<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
- -- of 1934
For the quarterly period ended March 31, 1997 or
--------------------
Transition report pursuant to Section 13 or 15(d) of the Securities
- -- Exchange Act of 1934
For the transition period from ________________ to ________________
Commission file number 0-19335
BMC WEST CORPORATION
Delaware 94-3050454
(State of other jurisdiction of incorporation or (IRS Employer
organization) Identification No.)
BMC West Corporation
1475 Tyrell Lane, Boise, Idaho 83706
Telephone: (208) 331-4410
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 month (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
---- ----
Class Shares Outstanding as
----- of May 1, 1997:
Common stock $.001 par value 11,828,988
Index to exhibits at page 13
This is Page 1 of 16 Pages
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BMC WEST CORPORATION
INDEX
Page
Number
------
PART I -- FINANCIAL INFORMATION
Item 1 - Financial Statements 3
Statements of Income for the three months ended March 31,
1997 and 1996 4
Balance Sheets as of March 31, 1997 and
December 31, 1996 5
Statements of Cash Flows for the three months ended
March 31, 1997 and 1996 6
Notes to the Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II -- OTHER INFORMATION 11
Item 1 - Legal Proceedings 11
Item 4 - Submission of Matters to a Vote of Security
Holders 11
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8-K 11
SIGNATURES 12
INDEX TO EXHIBITS 13
EXHIBITS 14
This is Page 2 of 16 Pages
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PART I - FINANCIAL INFORMATION
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, all
adjustments necessary to present fairly, the results for the periods
presented have been included therein. The adjustments made were of a normal,
recurring nature. Certain information and footnote disclosure normally
included in the financial statements have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. It is recommended that these condensed
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's 1996 Annual Report.
The results of operations for the periods presented are not necessarily
indicative of the results that might be expected for the fiscal year.
This is Page 3 of 16 Pages
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BMC WEST CORPORATION
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(Dollars in Thousands Except per Share Data)
Three Months Ended
March 31, March 31,
1997 1996
---------- ----------
Net sales $146,769 $147,599
Cost of sales 112,479 114,515
---------- ----------
Gross profit 34,290 33,084
Selling, general and
administrative expense 31,913 29,626
Other income, net 464 737
---------- ----------
Income from
operations 2,841 4,195
Interest expense 2,088 2,956
---------- ----------
Income before income taxes 753 1,239
Income taxes 297 489
---------- ----------
Net income $ 456 $750
---------- ----------
---------- ----------
Net income per common and common
equivalent share $ .04 $ .08
---------- ----------
---------- ----------
Weighted average number of common
and common equivalent shares 12,047,593 9,755,099
--------- ----------
--------- ----------
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BMC WEST CORPORATION
CONDENSED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 7,011 $ 7,066
Receivables, net 72,932 70,184
Inventories 80,527 76,415
Deferred income tax benefit 1,743 1,743
Prepaid expenses 2,520 1,874
-------- --------
Total current assets 164,733 157,282
PROPERTY AND EQUIPMENT, net 103,920 103,921
DEFERRED LOAN COSTS 1,484 1,438
GOODWILL, net 20,013 19,679
OTHER 6,302 6,049
-------- --------
Total assets $296,452 $288,369
-------- --------
-------- --------
CURRENT LIABILITIES
Current portion of long-term debt $ 562 $ 568
Current redemption requirement on Class B preferred stock 1,000 1,994
Accounts payable 36,393 33,954
Accrued expenses 9,385 10,299
-------- --------
Total current liabilities 47,340 46,815
LONG-TERM DEBT, net of current portion 97,363 90,203
DEFERRED INCOME TAXES 4,368 4,368
OTHER LONG-TERM LIABILITIES 1,895 1,895
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 20,000,000
shares authorized, 11,828,988 and
11,825,106 shares outstanding at
March 31, 1996 and December 31, 1996,
respectively 12 12
Additional paid-in-capital 97,679 97,731
Retained earnings 47,795 47,345
-------- --------
TOTAL STOCKHOLDERS' EQUITY 145,486 145,088
-------- --------
Total liabilities, redeemable preferred stock
and stockholders' equity $296,452 $288,369
-------- --------
-------- --------
</TABLE>
This is Page 5 of 16 Pages
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BMC WEST CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
March 31, March 31,
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 456 $ 750
Adjustments to reconcile net loss to cash used
in operating activities:
Depreciation and amortization 2,714 2,498
(Gain)on sale of assets -- (367)
Changes in working capital items net of
effects of acquisitions (5,613) (8,094)
Other (463) (813)
-------- --------
Net cash used in operating activities (2,906) (6,026)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (2,429) (1,642)
Payment for acquisitions (930) (1,810)
Sale of property and equipment 319 1,639
-------- --------
Net cash used in investing activities (3,040) (1,813)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under revolving credit agreement 41,200 45,830
Repayments under revolving credit agreement (34,040) (39,100)
Redemption of Class B Preferred Stock (1,000) (1,000)
Capital lease payments -- (33)
Financing Costs (200) --
Other (69) --
-------- --------
Net cash provided by financial activities 5,891 5,697
-------- --------
NET DECREASE IN CASH (55) (2,142)
CASH, beginning of period 7,066 6,004
-------- --------
CASH, end of period $7,011 $ 3,862
-------- --------
-------- --------
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 547 $ 1,259
Cash paid for income taxes 172 $ --
</TABLE>
This is Page 6 of 16 Pages
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BMC WEST CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. WORKING CAPITAL CHANGES
Changes in working capital items, net of acquisitions, for the three months
ended March 31, 1997 and 1996 are as follows (in thousands):
1997 1996
-------- --------
Increase in accounts receivable ($2,337) ($2,761)
Increase in inventories (3,900) (7,747)
Increase in prepaid expenses (646) (1,157)
Increase (decrease) in accounts payable and
accrued expenses (271) 1,874
Increase in interest payable 1,541 1,697
------- -------
($5,613) ($8,094)
------- -------
------- -------
2. LONG-TERM DEBT
Long-term debt consisted of the following at(in thousands):
March 31, December 31,
1997 1996
--------- ------------
Revolving credit agreement borrowings 21,240 $14,080
9.18% unsecured senior notes 50,000 50,000
8.10% unsecured senior notes 25,000 25,000
Capital lease obligations and other 1,685 1,691
------- -------
97,925 90,771
Less current portion 562 568
------- -------
$97,363 $90,203
------- -------
------- -------
3. ACQUISITIONS
In the first quarter of 1997, the Company purchased substantially all of the
assets of a building supply firm in Utah. The total purchase price for this
facility was $930,000.
4. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
128, "Earnings per Share", which will be implemented in the fourth quarter of
1997. Earnings per share will be replaced with basic earnings per share and
diluted earnings per share, neither of which will be significantly different
than previously reported earnings per share. All previously reported amounts
will be restated upon adoption of this standard.
This is Page 7 of 16 Pages
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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage
relationship to net sales of certain costs, expenses and income items. The
table and subsequent discussion should be read in conjunction with the financial
statements and the notes thereto appearing elsewhere herein and in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
For The Three Months Ended
-------------------------
March 31, March 31,
1997 1996
--------- ---------
Net sales 100.0% 100.0%
Gross profit 23.4 22.4
Selling, general and
administrative expense 21.7 20.1
Other income (expense) 0.3 0.5
Income from operations 1.9 2.8
Interest expense 1.4 2.0
Income taxes 0.2 0.3
Net Income 0.3 0.5
FIRST QUARTER OF 1997 COMPARED TO THE FIRST QUARTER OF 1996
Net sales for the three months ended March 31, 1997 were $146.8 million down
0.6% from the first quarter of 1996 when sales were $147.6 million. The
decrease in net sales resulted from a decrease of 2% from the first quarter
of 1996 in sales at facilities that operated for at least two months in both
the first quarter of 1996 and the first quarter of 1997 ("Same-Store Sales").
Excluding price inflation, same-store sales decreased 6% or approximately
$10.0 million. Sales in the 1997 period were positively affected by higher
commodity wood product prices and from the acquisition of a new building
materials center. The price increase contributed to an overall price
inflator of 4%, the effect of which increased sales by approximately $6.0
million. The acquisition increased sales by approximately $3.0 million or
2%.
This is Page 8 of 16 Pages
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Gross profit as a percentage of sales increased to 23.4% in the first quarter
of 1997 from 22.4% in the first quarter of 1996. The increase was a result
of the sales mix and ongoing efforts by the Company to improve margins
through its increased focus on value-added products, such as roof trusses,
pre-hung doors and pre-assembled windows.
Selling, general and administrative (SG&A) expense, was $31.9 million in the
first quarter of 1997 as compared to $29.6 million in 1996, and increased as
a percentage of net sales to 21.7% in 1997 from 20.1% in 1996. The increase
can somewhat be attributed to the inclement weather throughout the Company's
market area in the quarter.
Interest expense of $2.1 million in the first quarter of 1997 decreased from
$3.0 million in the same period of 1996, primarily due to less debt
outstanding in the first quarter of 1997 compared to the first quarter of
1996 which was a result of the June 1996 offering of common stock and
retirement of certain subordinated debt.
Income taxes were provided at estimated annual effective tax rates of 39.4%
and 39.5% for the periods ended March 31, 1997 and March 31, 1996,
respectively.
As a result of the foregoing factors and the after tax gain on the sale of
real property in the first quarter of 1996 in the amount of $239,000, net
income decreased by $294,000 or 39% to $456,000 or 0.3% of net sales in the
first quarter of 1997, as compared to $750,000 or 0.5% of net sales, in the
first quarter of 1996.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997 the Company had $97.4 million of long-term debt
outstanding, consisting of $76.2 million of term borrowings under fixed rate
notes, and $21.2 million of variable rate borrowings under the revolving
credit agreement.
This is Page 9 of 16 Pages
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Based on its ability to generate cash from operations and the available
borrowing capacity at March 31, 1997 of $48.8 million under the revolving
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 current anticipated requirements.
NEW ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued Statement
128, "Earnings per Share", which will be implemented in the fourth quarter of
1997. Earnings per share will be replaced with basic earnings per share and
diluted earnings per share, neither of which will be significantly different
than previously reported earnings per share. All previously reported amounts
will be restated upon adoption of this standard.
This is Page 10 of 16 Pages
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in litigation and administrative proceedings
primarily arising in the normal course of its business. In the
opinion of management, the Company's recovery, if any, or the
Company's liability, if any, under any pending litigation or
administrative proceedings would not materially affect its financial
condition or operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 - Statement regarding computation of per share earnings.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
This is Page 11 of 16 Pages
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BMC WEST CORPORATION
Date: May 8, 1997 /s/ Donald S. Hendrickson
------------------------------------------
Donald S. Hendrickson
President, Chief Executive Officer
and Director (Principal Executive Officer)
Date: May 8, 1997 /s/ Ellis C. Goebel
------------------------------------------
Ellis C. Goebel
Vice President and Treasurer
(Principal Financial Officer)
This is Page 12 of 16 Pages
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INDEX TO EXHIBITS
BMC WEST CORPORATION
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 1997
Page
Exhibit Description Number
- ------- ----------- ------
11 Computation of Earnings Per Share 14
27 Financial Data Schedule
This is Page 13 of 16 Pages
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EXHIBIT 11
BMC WEST CORPORATION
Computation of Earnings Per Share
COMPUTATION OF PRIMARY EARNINGS PER SHARE
Three Months Ended
--------------------------
March 31, March 31,
1997 1996
--------- ---------
Net income $456,000 $750,000
Class B preferred stock accretion (6,500) (8,500)
---------- ----------
Adjusted net income $449,500 $741,500
---------- ----------
---------- ----------
Weighted average shares
outstanding 11,827,254 9,502,827
Net effect of dilutive stock
options based on the treasury
stock method using average
market price 220,339 252,272
---------- ----------
Total common shares and equivalents 12,047,593 9,755,099
---------- ----------
---------- ----------
PRIMARY INCOME PER SHARE $ .04 $ .08
---------- ----------
---------- ----------
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
Adjusted net income $449,500 $741,500
---------- ----------
---------- ----------
Weighted average shares outstanding
11,827,254 9,502,827
Net effect of dilutive stock
options based on the treasury
stock method using the higher of
quarter-end market price or
average market price 220,339 265,292
---------- ----------
Total shares and equivalents 12,047,593 9,768,119
---------- ----------
---------- ----------
FULLY DILUTED EARNINGS PER SHARE $ .04 $ .08
---------- ----------
---------- ----------
This is Page 14 of 16 Pages
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 7,011
<SECURITIES> 0
<RECEIVABLES> 74,397
<ALLOWANCES> 1,465
<INVENTORY> 80,527
<CURRENT-ASSETS> 164,733
<PP&E> 133,476
<DEPRECIATION> 29,556
<TOTAL-ASSETS> 296,452
<CURRENT-LIABILITIES> 47,340
<BONDS> 97,363
0
0
<COMMON> 12
<OTHER-SE> 145,474
<TOTAL-LIABILITY-AND-EQUITY> 296,452
<SALES> 146,769
<TOTAL-REVENUES> 146,769
<CGS> 112,479
<TOTAL-COSTS> 144,392
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,088
<INCOME-PRETAX> 753
<INCOME-TAX> 297
<INCOME-CONTINUING> 456
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 456
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
