<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
- - - of 1934
For the quarterly period ended March 31, 1996 or
-------------------
__ 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 0-19335
BMC WEST CORPORATION
Delaware 94-3050454
(State of other jurisdiction of incorporation or (IRS Employer
organization) Identification No.)
BMC West Corporation
1475 Tyrell Lane, Boise, Idaho 83706
Telephone: (208) 331-4410
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 month (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
----- -----
Class Shares Outstanding as
----- of May 8, 1996:
Common stock $.001 par value 9,492,983
---------
Index to exhibits at page ___
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BMC WEST CORPORATION
INDEX
-----
Page
Number
------
PART I -- FINANCIAL INFORMATION
Item 1 - Financial Statements 3
Statements of Income for the three months ended March 31,
1996 and 1995 4
Balance Sheets as of March 31, 1996 and December 31, 1995 5
Statements of Cash Flows for the three months ended
March 31, 1996 and 1995 6
Notes to the Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II -- OTHER INFORMATION
Item 1 - Legal Proceedings 11
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8-K 11
SIGNATURES 12
INDEX TO EXHIBITS 13
EXHIBITS 14
<PAGE>
PART I - FINANCIAL INFORMATION
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of management, all adjustments
necessary to present fairly, the results for the periods presented have been
included therein. The adjustments made were of a normal, recurring nature.
Certain information and footnote disclosure normally included in the financial
statements have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission, although the Company believes that
the disclosures are adequate to make the information presented not misleading.
It is recommended that these condensed financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's 1995 Annual Report.
The results of operations for the periods presented are not necessarily
indicative of the results that might be expected for the fiscal year.
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BMC WEST CORPORATION
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(Dollars in Thousands Except per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
--------- ---------
<S> <C> <C>
Net sales $ 147,599 $ 120,519
Cost of sales 114,515 93,282
---------- ----------
Gross profit 33,084 27,237
Selling, general
and administrative
expense 29,626 24,767
Other income, net 737 316
---------- ----------
Income from
operations 4,195 2,786
Interest expense 2,956 1,959
---------- ----------
Income before income taxes 1,239 827
Income taxes 489 323
---------- ----------
Net income $ 750 $ 504
---------- ----------
---------- ----------
Net income per common and common equivalent
share $ .08 $ .05
---------- ----------
---------- ----------
Weighted average number of common
and common equivalent shares outstanding 9,755,099 9,701,779
---------- ----------
---------- ----------
</TABLE>
<PAGE>
BMC WEST CORPORATION
CONDENSED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 3,862 $ 6,004
Receivables, net 69,817 65,820
Inventories 74,519 66,506
Deferred income tax benefit 1,668 1,668
Prepaid expenses 2,438 1,275
-------- --------
Total current assets 152,304 141,273
PROPERTY AND EQUIPMENT, net 94,964 96,403
DEFERRED LOAN COSTS 2,286 2,440
GOODWILL, NET 18,573 18,421
OTHER 6,875 6,433
-------- --------
Total assets $275,002 $264,970
-------- --------
-------- --------
CURRENT LIABILITIES
Current portion of long-term debt $ 96 $ 129
Current redemption requirement on Class B
preferred stock 1,000 1,000
Accounts payable 34,162 29,383
Accrued expenses 9,357 10,565
-------- --------
Total current liabilities 44,615 41,077
LONG-TERM DEBT, net of current portion 127,850 121,120
DEFERRED INCOME TAXES 3,161 3,161
OTHER LONG-TERM LIABILITIES 1,683 1,725
CLASS B PREFERRED STOCK 968 1,960
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 20,000,000
shares authorized, 9,491,183 and 9,483,229
shares outstanding at March 31 1996 and
December 31, 1995, respectively
9 9
Additional paid-in-capital 59,242 59,188
Retained earnings 37,474 36,730
-------- --------
TOTAL STOCKHOLDERS' EQUITY 96,725 95,927
-------- --------
Total liabilities, redeemable preferred stock
and stockholders equity $275,002 $264,970
-------- --------
-------- --------
</TABLE>
<PAGE>
BMC WEST CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------
March 31, March 31,
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 750 $ 504
Adjustments to reconcile net income to cash used in
operating activities:
Depreciation and amortization 2,498 2,012
(Gain) loss on sale of assets (367) --
Changes in working capital items net of effects
of acquisitions (8,094) (4,125)
Other (813) 192
--------- ---------
Net cash used in operating activities (6,026) (1,417)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (1,642) (4,600)
Payment for acquisitions (1,810) (5,367)
Sale of property and equipment 1,639 50
Purchase of other long-term assets -- (265)
--------- ---------
Net cash used in investing activities (1,813) (10,182)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable -- (2,664)
Borrowings under revolving credit agreement 45,830 48,489
Repayments under revolving credit agreement (39,100) (79,720)
Issuance of debt -- 50,000
Redemption of Class B preferred stock (1,000) (1,000)
Financing costs -- (782)
Capital lease payments (33) (20)
Other -- (71)
--------- ---------
Net cash provided by financing activities 5,697 14,232
--------- ---------
NET INCREASE (DECREASE) IN CASH (2,142) 2,633
CASH, beginning of period 6,004 5,173
--------- ---------
CASH, end of period $ 3,862 $ 7,806
--------- ---------
--------- ---------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for-
Interest, net of interest capitalized $ 1,259 $ 1,030
Income taxes $ -- $ --
</TABLE>
<PAGE>
BMC WEST CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. WORKING CAPITAL CHANGES
Changes in working capital items, net of acquisitions, for the three months
ended March 31, 1996 and 1995 are as follows (in thousands):
1996 1995
------ ------
(Increase) decrease in accounts receivable ($ 2,761) $1,375
Increase in inventories (7,747) (2,640)
Increase in prepaid expenses (1,157) (251)
Increase (decrease) in accounts payable and
accrued expenses 1,874 (3,378)
Increase in interest payable 1,697 769
------- -------
($ 8,094) ($4,125)
------- -------
------- -------
2. LONG-TERM DEBT
Long-term debt consisted of the following at (in thousands):
March 31, December 31,
1996 1995
--------- ------------
Revolving credit agreement borrowings $32,850 $26,120
9.18% unsecured senior notes 50,000 50,000
8.10% unsecured senior notes 25,000 25,000
10% unsecured senior subordinated notes 20,000 20,000
Capital lease obligations 96 129
-------- --------
127,946 121,249
Less current portion (96) (129)
-------- --------
$127,850 $121,120
-------- --------
-------- --------
3. ACQUISITIONS
In the first quarter of 1996, the Company purchased substantially all of the
assets of two window distribution facilities in Texas. The total purchase
price of these facilities was $1,810,000.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage
relationship to net sales of certain costs, expenses and income items. The
table and subsequent discussion should be read in conjunction with the financial
statements and the notes thereto appearing elsewhere herein and in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
For the Three Months Ended
--------------------------
March 31, March 31,
1996 1995
--------- ---------
Net sales 100.0% 100.0%
Gross profit 22.4 22.6
Selling, general and
administrative expense 20.1 20.6
Other income, net 0.5 0.3
Income from operations 2.8 2.3
Interest expense 2.0 1.6
Income taxes 0.3 0.3
Net income 0.5 0.4
FIRST QUARTER OF 1996 COMPARED TO THE FIRST QUARTER OF 1995
Net sales for the three months ended March 31, 1996 were $147.6 million up
22% from the first quarter of 1995 when sales were $120.5 million. The
growth in net sales resulted from an increase of 3% from the first quarter of
1995, in sales at facilities that operated for at least two months in both
the first quarter of 1995 and the first quarter of 1996 ("Same-store Sales"),
and from the acquisition of new building materials centers. Sales in the 1996
period were negatively affected by lower commodity wood product prices. The
price decrease contributed to an overall price deflator of more than 4% the
effect of which reduced sales by approximately $6.0 million. Excluding price
deflation, same-store sales increased 7%.
Gross profit as a percentage of sales declined slightly to 22.4% in the first
quarter of 1996 from 22.6% in the first quarter of 1995, primarily as a result
of a higher percentage of sales to professional contractors (which generally
carry lower margins) in the 1996 period compared to 1995.
Selling, general and administrative (SG&A) expense, was $29.6
million in the first quarter of 1996 as compared to $24.8 million in
<PAGE>
1995, but decreased slightly as a percentage of net sales from 20.6% in 1995
to 20.1% in 1996. The Company believes this reduction was due to
improvements in costs associated with integrating the 14 building materials
centers acquired in 1994 and 1995. SG&A expense as a percentage of sales in
the 1996 period also was negatively impacted by price deflation of 4%
compared to the prior year because the company shipped more product per
dollar of sales, which results in higher costs as a percent of overall sales.
Interest expense increased to $3.0 million in the first quarter of 1996 from
$2.0 million in the same period of 1995, primarily due to additional
borrowings to finance working capital growth and acquisitions.
Other income increased to $737,000 from $316,000 in the 1995 period. This
increase in 1996 was the result of a gain of $395,000 on the sale of real
property in 1996 made available by the consolidation of operations in the
Puget Sound market.
Income taxes were provided at estimated annual effective tax rates of 39.5%
and 39.1% for the periods ended March 31, 1996 and March 31, 1995,
respectively. This increase in the effective tax rate from 1995 was primarily
due to book/tax differences in accounting for goodwill in connection with
acquisitions in 1994 and 1995.
As a result of the foregoing factors, net income increased by $246,000, or
48.8% to $750,000, or 0.5% of net sales in the first quarter of 1996, as
compared to $504,000, or 0.4% of net sales, in the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996 the Company had $127.9 million of long-term debt outstanding,
consisting principally of $32.9 million of variable rate borrowings under the
revolving credit agreement and $95.0 million of term borrowings under fixed
rate notes.
In the first quarter of 1996, the Company used $6.0 million of cash in operating
activities. Working capital increased from $100.2 million at December 31, 1995
to $107.7 million at March 31, 1996, due primarily to the seasonal increase in
the Company's accounts receivable and inventories and two acquisitions.
Based on its ability to generate cash from operations and the available
borrowing capacity at March 31, 1996 of $37.1 million under the revolving
credit
<PAGE>
agreement, (availability of which is subject to the satisfaction of certain
customary borrowing conditions), the Company believes it will have sufficient
funds to meet its currently anticipated requirements.
In March of 1995, the Company issued $50.0 million of 9.18% unsecured senior
notes. The proceeds from these notes were used to support the Company's
capital expenditure and acquisition activities and increased working capital
levels.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in litigation and administrative proceedings
primarily 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 proceedings would not materially affect its financial
condition or operations.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 - Statement regarding computation of per share earnings.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
<PAGE>
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.
BMC WEST CORPORATION
Date: May 14, 1996 /s/ Donald S. Hendrickson
--------------------------------------------
Donald S. Hendrickson
President, Chief Executive Officer
and Director (Principal Executive Officer)
Date: May 14, 1996 /s/ Ellis C. Goebel
--------------------------------------------
Ellis C. Goebel
Vice President and Treasurer
(Principal Financial Officer)
<PAGE>
INDEX TO EXHIBITS
BMC WEST CORPORATION
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 1996
Page
Exhibit Description Number
- - ------- ----------- ------
11 Computation of Earnings Per Share 14
27 Financial Data Schedule
<PAGE>
EXHIBIT 11
BMC WEST CORPORATION
Computation of Earnings Per Share
COMPUTATION OF PRIMARY EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
1996 1995
--------- ---------
<S> <C> <C>
Net income $ 750,000 $ 504,000
Class B preferred stock accretion (8,500) (8,500)
---------- ----------
Adjusted net income $ 741,500 $ 495,500
---------- ----------
---------- ----------
Weighted average shares
outstanding 9,502,827 9,453,884
Net effect of dilutive stock
options based on the treasury
stock method using average
market price 252,272 247,895
---------- ----------
Total common shares and
equivalents 9,755,099 9,701,779
---------- ----------
---------- ----------
PRIMARY INCOME PER SHARE $ .08 $ .05
---------- ----------
---------- ----------
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
Adjusted net income $ 741,500 $ 495,500
---------- ----------
---------- ----------
Weighted average shares
outstanding 9,502,827 9,453,884
Net effect of dilutive stock
options based on the treasury
stock method using the higher
of quarter-end market price or
average market price 265,292 253,246
---------- ----------
Total shares and equivalents 9,768,119 9,707,130
---------- ----------
---------- ----------
FULLY DILUTED EARNINGS PER SHARE $ .08 $ .05
---------- ----------
---------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 3,862
<SECURITIES> 0
<RECEIVABLES> 71,525
<ALLOWANCES> 1,708
<INVENTORY> 74,519
<CURRENT-ASSETS> 152,304
<PP&E> 117,256
<DEPRECIATION> 22,292
<TOTAL-ASSETS> 275,002
<CURRENT-LIABILITIES> 44,615
<BONDS> 127,850
968
0
<COMMON> 9
<OTHER-SE> 96,716
<TOTAL-LIABILITY-AND-EQUITY> 275,002
<SALES> 147,599
<TOTAL-REVENUES> 147,599
<CGS> 114,515
<TOTAL-COSTS> 144,141
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,956
<INCOME-PRETAX> 1,239
<INCOME-TAX> 489
<INCOME-CONTINUING> 750
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 750
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
