<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For Quarter Ended April 2, 1994 Commission file number 0-7469
-------------- ------
TJ INTERNATIONAL, INC.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 82-0250992
- - ------------------------------ -------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
380 E. ParkCenter Boulevard
BOISE, IDAHO 83706
- - --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (208) 345-8500
--------------
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 and Exchange
Act of 1934 during the preceding 12 months (or for each shorter period that
the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
April 29, 1994. 16,800,794 shares of $1 par value common stock.
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TJ INTERNATIONAL, INC.
PART I. FINANCIAL INFORMATION
The condensed consolidated 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
financial statements have been condensed or omitted pursuant to such rules
and regulations, 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 the notes thereto included in the company's latest
annual report on Form 10-K.
The results of operations for the fiscal quarter ended April 2, 1994 are not
necessarily indicative of the results that might be expected for the fiscal
year ending December 31, 1994.
2
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TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(amounts in thousands)
April 2, January 1, April 3,
1994 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $30,319 $66,319 $ ---
Marketable securities 7,004 7,004 ---
Receivables, less allowances of
$502,000, $663,000 and $721,000 39,443 45,709 44,288
Inventories 75,574 53,081 52,399
Other 12,150 10,715 7,968
------------ ------------ ------------
164,490 182,828 104,655
Property
Property and equipment 382,769 361,952 336,295
Less - accumulated depreciation (124,493) (120,762) (104,171)
------------ ------------ ------------
258,276 241,190 232,124
Goodwill 23,400 23,660 24,440
Other assets 9,277 6,649 7,607
------------ ------------ ------------
$455,443 $454,327 $368,826
------------ ------------ ------------
------------ ------------ ------------
Liabilities and stockholders' equity
Current liabilities
Notes payable $1,160 $4,007 $43,816
Current portion of long-term debt 1,914 1,891 1,275
Accounts payable 29,566 23,686 21,386
Accrued liabilities 23,196 27,555 16,763
------------ ------------ ------------
55,836 57,139 83,240
Long-term debt, excluding current portion 30,350 30,877 32,906
Deferred income taxes 7,465 8,429 5,623
Other long-term liabilities 14,055 14,982 13,728
Minority interest in Partnership 111,691 108,159 104,338
Stockholders' equity
ESOP Convertible Preferred Stock, $1.00 par
value, authorized 2,000,000 shares,
issued 1,257,286, 1,259,308 and 631,521 14,835 14,859 14,920
Guaranteed ESOP benefit (12,390) (12,390) (13,321)
Common stock, $1.00 par value, authorized
40,000,000 shares, issued
16,796,318, 16,738,069 and 7,898,977 16,796 16,738 7,899
Paid-in capital 136,246 135,727 44,172
Retained earnings 83,544 82,139 96,000
Cumulative translation adjustments (2,985) (2,332) (820)
Treasury stock, 1,345,163 --- --- (19,858)
------------ ------------ ------------
236,046 234,741 128,992
------------ ------------ ------------
$455,443 $454,327 $368,826
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
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TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
(amounts in thousands
except per share figures)
For the fiscal
quarter ended
----------------------------------
April 2, April 3,
1994 1993
--------------- ---------------
<S> <C> <C>
Sales $135,048 $114,111
--------------- ---------------
Costs and expenses
Cost of sales 99,328 95,150
Selling expenses 15,613 14,462
Administrative expenses 8,198 7,111
--------------- ---------------
123,139 116,723
--------------- ---------------
Income (loss) from operations 11,909 (2,612)
Investment income, net 541 15
Interest expense --- (643)
Minority interest in Partnership (7,960) 1,095
--------------- ---------------
Income (loss) before income taxes 4,490 (2,145)
Income tax (benefits) 1,931 (1,572)
--------------- ---------------
Net income (loss) $2,559 ($573)
--------------- ---------------
--------------- ---------------
Net income (loss) per common share
Primary $0.13 ($0.06)
--------------- ---------------
--------------- ---------------
Fully Diluted $0.13 ($0.06)
--------------- ---------------
--------------- ---------------
Dividends declared per common share $0.0550 $0.0525
--------------- ---------------
--------------- ---------------
Weighted average number of common shares
outstanding during the periods
Primary 17,350 13,104
--------------- ---------------
--------------- ---------------
Fully diluted 18,617 14,858
--------------- ---------------
--------------- ---------------
</TABLE>
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<TABLE>
<CAPTION>
TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL QUARTER ENDED
APRIL 2, 1994 and APRIL 3, 1993
(Unaudited)
(amounts in thousands)
April April
2, 1994 3, 1993
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 2,559 $ (573)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 6,898 5,449
Minority interest in partnership 7,960 (1,095)
Other, net --- 50
Change in working capital items:
Receivables 6,266 (17,076)
Inventories (22,493) (8,162)
Other current assets (2,999) (1,013)
Accounts payable and accrued liabilities 415 5,556
Other, net (2,725) 558
------------- -------------
$ (4,119) $ (16,306)
Net cash used in operationg activities ------------- -------------
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures $ (26,868) $ (6,210)
Other, net 926 586
------------- -------------
Net cash used in investing activities $ (25,942) $ (5,624)
------------- -------------
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid on common stock $ (921) $ (688)
Minority partner capital contributions --- 2,327
Minority partner tax distributions (2,231) ---
Net (repayments) borrowings under lines of credit (2,847) 20,196
Principal payments of long-term debt (200) (150)
Other, net 260 35
------------- -------------
Net cash provided by financing
activities $ (5,939) $ 21,720
------------- -------------
------------- -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS
Net decrease in cash and cash
equivalents $ (36,000) $ (210)
Cash and cash equivalents at beginning of year 66,319 210
------------- -------------
Cash and cash equivalents at end of period $ 30,319 $ 0
------------- -------------
------------- -------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) during the period for:
Interest, net of amounts capitalized $ 327 $ 449
Income taxes (refunds), net 1,166 (463)
</TABLE>
5
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TJ INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
INVENTORIES
Inventories consisted of the following:
(amounts in thousands)
April 2, Jan. 1, April 3,
1994 1994 1993
-------- ------- --------
<S> <C> <C> <C>
Finished goods $39,266 $23,831 $20,638
Raw materials and
work-in-progress 40,673 33,243 34,424
------- ------- -------
79,939 57,074 55,062
Reduction to LIFO cost (4,365) (3,993) (2,663)
------- ------- -------
$75,574 $53,081 $52,399
------- ------- -------
------- ------- -------
</TABLE>
The determination of inventory under the LIFO method can be made only at the end
of each fiscal year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations must necessarily be based on the
company's estimates of expected year-end inventory levels and costs. Since these
estimates are subject to many forces beyond the company's control, interim
results could possibly be affected by the final year-end LIFO inventory
valuation.
RECLASSIFICATIONS:
Certain reclassifications have been made, none of which affected net loss, to
conform prior year's information to the current year's presentation.
NET INCOME PER COMMON SHARE
Primary net income (loss) per common share is based on net income (loss)
adjusted for preferred stock dividends and related tax benefits divided by the
weighted average number of common shares outstanding after giving effect to
stock options as common stock equivalents and to the 1993 two-for-one stock
split. Fully diluted net income per common share assumes conversion of the ESOP
convertible preferred stock into common stock at the date of issuance.
6
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Primary net income (loss) and fully diluted net income (loss) was calculated as
follows:
<TABLE>
<CAPTION>
For the fiscal
quarter ended
--------------------
April 2, April 3,
1994 1993
--------------------
<S> <C> <C>
PRIMARY NET INCOME (LOSS)
Net income (loss) as
reported $ 2,559 $ (573)
Preferred stock dividends, net
of related tax benefits (233) (223)
------- -------
Primary net income (loss) $ 2,326 $ (796)
------- -------
------- -------
FULLY DILUTED NET INCOME (LOSS)
Net income (loss) as
reported $ 2,559 $ (573)
Additional ESOP contribution
payable upon assumed
conversion of ESOP
preferred stock, net of
related tax benefits (180) (168)
------- -------
Fully diluted net income (loss) $ 2,379 $ (741)
------- -------
------- -------
</TABLE>
Fully diluted net income (loss) per share at April 3, 1993, is the same as
primary net income (loss) per share since the effect of the assumed conversion
of the preferred stock is anti-dilutive.
7
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TJ INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE FISCAL QUARTER ENDED APRIL 2, 1994
OPERATING RESULTS
The following comments discuss material variations in the results of operations
for the comparative periods presented in the condensed consolidated statements
of income.
SALES
The company's sales by quarter during the current year and for the preceding
four years are as follows:
<TABLE>
<CAPTION>
SALES BY QUARTER
(Amounts in thousands)
QUARTER 1994 1993 1992 1991 1990
- - ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
First $135,048 $114,111 $ 75,561 $ 45,330 $ 74,370
Second -------- 139,639 111,024 79,679 98,185
Third -------- 152,729 113,512 84,838 89,930
Fourth 144,725 100,383 73,363 64,987
-------- -------- -------- --------
$551,204 $400,480 $283,210 $327,472
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
FIRST QUARTER OF 1994 COMPARED WITH THE FIRST QUARTER OF 1993
Sales for the first quarter 1994 increased by $20.9 million or 18% from the same
period last year. As a result of higher gross margins, the Company posted an
operating profit for the current quarter of $11.9 million compared with a loss
from operations of $2.6 million for the first quarter of 1993. These results
were achieved despite falling prices for commodity lumber, against which the
company's engineered lumber competes, and exceptionally harsh winter weather
that brought record snowfalls and a severe slow down in construction across the
eastern portions of the United States and Canada.
The growth in sales and operating profit came from the company's engineered
lumber products. Sales of these products in the first quarter increased 26% to
$118.2 million from the sales in the first quarter of 1993. Growing acceptance
of the company's engineered lumber products as a substitute for commodity sawn
lumber was the primary factor behind the increased sales.
The company's window and door products were significantly affected by severe
winter conditions in its key market areas of Eastern Canada, the upper Mid-West
and the Ohio River Valley. Sales of these products were $16.8 million, a
8
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decrease of 16% from the first quarter of 1993. A window component cutstock
facility in Redding, California, was sold in March consistent with a raw
material procurement strategy designed to minimize dependence on Western
ponderosa pine. Window and door products were not profitable in the first
quarter. However, losses were incurred in approximately the same amount as the
first quarter of 1993 (excluding the results of the divested Redding cutstock
plant) despite lower sales and production volumes.
Gross operating margins as a percent of sales were 26.4% compared to 16.6% for
the first quarter of 1993. The higher margins were achieved primarily through
improved pricing for the engineered lumber products. In the first quarter of
1993, the Company decided to honor committed prices in its existing dealer order
files. Although prices were repeatedly raised throughout the first quarter of
1993, the outstanding quoted invoice prices lagged the current raw material
price increases and margins were compressed. The company's current pricing
policy allows more timely adjustment to prices during periods of rapidly
changing raw material costs.
Also contributing to the gross margin improvement was the progress made in the
first quarter of 1994 toward commercializing our newest engineered lumber
technology, TimberStrand-R- laminated strand lumber. This product is currently
produced at a plant in Deerwood, Minnesota. Despite a heavy agenda of testing
and process refinements, the plant achieved significantly improved manufacturing
efficiencies. Combined with higher sales, this enabled the TimberStrand-R-
laminated strand lumber operation to be profitable at the manufacturing level
for the quarter and to make a positive contribution to fixed corporate costs. In
the first quarter of 1993, TimberStrand-R- laminated strand lumber products
were not profitable at the manufacturing level.
While a great deal of work remains before TimberStrand-R- laminated strand
lumber can be considered a proven technology or commercial success, the Company
continues to believe this proprietary technology will contribute to sales and
earnings in the future.
Selling expenses increased $1.2 million but decreased as a percent of sales. The
percentage decrease was primarily a result of the leverage in the existing sales
and distribution network which has the capacity to handle volume increases with
the current infrastructure. This was offset somewhat by an increase in the
Company's advertising expenditures which is part of the effort to develop a
brand identification for the Company's engineered lumber products and framing
system.
Administrative expenses increased $1.1 in absolute dollars but dropped as a
percentage of sales, reflecting the impact of spreading largely fixed costs over
a higher sales base. This was offset somewhat by the company's expenditures on
information systems aimed at improving order management, inventory management,
and manufacturing production and scheduling processes.
The Minority interest in Partnership represents the contractual allocation of
49% of the engineered lumber product profits to the company's joint venture
partner MacMillan Bloedel. This compares to 1993's first quarter allocation of
70% of the TimberStrand-R- laminated strand lumber start-up losses and 33% of
the remaining partnership profits to MacMillan Bloedel.
9
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LIQUIDITY AND CAPITAL RESOURCES
APRIL 2, 1994, COMPARED TO JANUARY 1, 1994
Working capital decreased $17.0 million during the three months ended April 2,
1994. Cash was used to fund capital expenditures and dividend payments.
Inventories were higher because of the increased level of operations at the end
of the first quarter and planned effort to build inventory during the seasonably
slow winter months to have adequate product available during the spring and
summer building season.
APRIL 2, 1994, COMPARED TO APRIL 3, 1993
Working capital increased by $87.3 million to $108.7 million at April 2, 1994,
from $21.4 million at April 3, 1993. This increase was primarily the result of
the company's sale of 3,500,000 common shares in November 1993. Cash used by
operating activities was $4.1 million the first quarter of 1994. Capital
expenditures were $26.9 million for the quarter and related primarily to the
construction of the second TimberStrand-R- laminated strand lumber plant in
Hazard, Kentucky.
The Company entered into a $75 million Revolving Credit Facility (the Credit
Facility) on October 12, 1993, provided by a syndicate of banks. The Credit
Facility includes various customary financial covenants. These include a
limitation on indebtedness equal to 50 percent of total capitalization
(including Minority Interest in Partnership) and requirements to maintain (i) a
minimum net worth, and (ii) ratios of cash flow compared to indebtedness and
debt service. The Company initially used borrowings under the Credit Facility to
pay $13.6 million of the company's short-term notes payable. Upon completion of
the common stock offering, the Company paid all amounts outstanding under the
Credit Facility. Short-term debt at the end of the first quarter is related to
lines of credit used primarily for cash management purposes.
The company's Board of Directors has approved a two-year capital expansion
program. Pursuant to the capital expansion program, the Company intends to
construct a plant near Hazard, Kentucky, that will manufacture TimberStrand-R-
laminated strand lumber products. Construction commenced in the fall of 1993
with an expected cost of $100 million. The capital expansion program also
provides for capital expenditures of approximately $25 million to expand
capacity at its existing Microllam-TM- laminated veneer lumber and Parallam-R-
parallel strand lumber facilities. In addition, the company's Board of Directors
has approved construction of a plant that will manufacture both Microllam-TM-
laminated veneer lumber and Parallam-R- parallel strand lumber near Buckhannon,
West Virginia, at an expected cost of $85 million. The Company is evaluating
potential sites for a third TimberStrand-R- laminated strand lumber plant, or an
additional combination LVL and PSL plant, but has not determined whether or when
to proceed with that plant.
MacMillan Bloedel's Board of Directors has authorized a $49 million capital
contribution to the Partnership to help fund the capacity expansion program. The
Company expects the contribution to be made as the Partnership experiences
negative cash flow resulting from expenditures for capital expansion over the
next six to nine months. The first of these cash contributions was received
10
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April 4, 1994 and totaled $12.9 million. However, there is no provision in the
Partnership Agreement, or in any other agreement requiring the partners to
contribute funds.
The Company believes that cash generated from operations, borrowings under the
Credit Facility, net proceeds from the stock offering, and the $49 million
contribution authorized by MacMillan Bloedel will be sufficient to meet the
company's working capital needs and capital expansion program approved by the
Board of Directors. The Company also believes that additional or expanded lines
of credit or appropriate long-term capital can be obtained to fund capital
requirements as they arise, or to fund an acquisition.
A substantial majority of the company's assets is held, and revenues generated,
by the Partnership. Distributions of cash by the Partnership to the Company
require the unanimous consent of the members of the Partnership's Management
Board, which includes members of both the Company and MacMillan Bloedel.
Accordingly, there can be no assurance that distributions by the Partnership
will be approved for the payment of dividends to fund the company's other
operations, or for other purposes.
Microllam-TM- is a trademark of Trus Joist MacMillan a Limited Partnership,
Boise, Idaho
Parallam-R- and TimberStrand-R- are registered trademarks of Trus Joist
MacMillan a Limited Partnership, Boise, Idaho
11
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TJ INTERNATIONAL, INC.
PART II
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended
April 2, 1994.
12
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TJ INTERNATIONAL INC.
SIGNATURE
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.
TJ INTERNATIONAL, INC.
/s/ Valerie A. Heusinkveld
-------------------------------
Valerie A. Heusinkveld
Vice President, Finance & Chief
Financial Officer
Date: May 17, 1994
13
