<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY , 1996
REGISTRATION STATEMENT NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
BMC WEST CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 94-3050454
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) No.)
</TABLE>
---------------------
1475 TYRELL LANE
BOISE, IDAHO 83706
(208) 331-4410
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------------
DONALD S. HENDRICKSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BMC WEST CORPORATION
1475 TYRELL LANE
BOISE, IDAHO 83706
(208) 331-4410
(Name, address including zip code, and telephone number, including
area code, of agent for service)
---------------------
COPIES TO:
<TABLE>
<S> <C>
Lawrence Calof, Esq. Jonathan I. Mark, Esq.
GIBSON, DUNN & CRUTCHER LLP CAHILL GORDON & REINDEL
One Montgomery Street, Suite 3100 80 Pine Street
San Francisco, California 94104 New York, New York 10005
(415) 393-8200 (212) 701-3000
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
---------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AMOUNT TO PROPOSED MAXIMUM AGGREGATE
TITLE OF SHARES BE OFFERING PRICE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED (1) PER SHARE (2) PRICE (2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.001 par value (3)........... 2,300,000 $18.25 $41,975,000 $14,474
</TABLE>
(1) Includes 300,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee based on the high and low sales prices on the Nasdaq
National Market on May 9, 1996.
(3) Each share of Common Stock includes a right to purchase one-hundredth of a
share of Series C Junior Participating Cumulative Preferred Stock pursuant
to a rights agreement between the registrant and American Stock Transfer and
Trust Company's Rights Agent.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 14, 1996
2,000,000 SHARES
[LOGO]
COMMON STOCK
The 2,000,000 shares of common stock, par value $0.001 per share (the
"Common Stock"), offered hereby (the "Offering") are being offered by BMC West
Corporation ("BMC West" or the "Company"). The Common Stock is quoted on the
Nasdaq National Market ("Nasdaq") under the symbol "BMCW." On May 10, 1996, the
last reported sales price of the Common Stock on the Nasdaq was $18.75 per
share. See "Price Range of Common Stock and Dividend Policy."
FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF COMMON
STOCK OFFERED HEREBY, SEE "RISK FACTORS" ON PAGES 6 TO 7.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS* COMPANY+
<S> <C> <C> <C>
Per Share........................ $ $ $
Total++.......................... $ $ $
</TABLE>
- ------------
* The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
+ Before deducting expenses of the Offering payable by the Company estimated to
be $260,000.
++ The Company has granted the Underwriters a 30-day option to purchase up to
300,000 additional shares of Common Stock on the same terms per share solely
to cover over-allotments, if any. If such option is exercised in full, the
total price to public will be $ , the total underwriting discounts and
commissions will be $ and the total proceeds to Company will be
$ . See "Underwriting."
-------------------
The Common Stock is being offered by the Underwriters as set forth under
"Underwriting" herein. It is expected that the delivery of certificates therefor
will be made at the offices of Dillon, Read & Co. Inc., New York, New York on or
about , 1996, against payment therefor in same day funds. The
Underwriters include:
DILLON, READ & CO. INC. PIPER JAFFRAY INC.
The date of this Prospectus is , 1996
<PAGE>
BMC WEST'S 12-STATE MARKET AREA
[Map shows an outline of the states of Arizona, California, Colorado, Idaho,
Montana, Nevada, New Mexico, Oregon, Texas, Utah, Washington and Wyoming. Dots
indicate the locations of BMC West's 52 building materials centers and its
corporate headquarters. Certain major cities are shown on the map.]
BMC West Corporation is a leading regional distributor of building materials
to professional contractors and advanced, service-oriented consumers. The
Company is one of the largest building materials center operators in the western
United States, with 52 centers in 10 western states. BMC West's net sales in
1995 were $630.2 million.
-------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET MAKING TRANSACTIONS IN THE COMMON STOCK OF THE COMPANY ON THE NASDAQ IN
ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITING."
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO, THE MORE DETAILED INFORMATION AND THE FINANCIAL
STATEMENTS AND THE NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS AND
OTHER INFORMATION INCORPORATED BY REFERENCE HEREIN. EXCEPT WHERE OTHERWISE
INDICATED, ALL INFORMATION IN THIS PROSPECTUS RELATING TO THE OFFERING AND THE
PROCEEDS THEREFROM ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT
EXERCISED. BMC WEST AND BMC ARE REGISTERED TRADENAMES OF THE COMPANY. OTHER
BRAND NAMES OR TRADEMARKS APPEARING IN THIS PROSPECTUS ARE THE PROPERTY OF THEIR
RESPECTIVE HOLDERS.
THE COMPANY
BMC West Corporation ("BMC West" or the "Company") is a leading regional
distributor of building materials in the western United States, selling
primarily to professional contractors as well as to advanced, service-oriented
consumers. In addition to distributing lumber, panel products and other building
supplies from manufacturers, the Company conducts value-added activities, which
include pre-hanging doors, fabricating roof trusses, pre-assembling windows and
pre-cutting lumber to meet customer specifications. The Company operates 52
building materials centers located in Arizona, California, Colorado, Idaho,
Montana, Nevada, Oregon, Texas, Utah and Washington. Value-added activities are
conducted at 40 separate facilities, most of which are located at building
materials center sites.
BMC West targets primarily the professional contractor market, which is a
strategy distinct from that pursued by the high-volume, consumer-oriented home
center retailers now found throughout the United States. The Company's
professional contractor market consists of persons engaged principally in the
construction of single-family homes and, to a lesser extent, multi-family units
and light commercial and industrial construction. The Company also targets the
repair and remodel market which consists generally of advanced, service-oriented
consumers and contractors hired by them, who engage primarily in substantial
projects such as room additions, kitchen or bathroom remodeling and fence or
deck installations. The Company believes that many of its building materials
centers hold a first or second place local market share among professional
contractors and that the Company, as a whole, has the largest sales volume of
any distributor of building materials serving primarily professional contractors
in its 12-state market area.
Professional contractors generally are large-volume, repeat customers,
requiring certainty of product availability and delivery and a number of
specialized services typically not offered by home center retailers. BMC West
develops long-term relationships with its customers by providing them with a
broad range of high-quality products and services. Each of the Company's
building materials centers tailors its product and service mix to meet the
demands of its local market. The Company's products, which include lumber, panel
products, roofing materials, pre-hung doors, roof trusses, pre-assembled
windows, cabinets, hardware, paint and tools, are used primarily for new
residential construction, light commercial construction and repair and
remodeling projects. These products are sold by experienced professionals
consisting of both field sales personnel and facility-based sales and support
personnel. The Company also offers its customers various services, including
assistance with project designs and materials specifications, coordination of
delivery of orders to job sites, provision of credit to pre-approved contractors
and referral of retail customers to pre-qualified contractors. Complete home
packages (delivered to the sites of the Company's builder customers according to
their construction schedules) account for a significant amount of BMC West's
total sales. Professional contractors accounted for approximately 75% to 79% of
the Company's net sales in each of the last three years.
The Company believes that it is well positioned in some of the most
attractive markets for building materials in the United States. Population and
migration trends in the markets served by BMC West, as well as the relative
strength of many of the local economies in the regions it serves, have resulted
in the growth of residential housing in these markets at rates faster than the
United States as a whole. BMC West operates centers in 7 of the top 10 fastest
growing states over the last five years, based upon U.S. Bureau of the Census
estimates. In addition, according to the U.S. Bureau of the Census, the
Company's 12-state market area is forecast to outpace the rest of the country in
its rate of population growth between 1995 and 2000. The Company believes that
these population and migration trends provide a foundation for continued growth.
Furthermore, BMC West's 52 building materials centers operate in 18 distinct
regional markets, which collectively have a diverse economic base of
manufacturing, agricultural, recreational and service-based industries. The
Company believes that this geographic diversification lessens the impact on the
Company of a downturn in any one of its regional markets.
3
<PAGE>
BMC West traces its roots through various predecessor companies to 1915. The
Company was formed in 1987 through the acquisition of 20 building materials
centers from Boise Cascade Corporation and has since grown to 52 centers,
predominantly through acquisitions. The key elements of BMC West's strategy for
growth, expansion and profit improvement include:
- strengthening its leadership position in the growing regional markets in
which the Company presently operates;
- acquiring additional building materials centers in new and existing
markets in the western United States;
- increasing emphasis on the development and expansion of value-added
operations;
- refining its organizational structure, management information and computer
systems, cost reduction techniques, purchasing expertise and working
capital management; and
- enhancing and expanding its product line and services for professional
contractors and advanced, service-oriented consumers.
BMC West continues to seek acquisitions of building materials centers and
value-added facilities that serve professional contractors and advanced,
service-oriented consumers in new and existing markets in the western United
States. Typically, after an acquisition of a center, the Company enhances the
center's sales and service capabilities and expands its product offerings,
including value-added products, in an effort to increase sales. In addition, the
Company seeks to implement its accounting and management systems in each newly
acquired center. These systems assist in the effective management of the
Company's inventories and accounts receivable and in efforts to improve customer
service. BMC West generally is able to use its centralized purchasing expertise
to reduce product costs following acquisitions. The Company believes that the
fragmented nature of its industry presents opportunities for additional
acquisitions of strategically located building materials centers and value-added
facilities.
The management of BMC West has substantial experience in expanding building
materials supply businesses through acquisitions. BMC West's senior management
team has worked together for over 18 years and has an average of 27 years of
experience with the Company and its predecessors. This depth and breadth of
experience extends to the Company's building materials center managers who have
an average of approximately 20 years of industry experience.
As a result of the Company's operating and acquisition strategy, over the
last five years BMC West's net sales have increased from $218.8 million in 1991
to $630.2 million in 1995, representing a compound annual growth rate of 30.3%.
Over the same period, income from operations has grown at a compound annual rate
of 38.8% from $6.3 million in 1991 to $23.4 million in 1995.
The Company was incorporated in Delaware in 1987. The Company's executive
offices are located at 1475 Tyrell Lane, Boise, Idaho 83706, and its telephone
number is (208) 331-4410.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered............ 2,000,000 shares (1)
Common Stock to be outstanding
after the Offering............. 11,492,983 shares (1)(2)
Use of proceeds................. To repay indebtedness including (i) all of the Company's
10% Senior Subordinated Notes due 1999 (the "Subordinated
Notes") and (ii) a portion of the borrowings outstanding
under the Company's revolving credit agreement. After
completion of this Offering, the Company intends to
re-borrow under its revolving credit agreement as
necessary from time to time to fund acquisitions and for
other general corporate purposes. See "Use of Proceeds"
and "Capitalization."
Nasdaq National Market symbol... BMCW
</TABLE>
- ------------------------
(1) Assumes that the Underwriters' over-allotment option is not exercised.
(2) Represents the number of shares of Common Stock outstanding at May 7, 1996,
as adjusted to give effect to this Offering. Excludes 620,507 shares
reserved for issuance pursuant to options granted under the Company's stock
option plans as of May 7, 1996.
4
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
FISCAL YEARS ENDED DECEMBER(1) 31,
---------------------------------------------------------------- ------------------------
1991 1992 1993 1994 1995 1995 1996
----------- ------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales....................... $ 218,768 $ 290,957 $ 399,597 $ 547,109 $ 630,201 $ 120,519 $ 147,599
Gross profit.................... 46,548 60,120 83,904 119,158 138,173 27,237 33,084
Income from operations.......... 6,294 9,868 19,233 29,484 23,421 2,786 4,195
Net income...................... 837 2,616(2) 8,791 14,259 7,765 504 750
Net income per share............ $ 0.21 $ 0.45(2) $ 1.14 $ 1.62 $ 0.79 $ 0.05 $ 0.08
Weighted average number of
common and common equivalent
shares outstanding............. 3,854 5,701 7,708 8,798 9,752 9,702 9,755
SELECTED OPERATING DATA:
Number of centers at end of
period......................... 30 32 39 49 52 50 52
Number of value-added facilities
at end of period............... 16 15 23 32 38 35 39
Same-store sales(3)--percent
increase (decrease) period to
period:
Including price inflation/
deflation.................... 0% 26% 28% 11% (8)% (14)% 3%
Excluding price inflation/
deflation.................... n/a 16% 14% 8% (1)% (4)% 7%
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------------
ACTUAL AS ADJUSTED(4)
--------- ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital....................................................................... $ 107,689 $ 107,689
Total assets.......................................................................... 275,002 274,644(5)
Long-term debt (net of current portion)............................................... 127,850 92,766
Redeemable preferred stock (net of current redemption requirement).................... 968 968
Stockholders' equity.................................................................. 96,725 131,451(5)
Long-term debt as a percentage of total capitalization(6)............................. 56.7% 41.2%
</TABLE>
- --------------------------
(1) To facilitate industry comparisons, the Company elected in 1994 to change
its fiscal year-end from December 28 to December 31.
(2) After an extraordinary charge of $956,000, or $0.17 per share, arising from
the early retirement of debt.
(3) Includes centers and value-added facilities that operated for more than nine
months of the relevant years or two months of the relevant quarters. "Price
inflation/deflation" refers to the effect on sales primarily attributable to
changes in commodity wood product prices. See "Risk Factors--Prices of
Commodity Wood Products."
(4) Adjusted to reflect the sale of the 2,000,000 shares of Common Stock offered
hereby at an assumed public offering price of $18.75 per share and the
application of the estimated net proceeds of the Offering as described in
"Use of Proceeds," after deducting estimated underwriting discounts and
commissions and offering expenses.
(5) Includes after-tax effect of extraordinary, non-cash write-off of
unamortized loan costs, in the amount of approximately $358,000, associated
with repayment of the Subordinated Notes. See "Use of Proceeds."
(6) Total capitalization consists of long-term debt (net of current portion),
redeemable preferred stock (net of current redemption requirement) and
stockholders' equity.
5
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS,
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS IN
EVALUATING THE COMPANY AND ITS BUSINESS BEFORE PURCHASING ANY SHARES OF THE
COMMON STOCK OFFERED HEREBY.
INDUSTRY CONDITIONS; CYCLICALITY; SEASONALITY
The building materials industry historically has been subject to substantial
cyclical variation, and adverse economic changes in the regions served by the
Company could have a material adverse effect on the Company's financial
condition. The Company's operations have reflected substantial fluctuations from
period to period as a consequence of various factors, including general economic
conditions, prices of commodity wood products, levels of building activity and
interest rates, single-family housing starts, employment levels, consumer
confidence and availability of credit to professional contractors and
homeowners. Because a substantial percentage of the Company's net sales is
attributable to professional contractors, these factors may have a more
significant impact on the Company than on companies focused on a broad range of
retail customers. See "Business--Industry Overview."
In addition, although weather patterns affect the Company's results of
operations throughout the year, adverse weather historically has reduced
construction activity in the first and fourth quarters in the Company's markets.
The Company anticipates that fluctuations from period to period will continue in
the future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Quarterly Results and Seasonality."
ACQUISITION AND DEVELOPMENT STRATEGY
The Company's objective is to continue to acquire building materials centers
and to acquire or develop value-added facilities in the western United States.
Accomplishing this expansion goal will depend on a number of factors, including
the Company's ability to identify and acquire acceptable building materials
centers and acquire or develop value-added facilities, hire and train competent
managers, integrate new acquisitions into the Company's operations, successfully
implement cost reduction and working capital management systems, generate funds
from operations and continue to access external sources of financing. There can
be no assurance that the Company will be able to continue to identify and
complete successful acquisitions. The process of integrating acquired businesses
may be prolonged due to unforeseen difficulties and may require a
disproportionate amount of resources and management's attention. There can be no
assurance that the integration, implementation and expansion of the Company's
cost reduction and working capital and other management information and control
systems will keep pace with the Company's growth. Future acquisitions may be
financed through the incurrence of additional indebtedness or the issuance of
equity securities, which may dilute the Company's stockholders. See "Business--
Acquisition Strategy."
RELIANCE ON KEY PERSONNEL; MANAGEMENT OF GROWTH
The members of the Company's senior management team have worked together for
over 18 years, have an average of 27 years experience with the Company and its
predecessors and have been a significant factor in the Company's success to
date. The Company does not have employment agreements with any members of its
management team (other than agreements with respect to termination in the event
of a change of control of the Company). The Company believes that its future
success, including the skillful management of the Company's growth, will depend
on its ability to retain key members of its management team and to attract,
train and retain general managers in the future. There can be no assurance that
the Company will be able to do so. A failure to retain, acquire and/or
adequately train managerial employees sufficient to manage effectively the
Company's operations and growth could result in organizational deficiencies and
a material adverse impact on the Company. See "Management."
PRICES OF COMMODITY WOOD PRODUCTS
Historically, approximately 50% of the Company's sales has been attributable
to commodity wood products, including lumber and panel products. Approximately
47% of the Company's sales in 1995 was attributable to commodity wood products.
Prices of commodity wood products are subject to significant volatility and
directly affect the Company's sales. During 1995, the prices of commodity wood
products purchased and sold by the Company were on average 14% lower than in
1994, which reduced the rate of increase of both the Company's sales
6
<PAGE>
and gross profit and increased costs as a percentage of sales as the Company
shipped more product per dollar of sales. Declines in commodity wood prices in
the future may have an adverse effect on the Company's results of operations.
See "Business--Products."
COMPETITION
BMC West operates in a highly competitive environment. The Company's centers
compete primarily with privately owned, single-site enterprises as well as local
and regional building materials chains. To a lesser extent, in certain larger
markets the Company also competes with national building materials chains and
large home center retailers. Some of these large retailers have substantially
greater resources than the Company. Although home center retailers historically
have focused their sales efforts on consumers, there can be no assurance that
they will not intensify their marketing efforts to professional contractors in
the future. Home center retailers may indirectly increase competition in the
professional contractor market by prompting smaller local retailers of building
materials to increase their focus on this market. See "Business--Competition."
CERTAIN ANTI-TAKEOVER EFFECTS
Certain provisions of the Company's Certificate of Incorporation and Bylaws,
as well as Delaware corporate law and the Company's Stockholder Rights Plan (the
"Rights Plan"), may be deemed to have anti-takeover effects and may delay, defer
or prevent a takeover attempt that a stockholder might consider in its best
interest. Such provisions also may adversely affect prevailing market prices for
the Company's Common Stock. Certain of such provisions allow the Company's Board
of Directors to issue, without additional stockholder approval, preferred stock
having rights senior to those of the Common Stock. Other provisions impose
various procedural and other requirements that could make it more difficult for
stockholders to effect certain corporate actions. In addition, the Company is
subject to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which prohibits the Company from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
In July 1993, BMC West adopted the Rights Plan, pursuant to which holders of the
Common Stock received a distribution of rights to purchase additional shares of
Common Stock, which rights become exercisable upon the occurrence of certain
events. The Rights Plan has certain anti-takeover effects.
RESTRICTIONS ON PAYMENTS OF DIVIDENDS
The Company has never paid cash dividends on its Common Stock and has no
current plans to pay any such dividends in the future. Agreements governing
certain of the Company's indebtedness contain provisions that restrict the
Company's ability to pay dividends. There can be no assurance as to the amount
of funds, if any, that will be available for the declaration and payment of
dividends in the future.
7
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered hereby (at an assumed public offering price of $18.75 per
share), after deduction of underwriting discounts and commissions and offering
expenses, are estimated to be approximately $35,083,750 (approximately
$40,385,312, if the Underwriters' over-allotment option is exercised in full).
The Company intends to use approximately $20.0 million of the net proceeds
of this Offering to redeem all of the Subordinated Notes. The Company intends to
use the remainder of the net proceeds to pay down a portion of the Company's
outstanding indebtedness under the Company's revolving credit agreement (the
"Credit Agreement") with Wells Fargo Bank, N.A. and West One Bank, Idaho. All
indebtedness under the Credit Agreement bears interest, at the Company's option,
at prime to prime plus 0.25% or LIBOR plus 0.625% to 1.625%. The effective
annual interest rate on indebtedness under the Credit Agreement was 7.4% at
March 31, 1996. See Note 3 of Notes to the Financial Statements. After
completion of this Offering, the Company intends to re-borrow under the Credit
Agreement as necessary from time to time to fund acquisitions and for other
general corporate purposes. Pending the uses described above, the Company
intends to invest such net proceeds in short-term, investment-grade,
interest-bearing securities.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of March
31, 1996 and as adjusted to give effect to the sale by the Company of the
2,000,000 shares of Common Stock offered hereby (at an assumed public offering
price of $18.75 per share) and the application of the proceeds therefrom as
described under "Use of Proceeds," after deducting estimated underwriting
discounts and commissions and offering expenses. This table should be read in
conjunction with the financial statements of the Company, including the related
notes thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------
ACTUAL AS ADJUSTED
---------- ------------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Current portion of long-term debt............................................. $ 96 $ 96
Current redemption requirement on Redeemable Preferred Stock.................. 1,000 1,000
---------- ------------
Total short-term debt....................................................... $ 1,096 $ 1,096
---------- ------------
---------- ------------
Long-term debt (net of current portion):(1)
Revolving credit agreement.................................................... $ 32,850 $ 17,766
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 --
---------- ------------
Total long-term debt........................................................ 127,850 92,766
---------- ------------
Redeemable Preferred Stock (net of current redemption requirement)(1)........... 968 968
Stockholders' equity:
Common Stock, $0.001 par value, 20,000,000 shares authorized;
9,491,183 shares issued and outstanding; 11,491,183 shares
issued and outstanding as adjusted(2)........................................ 9 11
Additional paid-in capital.................................................... 59,242 94,324
Retained earnings............................................................. 37,474 37,116(3)
---------- ------------
Total stockholders' equity.................................................. 96,725 131,451
---------- ------------
Total capitalization...................................................... $ 225,543 $ 225,185
---------- ------------
---------- ------------
</TABLE>
- ------------------------
(1) See Notes 3 and 4 of Notes to the Financial Statements for a description of
the Company's long-term debt and Redeemable Preferred Stock.
(2) Excludes 529,952 shares of Common Stock reserved for issuance pursuant to
options granted under the Company's stock option plans. See Note 6 of Notes
to the Financial Statements.
(3) Includes after-tax effect of extraordinary, non-cash write-off of
unamortized loan costs, in the amount of approximately $358,000, associated
with repayment of 10% unsecured senior subordinated notes.
8
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock of BMC West has traded on the Nasdaq National Market under
the symbol "BMCW" since the Company's initial public stock offering in August
1991. The following table sets forth the high and low closing sales prices of
the Common Stock for the periods indicated, as reported by the Nasdaq National
Market. Such quotations represent inter-dealer prices without retail markup,
markdown or commission and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL 1994
First Quarter................................................... $29 1/8 $18 1/6
Second Quarter.................................................. 30 19 3/4
Third Quarter................................................... 26 14 3/4
Fourth Quarter.................................................. 19 12 3/4
FISCAL 1995
First Quarter................................................... 15 1/4 11 5/16
Second Quarter.................................................. 17 13 1/2
Third Quarter................................................... 15 1/2 14
Fourth Quarter.................................................. 14 3/4 12 1/4
FISCAL 1996
First Quarter................................................... 16 1/4 13
Second Quarter (through May 10, 1996)........................... 20 15 1/4
</TABLE>
The Company has never paid cash dividends on its Common Stock, and the Board
of Directors presently intends to continue this policy in order to retain
earnings for use in the Company's business. Agreements governing certain of the
Company's indebtedness contain provisions that restrict the Company's ability to
pay dividends. At March 11, 1996, the Company's Common Stock was held by
approximately 7,808 stockholders of record or through nominee or street name
accounts with brokers (233 registered holders). The last sales price for BMC
West's Common Stock, as reported by Nasdaq on May 10, 1996, was $18.75.
All per share amounts, weighted average number of common and common
equivalent shares and stock prices presented in this Prospectus reflect the
effect of a three-for-two stock split effected in the first quarter of 1994.
SELECTED FINANCIAL AND OPERATING DATA
The following selected financial data for the Company should be read in
conjunction with the financial statements and notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus. The statement of income data for the
1993, 1994 and 1995 fiscal years and the balance sheet data at the end of fiscal
years 1994 and 1995 are derived from the financial statements of the Company,
audited by Arthur Andersen LLP, independent accountants, which statements are
included elsewhere in this Prospectus. The statement of income data for the 1991
and 1992 fiscal years and the balance sheet data at the end of fiscal years
1991, 1992 and 1993 are derived from audited financial statements of the
Company, which have been audited by Arthur Andersen LLP, but are not included in
this Prospectus or incorporated by reference. The unaudited statement of income
data for the three months ended March 31, 1995 and 1996 and the selected
unaudited balance sheet data as of March 31, 1995 and 1996 are derived from the
Company's books and records and include all adjustments (all of which are of a
normal recurring nature) which are, in the opinion of management, considered
necessary to present fairly the Company's financial position and results of
operations for the periods presented. The operating results for any interim
period are not necessarily indicative of results for an entire fiscal year or
for future periods. During 1993, the Company dissolved its wholly owned
subsidiary and merged all of the subsidiary's assets and liabilities into the
Company's accounts. The financial statements for all periods presented include
the accounts of the Company and its subsidiary to date of dissolution.
9
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER (1) MARCH 31,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................ $ 218,768 $ 290,957 $ 399,597 $ 547,109 $ 630,201 $ 120,519 $ 147,599
Cost of sales.................... 172,220 230,837 315,693 427,951 492,028 93,282 114,515
--------- --------- --------- --------- --------- --------- ---------
Gross profit..................... 46,548 60,120 83,904 119,158 138,173 27,237 33,084
Selling, general and
administrative expense.......... 41,269 50,688 65,619 91,203 116,353 24,767 29,626
Other income, net................ 1,015 436 948 1,529 1,601 316 737
--------- --------- --------- --------- --------- --------- ---------
Income from operations........... 6,294 9,868 19,233 29,484 23,421 2,786 4,195
Interest expense................. 5,342 4,948 4,554 6,486 10,746 1,959 2,956
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes....... 952 4,920 14,679 22,998 12,675 827 1,239
Income taxes..................... 115 1,348 5,888 8,739 4,910 323 489
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary
item............................ 837 3,572 8,791 14,259 7,765 504 750
Extraordinary item (2)........... -- (956) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income....................... $ 837 $ 2,616 $ 8,791 $ 14,259 $ 7,765 $ 504 $ 750
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net income per share before
extraordinary item.............. $ 0.21 $ 0.62 $ 1.14 $ 1.62 $ 0.79 $ 0.05 $ 0.08
Extraordinary item (2)........... -- (0.17) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income per share............. $ 0.21 $ 0.45 $ 1.14 $ 1.62 $ 0.79 $ 0.05 $ 0.08
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Weighted average number of common
and common equivalent shares
outstanding..................... 3,854 5,701 7,708 8,798 9,752 9,702 9,755
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
SELECTED OPERATING DATA:
Number of centers at end of
period.......................... 30 32 39 49 52 50 52
Number of value-added facilities
at end of period................ 16 15 23 32 38 35 39
Same-store sales (3)--percent
increase (decrease) period to
period:
Including price inflation/
deflation..................... 0% 25% 28% 11% (8)% (14)% 3%
Excluding price inflation/
deflation..................... n/a 16% 14% 8% (1)% (4)% 7%
BALANCE SHEET DATA
(AT PERIOD END (1)):
Working capital.................. $ 30,130 $ 38,899 $ 60,321 $ 76,201 $ 100,196 $ 88,147 $ 107,689
Total assets..................... 73,489 92,021 142,297 222,450 264,970 235,425 275,002
Long-term debt (net of current
portion)........................ 32,901 32,343 53,276 76,411 121,120 95,160 127,850
Redeemable preferred stock (net
of current redemption
requirement).................... 4,824 4,858 3,892 2,925 1,960 1,931 968
Stockholders' equity............. 19,600 33,899 49,510 87,002 95,927 87,232 96,725
Long-term debt as a percentage of
total capitalization (4)........ 57.4% 45.5% 49.9% 45.9% 55.3% 51.6% 56.7%
</TABLE>
- --------------------------
(1) To facilitate industry comparisons, the Company elected in 1994 to change
its fiscal year-end from December 28 to December 31.
(2) Extraordinary charge arising from the early retirement of debt.
(3) Includes centers and value-added facilities that operated for more than nine
months of the relevant years or two months of the relevant quarters. "Price
inflation/deflation" refers to the effect on sales primarily attributable to
changes in commodity wood product prices. See "Risk Factors--Prices of
Commodity Wood Products."
(4) Total capitalization consists of long-term debt (net of current portion),
redeemable preferred stock (net of current redemption requirement) and
stockholders' equity.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
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 in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEARS ENDED DECEMBER ENDED MARCH 31,
---------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit........................................ 21.0 21.8 21.9 22.6 22.4
Selling, general and administrative expense......... 16.4 16.7 18.5 20.6 20.1
Other income, net................................... 0.2 0.3 0.3 0.3 0.5
Income from operations.............................. 4.8 5.4 3.7 2.3 2.8
Interest expense.................................... 1.1 1.2 1.7 1.6 2.0
Income taxes........................................ 1.5 1.6 0.8 0.3 0.3
Net income.......................................... 2.2 2.6 1.2 0.4 0.5
</TABLE>
FIRST QUARTER OF 1996 COMPARED TO 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% in same-store sales from the first
quarter of 1995 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 1995, but decreased
slightly as a percentage of net sales from 20.6% in 1995 to 20.1% in 1996. The
Company believes that 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
percentage 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 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.
The 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.
11
<PAGE>
1995 COMPARED TO 1994
Net sales for 1995 were $630.2 million, an increase of 15% or $83.1 million
from 1994. The sales increase reflects $71.1 million attributable to 1995
acquisitions and $52.6 million for a full year of sales for acquisitions made in
1994. Declines in new home construction, as well as lower commodity wood product
prices, contributed to a decrease of $40.6 million, or nearly 8% in same-store
sales. Excluding price deflation, same-store sales were down 1%. On an overall
basis, average sales prices for the Company's products declined about 7%,
causing a reduction in sales of approximately $47.4 million. This decrease was
due primarily to lower prices for commodity wood products, which were
approximately 14% lower in 1995 than in 1994.
Gross profit increased to 21.9% of net sales in 1995 from 21.8 % in 1994.
This slight increase reflects the ongoing efforts of the Company to improve
margins through its training programs as well as its increased focus on
value-added products, such as roof trusses, pre-hung doors and pre-assembled
windows, and increased sales to service-oriented consumers, all of which
generally have higher margins.
During 1995, SG&A expense as a percentage of net sales increased to 18.5% in
1995 from 16.7% in 1994. This increase was attributable primarily to costs
incurred integrating locations acquired in 1994 and 1995 and to support
acquisitions. These costs included, but were not limited to, the conversion of
computerized point-of-sale systems, marketing and sales programs, employee
training and upgrading of equipment and facilities to improve operational
efficiencies.
In March 1995, the Company issued $50.0 million of 9.18% unsecured senior
notes. The proceeds from the issuance of these notes were used to support the
Company's capital expenditure and acquisition activities and increased working
capital levels. Primarily due to the issuance of these notes, interest expense
increased to $10.7 million in 1995 from $6.5 million in 1994.
Income taxes were provided at annual effective tax rates of 38.7% and 38.0%
for 1995 and 1994, respectively. The increase in the effective tax rate was the
result of the income tax impact of acquisitions in 1993 and 1994.
As a result of the foregoing factors, net income in 1995 decreased by $6.5
million or 45.5% to $7.8 million, or 1.2% of net sales, as compared to $14.3
million, or 2.6% of net sales, in the prior year.
1994 COMPARED TO 1993
Net sales for 1994 were $547.1 million, an increase of 37% or $147.5 million
from 1993. These results were attributable primarily to (i) overall growth in
the markets the Company serves, (ii) increased market share, (iii) improvements
in operational efficiency and (iv) an aggressive acquisition program. Of the
1994 increase in sales, $57.1 million was contributed by businesses acquired in
1994. Same-store sales in 1994 increased $42.7 million, or 11%. Excluding price
inflation, same-store sales were up 8%. On an overall basis, average sales
prices for the Company's products increased approximately 3% in 1994. The
increase in same-store sales was due in significant part to a high level of
building activity in the Company's market area, particularly in Colorado, Idaho,
Nevada and Utah. Sales for 1994 also reflected a full year of sales from
acquisitions made in 1993; this accounted for $47.7 million of the sales
increase over 1993.
Gross profit increased to 21.8% of net sales in 1994 from 21.0 % in 1993.
This increase reflected the ongoing efforts of the Company to improve margins
through its training programs, its increased focus on value-added products, such
as roof trusses, pre-hung doors and pre-assembled windows and increased sales to
the service-oriented consumer, all of which generally have higher margins.
During 1993 and 1994, the Company expanded or constructed several value-added
operations and acquired several new centers, some of which focused on the
service-oriented consumer and some of which offered value-added products.
SG&A expense, as a percentage of net sales, increased to 16.7% in 1994 from
16.4% in 1993. This increase was principally a function of increased costs
associated with integrating acquired locations, partially offset by the
Company's continued cost control efforts.
12
<PAGE>
Interest expense increased to $6.5 million in 1994 from $4.6 million in
1993. Average borrowings under the Credit Agreement increased significantly in
1994 to support the Company's capital expenditure and acquisition activities and
increased working capital levels. In addition, the average interest rate under
the variable rate Credit Agreement was higher in 1994 than in 1993.
Income taxes of $8.7 million were provided in 1994, a 38.0% effective rate.
In 1993, income taxes were $5.9 million, a 40.1% effective rate. The reduction
in the income tax rate was the result of increased sales in states with lower
tax rates.
As a result of the foregoing factors, net income in 1994 increased by $5.5
million or 62.5% to $14.3 million, or 2.6% of net sales, as compared to $8.8
million, or 2.2% on net sales, in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal needs for capital resources are to finance
acquisitions, capital expenditures and increased working capital requirements.
The Company's capital base has grown in recent years through the retention of
operating earnings and increased borrowings. The Company had $121.1 million of
long-term debt outstanding at December 31, 1995, consisting principally of $26.1
million of variable rate borrowings under the Credit Agreement and $95.0 million
of term borrowings under fixed rate notes. See Note 3 of Notes to the Financial
Statements. 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 Credit Agreement and $95.0 million of term borrowings under fixed rate
notes.
OPERATIONS. In 1995, the Company generated $21.3 million of cash from
operating activities comprised primarily of net income plus depreciation and
amortization charges. In addition, in 1995 the Company reduced inventories at
recently acquired locations. Working capital at year-end 1995 was $100.2 million
compared with $76.2 million at 1994 year-end. This increase in working capital
was attributable primarily to increases in accounts receivable and inventories
as a result of the acquisition of four building materials centers in 1995.
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.
CAPITAL INVESTMENT AND ACQUISITIONS. Capital expenditures, exclusive of
acquisitions, totaled $16.9 million in 1995. The principal property and
equipment expenditures in 1995 included the completion of the expansion of the
Great Falls, Montana center; the construction/expansion of roof truss plants in
Boise, Idaho and Fresno, California; the construction of a reload facility in
Denver, Colorado; the expansion of the Temple, Texas center and the purchase of
new management information systems.
Cash used for acquisitions totaled $36.4 million in 1995, as the Company
completed two acquisitions in 1995 involving four building materials centers. In
1994, the Company completed eight acquisitions involving ten building materials
centers for aggregate consideration of $55.1 million, of which $21.5 million was
paid in cash, $10.6 million was paid in promissory notes and $23.0 million was
paid in Common Stock. Cash used for acquisitions totaled $1.8 million in the
first quarter of 1996, as the Company completed acquisitions of three
value-added facilities. See "Business--Acquisition Strategy" and Note 2 of Notes
to the Financial Statements.
FINANCING. In March 1995, the Company issued $50.0 million of 9.18%
unsecured senior notes due in 2006 and increased the Company's borrowing
capacity under the Credit Agreement from $60.0 million to $70.0 million. The
borrowings under the Credit Agreement decreased to $26.1 million at 1995
year-end from $31.2 million at 1994 year-end. This overall increase in debt,
together with cash flow from operations, funded increased working capital
levels, capital expenditures and acquisition activities for 1995. In addition,
the security required for the Credit Agreement and the $25.0 million of 8.10%
secured senior notes was eliminated. Borrowings under the Credit Agreement
increased during the first quarter of 1996 to $32.9 million at March 31, 1996,
due primarily to the seasonal increase in the Company's accounts receivable and
inventories.
13
<PAGE>
The various agreements related to long-term borrowings contain financial
covenants and restrictions. These covenants require the Company to maintain
minimum financial measures and limit additional debt, stock repurchases,
dividend payments, capital asset additions, liens on assets and business
combinations. These covenants and restrictions have not materially impacted the
Company's operations.
Based on its ability to generate cash from operations and the available
borrowing capacity at March 31, 1996 of $37.1 million under the Credit 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.
QUARTERLY RESULTS AND SEASONALITY
Although weather affects the Company's results of operations throughout the
year, adverse weather historically has reduced construction activity in the
first and fourth quarters in the Company's markets. In addition, quarterly
results historically have reflected, and are expected in the future to reflect,
fluctuations from period to period as a consequence of the impact of various
other factors, including general economic conditions, prices of commodity wood
products, levels of building activity and interest rates, single-family housing
starts, employment levels, consumer confidence and the availability of credit to
professional contractors and homeowners. The composition and level of working
capital typically has changed with the level of sales, with the Company's
inventories and receivables increasing during periods of rapidly increasing
sales. Working capital levels (receivables and inventories) typically increase
in the second and third quarter of the year due to higher sales during the peak
building and construction season. These increases historically have resulted in
negative operating cash flows during this peak season, which have been financed
generally through borrowings under the Credit Agreement. Collection of
receivables and reduction in inventory levels following the peak of the building
and construction season have more than offset this negative cash flow in recent
years. The Company believes it will continue to generate positive annual cash
flows from operating activities.
14
<PAGE>
BUSINESS
GENERAL
BMC West is a leading regional distributor of building materials in the
western United States, selling primarily to professional contractors, as well as
to advanced, service-oriented consumers. In addition to distributing lumber,
panel products and other building supplies from manufacturers, the Company
conducts value-added activities, which include pre-hanging doors, fabricating
roof trusses, pre-assembling windows and pre-cutting lumber to meet customer
specifications. The Company operates 52 building materials centers located in
Arizona, California, Colorado, Idaho, Montana, Nevada, Oregon, Texas, Utah and
Washington. Value-added activities are conducted at 40 separate facilities, most
of which are located at building materials center sites.
BMC West targets primarily the professional contractor market, which is a
strategy distinct from that pursued by the high-volume, consumer-oriented home
center retailers now found throughout the United States. The Company's
professional contractor market consists of persons engaged principally in the
construction of single-family homes and, to a lesser extent, multi-family units
and light commercial and industrial construction. Professional contractors
generally are large-volume, repeat customers requiring certainty of product
availability and delivery and a number of specialized services typically not
offered by home center retailers. The Company also targets the repair and
remodel market which consists generally of advanced, service-oriented consumers
and contractors hired by them, who engage primarily in substantial projects such
as room additions, kitchen or bathroom remodeling and fence or deck
installations.
BMC West develops long-term relationships with its customers by providing
them with a broad range of high-quality products and services. Each of the
Company's building materials centers tailors its product and service mix to meet
the demands of its local market. The Company's products, which include lumber,
panel products, roofing materials, pre-hung doors, roof trusses, pre-assembled
windows, cabinets, hardware, paint and tools, are used primarily for new
residential construction, light commercial construction and repair and
remodeling projects. These products are sold by experienced professionals
consisting of both field sales personnel and facility-based sales and support
personnel. The Company offers its customers various services, including
assistance with project designs and materials specifications, coordination of
delivery of orders to job sites, provision of credit to pre-approved contractors
and referral of retail customers to pre-qualified contractors. Complete home
packages (delivered to the sites of the Company's builder customers according to
their construction schedules) account for a significant amount of BMC West's
total sales. In each of the last three years, professional contractors accounted
for approximately 75% to 79% of the Company's net sales, and advanced,
service-oriented consumers accounted for approximately 19% to 24% of the
Company's net sales.
INDUSTRY OVERVIEW
The building materials distribution industry is characterized by its
substantial size, highly fragmented ownership structure and dependence on the
cyclical and seasonal construction industry. According to the United States
Department of Commerce, sales of building materials, lumber and hardware in the
United States in 1995 totaled approximately $110 billion. According to industry
sources, no building materials distributor accounted for more than 11% of the
total market in 1995.
Building materials distributors generally concentrate on serving either
service-oriented professional contractors or price-oriented retail consumers.
Contractor-oriented building materials distributors, such as BMC West, tend to
focus on contractors and advanced consumers and compete principally on the basis
of service, product quality and availability, on-time delivery, credit
availability and reliability, as well as price. Home center retailers, on the
other hand, target the mass consumer market, in which competition is based
principally on price, merchandising, location and cooperative advertising.
Typically, contractor-oriented distributors offer a greater range of services
and a wider variety of high quality building products than home center
retailers.
The contractor-oriented building materials distribution industry is
characterized by a large number of privately owned, small, regional distribution
companies and single-site enterprises. These businesses are typically family
run, relationship-based operations which focus on offering service, delivery and
reliability to their customers. As a result
15
<PAGE>
of their size, many of these businesses do not possess sophisticated working
capital management and control systems and generally lack the purchasing
expertise of a large entity, such as BMC West. Because of these factors, the
Company believes that these businesses include a number of attractive
acquisition candidates.
The building materials distribution industry is closely linked to the
economic cycles and seasonality associated with the construction industry. The
Company monitors the issuance of new housing permits as an important indicator
of its potential future sales volume. Construction expenditures are largely a
function of new residential, commercial and industrial building demand and
repair and remodeling projects undertaken. Residential construction is closely
linked to new job formation, household formation, interest rates, housing
affordability, availability of mortgage financing, regional demographics and
consumer confidence. Commercial construction is significantly affected by
vacancy and absorption rates, interest rates, long-term regional economic
outlooks and the availability of financing. Industrial construction expenditures
are linked to the industrial economic outlook, corporate profitability, interest
rates and capacity utilization. In difficult economic environments, repair and
remodeling expenditures generally represent a greater percentage of housing
construction expenditures as new housing starts decline. BMC West centers target
participants in all of these sectors, although economic conditions frequently
dictate which sector they may emphasize at a given time. A key attribute of the
contractor-oriented building materials distribution industry is that
professional contractors typically use the same building materials supplier for
all of their projects. In order to generate and maintain this loyalty, suppliers
generally focus on providing the professional contractor with service, quality,
on-time delivery and value-added services.
GEOGRAPHIC MARKETS
The Company believes that it is well positioned in some of the most
attractive markets for building materials in the United States. Population and
migration trends in the markets served by BMC West, as well as the relative
strength of many of the local economies in the regional markets it serves, have
resulted in the growth of residential housing in these markets at rates faster
than the United States as a whole. BMC West operates centers in 7 of the top 10
fastest growing states over the last five years, based upon U.S. Bureau of the
Census estimates. In addition, according to the U.S. Bureau of the Census, the
Company's 12-state market area is forecast to outpace the rest of the country in
its rate of population growth between 1995 and 2000. The Company believes that
these population and migration trends provide a foundation for continued growth.
Furthermore, BMC West's 52 building materials centers operate in 18 distinct
regional markets, which collectively have a diverse economic base of
manufacturing, agricultural, recreational and service-based industries. The
Company believes that this geographic diversification lessens the impact on the
Company of a downturn in any one of its regional markets.
OPERATING STRATEGY
BMC West's management has organized its 52 building materials centers as
autonomous, decentralized units capable of responding to local market needs and
offering competitive prices. Center managers have a substantial degree of
control over inventory, merchandising and pricing, and can develop their own
specific programs to meet the needs of their particular markets. The Company's
decentralized, microcomputer based, point-of-sale information system provides
each center manager with real-time pricing, inventory availability and margin
analysis. At the same time, the Company provides centralized purchasing
management, credit and financial controls, management information systems,
training and marketing support. The compensation of substantially all of the
employees of each unit is based, in part, on the performance of the individual
unit.
BMC West believes that many of its building materials centers hold a first
or second place local market share among professional contractors and that the
Company, as a whole, has the largest sales volume of any distributor of building
materials serving primarily professional contractors in its 12-state market
area. The Company intends to maintain its leadership position in these markets
by continuing to provide a broad range of high-quality products and services to
professional contractors and advanced, service-oriented consumers. The services
provided by the Company include assisting customers with project designs and
materials specifications, delivering orders to job sites, providing credit to
pre-approved contractors, and referring consumers to pre-qualified contractors.
In addition to distributing products from manufacturers, the Company currently
conducts value-added operations at 40 facilities (most of which are located at
building materials center sites) in eight states, as compared to 16 such
facilities in six states at the end of 1991. Value-added facilities generally
are constructed or acquired at or near a center and can
16
<PAGE>
service a sales area 35 to 45 miles in radius. The Company plans to introduce
value-added products such as pre-hung doors, roof trusses and pre-assembled
windows in more of the markets served by the Company. These products generally
carry higher gross margins than commodity wood products.
The Company continues to enhance and broaden its customer services, which
include new programs developed by its building materials center managers and
corporate management. For example, at certain of its locations, the Company
conducts "How-To" seminars for consumers, refers retail customers to
pre-qualified contractors and offers a private label credit card. BMC West's
decentralized operating philosophy permits unit managers to respond to the needs
of their local markets with creative new products and services. The Company
continues to upgrade its consumer advertising and merchandising, particularly in
smaller markets where it places more focus on advanced, service-oriented
consumers.
BMC West's total quality management program defines quality as providing the
best products and services at the right place at the right time. The program
provides an environment for employees to identify cost reduction and margin
improvement opportunities, empowers all employees to make significant
contributions and work together as a team and measures BMC West's performance
and follow through on improvement efforts. Quality teams at BMC West locations
seek to make specific, measurable improvements in the Company's critical
processes, including order processing, inventory control, delivery and customer
assistance. These teams include employees from all functional areas and
backgrounds. The Company supports this program through training and the sharing
of ideas among locations.
ACQUISITION STRATEGY
BMC West continues to seek acquisitions of building materials centers and
value-added facilities that serve professional contractors and advanced,
service-oriented consumers in new and existing markets in the western United
States. The Company believes that the fragmented nature of its industry presents
opportunities for additional acquisitions of strategically located building
materials centers and value-added facilities. The management of BMC West has
substantial experience in expanding building materials supply businesses through
acquisitions. Over the past several years, the Company's management has
contacted and visited many acquisition candidates in the western United States.
In addition, the Company is contacted regularly by persons seeking to sell their
businesses. The Company believes that, due to professional contractor loyalty to
existing centers, the most expedient way for BMC West to enter new geographic
markets is through acquisitions. The Company also believes that the availability
of a public market for its Common Stock provides it with additional flexibility
in pursuing acquisitions.
While the Company evaluates each potential acquisition candidate on its
individual merits, its primary objective has been to acquire profitable building
materials centers that meet certain general criteria. The typical targeted
acquisition candidate is located on a 5 to 10 acre site which includes 8,000 to
15,000 square feet of indoor showroom and contractor sales space and 20,000 to
50,000 square feet of covered storage area, with reasonable access to the local
road system and proximity to regional areas of construction demand. Additional
factors include the reputation of the center among local contractors and the
quality of the center's management and sales organization.
Typically, after an acquisition of a center, the Company enhances the
center's sales and service capabilities and expands its product offerings,
including value-added products, in an effort to increase sales. In addition, the
Company seeks to implement its accounting and management systems in each newly
acquired center. These systems assist in the effective management of the
Company's inventories and accounts receivable and in efforts to improve customer
service. BMC West generally is able to use its centralized purchasing expertise
to reduce product costs following acquisitions. See "Risk Factors--Acquisition
and Development Strategy."
17
<PAGE>
In 1994, the Company acquired 10 locations in Arizona, Colorado, Texas and
Washington for aggregate consideration of $55.1 million, of which $21.5 million
was paid in cash, $10.6 million was paid in promissory notes and $23.0 million
was paid in Common Stock of the Company. In 1995, the Company acquired four
locations in Texas for aggregate consideration of $36.4 million in cash. To date
in 1996, the Company has acquired three value-added facilities in Texas and Utah
for aggregate consideration of $3.4 million in cash. The following chart sets
forth the number of building materials centers acquired and consolidated by the
Company during each of the last five fiscal years. See Note 2 of Notes to the
Financial Statements.
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Beginning balance............................. 29 30 32 39 49
Acquisitions.................................. 1 3 7 10 4
Other*........................................ -- (1) -- -- (1)
-- -- -- -- --
Ending balance................................ 30 32 39 49 52
-- -- -- -- --
-- -- -- -- --
</TABLE>
----------------------------------------------
* In 1992, the Company consolidated its Santa Rosa,
California center with its Modesto, California center.
In 1995, the Company consolidated its Oakhurst,
California center with its Fresno, California center.
PRODUCTS
Each BMC West center carries a core of approximately 9,000 stock keeping
units ("SKUs"), plus an average of an additional 6,000 SKUs, the product mix of
which varies by location. The Company's principal products include lumber, panel
products, roofing materials, pre-hung doors, roof trusses, pre-assembled
windows, cabinets, hardware, paint and tools. In addition to distributing such
products, the Company conducts value-added activities, which include pre-hanging
doors, fabricating roof trusses, pre-assembling windows and pre-cutting lumber
to meet customer specifications.
The following table sets forth information regarding the percentage of net
sales represented by the specified categories of products sold at the Company's
centers during each of the last three fiscal years. While the Company believes
that the percentages included in the table generally indicate the mix of the
Company's sales by category of product, the specific percentages are affected
year-to-year by changes in the prices of commodity wood products as well as
changes in unit volumes sold.
<TABLE>
<CAPTION>
CATEGORY OF PRODUCT 1993 1994 1995
- -------------------------------------------------------------------- ------ ------ ------
<S> <C> <C> <C>
Wood products (lumber and panel products)........................... 56% 51% 47%
Building materials (roofing, siding, insulation and steel).......... 23 23 23
Millwork (pre-hung doors, trusses, windows and moldings)............ 13 15 18
Other (paint, hardware, tools, electrical and plumbing)............. 8 11 12
-- -- --
100% 100% 100%
-- -- --
-- -- --
</TABLE>
The Company fabricates roof trusses used to form roof support systems and
pre-hung door units and pre-assembled window units for the residential and light
commercial building markets. Door and window units are purchased and
pre-assembled to contractor specifications using a variety of moldings. The
door, truss and window product lines are particularly attractive since they
generally carry higher margins and are not offered by many building materials
centers or home center retailers. The Company believes that its ability to
provide pre-hung doors, roof trusses and pre-assembled windows in a number of
locations is a competitive advantage when soliciting business from contractors.
Inventories of door units, roof trusses and pre-assembled windows are
predominantly work-in-process, as these units are usually built to order.
The Company's customers generally order products, including pre-hung doors,
roof trusses, and pre-assembled windows on an as-needed basis. Therefore,
virtually all product shipments in a given fiscal quarter result from orders
received in that quarter. Consequently, order backlog represents only a small
percentage of the product sales anticipated by the Company in a given fiscal
quarter and is not indicative of the Company's actual sales for any future
fiscal period.
18
<PAGE>
As a distributor of building materials and products, the Company regularly
monitors innovations in product design to meet its customers' needs. The Company
test markets products that substitute for dimensional lumber and has for a
number of years distributed alternative products, such as engineered wood
products and steel studs, and has provided its builder customers information and
instruction on the use of such products.
SALES AND MARKETING
Each of BMC West's 52 building materials centers tailors its product and
service mix to the needs of its local market and operates as a separate profit
center. The Company reaches its professional contractor customers mainly through
field sales representatives, advertisements in trade journals and local
promotional events. The Company's customers include a broad base of professional
contractors and advanced, service-oriented consumers. No single customer
accounted for more than 2% of net sales in 1995.
PROFESSIONAL CONTRACTOR MARKET
The professional contractor market is comprised of two major customer
segments, new housing contractors and commercial and industrial contractors. The
Company's sales to professional contractors accounted for approximately 75% of
1995 net sales (including 67% to new housing contractors and 8% to commercial
and industrial contractors). Professional contractors accounted for
approximately 75% to 79% of the Company's net sales in each of the last three
years. A significant amount of this business consisted of sales of complete home
packages, including framing lumber, panel products, pre-hung doors and trim
packages, roof trusses, pre-assembled windows and other products required to
construct or improve a home.
BMC West provides a wide range of customer services to professional
contractors to meet their needs for credit, delivery and expert assistance.
While pricing is an important purchasing criterion for these customers, the
Company believes that other factors such as coordinated on-time deliveries,
quality and availability of products, relationships with salespeople, credit
availability and technical support are equally important. The Company believes
that its skills in these areas are important competitive advantages.
BMC West's principal channel for reaching the professional contractor market
is a sales force of approximately 230 field sales representatives supported by
approximately 215 facility-based salespeople. Field sales representatives
actively solicit business and work with the facility-based managers to develop
bids for contractor projects. The Company provides sales training for all sales
representatives and sales management training for all sales managers and center
managers. Sales representatives are compensated through a combination of salary
and commission based on individual sales volume and gross margin.
BMC West's center managers ensure that building materials are delivered
according to contractor specifications and schedules. Technical personnel
involved in purchasing, dispatching, invoicing and credit support both field
sales personnel and center managers to enhance customer satisfaction.
REPAIR AND REMODEL MARKET
The repair and remodel market consists generally of advanced,
service-oriented consumers and repair and remodel contractors hired by them. The
Company's sales to these customers accounted for approximately 24% of 1995 net
sales and for approximately 19% to 24% of net sales in each of the last three
years. The Company's sales to this market generally carry higher margins than
sales to the professional contractor market. The volume of sales to this market
varies depending on location, with the Company actively pursuing repair and
remodel business in smaller markets which have not attracted large home center
retailers. Showroom space varies from store to store, typically ranging from
approximately 5,000 to 20,000 square feet. This space features attractive
displays and is frequently remerchandized to reflect product and service
improvements. Sales personnel are trained to service both the more sophisticated
contractor and the individual consumer, thereby providing the consumer with
professional advice for home improvement projects.
To enhance public exposure, BMC West frequently advertises in local
newspapers, incorporates special display signs in its stores and uses
promotional events such as "How-To" programs sponsored by manufacturers of
building materials. Management believes that these advertising and promotion
programs, in conjunction with the Company's experienced sales staff, enable BMC
West to compete effectively in the repair and remodel market.
19
<PAGE>
CREDIT
Overall credit policy for sales to contractors is established by corporate
management, but each center has responsibility for overseeing local accounts.
The individual center managers and their staff are trained to have a thorough
understanding of state lien laws, which provide security for the Company's
accounts receivable. The Company's credit policies, together with daily computer
monitoring of customer balances, have resulted in an average bad debt expense of
approximately 0.16% of net sales during the last five years, with no single year
exceeding 0.22%. The Company believes that its bad debt expense levels are among
the lowest in the industry.
In addition to the credit extended by the Company, the Company accepts
third-party credit cards such as MasterCard, Visa, American Express and
Discover. BMC West also offers a private-label credit card to individual
customers. The BMC West card provides customers with rapid access to revolving
credit lines and offers them opportunities to take advantage of deferred
financing and other promotions. This program is owned and administered by
Household Retail Services, a division of Household Bank, N.A., and is without
recourse to BMC West. Household Retail Services handles all credit approval and
charge administration functions, and the Company receives payment within two
days of submitting charge data. Use of the credit card program gives BMC West a
low-cost means of extending credit to these customers without credit exposure.
Approximately 87% of the Company's sales in 1995 were made to customers to
whom the Company had extended credit for such sales. The remaining 13% of sales
in 1995 included cash purchases and purchases made with third-party credit cards
and the Company's private-label credit card.
MANAGEMENT INFORMATION SYSTEMS
BMC West's financial information, operational data, and other related
statistical information are processed and maintained at its headquarters on a
network of server computers and work stations. The Company recently installed a
state-of-the-art financial reporting and relational database system designed by
Oracle Corporation. The flexible nature of the Company's installed network
allows for accumulation, processing and distribution of information using
industry standard computing resources and programs. The point-of-sale
information systems used by BMC West operate on IBM RS6000 computers located at
each center. These on-line systems provide real-time pricing, inventory
availability and margin analysis, allowing each center's sales staff to serve
its customers better, while giving management the ability to access and use
timely information to improve operations. Management believes that these systems
also have enabled the Company to enhance profit margins, improve inventory
turnover through identification and elimination of low-turnover items,
accelerate analysis of sales trends and accounts receivable and better monitor
employee productivity, customer credit limits and lien protections.
PURCHASING
The Company purchases merchandise from a large number of manufacturers and
suppliers. In 1995, the Company's largest supplier accounted for approximately
7% of the Company's total purchases. In 1994, a different supplier accounted for
approximately 11% of the Company's total purchases. The Company does not believe
that the loss of any single supplier would have a material adverse effect on the
Company.
The Company purchases a majority of its inventory on a centralized basis in
order to capitalize on economies of scale, although a limited amount of
purchasing and all ordering is controlled at individual centers in order to
respond to local needs. A buying group located at the Company's headquarters
handles bulk commodity purchases, negotiates with major lumber and panel
products suppliers, and manages relations with the Company's non-commodity
suppliers. This group consolidates the Company's purchase orders in order to
negotiate the best possible prices and terms. Although the Company seeks to time
its purchases to take advantage of price movements, BMC West has a policy not to
speculate in the commodity wood products market.
Approximately 47% of the Company's 1995 sales were attributable to commodity
wood products. Prices of commodity wood products are subject to significant
volatility and directly affect the Company's sales. During 1995, the prices of
commodity wood products purchased and sold by the Company were on average 14%
lower than in 1994. The Company has established purchasing and pricing
procedures to minimize exposure to inventory writedowns. The Company's commodity
buyers monitor inventory and sales levels in each location on a regular basis.
With this supply and demand information, buyers can avoid overstocking commodity
wood products. As a result, the Company turns its commodity wood product
inventory approximately 12 times per year. Such rapid inventory
20
<PAGE>
turnover limits the Company's potential exposure to inventory loss from
commodity price fluctuations. In addition, the Company's real-time computer
network allows the Company to adjust sales prices as purchase prices of
commodity products change. See "Risk Factors--Prices of Commodity Wood
Products."
The Company's hardware products are purchased primarily from Cotter &
Company ("True Value"), Ace Hardware ("Ace") and Hardware Wholesalers, Inc.
("HWI"). By serving as a True Value, Ace and HWI dealer, the Company eliminates
the need to maintain separate distribution centers for such products.
COMPETITION
BMC West operates in a highly competitive environment. Due to the regional
nature of its industry, BMC West's competitive environment varies by location
and by market segment.
Within the professional contractor market, the Company competes primarily
with privately owned, single-site enterprises and local and regional building
materials chains. Professional contractors generally select building materials
centers on the basis of availability of knowledgeable personnel, on-time
delivery, reliable inventory levels, availability of credit and competitive
pricing. BMC West believes it competes favorably on each of these bases. The
Company's relatively large size also permits it to attract experienced and
professional sales and service personnel and provides BMC West the resources to
offer Company-wide product and service training programs. By working closely
with its contractor customers and utilizing the Company's real-time management
information system, BMC West's centers maintain appropriate inventory levels and
are well positioned to deliver completed orders on time to individual job sites.
The Company also competes to a lesser extent with certain larger home center
retailers such as Home Depot, HomeBase and Builders Square in this market.
Competition from large home center retailers can prompt other local suppliers to
pursue professional contractor business more aggressively. See "Risk Factors--
Competition."
Within the repair and remodel market, BMC West competes primarily with local
lumber yards and hardware stores and, in certain of its markets, with larger
home center chains such as Home Depot, HomeBase and Builders Square. The Company
believes that it meets the needs of advanced, service-oriented consumers and
repair and remodel contractors more effectively than such competitors by (i)
providing primarily higher quality products within each category, (ii) offering
consumers and contractors access to knowledgeable staff and (iii) developing
contractor referral programs and "How-To" programs to address the requirements
of consumers on larger projects.
EMPLOYEES
At March 31, 1996, BMC West employed approximately 3,000 persons, of which
approximately 300 were represented by unions. The Company has not experienced
any strikes or other work interruptions and has maintained generally favorable
relations with its employees. The following table shows the approximate
breakdown by job function of the Company's employees:
<TABLE>
<S> <C>
Officers, corporate and center management and
administrative............................................... 24%
Field and facility-based sales force.......................... 13%
Retail operations (cashiers, receiving, sales support)........ 13%
Delivery (truck drivers, load builders, yard)................. 31%
Assembly (truss, door and window)............................. 19%
</TABLE>
21
<PAGE>
PROPERTIES
BMC West's headquarters is in Boise, Idaho. In addition to administrative
buildings, the Company has four primary types of facilities: building materials
supply centers, pre-hung door plants, truss plants and window distribution
facilities. The Company believes that its facilities are well maintained and
generally are adequate for the Company's needs for the foreseeable future. All
of the Company's material assets, including land and facilities, are owned or
leased by the Company.
<TABLE>
<CAPTION>
SQUARE FOOTAGE
ACREAGE --------------------------
DATE ------------------------ SHOWROOM/ PLANT/
STATE AND CITY ACQUIRED OWNED LEASED OFFICE WAREHOUSE PRIMARY USES
- ------------------------ ----------- ----------- ----------- ------------- ----------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ARIZONA
Phoenix 1994 -- 12.7 4,000 81,000 Center
CALIFORNIA
Atwater 1990 -- 2.4 1,632 7,874 Center
Fresno 1989 13.1 -- 12,334 78,079 Center, Door Plant, Truss Plant
Merced *1977 2.9 0.5 9,499 54,122 Center, Door Plant
Modesto 1989 14.0 -- 7,101 38,897 Center, Door Plant, Truss Plant
COLORADO
Aspen *1978 4.1 -- 9,000 21,088 Center
Boulder 1990 6.0 -- 12,600 19,800 Center
Colorado Springs 1994 3.3 0.4 5,000 14,000 Center, Door Plant
Denver Door 1990 -- 1.0 3,120 33,326 Center, Door Plant
Denver 1994 8.7 -- 17,064 51,891 Center, Door Plant
Englewood 1990 3.9 -- 3,200 14,900 Center
Evergreen 1990 3.7 -- 5,000 15,600 Center
Fort Collins 1990 10.0 0.5 12,000 46,588 Center, Door Plant
Fort Lupton 1994 10.5 -- 2,610 26,900 Truss Plant
Grand Junction 1994 4.9 -- 12,000 27,450 Center
Glenwood Springs 1990 2.0 -- 5,540 10,240 Center
Greeley 1994 11.0 -- 37,846 19,480 Center, Door Plant, Truss Plant
Pueblo 1994 10.7 -- 11,000 48,700 Center, Door Plant
Steamboat Springs *1978 1.4 2.8 7,580 18,790 Center
IDAHO
Boise *1978 23.9 -- 18,664 56,300 Center, Truss Plant
Boise 1988 -- 0.5 24,066 -- Headquarters
Emmett *1957 2.6 -- 4,878 8,032 Center
Idaho Falls *1957 11.5 0.4 10,652 55,234 Center, Door Plant, Truss Plant
Lewiston 1990 -- 2.1 7,260 24,390 Center, Door Plant
Meridian *1979 -- 3.8 1,000 18,416 Door Plant
Pocatello *1957 4.6 -- 12,000 10,600 Center
Rexburg *1957 1.9 -- 8,168 12,288 Center
Twin Falls 1993 0.5 -- 600 6,000 Center, Door Plant
MONTANA
Great Falls 1993 9.0 -- 49,024 40,000 Center
NEVADA
Carson City 1992 7.6 -- 17,225 40,924 Center, Door Plant
Gardnerville 1992 4.4 -- 8,850 17,222 Center
Reno 1992 -- 3.0 2,000 -- Center
OREGON
Beaverton *1979 5.6 -- 6,800 25,260 Center, Door Plant
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
SQUARE FOOTAGE
ACREAGE --------------------------
DATE ------------------------ SHOWROOM/ PLANT/
STATE AND CITY ACQUIRED OWNED LEASED OFFICE WAREHOUSE PRIMARY USES
- ------------------------ ----------- ----------- ----------- ------------- ----------- ---------------------------------------
TEXAS
<S> <C> <C> <C> <C> <C> <C>
Abilene 1995 16.8 -- 13,750 22,500 Center, Door Plant, Truss Plant
El Paso 1991 7.0 -- 16,638 16,840 Center, Door Plant, Truss Plant
Fredericksburg 1993 4.0 -- 18,450 22,660 Center
Hurst 1994 5.3 2.3 9,480 64,600 Center, Door Plant
Killeen 1994 3.0 -- 8,500 36,633 Center, Door Plant
Marble Falls 1993 5.2 -- 17,000 21,580 Center
New Braunfels 1995 23.6 5.2 13,512 26,500 Center, Truss Plant, Window
Distribution
North Austin 1995 18.3 3.9 52,146 102,000 Center, Door Plant, Window Distribution
San Marcos 1993 3.0 -- 13,920 20,384 Center
Shiner 1993 1.2 0.4 6,400 12,615 Center
South Austin 1995 6.5 -- 34,255 -- Center
Temple 1993 11.3 -- 25,200 60,635 Center
UTAH
Ogden *1947 0.5 1.2 3,800 16,890 Center
Orem *1947 9.9 7.0 5,884 19,672 Center, Door Plant, Truss Plant
Salt Lake 1990 16.8 -- 12,744 64,088 Center, Door Plant, Truss Plant
Tooele *1947 1.5 0.7 2,000 5,320 Center
WASHINGTON
Issaquah 1994 -- 16.4 44,420 106,368 Center, Door Plant
Kent 1994 4.5 -- 19,200 26,200 Center
N. Everett 1994 29.3 -- 100 85,446 Center, Truss Plant
Spokane 1990 5.0 -- 7,500 50,812 Center, Door Plant
Tacoma *1979 8.9 -- 5,008 39,770 Center, Door Plant, Truss Plant
Vancouver 1994 -- 5.4 4,800 12,000 Center
</TABLE>
- ------------------------
* These locations were purchased from Boise Cascade Corporation in 1987, and
each date listed indicates the date such location was opened or acquired by
Boise Cascade Corporation.
LEGAL PROCEEDINGS
From time to time, the Company is involved in certain 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
proceeding, would not materially affect its financial condition or operations.
23
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company, their ages as of May 1,
1996, and the date each of them was first elected as an officer or director, are
as follows:
<TABLE>
<CAPTION>
DATE FIRST ELECTED AS AN
NAME AGE POSITION OR OFFICE OFFICER OR DIRECTOR
- ------------------------- --- -------------------------------------- -------------------------
<S> <C> <C> <C>
George E. McCown 60 Chairman of the Board of Directors 1987
Donald S. Hendrickson 66 President, Chief Executive Officer and 1987
Director
Robert L. Becci 55 Vice President and Controller 1990
Richard F. Blackwood 58 Senior Vice President of Operations 1987
Leroy D. Custer 51 Vice President of Marketing & 1990
Purchasing
Ellis C. Goebel 54 Vice President and Treasurer 1987
Steven H. Pearson 48 Vice President of Human Resources 1987
Alec F. Beck 40 Director 1996
H. James Brown 55 Director 1991
Wilbur J. Fix 68 Director 1991
Robert V. Hansberger 75 Director 1988
Guy O. Mabry 69 Director 1991
Robert E. Mellor 52 Director 1991
Peter S. O'Neill 59 Director 1993
</TABLE>
Mr. McCown is Chairman of the Board of Directors of the Company and has been
a director since 1987. He was cofounder and has been a Managing Partner of MDC
Management Company, the general partner of McCown De Leeuw & Co., since 1984 and
was instrumental in financing and executing the leveraged buy-out of the Company
in 1987. Mr. McCown currently serves as a director of three other publicly held
corporations, Nimbus CD International, Inc., Specialty Paperboard, Inc., and
Vans, Inc. Mr. McCown also serves as a director of several privately held
companies.
Mr. Hendrickson has served as President, Chief Executive Officer, and a
Director of the Company since its inception in November 1987. Mr. Hendrickson
served in several management positions at Boise Cascade Corporation from 1974 to
1987, including General Manager of Boise Cascade Corporation's Building
Materials Distribution Division at the time of the leveraged buy-out of the
Company. Mr. Hendrickson received a B.A. in economics from the Albertson College
of Idaho and an M.B.A. from the University of Chicago Graduate School of
Business. He is also a certified public accountant in the State of Idaho. Mr.
Hendrickson currently serves as a director of a privately held company, as
Trustee for Albertson College of Idaho, and as Director-at-Large for the Western
Building Materials Association.
Mr. Becci has served as the Company's Controller since its inception in 1987
and was elected Vice President in 1990. Mr. Becci was Controller of Boise
Cascade's Building Materials Distribution Division from 1985 to 1987.
Mr. Blackwood served as Vice President of Operations North of the Company
from 1987 to May 1996 and was promoted to Senior Vice President of Operations in
May 1996. He was Operations Manager of nine wholesale distribution facilities of
Boise Cascade's Wholesale Building Materials Distribution Division from 1985 to
1987.
Mr. Custer has served as Marketing Manager of the Company since 1988 and was
elected Vice President of Marketing in 1990. Mr. Custer was Manager of BMC
West's Boise, Idaho, unit from 1987 to 1988. He served as Boise Cascade's
Manager of Commodity Lumber and Panel Procurement from 1981 to 1987.
Mr. Goebel has served as Vice President and Treasurer of the Company since
its inception in November 1987. He was Division Credit Manager for Boise
Cascade's Building Materials Distribution Division from 1982 to 1987.
24
<PAGE>
Mr. Pearson has served as Vice President of Human Resources of the Company
since its inception in November 1987. He was Employee Relations Manager for
Boise Cascade's Building Materials Distribution Division from 1985 to 1987.
Mr. Beck has over 20 years experience in the building materials industry. He
joined Stripling-Blake Lumber Company, Inc. ("SBLC") an Austin Texas building
materials retailer, in 1974 and served as President from 1983 to 1995, when
certain assets of SBLC were sold to the Company. He served as Vice President of
Operations South of the Company from June 1995 to February 1996.
Dr. Brown is President of the Lincoln Institute of Land Policy, a non-profit
educational institution dedicated to the teaching of land policy, economics and
taxation. Dr. Brown previously served as a Professor at the John F. Kennedy
School of Government at Harvard University from 1976 to 1996. Dr. Brown also
served as Director of the Joint Center for Housing Studies at Harvard University
from 1984 to 1996 and as Chairman of Harvard University's City and Regional
Planning Program from 1981 to 1996. He also has served as a director of the
State, Local and Intergovernmental Center at Harvard University and the
MIT/Harvard University Joint Center for Urban Studies.
Mr. Fix has over 42 years of management experience with Allied Stores
Corporation, a retail holding company. Most recently, he served as Senior Vice
President of Allied Stores Corporation from 1987 until his retirement in
February of 1993. He also served as Chairman and Chief Executive Officer of The
Bon Marche, a subsidiary of Allied Stores Corporation, from 1980 until his
retirement. He currently serves as a director of one other publicly held
company, Vans, Inc., and several privately held companies.
Mr. Hansberger is Chairman of the Board of Directors and Chief Executive
Officer of Futura Corporation and its several subsidiaries and affiliates. Mr.
Hansberger was a founder of Boise Cascade Corporation and served as President,
Chief Executive Officer and Chairman of the Board of Directors from 1957 to
1972. He currently serves as a director of two other publicly held companies,
T.J. International, Inc. and MK Gold Corporation, and several privately held
companies.
Mr. Mabry served as Executive Vice President of Owens-Corning Fiberglas
Corporation from 1986 until his retirement in 1990. Mr. Mabry was a Senior Vice
President of Owens-Corning from 1980 to 1986. He served as Vice President of the
Owens-Corning Insulation Operating Division from 1976 to 1980 and as Vice
President of the Owens-Corning Home Building Products Division from 1969 to
1976.
Mr. Mellor served as the Executive Vice President and Chief Administrative
Officer, and as a director of, Di Giorgio Corporation from 1987 to 1990. He
joined Di Giorgio Corporation in 1976. Mr. Mellor has been Of Counsel with the
law firm of Gibson, Dunn & Crutcher LLP from 1991 to the present.
Mr. O'Neill is the founder of O'Neill Enterprises, Inc., a residential
development company, and has served as its President since 1989. He previously
founded River Run Development Company in 1979, which received the Award for
Excellence from the Urban Land Institute in 1990 for its planned community
development of River Run in Boise, Idaho. Mr. O'Neill has served as a director
of various local and national economic and urban development organizations,
including the MIT/Harvard University Joint Center for Urban Studies. He is a
member of the Urban Land Institute, a director of the Boise Area Chamber of
Commerce, a trustee of Albertson College of Idaho, and is currently serving as a
director of one other publicly held company, Idaho Power Company.
25
<PAGE>
UNDERWRITING
The names of the Underwriters of the shares of Common Stock offered hereby
and the aggregate number of shares which each has severally agreed to purchase
from the Company, subject to the terms and conditions specified in the
Underwriting Agreement, are as follows:
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- --------------------------------------------------------------------------- -----------------
<S> <C>
Dillon, Read & Co. Inc.....................................................
Piper Jaffray Inc..........................................................
--------
Total................................................................ 2,000,000
--------
--------
</TABLE>
The Managing Underwriters are Dillon, Read & Co. Inc. and Piper Jaffray Inc.
If any shares of Common Stock offered hereby are purchased by the
Underwriters, all such shares will be so purchased. The Underwriting Agreement
contains certain provisions whereby if any Underwriter defaults in its
obligation to purchase such shares and the aggregate obligations of the
Underwriters so defaulting do not exceed 10% of the shares offered hereby, the
remaining Underwriters, or some of them, must assume such obligations.
The shares of Common Stock offered hereby are being initially offered by the
several Underwriters for sale at the price set forth on the cover page hereof,
or at such price less a concession not to exceed $ per share on sales to
certain dealers. The Underwriters may allow, and such dealers may reallow, a
concession not to exceed $ per share on sales to certain other dealers. The
offering of the shares is made for delivery when, as, and if accepted by the
Underwriters and subject to prior sale and to withdrawal, cancellation, or
modification of the offer without notice. The Underwriters reserve the right to
reject any order for the purchase of the shares. After the shares are released
for sale to the public, the public offering price, the concession, and the
reallowance may be changed by the Managing Underwriters.
The Company has granted to the Underwriters an option to purchase up to an
additional 300,000 shares of Common Stock on the same terms per share. The
Underwriters may exercise such option on or before the thirtieth day from the
date of the public offering of the shares offered hereby, and only to cover
over-allotments of shares of Common Stock offered hereby. To the extent the
Underwriters exercise such option, each of the Underwriters will be obligated,
subject to certain conditions, to purchase approximately the number of
additional shares of Common Stock proportionate to such Underwriter's initial
commitment.
The Company and its officers and directors have agreed not to offer, sell,
contract to sell, grant any option to sell, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or securities convertible into or
exchangeable or exercisable for any shares of Common Stock or permit the
registration of any shares of Common
26
<PAGE>
Stock for a period of 90 days after the date of this Prospectus, without the
prior written consent of Dillon, Read & Co. Inc., except that the Company may,
without such consent, (i) grant options pursuant to the Company's director and
employee benefit plans, (ii) register and sell shares of Common Stock pursuant
to this Offering, (iii) issue Common Stock pursuant to the exercise of stock
options outstanding on the date of the Prospectus or issued pursuant to the
foregoing clause (i) and (iv) issue Common Stock and Series C Junior
Participating Cumulative Preferred Stock pursuant to its obligations under the
Rights Plan.
The Company has agreed in the Underwriting Agreement to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.
Each of the Managing Underwriters has, from time to time, provided
investment banking and other financial advisory services to the Company, for
which each has received customary fees.
In connection with this Offering, certain Underwriters and selling group
members or their affiliates may engage in passive market making transactions in
the Common Stock on the Nasdaq National Market in accordance with Rule 10b-6A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Passive market making consists of, among other things, displaying bids on the
Nasdaq limited by the bid prices of independent market makers and purchases
limited by such prices and effected in response to order flow. Net purchases by
a passive market maker on each day are limited to a specified percentage of the
passive market maker's average daily trading volume in the Common Stock during a
specified prior period and all possible market making activity must be
discontinued when such limit is reached. Passive market making may stabilize the
market price of the Common Stock at a level above that which might otherwise
prevail and, if commenced, may be discontinued at any time.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Gibson, Dunn & Crutcher LLP, San Francisco,
California. Certain legal matters related to this Offering will be passed upon
for the Underwriters by Cahill Gordon & Reindel, a partnership including a
professional corporation, New York, New York. Robert E. Mellor, a director of
the Company, is Of Counsel with Gibson, Dunn & Crutcher LLP and, as of May 1,
1996, owned 10,000 shares of the Common Stock and options to purchase 16,500
shares of the Common Stock.
EXPERTS
The financial statements and schedules included or incorporated by reference
in this Prospectus and elsewhere in the Registration Statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Exchange Act and
in accordance therewith, files annual and quarterly reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information may be
inspected and copied at the Commission's Public Reference Section, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, as well as at the Commission's
Regional Offices at 7 World Trade Center, 13th Floor, New York, New York 10048;
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Common Stock of the Company is quoted on the Nasdaq National Market. Reports and
other information concerning the Company may be inspected at the National
Association of Securities Dealers, Inc. at 1735 K Street, N.W. Washington, D.C.
20006.
A registration statement on Form S-3 with respect to the Common Stock
offered hereby (the "Registration Statement") has been filed with the Commission
under the Securities Act. This Prospectus does not contain all of the
information contained in such Registration Statement and the exhibits and
schedules thereto, certain portions
27
<PAGE>
of which have been omitted pursuant to the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules thereto. Statements contained in this Prospectus
regarding the contents of any contract or any other documents are not
necessarily complete and, in each instance, reference is hereby made to the copy
of such contract or document filed as an exhibit to the Registration Statement.
The Registration Statement, including exhibits thereto, may be inspected without
charge at the Commission's principal office in Washington, D.C., and copies of
all or any part thereof may be obtained from the Public Reference Section,
Securities and Exchange Commission, Washington, D.C., 20549, upon payment of the
prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed or to be filed with the Commission under the
Exchange Act are hereby incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended December 31,
1995;
(b) The sections entitled "Executive Compensation and Other Information"
(other than the Compensation Committee Report on Executive Compensation),
"Certain Relationships and Other Transactions" and "Security Ownership of
Certain Beneficial Owners" contained in the Company's Proxy Statement for its
Annual Meeting of Stockholders on April 30, 1996;
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996, including all material incorporated by reference therein;
(d) The Company's Current Report on Form 8-K, filed with the Commission on
April 12, 1995, and the amendment thereto on Form 8-K/A, filed with the
Commission on May 4, 1995.
(e) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A (No. 0-19335), filed with the Commission on
June 6, 1991.
(f) The description of certain rights attaching to the Common Stock to
purchase Series C Junior Participating Cumulative Preferred Stock contained in
the Company's Registration Statement on Form 8-A (No. 0-19335), filed with the
Commission on August 3, 1993.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this Offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the documents that have been
incorporated by reference herein (not including exhibits to such documents
unless such exhibits are specifically incorporated by reference herein or into
such documents). Such request may be directed to BMC West Corporation,
Attention: Ellis C. Goebel, 1475 Tyrell Lane, Boise, Idaho 83706, telephone
(208) 331-4410.
28
<PAGE>
BMC WEST CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Public Accountants................................................................... F-2
Audited Financial Statements:
Statements of Income for the years ended December 28, 1993 and December 31, 1994 and 1995................ F-3
Balance Sheets at December 31, 1994 and 1995............................................................. F-4
Statements of Stockholders' Equity for the years ended December 28, 1993 and December 31, 1994 and
1995.................................................................................................... F-5
Statements of Cash Flows for the years ended December 28, 1993 and December 31, 1994
and 1995................................................................................................ F-6
Notes to the Financial Statements........................................................................ F-7
Unaudited Financial Statements:
Unaudited Condensed Statements of Income for the three months ended March 31, 1995
and 1996................................................................................................ F-15
Condensed Balance Sheets at December 31, 1995 and March 31, 1996 (unaudited)............................. F-16
Unaudited Condensed Statements of Cash Flows for the three months ended March 31, 1995
and 1996................................................................................................ F-17
Notes to the Unaudited Condensed Financial Statements.................................................... F-18
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
BMC West Corporation:
We have audited the accompanying balance sheets of BMC West Corporation (a
Delaware corporation) as of December 31, 1994 and 1995, and the related
statements of income, stockholders' equity and cash flows for the years ended
December 28, 1993 and December 31, 1994 and 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of BMC West Corporation as of
December 31, 1994 and 1995, and the results of its operations and cash flows for
the years ended December 28, 1993 and December 31, 1994 and 1995 in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boise, Idaho
January 30, 1996
F-2
<PAGE>
BMC WEST CORPORATION
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 28, 1993 AND DECEMBER 31, 1994 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
----------------------------------------
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net sales............................................................... $ 399,597 $ 547,109 $ 630,201
Cost of sales........................................................... 315,693 427,951 492,028
------------ ------------ ------------
Gross profit............................................................ 83,904 119,158 138,173
Selling, general and administrative expense............................. 65,619 91,203 116,353
Other income, net....................................................... 948 1,529 1,601
------------ ------------ ------------
Income from operations.................................................. 19,233 29,484 23,421
Interest expense........................................................ 4,554 6,486 10,746
------------ ------------ ------------
Income before income taxes.............................................. 14,679 22,998 12,675
Income taxes............................................................ 5,888 8,739 4,910
------------ ------------ ------------
Net income.............................................................. $ 8,791 $ 14,259 $ 7,765
------------ ------------ ------------
------------ ------------ ------------
Net income per common and common equivalent share....................... $ 1.14 $ 1.62 $ 0.79
------------ ------------ ------------
------------ ------------ ------------
Weighted average number of common and common equivalent shares
outstanding............................................................ 7,707,986 8,798,374 9,751,547
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
BMC WEST CORPORATION
BALANCE SHEETS
AT DECEMBER 31, 1994 AND 1995
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1994 1995
------------- -------------
<S> <C> <C>
Current assets
Cash............................................................................. $ 5,173 $ 6,004
Receivables, net................................................................. 53,825 65,820
Inventories...................................................................... 65,910 66,506
Deferred income tax benefit...................................................... 1,307 1,668
Prepaid expenses................................................................. 1,411 1,275
------------- -------------
Total current assets......................................................... 127,626 141,273
Property and equipment, net........................................................ 67,684 96,403
Deferred loan costs................................................................ 2,247 2,440
Goodwill, net...................................................................... 19,354 18,421
Other.............................................................................. 5,539 6,433
------------- -------------
Total assets................................................................. $ 222,450 $ 264,970
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt................................................ $ 31 $ 129
Current redemption requirement on Class B preferred stock........................ 1,000 1,000
Notes due for acquisitions....................................................... 10,665 --
Accounts payable................................................................. 30,638 29,383
Accrued compensation expense..................................................... 4,897 4,205
Sales tax payable................................................................ 2,104 2,657
Other accrued expenses........................................................... 2,090 3,703
------------- -------------
Total current liabilities.................................................... 51,425 41,077
Long-term debt, net of current portion............................................. 76,411 121,120
Deferred income taxes.............................................................. 3,360 3,161
Other long-term liabilities........................................................ 1,327 1,725
Class B preferred stock, mandatory redemption requirements of $1,000,000 in 1996
and $2,000,000 in 1997............................................................ 2,925 1,960
Stockholders' equity
Common stock, $0.001 par value, 20,000,000 shares authorized; 9,112,417 and
9,483,229 shares outstanding at December 31, 1994 and 1995, respectively........ 9 9
Additional paid-in capital....................................................... 57,994 59,188
Retained earnings................................................................ 28,999 36,730
------------- -------------
Total stockholders' equity................................................... 87,002 95,927
------------- -------------
Total liabilities, redeemable preferred stock and stockholders' equity....... $ 222,450 $ 264,970
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
BMC WEST CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 28, 1993 AND DECEMBER 31, 1994 AND 1995
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------ PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balance, December 28, 1992.................................. 4,927 $ 5 $ 27,874 $ 6,020 $ 33,899
Net income.................................................. -- -- -- 8,791 8,791
Accretion of redeemable preferred stock..................... -- -- -- (34) (34)
Accrual of stock option compensation........................ -- -- 79 -- 79
Stock issued for acquisition................................ 300 -- 6,757 -- 6,757
Stock options exercised..................................... 5 -- 18 -- 18
Three-for-two stock split................................... 2,616 3 -- (3) --
----- -- ----------- ----------- ---------
Balance, December 28, 1993.................................. 7,848 8 34,728 14,774 49,510
Net income.................................................. -- -- -- 14,259 14,259
Accretion of redeemable preferred stock..................... -- -- -- (34) (34)
Accrual of stock option compensation........................ -- -- 216 -- 216
Stock issued for acquisitions............................... 1,242 1 22,955 -- 22,955
Stock options exercised..................................... 22 -- 95 -- 96
----- -- ----------- ----------- ---------
Balance, December 31, 1994.................................. 9,112 9 57,994 28,999 87,002
Net income.................................................. -- -- -- 7,765 7,765
Accretion of redeemable preferred stock..................... -- -- -- (34) (34)
Accrual of stock option compensation........................ -- -- 213 -- 213
Stock issued for acquisitions............................... 365 -- 938 -- 938
Stock options exercised..................................... 6 -- 43 -- 43
----- -- ----------- ----------- ---------
Balance, December 31, 1995.................................. 9,483 $ 9 $ 59,188 $ 36,730 $ 95,927
----- -- ----------- ----------- ---------
----- -- ----------- ----------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
BMC WEST CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 28, 1993 AND DECEMBER 31, 1994 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
-------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income............................................................... $ 8,791 $ 14,259 $ 7,765
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation and amortization.......................................... 3,474 5,551 9,192
Deferred income taxes.................................................. (527) 135 (361)
(Gain) loss on sale of assets.......................................... 60 (133) (40)
Stock option compensation.............................................. 79 216 213
Provision for other long-term liabilities.............................. 995 332 398
Changes in working capital items net of effects of acquisitions and
divestitures............................................................ (7,905) (766) 5,099
Other.................................................................... 512 (1,636) (1,007)
----------- ----------- -----------
Net cash provided by operating activities.......................... 5,479 17,958 21,259
----------- ----------- -----------
Cash flows from investing activities
Purchase of property and equipment....................................... (8,649) (15,072) (16,856)
Payment for acquisitions................................................. (12,347) (21,515) (36,363)
Sale of property and equipment........................................... 125 285 400
----------- ----------- -----------
Net cash used in investing activities.............................. (20,871) (36,302) (52,819)
----------- ----------- -----------
Cash flows from financing activities
Issuance of debt......................................................... 25,000 -- 50,000
Principal payments on debt............................................... (5,402) (1,081) (11,665)
Borrowings under revolving credit agreements............................. 112,460 186,144 223,360
Repayments under revolving credit agreements............................. (112,481) (162,874) (228,470)
Acquired obligations retired............................................. (2,108) -- --
Financing costs.......................................................... (1,630) (208) (795)
Additional capital lease obligations..................................... 454 -- --
Capital lease payments................................................... (26) (136) (83)
Other.................................................................... 18 95 44
----------- ----------- -----------
Net cash provided by financing activities.......................... 16,285 21,940 32,391
----------- ----------- -----------
Net increase in cash..................................................... 893 3,596 831
Cash, beginning of period................................................ 684 1,577 5,173
----------- ----------- -----------
Cash, end of period...................................................... $ 1,577 $ 5,173 $ 6,004
----------- ----------- -----------
----------- ----------- -----------
Supplemental cash flow information
Cash paid during the year for--
Interest, net of interest capitalized.................................. $ 4,008 $ 6,358 $ 9,238
Income taxes........................................................... 6,247 10,659 3,224
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
BMC WEST CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS. BMC West Corporation is a regional distributor of
building materials in the western United States, selling primarily to
professional contractors, as well as to advanced, service-oriented consumers.
The Company also conducts value-added activities which include pre-hanging
doors, fabricating roof trusses, pre-assembling windows and pre-cutting lumber
to meet customer specifications. The Company has 52 building materials centers
located in Arizona, California, Colorado, Idaho, Montana, Nevada, Oregon, Texas,
Utah and Washington.
CONSOLIDATION. During 1993, the Company dissolved its wholly-owned
subsidiary and merged all the subsidiary's assets and liabilities into the
Company's accounts. The financial statements for all periods presented include
the accounts of the Company and its subsidiary to date of dissolution. All
intercompany transactions and balances have been eliminated.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.
CHANGE IN YEAR-END. To facilitate industry comparisons, the Company elected
in 1994 to change its fiscal year-end from December 28 to December 31. This
change did not have a material impact on the comparability of the Company's
results of operations or cash flows for any of the three years presented.
STOCK SPLIT. In February 1994, the Company declared a three-for-two stock
split, effected in the form of a stock dividend, paid March 4, 1994 to
shareholders of record as of February 25, 1994. All per share amounts and
weighted average number of common and common equivalent shares presented in this
Prospectus reflect the effect of the stock split. The stock split has been
reflected as a 1993 transaction in the statement of stockholders' equity.
ACQUISITIONS. Businesses acquired in 1993, 1994 and 1995 were accounted for
using the purchase method of accounting. Under this accounting method, the value
of the consideration was allocated to the assets acquired and liabilities
assumed based on the estimated fair values at date of acquisition. Any excess of
the purchase price over the estimated fair value of the net assets acquired and
liabilities assumed was recorded as goodwill. Operating results of the acquired
businesses are included in the statements of income from date of acquisition.
NET INCOME PER COMMON SHARE. Net income per common share is determined by
dividing net income, after deducting the accretion of the discount on redeemable
preferred stock, by the weighted average of common and common equivalent shares.
The weighted average number of common and common equivalent shares includes
shares issued, shares issuable under dilutive stock options and shares
contingently issuable in connection with acquisitions. The contingently issuable
shares are equivalent to the number of additional shares (18,372) that would
have been issued at December 31, 1995 as if that were the date on which the
stock price guarantees were measured.
Fully diluted net income per share is not presented as the dilution was not
significant in 1993 and 1995 and not dilutive in 1994.
INCOME TAXES. Deferred income taxes are provided to reflect temporary
differences between the financial and tax bases of assets and liabilities using
presently enacted tax rates and laws.
INVENTORIES. Inventories consist principally of merchandise purchased for
resale and are stated at the lower of average cost or market.
PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost. Major
additions and improvements are capitalized while maintenance and repairs which
do not increase the useful life of the property are expensed as incurred.
F-7
<PAGE>
BMC WEST CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The net book value of property sold or retired is removed from the asset and
related depreciation accounts, and the net gain or loss is included in the
determination of income or loss.
The provision for depreciation is computed using the straight-line method.
The estimated useful lives are fifteen to thirty years for buildings and
improvements, seven to ten years for machinery and fixtures and three to seven
years for handling and delivery equipment.
DEFERRED LOAN COSTS. Loan costs are capitalized upon the issuance of
long-term debt and amortized over the life of the related debt using the
effective interest rate method. Amounts capitalized were $1,630,000 in 1993,
$208,000 in 1994 and $794,000 in 1995. Interest expense includes amortization of
deferred loan costs of $321,000 in 1993, $530,000 in 1994 and $602,000 in 1995.
GOODWILL. Goodwill is amortized on a straight-line basis over 30 years.
Accumulated amortization of goodwill was $221,047 at December 31, 1994 and
$941,000 at December 31, 1995.
Annually, the Company reviews the recoverability of goodwill. The
measurement of possible impairment is based primarily on the ability to recover
the balance of the goodwill from expected future operating cash flows on an
undiscounted basis. In management's opinion, no such impairment existed at
December 31, 1995.
OTHER ASSETS. The majority of other assets consist of non-compete covenants
arising from acquisitions and investments in cooperative supplier organizations.
The non-compete covenants are amortized over the life of related agreements
(three to five years).
CASH AND CASH EQUIVALENTS. For purpose of the statement of cash flows, the
Company considers all highly liquid debt instruments that had a maturity of
three months or less at the date of purchase to be cash equivalents.
FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) STATEMENTS. In 1995, the FASB
issued Statement 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR
LONG-LIVED ASSETS TO BE DISPOSED OF. The Company will adopt this statement in
1996. The FASB also issued Statement 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION. The Company is not required to change its accounting for
stock-based compensation, but will make additional disclosure in its 1996
financial statements. Neither statement is expected to have any material effect
on the Company's financial position or results of operations.
2. ACQUISITIONS
In 1995, the Company completed two acquisitions involving four building
materials centers. These centers are located in Abilene, New Braunfels, and two
in Austin, Texas. The aggregate purchase price for these centers was $36,363,000
consisting entirely of cash.
In 1994, the Company completed eight acquisitions involving a net of ten
building materials centers. These centers are located in Kileen and Hurst,
Texas; Phoenix, Arizona; Grand Junction, Denver, Greeley, Pueblo and Colorado
Springs, Colorado; and Issaquah, Kent and Vancouver, Washington. The aggregate
purchase price for these centers was $55,135,000, consisting of $21,515,000 in
cash, 1,242,133 shares of the Company's common stock and notes payable of
$10,665,000 plus the assumption of certain liabilities. The common stock issued
in connection with certain of the acquisitions was guaranteed by the Company to
retain a value of between $20.00 and $25.25 per share by specified dates. In
1995, 364,975 shares were issued in connection with prior year acquisitions.
In 1993, the Company completed three acquisitions, involving seven building
materials centers. Five of these centers are located in central Texas, one in
Great Falls, Montana and one in Twin Falls, Idaho. The aggregate purchase price
for these centers was $19,104,000, consisting of $12,347,000 in cash and 300,000
shares of the Company's common stock plus the assumption of certain liabilities.
F-8
<PAGE>
BMC WEST CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2. ACQUISITIONS (CONTINUED)
The following summarized unaudited pro forma results of operations assume
the acquisitions occurred as of the beginning of 1994. The pro forma data has
been prepared for comparative purposes only. It does not purport to be
indicative of the results of operations that would have resulted had the
acquisitions been consummated at the beginning of the years presented, or that
may occur in the future (in thousands, except per share amounts):
<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Net sales....................................................................... $ 715,478 $ 651,976
Net income...................................................................... 19,674 8,001
Net income per share............................................................ 2.07 0.82
</TABLE>
3. LONG-TERM DEBT
Long-term debt consisted of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1994 1995
--------- ----------
<S> <C> <C>
Revolving credit agreement borrowings............................................ $ 31,230 $ 26,120
8.10% unsecured senior notes..................................................... 25,000 25,000
9.18% unsecured senior notes..................................................... -- 50,000
10% unsecured senior subordinated notes.......................................... 20,000 20,000
Capital lease obligations........................................................ 212 129
--------- ----------
76,442 121,249
Less current portion............................................................. 31 129
--------- ----------
$ 76,411 $ 121,120
--------- ----------
--------- ----------
</TABLE>
In 1995, the Company's borrowing capacity under its revolving credit
agreement was increased from $60,000,000 to $70,000,000, limited by eligible
receivables and inventories. Also, the agreement's expiration date was extended
from 1996 to 1998. Interest is due monthly at prime to prime plus 0.25% or LIBOR
plus 0.625% to 1.625%. A fee of .25% - .375% per annum is charged on the unused
portion of the loan commitment. At year-end, the Company had $43,880,000 of
unborrowed capacity under this agreement.
The 8.10% unsecured senior notes issued in 1993 require annual principal
payments beginning in 1998 through 2000. The notes may be redeemed, in whole or
in part, at the option of the Company at any time, at the principal amount plus
accrued interest and a make-whole payment. The make-whole payment is due only if
the interest rate (as measured by agreement with the creditor) at the date of
redemption is less than 8.10%. Interest is payable semi-annually on April 30 and
October 31. In connection with the extension of the revolving credit agreement,
the collateral for the 8.10% senior notes was eliminated.
In March 1995, the Company issued $50 million of 9.18% unsecured senior
notes due in 2006. The notes require annual principal payments beginning in 2001
through 2006. The notes may be redeemed, in whole or in part, at the option of
the Company at any time, at the principal amount plus accrued interest and a
make-whole payment. The make-whole payment is due only if the interest rate (as
measured by agreement with the creditor) at the date of redemption is less than
9.18%. Interest is payable semi-annually on April 30 and October 31.
The 10% senior subordinated notes are due in 1999, but may be redeemed in
whole or in part, at the option of the Company, at any time after December 14,
1995, at the principal amount plus accrued interest. Interest is payable
monthly.
The scheduled principal payments of long-term debt are $129,000 in 1996,
$-0- in 1997, $34,453,000 in 1998, $28,333,000 in 1999, $8,334,000 in 2000 and
$50,000,000 thereafter.
The agreements related to the above borrowings contain financial covenants
and restrictions which require the Company to maintain a minimum net worth,
debt-service coverage, debt-to-equity ratio and current ratio, and limit
additional debt, stock repurchases, dividend payments, capital asset additions
and retirements, liens on assets,
F-9
<PAGE>
BMC WEST CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. LONG-TERM DEBT (CONTINUED)
stock ownership changes and business combinations. Currently, $15,408,000 of
retained earnings is available for the payment of common dividends under these
agreements of which a maximum of $1,941,000 may be paid in fiscal year 1996.
4. CLASS B PREFERRED STOCK
In 1987, the Company authorized and issued 50,000 shares of Class B
preferred stock with a total mandatory redemption requirement of $5,000,000, due
$1,000,000 annually through 1996 and $2,000,000 in 1997. As of December 31,
1995, 30,000 shares of Class B preferred stock remain outstanding.
Class B preferred stock has a preference in liquidation of $100 per share,
$3,000,000 in the aggregate at December 31, 1995. The difference between the
carrying value of the preferred stock and its redemption value is being added to
the preferred stock account ratably to 1997 through a charge to retained
earnings.
5. INCOME TAXES
Income taxes for the years ended December 28, 1993 and December 31, 1994 and
1995 consisted of the following (in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Current
Federal.................................................................. $ 5,548 $ 7,710 $ 4,648
State.................................................................... 867 1,156 727
--------- --------- ---------
6,415 8,866 5,375
--------- --------- ---------
Deferred
Federal.................................................................. (469) (110) (404)
State.................................................................... (58) (17) (61)
--------- --------- ---------
(527) (127) (465)
--------- --------- ---------
$ 5,888 $ 8,739 $ 4,910
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of the statutory Federal income tax rate to the rate
provided in the statements of income follows:
<TABLE>
<CAPTION>
1993 1994 1995
---------- ---------- ----------
<S> <C> <C> <C>
Statutory rate............................................................... 34.4% 35.0% 35.0%
State income taxes........................................................... 3.5 3.3 3.3
Other........................................................................ 2.2 (.3) .4
--- --- ---
40.1% 38.0% 38.7%
--- --- ---
--- --- ---
</TABLE>
F-10
<PAGE>
BMC WEST CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES (CONTINUED)
The components of deferred income taxes included in the Company's year-end
Balance Sheets were as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Deferred tax assets
Tax basis in excess of book basis of acquired assets............................. $ 877 $ 877
Inventories, tax in excess of book basis......................................... 1,169 1,392
Reserves not yet deductible for tax.............................................. 938 1,099
Other............................................................................ 270 716
--------- ---------
Total deferred tax assets...................................................... 3,254 4,084
Less valuation allowance....................................................... (877) (877)
--------- ---------
Net deferred tax assets........................................................ 2,377 3,207
--------- ---------
Deferred tax liabilities
Tax in excess of book depreciation............................................... 3,910 4,105
Deferred costs deducted for taxes................................................ 520 595
--------- ---------
Total deferred tax liabilities................................................. 4,430 4,700
--------- ---------
$ (2,053) $ (1,493)
--------- ---------
--------- ---------
Classified as
Deferred income tax benefit (current assets)..................................... $ 1,307 $ 1,668
Deferred income taxes (long-term liabilities).................................... (3,360) (3,161)
--------- ---------
$ (2,053) $ (1,493)
--------- ---------
--------- ---------
</TABLE>
The valuation allowance relates to the difference in tax and book basis of
the land acquired in conjunction with the initial acquisition of the Company.
6. STOCKHOLDERS' EQUITY
Under the shareholder rights plan adopted in July 1993, holders of common
stock received a distribution of one right to purchase common stock for each
common share held. The rights will generally 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. Ten days after a person acquires 15% or more of the
Company's outstanding voting securities (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 $33.33 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, expire in 2003 and may be redeemed by the
Company at a price of two-thirds of a cent per right at any time prior to the
tenth day after an individual or group acquired 15% of the Company's voting
stock, unless extended. Additional details are set forth in the Rights Plan
filed with the Securities and Exchange Commission on August 3, 1993.
F-11
<PAGE>
BMC WEST CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
6. STOCKHOLDERS' EQUITY (CONTINUED)
The Company has various plans, all approved by the shareholders, under which
the Compensation Committee of the Board of Directors may grant options to
purchase common stock to employees, officers and directors. The options vest
over various periods up to ten years. Information relating to all common shares
under option follows:
<TABLE>
<CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Activity for year--
Outstanding at beginning of year................. 343,533 427,241 472,482
Granted.......................................... 101,414 88,415 79,385
Exercised........................................ (8,601) (21,410) (5,837)
Forfeited........................................ (9,105) (21,764) (3,744)
--------------- --------------- ---------------
Outstanding at end of year..................... 427,241 472,482 542,286
--------------- --------------- ---------------
--------------- --------------- ---------------
At year-end--
Exercisable...................................... 209,304 377,204 443,818
Shares reserved.................................. 981,399 959,989 954,152
--------------- --------------- ---------------
--------------- --------------- ---------------
Exercise price per share
Options granted.................................. $8.67 - 16.17 $17.00 - 29.75 $13.50 - 14.25
Options exercised................................ 1.21 - 5.67 1.21 - 16.17 1.21 - 16.17
Options outstanding.............................. 1.21 - 5.67 1.21 - 29.75 1.21 - 29.75
</TABLE>
Some of the options were granted at exercise prices below fair market value.
The difference is being recognized ratably over the vesting period as
compensation expense and was $79,000 in 1993, $216,000 in 1994 and $213,000 in
1995. At December 31, 1995, options to purchase 42,887 remain outstanding that
were granted at less than fair market value. All other options were granted at
the fair market value of the underlying common stock on the date of grant.
7. RETIREMENT PLANS
The Company has a Savings and Retirement Plan for its salaried and certain
of its hourly employees whereby the eligible employees may contribute a
percentage of their salaries to a trust, i.e. a 401(k) plan. The Company also
makes contributions to the trust based on a percentage of the contributions made
by the participating employees. The Company's contributions are charged against
operations and were $343,000 in 1993, $544,000 in 1994 and $703,000 in 1995.
In 1993, the Company established a supplemental retirement plan for selected
key management employees and directors. The cost is based on the Company
achieving certain operating earnings levels. The Company charged operations for
$377,000 in 1993, $597,000 in 1994 and $414,000 in 1995 pursuant to this plan.
In 1994, the Company purchased company-owned life insurance on the participants
in order to have a funding mechanism for this plan. Retirement payments will be
paid to the participants or their beneficiary over a 15-year period subsequent
to retirement or death.
The Company does not provide any other postretirement benefits for its
employees.
8. RELATED PARTY TRANSACTIONS
The Company pays a management fee to MDC Management Company (MDC), of which
the Chairman of the Company is a managing partner. These management fees were
$195,000 in 1993 and 1994 and $155,000 in 1995.
F-12
<PAGE>
BMC WEST CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (Continued)
9. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES. The Company leases real property, vehicles and office
equipment under operating leases. Rental expense was $1,806,000 in 1993,
$2,496,000 in 1994 and $3,871,000 in 1995. Certain of the leases are
noncancellable and have minimum lease payment requirements of $3,067,000 in
1996, $2,718,000 in 1997, $1,725,000 in 1998, $1,143,000 in 1999 and $729,000 in
2000.
LEGAL PROCEEDINGS. The Company is involved in litigation and other legal
matters arising in the normal course of business. In the opinion of management,
the Company's recovery or liability, if any, under any of these matters will not
have a material effect on the Company's financial position, liquidity or results
of operations.
CONCENTRATIONS OF CREDIT RISK. The Company sells building materials,
primarily to professional contractors, as well as to advanced, service oriented
consumers through its 52 building materials centers located in ten western
states. No one customer exceeds 2% of net sales. Because the customers are
dispersed throughout the Company's various markets, the Company's credit risk to
any one customer or state economy is not considered significant. The Company
performs on-going credit evaluations of its customers and provides reserves for
potential losses.
10. OTHER DATA
Other income consisted of the following (in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ----------
<S> <C> <C> <C>
Interest income, primarily from delinquent accounts receivable...... $ 863 $ 1,159 $ 1,251
Gain (loss) on sale of assets....................................... (79) 133 40
Other............................................................... 164 237 310
--------- --------- ----------
$ 948 $ 1,529 $ 1,601
--------- --------- ----------
--------- --------- ----------
</TABLE>
Receivables consisted of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1994 1995
---------- ---------
<S> <C> <C>
Trade receivables............................................................... $ 50,843 $ 64,613
Allowance for doubtful accounts................................................. (932) (1,426)
---------- ---------
49,911 63,187
Other........................................................................... 3,914 2,633
---------- ---------
$ 53,825 $ 65,820
---------- ---------
---------- ---------
</TABLE>
Property and equipment consisted of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1994 1995
--------- ----------
<S> <C> <C>
Land............................................................................ $ 15,922 $ 23,898
Buildings and improvements...................................................... 34,556 53,908
Machinery and fixtures.......................................................... 11,689 18,226
Handling and delivery equipment................................................. 13,813 18,981
Construction in progress........................................................ 6,243 1,936
--------- ----------
82,223 116,949
Less accumulated depreciation................................................... (14,539) (20,546)
--------- ----------
$ 67,684 $ 96,403
--------- ----------
--------- ----------
</TABLE>
Property and equipment at December 31, 1995 includes $309,000 of assets and
$242,000 of accumulated depreciation arising from capital leases.
F-13
<PAGE>
BMC WEST CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
10. OTHER DATA (CONTINUED)
Changes in working capital items, net of acquisitions and divestitures, in
the statement of cash flows is as follows (in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ----------
<S> <C> <C> <C>
(Increase) decrease in receivables.................................. $ (12,438) $ 4,544 $ (4,316)
(Increase) decrease in inventories.................................. (6,413) (3,868) 9,994
(Increase) decrease in prepaid expenses and deferred income tax
benefit............................................................ (85) (555) 229
Increase (decrease) in accounts payable and accrued expenses........ 11,031 (887) (808)
--------- --------- ----------
$ (7,905) $ (766) $ 5,099
--------- --------- ----------
--------- --------- ----------
</TABLE>
11. FINANCIAL INSTRUMENTS
The book value compared with the fair value of financial instruments at
December 31 follows (in thousands):
<TABLE>
<CAPTION>
1994 1995
-------------------- ----------------------
BOOK FAIR BOOK FAIR
VALUE VALUE VALUE VALUE
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Cash and cash equivalents................................. $ 5,173 $ 5,173 $ 6,004 $ 6,004
--------- --------- ---------- ----------
--------- --------- ---------- ----------
Long-term debt:
Variable rate debt...................................... $ 31,230 $ 31,230 $ 26,120 $ 26,120
Fixed rate debt......................................... 45,181 43,324 95,000 95,037
--------- --------- ---------- ----------
$ 76,411 $ 74,554 $ 121,120 $ 121,157
--------- --------- ---------- ----------
--------- --------- ---------- ----------
</TABLE>
The fair value of variable interest rate long-term debt is deemed to
approximate book value.
The fair value of fixed rate debt has been estimated based upon relative
changes in the Company's variable borrowing rates since the date interest rates
were fixed. At December 31, 1995, the Company had no derivative financial
instruments.
F-14
<PAGE>
BMC WEST CORPORATION
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1995 1996
------------ ------------
<S> <C> <C>
Net sales............................................................................. $ 120,519 $ 147,599
Cost of sales......................................................................... 93,282 114,515
------------ ------------
Gross profit.......................................................................... 27,237 33,084
Selling, general and administrative expense........................................... 24,767 29,626
Other income, net..................................................................... 316 737
------------ ------------
Income from operations................................................................ 2,786 4,195
Interest expense...................................................................... 1,959 2,956
------------ ------------
Income before income taxes............................................................ 827 1,239
Income taxes.......................................................................... 323 489
------------ ------------
Net income............................................................................ $ 504 $ 750
------------ ------------
------------ ------------
Net income per common and common equivalent share..................................... $ 0.05 $ 0.08
------------ ------------
------------ ------------
Weighted average number of common and common equivalent shares outstanding............ 9,701,779 9,755,099
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-15
<PAGE>
BMC WEST CORPORATION
CONDENSED BALANCE SHEETS
AT DECEMBER 31, 1995 AND MARCH 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------- ------------
<S> <C> <C>
(UNAUDITED)
Current assets
Cash.............................................................................. $ 6,004 $ 3,862
Receivables, net.................................................................. 65,820 69,817
Inventories....................................................................... 66,506 74,519
Deferred income tax benefit....................................................... 1,668 1,668
Prepaid expenses.................................................................. 1,275 2,438
------------- ------------
Total current assets............................................................ 141,273 152,304
Property and equipment, net......................................................... 96,403 94,964
Deferred loan costs................................................................. 2,440 2,286
Goodwill, net....................................................................... 18,421 18,573
Other............................................................................... 6,433 6,875
------------- ------------
Total assets.................................................................... $ 264,970 $ 275,002
------------- ------------
------------- ------------
Current liabilities
Current portion of long-term debt................................................. $ 129 $ 96
Current redemption requirement on Class B preferred stock......................... 1,000 1,000
Accounts payable.................................................................. 29,383 34,162
Accrued expenses.................................................................. 10,565 9,357
------------- ------------
Total current liabilities....................................................... 41,077 44,615
Long-term debt, net of current portion.............................................. 121,120 127,850
Deferred income taxes............................................................... 3,161 3,161
Other long-term liabilities......................................................... 1,725 1,683
Class B preferred stock............................................................. 1,960 968
Stockholders' equity
Common stock, $0.001 par value, 20,000,000 shares authorized; 9,483,229 and
9,491,183 shares outstanding at December 31, 1995 and March 31, 1996,
respectively..................................................................... 9 9
Additional paid-in-capital........................................................ 59,188 59,242
Retained earnings................................................................. 36,730 37,474
------------- ------------
Total stockholders' equity...................................................... 95,927 96,725
------------- ------------
Total liabilities, redeemable preferred stock and stockholders' equity.......... $ 264,970 $ 275,002
------------- ------------
------------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-16
<PAGE>
BMC WEST CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net income............................................................................... $ 504 $ 750
Adjustments to reconcile net income to cash used in operating activities:
Depreciation and amortization.......................................................... 2,012 2,498
(Gain) loss on sale of assets.......................................................... -- (367)
Changes in working capital items net of effects of acquisitions.......................... (4,125) (8,094)
Other.................................................................................... 192 (813)
--------- ---------
Net cash used in operating activities................................................ (1,417) (6,026)
--------- ---------
Cash flows from investing activities
Purchase of property and equipment....................................................... (4,600) (1,642)
Payment for acquisitions................................................................. (5,367) (1,810)
Sale of property and equipment........................................................... 50 1,639
Purchase of other long-term assets....................................................... (265) --
--------- ---------
Net cash used in investing activities................................................ (10,182) (1,813)
--------- ---------
Cash flows from financing activities
Repayment of notes payable............................................................... (2,664) --
Borrowings under revolving credit agreement.............................................. 48,489 45,830
Repayments under revolving credit agreement.............................................. (79,720) (39,100)
Issuance of debt......................................................................... 50,000 --
Redemption of Class B preferred stock.................................................... (1,000) (1,000)
Financing costs.......................................................................... (782) --
Capital lease payments................................................................... (20) (33)
Other.................................................................................... (71) --
--------- ---------
Net cash provided by financing activities............................................ 14,232 5,697
--------- ---------
Net increase (decrease) in cash............................................................ 2,633 (2,142)
Cash, beginning of period.................................................................. 5,173 6,004
--------- ---------
Cash, end of period........................................................................ $ 7,806 $ 3,862
--------- ---------
--------- ---------
Supplemental cash flow information:
Cash paid during the period for --
Interest, net of interest capitalized.................................................. $ 1,030 $ 1,259
Income taxes........................................................................... $ -- $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-17
<PAGE>
BMC WEST CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules of the Commission. In the opinion
of management, all adjustments necessary to present fairly, the results for the
periods presented have been included herein. 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 Commission, although the Company believes that
the disclosures are adequate to make the information presented not misleading.
These unaudited condensed financial statements should be read in conjunction
with the audited financial statements and notes thereto included elsewhere in
this Prospectus. The results of operations for the periods presented are not
necessarily indicative of the results that might be expected for the fiscal
year.
2. WORKING CAPITAL CHANGES
Changes in working capital items, net of acquisitions, for the three months
ended March 31, 1995 and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
(Increase) decrease in accounts receivable...................................... $ 1,375 $ (2,761)
Increase in inventories......................................................... (2,640) (7,747)
Increase in prepaid expenses.................................................... (251) (1,157)
Increase (decrease) in accounts payable and accrued expenses.................... (3,378) 1,874
Increase in interest payable.................................................... 769 1,697
---------- ----------
$ (4,125) $ (8,094)
---------- ----------
---------- ----------
</TABLE>
3. LONG-TERM DEBT
Long-term debt consisted of the following at (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------- -----------
<S> <C> <C>
Revolving credit agreement borrowings....................................... $ 26,120 $ 32,850
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................................................... 129 96
------------- -----------
121,249 127,946
Less current portion........................................................ (129) (96)
------------- -----------
$ 121,120 $ 127,850
------------- -----------
------------- -----------
</TABLE>
4. 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.
F-18
<PAGE>
[PHOTOGRAPH SHOWS FLATBED TRUCKS LOADED WITH LUMBER.]
BMC West prepares building materials packages and
coordinates on-time delivery to job sites.
[PHOTOGRAPH SHOWS THE OUTSIDE VIEW OF A BMC WEST BUILDING MATERIALS CENTER.]
In its well-maintained facilities, BMC West tailors its product mix and services
to meet the demands of its individual local markets.
[PHOTOGRAPH SHOWS TWO MEN IN DISCUSSION AT HOUSING CONSTRUCTION SITE.]
BMC West's trained and experienced sales personnel
assist contractors with project
design and materials specification.
[PHOTOGRAPH SHOWS MAN OPERATING PIECE OF MACHINERY IN DOOR SHOP.]
Value-added activities, such as pre-hanging doors,
are an important part of BMC West's strategy.
<PAGE>
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus in connection with the offer contained herein, and if given or made,
such information or representation must not be relied upon as having been
authorized by the Company or any Underwriter. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, shares of
Common Stock in any jurisdiction to any person to whom it is not lawful to make
any such offer or solicitation in such jurisdiction or in which the person
making such offer or solicitation is not qualified to do so. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date of this Prospectus or that the information
contained herein is correct as of any time subsequent to its date.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary........................ 3
Risk Factors.............................. 6
Use of Proceeds........................... 8
Capitalization............................ 8
Price Range of Common Stock and Dividend
Policy................................... 9
Selected Financial and Operating Data..... 9
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 11
Business.................................. 15
Management................................ 24
Underwriting.............................. 26
Legal Matters............................. 27
Experts................................... 27
Available Information..................... 27
Incorporation of Certain Documents by
Reference................................ 28
Index to Financial Statements............. F-1
</TABLE>
[LOGO]
------------------------
2,000,000 SHARES
COMMON STOCK
PROSPECTUS
, 1996
---------------------
DILLON, READ & CO. INC.
PIPER JAFFRAY INC.
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates except
for the registration fee and the NASD filing fee.
<TABLE>
<S> <C>
Registration fee...................................................... $ 14,474
NASD filing fee....................................................... 4,698
Nasdaq fee............................................................ 17,500
Blue Sky qualification fees and expenses.............................. 12,000
Printing and engraving expenses....................................... 110,000
Transfer agent and registrar fees..................................... 5,000
Accounting fees and expenses.......................................... 30,000
Legal fees and expenses............................................... 50,000
Miscellaneous......................................................... 16,328
--------
Total............................................................. $260,000
--------
--------
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Registrant's Certificate of Incorporation and Bylaws include provisions
to (i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by
Section 102(b)(7) of the General Corporation Law of Delaware (the "Delaware
Law") and (ii) require the Registrant to indemnify its directors and officers to
the fullest extent permitted by Section 145 of the Delaware Law, including
circumstances in which indemnification is otherwise discretionary. Pursuant to
Section 145 of the Delaware Law, a corporation generally has the power to
indemnify its present and former directors, officers, employees and agents
against expenses incurred by them in connection with any suit to which they are,
or are threatened to be made, a party by reason of their serving in such
positions so long as they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of a corporation, and
with respect to any criminal action, they had no reasonable cause to believe
their conduct was unlawful. The Registrant believes that the provisions are
necessary to attract and retain qualified persons as directors and officers.
These provisions do not eliminate liability for breach of the director's duty of
loyalty to the Registrant or its stockholders, for acts or omissions not in good
faith or involving intentional misconduct or knowing violations of law, for any
transaction from which the director derived an improper personal benefit or for
any willful or negligent payment of any unlawful dividend or any unlawful stock
purchase agreement or redemption. The provisions of the Bylaws further provide
that rights conferred under such Bylaws shall not be deemed to be exclusive of
any other right such persons may have or acquire under any statute, provision of
the Certificate of Incorporation, Bylaws, agreement, vote of stockholders, vote
of disinterested directors or otherwise.
The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
(including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by
reason of the fact that such person is or was a director or officer of the
Registrant or any of its listed enterprises, provided such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Registrant and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The indemnification agreements also set forth certain procedures that will apply
in the event of a claim for indemnification thereunder. The indemnification
agreements and the indemnification provisions discussed above may be
sufficiently broad to permit indemnification of the Registrant's officers and
directors for liabilities arising under the Securities Act of 1933, as amended
(the "Securities Act").
II-1
<PAGE>
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Company and
its officers and directors, and by the Company of the Underwriters, for certain
liabilities arising under the Securities Act or otherwise.
The Registrant has purchased an insurance policy covering the officers and
directors of the Registrant with respect to certain liabilities arising under
the Securities Act or otherwise.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- --------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement.
5.1 Opinion of Gibson, Dunn & Crutcher LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Gibson, Dunn & Crutcher LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-3.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 15, 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 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 Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boise, State of Idaho, on the 14th day of May, 1996.
BMC WEST CORPORATION
By: /s/ DONALD S. HENDRICKSON
--------------------------------------
Donald S. Hendrickson
President and Chief Executive
Officer
(PRINCIPAL EXECUTIVE OFFICER)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Donald S. Hendrickson and Ellis C. Goebel, and
each of them, as his true and lawful attorneys-in-fact and agents with final
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, final power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------ ------------------------------------- --------------
/s/ DONALD S.
HENDRICKSON President, Chief Executive Officer
- ------------------------------------ and Director May 14, 1996
Donald S. Hendrickson (PRINCIPAL EXECUTIVE OFFICER)
/s/ ELLIS C.
GOEBEL Vice President and Treasurer
- ------------------------------------ (PRINCIPAL FINANCIAL OFFICER) May 14, 1996
Ellis C. Goebel
/s/ ROBERT L.
BECCI Vice President and Controller
- ------------------------------------ (PRINCIPAL ACCOUNTING OFFICER) May 14, 1996
Robert L. Becci
/s/ ALEC F.
BECK
- ------------------------------------ Director May 14, 1996
Alec F. Beck
/s/ GEORGE E.
MCCOWN
- ------------------------------------ Director May 14, 1996
George E. McCown
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------ ------------------------------------- --------------
/s/ H. JAMES
BROWN
- ------------------------------------ Director May 14, 1996
H. James Brown
/s/ WILBUR J.
FIX
- ------------------------------------ Director May 14, 1996
Wilbur J. Fix
/s/ ROBERT V.
HANSBERGER
- ------------------------------------ Director May 14, 1996
Robert V. Hansberger
/s/ GUY O.
MABRY
- ------------------------------------ Director May 14, 1996
Guy O. Mabry
/s/ ROBERT E.
MELLOR
- ------------------------------------ Director May 14, 1996
Robert E. Mellor
/s/ PETER S.
O'NEILL
- ------------------------------------ Director May 14, 1996
Peter S. O'Neill
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF DOCUMENT NUMBERED PAGE
------- -------------------------------------------------------------------------------- -------------
<S> <C> <C>
1.1 Form of Underwriting Agreement. ................................................
5.1 Opinion of Gibson, Dunn & Crutcher LLP. ........................................
23.1 Consent of Arthur Andersen LLP. ................................................
23.2 Consent of Gibson, Dunn & Crutcher LLP. Reference is made
to Exhibit 5.1. ...............................................................
24.1 Power of Attorney. Reference is made to page II-3. .............................
</TABLE>
<PAGE>
EXHIBIT 1.1
BMC WEST CORPORATION
2,000,000 Shares
Common Stock
($0.001 Par Value)
UNDERWRITING AGREEMENT
, 1996
<PAGE>
UNDERWRITING AGREEMENT
, 1996
DILLON, READ & CO. INC.
PIPER JAFFRAY INC.
as Managing Underwriters
535 Madison Avenue
New York, New York 10022
Ladies and Gentlemen:
BMC West Corporation (the "COMPANY") proposes to
issue and sell to the underwriters named in SCHEDULE A hereto
(the "UNDERWRITERS") an aggregate of 2,000,000 shares (the
"FIRM SHARES") of Common Stock, $.001 par value (the "COMMON
STOCK"), of the Company. In addition, solely for the purpose
of covering over-allotments, the Company proposes to grant to
the Underwriters the option to purchase from the Company up to
an additional 300,000 shares of Common Stock (the "ADDITIONAL
SHARES"). The Firm Shares and the Additional Shares are
hereinafter collectively sometimes referred to as the "SHARES".
The Shares are described in the Prospectus which is referred to
below.
The Company has filed, in accordance with the
provisions of the Securities Act of 1933, as amended, and the
rules and regulations thereunder (collectively, the "ACT"),
with the Securities and Exchange Commission (the "COMMISSION")
a registration statement on Form S-3, including a prospectus,
relating to the Shares, which incorporates by reference certain
documents which the Company has filed or will file in
accordance with the provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder
(collectively, the "EXCHANGE ACT"). The Company has furnished
to you, for use by the Underwriters and by dealers, copies of
one or more preliminary prospectuses and the documents
incorporated by reference therein (each thereof, including the
documents incorporated therein by reference, a "PRELIMINARY
PROSPECTUS") relating to the Shares. Except where the context
otherwise requires, the registration statement, as amended when
it becomes effective (together with any registration statement
filed pursuant to Rule 462(b) under the Act increasing the size
of the offering registered under the Act), including all
documents filed as a part thereof or incorporated by reference
therein, and including any information contained in a
<PAGE>
-2-
prospectus subsequently filed with the Commission pursuant to
Rule 424(b) under the Act and deemed to be part of the
registration statement at the time of effectiveness pursuant to
Rule 430A under the Act, is herein called the "REGISTRATION
STATEMENT", and the prospectus, including all documents
incorporated therein by reference, in the form filed by the
Company with the Commission pursuant to Rule 424(b) under the
Act or, if no such filing is required, the form of final
prospectus included in the Registration Statement at the time
it became effective, is herein called the "PROSPECTUS".
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE. Upon the basis of the
warranties and representations and the other terms and
conditions herein set forth, the Company agrees to sell to the
respective Underwriters and each Underwriter, severally and not
jointly, agrees to purchase from the Company, the respective
number of Firm Shares set forth opposite the name of such
Underwriter in SCHEDULE A hereto at a purchase price of $
per Share. You shall release the Firm Shares for public sale
promptly after this Agreement becomes effective. You may from
time to time increase or decrease the public offering price
after the initial public offering to such extent as you may
determine.
In addition, the Company hereby grants to the several
Underwriters the option to purchase, and upon the basis of the
warranties and representations and the other terms and
conditions herein set forth, the Underwriters shall have the
right to purchase, severally and not jointly, from the Company,
ratably in accordance with the number of Firm Shares to be
purchased by each of them (subject to such adjustment as you
shall determine to avoid fractiona1 shares), all or a portion
of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the
Firm Shares, at the same purchase price per share to be paid by
the Underwriters to the Company for the Firm Shares. This
option may be exercised at any time (but not more than once) on
or before the thirtieth day following the date hereof, by
written notice from Dillon, Read & Co. Inc. ("DILLON READ") to
the Company. Such notice shall set forth the aggregate number
of Additional Shares as to which the option is being exercised,
and the date and time when the Additional Shares are to be
delivered (such date and time, the "ADDITIONAL TIME OF
PURCHASE"); PROVIDED, HOWEVER, that the additional time of
purchase shall not be earlier than the time of purchase (as
<PAGE>
-3-
defined below) nor earlier than the second business day after
the date on which the option shall have been exercised nor
later than the eighth business day after the date on which the
option shall have been exercised. As used herein "BUSINESS
DAY" shall mean a day on which the New York Stock Exchange is
open for trading. The number of Additional Shares to be sold
to each Underwriter shall be the number which bears the same
proportion to the aggregate number of Additional Shares being
purchased as the number of Firm Shares set forth opposite the
name of such Underwriter on SCHEDULE A hereto bears to the
total number of Firm Shares (subject, in each case, to such
adjustment as you may determine to eliminate fractional
shares).
2. PAYMENT AND DELIVERY. Payment of the purchase
price for the Firm Shares shall be made to the Company by wire
transfer of immediately available funds, against delivery of
the certificates for the Firm Shares to you for the respective
accounts of the Underwriters. Such payment and delivery shall
be made at 10:00 A.M., New York City time, on , 1996
(unless another time shall be agreed to by you and the Company
or unless postponed in accordance with the provisions of
Section 9 hereof). The time at which such payment and delivery
are actually made is hereinafter sometimes called the "TIME OF
PURCHASE". Certificates for the Firm Shares shall be delivered
to you in definitive form in such names and in such
denominations as you shall specify on the second business day
preceding the time of purchase. For the purpose of expediting
the checking of the certificates for the Firm Shares by you,
the Company agrees to make such certificates available to you
for such purpose at least one full business day preceding the
time of purchase.
Payment of the purchase price for the Additional
Shares shall be made at the additional time of purchase in the
same manner and at the same office as the payment for the Firm
Shares. Certificates for the Additional Shares shall be
delivered to you in definitive form in such names and in such
denominations as you shall specify on the second business day
preceding the additional time of purchase. For the purpose of
expediting the checking of the certificates for the Additional
Shares by you, the Company agrees to make such certificates
available to you for such purpose at least one full business
day preceding the additional time of purchase.
<PAGE>
-4-
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Underwriters
that:
(a) when the Registration Statement becomes
effective, (i) the Registration Statement and the
Prospectus will fully comply in all material respects with
the provisions of the Act, (ii) the Registration Statement
will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (iii) the Prospectus will not contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that the Company makes no warranty or
representation with respect to any statement contained in
the Registration Statement or the Prospectus in reliance
upon and in conformity with information concerning the
Underwriters and furnished in writing by or on behalf of
any Underwriter through you to the Company expressly for
use in the Registration Statement or the Prospectus; the
documents incorporated by reference in the Prospectus, at
the time they were filed with the Commission, complied in
all material respects with the requirements of the
Exchange Act, and did not contain an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which they
were made, not misleading;
(b) as of the date of this Agreement, the Company
has an authorized capitalization as set forth under the
heading entitled "Actual" in the section of the
Registration Statement and the Prospectus entitled
"Capitalization" and, as of the time of purchase and the
additional time of purchase, as the case may be, the
Company shall have an authorized capitalization as set
forth under the heading entitled "As Adjusted" in the
section of the Registration Statement and the Prospectus
entitled "Capitalization"; all of the issued and
outstanding shares of capital stock including Common Stock
of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable; the Company
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State
<PAGE>
-5-
of Delaware, with full power and authority to own its
properties and conduct its business as described in the
Registration Statement and the Prospectus, to execute and
deliver this Agreement and to issue and sell the Shares as
herein contemplated;
(c) the Company has no subsidiaries; the Company is
duly qualified or licensed by and is in good standing in
each jurisdiction in which it conducts business and in
which the failure to be so licensed or qualified, singly
or in the aggregate with all other such failures, could
have a material adverse effect on the results of
operations, business, condition (financial or otherwise),
prospects, assets or liabilities of the Company (a
"MATERIAL ADVERSE EFFECT"); and the Company is in
compliance in all material respects with the laws, orders,
rules, regulations and directives issued or administered
by such jurisdictions;
(d) the Company is not in breach of, or in default
under (nor has any event occurred which with notice, lapse
of time, or both would constitute a breach of, or default
under), its certificate of incorporation or by-laws or in
the performance or observance of any obligation,
agreement, covenant or condition contained in any material
license, indenture, mortgage, deed of trust, bank loan or
credit agreement or other agreement or instrument to which
the Company is a party or by which it is bound, and the
execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby
will not conflict with, or result in any breach of or
constitute a default under (nor constitute any event which
with notice, lapse of time, or both would constitute a
breach of, or default under), any provision of the
certificate of incorporation or by-laws of the Company or
under any provision of any license, indenture, mortgage,
deed of trust, bank loan or credit agreement or other
agreement or instrument to which the Company is a party or
by which it or its properties may be bound or affected, or
under any federal, state, local or foreign law, regulation
or rule or any decree, judgment or order applicable to the
Company;
(e) this Agreement has been duly authorized,
executed and delivered by the Company and is a legal,
valid and binding agreement of the Company enforceable
against the Company in accordance with its terms;
<PAGE>
-6-
(f) the capital stock of the Company, including the
Shares, conforms in all material respects to the
description thereof contained in and incorporated by
reference in the Registration Statement and Prospectus and
the certificates for the Shares are in due and proper form
and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
(g) no approval, authorization, consent or order of
or filing with any national, state or local governmental
or regulatory commission, board, body, authority or agency
is required in connection with the issuance and sale of
the Shares as contemplated hereby other than registration
of the Shares under the Act and any necessary
qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being
offered by the Underwriters and filings with the National
Association of Securities Dealers, Inc. (the "NASD");
(h) no person has the right, contractual or
otherwise, to cause the Company to issue to it, or
register pursuant to the Act, any shares of capital stock
of the Company upon the issue and sale of the Shares to
the Underwriters hereunder, nor does any person have
preemptive rights, rights of first refusal or other rights
to purchase any of the Shares;
(i) Arthur Andersen LLP, whose reports on the
financial statements of the Company are filed with the
Commission as part of the Registration Statement and
Prospectus, are independent public accountants as required
by the Act;
(j) the Company has all necessary licenses,
authorizations, consents and approvals and has made all
necessary filings required under any federal, state, local
or foreign law, regulation or rule, and has obtained all
necessary authorizations, consents and approvals from
other persons, in order to conduct its business other than
any the failure of which to have, have made or have
obtained, singly or in the aggregate with all other such
failures, could not have a Material Adverse Effect; the
Company is not in violation of, or in default under, any
such license, authorization, consent or approval or any
federal, state, local or foreign law, regulation or rule
or any decree, order or judgment applicable to the Company
the effect of which, singly or in the aggregate with all
<PAGE>
-7-
other such violations and defaults, could have a Material
Adverse Effect;
(k) all legal or governmental proceedings, contracts
or documents of a character required to be described in
the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement have
been so described or filed as required;
(l) there is no action, suit or proceeding pending
or threatened against the Company or any of its
properties, at law or in equity, or before or by any
federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency
which could result in a judgment, decree or order having,
singly or in the aggregate with all other such judgments,
decrees and orders, a Material Adverse Effect;
(m) the audited financial statements included in the
Registration Statement and the Prospectus present fairly
the financial position of the Company as of the dates
indicated and the results of operations and changes in
financial position of the Company for the periods
specified; such financial statements have been prepared in
conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved
except as otherwise stated therein;
(n) subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, and except as may be otherwise stated in the
Registration Statement or Prospectus, there has not been
(A) any material and unfavorable change, financial or
otherwise, in the business, properties, prospects,
regulatory environment, results of operations or condition
(financial or otherwise), present or prospective, of the
Company, (B) any transaction which is material to the
Company contemplated or entered into by the Company or (C)
any obligation, contingent or otherwise, directly or
indirectly incurred by the Company which is material to
the Company; and
(o) the Company has obtained the agreement of each
of its directors and officers not to offer, sell, contract
to sell, grant any option to sell or otherwise dispose of,
directly or indirectly, any shares of Common Stock or
securities convertible into or exchangeable or exercisable
<PAGE>
-8-
for any shares of Common Stock, in each case, for a period
of 90 days after the date of the Prospectus.
4. CERTAIN COVENANTS OF THE COMPANY. The Company
hereby agrees with each Underwriter as follows:
(a) to furnish such information as may be required
and otherwise to cooperate in qualifying the Shares for
offering and sale under the securities or blue sky laws of
such states as you may designate and to maintain such
qualifications in effect so long as required for the
distribution of the Shares; PROVIDED, HOWEVER, that the
Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under
the laws of any such state (except service of process with
respect to the offering and sale of the Shares);
(b) to make available to you in New York City, as
soon as practicable after the Registration Statement
becomes effective (but in any event not later than 1:00
P.M. on the business day immediately following the date
hereof), and thereafter from time to time to furnish to
the Underwriters, as many copies of the Prospectus (or of
the Prospectus as amended or supplemented if the Company
shall have made any amendments or supplements thereto
after the effective date of the Registration Statement) as
the Underwriters may request for the purposes contemplated
by the Act;
(c) to advise you promptly (and if requested by you
to confirm such advice in writing) (i) when the
Registration Statement has become effective and when any
post-effective amendment thereto becomes effective and
(ii) if Rule 430A under the Act is used, when the
Prospectus is filed with the Commission pursuant to Rule
424(b) under the Act (which the Company agrees to file in
a timely manner under such Rules);
(d) to advise you promptly and to confirm such
advice in writing of any request by the Commission for
amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect
thereto, or of notice of institution of proceedings for,
or the entry of a stop order suspending the effectiveness
of the Registration Statement or the threatening or
initiation of any proceeding for that purpose; to make
every reasonable effort to prevent the issuance of any
<PAGE>
-9-
stop order or any order preventing or suspending the use
of any Preliminary Prospectus or suspending such
qualification, and if any stop order or any order
suspending the use of any Preliminary Prospectus or
suspending such qualification is issued, to obtain the
lifting or removal thereof as soon as possible; to advise
you promptly of any proposal to amend or supplement the
Registration Statement or Prospectus including by filing
any document that would be incorporated therein by
reference and to file no such amendment or supplement to
which you shall object after having had a reasonable
opportunity to review such amendment or supplement
(including any document that would be incorporated in the
Registration Statement or Prospectus by reference);
(e) to furnish to you and, upon request, to each of
the other Underwriters for a period of five years from the
date of this Agreement (i) copies of any reports or other
communications which the Company shall send to its
stockholders or shall from time to time publish or
publicly disseminate, (ii) copies of all annual, quarterly
and current reports filed with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar form as may be
designated by the Commission, and (iii) such other
information as you may reasonably request regarding the
Company;
(f) to advise the Underwriters promptly of the
happening of any event known to the Company within the
time during which a prospectus relating to the Shares is
required to be delivered under the Act which, in the
judgment of the Company, would require the making of any
change in the Prospectus then being used, or in the
information incorporated therein by reference, so that the
Prospectus would not include an untrue statement of
material fact or omit to state a material fact necessary
to make the statements therein, in the light of the
circumstances under which they are made, not misleading,
and, during such time, to prepare and furnish, at the
Company's expense, to the Underwriters promptly such
amendments or supplements to such Prospectus as may be
necessary to reflect any such change and to furnish you a
copy of such proposed amendment or supplement before
filing any such amendment or supplement with the
Commission;
<PAGE>
-10-
(g) as soon as practicable and for the time period
specified by Rule 158 under the Act, to make generally
available to its security holders, and to deliver to you,
an earnings statement of the Company that will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under
the Act;
(h) to furnish to you two (2) signed copies of the
Registration Statement, as initially filed with the
Commission, and of all amendments thereto (including all
exhibits thereto and documents incorporated by reference
therein) and sufficient conformed copies of the foregoing
(other than exhibits) for distribution of a copy to each
of the other Underwriters;
(i) to furnish to you as early as practicable prior
to the time of purchase and the additional time of
purchase, as the case may be, but not later than two
business days prior thereto, a copy of the latest
available unaudited interim financial statement, if any,
of the Company which has been read by the Company's
independent certified public accountants, as stated in
their letter to be furnished pursuant to Section 8(c) of
this Agreement;
(j) to apply the net proceeds from the sale of the
Shares in the manner set forth under the caption "Use of
Proceeds" in the Prospectus; and
(k) to furnish to you, before filing with the
Commission subsequent to the effective date of the
Registration Statement and during the period referred to
in paragraph (f) above, a copy of any document proposed to
be filed pursuant to Section 13, 14 or 15(d) of the
Exchange Act.
5. CERTAIN ADDITIONAL COVENANTS OF THE COMPANY.
The Company agrees with each Underwriter as follows:
(a) whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated,
the Company will pay all expenses, fees and taxes (other
than any transfer taxes and fees and disbursements of
counsel for the Underwriters except as set forth under
Section 6 hereof or (iii) or (iv) below) in connection
with (i) the preparation and filing of the Registration
Statement, each Preliminary Prospectus, the Prospectus,
<PAGE>
-11-
and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing
and shipment), (ii) the issuance, sale and delivery of the
Shares by the Company, (iii) the word processing and/or
printing of this Agreement, any Agreement Among
Underwriters and any dealer agreements and the
reproduction and/or printing and furnishing of copies of
each thereof to the Underwriters and to dealers (including
costs of mailing and shipment), (iv) the qualification of
the Shares for offering and sale under state laws and the
determination of their eligibility for investment under
state law as aforesaid (including the legal fees and
filing fees and other disbursements of counsel to the
Underwriters) and the printing and furnishing of copies of
any blue sky surveys or legal investment surveys to the
Underwriters and to dealers, (v) any listing of the Shares
on any securities exchange or qualification of the Shares
for quotation on NASDAQ and any registration thereof under
the Exchange Act, (vi) the filing for review of the public
offering of the Shares by the NASD, and (vii) the
performance of the Company's other obligations hereunder;
and
(b) the Company will not without the prior written
consent of Dillon Read, offer, sell, contract to sell,
grant any option to sell or otherwise dispose of, directly
or indirectly, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for any
shares of Common Stock or permit the registration under
the Act of any shares of Common Stock, in each case, for a
period of 90 days after the date of the Prospectus, except
that the Company may without such consent (i) register and
sell the Shares to the Underwriters pursuant to this
Agreement; (ii) grant options pursuant to the Company's
director and employee benefit plans; (iii) issue shares of
Common Stock upon the exercise of options outstanding on
the date hereof or granted pursuant to the foregoing
clause (ii); and (iv) issue shares of Common Stock or
Series C Junior Participating Cumulative Preferred Stock
that the Company may be obligated to issue pursuant to the
terms of the Company's Stockholders Rights Plan, dated as
of August 3, 1993.
6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the
Shares are not delivered for any reason other than the
termination of this Agreement pursuant to the second paragraph
<PAGE>
-12-
of Section 8 hereof or the default by one or more of the
Underwriters in its or their respective obligations hereunder,
the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the fees and disbursements of
their counsel.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The
several obligations of the Underwriters hereunder are subject
to the accuracy of the representations and warranties on the
part of the Company on the date hereof and at the time of
purchase (and the several obligations of the Underwriters at
the additional time of purchase are subject to the accuracy of
the representations and warranties on the part of the Company
on the date hereof and at the time of purchase (unless
previously waived) and at the additional time of purchase, as
the case may be), the performance by the Company of their
obligations hereunder and to the following conditions:
(a) The Company shall furnish to you at the time of
purchase and at the additional time of purchase, as the
case may be, an opinion of Gibson, Dunn & Crutcher LLP,
counsel for the Company, addressed to the Underwriters,
and dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for
each of the other Underwriters and in form satisfactory to
Cahill Gordon & Reindel, counsel for the Underwriters,
stating that:
(i) the Company has been duly incorporated and
is validly existing as a corporation in good standing
under the laws of the State of Delaware, with full
corporate power and authority to own its properties
and conduct its business as described in the
Registration Statement and the Prospectus, to execute
and deliver this Agreement and to issue, sell and
deliver the Shares as herein contemplated;
(ii) the Company is duly qualified or licensed
to do business as a foreign corporation and is in
good standing in each jurisdiction in which it owns
or leases real property or maintains an office and in
which such qualification is necessary and in which
the failure to be so licensed or qualified,
individually or in the aggregate with all other such
failures, could have a Material Adverse Effect;
<PAGE>
-13-
(iii) this Agreement has been duly authorized,
executed and delivered by the Company;
(iv) the Shares, when issued and delivered to
and paid for by the Underwriters, will be duly and
validly authorized and issued and will be fully paid
and non-assessable;
(v) the Company has an authorized
capitalization as set forth in the Registration
Statement and the Prospectus; the outstanding shares
of capital stock of the Company have been duly and
validly authorized and issued, and are fully paid,
nonassessable and free of statutory and contractual
preemptive rights; the Shares when issued will be
free of statutory and contractual preemptive rights;
the certificates for the Shares are in due and proper
form and the holders of the Shares will not be
subject to personal liability by reason of being such
holders;
(vi) the capital stock of the Company,
including the Shares, conforms in all material
respects to the description thereof contained in or
incorporated by reference in the Registration
Statement and Prospectus;
(vii) the Registration Statement and the
Prospectus (except as to the financial statements and
schedules and other financial and statistical data
contained or incorporated by reference therein, as to
which such counsel need express no opinion) comply as
to form in all material respects with the
requirements of the Act;
(viii) the Registration Statement has become
effective under the Act and, to the best of such
counsel's knowledge, no stop order proceedings with
respect thereto are pending or threatened under the
Act;
(ix) no approval, authorization, consent or
order of or filing with any national, state or local
governmental or regulatory commission, board, body,
authority or agency is required in connection with
the issuance and sale of the Shares as contemplated
hereby other than registration of the Shares under
<PAGE>
-14-
the Act and the filing of an additional listing
application with the NASD (except such counsel need
express no opinion as to any necessary qualification
under the state securities or blue sky laws of the
various jurisdictions in which the Shares are being
offered by the Underwriters);
(x) to the best of such counsel's knowledge,
there are no contracts, licenses, agreements, leases
or documents of a character which are required to be
filed as exhibits to the Registration Statement or to
be summarized or described in the Prospectus which
have not been so filed, summarized or described;
(xi) to the best of such counsel's knowledge,
there are no actions, suits or proceedings pending or
threatened against the Company or any of its
properties, at law or in equity or before or by any
commission, board, body, authority or agency which
are required to be described in the Prospectus but
are not so described;
(xii) the documents incorporated by reference
in the Registration Statement and Prospectus, when
they were filed (or, if an amendment with respect to
any such document was filed when such amendment was
filed), complied as to form in all material respects
with the Exchange Act (except as to the financial
statements and schedules and other financial and
statistical data contained or incorporated by
reference therein as to which such counsel need
express no opinion); and
(xiii) such counsel have participated in
conferences with officers and other representatives
of the Company, representatives of the independent
public accountants of the Company and representatives
of the Underwriters at which the contents of the
Registration Statement and Prospectus were discussed
and, although such counsel is not passing upon and
does not assume responsibility for the accuracy,
completeness or fairness of the statements contained
in the Registration Statement or Prospectus (except
as and to the extent stated in subparagraph (vi)
above), on the basis of the foregoing (relying as to
materiality to a large extent upon the opinions of
officers and other representatives of the Company)
<PAGE>
-15-
nothing has come to the attention of such counsel
that causes them to believe that the Registration
Statement or any amendment thereto at the time such
Registration Statement or amendment became effective
contained an untrue statement of a material fact or
omitted to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading, or that the Prospectus or any
supplement thereto at the date of such Prospectus or
such supplement, and at all times up to and including
the time of purchase or additional time of purchase,
as the case may be, contained an untrue statement of
a material fact or omitted to state a material fact
required to be stated therein or necessary to make
the statements therein, in light of the circumstances
under which they were made, not misleading (it being
understood that such counsel need express no opinion
with respect to the financial statements and
schedules and other financial and statistical data
included in the Registration Statement or
Prospectus).
(b) The Company shall furnish to you at the time of
purchase and at the additional time of purchase, as the
case may be, an opinion of Moffat, Thomas, Barrett, Rock &
Fields, counsel for the Company, addressed to the
Underwriters, and dated the time of purchase or the
additional time of purchase, as the case may be, with
reproduced copies for each of the other Underwriters and
in form satisfactory to Cahill Gordon & Reindel, counsel
for the Underwriters, stating that:
(i) the execution, delivery and performance of
this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby
do not and will not conflict with, or result in any
breach of, or constitute a default under (nor
constitute any event which with notice, lapse of
time, or both, would constitute a breach of or
default under), any provisions of the certificate of
incorporation or by-laws of the Company or under any
provision of any license, indenture, mortgage, deed
of trust, bank loan, credit agreement or other
agreement or instrument to which the Company is a
party or by which it or its properties may be bound
or affected, or under any law, regulation or rule or
<PAGE>
-16-
any decree, judgment or order applicable to the
Company;
(ii) to the best of such counsel's knowledge,
the Company is not in breach of, or in default under
(nor has any event occurred which with notice, lapse
of time, or both would constitute a breach of, or
default under), any license, indenture, mortgage,
deed of trust, bank loan or any other agreement or
instrument to which the Company is a party or by
which it or its properties may be bound or affected
or under any law, regulation or rule or any decree,
judgment or order applicable to the Company;
(iii) such counsel have participated in
conferences with officers and other representatives
of the Company, representatives of the independent
public accountants of the Company and representatives
of the Underwriters at which the contents of the
Registration Statement and Prospectus were discussed
and, although such counsel is not passing upon and
does not assume responsibility for the accuracy,
completeness or fairness of the statements contained
in the Registration Statement or Prospectus, on the
basis of the foregoing (relying as to materiality to
a large extent upon the opinions of officers and
other representatives of the Company) nothing has
come to the attention of such counsel that causes
them to believe that the Registration Statement or
any amendment thereto at the time such Registration
Statement or amendment became effective contained an
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading, or that the Prospectus or any supplement
thereto at the date of such Prospectus or such
supplement, and at all times up to and including the
time of purchase or additional time of purchase, as
the case may be, contained an untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make
the statements therein, in light of the circumstances
under which they were made, not misleading (it being
understood that such counsel need express no opinion
with respect to the financial statements and
schedules and other financial and statistical data
<PAGE>
-17-
included in the Registration Statement or
Prospectus).
(c) You shall have received from Arthur Andersen
LLP, letters dated, respectively, the date of this
Agreement and the time of purchase and additional time of
purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the
Underwriters) in the forms heretofore approved by the
Managing Underwriters.
(d) You shall have received at the time of purchase
and at the additional time of purchase, as the case may
be, the favorable opinion of Cahill Gordon & Reindel,
counsel for the Underwriters, dated the time of purchase
or the additional time of purchase, as the case may be, in
form and substance satisfactory to you.
(e) No amendment or supplement to the Registration
Statement or Prospectus, including documents deemed to be
incorporated by reference therein, shall be filed prior to
the time the Registration Statement becomes effective to
which you shall have objected in writing.
(f) The Registration Statement shall become
effective, or if Rule 430A under the Act is used, the
Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) under the Act, at or before 5:00
P.M., New York City time, on the date of this Agreement,
unless a later time (but not later than 5:00 P.M., New
York City time, on the second full business day after the
date of this Agreement) shall be agreed to by the Company
and you in writing or by telephone, confirmed in writing;
PROVIDED, HOWEVER, that the Company and you and any group
of Underwriters, including you, who have agreed hereunder
to purchase in the aggregate at least 50% of the Firm
Shares may from time to time agree on a later time for the
effectiveness of the Registration Statement.
(g) Prior to the time of purchase or the additional
time of purchase, as the case may be, (i) no stop order
with respect to the effectiveness of the Registration
Statement shall have been issued under the Act or
proceedings initiated under Section 8(d) or 8(e) of the
Act; (ii) the Registration Statement and all amendments
thereto, or modifications thereof, if any, shall not
contain an untrue statement of a material fact or omit to
<PAGE>
-18-
state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
and (iii) the Prospectus and all amendments or supplements
thereto, or modifications thereof, if any, shall not
contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in the light of
the circumstances under which they are made, not
misleading.
(h) Between the time of execution of this Agreement
and the time of purchase or the additional time of
purchase, as the case may be, (i) no material and
unfavorable change, financial or otherwise (other than as
referred to in the Registration Statement and Prospectus),
in the results of operations, business, condition
(financial or otherwise), prospects, assets or liabilities
of the Company shall occur or become known and (ii) no
transaction which is material and unfavorable to the
Company shall have been entered into by the Company.
(i) The Company will, at the time of purchase or
additional time of purchase, as the case may be, deliver
to you a certificate of two of its executive officers to
the effect that the representations and warranties of the
Company as set forth in this Agreement and the conditions
set forth in paragraph (f) and paragraph (g) have been met
and that they are true and correct as of each such date.
(j) The Company shall have furnished to you such
other documents and certificates as to the accuracy and
completeness of any statement in the Registration
Statement and the Prospectus as of the time of purchase
and the additional time of purchase, as the case may be,
as you may reasonably request.
(k) All corporate proceedings and other legal
matters incident to the authorization, form and validity
of this Agreement, the Shares, the Registration Statement
and the Prospectus, and all other legal matters relating
to this Agreement, the Shares, and the transactions
contemplated hereby and thereby shall be satisfactory in
all reasonable respects to Cahill Gordon & Reindel, and
such counsel shall have been furnished with such documents
and opinions, in addition to those set forth above, as
they may reasonably require for the purpose of enabling
them to review or pass upon the matters referred to in
<PAGE>
-19-
this Section 7, in order to evidence the accuracy,
completeness and satisfaction in all material respects of
any of the representations, warranties or conditions
herein contained and to render the opinion referred to in
Section 7(d).
(l) The Company shall have performed such of its
obligations under this Agreement as are to be performed by
the terms hereof at or before the time of purchase and at
or before the additional time of purchase, as the case may
be.
8. EFFECTIVE DATE OF AGREEMENT; TERMINATION: This
Agreement shall become effective (i) if Rule 430A under the Act
is not used, when you shall have received notification of the
effectiveness of the Registration Statement, or (ii) if Rule
430A under the Act is used, when the parties hereto have
executed and delivered this Agreement.
The obligations of the several Underwriters hereunder
shall be subject to termination in the absolute discretion of
you or any group of Underwriters (which may include you) which
has agreed to purchase in the aggregate at least 50% of the
Firm Shares, if, at any time prior to the time of purchase or,
with respect to the purchase of any Additional Shares, the
additional time of purchase, as the case may be, trading in
securities on the New York Stock Exchange shall have been
suspended or minimum prices shall have been established on the
New York Stock Exchange, or if a banking moratorium shall have
been declared either by the United States or New York State
authorities, or if the United States shall have declared war in
accordance with its constitutional processes or there shall
have occurred any material outbreak or escalation of
hostilities or other national or international calamity or
crisis of such magnitude in its effect on the financial markets
of the United States as, in your judgment or in the judgment of
such group of Underwriters, to make it impracticable to market
the Shares.
If you or any group of Underwriters elects to
terminate this Agreement as provided in this Section 8, the
Company and the other Underwriters, shall be notified promptly
by letter or telegram.
If the sale to the Underwriters of the Shares, as
contemplated by this Agreement, is not carried out by the
Underwriters for any reason permitted under this Agreement or
<PAGE>
-20-
if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the
Company shall not be under any obligation or liability under
this Agreement (except to the extent provided in Sections 5(a),
6 and 10 hereof), and the Underwriters shall be under no
obligation or liability to the Company under this Agreement
(except to the extent provided in Section 10 hereof) or to one
another hereunder.
9. INCREASE IN UNDERWRITERS' COMMITMENTS: If any
Underwriter shall default in its obligation to take up and pay
for the Firm Shares to be purchased by it hereunder and if the
number of Firm Shares which all Underwriters so defaulting
shall have agreed but failed to take up and pay for does not
exceed 10% of the total number of Firm Shares, the
non-defaulting Underwriters shall take up and pay for (in
addition to the aggregate principal amount of Firm Shares they
are obligated to purchase pursuant to Section 1 hereof) the
number of Firm Shares agreed to be purchased by all such
defaulting Underwriters, as hereinafter provided. Such Shares
shall be taken up and paid for by such non-defaulting
Underwriter or Underwriters in such amount or amounts as you
may designate with the consent of each Underwriter so
designated or, in the event no such designation is made, such
Shares shall be taken up and paid for by all non-defaulting
Underwriters pro rata in proportion to the aggregate number of
Firm Shares set opposite the names of such non-defaulting
Underwriters in SCHEDULE A.
Without relieving any defaulting Underwriter from its
obligations hereunder, the Company agrees with the
non-defaulting Underwriters that it will not sell any Firm
Shares hereunder unless all of the Firm Shares are purchased by
the Underwriters (or by substituted Underwriters selected by
you with the approval of the Company or selected by the Company
with your approval).
If a new Underwriter or Underwriters are substituted
by the Underwriters or by the Company for a defaulting
Underwriter or Underwriters in accordance with the foregoing
provision, the Company or you shall have the right to postpone
the time of purchase for a period not exceeding five business
days in order that any necessary changes in the Registration
Statement and Prospectus and other documents may be effected.
The term Underwriter as used in this agreement shall
refer to and include any Underwriter substituted under this
<PAGE>
-21-
Section 9 with like effect as if such substituted Underwriter
had originally been named in SCHEDULE A.
10. INDEMNITY BY THE COMPANY AND THE UNDERWRITERS.
(a) The Company agrees to indemnify, defend and hold
harmless each Underwriter, any person who controls any
Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and their respective officers,
directors, partners, employees, representatives and agents
(each, an "INDEMNITEE") from and against any loss, expense,
liability or claim, including the reasonable cost of
investigation (collectively, "LOSSES"), which, jointly or
severally, any such Indemnitee may incur under the Act, the
Exchange Act or otherwise insofar as such Loss arises out of or
is based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or
in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term
Prospectus for the purpose of this Section 10 being deemed to
include any Preliminary Prospectus, the Prospectus and the
Prospectus as amended or supplemented by the Company), or
arises out of or is based upon any omission or alleged omission
to state a material fact required to be stated in either such
Registration Statement or Prospectus or necessary to make the
statements made therein not misleading, except insofar as any
such Loss arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in and
in conformity with information furnished in writing by any
Underwriter through you to the Company expressly for use with
reference to such Underwriter in such Registration Statement or
such Prospectus or arises out of or is based upon any omission
or alleged omission to state a material fact in connection with
such information required to be stated in either such
Registration Statement or Prospectus or necessary to make such
information not misleading.
If any action is brought against an Indemnitee in
respect of which indemnity may be sought against the Company
pursuant to the foregoing paragraph, such Indemnitee shall
promptly notify the Company in writing of the institution of
such action and the Company, as the case may be, shall assume
the defense of such action, including the employment of counsel
satisfactory to such Indemnitee and payment of expenses. Such
Indemnitee shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such Indemnitee unless the
<PAGE>
-22-
employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such
action or the Company shall not have employed counsel to have
charge of the defense of such action within a reasonable period
after notice of such action or such Indemnitee shall have
reasonably concluded that there may be defenses available to it
that are different from or additional to those available to the
Company (in which case the Company shall not have the right to
direct the defense of such action on behalf of the Indemnitee),
in any of which events such fees and expenses shall be borne by
the Company, as the case may be, and paid as incurred (it being
understood, however, that the Company shall not be liable for
the expenses of more than one separate counsel (other than
local counsel) in any one action or series of related actions
in the same jurisdiction representing the Indemnitees who are
parties to such action). Anything in this paragraph to the
contrary notwithstanding, the Company shall not be liable for
any settlement of any such claim or action effected without its
written consent (unless the Company shall be in breach of its
obligation to pay fees and expenses pursuant to this
Agreement).
(b) Each Underwriter severally agrees to indemnify,
defend and hold harmless the Company, its directors and
officers, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange
Act (each, a "COMPANY INDEMNITEE") from and against any Loss
which, jointly or severally, such Company Indemnitee may incur
under the Act or otherwise, insofar as such Loss arises out of
or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity
with information furnished in writing by or on behalf of such
Underwriter through you to the Company expressly for use with
reference to such Underwriter in the Registration Statement (or
in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus, or arises
out of or is based upon any omission or alleged omission to
state a material fact in connection with such information
required to be stated either in such Registration Statement or
Prospectus or necessary to make such information not
misleading.
If any action is brought against a Company Indemnitee
in respect of which indemnity may be sought against any
Underwriter pursuant to the foregoing paragraph, such Company
Indemnitee shall promptly notify such Underwriter in writing of
the institution of such action and such Underwriter shall
<PAGE>
-23-
assume the defense of such action, including the employment of
counsel and payment of expenses. Such Company Indemnitee shall
have the right to employ its own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense
of such Company Indemnitee unless the employment of such
counsel shall have been authorized in writing by such
Underwriter in connection with the defense of such action or
such Underwriter shall not have employed counsel to have charge
of the defense of such action within a reasonable time after
notice of such action or such Company Indemnitee shall have
reasonably concluded that there may be defenses available to it
or them which are different from or additional to those
available to such Underwriter (in which case such Underwriter
shall not have the right to direct the defense of such action
on behalf of such Company Indemnitee), in any of which events
such fees and expenses shall be borne by such Underwriter and
paid as incurred (it being understood, however, that such
Underwriter shall not be liable for the expenses of more than
one separate counsel (other than local counsel) in any one
action or series of related actions in the same jurisdiction
representing the Indemnitees who are parties to such action).
Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such
claim or action effected without the written consent of such
Underwriter.
(c) If the indemnification provided for in this
Section 10 is unavailable to an indemnified party under
subsections (a) and (b) of this Section 10 in respect of any
Losses referred to therein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified
party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand
from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and of the
Underwriters on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on
the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts
and commissions but before deducting expenses) received by the
<PAGE>
-24-
Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault
of the Company on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things,
whether the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission relates to
information supplied by the Company or by the Underwriters and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of
the Losses referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any claim
or action.
(d) The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to
this Section 10 were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose)
or by any other method of allocation that does not take account
of the equitable considerations referred to in subsection (c)
above. Notwithstanding the provisions of this Section 10, no
Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the
Shares underwritten by such Underwriter and distributed to the
public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to
pay by reason of such untrue statements or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations to contribute pursuant to this
Section 10 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements
contained in this Section 10 and the covenants, warranties and
representations of the Company contained in this Agreement
shall remain in full force and effect regardless of any
investigation made by or on behalf of any Indemnitee or any
Company Indemnitee, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. The
Company and each Underwriter agree promptly to notify the
others of the commencement of any litigation or proceeding
against it and, in the case of the Company, against any of the
Company's officers and directors in connection with the
<PAGE>
-25-
issuance and sale of the Shares, or in connection with the
Registration Statement or Prospectus.
(f) The Company acknowledges that for all purposes
under this Agreement (including this Section 10 and
Section 3(a) hereof) the statements set forth in the last
paragraph on the outside front cover page of the Prospectus,
the last two paragraphs on the inside front cover page of the
Prospectus and the first, second and fourth paragraphs and the
first sentence of the ninth paragraph under the caption
"Underwriting" in the Prospectus constitute the only written
information furnished to the Company by or on behalf of the
Underwriters through you or your counsel expressly for use in
the Registration Statement, any Preliminary Prospectus or the
Prospectus (or any amendment or supplement to any of them) and
that no Underwriter shall be deemed to have provided any
information (and therefore is not responsible for any
statements or omissions) pertaining to any arrangement or
agreement with respect to any party other than such
Underwriter.
11. NOTICES. Except as otherwise herein provided,
all statements, requests, notices and agreements shall be in
writing or by telegram and, if to the Underwriters, shall be
sufficient in all respects if delivered or sent to Dillon, Read
& Co. Inc., 535 Madison Avenue, New York, N.Y. 10022,
Attention: Syndicate Department, if to the Company, shall be
sufficient in all respects if delivered or sent to the Company
at the offices of the Company at 1475 Tyrell Lane, Boise, Idaho
83706, Attention: Donald S. Hendrickson.
12. CONSTRUCTION. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
New York. The Section headings in this Agreement have been
inserted as a matter of convenience of reference and are not a
part of this Agreement.
13. PARTIES AT INTEREST. The Agreement herein set
forth has been and is made solely for the benefit of the
Underwriters, the Company and the other Indemnitees and Company
Indemnitees referred to in Section 10 hereof, and their
respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the
Underwriters) shall acquire or have any right under or by
virtue of this Agreement.
<PAGE>
-26-
14. COUNTERPARTS. This Agreement may be signed by
the parties in counterparts which together shall constitute one
and the same agreement among the parties.
<PAGE>
-27-
If the foregoing correctly sets forth the
understanding between the Company and the Underwriters, please
so indicate in the space provided below for the purpose,
whereupon this letter and your acceptance shall constitute a
binding agreement between the Company and the several
Underwriters.
Very truly yours,
BMC WEST CORPORATION
By: ________________________
Name:
Title:
Accepted and agreed to as of
the date first above
written, on behalf of
themselves and the other
several Underwriters named
in SCHEDULE A
DILLON, READ & CO. INC.
PIPER JAFFRAY INC.
By: DILLON, READ & CO. INC.
By: ___________________________
Name:
Title:
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF
- ----------- FIRM SHARES
-----------
<S> <C>
DILLON, READ & CO. INC.
PIPER JAFFRAY INC.
---------
Total. . . . . 2,000,000
---------
---------
</TABLE>
<PAGE>
EXHIBIT 5.1
[GIBSON, DUNN & CRUTCHER LLP LETTERHEAD]
May 14, 1996
BMC West Corporation
1475 Tyrell Lane
Boise, ID 83706
Re: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as your counsel in connection with the preparation of the
Registration Statement on Form S-3 (the "Registration Statement"), which
registers 2,300,000 shares of common stock, par value $0.001 per share (the
"Common Stock"), of BMC West Corporation, a Delaware corporation (the
"Company").
For purposes of rendering this opinion, we have made such legal and
factual examinations as we have deemed necessary under the circumstances and,
as part of such examination, we have examined, among other things, originals
and copies, certified or otherwise, identified to our satisfaction, of such
documents, corporate records and other instruments as we have deemed
necessary or appropriate. For the purposes of such examination, we have
assumed the genuineness of all signatures on original documents and the
conformity to original documents of all copies submitted to us.
On the basis of and in reliance upon the foregoing examinations and
assumptions, we are of the opinion that, assuming the Registration Statement
has become effective pursuant to the provisions of the Securities Act of
1933, as amended, the shares of Common Stock being sold by the Company, when
issued in accordance with the Registration Statement, will be validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ GIBSON, DUNN & CRUTCHER LLP
--------------------------------------
GIBSON, DUNN & CRUTCHER LLP
LC/GTD/vel
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our firm included in or made a part of this
registration statement.
Boise, Idaho ARTHUR ANDERSEN LLP
May 14, 1996
