<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For Quarter Ended April 4, 1998 Commission file number 0-7469
TJ INTERNATIONAL, INC.
- -------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 82-0250992
- ------------------------------- ----------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 E. Mallard Drive
Boise, Idaho 83706
- ---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (208) 364-3300
----------------------
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities and
Exchange Act of 1934 during the preceding 12
months (or for each shorter period that the
registrant was required to file such reports)
and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of
each of the issuer's classes of common stock,
as of the latest practicable date.
May 11, 1998, 17,019,275 shares of $1 par
value common stock.
EXHIBIT INDEX ON PAGE 16
<PAGE>
TJ INTERNATIONAL, INC.
PART I. Financial Information
The condensed consolidated financial statements included herein
have been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.
In the opinion of management, all adjustments necessary to present
fairly the results for the periods presented have been included
therein. The adjustments made were of a normal, recurring nature.
Certain information and footnote disclosure normally included
in financial statements have been condensed or omitted in
accordance with such rules and regulations, although the Company
believes that the disclosures are adequate to make the information
presented not misleading. It is recommended that these condensed
financial statements be read in conjunction with the audited
financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.
The results of operations for the periods presented are not
necessarily indicative of the results that might be expected
for the fiscal year ending January 2, 1999.
<PAGE>
TJ INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
ASSETS April 4, January 3, March 29,
1998 1998 1997
<S> <C> <C> <C>
Current assets
Cash and cash
equivalents $ 97,192 $119,087 $ 21,516
Marketable securities --- 40,751 ---
Receivables, less
allowances of $398,
$397 and $447 123,790 55,369 103,866
Inventories 72,882 68,954 51,644
Other 12,988 10,923 11,545
-------- -------- ---------
306,852 295,084 188,571
Property
Property and
equipment 609,848 603,693 572,124
Less - Accumulated
depreciation (233,333) (223,207) (192,835)
-------- -------- ---------
376,515 380,486 379,289
Goodwill 19,240 19,500 20,280
Other assets 17,244 17,034 23,133
-------- -------- ---------
$719,851 $712,104 $611,273
-------- -------- ---------
-------- -------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ --- $ --- $ 2,505
Accounts payable 31,221 25,238 36,434
Accrued liabilities 43,808 50,641 32,535
-------- -------- ---------
75,029 75,879 71,474
Long-term debt 142,390 142,390 88,140
Other long-term
liabilities 19,770 18,336 6,050
Reserve for discontinued
operations 14,448 17,482 20,757
Minority interest in
Partnership 222,344 216,605 199,287
Stockholders' equity
ESOP Convertible
Preferred Stock, $1.00
par value, authorized
10,000,000 shares, issued
1,140,319, 1,147,219, and
1,160,993 13,454 13,535 13,698
Guaranteed ESOP Benefit (8,188) (8,188) (9,204)
Common stock, $1.00 par
value, authorized
200,000,000 shares,
issued 17,893,134,
17,807,142, and
17,654,009 17,893 17,807 17,654
Paid-in capital 155,798 153,936 149,013
Retained earnings 91,995 86,116 67,546
Other (1,866) (1,730) (1,663)
Accumulated other
comprehensive (3,858) (3,805) (3,179)
income (loss)
Treasury stock, 888,782,
761,152 and 419,300,
shares, at cost (19,358) (16,259) (8,300)
-------- -------- --------
245,870 241,412 225,565
-------- -------- --------
$719,851 $712,104 $611,273
-------- -------- --------
-------- -------- --------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS.
</TABLE>
<PAGE>
T J INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
(amounts in thousands
except per share figures)
For the fiscal quarter ended
------------------------
April 4, March 29,
1998 1997
-------- --------
<S> <C> <C>
Sales $185,829 $161,263
-------- --------
Costs and expenses
Cost of sales 135,523 117,923
Selling expenses 19,575 17,083
Administrative expenses 9,610 8,562
--------- --------
164,708 143,568
--------- --------
Income from operations 21,121 17,695
Investment income, net 1,959 412
Interest expense (2,316) (1,549)
Minority interest in Partnership (9,847) (7,795)
---------- --------
Income before income taxes 10,917 8,763
Income taxes 4,094 3,286
---------- -------
Net income 6,823 5,477
---------- -------
---------- -------
Net income per common share
Basic $ 0.39 $ 0.30
--------- --------
--------- --------
Diluted $ 0.36 $ 0.28
--------- --------
--------- --------
Dividends declared per common share $ 0.0550 $ 0.0550
--------- --------
--------- --------
Weighted average number of common
shares outstanding during the periods
Basic 16,958 17,501
--------- -------
--------- -------
Diluted 18,556 19,025
--------- -------
--------- -------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS.
</TABLE>
<PAGE>
TJ INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL QUARTER ENDED
APRIL 4, 1998 AND MARCH 29, 1997
(Unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
April 4, March 29,
1998 1997
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6,823 $ 5,477
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 11,081 10,037
Minority interest in partnership 9,847 7,795
Other, net 1,201 895
Change in working capital items:
Receivables (68,421) (29,973)
Inventories (3,928) (95)
Other current assets (2,065) (1,804)
Accounts payable and accrued liabilities (326) 9,221
Other, net (1,062) 29
--------- --------
Net cash provided by (used in) operating
activities $(46,850) $ 1,582
--------- ---------
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures $ (6,904) $ (7,326)
Sales of marketable securities 40,751 ---
Other, net (801) 401
--------- ---------
Net cash provided by (used in) investing
activities $ 33,046 $ (6,925)
--------- ----------
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid on common stock $ (938) $ (963)
Cash dividends paid on preferred stock --- (1,245)
Minority partners tax distributions (4,179) (2,133)
Net borrowings under lines-of-credit --- 2,505
Purchase of treasury stock (3,099) (8,300)
Other, net 125 194
--------- ---------
Net cash used in financing activities $ (8,091) $ (9,942)
--------- ---------
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS
Net decrease in cash and cash equivalents $(21,895) $(15,285)
Cash and cash equivalents at beginning
of year 119,087 36,801
--------- --------
Cash and cash equivalents at end of period $ 97,192 $ 21,516
--------- ---------
--------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest, net of amounts capitalized $ 2,659 $ 1,182
Income taxes $ 2,597 $ 736
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS.
</TABLE>
<PAGE>
TJ INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
INVENTORIES
Inventories consisted of the following:
(amounts in thousands)
April 4, Jan. 3, March 29,
1998 1998 1997
--------- --------- ---------
Finished goods $54,523 $51,737 $35,690
Raw materials and
work-in-progress 18,359 17,217 15,954
--------- ------- ---------
72,882 68,954 51,644
Reduction to LIFO cost - - -
--------- ------- ---------
$72,882 $68,954 $51,644
--------- ------- ---------
--------- ------- ---------
The determination of inventory under the LIFO method can be made
only at the end of each fiscal year based on the inventory levels
and costs at that time. Accordingly, interim LIFO calculations must
necessarily be based on the Company's estimates of expected
year-end inventory levels and costs. Since these estimates are
subject to many forces beyond the Company's control, interim
results could possibly be affected by the final year-end LIFO
inventory valuation.
<PAGE>
NET INCOME PER COMMON SHARE:
Basic net income per common share is based on net income adjusted
for preferred stock dividends and related tax benefits divided by
the weighted average number of common shares outstanding. 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 and
weighted average number of common shares outstanding after giving
effect to stock options under the treasury stock method.
Basic net income and diluted net income were calculated as follows:
<TABLE>
<CAPTION>
For the fiscal
quarter ended
--------------------
April 4, March 29,
1998 1997
--------------------
<S> <C> <C> <C>
BASIC NET INCOME
Net income as reported $ 6,823 $ 5,477
Preferred stock dividends, net
of related tax benefits (253) (248)
------- -------
Basic net income $ 6,570 $ 5,229
------- -------
------- -------
DILUTED NET INCOME
Net income as reported $ 6,823 $ 5,477
Additional ESOP contribution
payable upon assumed
conversion of ESOP
preferred stock, net of
related tax benefits (166) (174)
------- -------
Diluted net income $ 6,657 $ 5,303
------- -------
------- -------
- -------------------------------------------------------------------
Weighted average shares outstanding
used to determine basic earnings
per common share 16,958 17,501
ESOP preferred stock 1,140 1,161
Stock Options 458 363
------- -------
Weighted average shares used to
determine diluted earnings
per common share 18,556 19,025
------- -------
------- -------
- -------------------------------------------------------------------
<PAGE>
COMPREHENSIVE INCOME (LOSS)
Comprehensive income for the
periods include the following:
For the fiscal
quarter ended
------------------
April 4 March 29,
1998 1997
------------------
Net Income $ 6,823 $ 5,477
Other Comprehensive Loss (53) (399)
------------------
Comprehensive Income $ 6,770 $ 5,078
------- -------
------- -------
Accumulated other comprehensive income (loss) for each period ended
was as follows:
(amounts in thousands)
April 4, Jan. 3, March 29,
1998 1998 1997
-------- -------- ---------
Balances at beginning of period-
cumulative translation
adjustment $(3,805) $ (2,780) $ (2,780)
Changes within periods-
cumulative translation adjustment (53) (1,025) (399)
-------- -------- ---------
Balance at end of period-
cumulative translation
adjustment $(3,858) $ (3,805) $ (3,179)
-------- -------- ---------
-------- -------- ---------
</TABLE>
- -------------------------------------------------------------------
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued
Statement No. 131 Disclosures about Segments of an Enterprise and
Related Information ("SFAS No. 131"). SFAS No. 131 requires
publicly-held companies to report segment and other information
which is utilized by the Chief Executive Officer and to reconcile
the segment information to financial statement amounts. SFAS No.
131 is effective for the Corporation for the year ending January 2,
1999. The Company is evaluating the impact of this new standard on
its reporting and disclosure.
<PAGE>
TJ INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE FISCAL QUARTER ENDED APRIL 4, 1998
OPERATING RESULTS
TJ International, Inc., (the Company) is the 51 percent owner and
managing partner of Trus Joist MacMillan A Limited Partnership
(TJM), the world's leading manufacture and marketer of engineered
lumber products. Substantially all of the Company's operating
assets are held and revenue generated by TJM. MacMillan Bloedel
Limited (MB) owns a 49 percent interest in TJM.
The following comments discuss material variations in the results
of operations for the comparative periods presented in the
condensed consolidated statements of income.
SALES
The Company's sales by quarter during the current year and for the
preceding four years are as follows:
<TABLE>
<CAPTION>
SALES BY QUARTER
(amounts in thousands)
Quarter 1998 1997 1996 1995 1994
- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
First $185,829 $161,263 $111,157 $109,941 $118,163
Second 185,730 155,050 123,882 128,773
Third 185,576 179,571 137,759 136,266
Fourth 173,747 131,388 113,263 112,858
-------- -------- -------- --------
$706,316 $577,166 $484,845 $496,060
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
FIRST QUARTER OF 1998 COMPARED WITH THE FIRST QUARTER OF 1997
First quarter sales increased $24.6 million or 15% from the prior
year first quarter. The sales increase is due to the continued
acceptance of engineered lumber products as a substitute for solid-
sawn lumber in the marketplace. The Company believes this growing
acceptance is achieved primarily through homebuilders' and
homeowners' increasing awareness of engineered lumber's superior
quality and value. Additionally, growth in product acceptance is
achieved through the Company's on-going education and sales efforts
in the builder and specifier communities, introduction of new
products and the adoption of engineered lumber products as the
product of choice in a growing number of regional markets.
In both the first quarter of 1997 and 1998, the Company offered its
Strategic Inventory Program to its customers. This program, which
included rebates, extended terms and price protection was designed
to encourage distribution customers to increase their inventory
levels as the traditional building season begins.
In the west prices for competing Douglas fir wide-dimension
products began 1998 at a two year low but began to slowly increase
during the quarter. Prices for competing wide-dimension southern
yellow pine began the year at a two year high and have continued to
increase slightly over year ago prices.
<PAGE>
The Company had increased unit volume sales of approximately 18%,
compared to the prior year first quarter. Volume gains were
strongest in the Company's TJI-Registered Trademark- Joist
products. During the first quarter, the Company introduced its new
TJI-Registered Trademark-/Pro-Registered Trademark- 120TS joist.
This product is the first I-joist to include TimberStrand
- -Registered Trademark- LSL as a flange material. This new product
introduction, combined with increased marketing emphasis on its
TimberStrand-Registered Trademark- LSL wall framing and header
products are pursuant to the Company's goal to increase the
proportion of higher value products in its TimberStrand-Registered
Trademark- LSL sales mix.
Gross margins for the first quarter were 27.1% compared with 26.9%
in the first quarter of 1997. The Company was able to increase
gross margin compared to the prior year despite increased costs for
Oriented Strand Board (OSB). This increase in OSB costs was offset
by lower veneer costs and increased operating efficiencies at many
of the Company's manufacturing facilities. The Company's
TimberStrand-Registered Trademark- LSL plants in Northern Minnesota
and Eastern Kentucky continue to make incremental gains improving
product properties, productivity, and operating costs.
Selling expenses increased $2.5 million, from $17.1 million in the
first quarter 1997 to $19.6 million in the first quarter of 1998,
however, they declined as a percentage of sales to 10.5% from 10.6%
in 1997. Total selling expenses rose primarily because of variable
selling expense and sales commissions resulting from sales growth.
The Company also increased spending for targeted advertising.
General and administrative expenses increased $1.0 million, from
$8.6 million in the first quarter of 1997 to $9.6 million in the
first quarter 1998, however, they declined as a percentage of sales
to 5.2% from 5.3% in 1997. This increase in spending is primarily
driven by the Company's investment in business support software
which is intended to provide the infrastructure for future growth.
Minority interest expense increased $2.1 million from 1997 due to
the increase in earnings at the Trus Joist MacMillan (TJM)
Partnership.
LIQUIDITY AND CAPITAL RESOURCES
APRIL 4, 1998 COMPARED TO JANUARY 3, 1998
Working capital increased $12.4 million during the first quarter of
1998 to $232 million. Accounts receivable increased $68.4 million
due to increased sales combined with the sales incentives offered
in the first quarter of 1997 and 1998, as part of the Company's
strategic inventory plan.
APRIL 4, 1998 COMPARED TO MARCH 29, 1997
Working capital increased $115 million from the prior year, to $232
million at April 4, 1998. The increase is due to strong earnings
combined with modest capital expansion spending.
The Company completed construction in late 1997 of a TimberStrand-
Registered Trademark- LSL - flange I line at its Eastern Kentucky
location. The new production facility will allow the Company to
produce traditional I-joist products, using TimberStrand-Registered
Trademark- LSL as the top and bottom flange material. The plant
ramp up is on schedule, with market introduction of this
product in the first quarter 1998. The additional I-line required
a capital investment of approximately $16.5 million in 1997.
Also in 1997 the Company began construction of a Microllam-
Registered Trademark- LVL, TJI-Registered Trademark- Joist plant
located in Evergreen, Alabama, with production scheduled to begin
late
<PAGE>
in the fourth quarter of 1998. The new production facility
will allow the Company to produce traditional Microllam-Registered
Trademark- LVL and TJI-Registered Trademark- Joist products. The
plant will require a capital investment of approximately $45
million. Total spending on the project through the first quarter
of 1998 was $5.2 million, including first quarter 1998 expenditures
of $2.2 million.
The Company is evaluating potential sites for an additional
combination Microllam-Registered Trademark- LVL, Parallam-
Registered Trademark- PSL and TJI-Registered Trademark- Joist 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 on-going operating and
capital expansion needs of the Company. The Company also believes
that additional or expanded lines of credit or appropriate
long-term capital can be obtained to fund other major capital
requirements as they arise, or to fund an acquisition.
In the first quarter 1998, the Board of Directors authorized the
Company to purchase $3.1 million of treasury stock.
For 1997, the Company's Board of Directors authorized the purchase
of up to $15 million of the Company's common stock at market
prices. The Company purchased $8.3 million of treasury stock during
the first quarter of 1997 and $6.7 million of stock during the
second quarter of 1997 completing the stock purchase plan. In
addition, the Board of Directors authorized and the Company
purchased an additional $1.3 million of stock during the third
quarter of 1997.
In the fourth quarter of 1997, the Company issued $42.6 million of
taxable notes to preserve the Company's ability in the future to
issue additional industrial revenue bonds to help finance the East
Kentucky TimberStrand-Registered Trademark- LSL plant. The taxable
notes are due in a single maturity on November 15, 2001, subject to
prepayment at the option of the Company, and are unsecured. In
addition, during the second quarter of 1997, the Company issued
$11.65 million of industrial revenue bonds associated with the
construction of the East Kentucky plant. The bonds are due in a
single maturity in 2027, with interest payable semi-annually at
6.55%.
The Company sold its windows operations in 1996, however, it
retained certain liabilities related to these operations.
Management believes that existing reserves are adequate to meet all
subsequent liabilities that may arise related to the discontinued
operations.
Substantially all of the Company's operating assets are held, and
revenue generated, by its TJM partnership. The partnership
regularly distributes cash to the partners to fund the
tax liabilities generated by the partnership at the corporate
level. All other distributions of cash by the partnership are
dependent on the affirmative votes of the representatives of the
minority partner. Accordingly, there can be no assurance that such
distributions will be approved and thereby be available for the
payment of dividends or to fund other operations of the Company.
INDUSTRY, COMPETITION, AND CYCLICALITY
The Company's engineered lumber products continue to gain market
acceptance as high-quality alternatives to traditional solid-sawn
lumber products. Through the Company's intensive marketing
efforts, the Company believes that builders and other wood users
are increasingly recognizing the consistent quality, superior
strength, lighter weight, and ease of installation of engineered
lumber products. The Company believes that this trend will
continue.
<PAGE>
No other company possesses the range of engineered lumber products,
the levels of service and technical support, or the second
generation technologies of TimberStrand-Registered Trademark- LSL
or Parallam-Registered Trademark- PSL. There are, however, a
number of companies, including several large forest products
companies, that now produce look-alike wood I-joist and laminated
veneer lumber products. Several of these companies have announced
capacity expansions. These look-alike products are manufactured
using processes similar to the Company's older generation
technologies.
The Company believes its network of manufacturing plants and
multiple technologies position it as the low-cost producer of
engineered lumber. While competition helps expand the market for
engineered wood products, including those manufactured by the
Company, it may also make the existing markets more price
competitive. Traditional wide-dimension lumber, however, remains
the predominant structural framing material used in residential
construction and is the primary competitor of the Company's
products. Commodity lumber prices historically have been subject
to high volatility, and during periods of significant lumber price
movements the Company's prices have trended in the same direction.
The Company's operations are strongly influenced by the cyclicality
and seasonality of residential housing construction. This industry
experiences fluctuations resulting from a number of factors,
including the state of the economy, consumer confidence, credit
availability, interest rates, and weather patterns. Consistent with
the seasonal pattern of the construction industry as a whole, the
Company's sales have historically tended to be lowest in the first
and fourth quarters and highest in the second and third quarters of
each year.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued
Statement No. 131 Disclosures about Segments of an Enterprise and
Related Information ("SFAS No. 131"). SFAS No. 131 requires
publicly-held companies to report segment and other information
which is utilized by the Chief Executive Officer and to
reconcile the segment information to financial statement amounts.
SFAS No. 131 is effective for the Corporation for the year ending
January 2, 1999. The Company is evaluating the impact of this new
standard on its reporting and disclosure.
FORWARD LOOKING STATEMENTS
This Form 10-Q includes a number of "forward-looking statements" as
defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, without limitation, statements
regarding the adequacy of the Company's reserves for discontinued
operations and other statements regarding the Company's beliefs.
Investors are cautioned that forward-looking statements
are subject to an inherent risk that actual results may vary
materially from those described, projected or implied herein.
Factors that may result in such variance include, among others:
changes in interest rates, commodity prices, and other economic
conditions; actions by competitors; changing weather conditions and
other natural phenomena; actions by government authorities;
technological developments; future decisions by management in
response to changing conditions; and misjudgments in the course of
preparing forward-looking statements. Other factors are discussed
in the Company's filings with the Securities and Exchange
Commission.
<PAGE>
Microllam-Registered Trademark-, Parallam-Registered Trademark-,
TJI-Registered Trademark-, and TimberStrand-Registered Trademark-
are registered trademarks of Trus Joist MacMillan A Limited
Partnership, Boise, Idaho.
<PAGE>
TJ INTERNATIONAL, INC.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Filed as an exhibit to this report is the following:
(10) Material Contract
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
<PAGE>
TJ INTERNATIONAL INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
TJ INTERNATIONAL, INC.
/s/ Valerie A. Heusinkveld
----------------------------
Valerie A. Heusinkveld
Vice President, Finance & Chief
Financial Officer
Date: May 19, 1998
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS TO FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL QUARTER COMMISSION FILE NUMBER 0-7469
ENDED APRIL 4, 1998
TJ INTERNATIONAL, INC.
EXHIBIT INDEX
Exhibits Page
- -------- ------
(10) Form of Change of Control Employment Document 2
Agreement entered into by participants
in the Long Term Incentive Plan in
January 1998.
(27) Financial Data Schedule Document 3
<PAGE>
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between TJ International, Inc., a
Delaware corporation (the "Company") and __________________ (the
"Executive"), dated as of the ___ day of January, 1998.
The Board of Directors of the Company (the "Board"),
has determined that it is in the best interests of the Company
and its shareholders to assure that the Company will have the
continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to
encourage the Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending
Change of Control, and to provide the Executive with compensation
and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date"
shall mean the first date during the Change of Control Period (as
defined in Section 1(b)) on which a Change of Control (as defined
in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to
the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that
<PAGE>
such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change
of Control or (ii) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the
period commencing on the date hereof and ending on the third
anniversary of the date hereof; provided, however, that
commencing on the date one year after the date hereof, and on
each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the
"Renewal Date"), unless previously terminated, the Change of
Control Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless at least 60 days prior
to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so
extended.
2. CHANGE OF CONTROL. For the purpose of this
Agreement, a "Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any
acquisition pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this
Section 2; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the
Board; provided,
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however, that any individual becoming a director
subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest
with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the
Board; or
(c) Consummation by the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of
the Company or the acquisition of assets of another
entity (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or
substantially all of the individuals and entities who
were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from
such Business Combination (including, without limitation,
a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company's
assets either directly or through one or more
subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case
may be, (ii) no Person (excluding any employee benefit
plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business
Combination or the combined voting power of the then
outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the
Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation
resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.
3. EMPLOYMENT PERIOD. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the terms
and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date
(the "Employment Period").
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4. TERMS OF EMPLOYMENT. (a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held, exercised and assigned to the Executive at any
time during the 120-day period immediately preceding the
Effective Date and (B) the Executive's services shall be
performed at the location where the Executive was employed
immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period
it shall not be a violation of this Agreement for the Executive
to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly
interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to
the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall
not thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive an annual base
salary ("Annual Base Salary"), which shall be paid at a
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monthly rate, at least equal to twelve times the highest monthly
base salary paid or payable, including any base salary which has
been earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base Salary
shall be reviewed no more than 12 months after the last salary
increase awarded to the Executive prior to the Effective Date and
thereafter at least annually. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base Salary
as utilized in this Agreement shall refer to Annual Base Salary
as so increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling
or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending
during the Employment Period, an annual bonus (the "Annual
Bonus") in cash at least equal to the Executive's most recently
established target bonus under the Company's Incentive Program,
or any comparable bonus under any predecessor or successor plan,
before the public announcement of the transaction that resulted
in the Change of Control (annualized in the event that the
Executive was not employed by the Company for the whole of such
fiscal year) (such target, the "Annual Bonus Amount"). Each such
Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices,
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policies and programs applicable generally to other peer executives
of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and
retirement benefit opportunities, in each case, less favorable, in
the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective Date
or if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case
may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with benefits which are less favorable, in the
aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
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(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits in accordance
with the most favorable plans, practices, programs and policies
of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
(vii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with
the most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
5. TERMINATION OF EMPLOYMENT. (a) Death or
Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth
below), it may give
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to the Executive written notice in accordance with Section 12(b) of
this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of
such notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean
the absence of the Executive from the Executive's duties with the
Company on a full-time basis for 180 consecutive business days as
a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the
Executive's legal representative.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes
of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties
with the Company or one of its affiliates (other than any
such failure resulting from incapacity due to physical or
mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or
the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or
Chief Executive Officer believes that the Executive has
not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially
and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively
presumed
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to be done, or omitted to be done, by the Executive in good faith
and in the best interests of the Company. The cessation of
employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at
a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is
given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph (i)
or (ii) above, and specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or any other
action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by
the Executive;
(ii) any failure by the Company to comply with any
of the provisions of Section 4(b) of this Agreement, other
than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be
based at any office or location other than as provided in
Section 4(a)(i)(B) hereof or the Company's requiring the
Executive to travel on Company business to a substantially
greater extent than required immediately prior to the
Effective Date;
(iv) any purported termination by the Company of
the Executive's employment otherwise than as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
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For purposes of this Section 5(c), any good faith determination
of "Good Reason" made by the Executive shall be conclusive.
Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason during the 30-day
period immediately following the first anniversary of the
Effective Date shall be deemed to be a termination for Good
Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving
of such notice). The failure by the Executive or the Company to
set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively,
hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's employment
is terminated by the Company other than for Cause or Disability,
the date on which the Company notifies the Executive of such
termination and (iii) if the
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Executive's employment is terminated by reason of death or
Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a)
Good Reason; Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the
extent not theretofore paid, (2) the product of (x)
the Annual Bonus Amount and (y) a fraction, the
numerator of which is the number of days in the
current fiscal year through the Date of
Termination, and the denominator of which is 365
and (3) any compensation previously deferred by the
Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in
each case to the extent not theretofore paid (the
sum of the amounts described in clauses (1), (2),
and (3) shall be hereinafter referred to as the
"Accrued Obligations"); and
B. the amount equal to the product of (1) the
Multiple (as defined below) and (2) the sum of (x)
the Executive's Annual Base Salary and (y) the
Annual Bonus Amount;
(ii) for a number of years equal to the Multiple
after the Executive's Date of Termination, or such longer
period as may be provided by the terms of the appropriate
plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been
provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(iv) of
this Agreement if the Executive's employment had not been
terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated
companies and their families, provided, however, that if
the Executive becomes reemployed with another employer
and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall
be secondary to those provided under such other plan
during such applicable period of eligibility, and for
purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree
benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have
remained employed for a number of years equal to the
Multiple after the Date of Termination and to have
retired on the last day of such period;
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(iii) the Company shall, at its sole expense as
incurred, provide the Executive with outplacement
services the scope and provider of which shall be
selected by the Executive in the Executive's sole
discretion; and
(iv) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required to be
paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
For purposes of this Section 6(a), the "Multiple" shall mean (i)
two, in case of a termination of employment by the Executive for
"Good Reason" pursuant to the last sentence of Section 5(c), and
(ii) three, in the case of any other termination of employment by
the Executive for Good Reason or termination of employment by the
Company other than for Cause or Disability.
(b) Death. If the Executive's employment is
terminated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in this
Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits
provided by the Company and affiliated companies to the estates
and beneficiaries of peer executives of the Company and such
affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with
respect to other peer executives and their beneficiaries at any
time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate
and/or the Executive's beneficiaries, as in effect on the date of
the Executive's death with respect to other peer executives of
the Company and its affiliated companies and their beneficiaries.
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(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Executive in
a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(c) shall include, and the
Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families
in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with
respect to other peer executives and their families at any time
during the 120-day period immediately preceding the Effective
Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive (x) the Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously
deferred by the Executive, and (z) Other Benefits, in each case
to the extent theretofore unpaid. If the Executive voluntarily
terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for
Accrued Obligations and the timely payment or provision of Other
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Benefits. In such case, all Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement
with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program
of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice
or program or contract or agreement except as explicitly modified
by this Agreement.
8. FULL SETTLEMENT; LEGAL FEES. The Company's
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and except as specifically provided in
Section 6(a)(ii), such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company,
the Executive or others of the validity or enforceability of, or
liability or entitlement under, any provision of this Agreement
or any guarantee of
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performance thereof (whether such contest is between the Company
and the Executive or between either of them and any third party,
and including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each
case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it
shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any
corresponding provision of state or local tax laws, or any interest
or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 9(a), if
it shall be determined that the Executive is entitled to a Gross-Up
Payment, but that the Payments do not exceed 110% of the greatest
amount (the "Reduced Amount") that could be paid to the Executive
such that the receipt
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of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the
aggregate, shall be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9,
including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
Arthur Andersen or such other certified public accounting firm as
may be designated by the Executive (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt
of notice from the Executive that there has been a Payment, or
such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor for
the individual, entity or group effecting the Change of Control,
the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the
Company to the Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the
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Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no
later than ten business days after the Executive is informed in
writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which the
Executive gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect
to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such
representation and payment
-17-
<PAGE>
of costs and expenses. Without limitation on the foregoing
provisions of this Section 9(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which such contested amount
is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an
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<PAGE>
amount advanced by the Company pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive
in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 10 constitute
a basis for deferring or withholding any amounts otherwise payable
to the Executive under this Agreement.
11. SUCCESSORS. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
-19-
<PAGE>
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be
governed by and construed in accordance with the laws of the
State of Idaho, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
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<PAGE>
If to the Company:
TJ International, Inc.
200 East Mallard Drive
Boise, Idaho 83706
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right
the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v) of
this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the employment
of the Executive by the Company is "at will" and, prior to the
Effective Date, the Executive's employment may be terminated by
either the Executive or the Company at any time prior to the
Effective Date, in which case the Executive shall have no further
rights under this
-21-
<PAGE>
Agreement. From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with respect to
the subject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused this Agreement to be
executed in its name on its behalf, all as of the day and year
first above written.
--------------------------------
[Executive]
TJ INTERNATIONAL, INC.
By
--------------------------------
-22-
<PAGE>
<TABLE> <S> <C>
<S><C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS DATA SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM
THE TJ INTERNATIONAL, INC. BALANCE SHEET AT APRIL 4, 1998, AND FROM
ITS STATEMENT OF INCOME FOR THE THREE MONTHS ENDED APRIL 4, 1998.
THE INFORMATION PRESENTED IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> APR-04-1998
<CASH> 97,192
<SECURITIES> 0
<RECEIVABLES> 124,188
<ALLOWANCES> 398
<INVENTORY> 72,882
<CURRENT-ASSETS> 306,852
<PP&E> 609,848
<DEPRECIATION> 233,333
<TOTAL-ASSETS> 719,851
<CURRENT-LIABILITIES> 75,029
<BONDS> 142,390
0
13,454
<COMMON> 17,893
<OTHER-SE> 214,523
<TOTAL-LIABILITY-AND-EQUITY> 719,851
<SALES> 185,829
<TOTAL-REVENUES> 185,829
<CGS> 135,523
<TOTAL-COSTS> 135,523
<OTHER-EXPENSES> 29,185
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,316
<INCOME-PRETAX> 10,917
<INCOME-TAX> 4,094
<INCOME-CONTINUING> 6,823
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,823
<EPS-PRIMARY> .39
<EPS-DILUTED> .36
</TABLE>
