TJ INTERNATIONAL INC, 10-K405, 1998-04-03

TJ INTERNATIONAL INC
10-K405, 1998-04-03
MILLWOOD, VENEER, PLYWOOD, & STRUCTURAL WOOD MEMBERS

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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 January 3, 1998

/ / 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.
- ------------------------------------------------------------------------------
(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 30, 1998 was $432,034,000.

The number of outstanding shares of the registrant's common stock ($1.00 par
value), as of March 30, 1998 was 17,003,765, excluding 888,782 shares held as
treasury stock.

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 for use in connection with
the annual meeting of stockholders scheduled to be held on May 27, 1998,
portions of which are incorporated by reference into Part III of this Form
10-K.

EXHIBIT INDEX ON PAGE 25

1
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PART I

ITEM 1. BUSINESS

ITEM 1(a). General Development of Business

RECENT DEVELOPMENTS

1997 Financial 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 Company achieved record sales in 1997, due to the continued
acceptance of engineered lumber products as a substitute for solid-sawn
lumber 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, the adoption of engineered lumber products as the product
of choice in many regional markets, and the development and introduction of
new products.

The Company experienced an increase in sales of $129 million in 1997,
compared to 1996. Resulting in a 22.4% percent increase in sales in a year
when North American housing starts were essentially flat comparing 1997 to
1996. Market prices for certain traditional solid-sawn lumber products, which
represent the primary competitor of engineered lumber products began 1997 at
near two-year high levels, but declined during the second half of the year.
The declines were particularly sharp in West Coast species, such as Douglas
Fir. In 1997, the Company's key benchmark of residential product sale per
North American housing start rose 19 percent to $344 per start from the $289
per start of 1996.

Income from continuing operations improved as a percent of sales
primarily as a result of lower costs for oriented strand board (OSB) and
veneer; increased prices for TimberStrand-Registered Trademark- LSL stemming
from a product mix shift to higher margin products; and increased operating
efficiencies and lower costs at many of the Company's manufacturing
facilities.

Selling expenses as a percentage of sales declined in 1997 to 10 percent,
compared to 10.6 percent in 1996. General and Administrative expenses as a
percent of sales increased in 1997 to 5.2 percent, from 4.6 percent in 1996.
This increase was primarily the result of increased investments in business
support software, which will provide the infrastructure for future growth
increased research and development expenses to improve the Company's
TimberStrand-Registered Trademark- LSL technology, and other costs necessary
to support the growth of the Company.

Net income from continuing operations increased $11.4 million to $27.5
million in 1997. Income from continuing operations per diluted share
increased from $0.82 in 1996 to $1.44 in 1997.

Sales for the fourth quarter of 1997 were $173.7 million, compared to
$131.4 million in the fourth quarter of 1996, a 32.2 percent increase. Income
from continuing operations improved to $6 million or $.31 per diluted share
in the fourth quarter of 1997, compared to $4.1 million, or $.21 per diluted
share in the fourth quarter of 1996.

<PAGE>

Market Developments

The Company believes that its engineered lumber products offer advantages
in both performance and cost effectiveness over solid-sawn lumber and that
such products are achieving increased market acceptance in residential
construction. In 1997, the Company's residential product sales per North
American housing start rose 19 percent to $344 per start from the $289 per
start of 1996. 1997 marked the 15th consecutive year that the Company has
increased sales per North American housing start in the key residential
construction market. The Company's engineered lumber sales, per North
American housing start have increased from $20 per start in 1983 to $344 per
start in 1997, an increase of 1620 percent, with an annual compounded growth
rate of 23 percent. Prices for solid-sawn lumber, which remains the Company's
main competition, varied in 1997 from region to region. Prices for 2" x 10"
green 14' Douglas fir lumber decreased 36% during 1997 from $475 per thousand
board feet at the beginning of 1997 to $350 per thousand board feet at the
end of 1997. Prices for southern yellow pine (SYP) 2" x 10", kiln dried 14'
increased 12% during 1997 from $520 per thousand board feet at the beginning
of 1997 to $580 per thousand at the end of 1997. 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 its fundamentals
remain strong: builders continue to make the switch to engineered lumber
products, which they are using in more applications on each project; consumer
confidence and employment rates are high, so housing starts should remain at
favorable levels; and the Company believes that it is well positioned with
manufacturing, sales, marketing, and distribution to continue to grow its
business. The Company also believes that regional 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 of approximately 60
percent for engineered lumber products sold in North America. The Company's
strategy includes the following:

1. Low-cost Proprietary Technologies and Industry Leading 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 solid-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

<PAGE>

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 solid-sawn structural lumber products with which its products
compete.

The Company completed in 1997 its most recent capital expansion program,
which is a new TJI-Registered Trademark--joist manufacturing plant at its
East Kentucky facility that utilizes TimberStrand-Registered Trademark- LSL
for flange material. The Company also began construction in 1997 of a
Microllam-Registered Trademark- LVL plant in Evergreen, Alabama, which
eventually may include the construction of a Parallam-Registered Trademark-
PSL plant on the same site allowing the Company to take advantage of the
synergies of the two technologies. These expansion projects are intended to
enhance the Company's leading position in engineered lumber products. Through
the expansion and addition of the new production facilities the Company
believes it will maintain its approximate 60 percent share of the engineered
lumber industry's capacity.

The Company is examining potential sites for an additional combination
Microllam-Registered Trademark- LVL and Parallam-Registered Trademark- 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 capacity expansion
plans are appropriate because its proprietary technology plants are expected
to give the Company a significant 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, that markets for new products will develop, or that
the expected cost advantages will be realized.

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, 1996, and 1997 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
currently analyzing, investigating, and developing the FrameWorks-Registered
Trademark- Building System, which will represent a complete system in
engineered lumber to build the entire structural frame of a home. The
FrameWorks-Registered Trademark- Building System is expected to include roof,
wall, stair, floor and other structural systems, enhancing the overall
performance of the home, which the Company believes will be a benefit to
architects, builders, dealers and homebuyers.

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,

<PAGE>

including (i) a system performance guarantee for the lifetime of the home;
(ii) the largest technical service support, and sales 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
value-added 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

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.

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
approximately 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,

5
<PAGE>

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 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 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.

<PAGE>

ENGINEERED LUMBER PRODUCTS

OVERVIEW. The Company believes that the housing construction industry is
undergoing a transition in its use of structural building materials as
solid-sawn structural lumber increases in price and decreases in quality.
Engineered lumber is enjoying increased market acceptance and is displacing
solid-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 Rectangular high-grade 80 feet long by Buckhannon, West Virginia
Trademark- LVL veneer 4 feet wide by Eugene, Oregon
3 1/2 inches thick Junction City, Oregon
Natchitoches, Louisiana
Valdosta, Georgia

Parallam-Registered Irregular veneer from first 66 feet long by Buckhannon, West Virginia
Trademark- PSL and last peels of the log 20 inches wide by Colbert, Georgia
11 inches thick Vancouver, British Columbia

TimberStrand-Registered Strands of pulpwood up to 48 feet long by Deerwood, Minnesota
Trademark- LSL 12 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.

<PAGE>

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 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 poplar. These are species traditionally used in lower value
applications such as pulp logs, and are therefore substantially less expensive
than traditional sources of solid-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.

<PAGE>

TJ INTERNATIONAL ENGINEERED LUMBER PRODUCTS

<TABLE>
<CAPTION>
RESIDENTIAL ENGINEERED LUMBER PRODUCT
PRODUCTS TECHNOLOGY SIZE END USE
- --------------------------- --------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
TJI-Registered Trademark- Microllam-Registered 9 1/2" to 16" deep Residential construction
- -joists Trademark- LVL or Width from 1 1/2" to floor and roof joists.
TimberStrand-Registered 3 1/2" Substitutes for traditional
Trademark- LSL on the top Up to 80' long 2x10 and 2x12 sawn lumber
and bottom with enhanced systems.
composite panel webs in the
middle

Rim joists TimberStrand-Registered 1 1/2" thick Residential construction
Trademark- LSL 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.

Wall Framing TimberStrand-Registered 2" x 4" and 2" x 6" Designed for residential and
Trademark- LSL dimensions light-commercial
14' to 22' long construction. Substitutes
for traditional sawn lumber
in wall framing applications.

Headers, beams, and Microllam-Registered 1 3/4" to 7 1/4" thick Residential construction.
columns Trademark- LVL 9 1/2" to 18" deep Ranges from main carrying
Parallam-Registered Up to 80' long beam in home to support
Trademark- PSL structures above a window
TimberStrand-Registered or door (header).
Trademark- LSL Substitutes for traditional
2x10 and 2x12 sawn
lumber, glulam and steel
beams.

COMMERCIAL PRODUCTS
- ---------------------------
Open-web truss Microllam-Registered 14" to 114" deep Roof support structure in
Trademark- or strength- Spans lengths up to light commercial buildings.
rated lumber on the top and 120' long
bottom with tubular steel
webs in the middle

TJI-Registered Microllam-Registered 2.3" to 4.65" thick Roof structure for smaller
Trademark- roof truss Trademark- LVL 4 1/2" to 37.1" deep commercial buildings.
series Up to 80' long

INDUSTRIAL PRODUCTS
- ---------------------------

<PAGE>

Window and door core TimberStrand-Registered Various Substitutes for finger-
material Trademark- LSL jointed Ponderosa pine
lumber in the manufacture
of wood windows and
doors.

Concrete forming and Microllam-Registered 1 1/2" to 5 1/4" thick Support members in the
shoring support members Trademark- LVL 6 1/2" to 20" deep structure into which wet
Parallam-Registered Up to 80' long concrete is poured in both
Trademark- residential and commercial
buildings. Substitutes for
2x10, 2x12, 4x4 and larger
sawn lumber and for
aluminum form support
systems.

Scaffold plank Microllam-Registered 1 1/2" to 2 1/2" thick Decking material in scaffold
Trademark- LVL 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 solid-sawn lumber. The Company has
developed and has increased manufacturing and marketing of a
TJI-Registered Trademark--joist utilizing TimberStrand-Registered Trademark- LSL
as the flange material. The Company has an aggressive R&D program that focuses
on new product development that has a targeted effort to develop further
TimberStrand-Registered Trademark- LSL products as well as 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 four 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. International markets consist of sales
outside of North America with products going into new construction residential
housing, manufactured housing, and OEM applications.

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 Company sells directly to stocking retail lumber
dealers in the United States and

<PAGE>

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. Solid-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, Union Camp,
and Willamette Industries 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, Union Camp, 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

<PAGE>

advantage over its competition. In addition, the Company believes it enjoys a
leadership position in terms of brand name recognition, value-added services
to 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 January 3, 1998 was approximately $41 million
compared to approximately $31 million at December 28, 1996. 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 January 3, 1998, the Company employed a total of approximately 3,592
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.

YEAR 2000 COMPUTER ISSUE

Virtually all computer systems today were developed using two digits to
specify the year. As a result, such computer systems recognize the year 2000 as
00. This issue could cause computer applications to fail or to create incorrect
results unless corrective action is taken. The Company is currently
implementing, or are planning to implement computer system upgrades that will be
completed before the year 2000, which will make these computer systems
2000-compliant. The Company is evaluating what actions will be necessary to make
the Company's remaining computer systems year 2000-compliant. The expense
associated with these actions is not expected to be material to the Company.

13
<PAGE>

FORWARD LOOKING STATEMENTS

Forward looking statements include, without limitation, statements
regarding the adequacy of the Company's reserves for discontinued operations
and expectations of future increases in its product acceptance. 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 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.

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. In 1997, revenues and identifiable assets attributable to the
Canadian operations were less than 10% of the corresponding consolidated
amounts. Accordingly, financial information about foreign and domestic
operations and export sales is not included herein.

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-JOIST
- ------------------------------------------------------------------ --- --- --- -------------
<S> <C> <C> <C> <C>

</TABLE>

14
<PAGE>

<TABLE>
<S> <C> <C> <C> <C>
Buckhannon, West Virginia......................................... X X
Chino, California.................................................
Claresholm, Alberta............................................... X
Colbert, Georgia.................................................. X
Deerwood, Minnesota............................................... X
Delaware, Ohio....................................................
Eugene, Oregon ................................................... X X
Hazard, Kentucky.................................................. X X
Hillsboro, Oregon.................................................
Junction City, Oregon............................................. X
Natchitoches, Louisiana........................................... X X
Stayton, Oregon................................................... X X
Valdosta, Georgia................................................. X X
Vancouver, British Columbia....................................... X
Elma, Washington.................................................. * *
Evergreen, Alabama **.............................................
</TABLE>

<TABLE>
<CAPTION>
STRUCTURAL PRODUCTS MANUFACTURING OPEN WEB TRUSSES
- ------------------------------------------------------------------ -----------------------
<S> <C>
Buckhannon, West Virginia.........................................
Chino, California................................................. X
Claresholm, Alberta............................................... X
Colbert, Georgia..................................................
Deerwood, Minnesota...............................................
Delaware, Ohio.................................................... X
Eugene, Oregon....................................................
Hazard, Kentucky..................................................
Hillsboro, Oregon................................................. X
Junction City, Oregon.............................................
Natchitoches, Louisiana...........................................
Stayton, Oregon...................................................
Valdosta, Georgia.................................................
Vancouver, British Columbia.......................................
Elma, Washington..................................................
Evergreen, Alabama **.............................................
</TABLE>

- ------------------------
* Produces veneer for LVL and PSL Lumber productions
** Scheduled to begin production late 1998

The Company owns a Boise, Idaho, property of approximately 32 acres of
unimproved land. The Company's headquarters staff are located on leased
property 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.

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.

15
<PAGE>
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 January 3, 1998, each of whose term
of office is one year.

<TABLE>
<CAPTION>
NAME AND AGE OFFICE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Harold E. Thomas, age 71 Chairman of the Board

Thomas H. Denig, age 51 President and Chief Executive Officer

Robert J. Dingman, age 56 Senior Vice President, Custom Operations Group

Randy W. Goruk, age 45 Senior Vice President, North American Residential
Operations Group

Patrick D. Smith, age 51 Senior Vice President, Manufacturing Operations Group

Valerie A. Heusinkveld, age 39 Vice President, Finance and Chief Financial Officer

Richard B. Drury, age 48 Secretary and Treasurer

Jody B. Olson, age 50 Vice President, Corporate Development

Floyd J. Juday, age 54 Vice President, Marketing Services

James H. Ware, age 54 Vice President, Technology and Chief Technology Officer
</TABLE>

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-R- Lumber Industrial Sales Manager, National Sales Manager,
Western Division Manager, Eastern Division Manager and had been elected Vice
President,

16
<PAGE>

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-R- 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.

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 worked for Arthur Andersen & Co.

Jody B. Olson was elected Vice President, Corporate Development in 1987.
Previous positions held by Mr. Olson were Microllam-R- Lumber Division
Controller; Microllam-R- 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

<PAGE>

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 Chief Technology
Officer for Trus Joist MacMillan 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.

<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 18, 1998, is set forth below:

<TABLE>
<CAPTION>
(1) (2)
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>

Common Stock, $1 par value 1,909
</TABLE>

There are approximately 14,000 beneficial stockholders. 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 33 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 41 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 for 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

<TABLE>
<S> <C> <C> <C>
ITEM 6. Selected Financial Data "Selected Financial Data".... 27

ITEM 7. Management's Discussion and "Management's Discussion and
Analysis of Financial Analysis".................... 29
Conditions and Results of
Operations

ITEM 8. Financial Statements and "Consolidated Financial
Supplementary Data Statements".................. 35
</TABLE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

<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 under the caption "Stock
Ownership"; 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 49
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

<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 1997.

(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 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

<PAGE>

for the quarter ended July 1, 1995 and is incorporate herein by reference.

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.

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.

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.

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.

1997 Non-Employee Director filed as an exhibit to the Company's form
10-Q for the quarter end June 28, 1997 and is incorporated herein by
reference.

1996 Stock Option Plan. This document was filed as an exhibit to the
Company's form 10-Q for the quarter ended June 28, 1997 and is incorporated
herein by reference.

(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.

<PAGE>

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 and are incorporated herein by reference.

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
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 and are incorporated herein by
reference.

Loan Agreement, Trust Indenture and Guaranty pertaining to the Solid
Waste Disposal Revenue bonds, Series 1995 is available to the Commission
upon request.

Loan Agreement, Loan Agreement, Note, and Guarantee Agreement dated
September 30, 1997 pertaining to the $42,600,000 taxable notes. These documents
were filed as an exhibit to the Company's Form 10-Q for the quarter ended
September 28, 1997 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 42 of this Report.

(22) Subsidiaries of the registrant.

(24) Consent of independent public accountants to the incorporation of their
report dated February 2, 1998, included in this Form 10-K for the year ended
January 3, 1998, into TJ International, Inc.'s previously filed Form S-8
Registration Statements as follows: (registration numbers in parentheses).
Trus Joist Corporation Employee Stock Ownership Plan (2-96065), Trus Joist
Corporation Associates' Stock Purchase Plan, (2-96821), Trus Joist Corporation
Key Employees' 1982 Inventive Stock Option Plan with Nonstatutory feature
(2-96964), Trus Joist Corporation Employee Stock Ownership Plan ( 33-4704),
Trus Joist Corporation Profit Sharing Plan, (33-21870), Trus Joist Corporation
Key Employees' 1985 Incentive Stock Option Plan with

<PAGE>

Nonstatutory Feature, as amended (33-22186), TJ International, Inc. Key
Employees' 1988 and 1992 Stock Option Plans (33-54582), TJ International Inc.,
Key Employees' 1993 Stock Option Plan (333-04713) Associates' Stock Purchase
Plan (333-18425) and Leveraged Stock Purchase Plan (333-18427), Key Employees'
1996 Stock Option Plan and Non-Employee Directors 1997 Stock Plan (333-32665).

(25) Powers of Attorney.

(27) Financial Data Schedule.

All other Exhibits are omitted since they are not applicable or not
required.
<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
--------------------------------------------------------
Thomas H. Denig--President, Chief Executive Officer,
Director and Attorney-in-Fact for Directors listed below

By
--------------------------------------------------------
Valerie A. Heusinkveld--Vice President, Finance
and Chief Financial Officer

Each of the above signatures is affixed as of March 18, 1998. 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
Joyce A. Godwin
Steven C. Wheelwright
William J. White

<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 January 3, 1998 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
---------------------

<S> <C>
(1) Financial Statements:

Selected Financial Data.......................................................................27

Management's Discussion and Analysis..........................................................29

Market and Dividend Information...............................................................33

Report of Independent Public Accountants......................................................33

Quarterly Financial Data (Unaudited)..........................................................34

Consolidated Balance Sheets at January 3, 1998, December 28, 1996 and December 30, 1995.......35

Consolidated Statements of Income for the three years ended January 3, 1998...................36

Consolidated Statements of Stockholders' Equity for the three years ended January 3, 1998.....37

Consolidated Statements of Cash Flow for the three years ended January 3, 1998................38

Notes to Consolidated Financial Statements....................................................39
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
PAGES IN THIS
THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT: REPORT
------------------
<S> <C>
(3)Exhibits

(21)Subsidiaries of the Registrant............................................................ Document 2

(24)Consent of Independent Public Accountants................................................. Document 3

(25)Powers of Attorney........................................................................ Document 4

(27)Financial Data Schedules for the year ended December 30, 1995, December 28, 1996, and
January 3, 1998............................................................................. Document 5
</TABLE>

All other schedules are omitted because they are not applicable or the
required information is shown in the Consolidated Financial Statements or Notes
thereto.

<PAGE>
SELECTED FINANCIAL DATA
AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES AND PERCENTAGES

The following table summarizes selected financial data for the five fiscal
years ended January 3, 1998, and should be read in conjunction with the
more-detailed Consolidated Financial Statements included herein.

<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sales................................................ $ 706,316 $ 577,166 $ 484,845 $ 496,060 $ 436,602
Income from continuing operations.................... 27,525 16,175 9,741 16,250 20,668
Net income (loss).................................... 27,525 16,175 (29,911) 8,848 12,528
Net income from continuing operations per share
Basic.............................................. 1.55 0.88 0.52 0.91 1.44
Diluted............................................ 1.44 0.82 0.48 0.83 1.29
Weighted average number of shares outstanding
Basic.............................................. 17,156 17,277 17,132 16,848 13,762
Diluted............................................ 18,663 18,853 17,132 18,608 15,529
Cash dividends declared per common share............. $ 0.220 $ 0.220 $ 0.220 $ 0.220 $ 0.215
Working capital, excluding discontinued operations... 219,205 116,862 53,355 98,042 109,503
Total assets......................................... 712,104 599,815 546,310 584,909 421,150
Long-term debt, excluding current portion............ 142,390 88,140 89,440 102,280 23,709
Stockholders' equity................................. 241,412 228,070 210,144 240,558 234,741
Net book value per share............................. 14.16 13.03 12.27 14.22 14.02
Return from continuing operations on average
stockholders' equity............................... 11.7% 7.4% 4.3% 3.7% 6.9%

</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 footnote 2 for further discussion.

<PAGE>

FINANCIAL HIGHLIGHTS

AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES AND PERCENTAGES

<TABLE>
<CAPTION>
1997 1996 % CHANGE
------------ ------------ ---------------
<S> <C> <C> <C>
FOR THE TWO YEARS ENDED JANUARY 3, 1998
Sales..................................................................... $ 706,316 $ 577,166 22%
Income from operations.................................................... 85,456 54,449 57%
Operating margin.......................................................... 12.1% 9.4%
Net income................................................................ 27,525 16,175 70%
Net income per share
Basic................................................................... 1.55 0.88 76%
Diluted................................................................. 1.44 0.82 76%
Return on average stockholders' equity.................................... 11.7% 7.4%

AT THE END OF THE FISCAL YEAR
Total assets.............................................................. $ 712,104 $ 599,815 19%
Stockholders' equity...................................................... 241,412 228,070 6%
Number of shares -- Common stock outstanding.............................. 17,807,142 17,500,896 2%
Associates................................................................ 3,592 3,037 18%
Share price -- close...................................................... 24.38 22.00 11%
Book value per share...................................................... 14.16 13.03 4%
Market capitalization..................................................... $ 415,496 $ 385,020 13%

FOR THE FOURTH QUARTER OF EACH FISCAL YEAR
Sales..................................................................... $ 173,747 $ 131,388 32%
Income from operations.................................................... 18,716 12,590 49%
Net income................................................................ 6,015 4,089 47%
Net income per share
Basic................................................................... 0.34 0.22 55%
Diluted................................................................. $ 0.31 $ 0.21 48%
------------ ------------ --
------------ ------------ --

</TABLE>

ANALYST REPORTS RECENTLY ISSUED

A.G. Edwards & Sons, Inc., St. Louis, MO; CIBC Wood Gundy Securities Inc.,
Toronto, Canada; CS First Boston Corporation, New York, NY; D.A. Davidson & Co.,
Portland, OR; Goldman Sachs &Co., New York, NY; Piper Jaffray Inc., Seattle,WA;
Ragen Mackenzie Incorporated, Seattle,WA; TD Securities, Inc., Toronto, Ontario;
Value Line, Inc., New York, NY

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

1997 Compared to 1996

The Company achieved record sales levels in 1997. Sales increased by $129
million from the prior year. This increase stems primarily from greater
acceptance of the Company's engineered lumber products as a substitute for
commodity solid-sawn lumber in North American residential construction
markets together with very strong growth in commercial construction markets
and international markets.

In 1997, the Company's sales of products in commercial construction
markets increased 35% to $76 million. The growth was primarily a result of
intensified sales efforts in established West Coast markets, increased
success of marketing to national commercial accounts and the introduction of
new products. Sales in international markets grew 44% to $30.4 million in
1997. The largest growth came from sales of TimberStrand-Registered
Trademark- lumber products in Japan.

Sales per North American housing start rose 19 percent to $344 per start
from the $289 per start of 1996. This marks the 15th consecutive year the
Company has achieved market penetration growth in the key residential
construction market. Nearly every geographic region of the continent showed
gains in sales per housing start, with exceptionally strong improvements
registered in eastern Canada, the Southwest, and the southern United States.
It should be noted that this strong improvement in market penetration
occurred in a highly competitive North American housing environment where
starts were essentially flat comparing 1997 with 1996.

Prices for commodity solid-sawn lumber products, which remain the
principal competition for the Company's engineered lumber products, began
1997 at near two-year high levels, but declined in the second half of the
year. The declines were particularly sharp in the West Coast species such as
Douglas fir. Sales growth resulted primarily from increased unit-volume
sales, as prices for the Company's products were on average flat for 1997
compared to 1996. Volume gains were strongest for the Company's
new-technology TimberStrand-Registered Trademark- LSL and ParallamO PSL
products.

Sales for the fourth quarter of 1997 were $173.7 million, compared to
$131.4 million in the fourth quarter of 1996, a 32.2 percent increase. This
sales growth was primarily unit-volume growth. Unit-selling prices were
essentially flat for the fourth quarter 1997 compared to the fourth quarter
1996.

Gross margins for the year ended January 3, 1998, were 27.4 percent
compared to 24.7 percent for 1996. Margin gains resulted from lower costs for
raw materials such as oriented strand board (OSB) and veneer; increased
prices for TimberStrand-Registered Trademark- LSL products stemming from a
product mix shift to higher value products; and increased operating
efficiencies at many of the Company's manufacturing facilities.

The Company's newest facility, which manufactures TimberStrand-Registered
Trademark- LSL in East Kentucky, continued to improve its performance in
1997. The plant transitioned from losses in the first quarter to
profitability in the third quarter of the year. Additionally, in 1997 the
Company's other new plant, located in Buckhannon, West Virginia, successfully
improved in 1997 to become the Company's low cost producer of
Parallam-Registered Trademark- PSL and Microllam-Registered Trademark- LVL.

Selling expenses for 1997 increased $9.7 million, from $61.3 million in
1996 to $71 million in 1997, however, they declined as a percentage of
sales to 10 percent from 10.6 percent in 1996. Total selling expenses rose
because of variable selling expenses and sales commissions resulting from
sales growth. Additionally, the Company continues to invest in developing
international markets, aggressively bringing innovative products to market
and support efforts related to product mix optimization such as literature
and training.

General and administrative expenses for 1997 increased $10.3 million, from
$26.6 million and 4.6 percent as a percentage of sales in 1996, to $36.9 million
and 5.2 percent as a percentage of sales in 1997. The largest component of this
increase is spending for business support software, which will provide
infrastructure for future growth. Additionally, the Company increased research
and development expenses to further improve the Company's TimberStrand LSL
technology and other costs necessary to support the growth of the Company.

Interest expense in 1997 was $6.9 million compared to $6.3 million in
1996. The increase in interest was due to higher debt levels offset somewhat
by higher amounts of capitalized interest and lower rates on the variable
interest rate debt. Minority interest increased to $39.7 million in 1997 as a
result of the increased earnings at the TJM Partnership.

<PAGE>

1996 Compared to 1995

The Company achieved record sales levels in 1996 with sales increasing
$92 million from the prior year. The increase resulted primarily from growing
acceptance of the Company's engineered lumber products as a substitute for
commodity solid-sawn lumber. Increasing 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 rose 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. This was the 14th
consecutive year the Company 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, combined with existing
new-technology products, such as TimberStrand-Registered Trademark- LSL Rim
Board, window and door parts, and furniture components, to achieve 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. This
increase came from strong volume growth, particularly in the Company's
TimberStrand-Registered Trademark- LSL products. Average selling prices also
increased 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 resulted primarily from
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 East 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 LSL plant in
East 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 OSB and veneer.

Selling expenses increased $7.6 million in 1996; however, they declined
slightly as a percent of sales compared to the prior year. The overall
increase was due to variable selling expenses and commissions. Additionally,
the Company continued to invest in developing and bringing new and innovative
products to the market place.

General and administrative expenses increased $1.9 million from the prior
year. This increase was driven by additional research and development
expenses and other costs necessary to support the growth of the business.

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 because of increased earnings at the TJM
Partnership.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Cash generated from the operations of the Company's engineered lumber
partnership, as measured by net income plus non-cash charges, for
depreciation, amortization, and minority interest, was $110 million during
1997, compared to $80 million in 1996. The Company invested $43 million in
capital expenditures during 1997, which primarily represented its
on-going program for productivity improvements in its manufacturing
facilities and an investment in increased production capacity.

In 1997 the Company completed construction of a TJIO-joist manufacturing
facility at its East Kentucky location. The new production line will allow
the Company to produce TJIO-joist products, using TimberStrand-Registered
Trademark- LSL as the top and bottom flange. Spending in 1997 for this
facility was $16.5 million. The Company also began construction of a $45
million Microllam-Registered Trademark- lumber and TJIO joist facility in
Evergreen, Alabama. During 1997 spending for this facility was $3.0 million.
The plant is expected to be completed in the fourth quarter of 1998 with
production volumes available for the 1999 building season.

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 stock during the first quarter 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 in the
future additional industrial revenue bonds to help finance the East Kentucky
TimberStrand-Registered Trademark- LSL plant. The notes are due in a single
maturity on November 15, 2001, subject to prepayment at the option of the
Company. The notes 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
percent.

In the second quarter of 1996, the Company issued $5.7 million of
industrial revenue bonds related to the construction of the East Kentucky
TimberStrand-Registered Trademark- LSL plant. The bonds are due in a single
maturity in 2026, with interest payable 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.

The Company completed the sale of its window division during the third
quarter of 1996. As part of the sale the Company retained certain liabilities
regarding warranty obligations. Management believes that existing reserves
are adequate to meet all subsequent liabilities that may arise related to the
discontinued operations.

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 when or where 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 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 Company level. All other distribution 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.

<PAGE>

INDUSTRY, COMPETITION, AND CYCLICALITY

The Company's engineered lumber products continue to gain 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 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 proprietary, 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 a process similar to the Company's older technologies.

The Company believes its network of manufacturing plants and multiple
technologies positions 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 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 been lowest in the
first and fourth quarters and highest in the second and third quarter of each
year.

FORWARD-LOOKING STATEMENTS

<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 1997 and 1996 were as follows:

SALES PRICE
---------------------- DIVIDENDS
1997 HIGH LOW PAID
- --------------------------------------------------------------------------------- --------- ----------- ---------
<S> <C> <C> <C>

First............................................................................ $ 23 1/4 $ 18 1/2 $ 0.055
Second........................................................................... 24 3/8 18 7/8 0.055
Third............................................................................ 26 3/4 22 3/8 0.055
Fourth........................................................................... 27 3/16 22 1/4 0.055
</TABLE>

SALES PRICE
---------------------- DIVIDENDS
1996 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
</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 January
3, 1998, December 28, 1996, and December 30, 1995, 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 January 3, 1998, December 28, 1996, and December
30, 1995, and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.

/s/ Arthur Anderson LLP
- ------------------------------
Boise, Idaho. February 2, 1998
<PAGE>
UNAUDITED RESULTS OF QUARTERLY OPERATIONS
DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES

<TABLE>
<CAPTION>
QUARTER
<S> <C> <C> <C> <C>
1997 FIRST SECOND THIRD FOURTH
- -----------------------------------------------------------------------------------------------------------------
Sales.......................................................... $ 161,263 $ 185,730 $ 185,576 $ 173,747
Gross profit................................................... 43,340 51,132 52,046 46,766
Net income..................................................... 5,477 7,491 8,542 6,015
Net income per share
Basic........................................................ 0.30 0.42 0.48 0.34
Diluted...................................................... 0.28 0.39 0.45 0.31
- -----------------------------------------------------------------------------------------------------------------
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
Basic........................................................ (0.01) 0.25 0.43 0.22
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
Basic...................................................... 0.09 0.17 0.23 0.03
Diluted.................................................... 0.09 0.15 0.21 0.03
Loss from discontinued operations
Basic...................................................... (0.07) (0.03) (0.10) --
Diluted.................................................... (0.07) (0.02) (0.09) --
Loss on disposal of discontinued operations
Basic...................................................... -- -- -- (2.11)
Diluted.................................................... -- -- -- (2.11)
Net income (loss)
Basic...................................................... 0.02 0.14 0.13 (2.08)
Diluted.................................................... 0.02 0.13 0.12 (2.08)
</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.

<PAGE>

CONSOLIDATED BALANCE SHEETS
DOLLAR AMOUNTS IN THOUSANDS

JANUARY 3, 1998 DECEMBER 28, 1996 DECEMBER 30, 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................ $ 119,087 $ 36,801 $ 19,715
Marketable securities.................................... 40,751 -- --
Receivables, less allowances of $397, $451, and $384,
respectively........................................... 55,369 73,893 28,754
Inventories.............................................. 68,954 51,549 38,560
Deferred income taxes.................................... 3,382 4,985 11,607
Other.................................................... 7,541 4,756 6,036
----------------------------------------------------
295,084 171,984 104,672
Property
Land..................................................... 11,696 11,698 11,682
Buildings and leasehold improvements..................... 114,496 104,203 99,232
Machinery, equipment, and other.......................... 477,501 450,702 440,634
Accumulated depreciation................................. (223,207) (184,504) (149,069)
----------------------------------------------------
380,486 382,099 402,479

Goodwill................................................... 19,500 20,540 21,580
Unexpended bond funds...................................... -- -- 117
Deferred income taxes...................................... -- 8,846 5,088
Other assets............................................... 17,034 16,346 12,374
----------------------------------------------------
$ 712,104 $ 599,815 $ 546,310
----------------------------------------------------
----------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable............................................ $ -- $ -- $ 2,994
Current portion of long-term debt........................ -- -- 340
Accounts payable......................................... 25,238 23,113 23,746
Accrued liabilities...................................... 50,641 32,009 24,237
----------------------------------------------------
75,879 55,122 51,317

Long-term debt, excluding current portion.................. 142,390 88,140 89,440
Deferred income taxes...................................... 4,363 -- --
Other long-term liabilities................................ 13,973 11,327 8,597
Reserve for discontinued operations........................ 17,482 21,970 5,755

Minority interest in Partnership........................... 216,605 195,186 181,057

Stockholders' equity
ESOP Convertible Preferred Stock, issued 1,147,219,
1,162,914, and 1,185,933 shares, respectively.......... 13,535 13,721 13,992
Guaranteed ESOP Benefit.................................. (8,188) (9,204) (10,382)
Common stock, issued 17,807,142, 17,500,896,and 17,131,758
shares, respectively................................... 17,807 17,501 17,132
Paid-in capital.......................................... 153,936 145,583 140,384
Retained earnings........................................ 86,116 63,249 51,808
Cumulative translation adjustment........................ (3,805) (2,780) (2,790)
Other.................................................... (1,730) -- --
Treasury stock, 761,152, shares, at cost................. (16,259) -- --
----------------------------------------------------
241,412 228,070 210,144
----------------------------------------------------
$ 712,104 $ 599,815 $ 546,310
----------------------------------------------------
----------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE YEARS ENDED JANUARY 3, 1998 (DOLLAR AMOUNTS IN THOUSANDS EXCEPT
PER SHARE FIGURES)

<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales........................................................................ $ 706,316 $ 577,166 $ 484,845
----------------------------------
Costs and expenses
Cost of sales.............................................................. 513,032 434,852 376,187
Selling expenses........................................................... 70,957 61,270 53,675
Administrative expenses.................................................... 36,871 26,595 24,641
----------------------------------
620,860 522,717 454,503
----------------------------------
Income from operations....................................................... 85,456 54,449 30,342
Investment income, net....................................................... 5,213 1,593 2,209
Interest expense............................................................. (6,933) (6,328) (631)
Minority interest in Partnership............................................. (39,696) (23,956) (16,376)
----------------------------------
Income from continuing operations before income taxes........................ 44,040 25,758 15,544
Income taxes................................................................. 16,515 9,583 5,803
----------------------------------
Income from continuing operations............................................ 27,525 16,175 9,741
----------------------------------
Discontinued operations
Loss from discontinued operations (net of tax benefit of $2,171)........... -- -- (3,461)
Loss on disposal of discontinued operations (net of tax benefit of
$23,718)................................................................. -- -- (36,191)
----------------------------------
Net income (loss)............................................................ $ 27,525 $ 16,175 $ (29,911)
----------------------------------
----------------------------------
Net income (loss) per share
Income from continuing operations
Basic.................................................................... $ 1.55 $ 0.88 $ 0.52
Diluted.................................................................. $ 1.44 $ 0.82 $ 0.48
Loss from discontinued operations
Basic.................................................................... -- -- (0.21)
Diluted.................................................................. -- -- (0.17)
Loss on disposal of discontinued operations
Basic.................................................................... -- -- (2.11)
Diluted.................................................................. -- -- (2.11)
Net income (loss)
----------------------------------
Basic.................................................................... $ 1.55 $ 0.88 $ (1.80)
----------------------------------
Diluted.................................................................. $ 1.44 $ 0.82 $ (1.80)
----------------------------------
----------------------------------
Weighted average number of common shares outstanding during the periods
Basic...................................................................... 17,156 17,277 17,132
Diluted.................................................................... 18,663 18,853 17,132
------------------------------
------------------------------

</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE THREE YEARS ENDED JANUARY 3, 1998 (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
GUARANTEED CUMULATIVE COMMON
PREFERRED ESOP COMMON PAID-IN RETAINED TRANSLATION STOCK IN
STOCK BENEFIT STOCK CAPITAL EARNINGS ADJUSTMENT TREASURY OTHER
----------- ----------- --------- ---------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994..... $14,744 $(12,100) $16,916 $138,003 $ 86,355 $(3,360) -- --
Net income (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 -- -- -- --
Stock Company Match, 401(k)
Contributions................ -- -- 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) -- --
Net income..................... -- -- -- -- 27,525 -- -- --
Cash dividends declared:
Common stock................. -- -- -- -- (3,759) -- -- --
Preferred stock, net of
tax........................ -- -- -- -- (899) -- -- --
Stock options exercised, net of
tax.......................... -- -- 148 2,881 -- -- -- --
Stock Company Match, 401(k)
Contributions................ -- -- 160 3,460 -- -- -- --
Treasury stock purchased....... -- -- -- -- -- -- (16,259) --
Other.......................... (186) 1,016 (2) 2,012 -- (1,025) -- (1,730)
----------- ----------- --------- ---------- ---------- ----------- ---------- ---------
Balance, January 3, 1998....... $13,535 $ (8,188) $17,807 $153,936 $ 86,116 $(3,805) $(16,259) $(1,730)
</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE YEARS ENDED JANUARY 3, 1998 (AMOUNTS IN THOUSANDS)
THIS STATEMENT HAS NOT BEEN RESTATED FOR DISCONTINUED OPERATIONS.

<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).......................................................... $ 27,525 $ 16,175 $ (29,911)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities
Discontinued operations charge........................................... -- -- 36,191
Depreciation and amortization............................................ 42,945 39,591 33,236
Minority interest in Partnership......................................... 39,696 23,956 16,376
Deferred income taxes.................................................... 14,317 9,583 4,433
Other, net............................................................... 3,620 2,290 1,082
Change in working capital items:
Receivables.............................................................. 18,524 (45,139) 9,039
Inventories.............................................................. (17,405) (12,989) (1,401)
Other current assets..................................................... (2,785) 1,280 118
Accounts payable and accrued liabilities................................. 20,754 3,805 (766)
Other, net................................................................. 185 (1,847) (4,205)
---------- ---------- -----------
Net cash provided by operating activities.................................. $ 147,379 $ 36,705 $ 64,192
---------- ---------- -----------
---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures....................................................... $ (42,627) $ (19,056) $ (105,672)
Proceeds from the sale of discontinued operations.......................... -- 24,035 --
Payments of discontinued operations liabilities............................ (2,460) (10,733) --
Decrease in unexpended bond funds.......................................... -- 117 11,433
Sales (purchases) of marketable securities................................. (40,751) -- 16,084
Other, net................................................................. 1,969 2,357 2,316
---------- ---------- -----------
Net cash used in investing activities...................................... $ (83,869) $ (3,280) $ (75,839)
---------- ---------- -----------
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid on common stock........................................ $ (3,823) $ (3,791) $ (3,742)
Cash dividends paid on preferred stock..................................... (2,473) -- (1,263)
Minority partners tax distributions........................................ (13,435) (7,960) (7,522)
Net borrowings (repayments) under lines-of-credit.......................... -- (2,994) (759)
Proceeds from the issuance of long-term debt............................... 54,250 5,740 22,500
Principal payments of long-term debt....................................... -- (7,380) (35,650)
Purchases of treasury stock................................................ (16,259) -- --
Other, net................................................................. 516 46 171
---------- ---------- -----------
Net cash provided by (used in) financing activities........................ $ 18,776 $ (16,339) $ (26,265)
---------- ---------- -----------
---------- ---------- -----------

NET CHANGE IN CASH AND CASH EQUIVALENTS
Net increase (decrease) in cash and cash equivalents....................... $ 82,286 $ 17,086 $ (37,912)
Cash and cash equivalents at beginning of year............................. 36,801 19,715 57,627
---------- ---------- -----------
Cash and cash equivalents at end of year................................... $ 119,087 $ 36,801 $ 19,715
---------- ---------- -----------
---------- ---------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest, net of amounts capitalized..................................... $ 6,230 $ 6,084 $ 634
Income taxes (refunds), net.............................................. $ (2,961) $ -- $ 1,392
---------- ---------- -----------
---------- ---------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL

The consolidated financial statements include the accounts of TJ
International, Inc. (TJI or the Company) and its subsidiaries, including the
Company's engineered lumber business, Trus Joist MacMillan a Limited
Partnership (TJM). All significant inter-company balances and transactions
have been eliminated. Certain components of the accompanying consolidated
balance sheets and statements of income require estimates made by management.
Actual results could differ from those estimates.

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 respective
engineered lumber businesses.

Goodwill recognized in the transaction is being amortized using the
straight-line method over 25 years. As of January 3, 1998, a total of
$6,500,000 of this goodwill has been amortized. Goodwill expense was
$1,040,000 each year in 1997, 1996, and 1995.

MINORITY INTEREST IN PARTNERSHIP

The Company has a 51 percent interest in TJM. Income and losses through
January 3, 1998, are allocated on a formula basis as agreed to by the
partners and in accordance with the partnership agreement. As a result, the
minority owners of the Partnership were allocated $39,696,000 of income in
1997, $23,956,000 of income in 1996, and $16,376,000 of income in 1995. 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.

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 value,
and totaled $119,087,000 at January 3, 1998, $36,801,000 at December 28, 1996,
and $19,715,000 at December 30, 1995. Marketable securities include commercial
paper. These securities are recorded at cost, which approximates fair value
based on quoted market prices.

<PAGE>

Substantially all of the Company's operating assets are held by and cash
generated through its TJM partnership. At year end 1997, $29,276,000 of the
cash and marketable securities was held by TJI and the remaining $130,562,000
was held by TJM. The partnership regularly distributes cash to the partners
to fund the tax liabilities generated by the partnership at the Company
level. All other distributions of cash by the partnership to its partners 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 requirements of TJI including expenses associated with public company
costs and payments on liabilities retained after its divestiture of its
window segments.

INVENTORIES

Inventories are valued at the lower of cost or market and include
material, labor, and production overhead costs.

EXPRESSED IN THOUSANDS

<TABLE>
<CAPTION>
JANUARY 3,
1998 DECEMBER 28, 1996 DECEMBER 30, 1995
-------------- ----------------- -----------------
<S> <C> <C> <C>
Finished goods............................................. $ 51,737 $ 38,278 $ 25,882
Raw materials.............................................. 17,217 13,271 14,657
---------- --------- -----------------
68,954 51,549 40,539
Reduction to LIFO cost..................................... -- -- (1,979)
---------- --------- -----------------
$ 68,954 $ 51,549 $ 38,560
---------- --------- -----------------
---------- --------- -----------------
</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 39 percent of total inventories
at the end of 1997, 49 percent of total inventories at the endof 1996, and
49 percent of total inventories at the end of 1995 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
January 3, 1998, and December 28, 1996, the LIFO valuation approximated
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
$29,978,000 in 1997, $26,607,000 in 1996, and $20,377,000 in 1995. 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.

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. Interest expense
and income capitalized into property and equipment were as follows:

EXPRESSED IN THOUSANDS

<TABLE>
<CAPTION>
1997 1996 1995
--------- ----- ---------
<S> <C> <C> <C>
Interest expense.......................................................................... $ 487 -- $ 6,838
Interest income........................................................................... -- -- 336
</TABLE>
<PAGE>

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred. Research and
development costs charged to expense were approximately $3,940,000 in 1997,
$3,221,000 in 1996, and $2,262,000 in 1995.

DERIVATIVE FINANCIAL INSTRUMENTS

TJ International has only limited involvement with derivative financial
instruments in the form of infrequent foreign currency forward exchange
contracts for the purchase of machinery and equipment, and at January 3, 1998,
had no material derivative financial instruments outstanding.

RECLASSIFICATIONS

Certain reclassifications have been made, none of which affected net income,
to conform prior years' information to the current year's presentation.

NET INCOME PER SHARE

Basic 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 and weighted average number
of common shares outstanding after giving effect to stock options as common
stock equivalents. 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. Diluted net loss per
share for 1995 is the same as basic net loss per share since the effect of the
assumed conversion of the ESOP preferred stock is anti-dilutive. Basic and
diluted net income were calculated as follows:

BASIC AND DILUTED NET INCOME

EXPRESSED IN THOUSANDS

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ----------
<S> <C> <C> <C>
Net income from continuing operations........................................... $ 27,525 $ 16,175 $ 9,741
Preferred stock dividends, net of related tax benefits.......................... (985) (949) (899)
--------- --------- ---------
Basic net income from continuing operations..................................... 26,540 15,226 8,842
--------- --------- ---------
Loss from discontinued operations............................................... -- -- (3,461)
Loss from disposal of discontinued operations................................... -- -- (36,191)
--------- --------- ---------
Basic net income (loss)......................................................... $ 26,540 $ 15,226 $ (30,810)
--------- --------- ---------
Net income from continuing operations........................................... $ 27,525 $ 16,175 $ 9,741
Additional ESOP contribution payable upon assumed conversion of ESOP preferred
stock, net of related tax benefits............................................ (696) (711) (677)
--------- --------- ---------
Diluted net income (from continuing operations)................................. 26,829 15,464 9,064
--------- --------- ---------
Loss from discontinued operations............................................... -- -- (3,461)
Loss from disposal of discontinued operations................................... -- -- (36,191)
--------- --------- ---------
Diluted net income (loss)....................................................... $ 26,829 $ 15,464 $ (30,588)
--------- --------- ---------
Weighted average shares outstanding
Basic shares outstanding........................................................ 17,156 17,277 17,132
Diluted shares outstanding...................................................... 18,663 18,853 18,689
--------- --------- ---------
--------- --------- ---------
</TABLE>

<PAGE>

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.
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 allows the Company to devote all of
its resources toward 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 and
$95,569,000 in 1995. There have been no allocations of corporate overhead
or holding company interest expense to discontinued operations in the
accompanying financial statements.

The components of net liabilities from discontinued operations included
in the Consolidated Balance Sheets are as follows:

END OF YEAR:

<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ---------
<S> <C> <C> <C>
Accounts receivable............................................................. $ -- $ -- $ 6,921
Inventories..................................................................... -- -- 11,488
Property, plant, and equipment.................................................. -- -- 14,108
Accounts payable and accrued liabilities........................................ -- (4,438) (17,981)
Other liabilities............................................................... (17,482) (17,532) (20,291)
---------- --------- ---------
Net liabilities................................................................. $ (17,482) $ (21,970) $ (5,755)
---------- --------- ---------
---------- --------- ---------
</TABLE>

3. DEBT

At year-end, the Company has available unsecured, committed lines of credit
totaling $13,498,000 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 January 3, 1998, and December 28, 1996, there
were no borrowings under these agreements. At December 30, 1995, there was
$2,994,000 at 6.3 percent 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 exceed prime, and matures on
November 15, 2001. At January 3, 1998, there were no borrowings under this
facility.

In the second quarter of 1997, the Company issued $11,650,000 of
industrial revenue bonds associated with the construction of the East
Kentucky TimberStrand-Registered Trademark- LSL plant. The bonds are due in a
single maturity in 2027, with interest payable semi-annually at a fixed rate
of 6.55 percent and are unsecured. In the fourth quarter of 1997, the Company
issued $42,600,000 of taxable industrial revenue variable rate bonds 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 notes are due in a single maturity in 2001 subject
to prepayment at the option of the Company, and are unsecured. The interest
rate at the beginning of each interest period as selected by the Company, is
either LIBOR based or prime.

<PAGE>

During 1996, $5,740,000 of industrial revenue bonds were issued to
finance portions of the construction of the TimberStrand-Registered
Trademark- LSL plant in East Kentucky. These bonds have a fixed interest rate
of 6.8 percent, provide for semi-annual interest payments, with the principal
due 2026, and are unsecured.

During 1995, $22,500,000 of industrial revenue bonds were issued to
finance the construction of a combination MicrollamO LVL/Parallam-Regostered
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 principal due in 2025, and are unsecured.

The Company's industrial revenue variable rate demand bonds are secured
by the property and equipment acquired with the bond proceeds. At January 3,
1998, the cost of such property and equipment was approximately $16,400,000.
These bonds are supported by irrevocable letters of credit. These letters of
credit, together with the Company's revolving line of credit, 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 January 3, 1998. Under the most
restrictive of these agreements, retained earnings available for cash
dividends at January 3, 1998, was $93,171,000. 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:

EXPRESSED IN THOUSANDS

<TABLE>
<CAPTION>
JANUARY 3, 1998 DECEMBER 28, 1996 DECEMBER 30, 1995
--------------------- -------------------- ---------------------
<S> <C> <C> <C>
LONG-TERM DEBT
Borrowings under the Credit Facility.................. $ -- $ -- $ --
Industrial revenue bonds, 6.92% weighted average
interest rate during 1997, payable in varying
amounts from 2024 through 2027...................... 83,390 71,740 73,380
Taxable industrial revenue variable rate bonds,
interest rates established at the beginning of each
interest period, 6.29% weighted average during
1997, payable in 2001............................... 42,600 -- --
Industrial revenue $10,000,000 payable variable rate
in 2000, and demand bonds, $6,400,000 payable in
interest rates 2009 established weekly, 3.96%
weighted average during 1997,....................... 16,400 16,400 16,400
--------------- ---------------- ----------------
142,390 88,140 89,780
Less current portion.................................. -- -- (340)
--------------- ---------------- ----------------
$142,390 $ 88,140 $ 89,440
--------------- ---------------- ----------------
--------------- ---------------- ----------------
</TABLE>

4. ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

EXPRESSED IN THOUSANDS

JANUARY 3, 1998 DECEMBER 28, 1996 DECEMBER 30, 1995
--------------- ----------------- -----------------
<S> <C> <C> <C>
Salaries, wages, and commissions........................... $ 6,353 $ 4,328 $ 3,092
Retirement plans and other associate benefits.............. 17,854 13,750 10,525
Marketing incentives....................................... 17,346 8,216 4,439
Other...................................................... 9,088 5,715 6,181
---------- --------- ---------
$ 50,641 $ 32,009 $ 24,237
---------- --------- ---------
</TABLE>
<PAGE>

5. INCOME TAXES

Income tax information has not been restated to exclude discontinued
operations in prior years. Income (loss) before income taxes and income taxes
(benefits) include the following:

EXPRESSED IN THOUSANDS

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
INCOME (LOSS) BEFORE INCOME TAXES
U.S............................................................................ $ 36,420 $ 23,194 $ 20,947
Canada......................................................................... 7,620 2,564 (5,403)
--------- --------- ---------
$ 44,040 $ 25,758 $ 15,544
--------- --------- ---------
--------- --------- ---------
INCOME TAXES (BENEFITS)
Current income taxes
U.S. federal................................................................... $ 2,027 -- $ 1,370
U.S. state..................................................................... 171 -- --
Canada......................................................................... -- -- --
--------- --------- ---------
$ 2,198 -- $ 1,370
--------- --------- ---------
--------- --------- ---------
Deferred income taxes
U.S. federal................................................................... $ 10,156 $ 7,073 $ 5,452
U.S. state..................................................................... 1,113 1,484 993
Canada......................................................................... 3,048 1,026 (2,012)
--------- --------- ---------
$ 14,317 $ 9,583 $ 4,433
$ 16,515 $ 9,583 $ 5,803
--------- --------- ---------
--------- --------- ---------
</TABLE>

The Company's effective income tax rate varied from the U.S. federal
statutory income tax rate for the following reasons:

EXPRESSED IN THOUSANDS

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C> <C>
U.S. federal statutory income tax rate........................................... $ 15,414 35.0% 35.0% 35.0%
Reversal of excess tax reserves provided in prior years.......................... -- -- (1.8)
Foreign income (losses) at different rates....................................... 381 0.9 1.2 (4.5)
State income taxes, net of federal effect........................................ 1,598 3.6 4.2 6.6
Other items...................................................................... (878) (2.0) (3.2) 2.0
Effective income tax rate........................................................ $ 16,515 37.5% 37.2% 37.3%
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

<PAGE>

The deferred tax liabilities and assets included in the Consolidated Balance
Sheets, computed under Statement No. 109, are comprised of the following:
<PAGE>
EXPRESSED IN THOUSANDS

<TABLE>
<CAPTION>
JANUARY 3,
1998 DECEMBER 28, 1996 DECEMBER 30, 1995
-------------- ----------------- -----------------
<S> <C> <C> <C>
Tax in excess of book depreciation......................... $ (28,555) $ (27,101) $ (18,090)
Other...................................................... (5,972) (7,330) (7,851)
-------------- ----------------- -----------------
Total deferred tax liabilities............................. (34,527) (34,431) (25,941)
Reserves not yet deductible for tax purposes............... 3,360 2,370 1,352
Net operating loss carryforwards........................... 7,252 13,062 5,652
Alternative minimum tax credit carryforward................ 9,126 4,279 5,436
Reserves and operating losses related to discontinued
operations............................................... 9,777 19,740 25,889
Other...................................................... 4,031 8,811 4,307
Total deferred tax assets.................................. 33,546 48,262 42,636
$ (981) $ 13,831 $ 16,695
Classified as
Deferred income taxes -- current assets.................. $ 3,382 $ 4,985 $ 11,607
Deferred income taxes -- long-term assets (liabilities).. (4,363) 8,846 5,088
$ (981) $ 13,831 $ 16,695
-------------- ----------------- -----------------
-------------- ----------------- -----------------
</TABLE>

The Company's alternative minimum tax credits of $9,126,000 at January 3,
1998, are available indefinitely. Net operating loss carryforwards 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 associates are covered under defined contribution
retirement plans and are also participants in the Company's ESOP. 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 $783,000 in 1997,
$1,022,000 in 1996, and $1,153,000 in 1995.

The Company matches certain contributions of participating associates to its
retirement plans. Contributions to these plans were approximately $16,902,000 in
1997, $13,445,000 in 1996, and $11,130,000 in 1995, of which approximately 46
percent, 49 percent, and 57 percent, respectively, resulted from contributions
made under the compensation reduction agreement provision of the plans.

<PAGE>

Substantially all of the Company's officers and key employees participate in
incentive bonus programs, which are based on formulas aimed at improving
returns, sales growth, and profitability. Amounts charged to income under the
programs were approximately $3,050,000 in 1997, $2,361,000 in 1996, and
$1,259,000 in 1995.

7. STOCKHOLDERS' EQUITY

At January 3, 1998, 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.

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 $0.005 per
right. In connection with these rights, the Board has reserved for issuance the
same number of shares as are outstanding at any one point in time.

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 1997, the Company's stockholders approved a new stock-option plan for
officers and key employees. Under the terms of this plan, incentive stock
options (ISOs) and nonstatutory options (NSOs) may be issued at an exercisable
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 order to partially mitigate the potential dilutive effect of this new
stock option plan, the Board also authorized a program to repurchase shares of
the Company's common stock at market price. During 1997, a total of 761,152
shares were repurchased at $16,259,000.

The Company also has four other stock-option plans in effect for officers
and key associates. Under the 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 date of grant, and, depending upon board determination at the
time of grant, the NSO's either become exercisable three years after date of
grant or in 20 percent annual installments commencing five years after date
of grant.

At January 3, 1998, a total of 40,800 ISOs and 1,253,499 NSOs were
outstanding and 2,338,000 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.

<PAGE>

Total compensation expenses recognized from the Company's various stock
option plans were $1,682,000, $1,535,000, and $987,000 in 1997, 1996, and 1995,
respectively. Stock-option transactions are summarized as follows:

<TABLE>
<CAPTION>
1997 1996 1995
WTD. AVG. WTD. AVG.
SHARES OPTION PRICE SHARES OPTION PRICE SHARES
---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
STOCK OPTION TRANSACTIONS
Number of Option Shares
Granted....................................... 49,500 $ 21.13 867,700 $ 16.85 98,400
Exercised..................................... (75,758) 1.63 (230,470) 1.45 (178,418)
Cancelled..................................... (14,288) 6.15 (57,947) 0.83 (21,025)
---------- ------------- ---------- ------------- ----------
Outstanding at end of year.................... 1,294,299 12.49 1,334,845 11.49 755,562
Exercisable at end of year.................... 351,237 14.77 132,778 3.62 195,130
Weighted average fair value of options granted
(Black-Scholes)............................... $ 8.96 $ 10.31 N/A
---------- ------------- ---------- ------------- ----------
</TABLE>

The following table summarizes certain information about stock options
outstanding at January 3, 1998:

<TABLE>
<CAPTION>
OUTSTANDING AT WTD. AVG. EXERCISABLE AT
JANUARY 3, REMAINING WTD. AVG. JANUARY 3, WTD. AVG.
1998 CONTRACTURAL LIFE OPTION PRICE 1998 OPTION PRICE
-------------- ----------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
RANGE OF OPTION PRICES
$0.50-- $1.00...................... 539,332 6.3 0.80 88,134 0.59
9.38 40,800 3.0 9.38 40,800
$19.00--$24.125.................... 714,167 8.9 21.50 222,303 21.38
-------------- ----------------- ------------- -------------- -------------
1,294,299 7.7 12.49 351,237 14.77
-------------- ----------------- ------------- -------------- -------------
-------------- ----------------- ------------- -------------- -------------
</TABLE>

Effective at the beginning of 1996, the Company adopted SFAS No. 123, which
prescribes the accounting for stock-based compensation. Under an election
available in the adoption of this statement, the Company continues to account
for stock options in accordance with APB No. 25. However, SFAS No. 123 requires
the Company to provide certain additional disclosures. The fair value of each
option grant is estimated on the date of grant using the Black-Scholes option
pricing model, with the following weighted average assumptions used for grants
in 1997 and 1996; risk-free interest rate of 6.5% for both years; vesting
discounts of 94% and 93%; and annual stock price volatility of .26 and .27. Had
compensation expenses for 1997 and 1996 been determined using the Black-Scholes
model, the Company's net income and net income per diluted share would have been
reduced by $1,182,000, or $0.063 per share, and $49,000, or $0.002 per share,
respectively.

8. LEASES

Basic or minimum rental expenses for operating and month-to-month leases
amounted to $5,002,000 in 1997, $3,985,000 in 1996, and $2,990,000 in 1995.

The Company has various operating leases with initial or remaining terms of
more than one year. These leases have minimum lease payment requirements of
$2,632,000 in 1998, $1,563,000 in 1999, $1,283,000 in 2000, $858,000 in 2001,
and $627,000 in 2002. 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.

<PAGE>

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 distributors. Sales to MBBM were
$205,500,000, $168,500,000, and $116,900,000, in 1997, 1996, and 1995,
respectively. Accounts receivable from MBBM were $17,357,000 at January 3,
1998, $16,658,000 at December 28, 1996, and $7,163,000 at December 30, 1995.
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
$1,922,000, $1,741,000, and $1,658,000 for 1997, 1996, and 1995, respectively.

Quarterly, the partnerships make cash distributions to the Partners in lieu
of state and federal income taxes. Payments of $13,435,000, $7,960,000, and
$7,522,000 were made to MBA in 1997, 1996, and 1995, 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 1997, 1996, and 1995 were
$5,890,000, $5,756,000, and $4,925,000, respectively. Total payables to MB and
MBA for such services and tax distributions at January 3, 1998, December 28,
1996, and December 30, 1995, were $4,590,000, $2,745,000, $844,000,
respectively, and are included in accounts payable in the accompanying
Consolidated Balance Sheets.

10. SIGNIFICANT CUSTOMERS

TJM has a strategic alliance with Weyerhaeuser's Building Materials
Distribution Division. The arrangement allows the Partnership to expand its
distribution network through the Weyerhaeuser customer service centers.
Additionally, there are certain supply agreements, whereby the Partnership
procures raw materials such as veneer and oriented strand board (OSB) from
Weyerhaeuser. Total sales to Weyerhaeuser for the years ended January 3, 1998,
December 28, 1996, and December 30, 1995, were $218,400,000, $188,000,000, and
$146,200,000, respectively.

<PAGE>

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
--------------- -----

<S> <C> <C>
Trus Joist MacMillan, A Limited
Partnership Delaware 51%

Norco, Inc. Wisconsin 100%
</TABLE>

(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>

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
report dated February 2, 1998, included in this Form 10-K for the year ended
January 3, 1998, into TJ International, Inc.'s previously filed Form S-8
registration statement (File No. 2-96065); the registration statement on Form
S-8 (File No. 2-96821); the registration statement on form S-8 (File No.
2-96964); the registration statement on Form S-8 (File No. 33-4704); the
registration statement on Form S-8 (File No. 33-21870); the registration
statement on Form S-8 (File No. 33-22186)); the registration statement on Form
S-8 (File No. 33-54582); the registration statement on Form S-8 (File No.
333-04713); the registration statement on Form S-8 (File No. 333-18425); the
registration statement on Form S-8 (File No. 333-18427); the registration
statement on Form S-8 (File No. 333-32659); and the registration statement on
Form S-8 (File No. 333-32665).

/s/ ARTHUR ANDERSEN LLP
-----------------------

<PAGE>

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 January 3, 1998 to be filed with the Securities and
Exchange Commission on or before April 3, 1998, 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, 1998.

/s/ Thomas H. Denig
------------------------------------

STATE OF Idaho

County of Ada

On this 13th day of February, 1998, 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, Robert B. Findlay, 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 January 3, 1998 to be filed with the Securities and
Exchange Commission on or before April 3, 1998, 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.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1998.

/s/ Robert B. Findlay
------------------------------------

STATE OF Idaho

County of Ada

On this 13th day of February, 1998, 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, Joyce A. Godwin, 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 January 3, 1998 to be filed with the Securities and
Exchange Commission on or before April 3, 1998, 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.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1998.

/s/ Joyce A. Godwin
------------------------------------

STATE OF Idaho

County of Ada

On this 13th day of February, 1998, before me, the undersigned, a Notary
Public in and for said State, personally appeared Joyce A. Godwin, 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 January 3, 1998 to be filed with the Securities and
Exchange Commission on or before April 3, 1998, 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.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1998.

/s/ J. L. Scott
------------------------------------

STATE OF Idaho

County of Ada

On this 13th day of February, 1998, 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 January 3, 1998 to be filed with the Securities and
Exchange Commission on or before April 3, 1998, 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.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1998.

/s/ Jerre L. Stead
------------------------------------

STATE OF Idaho

County of Ada

On this 13th day of February, 1998, 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, 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 January 3, 1998 to be filed with the Securities and
Exchange Commission on or before April 3, 1998, 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.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1998.

/s/ Harold E. Thomas
------------------------------------

STATE OF Idaho

County of Ada

On this 13th day of February, 1998, 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, 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 January 3, 1998 to be filed with the Securities and
Exchange Commission on or before April 3, 1998, 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.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1998.

/s/ Steven C. Wheelwright
------------------------------------

STATE OF Idaho

County of Ada

On this 13th day of February, 1998, 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 January 3, 1998 to be filed with the Securities and
Exchange Commission on or before April 3, 1998, 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.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1998.

/s/ William J. White
------------------------------------

STATE OF Idaho

County of Ada

On this 13th day of February, 1998, 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

<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 January 3, 1998 to be filed with the Securities and
Exchange Commission on or before April 3, 1998, 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.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day of
February, 1998.

/s/ Arthur L. Troutner
------------------------------------

STATE OF Idaho

County of Ada

On this 13th day of February, 1998, 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>
<ARTICLE> 5
<LEGEND>
THIS DATA SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE TJ
INTERNATIONAL, INC. BALANCE SHEET AT JANUARY 3, 1998 AND FROM ITS STATEMENT OF
INCOME FOR THE 12 MONTHS ENDED JANUARY 3, 1998. THE INFORMATION PRESENTED
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000099974
<NAME> TJ INTERNATIONAL,INC.
<MULTIPLIER> 1,000
<CURRENCY> USDOLLAR

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-31-1996
<PERIOD-END> JAN-03-1998
<EXCHANGE-RATE> 1.
<CASH> 119,087
<SECURITIES> 40,751
<RECEIVABLES> 55,766
<ALLOWANCES> 397
<INVENTORY> 68,954
<CURRENT-ASSETS> 295,084
<PP&E> 603,693
<DEPRECIATION> 223,207
<TOTAL-ASSETS> 712,104
<CURRENT-LIABILITIES> 75,879
<BONDS> 142,390
0
13,535
<COMMON> 17,807
<OTHER-SE> 210,070
<TOTAL-LIABILITY-AND-EQUITY> 712,104
<SALES> 706,316
<TOTAL-REVENUES> 706,316
<CGS> 513,032
<TOTAL-COSTS> 513,032
<OTHER-EXPENSES> 107,828
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,933
<INCOME-PRETAX> 44,040
<INCOME-TAX> 16,515
<INCOME-CONTINUING> 27,525
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,525
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.44

</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TJ
INTERNATIONAL, INC. RESTATED BALANCE SHEET AT SEPT. 27, 1997 AND FROM ITS
STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPT. 27, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> DEC-31-1996
<PERIOD-END> SEP-27-1997
<CASH> 96,771
<SECURITIES> 0
<RECEIVABLES> 78,758
<ALLOWANCES> 400
<INVENTORY> 54,239
<CURRENT-ASSETS> 241,313
<PP&E> 591,523
<DEPRECIATION> 212,837
<TOTAL-ASSETS> 664,764
<CURRENT-LIABILITIES> 93,214
<BONDS> 99,790
0
13,584
<COMMON> 17,765
<OTHER-SE> 202,534
<TOTAL-LIABILITY-AND-EQUITY> 664,764
<SALES> 532,569
<TOTAL-REVENUES> 532,569
<CGS> 386,051
<TOTAL-COSTS> 386,051
<OTHER-EXPENSES> 79,778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,709
<INCOME-PRETAX> 34,417
<INCOME-TAX> 12,907
<INCOME-CONTINUING> 21,510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,510
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.12

</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TJ
INTERNATIONAL, INC. RESTATED BALANCE SHEET AT JUNE 28, 1997 AND FROM ITS
STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 28, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> DEC-31-1996
<PERIOD-END> JUN-28-1997
<CASH> 70,875
<SECURITIES> 0
<RECEIVABLES> 82,026
<ALLOWANCES> 403
<INVENTORY> 51,649
<CURRENT-ASSETS> 215,687
<PP&E> 580,174
<DEPRECIATION> 202,711
<TOTAL-ASSETS> 636,846
<CURRENT-LIABILITIES> 79,948
<BONDS> 99,790
0
13,650
<COMMON> 17,707
<OTHER-SE> 195,362
<TOTAL-LIABILITY-AND-EQUITY> 636,846
<SALES> 346,993
<TOTAL-REVENUES> 346,993
<CGS> 252,521
<TOTAL-COSTS> 252,521
<OTHER-EXPENSES> 53,623
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,113
<INCOME-PRETAX> 20,749
<INCOME-TAX> 7,781
<INCOME-CONTINUING> 12,968
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,968
<EPS-PRIMARY> .72
<EPS-DILUTED> .67

</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TJ
INTERNATIONAL, INC. RESTATED BALANCE SHEET AT MARCH 29, 1997 AND FROM ITS
STATEMENT OF INCOME FOR THE 3 MONTHS ENDED MARCH 29, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> DEC-31-1996
<PERIOD-END> MAR-29-1997
<CASH> 21,516
<SECURITIES> 0
<RECEIVABLES> 104,313
<ALLOWANCES> 447
<INVENTORY> 51,644
<CURRENT-ASSETS> 188,571
<PP&E> 572,124
<DEPRECIATION> 192,835
<TOTAL-ASSETS> 611,273
<CURRENT-LIABILITIES> 71,474
<BONDS> 88,140
0
13,698
<COMMON> 17,654
<OTHER-SE> 193,758
<TOTAL-LIABILITY-AND-EQUITY> 611,273
<SALES> 161,263
<TOTAL-REVENUES> 161,263
<CGS> 117,923
<TOTAL-COSTS> 117,923
<OTHER-EXPENSES> 25,645
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,549
<INCOME-PRETAX> 8,763
<INCOME-TAX> 3,286
<INCOME-CONTINUING> 5,477
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,477
<EPS-PRIMARY> .30
<EPS-DILUTED> .28

</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TJ
INTERNATIONAL, INC. RESTATED BALANCE SHEET AT JUNE 29, 1996 AND FROM ITS
STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 29, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> JUN-29-1996
<CASH> 20,957
<SECURITIES> 0
<RECEIVABLES> 52,108
<ALLOWANCES> 419
<INVENTORY> 43,700
<CURRENT-ASSETS> 134,775
<PP&E> 558,983
<DEPRECIATION> 165,983
<TOTAL-ASSETS> 567,586
<CURRENT-LIABILITIES> 60,121
<BONDS> 95,180
0
13,857
<COMMON> 17,277
<OTHER-SE> 182,893
<TOTAL-LIABILITY-AND-EQUITY> 567,586
<SALES> 266,207
<TOTAL-REVENUES> 266,207
<CGS> 205,667
<TOTAL-COSTS> 205,667
<OTHER-EXPENSES> 42,683
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,114
<INCOME-PRETAX> 7,239
<INCOME-TAX> 2,787
<INCOME-CONTINUING> 4,452
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,452
<EPS-PRIMARY> .24
<EPS-DILUTED> .22

</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TJ
INTERNATIONAL, INC. RESTATED BALANCE SHEET AT SEPT. 28, 1996 AND FROM ITS
STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPT. 28, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> SEP-28-1996
<CASH> 53,091
<SECURITIES> 0
<RECEIVABLES> 64,338
<ALLOWANCES> 390
<INVENTORY> 40,450
<CURRENT-ASSETS> 173,652
<PP&E> 561,474
<DEPRECIATION> 175,299
<TOTAL-ASSETS> 601,109
<CURRENT-LIABILITIES> 88,305
<BONDS> 88,140
0
13,772
<COMMON> 17,375
<OTHER-SE> 190,682
<TOTAL-LIABILITY-AND-EQUITY> 601,109
<SALES> 445,778
<TOTAL-REVENUES> 445,778
<CGS> 337,822
<TOTAL-COSTS> 337,822
<OTHER-EXPENSES> 66,097
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,688
<INCOME-PRETAX> 19,493
<INCOME-TAX> 7,407
<INCOME-CONTINUING> 12,086
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,086
<EPS-PRIMARY> .67
<EPS-DILUTED> .62

</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TJ
INTERNATIONAL, INC. RESTATED BALANCE SHEET AT DEC. 28, 1996 AND FROM ITS
STATEMENT OF INCOME FOR THE 12 MONTHS ENDED DEC. 28, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> DEC-28-1996
<CASH> 36,801
<SECURITIES> 0
<RECEIVABLES> 74,344
<ALLOWANCES> 451
<INVENTORY> 51,549
<CURRENT-ASSETS> 171,984
<PP&E> 566,603
<DEPRECIATION> 184,504
<TOTAL-ASSETS> 599,815
<CURRENT-LIABILITIES> 55,122
<BONDS> 88,140
0
13,721
<COMMON> 17,501
<OTHER-SE> 196,848
<TOTAL-LIABILITY-AND-EQUITY> 599,815
<SALES> 577,166
<TOTAL-REVENUES> 577,166
<CGS> 434,852
<TOTAL-COSTS> 434,852
<OTHER-EXPENSES> 87,865
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,328
<INCOME-PRETAX> 25,758
<INCOME-TAX> 9,583
<INCOME-CONTINUING> 16,175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,175
<EPS-PRIMARY> .88
<EPS-DILUTED> .82

</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TJ
INTERNATIONAL, INC. BALANCE SHEET AT DECEMBER 30, 1995 AND FROM ITS STATEMENT OF
INCOME FOR 12 MONTHS ENDED DECEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 19,715
<SECURITIES> 0
<RECEIVABLES> 29,138
<ALLOWANCES> 384
<INVENTORY> 38,560
<CURRENT-ASSETS> 104,672
<PP&E> 551,548
<DEPRECIATION> 149,069
<TOTAL-ASSETS> 546,310
<CURRENT-LIABILITIES> 51,317
<BONDS> 89,440
0
13,992
<COMMON> 17,132
<OTHER-SE> 179,020
<TOTAL-LIABILITY-AND-EQUITY> 546,310
<SALES> 484,845
<TOTAL-REVENUES> 484,845
<CGS> 376,187
<TOTAL-COSTS> 376,187
<OTHER-EXPENSES> 78,316
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 631
<INCOME-PRETAX> 15,544
<INCOME-TAX> 5,803
<INCOME-CONTINUING> 9,741
<DISCONTINUED> 39,652
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,911)
<EPS-PRIMARY> (1.80)
<EPS-DILUTED> (1.80)

</TABLE>