<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 MARCH 29, 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.
MAY 2, 1997, 17,676,737 SHARES OF $1 PAR VALUE COMMON STOCK.
EXHIBIT INDEX ON PAGE 13
<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, 1997.
<PAGE>
TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
MARCH 29, DECEMBER 28, MARCH 30,
ASSETS 1997 1996 1996
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $ 21,516 $ 36,801 $ 4,503
Receivables, less allowances of
$447, $451 and $385 103,866 73,893 33,724
Inventories 51,644 51,549 46,580
Other 11,545 9,741 18,377
--------- --------- ---------
188,571 171,984 103,184
Property
Property and equipment 572,124 566,603 558,237
Less - Accumulated depreciation (192,835) (184,504) (156,788)
--------- --------- ---------
379,289 382,099 401,449
Goodwill 20,280 20,540 21,320
Other assets 23,133 25,192 16,342
--------- --------- ---------
$ 611,273 $ 599,815 $ 542,295
--------- --------- ---------
--------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable 2,505 $ -- 3,197
Current portion of long-term debt -- -- 340
Accounts payable 36,434 23,113 22,646
Accrued liabilities 32,535 37,286 21,765
--------- --------- ---------
71,474 60,399 47,948
Long-term debt, excluding current portion 88,140 88,140 89,440
Other long-term liabilities 6,050 6,050 10,517
Reserve for discontinued operations 20,757 21,970 4,232
Minority interest in Partnership 199,742 195,186 181,107
Stockholders' equity
ESOP Convertible Preferred Stock, $1.00 par 13,698 13,721 13,918
value, authorized 10,000,000 shares,
issued 1,160,993, 1,162,914, and 1,179,659
Guaranteed ESOP Benefit (9,204) (9,204) (10,382)
Common stock, $1.00 par value, authorized
200,000,000 shares, issued 17,654,009,
17,500,896, and 17,154,596 17,654 17,501 17,155
Paid-in capital 148,558 145,583 140,623
Retained earnings 67,546 63,249 50,614
Other (1,663) -- --
Cumulative translation adjustment (3,179) (2,780) (2,877)
Treasury stock, 419,300, shares, at cost (8,300) -- --
--------- --------- ---------
225,110 228,070 209,051
--------- --------- ---------
$ 611,273 $ 599,815 $ 542,295
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(AMOUNTS IN THOUSANDS
EXCEPT PER SHARE FIGURES)
FOR THE FISCAL
QUARTER ENDED
------------------------
MARCH 29, MARCH 30,
1997 1996
-------- --------
SALES $161,263 $111,157
-------- --------
COSTS AND EXPENSES
COST OF SALES 117,923 90,202
SELLING EXPENSES 17,083 13,287
ADMINISTRATIVE EXPENSES 8,562 6,054
-------- --------
143,568 109,543
-------- --------
INCOME FROM OPERATIONS 17,695 1,614
INVESTMENT INCOME, NET 412 58
INTEREST EXPENSE (1,549) (1,481)
MINORITY INTEREST IN PARTNERSHIP (7,795) (220)
-------- --------
INCOME (LOSS) BEFORE INCOME TAXES 8,763 (29)
INCOME TAXES (BENEFITS) 3,286 (12)
-------- --------
NET INCOME (LOSS) 5,477 (17)
-------- --------
-------- --------
NET INCOME (LOSS) PER COMMON SHARE
PRIMARY $0.29 ($0.01)
-------- --------
-------- --------
FULLY DILUTED $0.28 ($0.01)
-------- --------
-------- --------
DIVIDENDS DECLARED PER COMMON SHARE $0.0550 $0.0550
-------- --------
-------- --------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIODS
PRIMARY 17,863 17,144
-------- --------
-------- --------
FULLY DILUTED 19,025 17,144
-------- --------
-------- --------
<PAGE>
TJ INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL QUARTER ENDED MARCH 29, 1997, AND MARCH 30, 1996,
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 29, MARCH 30,
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) $ 5,477 $ (17)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 10,037 8,994
MINORITY INTEREST IN PARTNERSHIPS 7,795 220
OTHER, NET 895 45
CHANGE IN WORKING CAPITAL ITEMS:
RECEIVABLES (29,973) (4,970)
INVENTORIES (95) (8,020)
OTHER CURRENT ASSETS (1,804) (734)
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 9,221 (2,038)
OTHER, NET 29 (1,450)
-------- --------
NET CASH PROVIDED BY (USED IN) FROM OPERATING ACTIVITIES $ 1,582 $ (7,970) $
-------- --------
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENDITURES $ (7,326) $ (6,435) $
PAYMENTS OF DISCONTINUED OPERATIONS LIABILITIES (318) --
DECREASE IN UNEXPENDED BOND FUNDS -- 117
OTHER, NET 719 467
-------- --------
NET CASH USED IN INVESTING ACTIVITIES $ (6,925) $ (5,851) $
-------- --------
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
CASH DIVIDENDS PAID ON COMMON STOCK $ (963) $ (942) $
CASH DIVIDENDS PAID ON PREFERRED STOCK (1,245) --
MINORITY PARTNERS TAX DISTRIBUTIONS (2,133) (750)
NET BORROWINGS UNDER LINES-OF-CREDIT 2,505 203
PURCHASE OF TREASURY STOCK (8,300) --
OTHER, NET 194 98
-------- --------
NET CASH USED IN FINANCING ACTIVITIES $ (9,942) $ (1,391) $
-------- --------
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $(15,285) $(15,212) $
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 36,801 19,715
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 21,516 $ 4,503 $
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD FOR:
INTEREST, NET OF AMOUNTS CAPITALIZED $ 1,182 $ 1,005 $
INCOME TAXES $ 736 $ 603 $
</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)
March 29, Dec. 28, March 30,
1997 1996 1996
--------- -------- ---------
Finished goods $35,690 $38,278 $33,511
Raw materials and
work-in-progress 15,954 13,271 15,264
------- ------- -------
51,644 51,549 48,775
Reduction to LIFO cost -- -- (2,195)
------- ------- -------
$51,644 $51,549 $46,580
------- ------- -------
------- ------- -------
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.
Primary net income and fully diluted net income was calculated as follows:
For the fiscal
quarter ended
----------------------
March 29, March 30,
1997 1996
--------- ---------
Net income from continuing
operations as reported $ 5,477 $ (17)
Preferred stock dividends, net
of related tax benefits (248) (240)
------- -------
Primary net income $ 5,229 $ (257)
------- -------
------- -------
<PAGE>
FULLY DILUTED NET INCOME
Net income from continuing
operations as reported $ 5,477 $ (17)
Additional ESOP contribution
payable upon assumed
conversion of ESOP
preferred stock, net of
related tax benefits (174) (181)
------- -------
Fully diluted net income $ 5,303 $ (198)
------- -------
------- -------
<PAGE>
TJ INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE FISCAL QUARTER ENDED MARCH 29, 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 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
-------- -------- -------- --------
$577,166 $484,845 $496,060 $436,602
-------- -------- -------- --------
-------- -------- -------- --------
FIRST QUARTER OF 1997 COMPARED WITH THE FIRST QUARTER OF 1996
First quarter sales increased $50 million or 45% from the prior year first
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. Additionally, the Company's strategic
inventory program added to sales in the first quarter of 1997. This
program, which included rebates, extended terms and price protection was
designed to encourage distribution customers to increase their inventory
levels as the traditional building season begins. The Company's International
and Commercial markets also delivered strong growth in the quarter, increasing
138% and 39%, respectively over the first quarter of 1996.
First quarter sales increased despite a flat housing market. North American
housing starts in the first quarter of 1997 were down 2% from the prior year
first quarter. Prices for competing wide-dimension lumber continued to rise
during the quarter and hit a three-year high in February. The rising prices
of competing solid-sawn lumber aided in the continuing conversion of builders
to engineered lumber from traditional commodity lumber products.
The Company had increased unit volume sales in excess of 40%, compared to the
prior year first quarter. 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- Wall
Framing and 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.
Gross margins for the first quarter were 26.9% compared with 18.9% in the
first quarter of 1996. The margin gains were primarily the result of lower
raw material costs such as Oriented Strand Board. Also, the higher sales
volumes resulted in more efficient production at the Company's manufacturing
facilities. The Company's new combination Microllam-Registered Trademark-
<PAGE>
LVL and Parallam-Registered Trademark- PSL plant in Buckhannon, West Virginia
and TimberStrand-Registered Trademark- LSL plant in Eastern Kentucky both
showed improved results over the first quarter of last year. The West
Virginia combination plant showed solid profitability during the quarter.
Although, the Company's TimberStrand-Registered Trademark- LSL plant in
Eastern Kentucky was not profitable for the quarter, the facility achieved a
positive cash flow.
Selling expenses increased $3.8 million in the first 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
fund operating costs in its international sales efforts. General and
administrative expenses increased $2.5 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 $7.8 million from 1996 due to the
increase in earnings at the Trus Joist MacMillan (TJM) Partnership.
LIQUIDITY AND CAPITAL RESOURCES
MARCH 29, 1997 COMPARED TO DECEMBER 28, 1996
Cash generated from the Company's engineered lumber segment, as measured by
net income plus non-cash charges, primarily for depreciation and minority
interest, was $34 million for the first quarter of 1997. Of those proceeds,
working capital items such as accounts receivable required $30 million. The
increase in Accounts Receivable is due to increased sales combined with the
sales incentives offered as part of the Company's strategic inventory plan.
MARCH 29, 1997 COMPARED TO MARCH 30, 1996
Working capital increased $62 million from the prior year, to $117 million at
March 29, 1997. The increase in liquidity is due to strong earnings combined
with modest capital expansion spending.
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. In the first quarter, the Company spent $7
million in capital expenditures.
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 purchase $8.3 million of treasury stock during the first quarter.
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.
In the second quarter of 1996, the Company issued $5.7 million of industrial
revenue bonds to finance the final stages of 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.
The Company is evaluating potential sites for an additional combination
Microllam-Registered Trademark- LVL, Parallam-Registered Trademark- PSL
and I-joist plant or a third TimberStrand-Registered Trademark- LSL plant but
has not determined whether or when to proceed with construction. The Company
<PAGE>
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.
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 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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Filed as an exhibit to this report is the following:
(27) Financial Data Schedule
(b) No reports on From 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: May 13, 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 MARCH 29, 1997 COMMISSION FILE NUMBER 0-7469
TJ INTERNATIONAL, INC.
EXHIBIT INDEX
EXHIBITS PAGE
- -------- ----
(27) Financial Data Schedule Document 2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE T.J.
INTERNATIONAL INC. BALANCE SHEET AT MARCH 29, 1997 AND FROM ITS STATEMENT OF
INCOME FOR THE THREE MONTHS ENDED MARCH 29, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> MAR-29-1997
<CASH> 21,516
<SECURITIES> 0
<RECEIVABLES> 104,313
<ALLOWANCES> 447
<INVENTORY> 51,644
<CURRENT-ASSETS> 188,571
<PP&E> 572,124
<DEPRECIATION> 192,835
<TOTAL-ASSETS> 611,273
<CURRENT-LIABILITIES> 71,474
<BONDS> 88,140
0
13,698
<COMMON> 17,654
<OTHER-SE> 193,758
<TOTAL-LIABILITY-AND-EQUITY> 611,273
<SALES> 161,263
<TOTAL-REVENUES> 161,263
<CGS> 117,923
<TOTAL-COSTS> 117,923
<OTHER-EXPENSES> 25,645
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,549
<INCOME-PRETAX> 8,763
<INCOME-TAX> 3,286
<INCOME-CONTINUING> 5,477
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,477
<EPS-PRIMARY> .29
<EPS-DILUTED> .28
</TABLE>
