<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 June 28, 1997 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.)
200 E. Mallard Drive
BOISE, IDAHO 83706
- ---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (208) 364-3300
---------------
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.
August 4, 1997, 16,991,870 shares of $1 par value common stock,
excluding 711,152 shares held as treasury stock.
EXHIBIT INDEX ON PAGE 14
<PAGE>
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 periods presented are not necessarily
indicative of the results that might be expected for the fiscal year ending
January 3, 1998.
<PAGE>
TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
JUNE 28, DECEMBER 28, JUNE 29,
ASSETS 1997 1996 1996
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $70,875 $36,801 $20,957
Receivables, less allowances of
$403, $451 and $419 81,623 73,893 51,689
Inventories 51,649 51,549 43,700
Other 11,540 9,741 18,429
---------- ---------- ----------
215,687 171,984 134,775
Property
Property and equipment 580,174 566,603 558,983
Less - Accumulated depreciation (202,711) (184,504) (165,983)
---------- ---------- ----------
377,463 382,099 393,000
Goodwill 20,020 20,540 21,060
Other assets 23,676 25,192 18,751
---------- ---------- ----------
$636,846 $599,815 $567,586
---------- ---------- ----------
---------- ---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 96 $ -- $ 1,017
Current portion of long-term debt -- -- 340
Accounts payable 33,455 23,113 30,702
Accrued liabilities 46,397 37,286 28,062
---------- ---------- ----------
79,948 60,399 60,121
Long-term debt, excluding current portion 99,790 88,140 95,180
Other long-term liabilities 6,050 6,050 10,517
Reserve for discontinued operations 18,945 21,970 2,003
Minority interest in Partnership 205,394 195,186 185,738
Stockholders' equity
ESOP Convertible Preferred Stock, $1.00 par
value, authorized 10,000,000 shares,
issued 1,156,947, 1,162,914, and 1,174,500 13,650 13,721 13,857
Guaranteed ESOP Benefit (9,204) (9,204) (10,382)
Common stock, $1.00 par value, authorized
200,000,000 shares, issued 17,707,180,
17,500,896, and 17,276,923 17,707 17,501 17,277
Paid-in capital 150,602 145,583 142,195
Retained earnings 73,839 63,249 53,902
Other (1,687) -- --
Cumulative translation adjustment (3,188) (2,780) (2,822)
Treasury stock, 711,152, shares, at cost (15,000) -- --
---------- ---------- ----------
226,719 228,070 214,027
---------- ---------- ----------
$636,846 $599,815 $567,586
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
<PAGE>
TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(amounts in the thousands
except per share figures)
FOR THE FISCAL FOR THE TWO FISCAL
QUARTER ENDED QUARTERS ENDED
---------------------------- ----------------------------
JUNE 28, JUNE 29, JUNE 28, JUNE 29,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SALES $185,730 $155,050 $346,993 $266,207
---------- ---------- ---------- ----------
COSTS AND EXPENSES
COST OF SALES 134,598 115,465 252,521 205,667
SELLING EXPENSES 19,216 16,994 36,299 30,281
ADMINISTRATIVE EXPENSES 8,762 6,348 17,324 12,402
---------- ---------- ---------- ----------
162,576 138,807 306,144 248,350
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 23,154 16,243 40,849 17,857
INVESTMENT INCOME, NET 876 161 1,288 219
INTEREST EXPENSE (1,564) (1,634) (3,113) (3,115)
MINORITY INTEREST IN PARTNERSHIP (10,480) (7,503) (18,275) (7,723)
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 11,986 7,267 20,749 7,238
INCOME TAXES 4,495 2,799 7,781 2,787
---------- ---------- ---------- ----------
NET INCOME $ 7,491 $ 4,468 $ 12,968 $ 4,451
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET INCOME (LOSS) PER COMMON SHARE
PRIMARY $0.41 $0.24 $0.71 $0.23
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
FULLY DILUTED $0.39 $0.23 $0.67 $0.22
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
DIVIDENDS DECLARED PER COMMON SHARE $0.0550 $0.0550 $0.1100 $0.1100
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIODS
PRIMARY 17,654 17,566
---------- ----------
---------- ----------
FULLY DILUTED 18,818 18,744
---------- ----------
---------- ----------
</TABLE>
<PAGE>
TJ INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWO FISCAL QUARTERS ENDED JUNE 28, 1997, AND JUNE 29, 1996,
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 28, JUNE 29,
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
<S> <C> <C>
NET INCOME (LOSS) $ 12,968 $ 4,452
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 20,608 19,728
MINORITY INTEREST IN PARTNERSHIPS 18,275 7,723
OTHER, NET 1,787 495
CHANGE IN WORKING CAPITAL ITEMS:
RECEIVABLES (7,730) (22,935)
INVENTORIES (100) (5,140)
OTHER CURRENT ASSETS (1,799) (786)
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 18,940 10,230
OTHER, NET (2,642) (3,462)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 60,307 $ 10,305
--------- ---------
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
CAPITAL EXPENDITURES $(15,957) $(10,484)
DECREASE IN UNEXPENDED BOND FUNDS --- 117
PROCEEDS (ADVANCES) FROM NOTES RECEIVABLE 581 706
OTHER, NET 265 (738)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES $(15,111) $(10,399)
--------- ---------
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
CASH DIVIDENDS PAID ON COMMON STOCK $ (1,914) $ (1,885)
CASH DIVIDENDS PAID ON PREFERRED STOCK (1,245) ---
MINORITY PARTNERS TAX DISTRIBUTIONS (4,996) (835)
NET BORROWINGS (REPAYMENTS) UNDER LINES-OF-CREDIT 96 (1,977)
PROCEEDS FROM THE ISSUANCE OF LONG-TERM DEBT 11,650 5,740
PURCHASE OF TREASURY STOCK (15,000) ---
OTHER, NET 286 294
--------- ---------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES $(11,122) $ 1,336
--------- ---------
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS
- ---------------------------------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 34,074 $ 1,242
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 36,801 19,715
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 70,875 $ 20,957
--------- ---------
--------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
- -------------------------------------------------
CASH PAID DURING THE PERIOD FOR:
INTEREST, NET OF AMOUNTS CAPITALIZED 3,095 3,033
INCOME TAXES 534 1,323
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
TJ INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
INVENTORIES
Inventories consisted of the following:
(amounts in thousands)
June 28, Dec. 28, June 29,
1997 1996 1996
------- -------- --------
Finished goods $39,412 $38,278 $32,436
Raw materials and
work-in-progress 12,237 13,271 13,709
------- ------- -------
51,649 51,549 46,145
Reduction to LIFO cost -- -- (2,445)
------- ------- -------
$51,649 $51,549 $43,700
------- ------- -------
------- ------- -------
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.
NET INCOME PER COMMON SHARE:
Primary net income per common share is based on net income 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. Fully diluted net income per common share assumes
conversion of the ESOP convertible preferred stock into common stock at the date
of issuance.
<PAGE>
Primary net income and fully diluted net income was calculated as follows:
For the fiscal For the two fiscal
quarter ended quarters ended
------------------- -------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
------------------- -------------------
Primary net income
- ------------------
Net income from continuing
operations as reported $ 7,491 $ 4,468 $ 12,968 $ 4,451
Preferred stock dividends, net
of related tax benefits (246) (237) (494) (477)
------- ------- ------- -------
Primary net income $ 7,245 $ 4,231 $ 12,474 $ 3,974
------- ------- ------- -------
------- ------- ------- -------
Fully diluted net income
- -------------------------
Net income from continuing
operations as reported $ 7,491 $ 4,468 $ 12,968 $ 4,451
Additional ESOP contribution
payable upon assumed
conversion of ESOP
preferred stock, net of
related tax benefits (174) (181) (348) (361)
------- ------- ------- -------
Fully diluted net income $ 7,317 $ 4,287 $12,620 $4,090
------- ------- ------- -------
------- ------- ------- -------
- --------------------------------------------------------------------------------
In February 1997, the Financial Accounting Standards Board issued Statement 128,
Earnings per Share, which will be implemented in the fourth quarter of 1997.
Primary earnings per share will be replaced with basic earnings per share and
fully diluted earnings per share will be renamed diluted earnings per share,
neither of which will be significantly different than previously reported
primary and fully diluted earnings per share. All previously reported amounts
will be restated.
<PAGE>
TJ INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE FISCAL QUARTER ENDED JUNE 28, 1997
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:
SALES BY QUARTER
----------------
(AMOUNTS IN THOUSANDS)
QUARTER 1997 1996 1995 1994 1993
- ------- -------- -------- -------- -------- --------
First $161,263 $111,157 $109,941 $118,163 $ 93,799
Second 185,730 155,050 123,882 128,773 106,529
Third 179,571 137,759 136,266 118,698
Fourth 131,388 113,263 112,858 117,576
-------- -------- -------- -------- --------
$346,993 $577,166 $484,845 $496,060 $436,602
======== ======== ======== ======== ========
SECOND QUARTER OF 1997 COMPARED WITH THE SECOND QUARTER OF 1996
Second quarter sales increased $30.7 million or 20% from the prior year second
quarter. The sales increase is primarily the result of the growing acceptance
of the Company's engineered lumber products as a substitute for commodity
solid-sawn lumber.
Second quarter sales increased despite a relatively flat housing market.
North American housing starts in the second quarter of 1997 were up 1% from
the prior year second quarter. Prices for competing wide-dimension lumber
were slightly above year ago prices early in the quarter, falling to year ago
prices by mid-quarter and trending sideways through the remainder of the
quarter. Continued product acceptance aided in the continuing conversion of
builders to engineered lumber from traditional commodity lumber products.
Unit volume sales growth accounted for virtually all the sales increase for
the second quarter of 1997. Volume gains were strongest in the Company's
TJI-Registered Trademark- Joist products. The Company's new technology
TimberStrand-Registered Trademark- LSL and Parallam-Registered Trademark- PSL
products delivered the largest percentage growth for the quarter. In
particular, new products, such as the TimberStrand-Registered Trademark;
components for the Japanese manufactured housing market, Light-Duty Header
products and the Parallam-Registered Trademark-Commercial Beam, joined
existing new technology products (e.g., TimberStrand-Registered Trademark-
Rim Board, window and door parts, furniture components) in achieving these
significant volume increases.(3)
Gross margins for the second quarter were 27.5% compared with 25.5% in the
second quarter of 1996. The margin gains were primarily the result of lower
<PAGE>
raw material costs for oriented strand board which is a significant component of
the Company's TJI-Registered Trademark--joist product line. Also, the higher
sales volumes resulted in more efficient production at the Company's
manufacturing facilities.
Margin improvement also was a result of better performance at the Company's two
most recent new technology plant additions. The Company's new combination
Microllam-Registered Trademark- LVL and Parallam-Registered Trademark- PSL plant
in Buckhannon, West Virginia has made significant cost reductions since the
second quarter of 1996 and is currently the Company's low cost producer of
Microllam-Registered Trademark- laminated veneer lumber and Parallam-Registered
Trademark- parallel strand lumber. The TimberStrand-Registered Trademark- LSL
plant in Eastern Kentucky also had improved results over the second quarter of
last year and delivered break-even results at the gross margin line in the
second quarter of 1997.
Selling expenses increased $2.2 million in the second quarter of 1997, compared
to the prior year. This increase is largely due to variable selling expenses
and commissions. Additionally, the Company continues to invest in developing and
bringing new and innovative products to the marketplace and to fund operating
costs in its international sales efforts. General and administrative expenses
increased $2.4 million from the prior year. This increase is primarily driven
by the Company's investment in business support software which will provide the
infrastructure for future growth.
Minority interest expense increased $3.0 million from 1996 due to the increase
in earnings at the Trus Joist MacMillan (TJM) Partnership.
FIRST TWO QUARTERS OF 1997 COMPARED WITH THE FIRST TWO QUARTERS OF 1996
Sales for the first half of 1997 increased by $81 million or 30% from the
comparable period last year. Unit volume sales growth accounted for the majority
of the increase due to increased acceptance of the Company's engineered lumber
products.
Gross margins increased from 22.7% to 27.29% between the two periods. Improved
performance at the Company's two new plants represented the majority of the
improvement.
Selling expenses increased $6.0 million or 20%. As a percent of sales, however,
they decreased from 11.4% to 10.5% on sales. This reflects the increased
absorption of fixed selling costs offset by an increased investment in new
product introduction and national advertising. General and administrative
expenses increased $4.9 million. This increase is driven primarily by the
Company's investment in business support software which will provide the
infrastructure for future growth.
LIQUIDITY AND CAPITAL RESOURCES
JUNE 28, 1997 COMPARED TO DECEMBER 28, 1996
Working capital increased $24 million during the first half of 1997 to $136
million. The increase reflects the Company's seasonal investment in inventory
and receivables as the traditional building season gains full momentum. Cash
flows from operations were $60 million.
JUNE 28, 1997 COMPARED TO JUNE 29, 1996
Working capital increased $61 million from the prior year, to $136 million at
June 28, 1997. The increase in liquidity is due to strong earnings combined
with modest capital expansion spending.
<PAGE>
The Company announced it will begin construction of a new TJI-Registered
Trademark- joists and Microllam-Registered Trademark-, laminated veneer
lumber (LVL) manufacturing facility in Evergreen, Alabama. The first phase
of this new plant will cost approximately $45 million. Construction is
planned to begin late in the third quarter of 1997, after all required state
and local permits are secured. The plant is expected to begin manufacturing
LVL and TJI-Registered Trademark- joists in late 1998.
The Company has begun the construction of a TimberStrand-Registered Trademark-
LSL -flange I line at its Eastern Kentucky location. The new production
facility will allow the Company to produce traditional I-joist products, using
TimberStrand-Registered Trademark- LSL as the top and bottom flange material.
The additional I-line will require a capital investment of approximately $20
million. Production is expected to begin ramping up in late 1997.
In December of 1996, the Company's Board of Directors authorized the purchase of
up to $15 million of the Company's common stock at market prices. The Company
purchased $8.3 million of treasury stock during the first quarter and $6.7
million during the second quarter completing the stock repurchase program.
In the second quarter of 1996, the Company issued $5.7 million of industrial
revenue bonds to finance construction of the Hazard, Kentucky
TimberStrand-Registered Trademark- LSL plant. The bonds are due in a single
maturity in 2026, with interest payable semi-annually at 6.8 percent. In the
second quarter of 1997, the Company issued $11.65 million of industrial
revenue bonds associated with the construction of this plant. The bonds are
due in a single maturity in 2027, with interest payable semi-annually at 6.55
percent.
The Company is evaluating potential sites for a third TimberStrand-Registered
Trademark- LSL plant but has not determined whether or when to proceed with
construction. The Company believes that current cash balances, cash generated
from operations, and borrowing under a $150 million Revolving Credit Facility
will be sufficient to meet the on-going operating and capital expansion needs of
the Company. The Company also believes that additional or expanded lines of
credit or appropriate long-term capital can be obtained to fund other major
capital requirements as they arise, or to fund an acquisition.
The Company sold its windows operations in 1996, however, it retained certain
liabilities related to these operations. Management believes that existing
reserves are adequate to meet all subsequent liabilities that may arise related
to the discontinued operations.
Substantially all of the Company's operating assets are held, and revenue
generated, by its TJM partnership. The partnership regularly distributes cash
to the partners to fund the tax liabilities generated by the partnership at the
corporate level. All other distributions of cash by the partnership are
dependent on the affirmative votes of the representatives of the minority
partner. Accordingly, there can be no assurance that such distributions will be
approved and thereby be available for the payment of dividends or to fund other
operations of the Company.
INDUSTRY, COMPETITION, AND CYCLICALITY
The Company's engineered lumber products continue to gain market acceptance as
high-quality alternatives to traditional solid-sawn lumber products. Through
the Company's intensive marketing efforts, builders and other wood users are
increasingly recognizing the consistent quality, superior strength, lighter
weight, and ease of installation of engineered lumber products. The Company
believes that this trend will continue well into the future.
No other company possesses the range of engineered lumber products, the levels
of service and technical support, or the second generation technologies of
<PAGE>
TimberStrand-Registered Trademark- LSL or Parallam-Registered Trademark- PSL.
There are, however, a number of companies, including several large forest
products companies, that now produce look-alike wood I-joist and laminated
veneer lumber products. Several of these companies have announced capacity
expansions. These look-alike products are manufactured using processes similar
to the Company's oldest generation technologies.
The Company believes its network of manufacturing plants and multiple
technologies position it as the low-cost producer of engineered lumber. While
competition helps expand the market for engineered wood products, including
those manufactured by the Company, it may also make the existing markets more
price competitive. Traditional wide-dimension lumber, however, remains the
predominant structural framing material used in residential construction and is
the primary competitor of the Company's products. Commodity lumber prices
historically have been subject to high volatility, and during periods of
significant lumber price movements the Company's prices have trended in the same
direction.
The Company's operations are strongly influenced by the cyclicality and
seasonality of residential housing construction. This industry experiences
fluctuations resulting from a number of factors, including the state of the
economy, consumer confidence, credit availability, interest rates, and weather
patterns. Consistent with the seasonal pattern of the construction industry as a
whole, the Company's sales have historically tended to be lowest in the first
and fourth quarters and highest in the second and third quarters of each year.
Microllam-Registered Trademark-, Parallam-Registered Trademark-, and
TimberStrand-Registered Trademark- are registered trademarks of Trus Joist
MacMillan a Limited Partnership, Boise, Idaho
<PAGE>
TJ INTERNATIONAL, INC.
PART II
OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Company's May 21, 1997 annual meeting of stockholders, the
following matters were voted upon and approved by the stockholders as
indicated:
Votes Cast
----------------------------------
Against or
Description For Withheld Abstentions
------------------------ ----------- ----------- -----------
1. To elect as directors the
following individuals
FOR TERMS EXPIRING AT THE 2000
ANNUAL MEETING
Joyce A. Godwin 15,268,226 108,282 85,810
J. L. Scott 15,309,528 71,680 85,810
Harold E. Thomas 15,298,784 82,424 85,810
William J. White 15,310,330 70,878 84,910
2. Adopt TJ International, Inc.
Non-Employee Directors 1997
Stock Plan 12,209,047 638,381 219,764
3. Adopt TJ International, Inc.
Key Employees 1996 Stock
Option Plan 12,060,688 811,543 191,929
4. Ratification of Appointment
of Arthur Andersen LLP as
Independent Accountants for
the Company 15,271,019 105,021 94,688
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Filed as an exhibit to this report is the following:
(4) A copy of the TJ International, Inc. Non-Employee Directors
1997 Stock Plan, which is a subject in Item 4 of this
report.
(4) A copy of the TJ International, Inc. Key Employees 1996
Stock Option Plan, which is a subject in Item 4 of this
report.
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter.
<PAGE>
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: August 12, 1997
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS TO FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL QUARTER ENDED JUNE 28, 1997 COMMISSION FILE NUMBER 0-7469
TJ INTERNATIONAL, INC.
EXHIBIT INDEX
Exhibits Page
- -------- ----
(4) TJ International, Inc. Non-Employee Directors
1997 Stock Plan Document 2
(4) TJ International, Inc. Key Employees 1996 Stock
Option Plan Document 3
(27) Financial Data Schedule Document 4
<PAGE>
THE TJ INTERNATIONAL, INC.
NON-EMPLOYEE DIRECTORS 1997 STOCK PLAN
This Non-Employee Directors 1997 Stock Plan (the "Plan") of TJ
INTERNATIONAL, INC., a Delaware corporation (the "Company") contains both
nonstatutory stock option provisions and stock award provisions.
1. PURPOSE OF THE PLAN.
The purpose of the Plan is to encourage ownership in the Company by outside
directors of the Company (individually, a "Non-Employee Director," or
collectively, the "Non-Employee Directors") whose continued services are
considered essential to the Company's continued progress and thus to provide
them with an opportunity to share in the future success of the Company and with
a further incentive to remain as directors of the Company.
Options granted under this Plan ("Options") are non-statutory stock options
which are not entitled to special tax treatment under Section 422 of the
Internal Revenue Code.
2. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board").
(b) Subject to the provisions of the Plan, the Board shall have authority
in its discretion (i) to construe and interpret the Plan and all Options granted
hereunder, to determine the terms and provisions (and amendments thereof) of the
Options granted under the Plan; (ii) to define the terms used in the Plan and in
the Options granted thereunder; (iii) to prescribe, amend or rescind rules and
regulations relating to the Plan; (iv) to make all other determinations
necessary or advisable for the administration of the Plan; and (v) to exercise
all powers expressly granted to the Board by this Plan and all other powers
deemed by the Board, in its discretion, to be necessary or desirable to
accomplish the intent and purposes of the Plan. All determinations and
interpretations made by the Board shall be binding and conclusive on all
participants in the Plan and on their legal representatives and beneficiaries.
(c) Any action of the Board with respect to the Plan shall be taken by a
majority vote at a meeting of the Board or by written consent of a majority of
the Board without a meeting.
(d) The Board may, if it deems advisable, appoint a Stock Option
Committee, consisting of not less than two (2) Non-Employee Directors of the
Company appointed by the Board, to carry out such functions and to serve such
terms as the Board may designate. However, all Options granted under this Plan
shall be granted by the Board unless the Board
-1-
<PAGE>
expressly authorizes the Stock Option Committee to grant Options under this
Plan. For purposes of this Section 2(d) only, "Non-Employee Director" means a
director who meets the criteria of Rule 16b-3(b)(3)(i) of the Securities
Exchange Act of 1934 (i.e., a director who, at the time he exercises discretion
concerning this plan (1) is not an officer or employee of the Company or any
subsidiary or parent of the Company; (2) does not receive compensation, either
directly or indirectly, from the Company or any subsidiary or parent of the
Company in any capacity other than as a director, except for an amount that
would not need to be disclosed under 17 C.F.R. Section 229.404(a); (3) does not
possess an interest in any other transaction required to be disclosed under 17
C.F.R. Section 229.404(a); and (4) is not engaged in a business relationship
required to be disclosed under 17 C.F.R. Section 229.404(a)).
3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN.
The maximum number of shares of the Company's $1.00 per value common stock
("Stock") that may be issued under the Plan, whether in direct stock awards
("Awards") or upon exercise of Options or both, shall be One Hundred Thousand
(100,000) shares of Stock, subject to adjustment in accordance with Section 14
of the Plan. If any Option granted hereunder shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares of Stock
subject thereto shall (unless the Plan shall have been terminated) again be
available for other Awards or Options to be granted under the Plan. Shares of
Stock subject to Options granted under this Plan may be made available, as the
Board shall determine from time to time, from authorized but unissued shares of
Stock or issued shares of Stock which have been reacquired by the Company.
Shares of Stock delivered under the Plan shall be fully paid, validly issued and
nonassessable.
4. PARTICIPATION IN THE PLAN.
Each member of the Board who is not an officer or employee of the Company
or any of its subsidiaries or affiliates shall be eligible to participate in the
Plan.
5. DURATION OF PLAN AND OPTIONS.
Unless the Plan shall theretofore have been terminated as provided in
Section 18, the Plan shall terminate on February 12, 2007, and no Options shall
be granted and no Stock Awards shall be made under this Plan after the date on
which the Plan terminates. Notwithstanding any other provision of this Plan, no
Option may be exercised after ten (10) years from the date of grant of such
Option. Unexercised Options shall expire ten (10) years after date of grant.
6. GRANT OF OPTIONS.
The Board shall have authority to grant each eligible director Options to
purchase Stock subject to the terms set forth in Section 7.
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7. TERMS OF OPTIONS.
(a) The exercise price per share of Stock subject to each Option shall be
determined by the Board at the time of granting each individual Option hereunder
and shall be set forth in the applicable Option Agreement; but in no event shall
the exercise price of an Option be less than the fair market value of the
Company's Stock on the date the Option is granted. The fair market value of
such shares shall be determined by the Board on the basis of published market
quotations; but in no event shall the fair market value so determined be less
than the closing price of the publicly traded shares of Stock on the trading day
immediately preceding the date on which the Option is granted, as quoted in the
WALL STREET JOURNAL or successor generally recognized business journal or, if
such business journal does not list the published market quotation, then on the
NASDAQ reporting system or successor reporting system.
(b) In 1997, the Board shall have authority in its discretion to grant
eligible directors Options to purchase up to Four Thousand (4,000) shares of
Stock. The Options granted in 1997 shall be exercisable as follows:
(i) Options to purchase up to Two Thousand (2,000) shares of Stock may be
exercisable beginning one (1) year after the grant; (ii) Options to purchase up
to an additional One Thousand Three Hundred Thirty-Three (1,333) shares of Stock
may be exercisable beginning two (2) years after the grant; and (iii) Options to
purchase the remaining additional shares (I.E. up to Six Hundred Sixty-Seven
(667)) of Stock may be exercisable beginning three (3) years after the grant.
Each year after 1997, the Board shall have authority in its discretion to grant
eligible directors Options to purchase up to Two Thousand (2,000) shares of
Stock. Such Options shall be exercisable in three (3) equal annual installments
beginning one (1) year after the grant. The Board shall prescribe in the
applicable Option Agreement the time or times when an Option may be exercised
and the number of shares of Stock subject to the Option. Each Option shall
expire and all rights to purchase Stock thereunder shall cease on the date fixed
by the Board in the Option Agreement.
8. TIME OF OPTION GRANT.
No Option shall be deemed to have been granted until it has been duly
executed in writing by the Company. The grant of an Option pursuant to the Plan
shall be effective as of the date of the Board meeting (or written consent in
lieu of a meeting) approving the grant of the Option, but only if a written
Option Agreement containing the terms and conditions of the Option shall
thereafter be duly executed and delivered by or on behalf of the Company and the
director to whom such Option is granted. The Option Agreement shall be dated as
of the date of the meeting (or written consent) of the Board at which grant of
the Option was approved.
9. EXERCISE OF OPTIONS.
(a) Except as hereinafter expressly provided, no Option may be exercised
at any time unless the holder thereof is at the time of exercise a director of
the Company. After an Option or an installment of an Option becomes
exercisable, such Option or installment may
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be exercised in full or in part at any time prior to its expiration or
termination as provided in this Plan.
(b) Options may be exercised by giving written notice to the Company
specifying the number of shares of Stock to be acquired, accompanied by the
entire exercise price for such shares either (i) in cash (or by certified or
cashier's check or money order), or (ii) in the form of an assignment to the
Company of sufficient other shares of Stock, which have been owned by the Option
holder for at least six months before the date of exercise, having a fair market
value equalling such exercise price, or (iii) in a combination of such cash and
Stock. If shares of Stock are used to pay the exercise price in whole or in
part, such shares shall be valued on the basis of published market quotations;
but in no event shall the fair market value so determined be less than the
closing price of the publicly traded shares of Stock on the trading day
immediately preceding the date on which the Option holder exercises the Option,
as quoted in the WALL STREET JOURNAL or successor generally recognized business
journal or, if such business journal does not list the published market
quotation, then on the NASDAQ reporting system or successor reporting system.
(c) Payment of the exercise price may also be made by delivering to the
Company a properly executed exercise notice together with irrevocable
instructions to the Company to deliver, to a securities broker specified in the
notice, the certificate for the Stock acquired upon exercise of the Option and
further irrevocable instructions to the specified broker to deposit the Stock in
the Option holder's cash account (if the Stock is to be sold to pay the exercise
price) or his/her margin account (if the exercise price is to be funded by a
margin loan) and to promptly deliver to the Company the Stock sale or margin
loan proceeds in the amount of the exercise price. The Board may adopt
regulations establishing a mechanism by which this payment method shall be
implemented in accordance with Federal Reserve Board Regulation T.
(d) Notwithstanding anything contained herein to the contrary, the
issuance date of the shares of Stock issued upon the exercise of the Option
shall be the date the cash and/or Stock received by the Company is appropriately
recorded in the Company's books and records. No person entitled to exercise any
Option granted under the Plan shall have any of the rights and privileges of a
shareholder of the Company in respect to any shares of Stock issuable upon
exercise of such Option until certificates representing such shares shall have
been issued and delivered.
10. STOCK OWNERSHIP GUIDELINES.
(a) Directors otherwise eligible to receive Options under this Plan
("Participants") will observe a stock ownership guideline as described herein
(the "Guideline"). Each Participant will own a number of shares of Stock
determined by the Board. The Board may change the Guideline in its sole
discretion from time to time by notice to each Participant. For purposes of
determining whether the Participant meets the Guideline, the Participant may
calculate the number of Eligible Shares the Participant owns at the time of
receipt of any such
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notice. "Eligible Shares" shall mean (i) shares of Stock held (whether in
certificated form or in street name) directly in sole ownership or in joint
ownership with a spouse, and (ii) shares of Stock held (whether in certificated
form or in street name) indirectly in beneficial ownership or in joint
beneficial ownership with a spouse in a trust, family limited partnership or
similar estate planning vehicle.
(b) In consideration for a Participant's compliance with the Guideline,
the Participant will be eligible to receive grants of Options under the Plan in
each year in which the Guideline is satisfied. If Options are granted under
this Plan to a Participant because the Participant has satisfied the applicable
Guideline and the Participant later sells, or otherwise transfers, enough Stock
so that the Participant no longer satisfies the applicable Guideline, the
Participant shall not be eligible to receive grants of additional Options under
the Plan until the Participant again satisfies the applicable Guideline, and the
Board may, in its discretion, cancel all or any part of the then unexercised
Options held by the Participant under this Plan.
(c) Notwithstanding the foregoing, any director first elected to the Board
(a "new director") after the effective date of this Plan, shall not be required
to satisfy the Guideline until the end of the three-year period beginning on the
date the new director is first elected. The Board contemplates that new
directors will obtain, through the exercise of Options or otherwise, sufficient
shares of Stock over this three-year period to satisfy the Guideline. To assist
new directors in accomplishing that objective, each new director shall be
entitled to receive, at the time of his or her first election to the Board, a
grant of Two Thousand (2,000) shares of Stock, which shall be subject to the
restrictions set forth in Section 10(d).
(d) A stock certificate representing the number of shares granted shall be
registered in the Participant's name but shall be held in custody by the Company
for the Participant's account. The Participant shall have all rights and
privileges of a stockholder as to such shares, except that, unless otherwise
provided in this Section 10(d), the following restrictions shall apply: (i) the
Participant shall not be entitled to delivery of the certificate until the
completion of three years of service (the "Earn-out Period") as an eligible
director; (ii) none of the shares may be sold, transferred, assigned, pledged,
or otherwise encumbered or disposed of during the Earn-out Period; (iii) the
shares shall be forfeited and all rights of the Participant to such shares shall
terminate unless the Participant has remained an eligible director of the
Company for the entire Earn-out Period except that 33-1/3% of the shares shall
become non-forfeitable after each succeeding year of service as an eligible
director following the date of grant. If a Participant ceases to be an eligible
director before the end of the Earn-out Period for any reason (including,
without limitation, becoming an ineligible employee director), the Participant
shall forfeit all shares with respect to which the appropriate years of service
as an eligible director have not been completed and all restrictions on the
shares that have become non-forfeitable shall lapse. The forfeited shares shall
be transferred to the Company without further action by the Participant, and a
certificate for the non-forfeitable shares shall be delivered to the Participant
or the Participant's beneficiary or estate, as the case may be. If a
Participant remains an eligible director to the end of the Earn-out Period, the
restrictions on the shares shall lapse and a stock
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certificate for the full number of shares granted pursuant to Section 10(c)
shall be delivered, free of all such restrictions, to the Participant. The
Company shall not be required to deliver any fractional share of Stock but will
pay, in lieu thereof, the fair market value (measured as of the date the
restrictions lapse) of such fractional share to the Participant or the
Participant's beneficiary or estate, as the case may be.
11. SPECIAL EXERCISE PROVISIONS.
(a) At any time after the date of grant, an Option shall be exercisable
(notwithstanding any contrary provisions of this Plan or any Option Agreement
under this Plan) with respect to the full number of shares subject to that
Option:
(1) During the period commencing as of the effective date of any
agreement entered by the Company or the shareholders of the Company to
dispose of all or substantially all of the assets or stock of the Company
by means of a sale, reorganization, liquidation, or otherwise, and ending
two (2) years after the disposition of assets or stock contemplated by the
agreement; or
(2) During the two (2) year period commencing on the date any person
or group (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) commences, or announces the intent to
make, a tender offer or exchange offer the consummation of which would
result in the beneficial ownership by the person or group of at least
thirty percent (30%) of the common stock then outstanding, or acquires, or
obtains the right to acquire, beneficial ownership of at least twenty
percent (20%) of the common stock then outstanding.
(b) After an Option holder's service on the Board terminates for any
reason other than death or permanent and total disability, the Option holder may
exercise his/her Options that were exercisable as of his/her last day of service
on the Board within thirty (30) days after the date he/she ceased to serve on
the Board. Any Options that were not yet exercisable as of the Option holder's
last day of service on the Board shall immediately be cancelled on the date
he/she ceases to serve on the Board. All Options not exercised by the Option
holder shall expire on the thirty-first (31st) day after the Option holder's
last day of service on the Board.
12. DEATH/DISABILITY OF THE OPTION HOLDER.
(a) If an Option holder dies or becomes totally and permanently disabled
while serving on the Board, all of his/her Options, whether or not previously
exercisable, shall become exercisable upon the date of his/her death or
disability. The Options shall continue to be exercisable until the earlier of
the expiration date of the Option and two (2) years from the date of death or
disability.
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(b) If an Option holder dies after termination of service on the Board,
the Options that were exercisable on the date of his/her death may be exercised
by the personal representative of his/her estate, his/her heir or his/her
legatee until the earlier of the expiration date of the Option and two (2) years
from the date of death.
(c) If deemed by the Board to be in the best interest of the Company, any
Option granted to an Option holder who is not a citizen of the United States may
include a cash settlement right ("Cash Settlement Right"). Cash Settlement
Rights shall be subject to such terms and conditions not inconsistent with the
other provisions of this Plan as the Board shall determine, provided that:
(1) A Cash Settlement Right shall be exercisable only after the
Option holder's death, by a legatee or legatees of the Cash Settlement
Right under the Option holder's last will, by the personal representative
of the Option holder's estate or by the Option holder's heirs or
distributees, and only to the extent the Option in which the Cash
Settlement Right is included is exercisable. Notwithstanding the preceding
sentence, a Cash Settlement Right is exercisable only when the fair market
value of a share of Stock exceeds the exercise price specified in the
Option.
(2) A Cash Settlement Right shall entitle the Option holder's
legatee, personal representative, heir or distributee (as the case may be)
to surrender to the Company unexercised the Option, or portion thereof, to
which it is related, or any portion thereof, and to receive from the
Company in exchange therefor cash in an amount equal to the excess of the
fair market value on the date of exercise of one share of Stock over the
exercise price per share specified in such Option multiplied by the number
of shares of Stock subject to the Option, or portion thereof, which is so
surrendered. The Board of Directors may elect to settle the Company's
obligation arising out of the exercise of a Cash Settlement Right by
payment of cash or by check.
13. STOCK AWARDS UPON RETIREMENT.
In addition to Options which may be granted as provided above, upon
retirement from the Board, each eligible director who has completed at least one
full term of service on the Board shall be entitled to receive (i) a grant of
One Thousand (1,000) shares of Stock if such director has served on the Board
for more than four (4) but less than nine (9) years or (ii) a grant of Two
Thousand Five Hundred (2,500) shares of Stock if such director has served on the
Board for nine (9) or more years. Except as otherwise provided below, each
grant pursuant to this Section 13 shall become effective and the eligible
director shall be entitled to receive all of such shares of Stock on the last
day such director serves on the Board prior to retirement therefrom (the "last
day of service"). Notwithstanding the foregoing, an eligible director may elect
to defer receipt of shares of Stock granted pursuant to this Section 13 ratably
over a five-year period
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commencing on the last day of service; provided, however, such election shall
not be effective unless contained in a written instrument signed by the eligible
director and delivered to the Company not less than 90 days prior to the last
day of service. Such election, by the terms of such instrument, shall be
irrevocable as of the date of its execution. Such instrument also shall
designate a beneficiary to receive the shares of Stock in the event the eligible
director dies prior to the expiration of such five-year period; the beneficiary
so designated shall receive the shares of Stock in such amounts and at such
times as would the eligible director had he or she survived. Shares of Stock
granted pursuant to this Section 13 shall become non-forfeitable immediately
upon grant on the last day of service.
14. ADJUSTMENTS.
The number of shares subject to the Plan and to Options granted under the
Plan shall be adjusted as follows:
(a) In the event that the Company's outstanding common stock is changed by
any stock dividend, stock split or combination of shares, the number of shares
subject to the Plan and to Options therefore granted thereunder and the exercise
price of such Options shall be proportionately adjusted; provided, however, that
no fractional share or shares shall be effected by such an event.
(b) In the event of any merger or consolidation of the Company with any
other corporation or corporations, there shall be substituted for each share of
Stock then subject to the Plan, whether or not at the time subject to the
outstanding Options, the number and kind of shares of stock or other securities
into which each outstanding share of Stock of the Company shall be converted by
such merger or consolidation.
(c) The number of shares to be granted as Awards of restricted stock under
Section 10 as Stock Awards under Section 13 shall be adjusted upon the
occurrence of the events described in Section 14(b). The Board may, in its
discretion, adjust the number of shares to be granted as Stock Awards under
Section 10 and Section 13 upon the occurrence of the events described in Section
14(a).
(d) The Board may, in its discretion, adjust the annual limitation on
Options in Section 7(b) upon the occurrence of the events described in Sections
14(a) and (b).
15. EFFECTIVE DATE OF PLAN.
The effective date of this Plan shall be February 13, 1997, subject to
subsequent approval thereof by the holders of one-half (1/2) of all the issued
and outstanding voting stock in the Company.
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16. NON-TRANSFERABILITY OF OPTIONS.
(a) Except as provided in subsection (b) next below, no Option granted
under this Plan shall be transferrable by any Option holder otherwise than by
will or the laws of descent and distribution; and, during an Option holder's
lifetime, his/her Options shall be exercisable only by him/her.
(b) Notwithstanding the provisions of subsection (a) above, an Option
holder, at any time before his/her death, may assign all or any portion of any
Option granted to him/her to (i) his/her spouse or lineal descendant, (ii) the
trustee of a trust for the primary benefit of his/her spouse or lineal
descendant, or (iii) a partnership of which his/her spouse and lineal
descendants are the only partners. In such event, the spouse, lineal
descendant, trustee or partnership will be entitled to the right to exercise the
assigned portion of such Option, subject to all of the terms, conditions and
restrictions applicable to the Option, as set forth in this Plan and in the
related Option Agreement immediately prior to the effective date of the
assignment. (For example, the provisions of this Plan and the Option Agreement
dealing with termination of service on the Board, death and disability shall
continue to apply with respect to the Option holder's termination of service on
the Board, death or disability and not with respect to the termination of
service, death or disability of any other person to whom the Option has been
assigned.) Any such assignment will be permitted only if (i) the Option holder
does not receive any consideration therefor, and (ii) the assignment is
expressly permitted by the applicable Option Agreement as approved by the Board.
Any such assignment shall be evidenced by an appropriate written document
executed by the Option holder, and a copy thereof shall be delivered to the
Company on or before the effective date of the assignment.
17. TERMINATION AND AMENDMENT.
The Board may at any time suspend or terminate the Plan. The Board may
also amend or revise the terms of the Plan. However, no such action shall:
(i) Change the class of persons eligible to receive Options;
(ii) Without the consent of the Option holder, change or impair any
Option previously granted;
(iii) Increase the maximum number of shares subject to Options hereunder;
(iv) Change the minimum exercise price;
(v) Change the limitations on the Options; or
(vi) Increase the time limitations on the grant of Options.
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Nothing in this Section 17 shall prevent adjustments required by Section 14
hereof.
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THE TJ INTERNATIONAL, INC. KEY EMPLOYEES' 1996
STOCK OPTION PLAN
This plan is a stock option plan that contains both "incentive" stock
option and nonstatutory stock option provisions (the "Plan"), under which
options can be granted from time to time to eligible employees of TJ
INTERNATIONAL, INC., a Delaware corporation (the "Company"), or any of its
subsidiary corporations (the "Option Holders"), to purchase shares of the
Company's $1.00 par value common stock ("Stock") subject to the limitations,
provisions and requirements hereinafter stated.
1. PURPOSE OF THE PLAN.
The general purpose of the Plan is to aid in attracting, developing and
retaining a management capable of insuring the future success of the Company.
The Plan is designed to aid the Company in retaining the services of key
management employees of the Company, or any of its subsidiaries, including the
officers of the Company, as may be determined in the discretion of the Board of
Directors from time to time; to attract new management personnel needed for
future operations and growth; to offer such present and future key employees
additional incentives to put forth maximum efforts for the future success of the
Company; and to afford them opportunities to obtain or increase a proprietary
interest in the Company, and thereby, to have an opportunity to share in such
future success.
Options granted under this Plan are intended to qualify either as
"incentive" stock options ("Incentive Options") under IRC Section 422A of the
Internal Revenue Code of 1986, as now or hereafter amended ("Internal Revenue
Code"), or, if so elected by the Board of Directors, as stock options which do
not meet the requirements of IRC Section 422A of the Internal Revenue Code
("Nonstatutory Options"). Incentive Options and Nonstatutory Options are
collectively referred to as "Options."
2. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board of Directors of the
Company.
(b) Subject to the provisions of the Plan, the Board of Directors shall
have authority in its discretion (i) to construe and interpret the Plan and all
Options granted hereunder, to determine the terms and provisions (and amendments
thereof) of the Options granted under the Plan (which need not be identical),
including such terms and provisions (and amendments) as shall be required in the
judgment of the Board of Directors to provide that Incentive Options under the
Plan will be treated as "incentive" stock options under the Internal Revenue
Code or to conform to any change in any law or regulation applicable thereto;
(ii) to define the terms used in the Plan and in the Options granted thereunder;
(iii) to prescribe, amend or rescind rules and regulations relating to the Plan;
(iv) to determine the individuals to whom and the time or times
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at which Options shall be granted, the types of Options granted, the number of
shares subject to each Option, the exercise price for Options, and the duration
of leaves of absence which may be granted to participants without constituting a
termination of their employment for the purposes of the Plan; (v) to make all
other determinations necessary or advisable for the administration of the Plan;
and (vi) to exercise all powers expressly granted to the Board of Directors by
this Plan and all other powers deemed by the Board of Directors, in its
discretion, to be necessary or desirable to accomplish the intent and purposes
of the Plan. All determinations and interpretations made by the Board of
Directors shall be binding and conclusive on all participants in the Plan and on
their legal representatives and beneficiaries.
(c) Any action of the Board of Directors with respect to the Plan shall be
taken by a majority vote at a meeting of the Board of Directors or by written
consent of a majority of the Board of Directors without a meeting.
(d) The Board of Directors may, if it deems advisable, appoint a Stock
Option Committee, consisting of not less than two (2) Non-Employee Directors of
the company appointed by the Board of Directors, to carry out such functions and
to serve such terms as the Board may designate. However, all Options granted
under this Plan shall be granted by the Board of Directors of the Company unless
the Board expressly authorizes the Stock Option Committee to grant Options under
this Plan. For purposes of this Plan, "Non -Employee Director" means a director
who meets the criteria of Rule 16b-3(b)(3)(i) of the Securities Exchange Act of
1934 (i.e., a director who, at the time he exercises discretion concerning this
plan (1) is not an officer or employee of the Company or any subsidiary or
parent of the Company; (2) does not receive compensation, either directly or
indirectly, from the Company or any subsidiary or parent of the Company in any
capacity other than as a director, except for an amount that would not need to
be disclosed under 17 C.F.R. Section 229.404(a); (3) does not possess an
interest in any other transaction required to be disclosed under 17 C.F.R.
Section 229.404(a); and (4) is not engaged in a business relationship required
to be disclosed under 17 C.F.R. Section 229.404(a)).
3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN.
The Board of Directors may grant Options to purchase from the Company not
more than One Million Five Hundred Thousand (1,500,000) shares of Stock, subject
to adjustment in accordance with Section 13 of the Plan. If any Option granted
hereunder shall expire or terminate for any reason without having been exercised
in full, the unpurchased shares of Stock subject thereto shall (unless the Plan
shall have been terminated) again be available for other Options to be granted
under the Plan. Shares of Stock subject to Options granted under this Plan may
be made available, as the Board of Directors of the Company shall determine from
time to time, from authorized but unissued shares of Stock or issued shares of
Stock which have been reacquired by the Company. Shares of Stock delivered
under the Plan shall be fully paid, validly issued and nonassessable.
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4. SELECTION OF OPTION HOLDERS.
Options shall be granted only to such key management employees, including
officers of the Company or any of its subsidiaries, as may from time to time be
selected by the Board of Directors of the Company, subject to the provisions
herein contained. No Option shall be granted to a Director or officer who is
not an employee of the Company or one of its subsidiaries. No Incentive Option
shall be granted to an employee who immediately before such grant owned stock
representing more than ten percent (10%) of the voting power or value of all
classes of stock of the Company or any of its subsidiaries unless the exercise
price is at least one hundred ten percent (110%) of the fair market value of the
Stock subject to the Incentive Option at the time of the grant, and such
Incentive Option is not exercisable more than five (5) years after the date such
Option was granted.
5. DURATION OF PLAN AND OPTIONS.
Unless the Plan shall theretofore have been terminated as provided in
Section 18, no Options shall be granted under this Plan later than December 18,
2006. Notwithstanding any other provision of this Plan, no Option may be
exercised after ten (10) years from the date of grant of such Option.
Unexercised Options shall expire ten (10) years after date of grant.
6. TERMS OF OPTIONS.
(a) The exercise price per share of Stock subject to each Option shall be
determined by the Board of Directors of the Company at the time of granting each
individual Option hereunder and shall be set forth in the applicable Option
Agreement; but in no event shall the exercise price of an Option be less than
the fair market value of the Company's Stock on the date the Option is granted.
The fair market value of such shares shall be determined by the Board of
Directors on the basis of published market quotations; but in no event shall the
fair market value so determined be less than the closing price of the publicly
traded shares of Stock on the trading day immediately preceding the date on
which the Option is granted, as quoted in the WALL STREET JOURNAL or successor
generally recognized business journal or, if such business journal does not list
the published market quotation, then on the NASDAQ reporting system or successor
reporting system.
(b) The Board of Directors shall have authority in its discretion to
prescribe in any Option Agreement the time or times when an Option may be
exercised and the number of shares of Stock subject to the Option. Each Option
shall expire and all rights to purchase Stock thereunder shall cease on the date
fixed by the Board in the Option Agreement.
7. INCENTIVE OPTIONS.
The provisions of this Section 7 apply only to Incentive Options:
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The aggregate fair market value (determined as of the date of grant) of
shares of Stock for which "incentive" stock options are exercisable for the
first time by an employee under all stock option plans of the Company or any of
its subsidiaries, shall not exceed $100,000 during any calendar year.
8. TIME OF OPTION GRANT.
No Option shall be deemed to have been granted until it has been duly
executed in writing by the Company. The grant of an Option pursuant to the Plan
shall be effective as of the date of the Board meeting (or written consent in
lieu of a meeting) approving the grant of the Option, but only if a written
Option Agreement containing the terms and conditions of the Option shall
thereafter be duly executed and delivered by or on behalf of the Company and the
employee to whom such Option is granted. The Option Agreement shall be dated as
of the date of the meeting (or written consent) of the Board of Directors at
which grant of the Option was approved.
9. EXERCISE OF OPTIONS.
(a) Except as hereinafter expressly provided, no Option, whether Incentive
or Nonstatutory, may be exercised at any time unless the Option Holder thereof
is at the time of exercise an employee of the Company or one of its
subsidiaries. After an Option or an installment of an Option becomes
exercisable, such Option or installment may be exercised in full or in part at
any time prior to its expiration or termination as provided in this Plan.
(b) Options may be exercised by giving written notice to the Company
specifying the number of shares of Stock to be acquired, accompanied by the
entire exercise price for such shares either (i) in cash (or by certified or
cashier's check or money order), or (ii) in the form of an assignment to the
Company of sufficient other shares of Stock, which have been owned by the Option
Holder for at least six months before the date of exercise, having a fair market
value equalling such exercise price, or (iii) in a combination of such cash and
Stock. If shares of Stock are used to pay the exercise price in whole or in
part, such shares shall be valued on the basis of published market quotations;
but in no event shall the fair market value so determined be less than the
closing price of the publicly traded shares of Stock on the trading day
immediately preceding the date on which the Option Holder exercises the Option,
as quoted in the WALL STREET JOURNAL or successor generally recognized business
journal or, if such business journal does not list the published market
quotation, then on the NASDAQ reporting system or successor reporting system.
(c) Payment of the exercise price may also be made by delivering to the
Company a properly executed exercise notice together with irrevocable
instructions to the Company to deliver, to a securities broker specified in the
notice, the certificate for the Stock acquired upon exercise of the Option and
further irrevocable instructions to the specified broker to deposit the Stock in
the Option Holder's cash account (if the Stock is to be sold to pay the
-4-
<PAGE>
exercise price) or his/her margin account (if the exercise price is to be funded
by a margin loan) and to promptly deliver to the Company the Stock sale or
margin loan proceeds in the amount of the exercise price. The Board of
Directors may adopt regulations establishing a mechanism by which this payment
method shall be implemented in accordance with Federal Reserve Board
Regulation T.
(d) In addition to payment of the exercise price upon exercise of an
Option under this Plan, the Company shall require the recipient of the Stock to
remit to the Company an amount sufficient to satisfy all applicable federal and
state income tax withholding requirements resulting from the exercise, either
(i) in cash (or by certified or cashier's check or money order), or (ii) in the
form of an assignment to the Company of sufficient other shares of Stock which
have been owned by the Option Holder for at least six months before the date of
exercise, having a fair market value equalling such withholding tax, or (iii) in
a combination of such cash and Stock. Stock surrendered under this Section 9(d)
shall be valued at its fair market value on the date the amount of withholding
tax is determined.
(e) Notwithstanding anything contained herein to the contrary, the
issuance date of the shares of Stock issued upon the exercise of the Option
shall be the date the cash and/or Stock received by the Company is appropriately
recorded in the Company's books and records. No person entitled to exercise any
Option granted under the Plan shall have any of the rights and privileges of a
shareholder of the Company in respect to any shares of Stock issuable upon
exercise of such Option until certificates representing such shares shall have
been issued and delivered.
10. STOCK OWNERSHIP GUIDELINES.
The Company anticipates that some of the Options granted pursuant to this
Plan will be granted under the Company's Long Term Stock Ownership Incentive
Program to eligible executives ("Executives") who satisfy Stock ownership
guidelines set forth in the Company's Leveraged Stock Purchase Plan (the "Stock
Purchase Plan"). If Options are granted under this Plan to an Executive because
the Executive has satisfied the Stock ownership guidelines in the Stock Purchase
Plan and the Executive later sells, or otherwise transfers, enough Stock of the
Company so that the Executive no longer satisfies the applicable Stock ownership
guideline, the Board of Directors may, in its discretion, cancel all or any part
of the then unexercised Options held by the Executive under this Plan.
11. SPECIAL EXERCISE PROVISIONS.
At any time after the date of grant, an Option shall be exercisable
(notwithstanding any contrary provisions of this Plan or any Option Agreement
under this Plan) with respect to the full number of shares subject to that
Option:
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<PAGE>
(1) During the period commencing as of the effective date of any
agreement entered by the Company or the shareholders of the Company to
dispose of all or substantially all of the assets or stock of the Company
by means of a sale, reorganization, liquidation, or otherwise, and ending
two (2) years after the disposition of assets or stock contemplated by the
agreement; or
(2) During the two (2) year period commencing on the date any
person or group (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) commences, or announces the intent
to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by the person or group of at
least thirty percent (30%) of the common stock then outstanding, or
acquires, or obtains the right to acquire, beneficial ownership of at
least twenty percent (20%) of the common stock then outstanding.
12. TERMINATION OF EMPLOYMENT.
(a) If an Option Holder's employment with the Company is terminated for
cause (as defined in Section 12(e)) or if the Option Holder voluntarily
terminates employment with the Company for any reason other than death,
permanent and total disability or retirement after age 55 pursuant to the terms
of a retirement program of the Company, the Option Holder may exercise his/her
Options that were exercisable as of his/her last day of employment within thirty
(30) days after the date he/she ceased employment. Any Options that were not
yet exercisable as of the Option Holder's last day of employment shall
immediately be cancelled on the date he/she ceases employment. All Options not
exercised by the Option Holder shall expire on the thirty-first (31st) day after
the Option Holder's last day of employment.
(b) If an Option Holder's employment with the Company is terminated
involuntarily but not for cause (as defined in Section 12(e)), the Option Holder
may exercise his/her Options that were exercisable as of his/her last day of
employment during a period to be determined by the Board of Directors of the
Company, but in no event less than thirty (30) days or more than one (1) year
for Incentive Options and two (2) years for Nonstatutory Options after his/her
last day of employment. The Board of Directors shall also have discretion to
determine what additional Options, if any, held by the Option Holder on his/her
last day of employment shall be exercisable during the exercise period the Board
establishes.
(c) If an Option Holder retires after reaching age fifty-five (55)
pursuant to the terms of a retirement program of the Company, his/her Options
that were exercisable as of his/her last day of employment shall continue to be
exercisable and, for each year of the Option Holder's service with the Company,
an additional three percent (3%) of his/her Options that were not previously
exercisable shall become immediately exercisable upon his/her retirement.
Incentive Options shall continue to be exercisable until the earlier of the
expiration date and two (2) months after the Option Holder's retirement; and
Nonstatutory Options shall continue to be exercisable until the earlier of the
expiration date and two (2) years after the Option Holder's retirement.
-6-
<PAGE>
(d) A leave of absence approved in writing by the Chief Executive Officer
of the Company or, in the case of the Chief Executive Officer, by the Board of
Directors, shall not be deemed a termination of employment for the purposes of
this Section 11; but no Option may be exercised during any such leave of absence
except during the first three (3) months thereof.
(e) For purposes of this Plan, "cause" means the Option Holder has
(i) committed any act detrimental to the Company's interest, such as any form of
dishonesty, including theft; criminal or other conduct involving moral turpitude
connected with employment or that otherwise reflects adversely upon the
Company's reputation or operations; violation of any noncompetition agreement;
unauthorized disclosure of proprietary or confidential information; sabotage or
destruction of the Company's property or equipment; refusal to return property,
documents, or information belonging to or originating with the Company; willful
or intentional violation or disregard of Company policy; repeated performance or
conduct problems; refusal to follow supervisory directions or instructions;
unlawful harassment or discrimination; or similar acts or reasons; or
(ii) engaged in any other type of conduct or behavior detrimental to the
Company's safe and efficient operation, the orderly closure, elimination, sale,
leasing or subcontracting out of the Option Holder's job, operation or
department, and/or its other business interests.
13. DEATH/DISABILITY OF THE OPTION HOLDER.
(a) If an Option Holder dies or becomes totally and permanently disabled
while employed by the Company, all of his/her Options, whether or not previously
exercisable, shall become exercisable upon the date of his/her death or
disability. The Options shall continue to be exercisable until the earlier of
the expiration date of the Option and two (2) years from the date of death or
disability; provided that in the case of an Option Holder's disability, all
Incentive Options shall expire no later than one (1) year after the date of
disability.
(b) If an Option Holder dies after termination of employment with the
Company, the Options that were exercisable on the date of his/her death may be
exercised by the personal representative of his/her estate, his/her heir or
his/her legatee until the earlier of the expiration date of the Option and two
(2) years from the date of death.
(c) If deemed by the Board of Directors to be in the best interest of the
Company, any Option granted to an Option Holder who is not a citizen of the
United States may include a cash settlement right ("Cash Settlement Right").
Cash Settlement Rights shall be subject to such terms and conditions not
inconsistent with the other provisions of this Plan as the Board of Directors
shall determine, provided that:
(1) A Cash Settlement Right shall be exercisable only after the
Option Holder's death, by a legatee or legatees of the Cash Settlement
Right under the Option Holder's last will, by the personal representative
of the Option Holder's estate or by the Option Holder's heirs or
distributees, and only to the extent the
-7-
<PAGE>
Option in which the Cash Settlement Right is included is exercisable.
Notwithstanding the preceding sentence, a Cash Settlement Right is
exercisable only when the fair market value of a share of Stock exceeds the
exercise price specified in the Option.
(2) A Cash Settlement Right shall entitle the Option Holder's
legatee, personal representative, heir or distributee (as the case may be)
to surrender to the Company unexercised the Option, or portion thereof, to
which it is related, or any portion thereof, and to receive from the
Company in exchange therefor cash in an amount equal to the excess of the
fair market value on the date of exercise of one share of Stock over the
exercise price per share specified in such Option multiplied by the number
of shares of Stock subject to the Option, or portion thereof, which is so
surrendered. The Board of Directors may elect to settle the Company's
obligation arising out of the exercise of a Cash Settlement Right by
payment of cash or by check.
14. ADJUSTMENTS.
The number of shares subject to the Plan and to Options granted under the
Plan shall be adjusted as follows:
(a) In the event that the Company's outstanding common stock is changed by
any stock dividend, stock split or combination of shares, the number of shares
subject to the Plan and to Options therefore granted thereunder and the exercise
price of such Options shall be proportionately adjusted; provided, however, that
no fractional share or shares shall be effected by such an event.
(b) In the event of any merger or consolidation of the Company with any
other corporation or corporations, there shall be substituted for each share of
Stock then subject to the Plan, whether or not at the time subject to the
outstanding Options, the number and kind of shares of stock or other securities
into which each outstanding share of Stock of the Company shall be converted by
such merger or consolidation.
15. DISCLOSURE.
If an employee shall sell or otherwise dispose of the Stock acquired upon
exercise of any Incentive Option either (i) before the expiration of a two (2)
year period after the date of the grant of the Incentive Option, or (ii) before
the expiration of a one (1) year period after the transfer of the Stock to
him/her, the employee agrees to inform the Company of such sale and all details
thereof, including the number of shares sold, selling price, ordinary income
realized thereon, and such other reasonable details as may be requested by the
Company.
-8-
<PAGE>
16. EFFECTIVE DATE OF PLAN.
The effective date of this Plan shall be December 19, 1996, subject to
subsequent approval thereof by the holders of one-half (1/2) of all the issued
and outstanding voting stock in the Company.
17. NON-TRANSFERABILITY OF OPTIONS.
(a) Except as provided in subsection (b) next below, no Option granted
under this Plan shall be transferrable by any Option Holder otherwise than by
will or the laws of descent and distribution; and, during an Option Holder's
lifetime, his/her Options shall be exercisable only by him/her.
(b) Notwithstanding the provisions of subsection (a) above, an Option
Holder, at any time before his/her death, may assign all or any portion of any
Nonstatutory Option granted to him/her to (i) his/her spouse or lineal
descendant, (ii) the trustee of a trust for the primary benefit of his/her
spouse or lineal descendant, or (iii) a partnership of which his/her spouse and
lineal descendants are the only partners. In such event, the spouse, lineal
descendant, trustee or partnership will be entitled to the right to exercise the
assigned portion of such Option, subject to all of the terms, conditions and
restrictions applicable to the Option, as set forth in this Plan and in the
related Option Agreement immediately prior to the effective date of the
assignment. (For example, the provisions of this Plan and the Option Agreement
dealing with termination of employment, death and disability shall continue to
apply with respect to the Option Holder's termination of employment, death or
disability and not with respect to the termination of employment, death or
disability of any other person to whom the Option has been assigned.) Any such
assignment will be permitted only if (i) the Option Holder does not receive any
consideration therefor, and (ii) the assignment is expressly permitted by the
applicable Option Agreement as approved by the Board of Directors. Any such
assignment shall be evidenced by an appropriate written document executed by the
Option Holder, and a copy thereof shall be delivered to the Company on or before
the effective date of the assignment.
18. TERMINATION AND AMENDMENT.
The Board of Directors of the Company may at any time suspend or terminate
the Plan. The Board may also amend or revise the terms of the Plan. However,
no such action shall:
(i) Change the class of employees eligible to receive Options;
(ii) Without the consent of the Option Holder, change or impair any
Option previously granted;
(iii) Increase the maximum number of shares subject to Options hereunder;
-9-
<PAGE>
(iv) Change the minimum exercise price;
(v) Change the limitations on the Options; or
(vi) Increase the time limitations on the grant of Options.
Nothing in this Section 18 shall prevent adjustments required by Section 14
hereof.
-10-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS DATA SCHEDULE CONTAINS RESTATED FINANCIAL INFORMATION EXTRACTED FROM THE
TJ INTERNATIONAL, INC. BALANCE SHEET AT JUNE 29, 1996 AND FROM ITS STATEMENT
OF INCOME FOR THE SIX MONTHS ENDED JUNE 29, 1996. THE INFORMATION PRESENTED IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-START> DEC-31-1995
<PERIOD-END> JUN-29-1996
<CASH> 20,957
<SECURITIES> 0
<RECEIVABLES> 52,108
<ALLOWANCES> 419
<INVENTORY> 43,700
<CURRENT-ASSETS> 134,775
<PP&E> 558,983
<DEPRECIATION> 165,983
<TOTAL-ASSETS> 567,586
<CURRENT-LIABILITIES> 60,121
<BONDS> 95,180
0
13,857
<COMMON> 17,277
<OTHER-SE> 182,893
<TOTAL-LIABILITY-AND-EQUITY> 567,586
<SALES> 266,207
<TOTAL-REVENUES> 266,207
<CGS> 205,667
<TOTAL-COSTS> 205,667
<OTHER-EXPENSES> 42,683
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,114
<INCOME-PRETAX> 7,239
<INCOME-TAX> 2,787
<INCOME-CONTINUING> 4,452
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,452
<EPS-PRIMARY> .23
<EPS-DILUTED> .22
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS DATA SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE TJ
INTERNATIONAL, INC. BALANCE SHEET AT JUNE 28, 1997 AND FROM ITS STATEMENT OF
INCOME FOR THE SIX MONTHS ENDED JUNE 28, 1997. THE INFORMATION PRESENTED IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> DEC-31-1996
<PERIOD-END> JUN-28-1997
<CASH> 70,875
<SECURITIES> 0
<RECEIVABLES> 82,026
<ALLOWANCES> 403
<INVENTORY> 51,649
<CURRENT-ASSETS> 215,687
<PP&E> 580,174
<DEPRECIATION> 202,711
<TOTAL-ASSETS> 636,846
<CURRENT-LIABILITIES> 79,948
<BONDS> 99,790
0
13,650
<COMMON> 17,707
<OTHER-SE> 195,362
<TOTAL-LIABILITY-AND-EQUITY> 636,846
<SALES> 346,993
<TOTAL-REVENUES> 346,993
<CGS> 252,521
<TOTAL-COSTS> 252,521
<OTHER-EXPENSES> 53,623
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,113
<INCOME-PRETAX> 20,749
<INCOME-TAX> 7,781
<INCOME-CONTINUING> 12,968
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,968
<EPS-PRIMARY> .71
<EPS-DILUTED> .67
</TABLE>
