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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 28, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________
Commission File Number 0-7469
TJ INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 82-0250992
- ------------------------ -----------------------------------
(State of incorporation) (IRS employer identification number)
200 East Mallard Drive, Boise, Idaho 83706
- ------------------------------------ ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (208) 364-3300
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($1.00 par value)
------------------------------
(Title of Class)
The registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of the close of business on
March 14, 1997, was $352,947,000.
The number of outstanding shares of the registrant's common stock ($1.00 par
value), as of March 14, 1997 was 17,647,360.
Documents incorporated by reference: Listed hereunder the following documents
if incorporated by reference, and the Parts of this Form 10-K into which the
document is incorporated:
The registrant's definitive proxy statement to be dated on or after April 10,
1997, for use in connection with the annual meeting of stockholders to be held
on May 21, 1997, portions of which are incorporated by reference into Part III
of this Form 10-K.
EXHIBIT INDEX ON PAGES 22 AND 23
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PART I
ITEM 1. BUSINESS
ITEM 1(a). GENERAL DEVELOPMENT OF BUSINESS
RECENT DEVELOPMENTS
1996 FINANCIAL RESULTS
The Company had record sales in 1996, due to the continued acceptance of
engineered lumber products in the marketplace. This continued acceptance was
due to a combination of factors, including the Company's on-going education
efforts in the building community, rising prices for alternative solid-sawn
lumber products, and an increase in North American housing starts compared to
the prior year.
The Company experienced an increase in sales of $92 million in 1996,
compared to 1995. This 19 percent increase in sales came in a period when North
American housing starts increased 10 percent from the prior year. Additionally,
market prices for certain traditional solid-sawn lumber products, which
represent the primary competitor of engineered lumber products, increased 7
percent from prior year levels. Unit volume sales of residential products
increased 14 percent per North American housing start.
Income from continuing operations improved as a percent of sales
primarily due to the further progress in the ramp-up of the Company's new
TimberStrand -Registered Trademark- LSL and combination Parallam -Registered
Trademark- PSL and Microllam -Registered Trademark- LVL plants.
Additionally, certain raw material costs declined in 1996 compared to 1995
and efficiencies of scale resulted in the Company's selling, general and
administrative functions.
Net income from continuing operations increased $6.4 million to $16.2
million in 1996. Income from continuing operations per fully diluted share
increased from $0.48 in 1995 to $0.82 in 1996.
Fourth quarter sales were $131.4 million compared to $113.3 million in the
corresponding period in 1995. Income from continuing operations improved to
$4.1 million or $.21 per fully diluted share in the fourth quarter of 1996,
compared to $766,000, or $0.03 per fully diluted share in the fourth quarter of
1995.
The Company completed the sale of its windows division during the third
quarter of 1996. As part of the sale, the Company retained all of the existing
operating and contingent liabilities of the window operations, which resulted in
an $11 million cash outflow. The sale of the segment assets resulted in a net
cash inflow of $24 million; $7.4 million of these sale proceeds were then
utilized to pay down long-term debt.
MARKET DEVELOPMENTS
The Company believes that its engineered lumber products offer advantages
in both performance and cost effectiveness over natural lumber and that such
products are achieving increased market acceptance in residential construction.
The Company's engineered lumber sales, per North American housing start,
increased from $116 per start in 1991 to $289 per start in 1996, an increase of
149%. During 1996, residential engineered lumber sales per start increased 10%.
1996 is the 14th consecutive year of market penetration growth in the key
residential construction market. Average prices for 2" x 10" green 14' Douglas
fir lumber increased 7%
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during 1996 from $433 per thousand board feet in 1995 to $465 per thousand board
feet during 1996. Wide dimension lumber remains the primary competition to the
Company's engineered lumber products.
COMPANY STRATEGY
The Company's primary objective remains increasing market penetration for
its engineered lumber products. The Company believes that the fundamentals
which have driven the Company's growth over the past several years remain in
place, including the declining availability of high-quality, large diameter
timber, the superior performance of engineered lumber products, and the
Company's continuing transition to proprietary, lower-cost technologies. In
addition, the Company continues to enjoy strong brand name recognition,
supported by an extensive North American distribution network. Most
importantly, the Company believes there continues to be growth in market
acceptance of engineered lumber products.
The Company's strategy, which is composed of two key elements, is focused
on continuing its historic dominance in the engineered lumber industry -- a
dominance which is reflected in an estimated market share in excess of 60
percent for engineered lumber products sold in North America. The Company's
strategy includes the following:
1. LOW-COST PROPRIETARY TECHNOLOGIES AND DOMINANT PRODUCTION CAPACITY.
The Company intends to pursue the advantages of its technological leadership.
The Company believes its technologies in engineered lumber enable it to use
smaller logs and to make more efficient use of wood fiber than the current
sawmill production of sawn structural lumber. The Company also intends to
capitalize on its proprietary technologies -- Parallam -Registered Trademark-
PSL and TimberStrand -Registered Trademark- LSL which allow the Company to
manufacture engineered lumber from non-traditional tree species such as aspen
and poplar. These species are lower in cost, more abundant and less
environmentally sensitive than traditional fir and pine species. The Company
believes it is well positioned to benefit from the increasing scarcity and
associated higher prices of the high quality, large diameter logs utilized to
make the sawn structural lumber products with which its products compete.
The Company has completed its recent capital expansion program and is in
the process of attaining full production of its new capacity. The new
capacity includes two new technology plants, a TimberStrand -Registered
Trademark- LSL plant in Eastern Kentucky and a combination Microllam
- -Registered Trademark- LVL and Parallam -Registered Trademark- PSL plant in
Buckhannon, West Virginia. This expansion is intended to enhance the
Company's leading position in engineered lumber products. Through the
expansion of existing plants and the addition of the two new production
facilities, as described below, the Company believes it will maintain its
dominant 60 percent share of engineered lumber industry capacity.
The Company is examining potential sites for an additional combination LVL
and PSL plant or a third TimberStrand -Registered Trademark- LSL plant.
Commitment to this new capacity is contingent upon continued market demand and
acceptance of engineered lumber products.
The Company believes that the housing construction industry is undergoing a
transition toward increased use of engineered lumber for structural building
material, as wide-dimension commodity lumber generally increases in price and
decreases in quality. The Company believes its expansion plan is appropriate
because its proprietary technology plants are expected to give the Company a
significant
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cost, wood source, and product breadth and flexibility advantage which the
Company believes will further strengthen its market leading position. The
Company also believes that its recent capital expansion is prudent given the
demand for these new technology products and competition in these markets that
the Company expects will develop over time. However, there can be no assurance
that the market for engineered lumber products will increase or that markets for
new products will develop.
The Company has financed its capital expansion program through several
sources, including a portion of the proceeds from the sale of common stock of
the Company in 1993, equity contributions by TJM's limited partner, the proceeds
of bond offerings in 1994, 1995, and 1996 and internally generated funds. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
2. A SYSTEM OF INTEGRATED COMPONENTS AND SERVICES AND VALUE ADDED
MARKETING. The Company intends to focus future marketing efforts on a system of
integrated components, rather than individual products. The Company is in the
process of developing the FrameWorks -Registered Trademark- Building System,
which represents a complete system in engineered lumber to build the entire
structural frame of a home. The FrameWorks -Registered Trademark- Building
System will include roof, wall, stair, foundation and frame systems,
enhancing the overall performance of the home, which the Company believes
will be a benefit to architects, builders, dealers and home buyers.
The Company believes it has a competitive advantage over other engineered
lumber producers in that it offers a complete support and service system for its
products, including (i) a system performance guarantee for the lifetime of the
home; (ii) the largest technical service force in the industry; (iii)
engineering assistance and performance recommendations; and (iv) computer-
generated framing plans and materials specifications from its TJ-Xpert -TM-
software, which gives the Company the ability to optimize design on a house-by-
house basis.
The Company will continue its emphasis on a broad and aggressive North
American distribution network, emphasizing product availability and just-in-time
delivery and services. The Company believes that its partnership with
MacMillan Bloedel Limited and strategic alliances with Weyerhaeuser Company and
other regional distributors and retailers offer it a significant advantage in
the distribution of its engineered lumber products.
The Company believes that its extensive product lines, highly-skilled,
service-oriented sales force, and its extensive distribution network provide an
unparalleled opportunity to meet the modern demands of the building community
and the discriminating homeowner.
DIVESTITURE OF WINDOW BUSINESS
In 1995, the Company announced its intention to divest of its window
division. The Company completed the sale of its windows division during the
third quarter of 1996. The divestiture will allow the Company to focus all of
its resources on the engineered lumber business.
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ITEM 1(b). Financial information about the Company's industry segments.
The Company divested of its window operations segment in 1996. Accordingly,
these operations have been reflected as discontinued operations in the Company's
financial statements for all years presented.
ITEM 1(c). NARRATIVE DESCRIPTION OF BUSINESS.
BUSINESS
GENERAL
The Company is the leading manufacturer and marketer of engineered lumber
products in the world. Engineered lumber products are high quality substitutes
for solid sawn structural lumber historically obtained from the logging of
older, large diameter trees. The Company utilizes advanced technology to
manufacture engineered lumber at fifteen facilities located in the United States
and Canada and estimates that its market share is in excess of 60 percent for
engineered lumber products sold in North America.
STRATEGY. The Company is the leading manufacturer and marketer of
value-added specialty building products to the residential and light commercial
construction industry. The Company believes it is well positioned to benefit
from the increasing scarcity and associated higher prices of the high quality,
large diameter logs historically utilized to make the sawn structural lumber
products with which the Company's products compete. A Company objective is to
increase the product acceptance of its engineered lumber products and to
strengthen its market leadership in these products. To increase product
acceptance, the Company's selling efforts highlight product advantages including
consistent quality, superior strength, relatively light weight and ease of
installation targeted at end users such as architects and contractors. The
Company seeks to strengthen its leading market position through (i) competitive
pricing; (ii) value-added marketing of technical support and services; (iii)
maintenance of industry production capacity dominance through the construction
of new engineered lumber manufacturing facilities, the expansion of existing
plants and the construction of other facilities as market conditions warrant;
(iv) the ongoing development of proprietary technologies including processes
utilizing relatively low-cost wood fiber from tree species, such as aspen and
yellow poplar, (v) the promotion of a complete system of structural frame
components rather than individual products; and (vi) reliance on an extensive
North American distribution network, including its partnership with MacMillan
Bloedel Limited and strategic alliances with the Weyerhaeuser Company and other
regional distributors and retailers.
TIMBER SUPPLY. In general, the supply of large diameter logs suitable for
wide dimension lumber has declined over the past several years in the Pacific
Northwest. In addition, environmental pressures have greatly slowed the harvest
of the remaining timber supply. The Company believes that the combined effect
of reduced supply and more restrictive environmental regulation on federally-
owned timberlands will continue to reduce the volume of high grade timber
available from this source.
Most of the Company's technologies can use wood fiber from trees that were
previously not suitable for the manufacture of structural lumber, and this
allows the Company to access the current inventory of wood fiber in North
America. This wood fiber differs from that in the past, primarily in the
species and size of the
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trees available for harvest. Much of today's potential wood fiber supply
consists of smaller second growth logs or is found in the interior forests of
Appalachia, the upper Midwest and the Canadian interior forests. These forests
include fast-growing, abundant and competitively priced species of trees such as
aspen and yellow poplar. These trees are not regarded as sufficiently large,
straight, or strong enough to be sawn into structural lumber. The Company's new
technologies now allow the use of these species for high grade structural
products. The Company will continue to use substantial volumes of Douglas fir
in the West and southern yellow pine wood fiber in the South at its existing LVL
plants from the available supply of mature trees or smaller second growth logs.
Unlike many of its principal competitors in engineered lumber, the Company
does not currently own any timberlands or significant amounts of standing
timber. The Company buys its raw materials on contract both from small
independent suppliers and larger integrated forest products companies. In
addition, a portion of its wood raw materials are purchased on the spot market.
The reduced supplies could result in more volatile wood markets. The Company
has experienced and believes it may continue to experience volatility in its
quarter-to-quarter results due to raw material price volatility.
However, the Company believes it will be able to satisfy its needs for raw
materials and it is not currently aware of any potential shortages for its
longer-term requirements. The Company is increasingly purchasing standing
timber tracts, to be processed at the Company's facilities in place of veneer
purchased from other producers. The Company believes that it has significant
competitive advantages over companies marketing traditional sawn lumber products
in an environment of reduced timber supply because its engineered lumber
technologies are able to utilize non-traditional sources of wood fiber, which
are both more abundant and less expensive.
ENGINEERED LUMBER PRODUCTS
OVERVIEW. The Company believes that the housing construction industry is
undergoing a transition in its use of structural building materials as sawn
structural lumber increases in price and decreases in quality. Engineered
lumber is enjoying increased market acceptance and is displacing sawn structural
lumber.
This transition is driven by the changing composition of the North American
timberlands, both in terms of regional log supply restrictions and the type and
size of logs currently available for use as raw material. The availability of
timber from federally-owned forests in the Pacific Northwest has been greatly
restricted, and the size of an average sawlog has decreased to the point where
it is often too small to produce significant quantities of high grade, wide-
dimension structural lumber.
TECHNOLOGY. The Company is the industry leader in developing and
commercializing proprietary technologies that enable the manufacture of
engineered lumber products from wood that has been regarded as not sufficiently
large, strong, straight, or free of defects to be sawn into structural lumber.
The following table outlines the principal features of the Company's
technologies:
<TABLE>
<CAPTION>
TECHNOLOGY RAW MATERIAL MAXIMUM SIZE PRODUCTION FACILITIES
- ---------- ------------ ------------ ---------------------
<S> <C> <C> <C>
Microllam -Registered Trademark- LVL Rectangular high-grade 80 feet long by Buckhannon, West Virginia
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veneer 4 feet wide by Eugene, Oregon
3 1/2 inches thick Junction City, Oregon
Natchitoches, Louisiana
Valdosta, Georgia
Parallam -Registered Trademark- PSL Irregular veneer from first 66 feet long by Buckhannon, West Virginia
and last peels of the log 20 inches wide by Colbert, Georgia
11 inches thick Vancouver, British
Columbia
TimberStrand -Registered Trademark- LSL strands of pulpwood up to 48 feet long by Deerwood, Minnesota
13 inches long 8 feet wide by Hazard, Kentucky
5 1/2 inches thick
</TABLE>
The Company's three engineered lumber technologies are: laminated veneer
lumber, or LVL, the oldest and most commercialized of the technologies; parallel
strand lumber, or PSL, first introduced in the mid-1980's in Canada; and
laminated strand lumber, or LSL, a new technology introduced in the fall of
1991. Both PSL and LSL are proprietary to the Company, while equipment to
produce LVL is now available from several machinery manufacturers and is
utilized by an increasing number of forest products manufacturers. The Company
believes its LVL manufacturing process, however, enjoys several advantages which
make this process cost-competitive compared to the commercially available
alternatives.
Although the Company has been issued and has applied for a number of
patents on its current processes, the Company believes that its technological
competitiveness also comes from its continued innovation and technical expertise
in this industry. The Company will, however, continue to assert its legal
rights wherever appropriate.
LAMINATED VENEER LUMBER (LVL): LVL uses thin sheets of veneer peeled from
a log. Each sheet is carefully dried and individually graded using ultrasonic
measurements to determine its strength characteristics. Sheets are then placed
in specific sequence and location within the product to maximize the stronger
veneer grades and randomize wood defects, such as knots. This engineered
configuration of veneers is then laminated with adhesives under heat and
pressure to form a piece of wood in widths of 24 inches or 48 inches,
thicknesses from 3/4 inches to 3-1/2 inches, and up to 80 feet in length.
PARALLEL STRAND LUMBER (PSL): This technology, which is proprietary to the
Company, starts with sheets of thin veneer peeled from a log. These are then
clipped into strands, which are up to eight feet long and 5/8 inches wide. The
ability to use this very narrow strand allows a significantly higher percentage
of the log to be manufactured into a value-added product. The strand is then
coated with adhesive. The next step in the process employs a pressing system in
which microwaves are used to cure the adhesives and form a large block, or
billet, of engineered lumber measuring up to 11 inches by 20 inches and 66 feet
long. The Company's PSL process is protected in the U.S. and in 15 other
countries. These patents provide protection through 2008.
The Company believes that the combination of the PSL and LVL technologies
in a single manufacturing facility, such as its Buckhannon, West Virginia plant,
will
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allow it to be among the most efficient converters of wood fiber to a high value
product. See "Recent Developments--Company Strategy" above.
LAMINATED STRAND LUMBER (LSL): The Company's other proprietary engineered
lumber technology, LSL, begins with small-diameter, 8-foot-long logs such as
aspen and yellow poplar. These are species traditionally used in lower value
applications such as pulp logs, and are therefore substantially less expensive
than traditional sources of sawn lumber. These logs are flaked into strands 12
inches long, which are then treated with an adhesive. The strands are put into
a steam-injection press that significantly densifies the wood and creates boards
up to 48 feet long, up to 5-1/2 inches thick, and 8 feet wide. The Company's
LSL process is protected in the U.S. and in 24 other countries. In addition,
one patent is pending approval. These patents provide protection through 2010.
PRODUCTS. The Company produces the broadest line of structural engineered
lumber building products in the industry, possesses certain exclusive product
technologies, and believes it enjoys a reputation for superior quality and
service. The table on the following page lists the Company's products, the
technology utilized, product size, and end use of such products.
TJ INTERNATIONAL ENGINEERED LUMBER PRODUCTS
<TABLE>
<CAPTION>
RESIDENTIAL PRODUCTS ENGINEERED LUMBER PRODUCT SIZE END USE
- -------------------- TECHNOLOGY ------------ -------
-----------------
<S> <C> <C> <C>
TJI-Registered Trademark- Microllam-Registered Trademark-LVL 9 1/2" to 16" deep Residential construction
I-joists on the top and bottom with Width from 1 1/2" to floor and roof joists.
enhanced composite panel webs in 3 1/2" Substitutes for traditional
the middle Up to 80' long 2x10 and 2x12 sawn lumber
systems.
Rim joists TimberStrand-Registered Trademark- LSL 1 1/4" thick Residential construction
9 1/2" to 16" deep frames in perimeter of floor.
17' to 48' long Substitutes for laterally
ripped plywood and/or 2x10
and 2x12 sawn lumber.
Headers, beams, and Microllam-Registered Trademark- LVL 1 3/4" to 7 1/4" thick Residential construction.
columns Parallam-Registered Trademark- PSL 9 1/2" to 18" deep Ranges from main carrying
TimberStrand-Registered Trademark- LSL Up to 80' long beam in home to support
structures above a window
or door (header).
Substitutes for traditional
2x10 and 2x12 sawn lumber,
glulam and steel beams.
COMMERCIAL PRODUCTS
- -------------------
Open-web truss Microllam-Registered Trademark-or 14" to 114" deep Roof support structure in
strength-rated lumber on the top Spans lengths up to light commercial buildings.
and bottom with tubular steel webs 120 long
in the middle
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TJI-Registered Trademark- Microllam-Registered Trademark- LVL 2.3" to 4.65" thick Roof structure for smaller
roof truss series 4 1/2" to 37.1" deep commercial buildings.
Up to 80' long
INDUSTRIAL PRODUCTS
- -------------------
Window and door core TimberStrand-Registered Trademark- LSL Various Substitutes for finger jointed
material Ponderosa pine lumber in
the manufacture of wood
windows and doors.
Concrete forming and Microllam-Registered Trademark- LVL 1 1/2" to 5 1/4" thick Support members in the
shoring support members Parallam-Registered Trademark- PSL 6 1/2" to 20" deep structure into which wet
Up to 80' long concrete is poured in both
residential and commercial
buildings. Substitutes for
2x10, 2x12, 4x4 and larger
sawn lumber and for
aluminum form support
systems.
Scaffold plank Microllam-Registered Trademark- LVL 1 1/2" to 2 1/2" thick Decking material in scaffold
9" to 11 3/4" wide frames. Substitutes for high
Up to 80' long strength rated 2x6 and 2x8
sawn lumber.
</TABLE>
The Company continues to explore the development of new and improved
engineered lumber products which have superior performance and quality
characteristics relative to traditional sawn lumber. The Company currently has
a focused effort to develop further TimberStrand-Registered Trademark- LSL
products including an I-joist utilizing TimberStrand-Registered Trademark- LSL
as the flange material, a truss system that will allow the easy transformation
of wasted attic space into a bonus room, and a solid floor joist targeted at the
multi-family construction market and other structural and industrial products,
including long-length garage door headers.
The Company owns a number of registered and non-registered trademarks for
its promotional literature and engineered lumber products. The Company believes
that its engineered lumber trademarks, and in particular, its Silent
Floor-Registered Trademark- brand of residential structural products, have
achieved significant name recognition in the engineered lumber industry.
MARKETS. The Company's engineered lumber is sold primarily to three
markets. The largest market is the new construction residential housing market,
which includes single-family detached homes, apartments, condominiums,
townhouses, and manufactured housing. Industrial uses are another market and
include core components for the millwork and furniture industry, scaffold plank,
and concrete forming and shoring products. The third market is light-commercial
construction, which includes structures such as warehouses, schools,
gymnasiums, shopping centers, and low-rise office buildings.
SALES, MARKETING, AND DISTRIBUTION. The Company's engineered lumber
products are sold through its network of wholesale lumber distributors,
including MacMillan Bloedel Building Materials Distribution Centers, the
Weyerhaeuser Building Materials Customer Service Centers, and a number of other
distributors. In addition, the
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Company sells directly to stocking retail lumber dealers in the United States
and Canada. This distribution network broadens the Company's market to include
an extensive range of smaller lumber dealers and outlets. The Company believes
this distribution network gives it the broadest and deepest reach into the
market of any engineered lumber producer.
Since July 1993, the Company has operated under an arrangement with the
Weyerhaeuser Building Material Distribution Division, pursuant to which the
Weyerhaeuser customer service centers in the United States and Canada distribute
the Company's engineered lumber products. In addition, Weyerhaeuser has assumed
an expanded role as a supplier of veneer and oriented strand board to certain of
the Company's manufacturing facilities. The Company believes this arrangement
has enhanced the visibility and sales of its products.
The Company employs the engineered lumber industry's largest sales force
consisting of approximately 165 technical sales representatives who market the
Company's products directly to architects, project engineers, contractors,
developers, independent lumber dealers, national wholesale building material
suppliers, and industrial users. This enables the Company to better educate and
assist customers in the use of engineered lumber and simultaneously helps create
demand, further enabling the Company to differentiate its products from those of
its competitors.
The Company's products are supported by numerous advanced computer-assisted
software packages. For residential construction, the Company's proprietary TJ-
Xpert -TM- software, which is receiving increasing acceptance by builders,
translates a builder's blueprints into a complete framing plan for a structural
system using engineered lumber products.
The Company also has sales offices and representatives in Japan, Australia,
France, the United Kingdom, Germany, Belgium, and the Middle East. While not
currently comprising a significant portion of the Company's business, the
Company believes these markets present future growth opportunities for its
products.
COMPETITION. Sawn lumber products produced in traditional sawmills remain
the primary competition for the Company's engineered lumber products.
The Company's competition in the growing engineered lumber industry
includes large competitors producing LVL and I-joists in several plants across
North America, and others that are manufacturing wood I-joists only.
Competition is expected to continue to increase as a number of the Company's
competitors, including Louisiana-Pacific Corporation, Boise Cascade Corporation,
and Georgia Pacific Corporation have undertaken capacity expansion plans in the
LVL and I-joist business. In particular, competition may emerge or increase
from established wood products companies that now sell primarily traditional
wood products. A number of existing competitors such as Louisiana-Pacific
Corporation, Boise Cascade Corporation, Willamette Industries, Inc., and
Georgia-Pacific Corporation, own a significant portion of their own raw
materials and generally have greater financial resources than the Company.
The Company believes that the principal competitive factors in the market
for engineered lumber are product quality, customer support, distribution
capabilities, and price. The Company believes its broader product line, based
in part on its proprietary technologies PSL and LSL lumber, provide an important
competitive advantage over its competition. In addition, the Company believes
it enjoys a leadership position in terms of brand name recognition, value-added
services to
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builders, an aggressive and broad distribution network and a wide selection of
products which have received building code approval in substantially all
markets. The Company has adopted a policy of protecting market share by
aggressively managing any price differentials between its products and those of
its engineered lumber competitors.
Other building materials, including steel, plastic, brick, and cement, are
alternative basic materials for construction. However, these materials may not
readily lend themselves to traditional residential framing methods or tools and
have certain inherent manufacturing and performance deficiencies.
BACKLOG
The Company's order backlog at December 28, 1996 was approximately $31
million compared to approximately $28 million at December 30, 1995. Some
portion of the current order backlog will probably not be filled due to extended
deliveries or cancellations. In addition, lead times of orders can vary
significantly from quarter to quarter and year to year. Accordingly, the
Company's backlog on a particular date may not be representative of the level of
future sales.
EMPLOYEES
As of December 28, 1996, the Company employed a total of approximately
3,000 employees in its engineered lumber operations.
ENVIRONMENTAL MATTERS
The Company is subject to various federal, state, provincial, and local
environmental laws and regulations, particularly relating to air and water
quality and the storage, handling, and disposal of various materials and
substances used in the Company's plants and processes. Permits are required for
certain of the Company's operations, and these permits are subject to
revocation, modification, and renewal by issuing authorities. Governmental
authorities have the power to enforce compliance with their regulations, and
violations may result in the payment of fines or the entry of injunctions, or
both.
The Company believes that it is in material compliance with existing
environmental laws and regulations, and that its expenditures in future years
for environmental compliance will not have a material adverse effect on its
operations.
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ITEM 1(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC
OPERATIONS AND EXPORT SALES.
The Company operates manufacturing facilities in two countries, the United
States and Canada; and the majority of all sales are made domestically in those
countries. Financial information relating to foreign and domestic operations is
presented in Note 10 to the consolidated financial statements, page 44 of this
Report.
ITEM 2. PROPERTIES
Set forth below are the locations of the Company's manufacturing facilities
and the technology and/or products produced at such facilities.
<TABLE>
<CAPTION>
Engineered
Lumber
Technology Products
--------------------- ---------------------------
Structural Products Manufacturing LVL PSL LSL I-Joists Open Web Trusses
- --------------------------------- --- --- --- -------- ----------------
<S> <C> <C> <C> <C> <C>
Buckhannon, West Virginia X X
Chino, California X
Claresholm, Alberta X X
Colbert, Georgia X
Deerwood, Minnesota X
Delaware, Ohio X
Eugene, Oregon X X
Hazard, Kentucky X
Hillsboro, Oregon X
Junction City, Oregon X
Natchitoches, Louisiana X X
Stayton, Oregon X
Valdosta, Georgia X X
Vancouver, British Columbia X
Elma, Washington * *
</TABLE>
* Produces veneer for LVL and PSL Lumber productions
The Company owns a Boise, Idaho, property of approximately 32 acres of
unimproved land. The Company's headquarters staff are located in a location in
Boise, Idaho.
The properties at Stayton, Oregon and Natchitoches, Louisiana are subject
to mortgages aggregating $16.4 million. Because the costs of these latter
properties are financed partially or wholly by Industrial Development Revenue
Bonds, record title to a significant portion of the land, buildings, and
equipment is being held by the bond-issuing authorities until the bonds are
retired.
12
<PAGE>
All properties in use or held for future use are considered suitable for
the Company's present and future needs and should have adequate capacity for
those needs.
ITEM 3. LEGAL PROCEEDINGS.
No material legal proceedings or claims are pending or known to the Company
other than several claims and suits for damages arising in the ordinary conduct
of business, resulting primarily from construction accidents and often involving
contractors and others as joint defendants.
Based on current facts and knowledge, all material liabilities under any of
the pending claims and suits would be covered under the Company's liability
insurance policies or are otherwise provided for in the Company's financial
statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
ITEM A. EXECUTIVE OFFICERS OF THE REGISTRANT.
Following is a schedule of names and certain information regarding all of
the executive officers of the Company, as of December 28, 1996, each of whose
term of office is one year.
NAME AND AGE OFFICE
Harold E. Thomas, age 70 Chairman of the Board,
TJ International, Inc.
Thomas H. Denig, age 50 President and Chief Executive
Officer
TJ International, Inc.
Robert J. Dingman, age 55 Senior Vice President, Custom
Operations Group, Trus Joist MacMillan
Randy W. Goruk, age 44 Senior Vice President, North American
Residential Operations Group, Trus Joist
MacMillan
Patrick D. Smith, age 50 Senior Vice President, Manufacturing
Operations Group, Trus Joist MacMillan
Valerie A. Heusinkveld, age 38 Vice President, Finance and
Chief Financial Officer,
TJ International, Inc.
Richard B. Drury, age 47 Secretary and Treasurer,
TJ International, Inc.
13
<PAGE>
Jody B. Olson, age 49 Vice President, Corporate
Development, TJ International, Inc.
Floyd J. Juday, age 53 Vice President, Marketing Services
James H. Ware, age 53 Vice President, Technology and
Engineering
Harold E. Thomas holds a Bachelor of Science Degree in Forestry from the
University of Idaho, and worked in sales for lumber mills prior to 1960, when
Mr. Thomas and Arthur L. Troutner founded the Company. Mr. Thomas was first
elected to the Board of Directors in 1960 and was President of the Company from
1960 to 1971. Mr. Thomas has been Chairman since 1960 and served as Chief
Executive Officer from 1971 to 1975 and from 1979 to 1986.
Thomas H. Denig was elected President and Chief Executive Officer of TJ
International, Inc. in 1995. Mr. Denig was elected Senior Vice President,
Structural Operations in 1990. Mr. Denig was also elected President and
Chief Executive Officer of Trus Joist MacMillan in 1991, after having served
as President of Trus Joist Corporation since 1990. Mr. Denig joined the
Company in 1974 as a salesperson and has subsequently served as California
South Sales Manager, Microllam -Registered Trademark- Lumber Industrial Sales
Manager, National Sales Manager, Western Division Manager, Eastern Division
Manager and had been elected Vice President, Eastern Operations in 1985. Mr.
Denig is a graduate of Valparaiso University and served as a lieutenant in
the U.S. Marine Corp. before joining the Company.
Robert J. Dingman was appointed Sr. Vice President, Custom Operations Group
for Trus Joist MacMillan, in 1995. Mr. Dingman joined the Company in 1983 as
the Southwest Division Manager and has subsequently served as Division
Manager, Microllam -Registered Trademark- Lumber Operations and Sr. Vice
President, Western Operations. Before joining the Company, Mr. Dingman, a
graduate of St. Lawrence University, was Vice President and General Manager
of the Architectural Building Products Division of Koppers Company, Inc.
Randy W. Goruk was appointed Sr. Vice President, North American Residential
Operations Group for Trus Joist MacMillan, in 1995. Mr. Goruk joined the
Company in 1974 as a draftsperson and has subsequently served as a salesperson,
British Columbia Regional Sales Manager, Canadian Division Sales Manager and
Canadian Division Manager, Vice President, Canadian Operations, Vice President,
Eastern Operations, and Sr. Vice President, Canadian and Industrial Operations.
Mr. Goruk is a graduate of the Northern Alberta Institute of Technology and the
University of British Columbia.
Patrick D. Smith was appointed Senior Vice President, Manufacturing
Operations Group for Trus Joist MacMillan in 1994. Mr. Smith joined the Company
in 1984 as the Plant Manager at the Natchitoches, Louisiana, plant and has
subsequently served as Plant Manager at the Colbert, Georgia, Plant, General
Manager of the Atlantic Coastal Division, and Vice President of Construction.
Before joining the Company, Mr. Smith, a graduate at Edinboro University, began
a 15 year career with the Koppers Company in their Forest Products Division. He
managed three different manufacturing plants and worked in the industrial
relations department.
14
<PAGE>
Valerie A. Heusinkveld was elected Vice President of Finance and Chief
Financial Officer of TJ International, Inc., in 1992. Ms. Heusinkveld is an
honors graduate of the University of Idaho and a Certified Public Accountant.
Before being named CFO, Ms. Heusinkveld served as Vice President of Finance and
Treasurer for Trus Joist MacMillan. Ms. Heusinkveld has also served as
controller of Norco Windows Western Operations group and as a corporate
accountant and assistant to the Vice President of Finance. Ms. Heusinkveld
joined TJ International in 1989 after working for Arthur Andersen & Co.
Richard B. Drury was elected Secretary in 1985 and was elected to the
additional position of Treasurer in 1991. Mr. Drury is a graduate of Boise
State University and a Certified Public Accountant. Prior to joining the
Company in 1979, Mr. Drury gained audit and tax experience with
Arthur Andersen & Co.
Jody B. Olson was elected Vice President, Corporate Development in 1987.
In 1991, Mr. Olson was also elected Secretary of the Board of Trus Joist
MacMillan. Previous positions held by Mr. Olson were Microllam -Registered
Trademark- Lumber Division Controller; Microllam -Registered Trademark-
Lumber Industrial Salesperson and Sales Manager; General Manager of the
Company's former trucking subsidiary; Manager, Energy Systems; Assistant to
the President, Mergers and Acquisitions; and Manager, Corporate Development.
Mr. Olson, who joined the Company in 1979, is a graduate of the University of
Idaho and the Lewis and Clark Law School.
Floyd J. Juday was appointed Vice President, Marketing for Trus Joist
MacMillan in February of 1996, upon joining the Company. Mr. Juday received his
undergraduate degree from Western Michigan University, and graduate degree from
Indiana University. Before joining the company, Mr. Juday spent 25 years in the
forest products industry with Georgia Pacific and MacMillan Bloedel in various
management positions.
James H. Ware was appointed Vice President, Engineering and Technology
in October of 1995. Dr. Ware joined the company as Vice President, Research and
Development, in February of 1995, after 17 years at Scott Paper Company where
his most recent positions were Worldwide Business Applications Leader and
Technology Manager for Worldwide Operations. Prior to his career with Scott,
Dr. Ware was a Research Scientist at Union Camp Corporation's Princeton Research
Center and a faculty member in the School of Engineering at North Carolina State
University. Dr. Ware holds BS, MS and Ph.D. degrees in Engineering Mechanics
from North Carolina State University.
15
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
The approximate number of record holders of the Company's $1.00 par value
common stock at March 14, 1997, is set forth below:
(1) (2)
Title of Class Number of Record Holders
-------------- ------------------------
Common Stock, $1 par value 2,011
There are approximately 14,000 beneficial shareholders. The remainder of
this Item 5 is contained in the following sections of the Report at the pages
indicated below:
"Market and Dividend Information," on page 30 of this Report, to the extent
that said section discusses the principal market or markets on which the
Company's common stock is being traded; the range of high and low quoted
sales prices (closing) for each quarterly period during the past two
years; the source of such quotations; and the frequency and amount of
any dividends paid during the past two years with respect to such common
stock.
"Note 3 to the consolidated financial statements," page 39 of this Report,
to the extent that said Note describes any restriction on the Company's
present or future ability to pay such dividends.
ITEMS 6, 7, AND 8.
The information called by Items 6, 7 and 8, inclusive of Part II of this form,
is contained in the following sections of this Report at the pages indicated
below:
CAPTIONS AND PAGES OF THIS REPORT
ITEM 6 Selected Financial Data "Selected Financial Data" ......24
ITEM 7 Management's Discussion "Management's Discussion
and Analysis of Financial and Analysis" ..................26
Conditions and Results of
Operations
ITEM 8 Financial Statements and "Consolidated Financial
Supplementary Data Statements".....................32
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
16
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Identification of the Company's executive officers is included in Item A
(following Item 4) in Part I of this Form 10-K.
The balance of this Item 10 is included in the Company's definitive proxy
statement, under the caption "Election of Directors;" and is incorporated herein
by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Item 11 is included in the Company's definitive proxy statement, under the
caption "Compensation of Executive Officers," including the sub-caption
"Executive Compensation Tables," and is incorporated herein by reference. The
subcaptions "Report of the Executive Compensation Committee on Executive
Compensation," and "Performance Graph," under the caption "Compensation of
Executive Officers" in the Company's definitive proxy statement are not
incorporated herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Item 12 is included in the Company's definitive proxy statement under the
caption "Security Ownership of Certain Beneficial Owners and Management;" and is
incorporated herein by reference.
For purposes of calculating the aggregate market value of the voting stock
held by non-affiliates as set forth on the cover page of this Form 10-K, the
Company has assumed that affiliates are those persons identified in the portion
of the definitive proxy statement identified above.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Item 13 is included in Note 9 to the consolidated financial statements,
pages 43 of this Report.
- -Registered Trademark- - Microllam, Parallam, TimberStrand, TJI, The Silent
Floor, FrameWorks are registered trademarks of the Company.
(TM) - TJ-Xpert is a trademark of the Company
17
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
(a) Financial Statements
A list of the financial statements included herein is set forth
in the Index to Financial Statements, Schedules and Exhibits
submitted as a separate section of this Report.
(b) Reports on Form 8-K.
There have been no Form 8-K filings during the fourth quarter of
1996.
(c) Exhibits. The following documents are filed as Exhibits to this
Form 10-K:
(3) Limited Partnership Agreement between TJ International,
Inc. and MacMillan Bloedel of America, Inc. whereby the
Partnership was formed. This document was filed as an
exhibit to the Company's Form 8-K dated September 30,
1991 and is incorporated herein by reference.
Bylaws of Trus Joist Corporation (a Delaware corporation).
This document was filed as an exhibit to the Company's
Form 10-K for the fiscal year ended December 28, 1991 and
is incorporated herein by reference.
Amendment to Limited Partnership Agreement effective the
beginning of the Company's fiscal year 1993. This
document was filed as an exhibit to the Company's Form
10-Q for the quarter ended September 26, 1992 and is
incorporated herein by reference.
Certificate of Ownership and Merger of TJ Merger Corporation
with and into Trus Joist Corporation, whereby the Company
changed its name from Trus Joist Corporation to TJ
International, Inc. effective September 16, 1988. This
document was filed as an exhibit to the Company's Form
10-K for the fiscal year ended January 2, 1993 and is
incorporated herein by reference.
Amended Certificate of Incorporation of TJ International
Inc. This document was filed as an exhibit to the
Company's Form 10-Q for the quarter ended July 2, 1994
(SEC file No. 000-07469) and is incorporated herein by
reference.
(4) Second Amendment to Credit Agreement, dated as of
November 15, 1996. This document is filed as an exhibit
to this Form 10-K for the fiscal year ended December 28,
1996.
Amended and Restated Credit Agreement, dated as of
May 31, 1995. This document was filed as an exhibit to
the Company's Form 10-Q for the quarter ended July 1,
1995 (SEC file No. 000-07469) and is incorporate herein
by reference.
18
<PAGE>
1992 Stock Option Plan. This document was filed as an
exhibit to the Company's Form 10-K for the fiscal year
ended January 2, 1993 and is incorporated herein by
reference.
1993 Stock Option Plan. This document was filed as an
exhibit to the Company's Form 10-Q for the quarter ended
July 3, 1993 and is incorporated herein by reference.
Amended and Restated Restricted Stock Plan for Non-Employee
Directors. This document was filed as an exhibit to the
Company's Form 10-Q for the quarter ended July 3, 1993
and is incorporated herein by reference.
Rights Agreement, dated as of August 24, 1989, between TJ
International, Inc. and West One Bank. These documents
were filed as an exhibit to the Company's Form 10-K for
the fiscal year ended December 31, 1994 (SEC file No.
000-07469).
1982 Incentive Stock Option Plan, as amended. These
documents were filed as an exhibit to the Company's Form
10-K for the fiscal year ended December 31, 1994 (SEC
file No. 000-07469).
1985 Incentive Stock Option Plan, as amended. These
documents were filed as an exhibit to the Company's Form
10-K for the fiscal year ended December 31, 1994 (SEC
file No. 000-07469).
1988 Stock Option Plan, as amended. These documents were
filed as an exhibit to the Company's Form 10-K for the
fiscal year ended December 31, 1994 (SEC file No.
000-07469).
(10) Certificate of Designation, Preferences and Rights of
ESOP Convertible Preferred Stock; Stock Purchase
Agreement; and ESOP Term Note. These documents were
filed as an exhibit to the Company's Form 10-Q for the
quarter ended September 29, 1990 and are incorporated
herein by reference.
Mortgage, Security Interest and Indenture of Trust; Lease
Agreement; Guaranty Agreement; Reimbursement Agreement;
Remarketing and Interest Services Agreement; pertaining
to Stayton, Oregon, plant. These documents were filed as
Exhibits to the Company's Form 10-K for the fiscal year
ended December 28, 1991 and are incorporated herein by
reference.
Trust Indenture; Refunding Agreement; Remarketing Agreement;
Reimbursement Agreement; Pledge and Security Agreement;
pertaining to the Natchitoches, Louisiana, plant. These
documents were filed as Exhibits to the Company's Form
10-K for the fiscal year ended January 2, 1993 and are
incorporated by reference.
Amendment to Reimbursement Agreement; Pledge and Security
Agreement; pertaining to the Natchitoches, Louisiana
plant. These documents were filed as exhibit to the
Company's Form 10-K for the fiscal year ended January 1,
1994 (SEC file No. 000-07469) and are incorporated
herein by reference.
19
<PAGE>
Stock Purchase and Resale Agreement. These documents were
filed as an exhibit to the Company's Form 10-K for the
fiscal year ended January 1, 1994 (SEC file No.
000-07469) and are incorporated herein by reference.
Loan Agreement, Trust Indenture and Guaranty pertaining to
Hazard, Kentucky, plant. These documents were filed as
an exhibit to the Company's Form 10-Q for the quarter
ended July 2, 1994 (SEC file No. 000-07469) and are
incorporated herein by reference.
(11) Statement regarding computation of per share earnings.
The information required by Exhibit (11) is included
under the caption "Net Income Per Share" in Note 1 to the
consolidated financial statements, page 37 of this
Report.
(22) Subsidiaries of the registrant.
(24) Consent of independent public accountants to the
incorporation of their report dated January 30, 1997,
included in this Form 10-K for the year ended December
28, 1996 into TJ International, Inc.'s previously filed
Form S-8 Registration Statement for the Trus Joist
Corporation Nonstatutory Stock Option Plan with 1982
Incentive Amendment, as amended (Registration No.
2-79209), Form S-8 Registration Statement for the Trus
Joist Corporation Employee Stock Ownership Plan
(Registration No. 2-96065), Form S-8 Registration
Statement for the Trus Joist Corporation Associates'
Stock Purchase Plan, as amended (Registration No.
2-96821), Form S-8 Registration Statement for the Trus
Joist Corporation Key Employees' 1982 Inventive Stock
Option Plan with Nonstatutory feature (Registration No.
2-96964), Form S-8 Registration Statement for the Trus
Joist Corporation Employee Stock Ownership Plan
(Registration No. 33-4704), Form S-8 Registration
Statement for the Trus Joist Corporation Profit Sharing
Plan, as amended (Registration No. 33-21870), Form S-8
Registration Statement for the Trus Joist Corporation Key
Employees' 1985 Incentive Stock Option Plan with
Nonstatutory Feature, as amended (Registration No.
33-22186), Form S-8 Registration Statement for TJ
International, Inc. Key Employees' 1988 and 1992 Stock
Option Plans (Registration No. 33-54582), Associate
Stock Purchase Plan (Registration No. 333-18425) and
Leverage Stock Purchase Plan (Registration No.
333-18427).
(25) Powers of Attorney.
(27) Financial Data Schedule.
All other Exhibits are omitted since they are not applicable or
not required.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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., Registrant
By /s/ Thomas H. Denig
--------------------------------------------------------------
Thomas H. Denig - President, Chief Executive Officer,
Director and Attorney-in-Fact for Directors listed below.
By /s/ Valerie A. Heusinkveld
--------------------------------------------------------------
Valerie A. Heusinkveld - Vice President, Finance and Chief
Financial Officer
Each of the above signatures is affixed as of February 13, 1997. Those
Directors of TJ International, Inc. listed below executed powers of attorney
appointing Thomas H. Denig their attorney-in-fact, empowering him to sign this
report on their behalf.
Robert B. Findlay
J. L. Scott
Jerre L. Stead
Harold E. Thomas
Arthur L. Troutner
J. Robert Tullis
Steven C. Wheelwright
William J. White
21
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS TO FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 28, 1996 Commission File Number 0-7469
TJ INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
The following documents are filed as part of this Report: Pages in this Report
--------------------
(1) FINANCIAL STATEMENTS:
Selected Financial Data...........................................24
Management's Discussion and Analysis..............................26
Market and Dividend Information...................................30
Report of Independent Public Accountants..........................30
Quarterly Financial Data (Unaudited)..............................31
Consolidated Balance Sheets at December 28, 1996,
December 30, 1995 and December 31, 1994........................32
Consolidated Statements of Income for the three
years ended December 28, 1996..................................33
Consolidated Statements of Stockholders' Equity for the
three years ended December 28, 1996............................34
Consolidated Statements of Cash Flow for the three years
ended December 28, 1996........................................35
Notes to Consolidated Financial Statements........................36
-22-
<PAGE>
The following documents are filed as part of this Report: Pages in this Report
--------------------
(3) EXHIBITS
(4) Second Amendment to Credit Agreement, dated as of November 15, 1996.
This amendment increases the credit agreement commitment from
$100,000,000 to $150,000,000 and extends the termination date until
November 15, 2001. This document is filed as an exhibit to this Form
10-K for the fiscal year ended
December 28, 1996.....................................Document 2
(21) Subsidiaries of the Registrant.........................Document 3
(24) Consent of Independent Public Accountants..............Document 4
(25) Powers of Attorney.....................................Document 5
(27) Financial Data Schedules for the years ended
December 31, 1994, December 30, 1995, and
December 28, 1996......................................Document 6
All other schedules are omitted because they are not applicable or the required
information is shown in the Consolidated Financial Statements or Notes thereto.
-23-
<PAGE>
FINANCIALS
- --------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
The following table summarizes selected financial data for the five fiscal years
ended December 28, 1996, and should be read in conjunction with the more
detailed Consolidated Financial Statements included herein.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES AND PERCENTAGES
1996 1995 1994 1993 1992
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $577,166 $484,845 $496,060 $436,602 $288,092
Income from continuing operations 14,175 9,741 16,250 20,668 7,167
Net income (loss) 16,175 (29,911) 8,848 12,528 7,311
Net income from continuing operations per share
Primary 0.84 0.51 0.88 1.39 0.44
Fully diluted 0.82 0.48 0.83 1.29 0.44
Weighted average shares outstanding
Primary 17,679 17,132 17,354 14.267 13,418
Fully diluted 18,861 17,132 18,635 15,603 14,700
Cash dividends declared per common share $ 0.220 $ 0.220 $ 0.220 $ 0.215 $ 0.210
Working capital, excluding discontinued
operations 111,585 53,355 98,042 109,503 21,821
Total assets 599,815 546,310 584,909 421,150 303,890
Long-term debt, excluding current portion 88,140 89,440 102,280 23,709 25,122
Stockholders' equity 228,070 210,144 240,558 234,741 129,333
Net book value per share 13.03 12.27 14.22 14.02 9.89
Return from continuing operations on average
stockholders' equity 7.4% 4.3% 3.7% 6.9% 5.7%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
In 1995, net income (loss) includes ($36,191) for the loss on disposal of
discontinued operations. All prior periods have been restated for discontinued
operations; see note 2 for further discussion. In 1992, net income and net
income per share include income of $900 and $.07, respectively, for the
cumulative effect of adopting Statement No. 109, Accounting for Income Taxes.
-24-
<PAGE>
1996 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES AND PERCENTAGES
FOR THE TWO YEARS ENDED DECEMBER 28, 1996
<TABLE>
<CAPTION>
1996 1995 % Change
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 577,166 $ 484,845 19%
Income from operations 54,449 30,342 79%
Income from continuing operations before
income taxes 25,758 15,544 66%
Income taxes 9,583 5,803 65%
Income from continuing operations 16,175 9,741 66%
Net income from continuing operations per share
Primary 0.86 0.51
Fully diluted 0.82 0.48
Return from continuing operations on average
stockholders' equity 7.4% 4.3%
Return from continuing operations on sales 2.8% 2.0%
- ----------------------------------------------------------------------------------------------------------
AT THE END OF THE FISCAL YEAR
Total assets $ 599,815 $ 546,310
Stockholders' equity 228,070 210,144
Number of shares - Common stock issued 17,500,896 17,131,758
Associates 3,037 2,714
Share price - close $ 22.00 $ 18.50
- ----------------------------------------------------------------------------------------------------------
FOR THE FOURTH QUARTER OF EACH FISCAL YEAR
Sales $ 131,388 $ 113,263 16%
Income from operations 12,590 4,182 201%
Income from continuing operations before
income taxes 6,265 1,485 322%
Income taxes 2,176 719 203%
Income from continuing operations 4,089 766 434%
Net income from continuing operations per share
Primary 0.22 0.03
Fully diluted 0.21 0.03
- ----------------------------------------------------------------------------------------------------------
</TABLE>
ANALYST REPORTS RECENTLY ISSUED
A.G. EDWARDS & SONS, INC., ST. LOUIS, MO. CREDIT SUISSE FIRST BOSTON
CORPORATION, NEW YORK, NY. GOLDMAN SACHS & CO., NEW YORK, NY. JENSEN SECURITIES
CO., PORTLAND, OR. LEGG MASON, BALTIMORE, MD. PACIFIC CREST SECURITIES,
PORTLAND, OR. PIPER JAFFRAY INC., SEATTLE, WA. RAGEN MACKENZIE INCORPORATED,
SEATTLE, WA. VALUE LINE, INC., NEW YORK, NY.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-25-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
1996 COMPARED TO 1995
The Company achieved record sales levels in 1996 with sales increasing by
$92 million from the prior year. The increase is primarily the result of the
growing acceptance of the Company's engineered lumber products as a substitute
for commodity solid-sawn lumber. Increased North American housing starts and
rising prices for solid-sawn lumber facilitated this transition. North American
housing starts increased nearly 10 percent over 1995 levels. Markets for
certain solid-sawn lumber products were up an average of 7 percent over 1995
levels, hitting a two-and-a-half-year high in the latter half of 1996. The
Company's sales per North American housing start were $289 compared to $263 at
year-end 1995, a 10 percent increase. 1996 is the 14th consecutive year the
Company has achieved market penetration growth in the key residential
construction market.
The Company had a 21 percent increase in unit volume sales compared to the
prior year. Volume gains were strongest in the Company's new technology
TimberStrand-Registered Trademark- LSL and Parallam-Registered Trademark- PSL
products. In particular, new products, such as TimberStrand-Registered
Trademark- LSL Wall Framing and Light-Duty Header products and the Parallam-
Registered Trademark- PSL Commercial Beam, joined existing new technology
products (e.g., TimberStrand-Registered Trademark- LSL Rim Board, window and
door parts, furniture components) in achieving these significant volume
increases. Additionally, exports of TimberStrand-Registered Trademark- LSL into
Pacific Rim countries, such as Japan, increased 186 percent over their 1995
levels. In 1996, Pacific Rim exports represented in excess of 15 percent of
total TimberStrand-Registered Trademark- LSL sales.
Sales for the fourth quarter of 1996 were $131.4 million, compared to
$113.3 million in the fourth quarter of 1995, a 16 percent increase. The sales
increase came from strong volume growth, particularly in the Company's
TimberStrand-Registered Trademark- LSL products. Average selling prices were
also up in the fourth quarter for all of the Company's product lines over the
prior year's levels.
Gross margins for the year ended December 28, 1996, were 24.7 percent
compared with 22.4 percent in 1995. The margin gains were primarily the result
of the improved operating performance at the Company's new combination
Microllam-Registered Trademark- LVL and Parallam-Registered Trademark- PSL plant
in Buckhannon, West Virginia, and TimberStrand-Registered Trademark- LSL plant
in Eastern Kentucky. The combination Microllam-Registered Trademark- LVL and
Parallam-Registered Trademark- PSL plant was a solid contributor to Company
margins during 1996. Although the Company's TimberStrand-Registered Trademark-
LSL plant in Eastern Kentucky was not profitable for the year as a whole, the
facility achieved a positive cash flow in the latter part of the third quarter
and throughout the fourth quarter. Margins also were aided by a general decline
in the cost of certain key raw materials such as oriented strand board and
veneer.
Selling expenses increased $7.6 million in 1996; however, they declined
slightly as a percent of sales 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. General and administrative expenses increased $1.9
million from the prior year. This increase is primarily driven by additional
research and development expenses and further development of the Company's
product application software, which helps customers incorporate the Company's
engineered lumber products into their building plans.
Interest expense was recognized in 1996 due to the end of the construction
phase of the two new plants in 1995. Minority interest expense increased $7.6
million from 1995 due to the increase in earnings at the Trus Joist MacMillan
(TJM) Partnership.
-26-
<PAGE>
1995 COMPARED TO 1994
Sales for the year ended December 30, 1995, decreased by $11 million from
the prior year. The sales decrease of 2 percent came in a period when North
American housing starts declined 9 percent from 1994 levels. Growing acceptance
of the Company's engineered lumber products as a substitute for commodity,
solid-sawn lumber helped increase sales volumes in a market of declining housing
starts. Price pressures due to depressed markets for dimension lumber products
had a downward impact on per-unit sales prices. Lumber prices for commodity
lumber were down approximately 16 percent from year-end 1994 levels. Despite
the market pressures on sales price, sales of the Company's residential products
per North American housing start increased to $263 for 1995 from $250 for 1994.
The most significant volume increases came from the Company's two new
technology product lines, Parallam-Registered Trademark- PSL and TimberStrand-
Registered Trademark- LSL. These increases came from established engineered
lumber products as well as new product innovations being introduced by the
Company.
Sales for the fourth quarter of 1995 increased slightly to $113.3 million,
compared to $112.9 million in the comparable period of 1994. The relatively
flat sales growth came from significant increases in volumes offset by declining
selling prices. The largest volume increases came from the Company's Parallam-
Registered Trademark- PSL product lines; however, all other product lines showed
increases, as well. While lumber prices were somewhat volatile in 1995, the
fourth quarter showed the greatest decline of the year, with prices dropping in
excess of 10 percent from the third quarter. On average, lumber prices were 14
percent below fourth quarter 1994 levels.
Gross margins for the year ended December 30, 1995, were 22.4 percent
compared with 26.1 percent in 1994. The decline was primarily due to the start-
up losses of $12.8 million at the Company's Eastern Kentucky TimberStrand-
Registered Trademark- LSL plant and West Virginia combination Parallam-
Registered Trademark- PSL and Microllam-Registered Trademark- LVL plant. Both
plants experienced start-up delays. Difficulties have come from mechanical
areas; there were no fundamental problems with the technology or the production
processes. In addition, prices for the Company's products were reduced in
response to continuing softness in the lumber market.
Profitability at the Company's initial TimberStrand-Registered Trademark-
LSL plant in Deerwood, Minnesota, continued to improve through 1995. This
resulted from a combination of improved production efficiencies and improved
sales volumes and prices for the products made at this TimberStrand-Registered
Trademark- LSL plant.
Selling expenses increased $1.3 million in 1995 compared to the prior year.
This increase reflects the Company's continuing investment in new product
development, as well as the cost of developing the European marketplace.
Administrative costs declined $2.3 million from the prior year. This decline is
primarily the result of severance and other accruals recorded in 1994 that were
not repeated in 1995.
The Company incurred interest expense in 1995 due to the end of the
construction phase of the two new plants in the third and fourth quarters. In
1995, interest payments of $6.5 million were capitalized in connection with this
construction. This compares to $4.8 million of capitalized interest
in 1994. Minority interest expense declined $10.4 million from 1994 due to the
decline in earnings at TJM.
The Company recorded a $36.2 million charge in connection with the disposal
of its window operations, which was partially completed in 1995. The loss on
disposal is net of a $23.7 million tax benefit related to the loss.
Additionally, a net loss of $3.5 million was incurred on the operations of
the window segment during 1995. This is down from a $7.4 million discontinued
operating loss in 1994. The decrease is primarily due to the disposal of the
Company's Canadian window operations at the end of 1994, which had contributed a
$4.9 million loss in 1994. Additionally, a large inventory adjustment
associated with the closure of certain distribution facilities in the Eastern
United States increased the loss in 1995.
-27-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
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 $92 million during 1996. Of those proceeds, working capital items
required $51 million. The most significant working capital requirement was from
the increased investment in accounts receivable. The Company introduced a
marketing incentive plan in the fourth quarter of 1996 to induce customers into
a less seasonal buying pattern. One element of the marketing incentive was
extended credit terms, which led to an increased investment in accounts
receivable during the winter months. The Company invested $19 million in
capital expenditures, which primarily represented its ongoing program for
productivity improvements in its manufacturing facilities and an investment in
computer hardware and software.
Additionally, the Company completed the sale of its windows division during
the third quarter of 1996. The sale of the assets resulted in a net cash inflow
of $24 million; $7.4 million of these sale proceeds were then utilized to pay
down long-term debt. As part of the sale, the Company retained all of the
existing operating and contingent liabilities of the window operations, and in
1996, approximately 10.7 million of cash was used to finance the operations
prior to sale and to fund the retained liabilities. 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
Eastern 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 third quarter of 1995, the Company issued $22.5 million of
industrial revenue bonds to help finance the construction of the Buckhannon,
West Virginia, combination Microllam-Registered Trademark- LVL and Parallam-
Registered Trademark- PSL plant. The bonds are due in a single maturity in
2025, with interest payable semi-annually at 7 percent.
In the second quarter of 1994, the Company issued $43.5 million of
industrial revenue bonds to finance construction of the Eastern Kentucky
TimberStrand-Registered Trademark- LSL plant. The bonds are due in a single
maturity in 2024, with interest payable at 7 percent.
The Company is evaluating potential sites for an additional combination
Microllam-Registered Trademark- LVL and Parallam-Registered Trademark- PSL plant
or 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 ongoing
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.
-28-
<PAGE>
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
increasingly recognize 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. 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 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.
-29-
<PAGE>
MARKET AND DIVIDEND INFORMATION
The Company's stock is traded on the over-the-counter market and is listed
with the National Association of Security Dealers Automated Quotations (NASDAQ)
under the symbol TJCO.
The high and low quoted sales prices (closing) and dividends paid per
common share for each quarterly period during 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
1996 SALES PRICE
----------------------------------
DIVIDENDS
HIGH LOW PAID
----------------------------------------------------
<S> <C> <C> <C>
First $ 18 3/4 $ 14 3/4 $ 0.055
SECOND 19 1/2 15 1/4 0.055
THIRD 18 15 5/8 0.055
FOURTH 22 1/2 17 3/4 0.055
- ------------------------------------------------------------------------------------------------
1995 SALES PRICE
----------------------------------
DIVIDENDS
HIGH LOW PAID
----------------------------------------------------
First $ 19 $ 16 1/4 $ 0.055
Second 19 16 1/4 0.055
Third 21 1/4 18 1/4 0.055
Fourth 19 3/8 15 1/4 0.055
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE STOCKHOLDERS OF TJ INTERNATIONAL, INC.:
We have audited the accompanying consolidated balance sheets of TJ
International, Inc. (a Delaware corporation) and subsidiaries as of December 28,
1996, December 30, 1995, and December 31, 1994, and the related consolidated
statements of income, stockholders' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of TJ International, Inc. and
subsidiaries as of December 28, 1996, December 30, 1995, and December 31, 1994,
and the results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Boise, Idaho
January 30, 1997
-30-
<PAGE>
RESULTS OF QUARTERLY OPERATIONS
Unaudited results of operations by quarter for 1996, 1995, and 1994 are as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES
QUARTER FIRST SECOND THIRD FOURTH
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
SALES $ 111,157 $ 155,050 $ 179,571 $ 131,388
GROSS PROFIT 21,438 39,585 46,933 34,358
NET INCOME (LOSS) (17) 4,468 7,635 4,089
NET INCOME (LOSS) PER SHARE
PRIMARY (0.01) 0.24 0.42 0.22
FULLY DILUTED (0.01) 0.23 0.40 0.21
--------------------------------------------------------
1995
Sales $ 109,941 $ 123,882 $ 137,759 $ 113,263
Gross profit 22,884 29,939 30,688 25,147
Income from continuing operations 1,815 3,047 4,113 766
Loss from discontinued operations (1,301) (461) (1,699) --
Loss on disposal of discontinued operations -- -- -- (36,191)
Net income (loss) 514 2,586 2,414 (35,425)
Net income (loss) per share
Income from continuing operations
Primary 0.09 0.16 0.23 0.03
Fully diluted 0.09 0.15 0.21 0.03
Loss from discontinued operations
Primary (0.07) (0.02) (0.10) --
Fully diluted (0.07) (0.02) (0.09) --
Loss on disposal of discontinued
operations
Primary -- -- -- (2.11)
Fully diluted -- -- -- (2.11)
Net income (loss)
Primary 0.02 0.14 0.13 (2.08)
Fully diluted 0.02 0.13 0.12 (2.08)
--------------------------------------------------------
1994
Sales $ 118,163 $ 128,773 $ 136,266 $ 112,858
Gross profit 34,999 35,297 35,112 24,308
Income (loss) from continuing operations 6,335 5,418 5,489 (992)
Income (loss) from discontinued operations (3,776) 304 (1,284) (2,646)
Net income (loss) 2,559 5,722 4,205 (3,638)
Net income (loss) per share
Income (loss) from continuing operations
Primary 0.35 0.30 0.30 (0.07)
Fully diluted 0.33 0.28 0.29 (0.07)
Income (loss) from discontinued operations
Primary (0.22) 0.02 (0.07) (0.16)
Fully diluted (0.20) 0.02 (0.07) (0.16)
Net income (loss)
Primary 0.13 0.32 0.23 (0.23)
Fully diluted 0.13 0.30 0.22 (0.23)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Per share calculations are based on the average common shares outstanding for
each period presented. Accordingly, the total of the per share figures for the
quarters may not equal the per share figures reported for the year.
-31-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
DOLLAR AMOUNTS IN THOUSANDS
DECEMBER 28, 1996 December 30, 1995 December 31, 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 36,801 $ 19,715 $ 57,764
Marketable securities -- -- 16,084
Receivables, less allowances of $451, $384, and
$585, respectively 73,893 28,754 38,462
Inventories 51,549 38,560 30,968
Deferred income taxes 4,985 11,607 5,803
Other 4,756 6,036 2,798
Net assets from discontinued operations -- -- 54,419
-----------------------------------------------------------
171,984 104,672 206,298
Property
Land 11,698 11,682 11,569
Buildings and leasehold improvements 104,203 99,232 79,740
Machinery, equipment, and other 450,702 440,634 363,155
Accumulated depreciation (184,504) (149,069) (124,328)
-----------------------------------------------------------
382,099 402,479 330,136
Goodwill 20,540 21,580 21,926
Unexpended bond funds -- 117 11,550
Deferred income taxes 8,846 5,088 --
Other assets 16,346 12,374 14,999
-----------------------------------------------------------
$ 599,815 $ 546,310 $ 584,909
-----------------------------------------------------------
-----------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ -- $ 2,994 $ 6,358
Current portion of long-term debt -- 340 570
Accounts payable 23,113 23,746 24,195
Accrued liabilities 37,286 24,237 22,714
-----------------------------------------------------------
60,399 51,317 53,837
Long-term debt, excluding current portion 88,140 89,440 102,280
Deferred income taxes -- -- 8,092
Other long-term liabilities 6,050 8,597 9,116
Discontinued operations (note 2) 21,970 5,755 --
Minority interest in Partnership 195,186 181,057 171,026
Stockholders' equity
ESOP Convertible Preferred Stock, issued 1,162,914,
1,185,933, and 1,249,582 shares, respectively 13,721 13,992 14,744
Guaranteed ESOP benefit (9,204) (10,382) (12,100)
Common stock, issued 17,500,896,
17,131,758, and 16,915,536 shares, respectively 17,501 17,132 16,916
Paid-in capital 145,583 140,384 138,003
Retained earnings 63,249 51,808 86,355
Cumulative translation adjustment (2,780) (2,790) (3,360)
-----------------------------------------------------------
228,070 210,144 240,558
-----------------------------------------------------------
$ 599,815 $ 546,310 $ 584,909
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-32-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
FOR THE THREE YEARS ENDED DECEMBER 28,1996 (dollar amounts in thousands except per share figures)
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 577,166 $ 484,845 $ 496,060
-----------------------------------------------------------
Costs and expenses
Cost of sales 434,852 376,187 366,344
Selling expenses 61,270 53,675 51,851
Administrative expenses 26,595 24,641 27,466
-----------------------------------------------------------
522,717 454,503 445,661
-----------------------------------------------------------
Income from operations 54,449 30,342 50,399
Investment income, net 1,593 2,209 2,282
Interest expense (6,328) (631) --
Minority interest in Partnership (23,956) (16,376) (26,848)
-----------------------------------------------------------
Income from continuing operations before
income taxes 25,758 15,544 25,833
Income taxes 9,583 5,803 9,583
-----------------------------------------------------------
Income from continuing operations 16,175 9,741 16,250
-----------------------------------------------------------
Discontinued operations
Loss from discontinued operations
(net of tax benefit of $2,171 and $1,855,
1995 and 1994, respectively) -- (3,461) (7,402)
Loss on disposal of discontinued operations
(net of tax benefit of $23,718) -- (36,191) --
-----------------------------------------------------------
Net Income (loss) $ 16,175 $ (29,911) $ 8,848
-----------------------------------------------------------
-----------------------------------------------------------
Net income (loss) per share
Income from continuing operations
Primary $ 0.86 $ 0.51 $ 0.88
Fully Diluted $ 0.82 $ 0.48 $ 0.83
Loss from discontinued operations
Primary -- (0.20) (0.42)
Fully Diluted -- (0.17) (0.39)
Loss on disposal of discontinued operations
Primary -- (2.11) --
Fully Diluted -- (2.11) --
Net income (loss)
-----------------------------------------------------------
Primary $ 0.86 $ (1.80) $ 0.46
-----------------------------------------------------------
Fully Diluted $ 0.82 $ (1.80) $ 0.44
-----------------------------------------------------------
-----------------------------------------------------------
Weighted average number of common shares
outstanding during the periods
Primary 17,679 17,132 17,354
-----------------------------------------------------------
Fully Diluted 18,861 17,132 18,635
-----------------------------------------------------------
-----------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-33-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE THREE YEARS ENDED DECEMBER 28, 1996 (amounts in thousands)
Guaranteed Cumulative
Preferred ESOP Common Paid-In Retained Translation
Stock Benefit Stock Capital Earnings Adjustment
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 $ 14,859 $ (12,390) $ 16,738 $ 135,727 $ 82,139 $ (2,332)
Net Income -- -- -- -- 8,848 --
Cash dividends declared:
Common stock -- -- -- -- (3,712) --
Preferred stock, net of tax -- -- -- -- (920) --
Stock options exercised,
net of tax -- -- 177 2,227 -- --
Other (115) 290 1 49 -- (1,028)
------------------------------------------------------------------------------------------
Balance, December 31, 1994 14,744 (12,100) 16,916 138,003 86,355 (3,360)
Net Loss -- -- -- -- (29,911) --
Cash dividends declared:
Common stock -- -- -- -- (3,754) --
Preferred stock, net of tax -- -- -- -- (882) --
Stock options exercised,
net of tax -- -- 178 1,549 -- --
Other (752) 1,718 38 832 -- 570
------------------------------------------------------------------------------------------
Balance, December 30, 1995 13,992 (10,382) 17,132 140,384 51,808 (2,790)
NET INCOME -- -- -- -- 16,175 --
CASH DIVIDENDS DECLARED:
COMMON STOCK -- -- -- -- (3,811) --
PREFERRED STOCK, NET OF TAX -- -- -- -- (923) --
STOCK OPTIONS EXERCISED,
NET OF TAX -- -- 230 2,968 -- --
401(K) COMPANY MATCH -- -- 125 2,165 -- --
OTHER (271) 1,178 14 66 -- 10
------------------------------------------------------------------------------------------
BALANCE, DECEMBER 28, 1996 $ 13,721 $ (9,204) $ 17,501 $ 145,583 $ 63,249 $ (2,780)
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-34-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
FOR THE THREE YEARS ENDED DECEMBER 28, 1996 (amounts in thousands)
This statement has not been restated for discontinued operations.
1996 1995 1994
-----------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 16,175 $ (29,911) $ 8,848
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Discontinued operations charge -- 36,191 --
Depreciation and amortization 39,591 33,236 28,343
Minority interest in partnerships 23,956 16,376 27,003
Deferred income taxes 9,583 4,433 813
Other, net 2,290 1,082 (89)
Change in working capital items:
Receivables (45,139) 9,039 13,574
Inventories (12,989) (1,401) (5,086)
Other current assets 1,280 118 1,542
Accounts payable and accrued liabilities 5,826 (766) 2,674
Other, net (3,868) (4,205) (4,716)
-----------------------------------------------------------
Net cash provided from operating activities $ 36,705 $ 64,192 $ 72,906
-----------------------------------------------------------
-----------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures $ (19,056) $ (105,672) $ (152,363)
Proceeds from the sale of discontinued operations 24,035 -- --
Payments of discontinued operations liabilities (10,733) -- --
Decrease (increase) in unexpended bond funds 117 11,433 (11,550)
Sales (purchases) of marketable securities -- 16,084 (9,080)
Other, net 2,357 2,316 670
-----------------------------------------------------------
Net cash provided by (used in) investing activities $ (3,280) $ (75,839) $ (172,323)
-----------------------------------------------------------
-----------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid on common stock $ (3,791) $ (3,742) $ (3,702)
Cash dividends paid on preferred stock -- (1,263) (1,331)
Minority partners capital contributions -- -- 49,000
Minority partners tax distributions (7,960) (7,522) (12,042)
Net repayments under lines of credit (2,994) (759) (254)
Proceeds from the issuance of long-term debt 5,740 22,500 78,500
Principal payments of long-term debt (7,380) (35,650) (18,919)
Other, net 46 171 (1,176)
-----------------------------------------------------------
Net cash provided by (used in) financing activities $ (16,339) $ (26,265) $ 90,076
-----------------------------------------------------------
-----------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS
Net increase (decrease) in cash and
cash equivalents $ 17,086 $ (37,912) $ (9,341)
Cash and cash equivalents at beginning of year 19,715 57,627 66,968
-----------------------------------------------------------
Cash and cash equivalents at end of year $ 36,801 $ 19,715 $ 57,627
-----------------------------------------------------------
-----------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest, net of amounts capitalized $ 6,084 $ 634 $ --
Income taxes $ -- $ 1,392 $ 6,463
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
A cash balance of $(137) in 1994 has been reflected in net assets from
discontinued operations on the balance sheet.
The accompanying notes are an integral part of these financial statements.
-35-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The consolidated financial statements include the accounts of the Company
and subsidiaries, including the Company's 51-percent interest in Trus Joist
MacMillan a Limited Partnership (TJM). All significant inter-company balances
and transactions have been eliminated. Certain components of the accompanying
balance sheets and statements of income require estimates made by management.
Actual results could differ from those estimates.
FISCAL YEAR
The Company's 52/53-week fiscal year ends on the Saturday closest to
December 31 of each year. The additional week, which occurs approximately every
fifth year, does not materially affect the comparability of operations between
years.
FOREIGN TRANSLATION
The accounts of the Company's Canadian subsidiaries are measured using the
Canadian dollar as functional currency. These financial statements are
translated into U.S. dollars using exchange rates in effect at year-end for
assets and liabilities and the average exchange rate during the period for
results of operations. The resulting translation adjustment is made directly to
the cumulative translation adjustment component of Stockholders' Equity.
CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES
The Company considers cash on hand, cash in banks, and all highly liquid
investments with maturities of three months or less when purchased to be cash
equivalents. These assets are recorded at cost, which approximates fair market
value, and totaled $36,801,000 at December 28, 1996, $19,715,000 at December 30,
1995, and $57,764,000 at December 31, 1994. Marketable securities include tax-
exempt municipal bonds and preferred stocks. These securities are recorded at
cost, which approximates fair market value based on quoted market prices.
INVENTORIES
Inventories are valued at the lower of cost or market and include material,
labor, and production overhead costs. Inventories consisted of the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
DECEMBER 28, 1996 December 30, 1995 December 31, 1994
-----------------------------------------------------------------
<S> <C> <C> <C>
Finished goods $ 38,278 $ 25,882 $ 21,099
Raw materials 13,271 14,657 15,131
-----------------------------------------------------------------
51,549 40,539 36,230
Reduction to LIFO cost -- (1,979) (5,262)
-----------------------------------------------------------------
$ 51,549 $ 38,560 $ 30,968
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
The Last-In, First-Out (LIFO) method is used in determining the cost of
lumber, veneer, Microllam-Registered Trademark- LVL, TJI-Registered Trademark-
joists, and open-web trusses. Approximately 49 percent of total inventories at
the end of 1996, 49 percent of total inventories at the end of 1995, and 53
percent of total inventories at the end of 1994 were valued using the LIFO
method of inventory valuation. The First-In, First-Out (FIFO) method of
inventory valuation was used to value all remaining inventory. At December 28,
1996, the LIFO valuation approximated the FIFO valuation.
PROPERTY
Property and equipment are recorded at cost. Additions, betterments, and
replacements of major units of property are capitalized. Maintenance, repairs,
and minor replacements are expensed as incurred and approximated $26,607,000 in
1996, $20,377,000 in 1995, and $17,931,000 in 1994. The net book value of
property sold or retired is removed from the asset and related depreciation
accounts, and any resulting gain or loss is included in income.
-36-
<PAGE>
The provision for depreciation on certain Microllam-Registered Trademark-
LVL, Parallam-Registered Trademark- PSL, and TimberStrand-Registered Trademark-
LSL manufacturing equipment is computed on the units-of-production method.
Virtually all other property and equipment is depreciated on the straight-line
method. Estimated useful lives of the principal items of property and equipment
range from three to 30 years.
CAPITALIZED INTEREST
The Company capitalizes interest on qualifying assets. There was no
capitalization of interest in 1996. Interest expense and income capitalized
into property and equipment were $6,838,000 and $336,000 in 1995 and $5,259,000
and $464,000 in 1994, respectively.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred. Research and
development costs charged to expense were approximately $3,221,000 in 1996,
$2,262,000 in 1995, and $3,309,000 in 1994.
RECLASSIFICATIONS
Certain reclassifications have been made, none of which affected net income
(loss), to conform prior years' information to the current year's presentation.
NET INCOME PER SHARE
Primary net income (loss) per common share is based on net income (loss)
adjusted for preferred stock dividends and related tax benefits divided by the
weighted average number of common shares outstanding after giving effect to
stock options as common stock equivalents, if dilutive. Fully diluted net
income per common share assumes conversion of the Employee Stock Ownership Plan
(ESOP) convertible preferred stock (ESOP preferred stock) into common stock at
the beginning of the year. Fully diluted net loss per share for 1995 is the
same as primary net loss per share since the effect of the assumed conversion of
the ESOP preferred stock is anti-dilutive. Primary and fully diluted net income
(loss) were calculated as follows:
PRIMARY AND FULLY DILUTED NET INCOME
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
1996 1995 1994
-----------------------------------------------------------
<S> <C> <C> <C>
Net income from continuing operations $ 16,175 $ 9,741 $ 16,250
Preferred stock dividends, net of related tax benefits (949) (899) (920)
-----------------------------------------------------------
Primary net income from continuing operations 15,226 8,842 15,330
-----------------------------------------------------------
Loss from discontinued operations -- (3,461) (7,402)
Loss from disposal of discontinued operations -- (36,191) --
-----------------------------------------------------------
Primary net income (loss) $ 15,226 $ (30,810) $ 7,928
-----------------------------------------------------------
Net income from continuing operations $ 16,175 $ 9,741 $ 16,250
Additional ESOP contribution payable upon
assumed conversion of ESOP preferred stock,
net of related tax benefits (711) (677) (720)
-----------------------------------------------------------
Fully diluted income from continuing operations 15,464 9,064 15,530
-----------------------------------------------------------
Loss from discontinued operations -- (3,461) (7,402)
Loss from disposal of discontinued operations -- (36,191) --
-----------------------------------------------------------
Fully diluted net income (loss) $ 15,464 $ (30,588) $ 8,128
-----------------------------------------------------------
Weighted average shares outstanding
Primary 17,679 17,132 17,354
Fully diluted 18,861 17,132 18,635
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
-37-
<PAGE>
PARTNERSHIP
On September 29, 1991, the Company and MacMillan Bloedel of America, Inc.
(MBA), a wholly owned subsidiary of MacMillan Bloedel Limited (MB), formed TJM.
The Company contributed all of its North American engineered lumber
technology, manufacturing facilities, and its sales and marketing organization
for a 51-percent interest in TJM. MBA and MB contributed all of their North
American engineered lumber technology and manufacturing facilities for a
49-percent interest in TJM. The Company, MBA, and MB also contributed all
patents and trademarks relating to their combined engineered lumber business.
Goodwill recognized in the transaction is being amortized using the
straight-line method over 25 years. As of December 28, 1996, a total of
$5,460,000 of this goodwill has been amortized. Goodwill expense was $1,040,000
each year in 1996, 1995, and 1994.
MINORITY INTEREST IN PARTNERSHIP
The Company has a 51-percent interest in TJM. Income and losses through
December 28,1996, are allocated on a formula basis as agreed to by the partners
and in accordance with the Partnership agreements. As a result, the minority
owners of the Partnership were allocated $23,956,000 of income in 1996,
$16,376,000 of income in 1995, and $26,848,000 of income in 1994. These
allocations are reflected as Minority interest in Partnership in the
Consolidated Statements of Income. The minority partner's interest in the
Partnership-accumulated equity is included in the Consolidated Balance Sheets as
Minority interest in Partnership.
2 DISCONTINUED OPERATIONS
The Company completed its plan to divest of its window segment in 1996.
Effective July 1, 1996, all of the remaining window operation assets owned by
the Company's Norco Windows subsidiary were sold to JELD-WEN, Inc. Net-cash
proceeds from the sale were approximately $24 million. The Company retained all
of the operating and contingent liabilities of the window segment, and
management believes that existing reserves are adequate to satisfy all of the
remaining liabilities. This divestiture will allow the Company to devote all of
its resources towards its Engineered Lumber segment. All of the Company's window
operations have been reflected in the accompanying financial statements as
Discontinued Operations for all periods presented.
Sales from these discontinued operations were $32,212,000 in 1996,
$95,569,000 in 1995, and $122,617,000 in 1994. There have been no allocations
of corporate overhead interest expense to discontinued operations in the
accompanying financial statements.
The components of net assets (liabilities) from discontinued operations
included in the Consolidated Balance Sheets are as follows:
<TABLE>
<CAPTION>
NET ASSETS (LIABILITIES) FROM DISCONTINUED OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
End of Year: 1996 1995 1994
-----------------------------------------------------------
<S> <C> <C> <C>
Accounts receivable -- $ 6,921 $ 10,695
Inventories -- 11,488 25,644
Property, plant, and equipment -- 14,108 20,443
Costs in excess of fair value of net assets acquired -- -- 26,963
Accounts payable and accrued liabilities (4,438) (17,981) (8,853)
Other liabilities (17,532) (20,291) (20,473)
-----------------------------------------------------------
Net assets (liabilities) $ (21,970) $ (5,755) $ 54,419
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
-38-
<PAGE>
3 DEBT
At year-end, the Company has available unsecured, committed lines of credit
totaling $13,657,000 with foreign and domestic banks. The interest rate on any
loan, determined at the time of the borrowing, would not exceed the lending
bank's prevailing prime rate. Arrangements with the domestic banks provide for
a commitment fee of .25 percent. At December 28, 1996, there were no borrowings
under these agreements. At December 30, 1995, and December 31, 1994, there was
$2,994,000 at 6.3 percent and $6,358,000 at 6.5 percent, respectively, borrowed
under similar arrangements.
The Company has a $150 million Revolving Credit Facility (the Credit
Facility) provided by a syndicate of banks. The Credit Facility provides
several interest rate options, none of which exceeds prime, and matures on
November 15, 2001. At December 28, 1996, there were no borrowings under this
facility.
During 1996, $5,740,000 of industrial revenue bonds were issued to finance
final stages of construction of a TimberStrand-Registered Trademark- LSL plant
in Eastern Kentucky. These bonds have a fixed interest rate of 6.8 percent,
provide for semi-annual interest payments, with the principal due in 2026.
These bonds are unsecured.
During 1995, $22,500,000 of industrial revenue bonds were issued to finance
the construction of a combination Microllam-Registered Trademark- LVL/Parallam-
Registered Trademark- PSL manufacturing plant near Buckhannon, West Virginia.
These bonds have a fixed interest rate of 7.0 percent, provide for semi-annual
interest payments, with the principle due in 2025, and are unsecured. During
1994, $43,500,000 of industrial revenue bonds were issued to finance the
construction of a TimberStrand-Registered Trademark- LSL plant in Eastern
Kentucky. The bonds also have a fixed interest rate of 7.0 percent, provide for
semi-annual interest payments, with the principal due in 2024, and are
unsecured.
All of the industrial revenue variable-rate demand bonds are secured by the
property and equipment acquired with the bond proceeds. At December 28, 1996,
the cost of such property and equipment was approximately $16,400,000. The
Company's variable rate demand bonds are supported by irrevocable letters of
credit. These letters of credit, together with the Company's Credit Facility,
allow the Company to borrow for periods in excess of one year, if drawn upon to
repay bondholders.
The debt agreements contain various customary financial covenants, all of
which the Company is in compliance with at December 28, 1996. Under the most
restrictive of these agreements, retained earnings available for cash dividends
at December 28, 1996, were $70,792,000. Debt is recorded at cost, net of any
discount or premium, which approximates fair market value based on borrowing
rates currently available to the Company for debt with similar terms and
maturities.
Long-term debt consisted of the following:
LONG-TERM DEBT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
DECEMBER 28, 1996 December 30, 1995 December 31, 1994
--------------------------------------------------------------------
<S> <C> <C> <C>
Borrowings under the Credit Facility $ -- $ -- $ 35,000
Industrial revenue bonds, 6.98% weighted
average interest rate during 1996, payable
in varying amounts from 2024 through 2026 71,740 73,380 51,450
Industrial revenue variable-rate demand bonds,
interest rates established weekly, 3.70%
weighted average during 1996, $10,000,000
payable in 2000, and $6,400,000 payable
in 2009 16,400 16,400 16,400
--------------------------------------------------------------------
88,140 89,780 102,850
Less current portion -- (340) (570)
--------------------------------------------------------------------
$ 88,140 $ 89,440 $ 102,280
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
-39-
<PAGE>
4 ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
DECEMBER 28, 1996 December 30, 1995 December 31, 1994
--------------------------------------------------------------------
<S> <C> <C> <C>
Salaries, wages, and commissions $ 4,328 $ 3,092 $ 2,310
Retirement plans and other associate benefits 13,750 10,525 11,064
Marketing incentives 8,216 4,439 --
Other 10,992 6,181 9,340
--------------------------------------------------------------------
$ 37,286 $ 24,237 $ 22,714
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
5 INCOME TAXES
Income tax information has not been restated to exclude discontinued operations
in 1994. Income (loss) before income taxes and income taxes (benefits) include
the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
1996 1995 1994
-----------------------------------------------------------
<S> <C> <C> <C>
Income (loss) before income taxes
U.S. $ 23,194 $ 20,947 $ 23,249
Canada 2,564 (5,403) (6,673)
-----------------------------------------------------------
$ 25,758 $ 15,544 $ 16,576
-----------------------------------------------------------
-----------------------------------------------------------
Income taxes (benefits)
Current income taxes
U.S. federal $ -- $ 1,370 $ 5,957
U.S. state -- -- 1,780
Canada -- -- (822)
-----------------------------------------------------------
-- 1,370 6,915
-----------------------------------------------------------
Deferred income taxes
U.S. federal 7,073 5,452 659
U.S. state 1,484 993 (329)
Canada 1,026 (2,012) 483
-----------------------------------------------------------
9,583 4,433 813
-----------------------------------------------------------
$ 9,583 $ 5,803 $ 7,728
-----------------------------------------------------------
-----------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company's effective income tax rate varied from the U.S. federal statutory
income tax rate for the following reasons:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
1996 1995 1994
-----------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. federal statutory income tax rate $ 9,015 35.0% 35.0% 35.0%
Reversal of excess tax reserves provided in prior years -- -- (1.8) (4.2)
Foreign income (losses) at different rates 302 1.2 (4.5) 12.0
State income taxes, net of federal effect 1,072 4.2 6.6 5.7
Other items (806) (3.2) 2.0 (1.9)
-----------------------------------------------------------
Effective income tax rate $ 9,583 37.2% 37.3% 46.6%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
-40-
<PAGE>
The deferred tax liabilities and assets included in the Consolidated Balance
Sheets, computed under Statement No. 109, are comprised of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
DECEMBER 28, 1996 December 30, 1995 December 31, 1994
--------------------------------------------------------------------
<S> <C> <C> <C>
Tax in excess of book depreciation $ (27,101) $ (18,090) $ (13,881)
Other (7,330) (7,851) (2,655)
--------------------------------------------------------------------
Total deferred tax liabilities (34,431) (25,941) (16,536)
Reserves not yet deductible for tax purposes 2,370 1,352 6,686
Net operating loss carryforwards 13,062 5,652 2,408
Alternative minimum tax credit carryforward 4,279 5,436 4,106
Reserves and operating losses related to
discontinued operations 19,740 25,889 --
Other 8,811 4,307 2,249
--------------------------------------------------------------------
Total deferred tax assets 48,262 42,636 15,449
Less valuation allowances -- -- (1,202)
--------------------------------------------------------------------
$ 13,831 $ 16,695 $ (2,289)
--------------------------------------------------------------------
--------------------------------------------------------------------
Classified as:
Deferred income taxes -- current assets $ 4,985 $ 11,607 $ 5,803
Deferred income taxes -- long-term
assets (liabilities) 8,846 5,088 (8,092)
--------------------------------------------------------------------
$ 13,831 $ 16,695 $ (2,289)
--------------------------------------------------------------------
--------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company's alternative minimum tax credits of $4,279,000 at December 28,
1996, are available indefinitely. Net operating loss carryforwards, which
expire in 1998 through 2010, are expected to be fully utilized based on
forecasted conditions and various tax-planning strategies.
6 RETIREMENT PLANS AND INCENTIVE BONUS PROGRAMS
Most of the Company's employees are covered under defined contribution
retirement plans which includes participation in the Company's ESOP and 401(k)
plan. Benefits under these plans are limited to each individual's fund
balances.
In September 1990, the ESOP borrowed $15 million at a 9-percent interest
rate from the Company. This term loan matures on March 31, 2011, and has no
prepayment penalties. Proceeds from the loan were used by the ESOP to purchase
1,269,842 shares of newly issued ESOP preferred stock from the Company. The
ESOP preferred stock is described in Note 7.
In connection with the above transactions, the Company has guaranteed that
over the term of the loan, it will make sufficient contributions to the ESOP to
allow the ESOP to repay the loan to the Company. This guarantee has been
recorded as Guaranteed ESOP benefit in Stockholders' Equity. The Company's
annual contributions to the ESOP are based on a formula. The contributions,
together with all dividends on the ESOP preferred shares, will be used by the
ESOP to make the necessary interest payments and any principal prepayments. With
each loan payment, a portion of the ESOP preferred stock is released and
allocated to the employees' accounts in the ESOP. The Guaranteed ESOP benefit
is amortized based on the shares allocated method of calculating expense. The
annual expense associated with the ESOP was approximately $1,022,000 in 1996,
$1,153,000 in 1995, and $676,000 in 1994.
The Company matches certain contributions of participating associates to
its retirement plans. Contributions to these plans were approximately
$13,445,000 in 1996, $11,130,000 in 1995, and $11,361,000 in 1994, of which
approximately 49 percent, 57 percent, and 57 percent, respectively, resulted
from contributions made under the compensation reduction agreement provision of
the plans.
Substantially all of the Company's officers and key employees participate
in incentive bonus programs which are based on formulas or are discretionary.
Amounts charged to income under the programs were approximately $2,361,000 in
1996, $1,259,000 in 1995, and $2,129,000 in 1994.
-41-
<PAGE>
7 STOCKHOLDERS' EQUITY
At December 28, 1996, there were 200,000,000 shares of common stock ($1.00
par value) and 10,000,000 shares of preferred stock ($1.00 par value)
authorized. In September 1990, the Company issued 1,269,842 shares of $1.00 par
value ESOP preferred stock at $11.8125 per share (liquidation preference) to the
ESOP. Each share of the ESOP preferred stock is convertible into the Company's
common stock at the higher of the liquidation preference or the fair market
value of the underlying common stock. The Company has the option to satisfy any
conversion in cash, common stock, or any combination thereof. The ESOP
preferred stock has voting rights equal to one vote per share and is entitled to
preferential dividends of $1.065 per share each year. The ESOP preferred stock
is redeemable at the Company's option under certain circumstances.
Effective April 1996, the Company's Board of Directors (the Board) approved
the funding of the Company's 401(k) matching contributions by issuance of
authorized but previously unissued common stock. Prior to that date, such
matching contributions were made in cash.
In December 1996, the Board approved a new stock-option plan, which will be
voted on by the stockholders at the Company's annual meeting of stockholders in
May 1997. Under terms of this plan, incentive stock options (ISOs) and
nonstatutory options (NSOs) may be issued at an exercise price of not less than
the fair market value of the stock on the date of grant. The ISOs become
exercisable three years after date of grant and the NSOs in 33.3 percent annual
installments commencing one year after date of grant. In December 1996, subject
to approval of the stock-option plan by the stockholders, the Board granted NSOs
to purchase 675,000 shares of the Company's common stock to officers and key
associates, with an exercise price of $21.375 per share.
In order to partially mitigate the potential dilutive effect of the 1996
stock-option plan, in December 1996, the Board also authorized a program to
repurchase up to $15,000,000 of the Company's common stock at market price. The
stock repurchase commenced in February 1997, after release of the Company's 1996
year-end earnings.
The Company also has four previously approved stock-option plans in effect
for officers and key associates. Under terms of these plans, which have been
approved by the Company's stockholders, ISOs may be issued at an exercise price
of not less than the fair market value of the stock on the date of grant and
NSOs may be issued at a $1.00 exercise price. The ISOs become exercisable three
years after the date of the grant, and, depending on Board determination at the
time of the grant, the NSOs either become exercisable three years after date of
grant or in 20 percent annual installments commencing five years after date of
grant.
At December 28, 1996, a total of 46,700 ISOs and 1,288,145 NSOs were
outstanding, and 2,319,000 shares were reserved for issuance under all the
stock-option plans. Outstanding options and exercise prices are adjusted to
reflect any stock splits and stock dividends. All unexercised options expire
10 years after date of grant. For NSOs, the excess of the fair market value
over the exercise price on date of grant is accrued ratably as compensation
expense from the date of grant to the exercisable date. No accounting entries
are made for ISOs until they are exercised.
In 1989, The Company issued common stock purchase rights (rights) to each
stockholder. The rights are not currently exercisable, but would become
exercisable if certain events occurred relating to a person or group acquiring
or attempting to acquire 20 percent or more of the outstanding shares of common
stock. With certain exceptions, if the Company is thereafter involved in a
merger or other business combination, the rights permit each holder, other than
the person or group that triggered the rights, to purchase common stock of the
surviving company at 50 percent of its market value. The rights expire in
September 1999, are non-voting, and may be redeemed by the Company at $.005 per
right. In connection with these rights, the Board has reserved for issuance the
same number of shares as are outstanding at any point in time.
Total compensation expenses recognized from the Company's various stock-
option plans were $1,535,000, $987,000, and $1,993,000 in 1996, 1995, and 1994,
respectively. The Company has elected not to adopt Statement 123 issued by the
Financial Accounting Standards Board; however, Company financial performance
would not have been materially different had the Statement been adopted in 1995
or in 1996. Stock-option transactions are summarized as follows:
-42-
<PAGE>
STOCK-OPTION TRANSACTIONS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
--------------------------------------------------------------
<S> <C> <C> <C>
Number of Option Shares
Granted 867,700 98,400 107,900
Became exercisable 168,118 146,475 255,732
Exercised 230,470 178,418 177,406
Canceled 57,947 21,025 124,635
Outstanding at end of year 1,334,845 755,562 856,605
Exercisable at end of year 132,778 195,130 227,073
Option Price Range (per share)
Granted $1.00 - 21.375 $ 1.00 $ 1.00
Exercised .25 - 9.38 .25-9.38 .25-9.38
Outstanding at end of year .50 - 21.375 .25-9.38 .25-9.38
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
8 LEASES
Basic or minimum rental expenses for operating and month-to-month leases
amounted to $3,985,000 in 1996, $2,990,000 in 1995, and $3,211,000 in 1994.
The Company has various operating leases with initial or remaining terms of
more than one year. These leases have minimum lease payment requirements of
$2,710,000 in 1997, $1,820,000 in 1998, $1,329,000 in 1999, $597,000 in 2000,
and $566,000 in 2001. In addition to minimum rentals, certain lease agreements
provide for usage charges and cost-of-living increases. Lease agreements
related to real property have fixed payment terms based upon the lapse of time.
Certain lease agreements provide the Company with the option to purchase
the leased property at the end of the lease term at approximately fair market
value. Additionally, certain lease agreements contain renewal options of up to
three years with substantially the same terms.
9 RELATED-PARTY TRANSACTIONS
TJM sells to MacMillan Bloedel Building Materials (MBBM), a division of MB,
on terms comparable to other Company distributors. Sales to MBBM were
$168,500,000, $116,900,000, and $116,500,000 in 1996, 1995, and 1994,
respectively. Accounts receivable from MBBM were: $16,658,000 at December 28,
1996; $7,163,000 at December 30, 1995; and $2,188,000 at December 31, 1994.
Amounts due from MBBM are included in receivables in the accompanying
Consolidated Balance Sheets.
MB provides certain technological and research assistance and computer
services support to TJM. Amounts incurred under this arrangement with MB were
$1,741,000, $1,658,000, and $1,959,000 for 1996, 1995, and 1994, respectively.
Quarterly, the Partnership makes cash distributions to the Partners in lieu
of state and federal income taxes. Payments of $7,960,000, $6,387,000, and
$10,471,000 were made to MBA in 1996, 1995, and 1994, respectively.
Certain employees who perform services for TJM at the former MB facilities
remain on the payroll of MB. The Partnership Agreement provides that MB will be
reimbursed for its actual payroll and related benefit costs relating to these
employees. Payroll reimbursements to MB for 1996, 1995, and 1994 were
$5,756,000, $4,925,000, and $4,290,000, respectively. Total payables to MB and
MBA for such services and tax distributions at December 28, 1996, December 30,
1995, and December 31, 1994, were $2,745,000, $844,000, and $1,649,000,
respectively, and are included in accounts payable in the accompanying
Consolidated Balance Sheets.
-43-
<PAGE>
10 GEOGRAPHIC INFORMATION AND SIGNIFICANT CUSTOMERS
The primary business of the Company is the manufacture and marketing of
specialty building products for buildings in the residential and light-
construction industries. More than 90 percent of the Company's sales are
derived from this activity.
The Company operates primarily in two countries, the United States and
Canada; the majority of all sales are made domestically in those countries.
Geographic information about the Company's operations for the three years ended
December 28,1996, is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
United States Canada Consolidated
--------------------------------------------------------------
<S> <C> <C> <C>
1996
SALES TO UNAFFILIATED CUSTOMERS $ 528,692 $ 48,474 $ 577,166
INCOME FROM OPERATIONS 50,945 3,504 54,449
IDENTIFIABLE ASSETS 566,710 33,105 599,815
--------------------------------------------------------------
1995
Sales to unaffiliated customers $ 444,267 $ 40,578 $ 484,845
Income (loss) from operations 34,636 (4,294) 30,342
Identifiable assets 515,153 31,157 546,310
--------------------------------------------------------------
1994
Sales to unaffiliated customers $ 446,651 $ 49,409 $ 496,060
Income (loss) from operations 50,799 (400) 50,399
Identifiable assets, excluding discontinued
operations 495,193 35,297 530,490
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain products are transferred between the United States and Canada for
further manufacture and marketing; these transfers between geographic areas
totaled approximately $43,923,000 in 1996, $26,840,000 in 1995, and $25,115,000
in 1994. The transfer price is approximately the same price charged to similar
customers.
The Partnership has a strategic alliance with Weyerhaeuser Company's
Building Materials Distribution Division. The arrangement allows the
Partnership to expand its distribution network through Weyerhaeuser's customer
service centers. Additionally, there are certain supply agreements, whereby the
Partnership procures raw materials such as veneer and oriented strand board from
Weyerhaeuser. Total sales to Weyerhaeuser for the years ended December 28,
1996, December 30, 1995, and December 31, 1994, were $188,000,000, $146,200,000,
and $101,000,000, respectively.
-44-
<PAGE>
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated effective
as of the 15th day of November, 1996, among TJ INTERNATIONAL, INC. (the
Borrower"), WACHOVIA BANK OF GEORGIA, N.A., as Agent (the "Agent"), and the
banks (collectively, the "Banks") which are parties with the Borrower and the
Agent to that certain Amended and Restated Credit Agreement dated as of May 31,
1995, (as amended by the First Amendment thereto dated as of December 8, 1995,
the "Credit Agreement");
W I T N E S S E T H:
WHEREAS, the Borrower has requested and the Agent and the Banks have agreed
to certain amendments with respect to certain provisions of the Credit
Agreement, including, without limitation, increasing the Commitments from
$100,000,000 to $150,000,000, subject to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the above premises and other
good and valuable consideration, the receipt and sufficiency of which hereby is
acknowledged by the parties hereto, the Borrower, the Agent and the Banks hereby
convenant and agree as follows:
1. DEFINITIONS. Unless otherwise specifically defined herein, each term
used herein which is defined in the Credit Agreements shall have the meaning
assigned to such term in the Credit Agreement. Each reference to "hereof",
"hereunder", "herein", and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference contained in the
Credit Agreement shall from and after the date hereof refer to the Credit
Agreement as amended hereby.
2. AMENDMENT TO SECTION 1.01. The definition of "Termination Date" set
forth in Section 1.01 is deleted in its entirety and substituted in lieu thereof
is the following definition:
"Termination Date" means November 15, 2001.
3. AMENDMENT TO SECTION 2.05 (c). Section 2.05 (c) of the Credit
Agreement hereby is amended by deleting the same in its entirety and
substituting the following in lieu thereof:
(c) In addition to the foregoing, the outstanding principal amount
(or Face Amount) of the Loans and Bankers' Acceptances, if any,
together with all accrued but unpaid interest thereon, if any, shall
be due and payable on the Termination Date.
<PAGE>
4. AMENDMENT TO COMMITMENT AMOUNTS. The signature pages of the Credit
Agreement hereby are amended to provide that the following Banks have the
following Commitments:
COMMITMENTS BANK
----------- ----
$32,812,500 WACHOVIA BANK OF GEORGIA, N.A.
$28,125,000 CIBC INC.
$28,125,000 THE CHASE MANHATTAN BANK
$23,437,500 NBD BANK
$18,750,000 THE BANK OF TOKYO-MITSUBISHI,
LTD. (Seattle Agency) (formerly known as
BANK OF TOKYO, LTD.)
$18,750,000 US BANK OF IDAHO
TOTAL COMMITMENTS: $150,000,000
5. RELEASE OF GUARANTORS. The Borrower has informed the Agent and the
Banks that the Borrower intends, with respect to SYSTEMS ERECTION, INC.
("SEI"), a non-operating Subsidiary, to dissolve its corporate charter or allow
it to lapse (such dissolution or lapse being referred to herein as the "SEI
Dissolution"). The Agent and the Banks hereby agree that (i) SEI is hereby
released as and shall no longer be a Guarantor for any purposes under the Credit
Agreement or the other Loan Documents, and (ii) consent to the SEI Dissolution
and waive any Default or Event of Default caused by the SEI Dissolution under
the Credit Agreement or the other Loan Documents.
6. EFFECT OF AMENDMENT. Except as set forth expressly hereinabove, all
terms of the Credit Agreement and the other Loan Documents shall be and remain
in full force and effect, and shall constitute the legal, valid, binding, and
enforceable obligations of the Borrower.
7. RATIFICATION. The Borrower hereby restates, ratifies and reaffirms
each and every term, covenant, and condition set forth in the Credit Agreement
and the other Loan Documents effective as of the date hereof.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the same
instrument.
2
<PAGE>
9. SECTION REFERENCES. Section titles and references used in this
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto evidenced hereby.
10. FURTHER ASSURANCES. The Borrower agrees to take such further actions
as the Agent shall reasonably request in connection herewith to evidence the
amendments herein contained to the Borrower.
11. GOVERNING LAW. This Amendment shall be governed by and construed and
interpreted in accordance with the laws of the State of Georgia.
12. CONDITIONS PRECEDENT. The following shall constitute express
conditions precedent to the effectiveness of this Amendment by the Banks and the
Agent: (i) receipt by the Agent from each of the parties hereto of a duly
executed counterpart of this Amendment, (ii) receipt by the Banks from the
Borrower of Second Amended and Restated Syndicated Loan Notes and Second Amended
and Restated Money Market Loan Notes in the forms respectively attached to the
Credit Agreement as Exhibits A-1 and A- 2, each reflecting the respective
increased amounts of the Commitments, (iii) receipt by the Agent from each of
the Subsidiary Guarantors of a duly executed Acknowledgment Consent and
Reaffirmation of Guarantors in the form attached hereto, reflecting the
Guarantors' guarantee of the increased amounts of the Commitments and Loans
outstanding thereunder from time to time, (iv) an opinion of Hawley Troxell
Ennis & Hawley, special counsel to the Borrower and its Subsidiaries,
substantially in the form previously delivered to the Agent and the Banks, and
(v) corporate and partnership certificates and documents substantially in the
form previously delivered to the Agent and the Banks.
IN WITNESS WHEREOF, the Borrower, the Agent, and each of the Banks has caused
this Amendment to be duly executed, under seal, by its duly authorized officer
as of the day and year first above written.
TJ INTERNATIONAL, INC. (SEAL)
By: /s/ Richard B. Drury
--------------------------------------
Title: Treasurer & Corporate Secretary
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent and as a Bank (SEAL)
By: /s/ John A. Whitner
--------------------------------------
Title: Vice President
3
<PAGE>
CIBC INC. (SEAL)
By: /s/ R. A. Mendoza
--------------------------------------
Title: Director
THE CHASE MANHATTAN BANK, N.A. (SEAL)
By: /s/ Helene Santo
--------------------------------------
Title: Vice President
NBD BANK (SEAL)
By: /s/ Russell H. Liebetrau, Jr.
--------------------------------------
Title Vice President
THE BANK OF TOKYO-MITSUBISHI, (SEAL)
LTD., (Seattle Agency) (formerly known as
BANK OF TOKYO, LTD.)
By: /s/ Clifford A. Sullam
--------------------------------------
Title: Assistant Vice President
US BANK OF IDAHO (SEAL)
By: /s/ Robert P. Aravich, Jr.
--------------------------------------
Title: Vice President
4
<PAGE>
EXHIBIT 21
TJ INTERNATIONAL, INC.
SUBSIDIARIES OF THE REGISTRANT
The significant subsidiaries of the Company are as follows:
State or Other Percentage
Jurisdiction of Voting
of Incorporation Securities
or Organization Owned
----------------- ----------
Trus Joist MacMillan, A Limited
Partnership Delaware 51% (1)
Norco, Inc. Wisconsin 100%
(1) The Company has a combined 51% interest in this Partnership. Norco, Inc.,
a wholly owned subsidiary of TJ International, Inc., owns 49.5% of the
Partnership and TJ International owns 1.5% of the Partnership directly.
<PAGE>
EXHIBIT 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Form 10-K for the year ended December 28, 1996
into TJ International, Inc.'s previously filed Form S-8 Registration
Statement for the Trus Joist Corporation Nonstatutory Stock Option Plan with
1982 Incentive Amendment, as amended (Registration No. 2-79209), Form S-8
Registration Statement for the Trus Joist Corporation Employee Stock
Ownership Plan (Registration No. 2-96065), Form S-8 Registration Statement
for the Trus Joist Corporation Associates' Stock Purchase Plan, as amended
(Registration No. 2-96821), Form S-8 Registration Statement for the Trus
Joist Corporation Key Employees' 1982 Incentive Stock Option Plan with
Nonstatutory Feature (Registration No. 2-96964), Form S-8 Registration
Statement for the Trus Joist Corporation Employee Stock Ownership Plan
(Registration No. 33-4704), Form S-8 Registration Statement for the Trus
Joist Corporation Profit Sharing Plan, as amended (Registration No.
33-21870), Form S-8 Registration Statement for the Trus Joist Corporation Key
Employees' 1985 Incentive Stock Option Plan with Nonstatutory Feature, as
amended (Registration No. 33-22186), Form S-8 Registration Statement for TJ
International, Inc. Key Employees 1988 and 1992 Stock Option Plans
(Registration No. 33-54582), Associate Stock Purchase Plan (Registration No.
333-18425) and Leverage Stock Purchase Plan (Registration No. 333-18427).
/s/ ARTHUR ANDERSEN LLP
-----------------------
Boise, Idaho
March 25, 1997
<PAGE>
EXHIBIT 25
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Thomas H. Denig, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended December 28, 1996 to be filed with the Securities
and Exchange Commission on or before March 28, 1997, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1997.
/s/ Thomas H. Denig
--------------------------------------
STATE OF IDAHO
County of Ada
On this 13th day of February, 1997, before me, the undersigned, a Notary
Public in and for said State, personally appeared Thomas H. Denig, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
-------------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Harold E. Thomas, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended December 28, 1996 to be filed with the Securities
and Exchange Commission on or before March 28, 1997, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1997.
/s/ Harold E. Thomas
--------------------------------------
STATE OF IDAHO
County of Ada
On this 13th day of February, 1997, before me, the undersigned, a Notary
Public in and for said State, personally appeared Harold E. Thomas, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
-------------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Robert B. Finday, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended December 28, 1996 to be filed with the Securities
and Exchange Commission on or before March 28, 1997, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1997.
/s/ Robert B. Findlay
--------------------------------------
STATE OF IDAHO
County of Ada
On this 13th day of February, 1997, before me, the undersigned, a Notary
Public in and for said State, personally appeared Robert B. Findlay, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
-------------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, J. L. Scott, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended December 28, 1996 to be filed with the Securities
and Exchange Commission on or before March 28, 1997, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1997.
/s/ J. L. Scott
--------------------------------------
STATE OF IDAHO
County of Ada
On this 13th day of February, 1997, before me, the undersigned, a Notary
Public in and for said State, personally appeared J. L. Scott, known to me to
be the person whose name is subscribed to the foregoing and acknowledged to me
that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
-------------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Jerre L. Stead, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended December 28, 1996 to be filed with the Securities
and Exchange Commission on or before March 28, 1997, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1997.
/s/ Jerre L. Stead
--------------------------------------
STATE OF IDAHO
County of Ada
On this 13th day of February, 1997, before me, the undersigned, a Notary
Public in and for said State, personally appeared Jerre L. Stead, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
------------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Arthur L. Troutner, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended December 28, 1996 to be filed with the Securities
and Exchange Commission on or before March 28, 1997, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1997.
/s/ Arthur L. Troutner
--------------------------------------
STATE OF IDAHO
County of Ada
On this 13th day of February, 1997, before me, the undersigned, a Notary
Public in and for said State, personally appeared Arthur L. Troutner, known to
me to be the person whose name is subscribed to the foregoing and acknowledged
to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
-------------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, J. Robert Tullis, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended December 28, 1996 to be filed with the Securities
and Exchange Commission on or before March 28, 1997, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1997.
/s/ J. Robert Tullis
--------------------------------------
STATE OF IDAHO
County of Ada
On this 13th day of February, 1997, before me, the undersigned, a Notary
Public in and for said State, personally appeared J. Robert Tullis, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
-------------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Steven C. Wheelwright, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended December 28, 1996 to be filed with the Securities
and Exchange Commission on or before March 28, 1997, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1997.
/s/ Steven C. Wheelwright
--------------------------------------
STATE OF IDAHO
County of Ada
On this 13th day of February, 1997, before me, the undersigned, a Notary
Public in and for said State, personally appeared Steven C. Wheelwright, known
to me to be the person whose name is subscribed to the foregoing and
acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
-------------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, William J. White, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended December 28, 1996 to be filed with the Securities
and Exchange Commission on or before March 28, 1997, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1997.
/s/ William J. White
--------------------------------------
STATE OF IDAHO
County of Ada
On this 13th day of February, 1997, before me, the undersigned, a Notary
Public in and for said State, personally appeared William J. White, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
-------------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
