andersen LLP (See page 19) -
24 Inapplicable -
27 Financial Data Schedule
99 Inapplicable -
(1) Exhibit 2 was filed under the same exhibit number in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996,
and is incorporated herein by reference.
(2) The Restated Certificate of Incorporation was filed as Exhibit 3 in the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, and is incorporated herein by reference.
(3) The Bylaws, as amended September 29, 1994, were filed as Exhibit 3 in the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994, and are incorporated herein by reference.
(4) The Trust Indenture between Boise Cascade Corporation and Morgan Guaranty
Trust Company of New York, Trustee, dated October 1, 1985, as amended,
was filed as Exhibit 4 in the Registration Statement on Form S-3
No. 33 5673, filed May 13, 1986. The First Supplemental Indenture, dated
December 20, 1989, to the Trust Indenture between Boise Cascade
Corporation and Morgan Guaranty Trust Company of New York, Trustee, dated
October 1, 1985, was filed as Exhibit 4.2 in the Pre-Effective Amendment
No. 1 to the Registration Statement on Form S-3 No. 33-32584, filed
December 20, 1989. The Second Supplemental Indenture, dated August 1,
1990, to the Trust Indenture was filed as Exhibit 4.1 in the Company's
Current Report on Form 8-K filed on August 10, 1990. Each of the
documents referenced in this footnote is incorporated herein by
reference.
(5) The Rights Agreement, dated as of December 13, 1988, as amended
September 25, 1990, was filed as Exhibit 1 in the Company's Form 8-K
filed with the Securities and Exchange Commission on September 25, 1990,
and is incorporated herein by reference.
(6) Exhibits 10.1, 10.2, 10.4, 10.6, 10.11, 10.12, 10.19, 10.20, 10.21,
10.22, and 10.23 were filed under the same exhibit numbers in the
Company's 1995 Annual Report on Form 10-K and are incorporated herein by
reference.
(7) The 1983 Board of Directors Deferred Compensation Plan, 1987 Board of
Directors Deferred Compensation Plan, and 1984 Key Executive Stock Option
Plan and Form of Agreement were filed as Exhibits 10.1, 10.2, and 10.3,
respectively, in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996, and are incorporated herein by
reference.
(8) Exhibits 10.5, 10.10, 10.14, 10.15, 10.16, and 10.17 were filed under the
same exhibit numbers in the Company's 1993 Annual Report on Form 10-K and
are incorporated herein by reference.
(9) Exhibit 10.7 was filed under the same exhibit number in the Company's
1994 Annual Report on Form 10-K and is incorporated herein by reference.