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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
For the fiscal year ended January 2, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________
Commission File Number 0-7469
TJ INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 82-0250992
- ------------------------ -------------------------
(State of incorporation) (IRS employer
identification number)
200 East Mallard Drive, Boise, Idaho 83706
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(Address of principal executive offices) (Zip code)
Registrant's telephone number,
including area code (208) 364-3300
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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)
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(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,
1999 was $333,506,000.
The number of outstanding shares of the registrant's common stock
($1.00 par value), as of March 30, 1999 was 18,131,991, excluding
2,626,905 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 to be dated on or
after April 8, 1999, for use in connection with the annual
meeting of stockholders to be held on May 26, 1999, portions of
which are incorporated by reference into Part III of this Form
10-K.
EXHIBIT INDEX ON PAGE 20
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PART I
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ITEM 1. BUSINESS
ITEM 1(a). GENERAL DEVELOPMENT OF BUSINESS
RECENT DEVELOPMENTS
1998 FINANCIAL RESULTS AND MARKET DEVELOPMENTS
The fundamentals for our business were quite strong through
all of 1998. North American housing starts for 1998 grew 8% over
1997 levels. Interest rates remained at low levels, consumer
confidence continued at high levels, and the trend away from
lumber to engineered lumber products continued.
Sales for the year reached a record $778 million, an
increase of 10 percent from the sales level reached in 1997. The
growth in 1998 came from unit volume growth, as average prices
were essentially flat from 1997 to 1998. We also achieved market
penetration gains for residential products for the 16th
consecutive year and increased sales per North American housing
start from $344 last year to $355 in 1998. These sales and
market penetration gains were achieved in an environment where
the prices for the primary competing product, solid sawn lumber,
fell dramatically during the year.
Lumber prices fell most dramatically in the East. Southern
Yellow Pine 2 x 10 prices, which early in the year ranged between
$570 to $630 per thousand, fell steadily to the $420 to $430 per
thousand range by the end of the year. A decline of over 25
percent. The steep lumber price decline in the West happened in
1997 with prices declining to the lowest levels in the last 5
years. For most of 1998, 2 x 10 Douglas Fir prices ranged
between $300 to $350 a thousand. We believe our 1998 penetration
growth demonstrates that we continue to convert new builders to
engineered lumber products even when the lumber markets are in
steep declines or are at historic lows.
Our commercial products demonstrated a good, solid growth
year. Sales increased to $85 million from the $76 million
achieved last year. This is also a product line where we were
able to raise our prices and increase our margins in 1998.
Sales for products outside North American experienced two
opposing trends. Like most other exporters to the Pacific Rim,
our sales into that geography declined significantly. However,
strong growth from our European group almost completely offset
the Pacific Rim declines. Our international sales ended 1998 at
$26 million, down from the $30 million in 1997.
Gross margins as a percent of sales declined this year. We
achieved 26.5 margin points in 1998, compared to 27.3 margin
points last year. The most significant factor pressuring our
margins was higher costs for OSB. We use a proprietary OSB as a
purchased raw material component for our TJI-Registered
Trademark- joists. Prices for commodity OSB began to increase in
August of 1998 and by October had increased over 100%. The price
spike cost us $11 to $12 million or 20 cents to 22 cents per
diluted share in the second half of the year. In such a soft
lumber market, we could not raise our prices to cover this cost
increase.
Also in 1998 we experienced significant improvement in our
new technologies. In both our TimberStrand-Registered Trademark-
LSL and Parallam-Registered Trademark- PSL technologies, we were
able to raise our prices, lower our manufacturing costs, increase
our production rates, and move our mix to higher-value products.
We continue to be very pleased with our Deerwood, Minnesota
TimberStrand-Registered Trademark- LSL plant. Each month the
plant increases its throughput and is now running at above pro
forma rates. The East Kentucky TimberStrand-Registered
Trademark-LSL plant is moving toward and, in 1999, should
approach the pro forma rates that we anticipated when we built
that mill. The new TJI-Registered Trademark- joist plant in East
Kentucky which uses TimberStrand-Registered Trademark- LSL as a
flange material is running very close to pro forma rates on one
shift. We
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anticipate going to an expanded shift schedule there this spring,
which will help the utilization of the capacity at that mill.
Our selling expenses, as a percent of sales were essentially
flat. Last year we spent 10 percent of our sales on selling
expenses, and this year we spent 10.1 percent.
General and administrative expenses for the year were
essentially flat. We spent approximately $36 million in both
years; 5.2 percent of sales last year, 4.7 percent this year.
Earnings per share improved from a $1.44 per diluted share in
1997 to $1.57 per share in 1998, and in the fourth quarter we
improved our earnings per share from 31 cents to 34 cents per
diluted share.
We completed our stock buyback announced in May and
repurchased over $38 million of stock in 1998. Our buyback will
begin to affect our earnings per share more significantly in
1999, reducing outstanding shares by approximately 8 percent.
Our site selection process for the next significant plant in
North America continues. We plan to have an announcement on the
technology and site later this year. In the interim, we're going
to make investments in capacity expansions at our existing
facilities in Vancouver, British Columbia, and Deerwood,
Minnesota. These capacity projects are a very effective use of
capital and also allow us to push out the construction start time
for a new mill a bit longer. We've also begun to evaluate
manufacturing opportunities in Europe, believing that within the
next several years we'll need some capacity in that region to
service these markets.
Looking forward, we expect the strong fundamentals for our
business to continue. Most economic forecasts project housing
starts for 1999 will be about the same, perhaps just a bit weaker
than in 1998. Our current order files are at all-time record
levels, indicating a very high level of confidence with builders
and among our distribution and retail partners. OSB prices are
down significantly from their peak, which improves our cost
structure. We are very encouraged by the success we're seeing
outside of North American markets, particularly in Europe where
we are looking for good, solid growth again in 1999.
COMPANY STRATEGY
Our primary objective remains increasing market penetration
for the engineered lumber products we make and market. We
believe the fundamentals, that have driven our 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 our continuing
transition to proprietary, lower-cost technologies. In addition,
we continue to enjoy strong brand name recognition, supported by
an extensive North American distribution network. Most
importantly, we believe there continues to be growth in market
acceptance of engineered lumber products as superior alternatives
to traditional solid sawn lumber.
Our strategy, which is composed of two key elements, is
focused on continuing our historic dominance in the engineered
lumber industry.
1. LOW-COST PROPRIETARY TECHNOLOGIES AND DOMINANT PRODUCTION
CAPACITY. We intend to pursue the advantages of our
technological leadership. We believe our technologies in
engineered lumber enable us to use smaller logs and to make more
efficient use of wood fiber than the current sawmill production
of sawn structural lumber. We also intend to capitalize on our
proprietary technologies -- Parallam-Registered Trademark- PSL
and TimberStrand-Registered Trademark- LSL which allow the
Company to manufacture engineered lumber from non-traditional
lumber species such as aspen and poplar. These species are lower
in cost, more abundant and less environmentally sensitive than
traditional fir and pine species.
In 1995, we completed an aggressive program to construct two
large manufacturing facilities. This new capacity included a
TimberStrand-Registered Trademark- LSL plant in Eastern Kentucky
and a combination Microllam-Registered Trademark- LVL and
Parallam-Registered Trademark- PSL plant in Buckhannon,
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West Virginia. During 1996 and 1997 these facilities were in the
start-up phase and were ramping up their production capacity. In
1997 TJI-joist manufacturing capability was added to East
Kentucky. In addition, we are currently in the process of
expanding capacity at the Vancouver, British Columbia Parallam
PSL plant and Deerwood Minnesota TimberStrand LSL plant. Through
the expansion of existing plants and the addition new production
facilities, we believe we will maintain our dominant share of
engineered lumber industry capacity.
We believe our system of proprietary technology plants will
give us a significant cost, wood source, product breadth and
flexibility advantages over competitors who are limited to older
generation technologies. Our continuing investment in our
proprietary technologies is aimed at further strengthening our
market leading position.
We have financed our capital expansion program through
several sources, including a portion of the proceeds from the
sale of TJ International, Inc. common stock in 1993, equity
contributions from our limited partner, the proceeds of tax
exempt bond offerings and internally generated funds. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources". We
are currently examining potential sites for an additional
combination LVL and PSL plant or a third TimberStrand-Registered
Trademark- LSL plant. Commitment to this new capacity is
contingent upon continued market demand and acceptance of
engineered lumber products.
2. A SYSTEM OF INTEGRATED COMPONENTS AND SERVICES AND VALUE
ADDED MARKETING. We believe the construction industry is
undergoing a transition toward increased use of engineered lumber
as a structural building material, as wide-dimension commodity
lumber generally increases in price and decreases in quality. We
intend to focus our marketing efforts on a system of integrated
components, rather than individual products. We are in the
process of developing the FrameWorks-Registered Trademark-
Building System, which represents a complete system in engineered
lumber to build the entire structural frame of a home. The
FrameWorks-Registered Trademark- Building System will include
roof, wall, stair, foundation and frame systems, enhancing the
overall performance of the home, which we believe will be a
benefit to architects, builders, dealers and home buyers.
We believe we have a competitive advantage over other
engineered lumber producers in that we offer a complete support
and service system for our products. This support and service
system includes, a system performance guarantee for the lifetime
of the home, the largest technical service force in the industry,
engineering assistance and performance recommendations and
computer-generated framing plans and materials specifications
from its TJ-Xpert-Trademark- software, which gives us the ability
to optimize design on a house-by-house basis.
We will continue our emphasis on a broad and aggressive
North American distribution network, focusing on product
availability and services. We believe our partnership with
MacMillan Bloedel Limited and strategic alliances with
Weyerhaeuser Company and other regional distributors and
retailers offer us the strongest distribution network in North
America for engineered lumber products.
Our extensive product lines, highly skilled,
service-oriented sales force, and extensive distribution network
provide an unparalleled opportunity to meet the modern demands of
the building community and the discriminating homeowner.
ITEM 1(b). FINANCIAL INFORMATION ABOUT THE COMPANY'S
INDUSTRY SEGMENTS.
As of January 2, 1999, we adopted SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information. This
statement requires public companies to disclose financial and
descriptive information about their reportable operating segments
as regularly evaluated by the chief operating decision-makers.
Our chief operating decision-makers consist of senior management
that work together to allocate resources to, and assess the
performance of, our engineered lumber business. We manufacture,
market and distribute various engineered lumber products that are
used for construction. We believe that we manage our business,
assess our
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performance and allocate resources as a single operating segment
in the engineered lumber business.
ITEM 1(c). NARRATIVE DESCRIPTION OF BUSINESS.
BUSINESS
GENERAL
We are 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. We utilize advanced technology to manufacture engineered
lumber at sixteen facilities located in the United States and
Canada.
STRATEGY. We are the leading manufacturer and marketer of
value-added engineered lumber products to the residential and
light commercial construction industry. We believe we are 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 our products compete. Our objective is to increase
the product acceptance of engineered lumber products and to
strengthen our market leadership in these products. To increase
product acceptance, our selling efforts highlight product
advantages including consistent quality, superior strength,
relatively light weight and ease of installation targeted at end
users such as architects and contractors. We seek to strengthen
our 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 our 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. We believe 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 our technologies can use wood fiber from trees that
were previously not suitable for the manufacture of structural
lumber, and this allows us 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 yellow poplar. These trees are not regarded as sufficiently
large, straight, or strong enough to be sawn into structural
lumber. Our new technologies now allow the use of these species
for high-grade structural products. We will continue to use
substantial volumes of Douglas fir in the West and southern
yellow pine wood fiber in the South at our existing LVL plants
from the available supply of mature trees or smaller second
growth logs.
Unlike many of our principal competitors in engineered
lumber, we do not currently own any timberlands or significant
amounts of standing timber. We buy our raw materials on contract
both from small independent suppliers and larger integrated
forest products companies. In addition, a portion of our wood
raw
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material is purchased on the spot market. The reduced supplies
could result in more volatile wood markets. We have experienced
and believe we may continue to experience volatility in our
quarter-to-quarter results due to raw material price volatility.
However, we believe we will be able to satisfy our needs for
raw materials and we are not currently aware of any potential
shortages for longer-term requirements. We are increasingly
purchasing standing timber tracts, to be processed at our
facilities in place of veneer purchased from other producers. We
believe we have significant competitive advantages over companies
marketing traditional sawn lumber products in an environment of
reduced timber supply because our engineered lumber technologies
are able to utilize non-traditional sources of wood fiber, which
are both more abundant and less expensive.
ENGINEERED LUMBER TECHNOLOGIES
OVERVIEW. We believe the construction industry is
undergoing a transition in its use of structural building
materials as sawn structural lumber decreases in quality.
Engineered lumber is enjoying increased market acceptance and is
displacing sawn structural lumber.
This transition is driven by the changing composition of the
North American timberlands, both in terms of regional log supply
restrictions and the type and size of logs currently available
for use as raw material. The availability of timber from
federally owned forests in the Pacific Northwest has been greatly
restricted, and the size of an average sawlog has decreased to
the point where it is often too small to produce significant
quantities of high grade, wide-dimension structural lumber.
TECHNOLOGY. We are 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>
<S> <C> <C> <C>
RAW MAXIMUM PRODUCTION
TECHNOLOGY MATERIAL SIZE FACILITIES
- ------------------------------------------------------------------------------
Microllam-Registered Rectangular 80 feet long by Buckhannon,
Trademark- LVL high-grade 4 feet wide by West Virginia
veneer 3-1/2 inches Eugene, Oregon
thick Junction City,
Oregon
Natchitoches,
Louisiana
Valdosta, Georgia
Evergreen, Alabama
Parallam-Registered Irregular 66 feet long by Buckhannon,
Trademark- PSL veneer from 20 inches wide West Virginia
first and by 11 inches Colbert, Georgia
last peels of thick Vancouver, British
the log Columbia
TimberStrand- Strands of 48 feet long by Deerwood,
Registered Trademark- pulpwood up to 8 feet wide by Minnesota
LSL 13 inches long 5-1/2 inches Hazard, Kentucky
thick
</TABLE>
Our 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 our proprietary technologies, while equipment to produce LVL
is now available from several machinery manufacturers and is
utilized by an increasing number of forest products
manufacturers. We believe our LVL manufacturing process,
however, enjoys
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several advantages which make this process cost-competitive
compared to the commercially available alternatives.
Although we have been issued and have applied for a number
of patents on our current processes, we believe our technological
competitiveness also comes from our continued innovation and
technical expertise in this industry. We will, however, continue
to assert our 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, 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.
We believe that the combination of the PSL and LVL
technologies in a single manufacturing facility, such as our
Buckhannon, West Virginia plant, will allow us to be among the
most efficient converters of wood fiber to a high value product.
LAMINATED STRAND LUMBER (LSL): Our other proprietary
engineered lumber technology, LSL, begins with small-diameter,
8-foot-long logs such as aspen and yellow poplar. These are
species traditionally used in lower value applications such as
pulp logs, and are therefore substantially less expensive than
traditional sources of sawn lumber. These logs are flaked into
strands 12 inches long, which are then treated with an adhesive.
The strands are put into a steam-injection press that
significantly densifies the wood and creates boards up to 48 feet
long, up to 5-1/2 inches thick, and 8 feet wide. The
TimberStrand LSL process is protected in the U.S. and in 24 other
countries. These patents provide protection through 2010.
We produce the broadest line of structural engineered lumber
building products in the industry, possess certain exclusive
product technologies, and believe we enjoys a reputation for
superior quality and service. Our largest product line is for the
new construction residential housing market, which includes
single-family detached homes, apartments, condominiums,
townhouses, and manufactured housing. Industrial uses constitute
our second product line and include core components for the
millwork and furniture industry, scaffold plank, and concrete
forming and shoring products. The third product line is
light-commercial construction, which includes structures such as
warehouses, schools, gymnasiums, shopping centers, and low-rise
office buildings. The table on the following page lists our
products, the technology utilized, product size, and end use of
such products.
TJ INTERNATIONAL ENGINEERED LUMBER PRODUCTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
RESIDENTIAL ENGINEERED LUMBER
PRODUCTS TECHNOLOGY SIZE END USE
- ------------------------------------------------------------------------------
TJI-Registered Microllam-Registered 9-1/2" to Residential
Trademark- Trademark- LVL 16" deep construction
I-joists or Timberstrand- Width from floor and roof
Registered Trademark- 1-1/2" to joists.
LSL on the top and 3-1/2" Substitutes for
bottom with enhanced Up to 80' traditional 2x10
composite panel webs long and 2x12 sawn
in the middle lumber systems.
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Rim joists TimberStrand-Registered 1-1/4" thick Residential
Trademark- LSL 9-1/2" to 16" construction
deep frames in
17' to 48' perimeter of
long floor.
Substitutes for
laterally ripped
plywood and/or
2x10 and 2x12 sawn
lumber.
Headers, beams, Microllam-Registered 1-3/4" to Residential
and columns Trademark- LVL 7-1/4" thick construction.
Parallam-Registered 9-1/2" to 18" Ranges from main
Trademark- PSL deep carrying beam in
TimberStrand-Registered Up to 80' long home to support
Trademark- LSL structures above a
window or door
(header).
Substitutes for
traditional 2x10
and 2x12 sawn
lumber, glulam and
steel beams.
COMMERCIAL PRODUCTS
- -------------------
Open-web truss Microllam-Registered 14" to 114" Roof support
Trademark- or strength- deep structure in
rated lumber on the Spans lengths light commercial
top and bottom with up to 120' buildings.
tubular steel webs long
in the middle
TJI-Registered Microllam-Registered 2.3" to 4.65" Roof structure
Trademark- roof Trademark- LVL thick for smaller
truss series 4-1/2" to commercial
37.1" deep buildings.
Up to 80' long
INDUSTRIAL PRODUCTS
- -------------------
Window and door TimberStrand-Registered Various Substitutes for
core material Trademark- LSL finger jointed
Ponderosa pine
lumber in the
manufacture of
wood windows and
doors.
Concrete forming Microllam-Registered 1-1/2" to Support members in
and shoring Trademark- LVL 5-1/4" thick the structure into
support members Parallam-Registered 6-1/2" to 20" which wet concrete
Trademark- PSL deep is poured in both
Up to 80' long 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 Decking material
Trademark- LVL 2-1/2" thick in scaffold
9" to 11-3/4" frames.
wide Substitutes for
Up to 80' long high strength
rated 2x6 and 2x8
sawn lumber.
</TABLE>
We continue to explore the development of new and
improved-engineered lumber products, which have superior
performance and quality characteristics relative to traditional
sawn lumber. We currently have a focused effort to develop
further TimberStrand-Registered Trademark- LSL products including
its use as a roof framing material and developing coating
applications that produce a high quality paintable surface.
We own a number of registered and non-registered trademarks
for its promotional literature and engineered lumber products.
We believe our engineered lumber trademarks, and in particular,
our Silent Floor-Registered Trademark- brand of residential
structural products, have achieved significant name recognition
in the engineered lumber industry.
SALES, MARKETING, AND DISTRIBUTION. Our engineered lumber
products are sold through our 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, we sell directly to stocking retail lumber dealers in
the United States and Canada. This
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distribution network broadens our market to include an extensive
range of smaller lumber dealers and outlets. We believe this
distribution network gives us the broadest and deepest reach into
the market of any engineered lumber producer.
Since July 1993, we have 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 our engineered lumber
products exclusively. In addition, Weyerhaeuser has assumed an
expanded role as a supplier of veneer and oriented strand board
to certain of our manufacturing facilities. We believe this
arrangement has enhanced the visibility and sales of our
products.
We employ the engineered lumber industry's largest sales
force consisting of approximately 203 technical sales
representatives who market our products directly to architects,
project engineers, contractors, developers, independent lumber
dealers, national wholesale building material suppliers, and
industrial users. This enables us to better educate and assist
customers in the use of engineered lumber and simultaneously
helps create demand, further enabling us to differentiate our
products from those of our competitors.
Our products are supported by numerous advanced
computer-assisted software packages. For residential
construction, our proprietary TJ-Xpert-Trademark- 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.
We also have sales offices and representatives in Japan,
France, the United Kingdom, Germany, Belgium, and the Middle
East. We believe the markets outside of North America present
future growth opportunities for our products.
COMPETITION. Sawn lumber products produced in traditional
sawmills remain the primary competition for our engineered lumber
products.
Our competition for look-a-like engineered lumber products
include 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 our competitors, including
Louisiana-Pacific Corporation, Boise Cascade Corporation, and
Georgia Pacific Corporation have undertaken capacity expansion
plans in their LVL and I-joist facilities. In particular,
competition may emerge or increase from established wood products
companies that now sell primarily traditional wood products. A
number of existing competitors such as Louisiana-Pacific
Corporation, Boise Cascade Corporation, Willamette Industries,
Inc., and Georgia-Pacific Corporation, own a significant portion
of their own raw materials and generally have greater financial
resources.
We believe the principal competitive factors in the market
for engineered lumber are product quality, customer support,
distribution capabilities, and price. We believe our broader
product line, based in part on our proprietary technologies PSL
and LSL lumber, provide an important competitive advantage over
our competition. In addition, we believe we enjoy 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.
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
Our order backlog at January 2, 1999 was approximately $75
million compared to approximately $41 million at January 3, 1998.
Some portion of the current order
9
<PAGE>
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 backlog on a particular date may not be
representative of the level of future sales.
EMPLOYEES
As of January 2, 1999, the Company employed a total of
approximately 3,735 employees in its engineered lumber
operations.
ENVIRONMENTAL MATTERS
We are 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 our
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.
We believe we are in material compliance with existing
environmental laws and regulations, and that our expenditures in
future years for environmental compliance will not have a
material adverse effect on our operations.
FORWARD LOOKING STATEMENTS
Forward-looking statements include, without limitation,
statements regarding expectations for raw material costs, sales
growth in international markets, and expectations of future
increases in product acceptance and penetration. 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.
We operate manufacturing facilities in two countries, the
United States and Canada; and the majority of all sales are made
domestically in those countries. Financial information relating
to foreign and domestic operations is presented in Note 9 to the
consolidated financial statements, page 37 of this Report.
10
<PAGE>
ITEM 2. PROPERTIES
Set forth below are the locations of our manufacturing
facilities and the technology and/or products produced at such
facilities.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Engineered Lumber
Technology
-----------------
STRUCTURAL PRODUCTS OPEN WEB
MANUFACTURING LVL PSL LSL I-JOISTS TRUSSES
- ------------------- --- --- --- -------- ---------
Buckhannon, West Virginia X X
Chino, California X
Claresholm, Alberta X X
Colbert, Georgia X
Deerwood, Minnesota X
Delaware, Ohio X
Eugene, Oregon X X
Evergreen, Alabama X X
Hazard, Kentucky X X
Hillsboro, Oregon X
Junction City, Oregon X
Natchitoches, Louisiana X X
Stayton, Oregon X X
Valdosta, Georgia X X
Vancouver, British Columbia X
Elma, Washington * *
<FN>
* Produces veneer for Microllam LVL and Parallam PSL
</FN>
Our headquarters staff is located in Boise, Idaho.
</TABLE>
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 our present and future needs.
ITEM 3. LEGAL PROCEEDINGS.
No material legal proceedings or claims are pending or known
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 liability insurance policies or are otherwise
provided for in the financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
None.
11
<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, 1999, is set forth
below:
(1) (2)
Title of Class Number of Record Holders
-------------- ------------------------
Common Stock, $1 par value 1,794
There are approximately 1,794 beneficial shareholders. The
remainder of this Item 5 is contained in the following sections
of the Report at the pages indicated below:
"Market and Dividend Information", on page 39 of this
Report, to the extent that said section discusses the principal
market or markets on which the 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 2 to the consolidated financial statements", page 30
of this Report, to the extent that said Note describes any
restriction on the Company's present or future ability to pay
such dividends.
ITEMS 6, 7, AND 8.
- ------------------
The information called by Items 6, 7 and 8, inclusive of Part II
of this form, is contained in the following sections of this
Report at the pages indicated below:
Captions and Pages of this Report
-----------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ITEM 6 SELECTED FINANCIAL DATA "Selected Financial Data" ......22
ITEM 7 MANAGEMENT'S DISCUSSION "Management's Discussion
AND ANALYSIS OF FINANCIAL and Analysis" ..................40
CONDITIONS AND RESULTS OF
OPERATIONS
ITEM 8 FINANCIAL STATEMENTS AND "Consolidated Financial
SUPPLEMENTARY DATA Statements".....................24
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
</TABLE>
12
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT.
Following is a schedule of names and certain information
regarding all of the executive officers, as of January 2, 1999,
each of whose term of office is one year.
<TABLE>
<CAPTION>
<S> <C>
Name and Age Office
- ------------- -------
Harold E. Thomas, age 72 Chairman of the Board
Thomas H. Denig, age 52 President and Chief Executive
Officer
Robert J. Dingman, age 57 Senior Vice President, Custom Group
Randy W. Goruk, age 46 Senior Vice President, North
American Residential Group
Patrick D. Smith, age 52 Senior Vice President, Manufacturing
Group
Valerie A. Heusinkveld, age 40 Vice President, Finance and
Chief Financial Officer
Richard B. Drury, age 49 Secretary and Treasurer
Jody B. Olson, age 51 Vice President, Corporate
Development
Floyd J. Juday, age 55 Vice President, Marketing Services
James H. Ware, age 55 Vice President, Technology and
Engineering
</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-Registered Trademark- Lumber
Industrial Sales Manager, National Sales Manager, Western
Division Manager, Eastern Division Manager and had been elected
Vice President, Eastern Operations in 1985. Mr. Denig is a
graduate of Valparaiso University and served as a lieutenant in
the U.S. Marine Corp. before joining the Company.
Robert J. Dingman was appointed Sr. Vice President, Custom
Operations Group for Trus Joist MacMillan, in 1995. Mr. Dingman
joined the Company in 1983 as the Southwest Division Manager and
has subsequently served as Division Manager, Microllam-Registered
Trademark- Lumber Operations and Sr. Vice President, Western
Operations. Before joining the Company, Mr. Dingman, a graduate
of St. Lawrence University, was Vice President and General
Manager of the Architectural Building Products Division of
Koppers Company, Inc.
13
<PAGE>
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 gained audit and tax experience with Arthur Andersen & Co.
Jody B. Olson was elected Vice President, Corporate
Development in 1987. In 1991, Mr. Olson was also elected
Secretary of the Board of Trus Joist MacMillan. Previous
positions held by Mr. Olson were Microllam-Registered Trademark-
Lumber Division Controller; Microllam-Registered Trademark-
Lumber Industrial Salesperson and Sales Manager; General Manager
of the Company's former trucking subsidiary; Manager, Energy
Systems; Assistant to the President, Mergers and Acquisitions;
and Manager, Corporate Development. Mr. Olson, who joined the
Company in 1979, is a graduate of the University of Idaho and the
Lewis and Clark Law School.
Floyd J. Juday was appointed Vice President, Markets for
Trus Joist MacMillan in February of 1996, upon joining the
Company. Mr. Juday received his undergraduate degree from
Western Michigan University, and graduate degree from Indiana
University. Before joining the company, Mr. Juday spent 25 years
in the forest products industry with Georgia Pacific and
MacMillan Bloedel in various management positions.
James H. Ware was appointed Vice President, Engineering and
Technology in October of 1995. Dr. Ware joined the company as
Vice President, Research and Development, in February of 1995,
after 17 years at Scott Paper Company where his most recent
positions were Worldwide Business Applications Leader and
Technology Manager for Worldwide Operations. Prior to his career
with Scott, Dr. Ware was a Research Scientist at Union Camp
Corporation's Princeton Research Center and a faculty member in
the School of Engineering at North Carolina State University.
Dr. Ware holds BS, MS and Ph.D. degrees in Engineering Mechanics
from North Carolina State University.
The balance of this Item 10 is included in the definitive
proxy statement, under the caption "Election of Directors"; and
is incorporated herein by reference.
14
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
Item 11 is included in the 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 "Executive Compensation
Committee Report on Executive Compensation", and "Performance
Graphs", 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 definitive proxy statement 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, we have 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 8 to the consolidated financial
statements, pages 36 of this Report.
-Registered Trademark- - Microllam, Parallam, TimberStrand,
TJI, The Silent Floor, FrameWorks are registered trademarks
of the Company.
-Trademark- - TJ-Xpert is a trademark of the Company
15
<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 1998.
(c) Exhibits. The following documents are filed as
Exhibits to this Form 10-K:
(3) Limited Partnership Agreement between TJ
International, Inc. and MacMillan Bloedel of America, Inc.
whereby the Partnership was formed. This document was filed as
an exhibit to the Company's Form 8-K dated September 30, 1991 and
is incorporated herein by reference.
Bylaws of Trus Joist Corporation (a Delaware
corporation). This document was filed as an exhibit to the
Company's Form 10-K for the fiscal year ended December 28, 1991
and is incorporated herein by reference.
Amendment to Limited Partnership Agreement
effective the beginning of the Company's fiscal year 1993. This
document was filed as an exhibit to the Company's Form 10-Q for
the quarter ended September 26, 1992 and is incorporated herein
by reference.
Certificate of Ownership and Merger of TJ Merger
Corporation with and into Trus Joist Corporation, whereby the
Company changed its name from Trus Joist Corporation to TJ
International, Inc. effective September 16, 1988. This document
was filed as an exhibit to the Company's Form 10-K for the fiscal
year ended January 2, 1993 and is incorporated herein by
reference.
Amended Certificate of Incorporation of TJ
International Inc. This document was filed as an exhibit to the
Company's Form 10-Q for the quarter ended July 2, 1994 and is
incorporated herein by reference.
(4) Second Amendment to Credit Agreement, dated as
of November 15, 1996. This document is filed as an exhibit to
this Form 10-K for the fiscal year ended December 28, 1996.
Amended and Restated Credit Agreement, dated as of
May 31, 1995. This document was filed as an exhibit to the
Company's Form 10-Q for the quarter ended July 1, 1995 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.
16
<PAGE>
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.
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
17
<PAGE>
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.
First Supplemental Trust Indenture, First
Supplemental Refunding Agreement, and Reimbursement and Security
Agreement, all dated November 1, 1998, pertaining to the
Natchitoches, Louisiana, plant.
(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 30 of this Report.
(22) Subsidiaries of the registrant.
(24) Consent of independent public accountants to
the incorporation of their report dated February 2, 1999,
included in this Form 10-K for the year ended January 2, 1999,
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
Incentive 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
Nonstatutory Feature, as amended (33-22186), TJ International,
Inc. Key Employees 1998 and 1992 Stock Option Plans (33-54582),
TJ International, Inc. Key Employees' 1993 Stock Option Plan
(333-04713), Associates' Stock Purchase Plan (333-18425),
Leveraged Stock Purchase Plan (333-18427), Key Employees' 1996
Stock Option Plan (333-32659), and Non-Employee Directors 1997
Stock Plan (333-32665).
(25) Powers of Attorney.
(27) Financial Data Schedule.
(d) Financial Statement Schedules
A list of financial schedules included herein is
contained in the Accompanying Index to Financial Statements,
Schedules, and Exhibits submitted as a separate section of this
report.
All other Exhibits are omitted since they are not
applicable or not required.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TJ INTERNATIONAL, INC., Registrant
By /s/ Thomas H. Denig
----------------------------------------
Thomas H. Denig - President, Chief Executive Officer,
Director and Attorney-in-Fact for Directors listed
below.
By /s/ Valerie A. Heusinkveld
----------------------------------------
Valerie A. Heusinkveld - Vice President, Finance
And Chief Financial Officer
Each of the above signatures is affixed as of March 31,
1999. 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.
J. L. Scott
Jerre L. Stead
Harold E. Thomas
Steven C. Wheelwright
William J. White
Joyce A. Godwin
Richard L. King
19
<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 Commission File
ended January 2, 1999 Number 0-7469
TJ INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
The following documents are filed as part of this Report:
Pages in
this Report
-----------
(1) Financial Statements:
---------------------
Selected Financial Data...................................22
Quarterly Financial Data (Unaudited)......................23
Consolidated Balance Sheets at January 2, 1999,
January 3, 1998 and December 28, 1996...................24
Consolidated Statements of Income for the three
years ended January 2, 1999.............................25
Consolidated Statements of Stockholders' Equity for the
three years ended January 2, 1999.......................26
Consolidated Statements of Cash Flow for the three years
ended January 2, 1999...................................27
Notes to Consolidated Financial Statements................28
Report of Independent Public Accountants..................38
Market and Dividend Information...........................39
Management's Discussion and Analysis......................40
(2) Financial Statement Schedules
Report of Independent Public Accountants .................45
I. Condensed Financial Information of Registrant
for the years ended January 2, 1999,
January 3, 1998, and December 28, 1996..............46
The following documents are filed as part of this Report:
Pages in
this Report
-----------
(3) Exhibits
(10) First Supplemental Trust Indenture, First
Supplemental Refunding Agreement, and
Reimbursement and Security Agreement, all
dated November 1, 1998, pertaining to the
Natchitoches, Louisiana plant. This
20
<PAGE>
document is filed as an Exhibit to this
form 10-K for the fiscal year
ended January 2, 1999...................Document 2
(21) Subsidiaries of the Registrant..........Document 3
(24) Consent of Independent Public
Accountants.............................Document 4
(25) Powers of Attorney......................Document 5
(27) Financial Data Schedule for the year ended
January 2, 1999 ........................Document 6
All other schedules are omitted because they are not applicable
or the required information is shown in the Consolidated
Financial Statements or Notes thereto.
21
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES AND PERCENTAGES
The following table summarizes selected financial data for the five fiscal
years ended January 2, 1999, and should be read in conjunction with the more
detailed Consolidated Financial Statements included herein.
<S> <C> <C> <C>
1998 1997 1996
- ------------------------------------------------------------------------------
Sales $778,063 $706,316 $577,166
Income from continuing operations 28,842 27,525 16,175
Net income (loss) 28,842 27,525 16,175
Net income from continuing operations
per share
Basic 1.69 1.55 0.88
Diluted 1.57 1.44 0.82
Weighted average number of shares
outstanding
Basic 16,464 17,156 17,277
Diluted 17,927 18,663 18,853
Cash dividends declared per common share $ 0.22 $ 0.22 $ 0.22
Working capital, excluding discontinued
operations 241,843 219,205 116,862
Total assets 730,939 712,104 599,815
Long-term debt, excluding current portion 142,390 142,390 88,140
Stockholders' equity 232,805 241,412 228,070
Net book value per share 14.78 14.16 13.03
Return from continuing operations
on average stockholders' equity 12.2% 11.7% 7.4%
<PAGE>
1995 1994
- ------------------------------------------------------------------------------
Sales $484,845 $496,060
Income from continuing operations 8,720 16,762
Net income (loss) (30,932) 9,360
Net income from continuing operations
per share
Basic 0.46 0.94
Diluted 0.42 0.86
Weighted average number of shares
outstanding
Basic 17,132 16,848
Diluted 17,132 18,608
Cash dividends declared per common share $ 0.22 $ 0.22
Working capital, excluding discontinued
operations 54,940 102,257
Total assets 548,289 590,171
Long-term debt, excluding current portion 89,440 102,280
Stockholders' equity 210,760 242,195
Net book value per share 12.30 14.32
Return from continuing operations
on average stockholders' equity 3.9% 7.0%
- ------------------------------------------------------------------------------
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. The 1995 and 1994 net income (loss) has been
restated for the change from the LIFO method of inventory valuation to the
FIFO method. There was no impact from this change to 1998, 1997, or 1996.
</TABLE>
22
<PAGE>
UNAUDITED RESULTS OF QUARTERLY OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
QUARTER
DOLLAR AMOUNTS IN THOUSANDS -----------------------------------------------
EXCEPT PER SHARE FIGURES FIRST SECOND THIRD FOURTH
- -----------------------------------------------------------------------------
1998
Sales $185,829 $193,361 $222,423 $176,450
Gross profit 50,306 54,297 55,642 45,624
Net income 6,823 8,084 7,931 6,004
Net income per share
Basic 0.39 0.46 0.46 0.37
Diluted 0.36 0.43 0.43 0.34
------------------------------------------------
1997
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
------------------------------------------------
- ------------------------------------------------------------------------------
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.
</TABLE>
23
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DOLLAR AMOUNTS IN THOUSANDS 1/2/99 1/3/98 12/28/96
-----------------------------------
ASSETS
Current assets
Cash and cash equivalents $140,060 $119,087 $ 36,801
Marketable securities 9,091 40,751 ---
Receivables, less allowances of
$374, $397 and $451, respectively 69,990 55,369 73,893
Inventories 78,827 68,954 51,549
Deferred income taxes 5,214 3,382 4,985
Other 9,227 7,541 4,756
-----------------------------------
312,409 295,084 171,984
Property
Land 13,324 11,696 11,698
Buildings and leasehold improvements 120,800 114,496 104,203
Machinery, equipment, and other 508,566 477,501 450,702
Accumulated depreciation (260,123) (223,207) (184,504)
-----------------------------------
382,567 380,486 382,099
Goodwill 18,460 19,500 20,540
Deferred income taxes ---- ---- 8,846
Other assets 17,503 17,034 16,346
-----------------------------------
$730,939 $712,104 $599,815
-----------------------------------
-----------------------------------
- ------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 19,639 $ 25,238 $ 23,113
Accrued liabilities 50,927 50,641 32,009
-----------------------------------
70,566 75,879 55,122
Long-term debt 142,390 142,390 88,140
Deferred income taxes 18,283 4,363 ---
Other long-term liabilities 13,636 13,973 11,327
Reserve for discontinued operations 13,687 17,482 21,970
Minority interest in Partnership 239,572 216,605 195,186
Stockholders' equity
ESOP Convertible Preferred Stock, issued
1,124,848, 1,147,219, and 1,162,914
shares, respectively 13,271 13,535 13,721
Guaranteed ESOP Benefit (7,288) (8,188) (9,204)
Common stock, issued 18,069,077,
17,807,142, and 17,500,896 shares,
respectively 18,069 17,807 17,501
Paid-in capital 160,863 153,936 145,583
Retained earnings 110,411 86,116 63,249
Accumulated other comprehensive
income (loss) (6,228) (3,805) (2,780)
Other (1,949) (1,730) ---
Treasury stock, 2,321,605, and
761,152 shares, at cost (54,344) (16,259) ---
-----------------------------------
232,805 241,412 228,070
-----------------------------------
$730,939 $712,104 $599,815
-----------------------------------
-----------------------------------
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
24
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE YEARS ENDED JANUARY 2, 1999.
DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES
<S> <C> <C> <C>
1998 1997 1996
-----------------------------------
Sales $778,063 $706,316 $577,166
-----------------------------------
Costs and expenses
Cost of sales 572,194 513,032 434,852
Selling expenses 78,587 70,957 61,270
Administrative expenses 36,417 36,871 26,595
-----------------------------------
687,198 620,860 522,717
-----------------------------------
Income from operations 90,865 85,456 54,449
Investment income, net 7,739 5,213 1,593
Interest expense (8,846) (6,933) (6,328)
Minority interest in Partnership (43,914) (39,696) (23,956)
-----------------------------------
Income before income taxes 45,844 44,040 25,758
Income taxes 17,002 16,515 9,583
-----------------------------------
Net Income $ 28,842 $ 27,525 $ 16,175
-----------------------------------
-----------------------------------
Net income per share
Basic $ 1.69 $ 1.55 $ 0.88
Diluted $ 1.57 $ 1.44 $ 0.82
Weighted average number of common shares
outstanding during the periods
Basic 16,464 17,156 17,277
Diluted 17,927 18,663 18,853
- ------------------------------------------------------------------------------
The accompany notes are an integral part of these financial statements
</TABLE>
25
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE THREE YEARS ENDED JANUARY 2, 1999
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C>
Guaranteed
Preferred ESOP Common
Stock Benefit Stock
- ------------------------------------------------------------------------------
Balance, December 30, 1995 $ 13,992 $(10,382) $ 17,132
Comprehensive income:
Net income --- --- ---
Other comprehensive income --- --- ---
Comprehensive income
Cash dividends declared:
Common stock --- --- ---
Preferred stock, net of tax --- --- ---
Stock options exercised, net of tax --- --- 230
Stock Company Match, 401(k) Contributions --- --- 125
Other (271) 1,178 14
-----------------------------------
Balance, December 28, 1996 13,721 (9,204) 17,501
Comprehensive income:
Net Income --- --- ---
Other comprehensive income (loss) --- --- ---
Comprehensive income
Cash dividends declared:
Common stock --- --- ---
Preferred stock, net of tax --- --- ---
Stock options exercised, net of tax --- --- 148
Stock Company Match, 401(k) Contributions --- --- 160
Treasury stock purchased --- --- ---
Other (186) 1,016 (2)
------------------------------------
Balance, January 3, 1998 13,535 (8,188) 17,807
Comprehensive income:
Net Income --- --- ---
Other comprehensive income (loss) --- --- ---
Comprehensive Income
Cash dividends declared:
Common stock --- --- ---
Preferred stock, net of tax --- --- ---
Stock options exercised, net of tax --- --- 102
Stock Company Match, 401(k) Contributions --- --- 156
Treasury stock purchased --- --- ---
Other (264) 900 4
-----------------------------------
Balance, January 2, 1999 $ 13,271 $ (7,288) $ 18,069
-----------------------------------
-----------------------------------
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
<PAGE>
<S> <C> <C> <C>
Accumulated
Other
Paid-In Retained Comprehensive
Capital Earnings Income (Loss)
-----------------------------------
Balance, December 30, 1995 $140,384 $ 51,808 $ (2,790)
Comprehensive income:
Net income --- 16,175 ---
Other comprehensive income --- --- 10
Comprehensive income
Cash dividends declared:
Common stock --- (3,811) ---
Preferred stock, net of tax --- (923) ---
Stock options exercised, net of tax 2,968 --- ---
Stock Company Match, 401(k) Contributions 2,165 --- ---
Other 66 --- ---
-----------------------------------
Balance, December 28, 1996 145,583 63,249 (2,780)
Comprehensive income:
Net Income --- 27,525 ---
Other comprehensive income (loss) --- --- (1,025)
Comprehensive income
Cash dividends declared
Common stock --- (3,759) ---
Preferred stock, net of tax --- (899) ---
Stock options exercised, net of tax 2,881 --- ---
Stock Company Match, 401(k) Contributions 3,460 --- ---
Treasury stock purchased --- --- ---
Other 2,012 --- ---
-----------------------------------
Balance, January 3, 1998 153,936 86,116 (3,805)
Comprehensive income:
Net Income --- 28,842 ---
Other comprehensive income (loss) --- --- (2,423)
Comprehensive Income
Cash dividends declared:
Common stock --- (3,595) ---
Preferred stock, net of tax --- (952) ---
Stock options exercised, net of tax 1,845 --- ---
Stock Company Match, 401(k) Contributions 3,840 --- ---
Treasury stock purchased --- --- ---
Other 1,242 --- ---
------------------------------------
Balance, January 2, 1999 $160,863 $110,411 $ (6,228)
------------------------------------
------------------------------------
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
<PAGE>
<S> <C> <C> <C>
Common
Stock in
Treasury Other Total
-----------------------------------
Balance, December 30, 1995 $ --- $ --- $210,144
Comprehensive income:
Net income --- --- 16,175
Other comprehensive income --- --- 10
--------
$ 16,185
Comprehensive income
Cash dividends declared:
Common stock --- --- (3,811)
Preferred stock, net of tax --- --- (923)
Stock options exercised, net of tax --- --- 3,198
Stock Company Match, 401(k) Contributions --- --- 2,290
Other --- --- 987
-----------------------------------
Balance, December 28, 1996 --- --- 228,070
Comprehensive income:
Net Income --- --- 27,525
Other comprehensive income (loss) --- --- (1,025)
--------
Comprehensive income 26,500
Cash dividends declared
Common stock --- --- (3,759)
Preferred stock, net of tax --- --- (899)
Stock options exercised, net of tax --- --- 3,029
Stock Company Match, 401(k) Contributions --- --- 3,620
Treasury stock purchased (16,259) --- (16,259)
Other --- (1,730) 1,110
-----------------------------------
Balance, January 3, 1998 (16,259) (1,730) 241,412
Comprehensive income:
Net Income --- --- 28,842
Other comprehensive income (loss) --- --- (2,423)
--------
Comprehensive Income 26,419
Cash dividends declared:
Common stock --- --- (3,595)
Preferred stock, net of tax --- --- (952)
Stock options exercised, net of tax --- --- 1,947
Stock Company Match, 401(k) Contributions --- --- 3,996
Treasury stock purchased (38,085) --- (30,085)
Other --- (219) 1,663
-----------------------------------
Balance, January 2, 1999 $(54,344) $ (1,949) $232,805
------------------------------------
------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
26
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE YEARS ENDED JANUARY 2, 1999.
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C>
1998 1997 1996
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 28,842 $ 27,525 $ 16,175
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 44,507 42,945 39,591
Minority interest in Partnership 43,914 39,696 23,956
Deferred income taxes 7,660 14,317 9,583
Other, net 3,997 3,620 2,290
Change in working capital items:
Receivables (14,621) 18,524 (45,139)
Inventories (9,873) (17,405) (12,989)
Other current assets (1,686) (2,785) 1,280
Accounts payable and accrued liabilities (5,313) 20,757 3,805
Other net 792 185 (1,847)
-----------------------------------
Net cash provided by operating activities$ 98,219 $147,379 $ 36,705
-----------------------------------
-----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures $(47,383) $(42,627) $(19,056)
Proceeds from the sale of discontinued
operations --- --- 24,035
Payments of discontinued operations
liabilities (2,776) (2,460) (10,733)
Sales (purchases) or marketable
securities, net 31,660 (40,751) ---
Other, net 1,385 1,969 2,474
-----------------------------------
Net cash used in investing activities $(17,114) $(83,869) $ (3,280)
-----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid on common stock $ (3,666) $ (3,823) $ (3,791)
Cash dividends paid on preferred stock (1,208) (2,473) ---
Minority partners tax distributions (17,535) (13,435) (7,960)
Net repayments under lines-of-credit --- --- (2,994)
Proceeds from the issuance of long-
term debt 6,710 54,250 5,740
Principal payments of long-term debt (6,710) --- (7,380)
Purchase of treasury stock (38,085) (16,259) ---
Other, net 362 516 46
-----------------------------------
Net cash provided by (used in) financing
activities $(60,132) $ 18,776 $(16,339)
-----------------------------------
-----------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS
Net increase in cash and cash
equivalents $ 20,973 $ 82,286 $ 17,086
Cash and cash equivalents at
beginning of year 119,087 36,801 19,715
-----------------------------------
Cash and cash equivalents at end of year $140,060 $119,087 $ 36,801
-----------------------------------
-----------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest, net of amounts capitalized $ 9,482 $ 6,230 $ 6,084
Income taxes (refunds), net $ 10,445 $ (2,961) $ ---
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Our consolidated financial statements include the accounts of TJ
International, Inc., our engineered lumber business, Trus Joist
MacMillan, a Limited Partnership, and their subsidiaries.
Significant intercompany balances and transactions were
eliminated. Management was required to make estimates for
portions of our consolidated balance sheets and income
statements. Actual financial results may differ from those
estimates.
PARTNERSHIP
On September 29, 1991 we entered into a partnership with
MacMillan Bloedel of America, Inc., a wholly owned subsidiary of
MacMillan Bloedel Limited, to form Trus Joist MacMillan, a
Limited Partnership (the Partnership). We contributed all of our
North American engineered lumber technology, manufacturing
facilities, and our sales and marketing organization for a 51%
interest in the Partnership. MacMillan Bloedel of America and
MacMillan Bloedel Limited contributed all of their North American
engineered lumber technology and manufacturing facilities for a
49% interest in the Partnership. In addition, each partner
contributed all the patents and trademarks related to their
engineered lumber business.
We amortize goodwill recorded as a result of forming the
Partnership ratably over a 25-year period. A total of $7,540,000
has been amortized as of January 2, 1999. Goodwill expense was
$1,040,000 each year for 1998, 1997, and 1996.
MINORITY INTEREST IN PARTNERSHIP
Income or losses of the Partnership are allocated between the
partners in accordance with the partnership agreement. MacMillan
Bloedel of America was allocated $43,914,000 of income in 1998,
$39,696,000 of income in 1997, and $23,956,000 of income in 1996.
This income allocation is reflected as Minority Interest in
Partnership in the Consolidated Statements of Income. MacMillan
Bloedel of America's accumulated equity in the Partnership is
reflected as Minority Interest in Partnership in the Consolidated
Balance Sheets.
FISCAL YEAR
Our 52/53-week fiscal year ends on the Saturday closest to
December 31 of each year. The comparability of our operations
from year to year is not significantly affected by the additional
fiscal week, which occurs approximately once every five years.
FOREIGN TRANSLATION
Our Canadian subsidiary's functional currency is the Canadian
dollar. We translate our Canadian subsidiary's financial
statements into U.S. dollars using the exchange rate at the end
of the year for assets and liabilities. We use an average monthly
exchange rate to translate the results of operations throughout
the year. Cumulative foreign currency translation is reflected as
Accumulated Other Comprehensive Income (Loss) in the Consolidated
Statements of Stockholders' Equity and is the only component of
other comprehensive income (loss) we have.
CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES
We consider cash equivalents to be cash and highly liquid
investments with maturities of three months or less. We record
these assets at cost, which approximates their fair market value.
These assets totaled $140,060,000 on January 2, 1999,
$119,087,000 on January 3, 1998, and $36,801,000 on December 28,
1996. Marketable securities is our investment in commercial
paper. We record marketable securities at our cost, which
approximates their fair value based on quoted market prices.
28
<PAGE>
All of our operating assets are owned by our engineered lumber
partnership, Trus Joist MacMillan, a Limited Partnership, and it
also earns almost all of our company's cash provided by operating
activities. At year-end 1998, cash and marketable securities
totaling $3,261,000 were held by TJ International, Inc. and the
remaining balance of $145,890,000 was held by Trus Joist
MacMillan, a Limited Partnership. The Partnership distributes
cash to the partners for payment of the partners' income tax
liabilities created by the partnership. No other cash
distributions from the Partnership may be made without approval
from the authorized representatives of MacMillan Bloedel of
America, the minority partner. There is no assurance that cash
distributions from the Partnership will be approved and thereby
be available for us to pay dividends or for us to fund other of
our cash requirements, including the expenses associated with
being a public company and paying any liabilities remaining from
the sale of our window business.
INVENTORIES
We value our inventory at the lower of cost or market. Material,
labor, and production overhead costs are included in our
inventory valuation.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS 1/2/99 1/3/99 12/28/96
- -----------------------------------------------------------------------------
Finished goods $ 59,740 $ 51,737 $ 38,278
Raw materials 19,087 17,217 13,271
-----------------------------------
$ 78,827 $ 68,954 $ 51,549
-----------------------------------
-----------------------------------
- ------------------------------------------------------------------------------
</TABLE>
Effective January 4, 1998, we changed our inventory costing
method for lumber, veneer, Microllam-Registered Trademark- LVL,
TJI-Registered Trademark- joists, and open web trusses from LIFO
to FIFO. We are executing a strategy to increase the sales of our
new technology Parallam-Registered Trademark- PSL,
TimberStrand-Registered Trademark- LSL, and TimberStrand-
Registered Trademark- flange I-joist products, which are valued
using FIFO methodology. We believe using the FIFO inventory
costing methodology for all of our product lines is a more
appropriate and consistent matching of cost against revenues.
This change in accounting had no material impact on previously
reported results for 1997 and 1996.
PROPERTY
We record property and equipment at the cost we paid to purchase
or construct the assets. Costs for additions and improvements are
added to the original purchase cost. Replacement of property is
capitalized at its cost. We expense costs related to maintenance,
repairs, and minor replacements, and these expenses were
$32,841,000 in 1998, $29,978,000 in 1997, and $26,607,000 in
1996. As property is sold or retired, we remove the value of the
property from our asset and depreciation accounts and any gain or
loss is reflected in income.
The depreciation expense on Microllam-Registered Trademark- LVL,
Parallam-Registered Trademark- PSL, and TimberStrand-Registered
Trademark- LSL manufacturing equipment is computed using the
units-of-production method. The straight-line depreciation method
is used to calculate the depreciation expense for all other
property and equipment. The estimated useful lives of our major
property and equipment range from three to thirty years.
CAPITALIZED INTEREST
We capitalize interest on qualifying assets. Interest expense
capitalized into property and equipment was $838,000 in 1998 and
$487,000 in 1997. No amounts were capitalized in 1996.
RESERVE FOR DISCONTINUED OPERATIONS
We completed our plan to divest of the Company's window segment
in 1996. We retained certain contingent liabilities of this
segment. The most significant of these are obligations under the
warranty provisions of the window product sales. We believe that
existing reserves are adequate to satisfy the remaining
liabilities.
RESEARCH AND DEVELOPMENT
We expense research and development costs as we incur them.
Research and development costs expensed were $5,686,000 in 1998,
$5,152,000 in 1997, and $4,421,000 in 1996.
29
<PAGE>
DERIVATIVE FINANCIAL INSTRUMENTS
We occasionally use foreign currency forward exchange contracts
to limit our exposure to foreign currency fluctuations on the
purchase of machinery and equipment from companies located
outside of the United States. As of January 2, 1999, we had no
material derivative financial instruments outstanding.
NET INCOME PER SHARE
Basic net income per share is based on net income adjusted for
any preferred stock dividends, net of related tax benefits,
divided by the weighted average number of common shares
outstanding. Diluted net income per share assumes conversion of
our retirement plans convertible preferred stock into shares of
common stock at the beginning of our fiscal year. Additionally,
it reflects the impact on weighted average number of common
shares assuming the exercise of outstanding stock options under
the treasury stock method.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS 1998 1997 1996
- -----------------------------------------------------------------------------
Net income as reported $ 28,842 $ 27,525 $ 16,175
Preferred stock dividends, net of
related tax benefits (997) (985) (949)
-----------------------------------
Basic net income $ 27,845 $ 26,540 $ 15,226
-----------------------------------
-----------------------------------
Net income as reported $ 28,842 $ 27,525 $ 16,175
Additional ESOP contribution payable upon
assumed conversion of ESOP preferred
stock, net of related tax benefits (728) (696) (711)
-----------------------------------
Diluted net income $ 28,114 $ 26,829 $ 15,464
-----------------------------------
-----------------------------------
Weighted average shares outstanding used
to determine basic net income per share 16,464 17,156 17,277
Conversion of ESOP preferred stock 1,137 1,156 1,174
Exercise of stock options using
the Treasury Stock Method 326 351 402
-----------------------------------
Weighted average shares used to determine
diluted net income per share 17,927 18,663 18,853
-----------------------------------
-----------------------------------
- -----------------------------------------------------------------------------
</TABLE>
2. DEBT
At year-end, we have available unsecured, committed lines of
credit totaling $13,267,000 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. We pay a commitment fee of .25% to the domestic banks. At
the end of each of the last three years, we had no borrowings
under these agreements.
We have a $150 million revolving credit facility provided by a
group of banks. This facility provides several interest rate
options, none of which exceed prime, and matures on November 15,
2001. At the end of each of the last three years, we had no
borrowings under this facility.
In the third quarter of 1998, we issued $6,710,000 of tax-exempt
variable rate industrial revenue demand bonds related to the East
Kentucky TimberStrand-Registered Trademark- LSL plant. The
interest rate on these bonds is established weekly, and the
interest is paid monthly. The bonds are unsecured, with the
principal due in a single maturity in 2028. We used the proceeds
from these bonds to prepay, without penalty, $6,710,000 of the
taxable industrial revenue bonds described below. In the fourth
quarter of 1998, we extended for five years the due date of the
$10,000,000 industrial revenue variable rate demand bonds that
otherwise would have matured in the year 2000.
In 1997, we issued $42,600,000 of taxable industrial revenue
bonds to preserve our ability in the future to issue additional
industrial revenue bonds to help finance the East Kentucky plant.
These bonds have a variable interest rate, which is either LIBOR
based or prime. The bonds are unsecured, with the principal due
in a single maturity in 2001. We can prepay at any time the
outstanding principal without penalty. In 1997, we also issued
$11,650,000 of industrial revenue bonds related to the East
Kentucky plant. The interest rate on these bonds is fixed at
6.55%, and the interest is paid semi-annually. The bonds are
unsecured, with the principal due in a single maturity in 2027.
30
<PAGE>
During 1996, we issued $5,740,000 of industrial revenue bonds to
finance portions of the construction of the East Kentucky plant.
The interest rate on these bonds is fixed at 6.8%, and the
interest is paid semi-annually. The bonds are unsecured, with the
principal due in a single maturity in 2026.
Our industrial revenue variable rate demand bonds issued before
1996 are secured by the property and equipment that was acquired
with the bond proceeds. All of the variable rate demand bonds are
supported by irrevocable letters of credit. These letters of
credit, together with our revolving credit facility described
above, allow us to borrow for periods greater than one year, if
drawn upon to repay bondholders.
The debt agreements contain various customary financial
covenants. We are in compliance with all of the covenants at
January 2, 1999. Under the most restrictive of these covenants,
retained earnings available for cash dividends at January 2, 1999
was $94,475,000. We record debt at cost, net of any discount or
premium, which is approximately the same as fair market value
based on borrowing rates currently available to us if we were to
borrow today on similar terms and maturities.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS 1/2/99 1/3/98 12/28/96
-----------------------------------
Borrowings under the revolving
credit facility $ --- $ --- $ ---
Industrial revenue bonds, 6.92% weighted
average interest rate during 1998,
payable in varying amounts from
2024 through 2027 83,390 83,390 71,740
Taxable industrial revenue variable rate
bonds, interest rates established at the
beginning of each interest period, 6.12%
weighted average during 1998, payable
in 2001 35,890 42,600 ---
Industrial revenue variable rate demand
bonds, interest rates established weekly,
3.82% weighted average during 1998,
$10,000,000 payable in 2005, $6,400,000
payable in 2009, and $6,710,000 payable
in 2028 23,110 16,400 16,400
-----------------------------------
$142,390 $142,390 $ 88,140
-----------------------------------
-----------------------------------
- ------------------------------------------------------------------------------
</TABLE>
3. ACCRUED LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS 1/2/99 1/3/98 12/28/96
-----------------------------------
Salaries, wages, and commissions $ 6,220 $ 6,353 $ 4,328
Retirement and profit sharing
plan contributions 8,227 7,443 4,934
Other associate benefits 12,614 10,411 8,816
Marketing incentives 16,992 17,346 8,216
Other 6,874 9,088 5,715
-----------------------------------
$ 50,927 $ 50,641 $ 32,009
-----------------------------------
-----------------------------------
- ------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
4. INCOME TAXES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS 1998 1997 1996
-----------------------------------
INCOME BEFORE INCOME TAXES
U.S. $ 43,666 $ 36,420 $ 23,194
Canada 2,178 7,620 2,564
-----------------------------------
$ 45,844 $ 44,040 $ 25,758
-----------------------------------
-----------------------------------
INCOME TAXES
Current income taxes
U.S. federal $ 7,944 $ 2,027 $ ---
U.S. state 1,398 171 ---
-----------------------------------
$ 9,342 $ 2,198 $ ---
Deferred income taxes
U.S. federal $ 6,262 $ 10,156 $ 7,073
U.S. state 518 1,113 1,484
Canada 880 3,048 1,026
-----------------------------------
$ 7,660 $ 14,317 $ 9,583
-----------------------------------
$ 17,002 $ 16,515 $ 9,583
-----------------------------------
- ------------------------------------------------------------------------------
Our effective income tax rate varied from the U.S. federal statutory income
tax rate for the following reasons:
<S> <C> <C> <C> <C>
AMOUNTS IN THOUSANDS 1998 1997 1996
-----------------------------------------
U.S. federal statutory income
tax rate $ 16,045 35.0% 35.0% 35.0%
Foreign income at different rates 76 0.2% 0.9% 1.2%
State income taxes, net of
federal effect 1,916 4.2% 3.6% 4.2%
Other items (1,035) (2.3%) (2.0%) (3.2%)
-----------------------------------------
Effective income tax rate $ 17,002 37.1% 37.5% 37.2%
-----------------------------------------
-----------------------------------------
</TABLE>
32
<PAGE>
The deferred tax liabilities and assets included in the
Consolidated Balance Sheets are comprised of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS 1/2/99 1/3/98 12/28/96
-----------------------------------
Tax in excess of book depreciation $(28,966) $(28,555) $(27,101)
Other (9,107) (5,972) (7,330)
-----------------------------------
Total deferred tax liabilities $(38,073) $(34,527) $(34,431)
Reserves not yet deductible
for tax purposes 4,882 3,360 2,370
Net operating loss carryforwards 1,510 7,252 13,062
Alternative minimum tax credit
carryforward 8,615 9,126 4,279
Reserves and operating losses related
to discontinued operations 2,657 9,777 19,740
Other 7,340 4,031 8,811
-----------------------------------
Total deferred tax assets 25,004 33,546 48,262
-----------------------------------
$(13,069) $ (981) $ 13,831
-----------------------------------
-----------------------------------
Classified as
Deferred income taxes - current assets $ 5,214 $ 3,382 $ 4,985
Deferred income taxes - long-term
assets (liabilities) (18,283) (4,363) 8,846
-----------------------------------
$(13,069) $ (981) $ 13,831
-----------------------------------
-----------------------------------
- ------------------------------------------------------------------------------
</TABLE>
Our alternative minimum tax credits of $8,615,000 at January
2,1999, are available indefinitely. Net operating loss
carryforwards are expected to be fully realized based on
forecasted operating results and various tax planning strategies.
5. RETIREMENT PLANS AND INCENTIVE BONUS PROGRAMS
Our associates are eligible to participate in defined
contribution retirement plans after a waiting period of up to six
months. The retirement benefits in these plans are limited to
each associate's account balance at the time of their retirement
or termination.
The retirement plans receive contributions from our associates
and us. Our contributions include matching of associate
contributions up to a total of 4% of salaries and wages. In
addition, we make a profit sharing contribution to associate
accounts.
The amounts contributed to the retirement plans for the past
three years are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CONTRIBUTION SOURCES 1998 1997 1996
-----------------------------------
Associate Contributions $ 9,376,000 $ 7,816,000 $ 6,555,000
Company Contributions 10,373,000 9,086,000 6,890,000
-----------------------------------
Total Contributions $19,749,000 $16,902,000 $13,445,000
-----------------------------------
-----------------------------------
- ------------------------------------------------------------------------------
</TABLE>
In September 1990, the U.S. retirement plan borrowed $15 million
at 9% interest from us. The loan matures on March 31, 2011 and
has no prepayment penalties. The proceeds from the loan were used
by the retirement plan to purchase 1,269,842 shares of newly
issued preferred stock in TJ International, Inc. The preferred
stock is described in more detail in note 6.
33
<PAGE>
We have guaranteed that over the term of the loan we will make
sufficient contributions to the retirement plan to repay the
loan. This guarantee has been recorded in the Stockholders'
Equity section of the balance sheet as "Guaranteed ESOP Benefit."
The retirement plan uses contributions from us and dividends on
the preferred shares to make the required loan payments. With
each principal and interest payment, a portion of the preferred
stock is allocated to our associates' accounts in the retirement
plan. The "Guaranteed ESOP Benefit" is amortized based on the
percentage of preferred shares allocated to the associates'
accounts. The annual amortized expense was approximately $542,000
in 1998, $783,000 in 1997, and $1,022,000 in 1996.
Our key associates participate in incentive bonus programs. The
incentive bonus programs are designed to motivate key associates,
improve company performance, and reward associates for improving
our return on invested capital. The incentive bonus program
expenses were approximately $2,396,000 in 1998, $4,006,000 in
1997, and $2,787,000 in 1996.
6. STOCKHOLDERS' EQUITY
GENERAL
Our stockholders have approved issuing up to 200,000,000 shares
of common stock and 10,000,000 shares of preferred stock. Both
the common stock and preferred stock have a $1.00 per share par
value.
Effective April 1996, our Board of Directors approved using
shares of our common stock to fund our matching contributions to
the retirement plans. Before that date, these contributions were
made in cash.
PREFERRED STOCK
In September 1990, we issued 1,269,842 shares of $1.00 par value
preferred stock at $11.8125 per share to our associate retirement
plan. Each share of preferred stock has one vote and receives a
preferential dividend of $1.065 each year. We may redeem the
preferred stock under certain circumstances. When any person
receives a payout from the retirement plans, we first convert
each share of this preferred stock into one share of our common
stock. If the current stock price is below $11.81, the preferred
shares are valued at $11.81 per share. We then have the choice to
pay the participant in common stock, cash, or any combination of
common stock and cash.
COMMON STOCK PURCHASE RIGHTS
In 1989, we issued common stock purchase rights to each
stockholder. The rights are not currently exercisable. They
become exercisable if certain events happen, such as a person or
group acquiring or trying to acquire 20% or more of the
outstanding shares of our common stock. With certain exceptions,
if we are 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% of its market value. The rights
expire in September 1999 and are non-voting. We may redeem them
at any time for $.005 per right. Our Board has reserved for
issuance the same number of common shares as are outstanding at
any time in case the rights are triggered.
STOCK BUY BACKS
In December 1998, our Board of Directors authorized us to buy
$25,000,000 of our common stock at market price. We started this
program in 1999. The Board had previously authorized us to buy
our common stock at market price in both 1998 and 1997. In 1998,
we bought a total of 1,560,453 shares for $38,085,000. In 1997,
we bought a total of 761,152 shares for $16,259,000.
STOCK OPTIONS
In 1997, our stockholders approved a new stock option plan for
officers and key associates. This plan allows us to issue both
incentive stock options (ISOs) and nonstatutory options (NSOs).
The exercise price for either ISOs or NSOs cannot be less than
the fair market value of our common stock on the date the option
is granted. The ISOs become exercisable three years after they
are granted and the NSOs in 33.3% annual installments starting
one year after they are granted.
We have four other stock option plans for officers and key
associates, which were approved by our stockholders before 1997.
These plans also allow us to issue both ISOs and NSOs. The
exercise price for ISOs cannot be less than the fair market value
of our common stock on the date the option is granted. The
exercise price for NSOs may be $1.00 per share. The ISOs become
exercisable three years after they are granted. The Board of
Directors decides when the NSOs are granted whether they become
exercisable three years after they are granted or in 20% annual
installments commencing five years after they are granted.
34
<PAGE>
At January 2, 1999, a total of 28,800 ISOs and 1,462,784 NSOs
were outstanding, and 2,222,000 shares were reserved for issuance
under all our stock option plans. We adjust outstanding options
and exercise prices for any stock splits and stock dividends. All
unexercised options expire 10 years after they are granted. For
NSOs, we accrue ratably as compensation expense from the date of
grant to the exercisable date, the excess of the fair market
value over the exercise price on the date of grant. For ISOs, we
do not make any accounting entries until they are exercised.
In 1998, we recorded total compensation expenses for our stock
option plans of $1,527,000. In 1997, we recorded $1,682,000, and,
in 1996, we recorded $1,535,000. Stock option transactions are
summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Wtd. Wtd. Wtd.
Avg. Avg. Avg.
Option Option Option
Shares Price Shares Price Shares Price
------------------------------------------------------
Number of Option Shares
Granted 324,000 $27.52 49,500 $21.13 867,700 $16.85
Exercised (106,445) 7.7 (75,758) 1.63 (230,470) 1.45
Cancelled (20,270) 18.90 (14,288) 6.15 (57,947) 0.83
Outstanding at end
of year 1,491,584 16.01 1,294,299 12.49 1,334,845 11.49
Exercisable at end
of year 564,078 17.08 351,237 14.77 132,778 3.62
Weighted average fair
value of options
granted (Black-Scholes) $12.78 $ 8.96 $10.31
------------------------------------------------------
</TABLE>
The following table summarizes certain information about stock
options outstanding at January 2, 1991:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Wtd. Avg. Wtd. Wtd.
Remaining Avg. Avg.
Outstanding Contractual Option Exercisable Option
at 1/2/99 Life Price at 1/2/99 Price
------------------------------------------------------
RANGE OF OPTION PRICES
$ .50 - $1.00 471,612 5.6 0.82 101,980 0.65
$ 9.38 28,800 2.0 9.38 28,800 9.38
$19.00 - $24.125 991,172 8.4 23.43 433,298 21.46
------------------------------------------------------
1,491,584 7.4 16.01 564,078 17.08
------------------------------------------------------
------------------------------------------------------
</TABLE>
Effective at the beginning of 1996, we adopted SFAS No. 123,
which prescribes the accounting for stock-based compensation. We
elected to continue to account for stock options in accordance
with APB No. 25. Under the terms of these rules, we have
estimated the fair value of each option on the date of grant
using the Black-Scholes option-pricing model. The following table
summarizes the assumptions we used for each year. It also shows
how much of our net income and net income per basic and diluted
share would have been reduced if we had determined compensation
expense for each year using the Black-Scholes option-pricing
model.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
-----------------------------------
Assumptions
Risk-free interest rate 6.5% 6.5% 6.5%
Vesting discounts 94% 94% 93%
Annual stock price volatility 0.32 0.26 0.27
Proforma Reduction in Reported Amounts
Net income $(1,006,000) $(1,182,000) $ (49,000)
Net income per basic and diluted share $ (0.06) $ (0.06) $ ---
</TABLE>
35
<PAGE>
7. LEASES
Basic or minimum rental expenses for operating and month-to-month
leases amounted to $5,472,000 in 1998, $5,002,000 in 1997, and
$3,985,000 in 1996.
We have operating leases with initial or remaining terms longer
than one year. Minimum payment requirements on these leases are
$3,399,000 in 1999, $2,509,000 in 2000, $1,871,000 in 2001,
$1,313,000 in 2002, and $910,000 in 2003. Some lease agreements
allow usage charges and cost-of-living increases. In addition,
lease agreements involving real property have fixed payment terms
based upon the lapse of time.
We have the option, in certain lease agreements, to purchase
leased property at the end of the lease at fair market value. In
addition, we can renew some lease agreements for up to three
years with similar terms.
8. RELATED PARTY TRANSACTIONS
We sell engineered lumber products to MacMillan Bloedel Building
Materials (MBBM), a division of MacMillan Bloedel Limited, on
terms comparable to other distributors. Sales to MBBM were
$216,600,000 in 1998, $205,500,000 in 1997, and $168,500,000 in
1996. Accounts receivable from MBBM were $16,238,000 at January
2, 1999, $17,357,000 at January 3, 1998, and $16,658,000 at
December 28, 1996, and are included in receivables in the
accompanying Consolidated Balance Sheets.
MacMillan Bloedel Limited has provided certain technological and
research services to us. We paid them $1,087,000 in 1998,
$1,922,000 in 1997, and $1,741,000 in 1996 for these services.
During 1998, MacMillan Bloedel Limited, closed its research
facility and we do not anticipate any future payment for these
services. Several individuals who were conducting research and
providing services to us accepted an offer of employment from us
and continue their work on our behalf.
Quarterly cash distributions are made to the Partners for payment
of state and federal income taxes. Payments of $17,535,000 in
1998, $13,435,000 in 1997, and $7,960,000 in 1996 were made to
MacMillan Bloedel of America.
Certain employees who perform services for us at former MacMillan
Bloedel Limited facilities remain on their payroll. The
Partnership Agreement provides that we reimburse MacMillan
Bloedel Limited for its actual payroll and related benefit costs
relating to these employees. Payroll reimbursements were
$5,939,000 for 1998, $5,890,000 for 1997, and $5,756,000 for
1996. Total payables to MacMillan Bloedel Limited and MacMillan
Bloedel of America for such services and tax distributions were
$3,776,000 at January 2, 1999, $4,590,000 at January 3, 1998, and
$2,745,000 at December 28, 1996. These amounts are included in
accounts payable in the accompanying Consolidated Balance Sheets.
36
<PAGE>
9. SEGMENT REPORTING
As of January 2, 1999, we adopted SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information. This statement
requires public companies to disclose financial and descriptive
information about their reportable operating segments as
regularly evaluated by the chief operating decision makers. Our
chief operating decision makers consist of senior management that
work together to allocate resources to, and assess the
performance of, our engineered lumber business. We manufacture,
market, and distribute various engineered lumber products that
are used for construction. We believe that we manage our
business, assess its performance, and allocate resources as a
single operating segment in the engineered lumber business.
Sales of engineered lumber products:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
EXPRESSED IN THOUSANDS 1/2/99 1/3/98 12/28/96
-----------------------------------
Residential $645,776 $584,860 $479,934
Commercial 84,866 76,010 56,552
Industrial 47,421 45,446 40,680
-----------------------------------
Net sales $778,063 $706,316 $577,166
-----------------------------------
-----------------------------------
</TABLE>
Geographic information consists of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
EXPRESSED IN THOUSANDS United States Foreign Consolidated
------------------------------------------
1998
Net sales $687,755 $ 90,308 $778,063
Long-lived assets 366,855 15,712 382,567
------------------------------------------
1997
Net sales $608,445 $ 97,871 $706,316
Long-lived assets 362,813 17,673 380,486
------------------------------------------
1996
Net sales $507,522 $ 69,644 $577,166
Long-lived assets 362,530 19,569 382,099
------------------------------------------
</TABLE>
Revenues are attributed to geographic area based on the location
of the customer.
We have a strategic alliance with Weyerhaeuser's Building
Materials Distribution Division. The arrangement allows us to
expand our distribution network through the Weyerhaeuser customer
service centers. Additionally, there are certain supply
agreements, where we purchase raw materials such as oriented
strand board from Weyerhaeuser. Total sales to Weyerhaeuser were
$249,000,000 in 1998, $218,400,000 in 1997, and $188,000,000 in
1996. Our other significant customer is MacMillan Bloedel
Building Materials. See note 8 for information related to sales
to them.
37
<PAGE>
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 2, 1999, January 3, 1998, and December 28, 1996,
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 2, 1999,
January 3, 1998, and December 28, 1996, and the results of their
operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
------------------------------
February 2, 1999
Boise, Idaho
38
<PAGE>
MARKET AND DIVIDEND INFORMATION
TJ International, Inc. 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 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1998 SALES PRICE
---------------------
HIGH LOW DIVIDENDS PAID
-----------------------------------------
First $ 33 7/8 $ 22 7/8 $ 0.05 1/2
Second 33 1/2 27 15/32 0.05 1/2
Third 29 3/8 17 9/16 0.05 1/2
Fourth 25 13/16 16 3/4 0.05 1/2
-----------------------------------------
1997 SALES PRICE
---------------------
HIGH LOW DIVIDENDS PAID
-----------------------------------------
First $ 23 1/4 $ 18 1/2 $ 0.05 1/2
Second 24 3/8 18 7/8 0.05 1/2
Third 26 3/4 22 3/8 0.05 1/2
Fourth 27 3/16 22 1/4 0.05 1/2
-----------------------------------------
</TABLE>
39
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
1998 COMPARED TO 1997
We achieved record sales levels in 1998. Sales for the year grew
to $778 million, or 10% from the $706 million reported a year
ago. Sales per North American housing start for 1998 were $355,
which is an increase of 3% from the levels reached in 1997 and
was our 16th consecutive year of growth in this key benchmark.
The increase in sales resulted from growing acceptance of
engineered lumber in construction due to the higher quality and
better value that engineered lumber products provide. This growth
has been achieved despite the challenging market conditions of
declining prices for commodity solid sawn lumber products, which
remain the primary competitor for our engineered lumber products.
Price declines for lumber were most significant in the East Coast
species, as prices for 2x10 southern yellow pine were down on
average 25%. Although prices for competing commodity products
were much lower, we have maintained and increased our base of
builders who have used our products over the years. However, the
low prices for competing commodity solid sawn lumber made it more
difficult during the year to convert builders who have not used
our products in the past.
Unit volume growth accounted for virtually all of the sales
increase for 1998. Our average prices across our technologies
were essentially flat in 1998 compared to 1997. Volume gains were
strong for all of our technologies with TJI-Registered Trademark-
Joists showing the strongest gain followed closely by
TimberStrand-Registered Trademark- LSL, Microllam-Registered
Trademark- LVL, Parallam-Registered Trademark- PSL, and Open Web
joists.
Gross margins for the year were 26.5% compared with 27.4% in
1997. The most significant factor in the margin decline was the
cost of oriented strand board (OSB), which is used as the raw
material component for the web in the Company's TJI-Registered
Trademark- Joist. Commodity OSB prices spiked in the third
quarter for an average increase of 96% for the third quarter of
1998 as compared to 1997's third quarter. OSB prices declined
significantly at the end of the third quarter; however, the
higher costs continued to affect margins in the fourth quarter,
as we used material held in inventory at the end of the price
spike.
In comparing the second half of 1998 to 1997, the higher OSB
prices negatively affected operating income by approximately $11
to $12 million or 20 to 22 cents per diluted share. High OSB
costs were partially offset by improved operating efficiencies at
many of our manufacturing plants. We experienced improved
productivity and throughput, lower unit costs, and higher product
prices for both TimberStrand-Registered Trademark- LSL and
Parallam-Registered Trademark- PSL. We also continue to execute
our plan to transition our new technologies to higher value
products. These include TimberStrand-Registered Trademark- LSL
headers, wall framing and door components, as well as our
TJI-Registered Trademark- Pro 120 TS, which uses
TimberStrand-Registered Trademark- LSL as a flange material in
the joist.
Selling expenses as a percentage of sales were essentially flat
from 1998 to 1997. Spending in dollars increased $7.6 million,
from $71.0 million in 1997 to $78.6 million in 1998. We continue
to execute our strategy of providing value-added services to the
market. In addition, our selling expenses include the costs to
develop our international markets.
General and administrative expenses were essentially flat from
1998 to 1997 with spending of $36 million in both years. However,
as a percentage of sales, general and administrative expenses
declined in of 1998 to 4.7% compared to 5.2% for 1997.
1997 COMPARED TO 1996
We achieved record sales levels in 1997. Sales increased by $129
million from the prior year. This increase stems primarily from
greater acceptance of our engineered lumber products as a
substitute for commodity solid sawn lumber in North American
residential construction markets. We also experienced very strong
growth in commercial construction markets and international
markets.
In 1997, our 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 outside of North
America grew 44% to $30.4 million in 1997. The largest growth
came from sales of TimberStrand-Registered Trademark- lumber in
Japan.
40
<PAGE>
Sales per North American housing start rose 19% to $344 per start
from the $289 per start of 1996. This was the 15th consecutive
year we have 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 to 1996.
Prices for commodity solid sawn lumber products, which remain the
principal competition for our 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 our
products were on average flat for 1997 compared to 1996. Volume
gains were strongest for our new technology
TimberStrand-Registered Trademark- LSL and Parallam-Registered
Trademark- PSL.
Gross margins for 1997, were 27.4% compared to 24.7% for 1996.
Margin gains resulted from lower costs for raw materials such as
OSB and veneer; increased prices for TimberStrand-Registered
Trademark- LSL stemming from a product mix shift to higher value
products; and increased operating efficiencies at many of our
manufacturing facilities.
Our 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 our new plant, located in Buckhannon, West
Virginia, successfully improved in 1997 to become the lowest-cost
producer of Parallam-Registered Trademark- PSL and
Microllam-Registered Trademark- LVL.
Selling expenses for 1997 increased $9.7 million to $71.0
million, from $61.3 million in 1996. In 1997, however, they
declined as a percentage of sales to 10% from 10.6% in 1996.
Total selling expenses rose because of variable selling expenses
and sales commissions resulting from sales growth. Additionally,
we continue to invest in developing international markets,
aggressively bringing innovative products to market and
supporting 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% as a percentage of sales in
1996, to $36.9 million and 5.2% 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, we increased research and development
expenses to further improve the TimberStrand-Registered
Trademark- LSL technology and other costs necessary to support
our growth.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased $22.6 million from the prior year, to
$241.8 million. The increase was due to strong cash flow from
operations combined with a modest capital program. Inventory
levels were increased to improve service levels and reduce lead
times to customers. Receivables have also increased as more
customers purchase and ship via rail, which have 60-day terms.
At our December 1998 Board of Directors meeting, the Board of
Directors approved a cash distribution of $70 million from Trus
Joist MacMillan, a limited partnership, to its partners,
MacMillan Bloedel of America and TJ International, Inc. The
distribution was made in January 1999, and appropriated to the
relative ownership interests of the two partners.
In 1997, we began construction of a Microllam-Registered
Trademark- LVL and TJI-Registered Trademark- Joist plant located
in Evergreen, Alabama and completed the facility in 1998.
Production began late in the fourth quarter of 1998. This new
facility will produce traditional Microllam-Registered Trademark-
LVL and TJI-Registered Trademark- Joist products. The plant
construction required a capital investment of approximately $45
million.
We also completed construction in late 1997 of a TJI-Registered
Trademark- Joist facility at our East Kentucky location, which
uses TimberStrand-Registered Trademark- LSL as the flange
material. Market introduction of this product began in the first
quarter 1998. The additional I-line required a capital investment
of approximately $16.5 million in 1997.
We are evaluating potential sites for a third
TimberStrand-Registered Trademark- LSL plant, but we have not
determined whether or when to proceed with construction. We
believe that current cash balances, cash generated from
operations, and borrowing under a $150 million Revolving Credit
Facility will be sufficient to meet our ongoing operating and
capital expansion needs. We also believe that additional or
expanded lines of credit or appropriate long-term capital can be
obtained to fund other major capital requirements as they arise,
or to fund an acquisition.
In the first quarter of 1998, the Board of Directors authorized
us to purchase $3.1 million of treasury stock. In addition, at
the Board of Directors meeting held on May 27, 1998, the Board
authorized us to purchase $35 million of treasury stock. We
purchased $4.4 million in the second quarter of 1998 and $30.6
million in the third quarter 1998 completing that stock purchase
plan.
41
<PAGE>
For 1997, the Board of Directors authorized the purchase of up to
$15 million of common stock at market prices. We purchased $8.3
million of treasury stock during the first quarter of 1997 and
$6.7 million of stock during the second quarter of 1997
completing that stock purchase plan. In addition, the Board of
Directors authorized the purchase of an additional $1.3 million
of stock during the third quarter of 1997.
In the third quarter of 1998, we issued $6.7 million of
tax-exempt industrial revenue variable rate demand bonds related
to the East Kentucky plant. In 1998, the weighted average
interest rate on these bonds was 3.82%. These bonds are
unsecured, with the principal due in a single maturity in 2028.
We used the proceeds from these bonds to prepay, without penalty,
$6.7 million of the taxable industrial revenue bonds described
below.
In the fourth quarter of 1998, we extended for five years the due
date of our $10 million tax-exempt industrial revenue variable
rate demand bonds, which otherwise would have matured in the year
2000. These bonds had a weighted average interest rate of 3.82%
in 1998.
In the fourth quarter of 1997, we issued $42.6 million of taxable
industrial revenue bonds. We issued these bonds to preserve our
ability to issue additional tax-exempt industrial revenue bonds
in the future to help finance the East Kentucky
TimberStrand-Registered Trademark- LSL plant. The weighted
average interest rate on these bonds during 1998 was 6.12%. These
bonds are payable in 2001.
Additionally, we have fixed rate debt of $83.4 million
outstanding. This debt has a weighted average interest rate of
6.92% and is payable in varying amounts from 2024 through 2027.
We also have $6.4 million of tax-exempt industrial revenue
variable rate demand bonds payable in 2009. These bonds had a
weighted average interest rate of 3.82% in 1998.
We completed the sale of our window operations in 1996; however,
we retained certain liabilities related to these operations. We
believe that existing reserves are adequate to meet all
liabilities that may arise related to the discontinued
operations.
Substantially all of the operating assets are held, and revenue
generated, by Trus Joist MacMillan a Limited Partnership. The
Partnership regularly distributes cash to the partners to fund
the tax liabilities generated by the Partnership at the corporate
level. All other distributions of cash by the Partnership are
dependent on the affirmative votes of the representatives of the
minority partner. Accordingly, there can be no assurance that
such distributions will be approved and thereby be available for
the payment of dividends or to fund other cash expenses.
INDUSTRY, COMPETITION, AND CYCLICALITY
Our engineered lumber products continue to gain market acceptance
as high-quality alternatives to traditional solid sawn lumber
products. Through intensive marketing efforts, builders and other
wood users are increasingly recognizing the consistent quality,
superior strength, lighter weight, and ease of installation of
engineered lumber products. We believe that this trend will
continue well into the future.
No other company possesses the range of engineered lumber
products, the levels of service and technical support, or the
second-generation technologies of TimberStrand-Registered
Trademark- LSL or Parallam-Registered Trademark- PSL. There are,
however, a number of companies, including several large forest
products companies, which now produce look-alike wood I-joist and
laminated veneer lumber products. Several of these companies have
announced capacity expansions. These look-alike products are
manufactured using processes similar to our oldest-generation
technologies.
We believe our network of manufacturing plants and multiple
technologies position us as the low-cost producer of engineered
lumber. While competition helps expand the market for engineered
wood products, including those manufactured by us, 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 for our products. Commodity lumber
prices historically have been subject to high volatility, and
during prolonged periods of significant lumber price movements,
our prices have trended in the same direction.
Our operations are strongly influenced by the cyclicality and
seasonality of residential housing construction. This industry
experiences fluctuations resulting from a number of factors,
including the state of the economy, consumer confidence, credit
availability, interest rates, and weather patterns. Consistent
with the seasonal pattern of the construction industry as a
whole, our sales have historically tended to be lowest in the
first and fourth quarters and highest in the second and third
quarters of each year.
42
<PAGE>
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting standards No. 133, Accounting
for Derivative Instruments and Hedging Activities. The Statement
establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its
fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. As of January
2, 1999, we had no material derivative financial instruments
outstanding. We plan to adopt this statement in the first quarter
of 2000.
YEAR 2000 ISSUE
We are working to resolve the effects of the Year 2000 problem on
our information systems, including the financial and transaction
systems, production and process control systems, and compliance
status of suppliers' systems. The Year 2000 problem, which is
common to most businesses, concerns the inability of such systems
to properly recognize the process dates and date-sensitive
information on and beyond January 1, 2000.
In 1997, we formally began a series of assessments, company-wide
tracking, and awareness programs. These programs ensured
company-wide awareness of the Year 2000 issues, standardized the
inventory and assessment methods, and tracked the results of the
assessments.
We have successfully educated key personnel on the issues,
completed our inventory and assessments of the Year 2000 risks
for financial and transaction systems and production and process
control systems. A number of applications in the financial and
transaction processing systems are compliant due to recent
implementations and upgrades. We have been configuring and
installing Year 2000 compliant systems as part of our program to
provide significantly improved functionality in our business
support software. This program is intended to provide the
infrastructure for future growth. Our core financial and
reporting systems are not yet fully compliant but are scheduled
to be complete by late fall 1999. To date, no significant issues
have been identified in connection with our assessment of our
primary production and process control systems. We expect to
complete replacement of the identified non-compliant equipment or
software by the third quarter of 1999.
We are also in the process of surveying vendors, principal
customers and business partners regarding their Year 2000
compliance. Contingency plans have been identified or are
currently being developed in the event either our systems or key
third-party systems are not compliant.
While we currently believe that we will be able to modify or
replace our affected systems in time to reduce any detrimental
effects on our operations, failure to do so, or the failure of
our major customers and suppliers to modify or replace their
affected systems, could have a material adverse impact on our
results of operations, liquidity, or consolidated financial
position in the future. The most reasonably likely, worst-case
scenario of our failure or our customers or suppliers, to resolve
the Year 2000 problem would be a temporary slowdown or cessation
of manufacturing operations at one or more of our facilities and
a temporary inability on our part to process orders and billings
on a timely basis and to timely deliver finished products to
customers. We are currently identifying and considering various
contingency operations, including identification of alternate
suppliers, vendors and service providers, and manual alternatives
to systems operations, which will allow us to minimize the risk
of any unresolved Year 2000 problems in our operations and to
minimize the effect of any unforeseen Year 2000 failures.
We currently estimate the cost to complete compliance should not
exceed $3,000,000. These costs will be expensed as incurred,
unless new software, equipment, or hardware is purchased that
should be capitalized in accordance with accounting policy.
43
<PAGE>
FORWARD-LOOKING STATEMENTS
This management's discussion and analysis includes a number of
"forward-looking statements" as defined by the Private Securities
Litigation Act of 1995. Forward-looking statements include,
without limitation, statements regarding the adequacy of our
reserves for discontinued operations and other statements
regarding our beliefs. Investors are cautioned that
forward-looking statements are subject to an inherent risk that
actual results may vary materially from those described,
projected, or implied herein. Factors that may result in such
variance include, among others: changes in interest rates,
commodity prices, and other economic conditions; actions by
competitors; changing weather conditions and other natural
phenomena; actions by government authorities; technological
developments; future decisions by management in response to
changing conditions; and misjudgments in the course of preparing
forward-looking statements. Other factors are discussed in our
filings with the Securities and Exchange Commission.
Microllam-Registered Trademark-, Parallam-Registered Trademark-,
TJI-Registered Trademark- joist, and TimberStrand-Registered
Trademark- are registered trademarks of Trus Joist MacMillan a
Limited Partnership, Boise, Idaho.
44
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited in accordance with generally accepted auditing
standards, the financial statements included in TJ International,
Inc.'s annual report to shareholders included in this Form 10-K,
and have issued our report thereon dated February 2, 1999. Our
audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedules listed in Part IV,
Item 14(a)(2) are the responsibility of the Company's management
and are presented for purposes of complying with the Securities
and Exchange Commissions rules and are not part of the basic
financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
------------------------------
Boise, Idaho
February 2, 1999
45
<PAGE>
SCHEDULE I
----------
<TABLE>
<CAPTION>
TJ INTERNATIONAL, INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
FOR THE YEARS ENDED JANUARY 2, 1999, JANUARY 3, 1998 AND DECEMBER 28,
1996
CONDENSED BALANCE SHEETS (in thousands)
<S> <C> <C> <C>
1/2/99 1/3/98 12/28/96
------ ------ --------
ASSETS
Current assets
Cash and cash equivalents $ 3,261 $ 29,276 $ 25,998
Receivables 3,901 5,099 8,422
Intercompany receivables 4,957 5,280 250
Deferred income taxes 3,610 3,382 4,985
Other 265 236 97
-------- -------- --------
15,994 43,273 39,752
Property
Property, plant & equipment 4,002 4,004 4,004
Accumulated depreciation (587) (361) (128)
-------- -------- --------
3,415 3,643 3,876
Deferred income taxes --- --- 6,049
Investment in subsidiaries 251,598 225,318 202,005
Intercompany notes receivable 132,990 132,990 78,740
Other assets 1,007 2,062 4,122
-------- -------- --------
$405,004 $407,286 $334,544
-------- -------- --------
-------- -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 893 $ 3,125 $ 2,239
Accrued liabilities 2,091 1,541 698
-------- -------- --------
2,984 4,666 2,937
Long-term debt 125,990 125,990 71,740
Deferred income taxes 17,403 5,263 ---
Other long-term liabilities 12,135 12,473 9,827
Reserve for discontinued operations 13,687 17,482 21,970
Stockholders' equity
ESOP Convertible Preferred Stock 13,271 13,535 13,721
Guaranteed ESOP Benefit (7,288) (8,188) (9,204)
Common stock 18,069 17,807 17,501
Paid-in capital 160,863 153,936 145,583
Retained earnings 104,183 82,311 60,469
Other (1,949) (1,730) ---
Treasury stock (54,344) (16,259) ---
-------- -------- --------
232,805 241,412 228,070
-------- -------- --------
$405,004 $407,286 $334,544
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
SCHEDULE I
----------
<TABLE>
<CAPTION>
TJ INTERNATIONAL, INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
FOR THE YEARS ENDED JANUARY 2, 1999, JANUARY 3, 1998 AND DECEMBER 28,
1996
CONDENSED STATEMENTS OF INCOME (in thousands, except per share information)
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
Equity in earnings of subsidiaries $ 45,705 $ 41,316 $ 24,934
Administrative expenses (2,028) (1,912) (1,264)
Interest income, net 1,289 1,586 1,062
-------- -------- --------
Income before income taxes 44,966 40,990 24,732
Income taxes 16,124 13,465 8,557
-------- -------- --------
Net Income $ 28,842 $ 27,525 $ 16,175
-------- -------- --------
-------- -------- --------
Net income per share
Basic $ 1.69 $ 1.55 $ 0.88
-------- -------- --------
-------- -------- --------
Diluted $ 1.57 $ 1.44 $ 0.82
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
SCHEDULE I
----------
<TABLE>
<CAPTION>
TJ INTERNATIONAL, INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
FOR THE YEARS ENDED JANUARY 2, 1999, JANUARY 3, 1998 AND DECEMBER 28,
1996
CONDENSED STATEMENTS OF CASH FLOWS (in thousands)
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ (2,249) $ 16,048 $ (6,205)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of
discontinued operations $ --- $ --- $ 24,035
Payments of discontinued operations
liabilities (2,776) (2,460) (10,733)
Other, net --- --- 134
Net cash provided by (used in) -------- -------- --------
investing activities $ (2,776) $ (2,460) $ 13,436
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid on common stock $ (3,666) $ (3,823) $ (3,791)
Cash dividends paid on preferred stock (1,208) (2,473) ---
Cash distributions received from
consolidated subsidiaries 21,285 16,759 8,285
Net intercompany borrowings 323 (5,030) 2,530
Intercompany long-term debt borrowings --- (54,250) (5,740)
Proceeds from the issuance of
long-term debt 6,710 54,250 5,740
Principal payments of long-term debt (6,710) --- (7,040)
Purchase of treasury stock (38,085) (16,259) ---
Other, net 361 516 552
-------- -------- --------
Net cash used in financing activities $(20,990) $(10,310) $ 536
-------- -------- --------
NET CHANGE IN CASH AND CASH
EQUIVALENTS
Net increase (decrease) in cash and
cash equivalents $(26,015) $ 3,278 $ 7,767
Cash and cash equivalents at beginning
of year 29,276 25,998 18,231
-------- -------- --------
Cash and cash equivalents at
end of year $ 3,261 $ 29,276 $ 25,998
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
EXHIBIT 10
FIRST SUPPLEMENTAL TRUST INDENTURE
This FIRST SUPPLEMENTAL TRUST INDENTURE (the "First
Supplemental Indenture"), made and entered into as of the first
day of November, 1998, by and between the PARISH OF NATCHITOCHES,
STATE OF LOUISIANA, a political subdivision of the State of
Louisiana (the "Issuer"), and BANK ONE TRUST COMPANY, N.A.
(successor to The First National Bank of Shreveport), in the City
of Shreveport, Louisiana (the "Trustee"),
W I T N E S S E T H:
WHEREAS, the Issuer has issued its $10,000,000 Variable Rate
Demand Refunding Bonds (Trus Joist Corporation Project) Series
1988 dated September 14, 1988 (the "Bonds") for the purpose of
refunding all of the Issuer's Industrial Revenue Bonds (Trus
Joist Corporation Project) Series 1984, pursuant to a Trust
Indenture dated as of September 1, 1988 (the "Indenture"), by and
between the Issuer and Bank One Trust Company, N.A. (successor to
The First National Bank of Shreveport), as trustee (the
"Trustee"); and
WHEREAS, in connection with the issuance of the Bonds, the
Issuer has also entered into a Refunding Agreement dated as of
September 1, 1988 (the "Refunding Agreement") with TJ
International, Inc. (formerly Trus Joist Corporation), a Delaware
corporation (the "Corporation"); and
WHEREAS, Article XI of the Indenture allows the Issuer and
the Trustee to enter into an indenture or indentures supplemental
to the Indenture with the consent of the holders of all of the
outstanding Bonds; and
WHEREAS, the sole bondholder has consented in writing to the
execution and delivery by the Issuer and the Trustee of this
First Supplemental Indenture to extend the maturity of the Bonds
and make such other changes as may be necessary to effectuate the
delivery of the Alternate Credit Facility (as defined in the
Indenture), which consent is evidenced by its execution of the
"Consent" attached to this First Supplemental Indenture; and
WHEREAS, the Corporation has consented to the terms,
conditions and other details of this First Supplemental
Indenture, which consent is evidenced by its execution of the
"Consent" attached to this First Supplemental Indenture; and
WHEREAS, the Corporation is also providing for the delivery
of an Alternate Credit Facility (as defined in the Indenture) to
be issued by Wachovia Bank, N.A. (the "Credit Bank"), and in
connection therewith it is necessary to make certain changes
which have been consented to by the sole bondholder and the
Credit Bank (such consent is also attached hereto); and
WHEREAS, the Issuer, the Corporation and the Trustee wish to
amend the Indenture and the Bonds issued thereunder in order to
extend the maturity date of the Bonds as set forth herein, and
provide for other matters as set forth herein; and
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration and of the mutual benefits,
covenants and agreements herein expressed, the Issuer and the
Trustee hereby agree as follows:
SECTION 1. All terms used herein, except otherwise noted,
shall have the same meanings assigned to them in the Indenture.
SECTION 2. Section 101 of the Indenture is hereby amended
by amending the definitions of Business Day and Pledged Bonds to
read as follows:
"Business Day" means a day (a) other than a Saturday or
Sunday or a day on which banks located in the city in which the
principal office of the Trustee or the office of the Credit Bank
at which drawing documents are required to be presented under the
Letter of Credit are required or authorized to close and (b) on
which the New York Stock Exchange is not closed."
<PAGE>
"Pledged Bonds" means Bonds purchased pursuant to a
drawing under the Letter of Credit, which Bonds are pledged by
the Company to the Credit Bank and in which Bonds the Company has
granted to the Credit Bank a security interest provided for in
the Reimbursement Agreement, but not including Bonds released
from such pledge and security interest under the terms of the
Reimbursement Agreement."
SECTION 3. Section 201 of the Indenture is hereby amended
to read as follows:
"SECTION 201. Limitation on Issuance of Bonds. No
Bonds may be issued under the provisions of this Indenture except
in accordance with the provisions of this Article. There is
hereby created for issuance under this Indenture a series of
bonds designated "Parish of Natchitoches, State of Louisiana
Variable Rate Demand Refunding Bonds (Trus Joist Corporation
Project) Series 1988" in the aggregate principal amount of Ten
Million Dollars ($10,000,000), maturing on October 1, 2005
(subject to prior redemption upon the terms and conditions
hereinafter set forth), and numbered consecutively from R-1
upwards. The Bonds shall be dated the date of delivery thereof
to the initial purchasers, and shall bear interest as hereinafter
set forth, and each Bond shall rank on a parity with all other
Bonds issued hereunder with respect to all matters of security
provided for herein."
SECTION 4. The maturity date listed in Exhibit A of the
Indenture on the Form of Bond is hereby amended to October 1,
2005 and the Form of Bond shall be as attached hereto as Exhibit
A.
SECTION 5. Upon execution and delivery of this First
Supplemental Indenture, the bondholder agrees to deliver the
Bonds to the Trustee and the Trustee agrees to deliver a new Bond
or Bonds to the Bondholder or its designee bearing the changes
set forth in the Form of Bond attached hereto as Exhibit A.
SECTION 6. Reference is made to the Indenture, the terms of
which are incorporated herein by reference, and the Indenture,
other than as modified hereby, is hereby ratified and confirmed
in its entirety.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this First
Supplemental Trust Indenture to be executed in its name and its
seal to be hereunto affixed and attested by its duly authorized
officer, all as of the date first above written but actually
executed on this 1st day of December, 1998.
PARISH OF NATCHITOCHES, STATE
OF LOUISIANA
By: \s\ Joe Mitchell, Jr.
-----------------------------
- -------------------------------- President
ATTEST:
By: \s\ Bobby W. Deen
---------------------------
Parish Administrator
(SEAL)
WITNESSES:
\s\ W. T. O'Donnell
- --------------------------------
\s\ Sadie Metoyer
- --------------------------------
\s\ Linda Cockrell
-----------------------------------
Notary Public
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this First
Supplemental Trust Indenture, to be executed in its name and its
seal to be hereunto affixed and attested by its duly authorized
officer, all as of the date first above written but actually
executed on this 1st day of December, 1998.
BANK ONE TRUST COMPANY, N.A.
By: \s\ Brenda W. Lupo
------------------------------
Trust Officer
(SEAL)
WITNESSES:
\s\ Hazel L. Fincher
- --------------------------------
\s\ Rosie B. Mays
- --------------------------------
\s\ Gwen Russell
-----------------------------------
Notary Public
<PAGE>
EXHIBIT A
(FORM OF BOND)
No. R- 189 Principal Amount:
$10,000,000
UNITED STATES OF AMERICA
PARISH OF NATCHITOCHES,
STATE OF LOUISIANA
VARIABLE RATE DEMAND REFUNDING BOND
(TRUS JOIST CORPORATION PROJECT) SERIES 1988
Maturity Date: Bond Date: CUSIP:
--------------- ----------- -------
October 1, 2005 September 14, 1988 63204E AA 9
The Parish of Natchitoches, State of Louisiana (the
"Issuer"), a political subdivision of the State of Louisiana, for
value received, hereby promises to pay, to
CHASE BANK - DTC
TO CREDIT ACCOUNT OF CEDE & CO.
solely from the sources provided therefor as hereinafter set
forth, to the Registered Owner set forth above or registered
assigns or legal representative, the Principal Amount set forth
above on the Maturity Date set forth above (or earlier as
hereinafter set forth), upon presentation and surrender hereof at
the principal corporate trust office of The First National Bank
of Shreveport, in the City of Shreveport, Louisiana, as paying
agent, or its successor as paying agent (the "Paying Agent").
The Issuer also promises to pay, but solely from the sources
described herein, interest from the Interest Payment Date next
preceding the date on which this Bond is authenticated, unless it
is authenticated on an Interest Payment Date, in which event it
shall bear interest from such date, or if it is authenticated
prior to December 1, 1988, in which event it shall bear interest
from the Bond Date set forth above, payable on the dates and at
the rates per annum determined as hereinafter set forth until the
Principal Amount hereof is paid.
Subject to the hereinafter described redemption provisions,
prior to the Conversion Date (hereinafter defined) interest on
this Bond is payable on the first Business Day (as defined in the
Indenture) of each March, June, September and December,
commencing the first Business Day of December, 1988; after the
Conversion Date, interest on this Bond is payable on the first
Business Day of January and July of each year; and the final
interest payment on this Bond is payable on the final maturity or
redemption date of the Bonds (collectively, the "Interest Payment
Dates"). The interest so payable and punctually paid or duly
provided for on any Interest Pavment Date, will, as provided in
the Indenture (hereinafter defined), be paid to the person in
whose name this Bond is registered as Registered Owner as of the
close of business on the Regular Record Date for such interest
payment, which prior to the Conversion Date, shall be the
Business Day immediately preceding theand after the Conversion
Date shall be the fifteenth day of the calendar month immediately
preceding such Interest Payment Date, whether or not such day is
a Business Day. Such payment of interest shall be by check or
draft mailed to the Registered Owner at his address as it appears
on the bond registration books maintained by the Paying Agent;
provided, however, that with respect to Bonds in the denomination
of $1,000,000 or more, at the option of the Registered Owner
thereof, interest may be paid by wire transfer in immediately
available funds to the bank and account designated in writing by
such Registered Owner to the Paying Agent at least seven (7) days
prior to the first payment date as to which such election shall
be effective. The principal of and redemption premium, if any,
on all Bonds shall be payable at the principal corporate trust
office of the Paying Agent, upon the presentation and surrender
of such Bonds as the same shall become due and payable or are
redeemed. The interest rates borne by this Bond are described on
the reverse hereof.
This Bond is authorized pursuant to the laws of the State of
Louisiana, particularly Chapter 14-A of Title 39 of the Louisiana
Revised Statutes of 1950, as amended (collectively, the "Act").
This Bond and the interest and
<PAGE>
redemption premium, if any, hereon shall not be deemed to
constitute or to create in any manner an obligation, general or
special, debt, liability or moral obligation of the State of
Louisiana, the Parish of Natchitoches or of any political
subdivision of either thereof or a pledge of the faith and credit
of the State of Louisiana, the Parish of Natchitoches or any
political subdivision thereof within the meaning of any
constitutional or statutory provision whatsoever, but shall be a
limited obligation of the Issuer payable solely from the revenues
and other funds pledged therefor under the Indenture and shall
not be payable from any assets or funds of the Issuer other than
the revenues and other funds pledged therefor, and neither the
faith and credit nor the taxing power of the State of Louisiana,
the Parish of Natchitoches or any political subdivision of either
thereof is pledged to the payment of the principal of or the
interest or redemption premium, if any, on this Bond.
This Bond is one of a duly authorized series of variable
rate demand bonds of the Issuer in the aggregate principal amount
of $10,000,000, designated "Parish of Natchitoches, State of
Louisiana Variable Rate Demand Refunding Bonds (Trus Joist
Corporation Project) Series 1988" (the said bonds are herein
referred to as the "Bonds"). All of the Bonds are issued under
and pursuant to the Trust Indenture dated as of September 1, 1988
(said Trust Indenture, together with all such supplements and
amendments thereto as therein permitted, being herein called the
"Indenture") between the Issuer and The First National Bank of
Shreveport, of Shreveport, Louisiana, as trustee (said trustee
and any successor trustee under the Indenture being herein called
the "Trustee"). An executed counterpart of the Indenture is on
file at the principal corporate trust office of the Trustee.
Reference is hereby he provisions, among others, with respect to
the custody and application of the proceeds of the Bonds, the
collection and disposition of revenues, a description of the
funds charged with and pledged to the payment of the principal of
and redemption premium, if any, and interest on the Bonds, the
nature and extent of the security, the terms and conditions under
which the Bonds are issued, the rights, duties and obligations of
the Issuer and of the Trustee and the rights of the Registered
Owners of the Bonds, and, by the acceptance of this Bond, the
Registered Owner hereof assents to all of the provisions of the
Indenture. All terms used herein and not otherwise defined shall
have the same meaning as set forth in the Indenture.
The Bonds have been issued for the purpose of providing a
portion of the funds necessary to refund all of the Issuer's
outstanding Industrial Revenue Bonds (Trus Joist Corporation
Project) series 1984 (the "Prior Bonds). The Prior Bonds were
issued to finance the cost of the acquisition, construction and
renovation of an industrial plant building and the equipping of
such building for use as a wood laminating facility, in the
Parish of Natchitoches, Louisiana (the "Project"). The Issuer
has entered into a Refunding Agreement dated as of September 1,
1988 (the "Agreement") with Trus Joist Corporation, a corporation
organized and existing under the laws of the State of Delaware
and qualified to do business in the State of Louisiana (herein,
together with any successor permitted under the Agreement, called
the "Company"), under which the Issuer has agreed to make
available to the Company the proceeds of the Bonds for the
aforesaid purpose and the Company has agreed to repay such
amounts. The Agreement provides that the Company will make
payments in such amounts and at such times as are required to
provide for timely payment of the principal of, premium, if any,
and interest on the Bonds. The Agreement provides that the
Company is to make the payments directly to tnt of the Issuer.
The Agreement also provides for the payment by the Company of
certain fees and expenses of the Issuer, the Trustee, the Credit
Bank (hereinafter defined) and the Paying Agent.
Pursuant to the Indenture the Issuer has, for the benefit of
the Registered Owners of the Bonds, assigned the Issuer's rights
under the Agreement, including all its rights, title and interest
therein and its right to receive payments thereunder (subject to
the reservation of certain rights of the Issuer, including its
rights to notices, payment of certain expenses and indemnity), to
the Trustee. The Indenture further provides that the payments
made pursuant to the Agreement are to be deposited with the
Trustee to the credit of a special fund designated "Parish of
Natchitoches, State of Louisiana Bond Fund - Trus Joist
Corporation Project" (herein referred to as the "Bond Fund"),
which fund is equally and ratably pledged to and charged with the
<PAGE>
payment of the principal of, redemption premium, if any, and
interest on all Bonds issued under the Indenture, subject to
certain rights of the Credit Bank which are more fully described
in the Indenture.
The Company has caused to be delivered to the Paying Agent
an Irrevocable Letter of Credit (the "Letter of Credit") issued
by National Westminster Bank PLC, San Francisco Overseas Branch
the principal office of which is located in the City of San
Francisco, California (the "Credit Bank"), in the initial amount
of $10,407,671 (an amount equal to the sum of the aggregate
principal amount of and 124 days' interest on the Bonds at a rate
of 12% per annum) for the purpose of providing for the payment of
the principal (by reason of maturity, acceleration or redemption)
and purchase price of, and interest on the Bonds which have not
been converted to a Fixed Rate, as hereinafter described. The
Initial Letter of Credit expires on September 14, 1993 (the
"Expiration Date") unless earlier terminated in accordance with
the terms thereof, and is subject to extension at the option of
the Company and the Credit Bank. Subject to the limitations and
conditions contained in the Indenture, the Company may, at its
option, provide for the delivery to the Paying Agent of an
Alternate Credit Facility (as defined in the Indenture) but only
on the dates and under the conditions provided in the Indenture.
The Bonds are further secured by a Collateral Mortgage
affecting the Project, which Collateral Mortgage is held by the
Trustee pursuant to a Collateral Pledge Agreement dated as of
September 1, 1988, as security for (i) the Company's obligations
under the Agreement, and (ii) the Reimbursement Agreement, dated
as of September 1, 1988 between the Company and the Credit Bank
(the "Reimbursement Agreement") which relates to the Letter of
Credit.
Prior to issued in denominations of $100,000 or any integral
multiple thereof; after the Conversion Date, the Bonds shall be
issued in denominations of $5,000 or any integral multiple
thereof. At the principal corporate trust office of the Paying
Agent, in the manner and subject to the limitations, conditions
and charges provided in the Indenture, Bonds may be exchanged for
an equal aggregate principal amount of Bonds, of other authorized
denominations and bearing interest at the same rate.
This Bond shall bear interest initially at the Floating
Interest Rate, as described below, from and including the date of
original issuance, except that the interest rate on this Bond may
be converted to a Fixed Rate as more fully provided herein. The
date on which the interest rate on the Bonds is effectively
converted to a Fixed Rate shall be known as the "Conversion
Date".
I. Floating Interest Rates.
(a) Determination of Floating Interest Rates. The Floating
Interest Rates to be applicable to the Bonds prior to the
Conversion Date shall be determined by the herein defined
Remarketing Agent under the Remarketing Agreement (the
"Remarketing Agreement") on the Business Day next preceding the
commencement of each Rate Period (a "Determination Date") and
notice thereof shall be given as follows:
(i) Notice of each such Floating Interest Rate shall
be made available, on the Business Day immediately succeeding
each Determination Date, by the Paying Agent to the holders of
Bonds to which such rates will be applicable.
(ii) The Floating Interest Rate so to be determined
shall be determined by the Remarketing Agent as that rate which,
if borne by the Bonds, would, in the sole judgement of the
Remarketing Agent exercised with due regard for prevailing
financial market conditions, be the interest rate necessary, but
which would not exceed the interest rate necessary, to enable the
Remarketing Agent to sell the Bonds at the principal amount
thereof (plus accrued interest); provided that (A) if the
Remarketing Agent shall fail to determine the Floating Interest
Rate on the Determination Date, then the Floating Interest Rate
for such Rate Period shall be the Floating Interest Rate for the
immediately preceding Rate Period; and (B) in no event shall the
Floating Interest Rate for any Rate Period exceed the Maximum
Rate.
<PAGE>
(iii) All determinations of Floating Interest Rates
pursuant to the Indenture shall be conclusive and binding upon
the Registered Owners of the Bonds to which such rates are
applicable. The Issuer, the Company, the Trustee, the Paying
Agent and the Re marketing Agent shall not be liable to any
Bondholder for failure to give any notice required above.
(b) Rate Periods. A Floating Interest Rate shall be
determined weekly for each Rate Period as follows:
(i) Rate Periods shall commence on the date of
issuance of the Bonds and thereafter on Wednesday of each week,
and shall end on Tuesday of the following week.
(ii) The Floating Interest Rate for each Rate Period
shall be effective from and including the commencement date of
such Rate Period and shall remain in effect through and including
the last day thereof. Each such Floating Interest Rate shall be
determined not later than 1:00 p.m., San Francisco time, on the
applicable Determination Date. Notice of each such Floating
Interest Rate shall be given in accordance with the provisions of
(a)(i) above.
II. Fixed Rate Conversion at Option of Company. At the
option of the Company, with the prior written approval of the
Credit Bank in certain circumstances, the Bonds shall be
converted by the Issuer to bear interest at a Fixed Rate as
hereinafter provided. Any such conversion shall be made as
follows:
(a) The Conversion Date shall be a Business Day.
(b) No more than two Business Days after receipt of notice
by the Company of its election to convert the interest rate on
the Bonds to a Fixed Rate, which notice must be received by the
Issuer not less than 30 days prior to the Conversion Date, the
Paying Agent shall mall a notice of the proposed conversion to
all affected Bondholders. Such notice shall inform the affected
Bondholders of (i) the proposed Conversion Date and the fact that
the Fixed Rate conversion may be cancelled under the
circumstances described below in III(d); (ii) the dates on which
the Remarketing Agent will determine and the Paying Agent will
notify the Bondholders of the Fixed Rate pursuant to (c) below;
(iii) that all Bonds for which no notice of election to retain
such Bonds has been received by the Paying Agent in accordance
with Section 215(a) of the Indenture shall be deemed tendered and
shall be purchased on the Conversion Date; (iv) the redemption
provisions applicable to the Bonds from and after the Conversion
Date; and (v) the procedure for electing to retain Bonds on the
Conversion Date.
(c) Not later than 1:00 p.m., San Francisco such 15th day
is not a Business Day) the Remarketing Agent shall determine the
Fixed Rate as follows: the Fixed Rate shall be the lowest rate
which, in the judgment of the Remarketing Agent as of the date of
determination and under prevailing market conditions, would cause
the Bonds (taking into account the credit quality of the Bonds)
to have a market value in a secondary market transaction equal to
the principal amount thereof, plus accrued interest.
III. Mandatory Fixed Rate Conversion. (a) The Bonds shall
be subject to mandatory conversion to a Fixed Rate (each a
"Mandatory Conversion Date"):
(i) On the Interest Payment Date immediately preceding
the Expiration Date of the Letter of Credit, or the first
business day thereafter, provided that no such conversion shall
be required if the initial Letter of Credit is renewed prior to
the Expiration Date, as provided in the Reimbursement Agreement,
or an Alternate Credit Facility is provided to the Paying Agent,
until the Interest Payment Date immediately preceding the
extended Expiration Date.
(ii) On a Business Day not later than sixty (60) days
after the institution of bankruptcy, insolvency, liquidation or
other similar proceedings by or against the Credit Bank, unless
other appropriate actions permitted by the Indenture are taken
prior to such date in order
<PAGE>
to prevent such a default or proceedings from becoming an Event
of Default under the Indenture, provided that no such conversion
shall be required if an Alternate Credit Facility is provided to
the Paying Agent.
(b) Not later than fifteen (15) days prior to the Mandatory
Conversion Date, the Paying Agent shall mail a written notice of
the conversion to the holders of all Bonds, which notice shall
(i) specify the Mandatory Conversion Date, (ii) specify the event
requiring the conversion pursuant to subsection (a) above and the
circumstances under which the conversion will not be required as
of the Mandatory Conversion Date pursuant to such subsection,
(iii) specify the dates on which the Remarketing Agent will
determine and the Paying Agent will notify the Bondholders of the
Fixed Rate for the Bonds, and (iv) set forth the procedure for
electing to retain Bonds on the Conversion Date.
(c) Not later than 1:00 p.m., San Francisco time, on the
10th day immediately preceding the Conversion Date (or the
immediately succeeding Business Day, if such 10th day is not a
Business Day), the Remarketing Agent shall determine the Fixed
Rate, in the manner described with respect to Fixed Rate
conversions at the option of the Company not later than 1:00
p.m., San Francisco time. On the immediately succeeding Business
Day, the Paying Agent shall give notice of such rate by
telephone, telegram, telecopy, telex or other similar
communication to all Bondholders who have elected to retain their
Bonds.
Notwithstanding the foregoing provisions to the contrary
with respect to the payment of interest, the interest rate borne
by the Bonds shall not at any time exceed the lower of (i) the
maximum interest rate permitted under the laws of the State or
(ii) prior to the Conversion Date, 12% per annum, or such higher
rate which shall be permitted if the Letter of Credit has been
increased to provide for interest payments on the Bonds at the
higher rate.
(d) A conversion of the Bonds to a Fixed Rate shall be
cancelled, and shall be of no effect whatsoever, upon the
occurrence of any of the following events:
(i) Election by the Company upon notice to the
Trustee, the Remarketing Agent, the Credit Bank and the Paying
Agent no less than sixteen (16) days prior to a proposed Fixed
Rate Conversion Date, to cancel the conversion; or
(ii) In the event that, for any reason including
failure of the Remarketing Agent to remarket the Bonds or failure
of the Paying Agent to receive the proceeds of such remarketing,
the Paying Agent shall not have received moneys sufficient to pay
the Purchase Price of the Bonds to be converted by 7:00 a.m., San
Francisco time, on the proposed Conversion Date.
(iii) The opinion of Bond Counsel required by the
Indenture is not confirmed on the Conversion Date.
Upon the occurrence of a failed Fixed Rate Conversion, as
described above, the Bonds shall continue to bear interest from
the proposed Conversion Date at the same Floating Interest Rate
as was applicable to the Bonds before the proposed Conversion
Date (provided, however, that no Rate Period may exceed the
remaining term of the Initial Letter of Credit or an Alternate
Letter of Credit), however the Remarketing Agent shall determine
an interest rate to be borne by such Bonds for the next Rate
Period as soon as practicable, such rate to be the rate which, in
the judgment of the Remarketing Agent, would cause the Bonds to
have a market value in a secondary market transaction equal to
the principal amount thereof, plus accrued interest. Upon the
occurrence of a failed Fixed Rate conversion, as described above,
all Bonds (including any Bonds for which owners have elected to
retain) shall be deemed tendered to the Paying Agent on the
proposed Conversion Date, and shall be remarketed by the
Remarketing Agent. Except as provided in this paragraph,
conversion of the Bonds to a Fixed Rate shall become effective on
the Conversion Date.
From and after the Conversion Date for the Bonds, the annual
rate of interest payable on the Bonds shall be permanently fixed
and all provisions of
<PAGE>
the Bonds stated to be applicable only prior to the Conversion
Date shall be of no further force and effect. From and after the
Conversion Date, Owners of such Bonds will no longer have the
right to tender such Bonds to the Paying Agent for purchase.
From and after the Conversion Date, such Bonds may not have the
benefit of the Letter of Credit. From and after the Conversion
Date, the Trustee shall perform the duties of the Paying Agent
set forth in the Indenture.
IV. Tenders During Floating Interest Rate Period.
(a) Purchase Dates. Prior to the portions thereof in
amounts equal to the lowest denomination then authorized or whole
multiples of such lowest denomination) purchased at a purchase
price equal to 100% of the principal amount of such Bonds (or
portions thereof), plus accrued interest (if the purchase date is
other than an Interest Payment Date), on any Business Day prior
to the Conversion Date, upon delivery of a written notice of
tender to the Paying Agent and Remarketing Agent not later than
12:00 noon, San Francisco time, on a Business Day not less than
seven (7) days prior to the purchase date, unless such seventh
day is not a Business Day, in which case such notice may specify
the next preceding Business Day.
(b) Notice of Tender. Each notice of tender:
(i) shall be delivered to the Paying Agent and the
Remarketing Agent in writing at its principal corporate trust
office and be in the form attached to the Indenture and
satisfactory to the Paying Agent;
(ii) shall state (A) the principal amount and number of
the Bond to which the notice relates, (B) that the Bondholder
irrevocably demands purchase of such Bond or a specified portion
thereof in an amount equal to the lowest denomination then
authorized or a whole multiple of such lowest denomination, and
(C) the date on which such Bond or portion thereof is to be
purchased; and
(iii) shall automatically constitute (A) an
irrevocable offer to sell the Bond (or portion thereof) to which
the notice relates on the purchase date to any purchaser selected
by the Remarketing Agent, at a price equal to the principal
amount of such Bond (or portion thereof) plus any interest
thereon accrued and unpaid as of the purchase date, (B) an
irrevocable authorization and instruction to the Paying Agent to
effect transfer of such Bond (or portion thereof) upon payment of
such price to the Paying Agent on the purchase date, (C) an
irrevocable authorization and instruction to the Paying Agent to
effect the exchange of the Bond to be purchased in whole or in
part for other Bonds in an equal aggregate principal amount so as
to facilitate the sale of such Bond (or portion thereof to be
purchased), and (D) an acknowledgment that such Bondholder will
have no further rights with respect to such Bond (or portion
thereof) upon payment of the purchase price thereof to the Paying
Agent on the purchase date, except for the right of such holder
to receive such purchase price upon surrender of such Bond to the
Paying Agent.
The determination of the Paying Agent as to whether a notice
of tender has been properly delivered pursuant to the foregoing
shall be conclusive and binding upon the holder.
(c) Payments of Purchase Price. By the close of business on
the date set for purchase of tendered Bonds, and upon receipt by
the Paying Agent of 100% of the aggregate purchase price of the
tendered Bonds, the Paying Agent shall pay the purchase price of
such Bonds to the holders thereof at its principal corporate
trust office or by bank wire transfer. Such payments shall be
made in immediately available funds.
(d) Delivery of Bonds; Effect of Failure to Surrender
Bonds. All Bonds to be purchased on any date shall be required
to be delivered by 7:00 a.m. San Francisco time on the date of
purchase to the principal corporate trust office of the Paying
Agent, prior to payment therefor, in order for the Bondholder to
be entitled to payment on such date, except that such delivery
shall not be
<PAGE>
required in the case of the Bonds of any holder which have been
resold by the Remarketing Agent to the same holder. If the
holder of any Bond (or portion thereof) that is subject to
purchase fails to deliver such Bond to the Paying Agent for
purchase on the purchase date, and if the Paying Agent is in
receipt of the purchase price there for, such Bond (or portion
thereof) shall nevertheless be deemed purchased on the day fixed
for purchase thereof and ownership of such Bond (or portion
thereof) shall be transferred to the purchaser thereof. Any
Bondholder who fails to deliver a Bond for purchase as required
above shall have no further rights thereunder except the right to
receive the purchase price thereof upon presentation and
surrender of said Bond to the Paying Agent.
V. Mandatory Tender Upon Fixed Rate Conversion, Delivery
of Alternate Credit Facility or Expiration Date.
(a) Mandatory Tenders. Any Bonds to be converted to bear
interequal to the principal amount thereof, plus accrued
interest, except Bonds which have been retained as described
herein. The Bonds are also subject to mandatory tender for
purchase at a purchase price equal to the principal amount
thereof plus any accrued interest on the Interest Payment Date
immediately preceding the Expiration Date of the Letter of Credit
or the effective date of any substitution of an Alternate Credit
Facility. Notwithstanding the foregoing, the holders of any such
Bonds may elect to retain their Bonds by delivering a written
notice of such election to the Paying Agent at its principal
corporate trust office not later than 1:00 p.m., San Francisco
time, on the date of determination of the Fixed Rate for the
Bonds in the case of tenders on a Conversion Date or on a
Business Day which is not less than seven (7) days prior to the
purchase date (in the case of a tender by reason of the
Expiration Date or the substitution of an Alternate Credit
Facility). Such written notice shall (i) state that the person
delivering the same is a Bondholder (specifying the numbers and
denominations of the Bonds of such holder), (ii) state that the
Bondholder is aware of the fact that, after the Conversion Date,
the Bonds will no longer be subject to tender at the option of
the holder, (iii) state, in the case of a substitution of an
Alternate Credit Facility, that the Bondholder is aware of the
fact that on and after the date of the substitution, the rating
or ratings, if any, assigned to the Bonds may be lowered or
withdrawn, (iv) state, in the case of the Conversion Date, that
the Bondholder is aware that after the Conversion Date the Bonds
will not be entitled to the benefits of a Letter of Credit and
that after the Conversion Date the ratings, if any, on the Bonds
may be lowered or withdrawn, and (v) direct the Paying Agent not
to purchase the Bonds of such holder. Any notice delivered to
the Paying Agent pursuant to this subsection shall be irrevocable
and binding upon the holder delivering the same and all
subsequent holders of the Bonds to be retained, including any
Bonds issued in exchange therefor or upon transfer thereof.
(b) Payments of Purchase Price. All payments to tendering
Bondholders shall be made as provided above with respect to
tenders prior to the Conversion Date, provided that all such
payments shall be made in immediately available funds.
(c) Delivery of Bonds; Effect of Failure to Surrender
Bonds. All Bonds to be purchased on any date shall be required
to be delivered to the principal corporate trust office of the
Paying Agent in the manner provided above with respect to tenders
during Floating Interest Rate Period. If the holder of any Bond
(or portion thereof) that is subject to purchase fails to deliver
such Bond to the Paying Agent for purchase on the purchase date,
and if the Paying Agent is in receipt of the purchase price
therefor, such Bond (or portion thereof) shall nevertheless be
deemed purchased on the day fixed for purchase thereof and
ownership of such Bond (or portion thereof) shall be transferred
to the purchaser thereof. Any Bondholder who fails to deliver a
Bond for purchase as required above shall have no further rights
hereunder except the right to receive the purchase price hereof
upon presentation and surrender of said Bond to the Paying Agent.
The Issuer has appointed The First National Bank of
Shreveport, of Shreveport, Louisiana, as Paying Agent under the
Indenture. The Paying Agent may be removed and replaced in
accordance with the provisions of the Indenture. The principal
office of the Paying Agent is 400 Texas Street, Shreveport,
<PAGE>
Louisiana 71154, or such other address designated in writing by
the Paying Agent to the Trustee.
The Issuer has appointed Piper, Jaffray & Hopwood, Inc., of
Seattle, Washington, as Remarketing Agent under the Indenture.
The Remarketing Agent may be removed and replaced in accordance
with the provisions of the Indenture. The principal office of
the Remarketing Agent is 1600 IBM Building, Seattle, Washington
98124-1920, or such other address designated in writing by the
Remarketing Agent to the Trustee.
VI. Redemption of Bonds. The Bonds shall not be subject to
prior redemption except as follows:
(a) Optional Redemption. Prior to the Conversion Date, the
Bonds are subject to redemption prior to their scheduled
maturity, at the option of the Company, on any Interest Payment
Date on or after September 1, 1989, at a redemption price of 100%
of the principal amount thereof, without premium. After the
Conversion Date, the Bonds are subject to redemption prior to
their scheduled maturity, at the option of the Company, in whole
or in part on an Interest Payment Date occurring on and after the
fifth year after the Conversion Date at a redemption price of
100% of the principal amount thereof, without premium.
In respect of any optional redemption provided for above, if
less than all of the Bonds shall be called for redemption, the
particular Bonds or portions of Bonds to be redeemed shall be
selected by the Trustee by lot, provided, however, that Pledged
Bonds, if any, shall be called for redemption, in the same
manner, prior to any other Bonds.
(b) Extraordinary Optional Redemption. All Bonds are
subject to redemption in whole or in part, whether prior or
subsequent to the Conversion Date, at the option of the Company,
at a redemption price equal to the principal amount thereof,
without premium, plus accrued interest to the redemption date
upon the occurrence of any of the following events:
(i) all or any part of the Project is damaged,
destroyed, or condemned or title to all or any part of the
Project shall have been lost, or
(ii) changes in the Constitution of the United States
of America or of the State or of legislative or administrative
action, or failure of administrative action by the United States
or the State or any agency or political subdivision of either
thereof, or by reason of any judicial decision,
in either event, to such extent that in the opinion of the
Company and an independent engineer or management consultant not
objected to by the Credit Bank, the Agreement is impossible to
perform without unreasonable delay or unreasonable burdens or
excessive liabilities being imposed on the Company.
(c) Mandatory Redemption. The Bonds are subject to
redemption in whole at any time, whether prior or subsequent to
the Conversion Date, at a redemption price equal to the principal
amount thereof, without premium, plus accrued interest to the
redemption date, upon the occurrence of a "Determination of
Taxability" as described in Section 9.2 of the Agreement.
(d) Extraordinary Mandatory Redemption. Bonds shall be
deemed redeemed prior to maturity upon delivery of such Bonds by
the Credit Bank or the Company to the Paying Agent for
cancellation.
VII. Notice of Redemption. At least 30 days before the
redemption date of any Bonds (or portions thereof) the Trustee
shall cause a notice of any such redemption, signed by the
Trustee on behalf of the Issuer, to be mailed by first-class
mail, postage prepaid, to all Registered Owners whose Bonds shall
have been called for redemption, but failure to mail any such
notice to one or more Registered Owners shall not affect the
validity of the proceedings for such redemption with respect to
the Registered Owners to whom notice was duly mailed hereunder.
No notice of redemption shall be required to be given with
<PAGE>
respect to an Extraordinary Mandatory Redemption pursuant to
VI(d) above. Each such notice shall set forth the date fixed for
redemption, the redemption price to be paid and, if less than all
of the Bonds then outstanding shall be called for redemption, the
numbers of such Bonds to be redeemed and, in the case of Bonds to
be redeemed in part only, the portion of the principal amount
thereof to be redeemed. In case any Bond is to be redeemed in
part only, the notice of redemption which relates to such Bond
shall state also that on or after the redemption date, upon
surrender of such Bond, a new Bond in principal amount equal to
the unredeemed portion of such Bond will be issued. The Trustee
shall not be required to mail any notice of redemption unless its
Administrative Expenses (as defined in the Agreement) shall have
been paid in full by the Company up to and including the date
fixed for redemption. On the date so designated for redemption,
notice having been given in the manner and under the conditions
provided in the Indenture, the Bonds, or portions of Bonds, so
called for redemption shall become and be due and payable at the
redemption price provided for redemption of such Bonds or
portions of Bonds on such date and, if Available Moneys (as
defined in the Indenture) or moneys drawn on the Letter of Credit
for payment of the redemption price and accrued interest shall be
held by the Trustee in trust for the Registered Owners of the
Bonds or portions thereof to be redeemed, all as provided in the
Indenture, interest on the Bonds or portions of Bonds called for
redemption shall cease to accrue, such Bonds or portion cease to
be entitled to any benefit or security under the Indenture, and
the Registered Owners of such Bonds or portions of Bonds shall
have no rights in respect thereof except to receive payment of
the redemption price thereof and accrued interest so held by the
Trustee and, to the extent provided in the Indenture, to receive
Bonds for any unredeemed portion of Bonds.
VIII. Miscellaneous.
The Indenture provides that in the event of certain
defaults, the Bonds will not be remarketed expect in certain
instances.
The Registered Owner of this Bond shall have no right to
enforce the provisions of the Indenture or to institute action to
enforce the covenants therein, or to take any action with respect
to any Event of Default under the Indenture, or to institute,
appear in or defend any suit or other proceeding with respect
thereto, except as provided in the Indenture.
In certain events, on the conditions, in the manner and with
the effect set forth in the Indenture, the principal of all the
Bonds then outstanding under the Indenture may become or may be
declared due and payable before the stated maturities thereof,
together with the interest accrued thereon.
Modifications or alterations of the Agreement and the
Indenture, and any supplement or amendment thereto, may be made
only to the extent and in the circumstances permitted by the
Indenture, and may be made in certain cases without the consent
of all of the Owners of the Bonds.
The transfer of this Bond may be registered by the
Registered Owner hereof in person or by his attorney or legal
representative at the principal corporate trust office of the
Paying Agent, but only in the manner and subject to the
limitations and conditions provided in the Indenture and payment
of certain charges upon surrender and cancellation of this Bond.
Upon any such registration of transfer, the Issuer shall execute
and the Paying Agent shall authenticate and deliver in exchange
for this Bond a new Bond registered in the name of the
transferee, of authorized denominations, in aggregate principal
amount equal to the principal amount of this Bond, of the same
series and maturity and bearing interest at the same rate.
This Bond shall be governed by and construed in accordance
with the laws of the State of Louisiana.
All acts, conditions and things required to happen, exist
and be performed precedent to and in the issuance of this Bond
and the execution of the Indenture have happened, exist and have
been performed as so required. No recourse under, or upon any
statement, obligation, covenant, or agreement contained in the
Indenture or in any Bond thereby secured or in the Agreement
<PAGE>
or in any document or certification whatsoever or under any
judgment obtained against the Issuer or by the enforcement of any
assessment or by any legal or equitable proceeding by virtue of
any constitution or statute or otherwise or under any
circumstance shall ever be had against any member, director,
agent, employee or officer, as such, of the Issuer, either
directly or through the Issuer, or otherwise, for the payment
for, or to, the Issuer or any receiver thereof, or for, or to,
the owner of any Bond may be due and unpaid by the Issuer upon
any such Bond. Any and all personal liability of every nature,
whether at law or in equity, or by statute or by constitution or
otherwise, of any such member, director, agent, employee or
officer, as such, to respond by reason of any act or omission on
his or her part or otherwise for the payment for, or to, the
Issuer or any receiver thereof, or for, or to the owner of any
Bond issued thereunder or otherwise, of any sum that may remain
due and unpaid upon the Bonds thereby secured or any of them, is
hereby expressly waived and released as an express condition of,
and in consideration for, the purchase of this Bond.
This Bond shall not be valid or become obligatory for any
purpose or be entitled to any benefit or security under the
Indenture until it shall have been authenticated by the execution
by the Paying Agent of the certificate of authentication endorsed
hereon.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Bond to be
executed with the facsimile signature of the President of the
Police Jury of Natchitoches Parish and a facsimile of its
official seal to be imprinted hereon and attested to by the
facsimile signature of the Parish Administrator of the Police
Jury of Natchitoches Parish.
PARISH OF NATCHITOCHES,
STATE OF LOUISIANA
By:
------------------------------
President
Police Jury Natchitoches
Parish
ATTEST:
By:
------------------------------
Parish Administrator
Police Jury Natchitoches Parish
(SEAL)
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds referred to in the
within-mentioned Trust Indenture.
THE FIRST NATIONAL BANK
OF SHREVEPORT,
400 Texas Street
Shreveport, Louisiana 71154
as Paying Agent
By:
------------------------------
Authorized Signature
Date of Authentication:
- ------------------------------------
<PAGE>
FIRST SUPPLEMENTAL REFUNDING AGREEMENT
This FIRST SUPPLEMENTAL REFUNDING AGREEMENT (the "First
Supplemental Agreement"), made and entered into as of the first
day of November, 1998, by and between the PARISH OF NATCHITOCHES,
STATE OF LOUISIANA, a political subdivision of the State of
Louisiana (the "Issuer") and TJ INTERNATIONAL, INC. (formerly
known as Trus Joist Corporation), a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation").
W I T N E S S E T H:
WHEREAS, the Issuer has issued its $10,000,000 Variable Rate
Demand Refunding Bonds (Trus Joist Corporation Project) Series
1988 dated September 14, 1988 (the "Bonds") for the purpose of
refunding all of the Issuer's Industrial Revenue Bonds (Trus
Joist Corporation Project) Series 1984, pursuant to a Trust
Indenture dated as of September 1, 1988 (the "Indenture"), by and
between the Issuer and Bank One Trust Company, N.A. (successor to
The First National Bank of Shreveport), as trustee (the
"Trustee"); and
WHEREAS, in connection with the issuance of the Bonds, the
Issuer has also entered into a Refunding Agreement dated as of
September 1, 1988 (the "Refunding Agreement") with TJ
International, Inc. (formerly Trus Joist Corporation), a Delaware
corporation (the "Corporation"); and
WHEREAS, the Issuer and the Trustee have entered into a
First Supplemental Trust Indenture dated as of November 1, 1998
(the "First Supplemental Indenture"), in order to extend the
maturity date of the Bonds from October 1, 2000 to October 1,
2005 and the Corporation has consented to the delivery of the
First Supplemental Indenture; and
WHEREAS, the Corporation is also providing for the delivery
of an Alternate Credit Facility (as defined in the Indenture) to
be issued by Wachovia Bank, N.A. (the "Credit Bank"), and in
connection therewith it is necessary to make certain changes
which shall not materially and adversely affect the interest of
the bondowners and which, in the judgement of the Trustee, will
not prejudice the interests of the Trustee, as permitted by
Article XI of the Indenture; and
WHEREAS, the Credit Bank has consented to the execution and
delivery of this First Supplemental Agreement; and
WHEREAS, the Trustee has accepted the Alternate Credit
Facility;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration and of the mutual benefits,
covenants and agreements herein expressed, the Issuer and the
Corporation hereby agree as follows:
SECTION 1. All terms used herein shall have the same
meanings assigned to them in the Indenture and the Agreement, as
amended from time to time.
<PAGE>
SECTION 2. The Company hereby reaffirms its obligation to
make payments under the Refunding Agreement in order to provide
timely payment of the Bonds in accordance with the Indenture, as
amended by the First Supplemental Indenture.
SECTION 3. The definition of Pledge and Security Agreement
in Article I of the Agreement is hereby amended in its entirety
to read as follows:
""Pledge and Security Agreement" means the Pledge and
Security Agreement dated as of September 1, 1988 by and among the
Company, the Credit Bank and the Paying Agent, and any other
pledge agreement entered into in connection with an Alternate
Credit Facility, including, in connection with the delivery of
the Alternate Credit Facility delivered by Wachovia Bank, N.A.,
as the Credit Bank, the Reimbursement and Security Agreement
dated as of November 1, 1998 by and among the Company, Trus Joist
MacMillan a Limited Partnership and the Credit Bank."
SECTION 4. Reference is made to the Agreement, the terms of
which are incorporated herein by reference, and the Agreement,
other than as modified hereby, is hereby ratified and confirmed
in its entirety.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this First
Supplemental Refunding Agreement to be executed in its name and
its seal to be hereunto affixed and attested by its duly
authorized officer, all as of the date first above written but
actually executed on this 1st day of December, 1998.
PARISH OF NATCHITOCHES, STATE OF
LOUISIANA
By: \s\ Joe Mitchell, Jr.
------------------------------
President
ATTEST:
By: \s\ Bobby W. Deen
------------------------------
Parish Administrator
(SEAL)
WITNESSES:
\s\ W. T. O'Donnell
- ------------------------------------
\s\ Sadie Metoyer
- ------------------------------------
\s\ Linda Cockrell
-----------------------------------
Notary Public
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this First
Supplemental Refunding Agreement to be executed in its name, all
as of the date first above written but actually executed on this
1st day of December, 1998.
TJ INTERNATIONAL, INC.
By: \s\ Richard B. Drury
------------------------------
Title: Corporate Secretary &
Treasurer
WITNESSES:
\s\ Paul M. Boyd
- ------------------------------------
\s\ J. Lacey Townley
- ------------------------------------
\s\ Dana Bassett
-----------------------------------
Notary Public
<PAGE>
REIMBURSEMENT AND SECURITY AGREEMENT
among
TJ INTERNATIONAL, INC.,
TRUS JOIST MACMILLAN A LIMITED PARTNERSHIP
and
WACHOVIA BANK, N.A.
Dated as of November 1, 1998
$10,000,000
Parish of Natchitoches,
State of Louisiana
Variable Rate Demand Refunding Bonds
(Trus Joist Corporation Project)
Series 1988
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TABLE OF CONTENTS
Page
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<S> <C> <C>
ARTICLE I. DEFINITIONS -1-
ARTICLE II. THE LETTER OF CREDIT -8-
Section 2.1. Agreement to Issue Letter of Credit -8-
Section 2.2. Term of Letter of Credit; Extensions of the Term -8-
Section 2.3. Reduction and Reinstatement of Stated Amount -9-
Section 2.4. Fees Relating to Letter of Credit -10-
Section 2.5. Reimbursement of Drawings under Letter of Credit -11-
Section 2.6. Tender Advances, Prepayments, Interest
Computations and Notices -12-
Section 2.7. Form and Place of Payments; Computation of Interest -13-
Section 2.8. Conditions Precedent to Issuance of Letter of Credit -13-
ARTICLE III. OBLIGATIONS ABSOLUTE -15-
Section 3.1. Obligations Absolute, Unconditional and Irrevocable -15-
ARTICLE IV. REPRESENTATIONS AND WARRANTIES -16-
Section 4.1. Organization and Existence -16-
Section 4.2. Authority; No Conflict -16-
Section 4.3. Binding Effect -16-
Section 4.4. Governmental Approval -17-
Section 4.5. Litigation -17-
Section 4.6. Compliance with ERISA -17-
Section 4.7. Official Statement -17-
Section 4.8. Financial Information -17-
Section 4.9. Material Liabilities -17-
Section 4.10. Taxes -18-
Section 4.11. Representations and Warranties True -18-
Section 4.12. Environmental Matters -18-
Section 4.13. No Default -18-
Section 4.14. Margin Stock -18-
Section 4.15. Investment Company -19-
Section 4.16. Public Utility Holding Company -19-
Section 4.17. Full Disclosure -19-
Section 4.18. Year 2000 Compliance -19-
Section 4.19. Compliance with Laws -19-
ARTICLE V. COVENANTS -19-
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ARTICLE VI. EVENTS OF DEFAULT; REMEDIES -20-
Section 6.1. Events of Default -20-
Section 6.2. Remedies -22-
ARTICLE VII. PLEDGED BONDS -22-
Section 7.1. The Pledge -23-
Section 7.2. Remedies Upon Default -23-
Section 7.3. Valid Perfected First Lien -24-
Section 7.4. Release of Pledged Bonds -24-
ARTICLE VIII. MISCELLANEOUS -24-
Section 8.1. Notices -24-
Section 8.2. Amendments, Consents and Waivers -25-
Section 8.3. No Waiver; Remedies -25-
Section 8.4. Indemnification -25-
Section 8.5. Continuing Obligations -25-
Section 8.6. Waiver of Right of Set-Off;
Limitation on Collateral -26-
Section 8.7. Limited Liability of the Bank -26-
Section 8.8. Costs, Expenses and Taxes -27-
Section 8.9. Severability -27-
Section 8.10. Governing Law -27-
Section 8.11. Consent to Jurisdiction -27-
Section 8.12. Headings -27-
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ANNEX I - IRREVOCABLE LETTER OF CREDIT
ANNEX II - PROMISSORY NOTE
ANNEX III - GUARANTY AGREEMENT
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<PAGE>
REIMBURSEMENT AND SECURITY AGREEMENT
THIS REIMBURSEMENT AND SECURITY AGREEMENT, dated as of
November 1, 1998 among TJ INTERNATIONAL, INC., a corporation
organized and existing under the laws of the State of Delaware
(the "Applicant"), TRUS JOIST MACMILLAN A LIMITED PARTNERSHIP, a
Delaware limited partnership (the "Operator"), and WACHOVIA BANK,
N.A., a national banking association organized and existing under
the laws of the United States of America (together with its
successors and assigns, the "Bank").
W I T N E S S E T H:
WHEREAS, the Parish of Natchitoches, State of Louisiana
(the "Issuer"), has issued its Variable Rate Demand Refunding
Bonds (Trus Joist Corporation Project) Series 1988 in the
aggregate principal amount of $10,000,000 (the "Bonds") pursuant
to a Trust Indenture dated as of September 1, 1988 (as amended
and supplemented, the "Indenture"), between the Issuer and The
First National Bank of Shreveport, as trustee (now Bank One Trust
Company, N. A. and hereinafter referred to as the "Trustee"); and
WHEREAS, pursuant to a Refunding Agreement dated as of
September 1, 1988 (as amended, the "Refunding Agreement") between
the Issuer and Trus Joist Corporation (now the Applicant), the
proceeds derived from the issuance of the Bonds were applied to
refund the Prior Bonds (as defined in the Indenture) which were
issued to finance the cost of acquisition, construction,
renovation and installation of the Project (as defined in the
Indenture); and
WHEREAS, to provide additional security for the payment of
the Bonds, the Applicant has requested the Bank to issue its
letter of credit in favor of the Trustee, substantially in the
form of Annex I attached hereto and by this reference made a part
hereof (the "Letter of Credit"); and
WHEREAS, the Operator is assignee of Trus Joist Corporation
and its rights and obligations under the Refunding Agreement and
the other agreements and instruments executed in connection with
the issuance of the Bonds; and
WHEREAS, the Operator is a wholly-owned Subsidiary of the
Applicant and, as such, the Applicant expects to derive
substantial and direct benefits from the issuance of the Letter
of Credit by the Bank;
NOW THEREFORE, in consideration of the premises and the
promises herein contained, and in order to induce the Bank to
issue the Letter of Credit, the parties hereto hereby agree as
follows:
<PAGE>
ARTICLE I. DEFINITIONS.
In addition to the words and terms defined above, the
following terms when used herein shall have the following
respective meanings:
"A Drawing" shall have the meaning specified in the Letter
of Credit.
"Agreement" means this Reimbursement and Security Agreement,
as the same may be amended, supplemented or modified from time to
time.
"B Drawing" shall have the meaning specified in the Letter
of Credit.
"Business Day" means a day (a) other than a Saturday or
Sunday or a day on which banks located in the city in which the
principal office of the Trustee or the office of the Bank at
which drawing documents are required to be presented under the
Letter of Credit are required or authorized to close and (b) on
which the New York Stock Exchange is not closed.
"C Drawing" shall have the meaning specified in the Letter
of Credit.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Information System established
pursuant to CERCLA.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor Federal tax code. Any
reference to any provision of the Code shall also include the
income tax regulations promulgated thereunder, whether final,
temporary or proposed.
"Collateral" has the meaning set forth in Section 7.1
hereof.
"Consolidated Subsidiary" means at any date any Subsidiary
or other entity the accounts of which, in accordance with GAAP,
would be consolidated with those of the Applicant in its
consolidated financial statements as of such date; provided,
however, that for purposes of this Agreement and notwithstanding
any provision of GAAP to the contrary, the term "Consolidated
Subsidiary" shall include the Operator and its Subsidiaries.
"Controlled Group" means all members of a controlled group
of corporations and all trades or businesses (whether or not
incorporated) under common control, which, together with the
Applicant, are treated as a single employer under Section 414(b)
or 414(c) of the Code.
"Credit Agreement" means the $100,000,000 Amended and
Restated Credit Agreement dated as of May 31, 1995 among the
Applicant, the Credit Banks, and Wachovia Bank of Georgia, N.A.,
as Agent (the "Agent"), as amended by a First Amendment to Credit
Agreement dated as of December 8, 1995, as further amended by a
Second Amendment to Credit Agreement dated as of November 15,
1996, and as such agreement may be further amended, supplemented
<PAGE>
or restated from time to time. References to the Credit
Agreement shall be effective regardless of any termination of the
Credit Agreement and without regard to whether any Loans are
outstanding thereunder or any Commitment is in effect thereunder.
"Credit Banks" means all banks listed on the signature pages
of the Credit Agreement, and their successors and assigns.
"Date of Issuance" means December 1, 1998.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or
services, except trade accounts payable and salary and other
normal accruals (other than interest accruals) arising in the
ordinary course of business, (iv) all obligations of such Person
as lessee under capital leases, (v) all obligations of such
Person, contingent or otherwise, to reimburse any bank or other
Person in respect of amounts payable under a bankers' acceptance,
(vi) all Redeemable Preferred Stock of such Person (in the event
such Person is a corporation), (vii) all obligations of such
Person, contingent or otherwise, to reimburse any bank or other
Person in respect of the face amount of any outstanding letter of
credit or similar instrument, (viii) all Debt of others secured
by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Person, (ix) all Debt of others Guaranteed by
such Person, and (x) all obligations of such Person to purchase
securities which arise out of or in connection with the sale of
the same or substantially similar securities.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or the lapse
of time or both would, unless cured or waived, become an Event of
Default.
"Default Rate" means a per annum interest rate equal to the
lesser of (a) the Prime Rate plus two percent (2%), or (b) the
maximum rate permitted by applicable law.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous
substances or wastes into the environment, including, without
limitation, ambient air, surface water, groundwater or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances or wastes
or the clean-up or other remediation thereof.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way
associated with any Environmental Requirements.
<PAGE>
"Environmental Requirements" means any legal requirement
relating to health, safety or the environment and applicable to
the Applicant or the Properties, including but not limited to any
such requirement under CERCLA or similar state legislation.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time. Any reference to any
provision of ERISA shall also be deemed to be a reference to any
successor provision or provisions thereof.
"Event of Default" means any one or more of the events
specified in Section 6.1 hereof.
"Expiration Date" means the Initial Expiration Date or, if
the term of the Letter of Credit is extended as contemplated in
Section 2.2(b) hereof, the last day of each Successive Extension
Period.
"Fee Percentage" means (a) on and prior to the first
anniversary of the Date of Issuance, the Fee Percentage set forth
in the chart below opposite the Applicant's applicable ratio of
Consolidated Cash Flow to Consolidated Funded Debt for the
immediately preceding four (4) Fiscal Quarters calculated in
accordance with the Credit Agreement (provided that in the event
that the Credit Agreement is amended subsequent to the Date of
Issuance to change the Applicable Margin (as defined in the
Credit Agreement) with respect to LIBOR Loans (as defined in the
Credit Agreement) and/or to change the per annum percentage at
which the Facility Fee (as defined in the Credit Agreement) is
calculated, the Fee Percentage set forth below will automatically
be adjusted so as to equal the sum of the Applicable Margin (as
defined in the Credit Agreement) and the per annum percentage at
which the Facility Fee (as defined in the Credit Agreement) is
calculated, after giving effect to such amendment), and (b) after
the first anniversary of the Date of Issuance, either (i) the Fee
Percentage determined in accordance with clause (a) above, or
(ii) in the event that the Bank has adjusted the Fee Percentage
pursuant to Section 2.4(b) hereof, that figure to which the Fee
Percentage has been so adjusted.
Ratio Fee Percentage
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Greater than 0.60 to 1.0 0.375%
Greater than 0.45 to 1.0 but equal to 0.45%
or less than 0.60 to 1.0
Greater than 0.30 to 1.0 but equal to 0.55%
or less than 0.45 to 1.0
Equal to or less than 0.30 to 1.0 0.80%
"Fiscal Year" means the fiscal year of the Applicant.
"GAAP" means generally accepted accounting principles as in
effect from time to time, consistently applied.
<PAGE>
"Governmental Authority" means any nation or government, any
state, department, agency or other political subdivision thereof,
and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any
government, and any corporation or other entity owned or
controlled (through stock or capital ownership or otherwise) by
any of the foregoing.
"Guarantee" by any Person means any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing
any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct
or indirect, contingent or otherwise, of such Person (i) to
secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to
provide collateral security, to take-or-pay, or to maintain
financial statement conditions or otherwise), or (ii) entered
into for the purpose of assuring in any other manner the obligee
of such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantors" means, individually and collectively, (a) the
Operator, (b) Norco Windows, Inc., a Wisconsin corporation, (c)
Trus Joist MacMillan Limited, a British Columbia corporation, (d)
Trus-Joist (Western) Ltd., a Province of New Brunswick
corporation, (e) Trus Joist Corporation, a Delaware corporation,
(f) TJM Facilities Corporation, a Delaware corporation and (g)
any other Person delivering a Guaranty to the Bank, together with
each of their successors and permitted assigns.
"Guaranty" means, individually and collectively, (i) that
certain Guaranty Agreement, substantially in the form of Annex
III hereto, executed by each of the Guarantors, jointly and
severally, for the benefit of the Bank, together with all
amendments and modifications thereto, guaranteeing payment of the
obligations of the Applicant under this Agreement and the
Reimbursement Note and (ii) any other guaranty agreement
delivered to the Bank, each substantially in the form of Annex
III hereto, for the purpose of providing a Guarantee of any of
the Applicant's or the Guarantors' obligations under this
Agreement or any of the Related Documents, together with all
amendments and modifications thereto.
"Hazardous Materials" includes, without limitation, (a)
solid or hazardous waste, as defined in the Resource Conservation
and Recovery Act of 1980, or in any applicable state or local law
or regulation, (b) hazardous substances, as defined in CERCLA, or
in any applicable state or local law or regulation, (c) gasoline,
or any other petroleum product or by-product, (d) toxic
substances, as defined in the Toxic Substances Control Act of
1976, or in any applicable state or local law or regulation or
(e) insecticides, fungicides, or rodenticides, as defined in the
Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or
in any applicable state or local law or regulation, as each such
Act, statute or regulation may be amended from time to time.
"Initial Expiration Date" means December 5, 2001.
<PAGE>
"Lien" means any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law,
statute or contract, and including but not limited to the lien or
security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien"
shall include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting property. For
the purposes of this Agreement, the Applicant shall be deemed to
be the owner of any property which it has acquired or holds
subject to a conditional sale agreement, financing lease, or
other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security
purposes.
"Limited Partnership Agreement" means the Limited
Partnership Agreement dated as of September 30, 1991, between TJ
International, Inc. and MacMillan Bloedel of America Inc., as
amended from time to time.
"Loan Documents" has the meaning given such term in the
Credit Agreement.
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any
adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or
not related, a material adverse change in, or a material adverse
effect upon, any of (a) the current or future financial
condition, operations, business, or properties of the Applicant
and its Consolidated Subsidiaries taken as a whole, (b) the
ability of the Applicant to perform its obligations under this
Agreement, the Credit Agreement, or the Related Documents or the
Loan Documents to which it is a party, as applicable, or (c) the
legality, validity or enforceability of (including the rights and
remedies of the Bank, the Agent and the Credit Banks under) this
Agreement, the Credit Agreement, or any of the Related Documents
or the Loan Documents.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Notice of Non-Extension" means a written notice delivered
by the Bank to the Applicant and the Trustee to the effect that
the Letter of Credit will not be extended for a Successive
Extension Period.
"Obligations" has the meaning set forth in Section 7.1
hereof.
"Official Statement" means the Final Offering Memorandum
dated September 14, 1988 with respect to the initial offering and
sale of the Bonds, as amended, supplemented or modified from time
to time through the date of issuance.
"Operator" means Trus Joist MacMillan a Limited Partnership,
a Delaware limited partnership and its successors and permitted
assigns.
<PAGE>
"Payment Date" means the fifteenth day of each February,
May, August and November of each year, commencing February 15,
1999.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means any individual, joint venture, corporation,
company, voluntary association, partnership, trust, joint stock
company, unincorporated organization, association, government, or
any agency, instrumentality, or political subdivision thereof, or
any other form of entity.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either (a)
maintained by the Applicant or any member of the Controlled Group
for employees of the Applicant or any member of the Controlled
Group or (b) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one
employer makes contributions and to which the Applicant or any
member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five
(5) plan years made contributions.
"Pledged Bonds" means those Bonds which have been purchased
from monies drawn under the Letter of Credit pursuant to the
Indenture and not remarketed by the Remarketing Agent pursuant to
the Indenture.
"Prime Rate" means that rate of interest so denominated and
set by the Bank from time to time as an interest rate basis for
borrowings. The Prime Rate is but one of several interest rate
bases used by the Bank, which lends at rates above and below the
Prime Rate. For purposes of calculating any interest rate
hereunder which is based on the Prime Rate, such interest rate
shall be adjusted automatically on the effective date of any
change in the Prime Rate.
"Properties" means all real property owned, leased or
otherwise used or occupied by the Applicant or any Subsidiary,
wherever located, including, without limitation, the Project.
"Purchase Price" shall have the meaning specified in Article
I of the Indenture.
"Redeemable Preferred Stock" of any Person means any
preferred stock issued by such Person which is at any time prior
to the Termination Date either (i) mandatorily redeemable (by
sinking fund or similar payments or otherwise) or (ii) redeemable
at the option of the holder thereof.
"Reimbursement Note" means the promissory note dated as of
even date herewith from the Applicant to the Bank evidencing the
Tender Advances, if any, to be made under this Agreement, which
promissory note shall be substantially in the form of Annex II
attached hereto and by this reference made a part hereof.
"Reimbursement Obligations" means any one or more of the
obligations of the Applicant to the Bank under Section 2.5 of
this Agreement.
<PAGE>
"Related Documents" means the Refunding Agreement, the
Indenture, the Reimbursement Note and any other agreement or
instrument relating thereto or otherwise executed and delivered
in connection with the issuance of the Bonds or the Letter of
Credit.
"Remarketing Agent" means Piper Jaffray Inc. and its
successors appointed and serving in such capacity under the
Indenture.
"Reportable Event" means a Reportable Event as defined in
Section 4043(b) of ERISA and in any regulations promulgated
thereunder.
"Stated Amount" shall have the meaning specified in the
Letter of Credit.
"Subsidiary" means any corporation, partnership or other
entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
the time directly or indirectly owned by the Applicant or a
Subsidiary of the Applicant and, in any event, shall include the
Operator.
"Successive Extension Period" has the meaning set forth in
Section 2.2(b) hereof.
"Tender Advance" has the meaning ascribed thereto in Section
2.5(b)(i) hereof.
"Tender Drawing" means an A Drawing under the Letter of
Credit to pay the portion of the Purchase Price corresponding to
principal of the Bonds.
"Termination Date" has the meaning assigned to that term in
the Letter of Credit.
Y2K Plan has the meaning set forth in Section 4.18.
ARTICLE II. THE LETTER OF CREDIT
Section 2.1. Agreement to Issue Letter of Credit. Subject
to the terms and conditions hereinafter set forth, the Bank
hereby agrees to issue the Letter of Credit on the Date of
Issuance. The Letter of Credit shall be issued in an amount
equal to the sum of (a) the aggregate principal amount of the
Bonds, plus (b) an amount equal to one hundred twenty-four (124)
days' interest on the Bonds, computed as though the Bonds bore
interest at the rate of twelve percent (12%) per annum
notwithstanding the actual rate borne by the Bonds from time to
time and based on a 365/366-day year for the actual days elapsed.
Section 2.2. Term of Letter of Credit; Extensions of the
Term.
(a) The term of the Letter of Credit shall end on the
Termination Date.
(b) The initial term of the Letter of Credit is stated to
expire, subject to earlier termination, on the Initial Expiration
Date. In the event that the Bank has not delivered a Notice
<PAGE>
of Non-Extension prior to the first anniversary of the Date of
Issuance, or, in the event that the Initial Expiration Date shall
have been automatically extended in accordance with this
paragraph, prior to any subsequent anniversary of the Date of
Issuance, the Expiration Date shall be automatically extended on
each such anniversary of the Date of Issuance for successive
additional periods of one calendar year each ("Successive
Extension Periods"). Upon the delivery by the Bank to the
Applicant and the Trustee of a Notice of Non-Extension prior to
any anniversary of the Date of Issuance, the Expiration Date
shall no longer be extended and shall be the date which is two
years following the anniversary date of the Date of Issuance next
following the date of delivery of such Notice of Non-Extension.
The Bank's decision to deliver a Notice of Non-Extension shall be
made in its sole and absolute discretion and no course of dealing
or other circumstance shall require the Bank to refrain from
delivering a Notice of Non-Extension.
(c) The Letter of Credit may be canceled or replaced
at any time (to the extent permitted under the Indenture) without
penalty or premium at the request of the Applicant upon
satisfaction of all conditions specified in subsections (i), (ii)
and (iii) hereof:
(i) the Applicant shall have given not less than
forty-five (45) days prior written notice to the Bank that the
Applicant desires to cancel or replace the Letter of Credit;
(ii) all Reimbursement Obligations (including all
Letter of Credit fees) shall have been paid in full; and
(iii) the Letter of Credit shall have been returned
to the Bank for cancellation.
Upon the cancellation or replacement of the Letter of
Credit in accordance with this Section 2.2(c), the Bank will
within ten (10) days of the effective date of such cancellation
or replacement refund to the Applicant any unearned portion of
the letter of credit fee previously paid by the Applicant to the
Bank pursuant to Section 2.4(a).
Section 2.3. Reduction and Reinstatement of Stated Amount.
The Stated Amount of the Letter of Credit shall be reduced and
reinstated as provided in the Letter of Credit. Without limiting
the provisions of the Letter of Credit, the portion of the Stated
Amount allocated to interest shall be reduced in an amount equal
to each draw for interest on the Bonds, but shall be reinstated
automatically ten (10) Business Days after drawing unless the
Bank shall have notified the Trustee that an Event of Default has
occurred and is continuing. In addition, and without limiting
the provisions of the Letter of Credit, the portion of the Stated
Amount allocated to principal shall be reduced in an amount equal
to any draw thereunder for principal of the Bonds, but with
respect to any Tender Drawing, will be reinstated upon receipt by
the Trustee of notice from the Bank that the Tender Advance
applicable thereto has been repaid.
<PAGE>
Section 2.4. Fees Relating to Letter of Credit.
(a) The Applicant hereby agrees to pay to the Bank
quarterly in advance commencing on the Date of Issuance and
thereafter on each Payment Date a letter of credit fee in an
amount equal to one-quarter of the product of the Stated Amount
(determined without taking into account any reductions pursuant
to Section 2.3 hereof of the portion of the Stated Amount
allocated to interest) in effect on the date of such payment
multiplied by the Fee Percentage in effect on such date. The
letter of credit fee shall be computed on the basis of actual
days elapsed and a 365-day year.
(b) The Bank shall have the right from time to time,
by written notice delivered to the Applicant no less than sixty
(60) days prior to the first anniversary of the Date of Issuance
or prior to each successive anniversary of the Date of Issuance
(each a "Notice of Adjustment"), to adjust the Fee Percentage.
Any such adjustment of the Fee Percentage shall become effective
beginning on the anniversary of the Date of Issuance immediately
succeeding the date on which the related Notice of Adjustment
was delivered and shall continue to be effective until a
subsequent Notice of Adjustment is delivered and becomes
effective in accordance with this subsection.
(c) If after the date hereof any change shall occur in
any law or regulation or in the interpretation thereof by any
court or administrative or Governmental Authority charged with
the administration thereof, or in GAAP, which change shall either
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit issued
by, or assets held by, or deposits in or for the account of, the
Bank or (ii) impose on the Bank any other condition relating,
directly or indirectly, to this Agreement, the Reimbursement Note
or the Letter of Credit and the result of any event referred to
in clause (i) or (ii) of this subsection shall be to increase the
cost to the Bank of issuing or maintaining the Letter of Credit
by an amount deemed by the Bank to be material, then the
Applicant shall pay to the Bank, within 15 days following demand
therefor by the Bank, such additional amounts as the Bank shall
reasonably determine are necessary to compensate the Bank for
such increased cost together with interest on each such amount
from the date such amount is due until payment in full at the
Default Rate. With each demand for payment under this
subsection, the Bank shall deliver to the Applicant a certificate
as to such increased cost incurred by the Bank as a result of any
event mentioned in this subsection shall be submitted by the Bank
to the Applicant and shall be conclusive (absent manifest error)
as to the amount thereof. The effect of any such increased cost
which is imposed on the Bank, will be fairly allocated to the
Letter of Credit in relation to similar obligations subject to
similar charges.
(d) If after the date hereof, the Bank shall have
determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by the Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on the
Bank's capital as a consequence of its obligations under the
Letter of Credit to a level below that which the Bank
<PAGE>
could have achieved but for such adoption, change or compliance
(taking into consideration the Bank's policies with respect to
capital adequacy) by an amount deemed by the Bank to be material,
then the Applicant shall pay to the Bank, within 15 days
following notice of such change by the Bank by submission to the
Applicant of the certificate hereinafter described, such
additional amount or amounts as will compensate the Bank for such
reduction. All payments pursuant to this subsection (d) shall
bear interest thereon from the date such amount is due until
payment in full at the Default Rate. With each demand for
payment under this subsection, the Bank shall deliver to the
Applicant a certificate of the Bank claiming compensation under
this subsection (d) and setting forth the additional amount or
amounts to be paid hereunder and setting forth in reasonable
detail the basis therefor and the manner of calculation thereof.
Such certificate shall be conclusive in the absence of manifest
error. The effect of any such increased cost which is imposed on
the Bank, will be fairly allocated to the Letter of Credit in
relation to similar obligations subject to similar charges.
(e) The Applicant hereby agrees to pay to the Bank
upon each drawing under the Letter of Credit in accordance with
its terms a drawing fee equal to $100.00 per drawing. Such fee
is due and payable on the date each drawing under the Letter of
Credit is made.
Section 2.5. Reimbursement of Drawings under Letter of
Credit.
(a) The Applicant hereby agrees to pay to the Bank:
(i) except as set forth in subsection (b) below
applicable to Tender Drawings and except to the extent that any
drawing under the Letter of Credit is to be paid from the
proceeds of a Tender Advance made pursuant to Section 2.6 below,
immediately after (and on the same Business Day as) any amount is
honored under the Letter of Credit, a sum (and interest on such
amount as provided in subsection (c) below) equal to the amount
so drawn; and
(ii) any and all expenses incurred by the Bank in
enforcing any rights under this Agreement.
(b) (i) Unless an Event of Default or Default shall
have occurred and be continuing, the proceeds of the amount of
each Tender Drawing (other than a Tender Drawing upon conversion
of the interest rate on the Bonds to a Fixed Rate (as defined in
the Indenture)) shall, as provided in Section 2.6 below,
constitute an advance made by the Bank to the Applicant on the
date and in the amount of said drawing, each such advance being
hereinafter referred to as a "Tender Advance." Each Tender
Advance shall be treated as a reimbursement of the amount of the
related Tender Drawing pursuant to Section 2.5(a) above. Any
amounts drawn to pay the portion of the Purchase Price of the
Bonds constituting interest shall be reimbursed as provided in
Section 2.5(a) above.
(ii) Each Tender Drawing under the Letter of
Credit shall constitute a representation and warranty by the
Applicant that the representations
<PAGE>
and warranties contained in Section 4.1 hereof are true and
correct on and as of the date of such Tender Drawing as if made
on and as of such date.
(c) The Applicant shall pay to the Bank upon demand
interest at the Default Rate on any and all amounts unpaid by the
Applicant when due hereunder (in the case of amounts in respect
of interest, to the maximum extent permitted by law) for each day
from the date such amounts became due until payment in full.
Section 2.6. Tender Advances, Prepayments, Interest
Computations and Notices.
(a) The Bank agrees, on the terms and conditions of
this Agreement, to make Tender Advances to the Applicant for the
purpose of paying Tender Drawings arising from time to time. The
Bank agrees that upon any Tender Drawing under the Letter of
Credit the Bank shall, without any notice or other action on the
part of the Applicant but subject to the satisfaction of the
conditions precedent set forth in subsections (b) and (c) of
Section 2.8 hereof, make a Tender Advance in an amount equal to
such Tender Drawing, the proceeds of which shall automatically be
applied by the Bank to the payment in full of the Tender Drawing.
The Applicant hereby agrees to pay to the Bank the aggregate
unpaid principal amount of the Tender Advances together with all
accrued and unpaid interest thereon on the Termination Date. The
Tender Advances shall be made against and evidenced by and
repayable as provided in the Reimbursement Note. The Applicant
hereby authorizes the Bank to endorse on the schedule attached to
the Reimbursement Note (or any continuation thereof) the amount
of each Tender Advance made by the Bank to the Applicant
hereunder, the date such Tender Advance is made and the amount of
each payment or prepayment of principal of such Tender Advance
received by the Bank; provided, however, that any failure by the
Bank to make, or any error in making, any such endorsement shall
not limit, modify or affect the obligations of the Applicant
hereunder or under the Reimbursement Note in respect of such
Tender Advances.
(b) The Applicant hereby promises to pay to the Bank
interest at a rate per annum equal to the Prime Rate on the
unpaid principal amount of each Tender Advance for the period
commencing on the date of such Tender Advance to, but excluding,
the date such Tender Advance is paid in full. Accrued interest
on each Tender Advance shall be payable (i) on each Payment Date,
(ii) upon the payment or prepayment thereof (but only on the
principal so paid or prepaid), and (iii) on the Termination Date.
(c) All Tender Advances may be prepaid (i) at any time
by the Applicant on one (1) Business Day's notice stating the
amount to be prepaid (which shall be $5,000, a whole number
multiple thereof), and (ii) at any time on behalf of the
Applicant on one (1) Business Day's notice from the Applicant
directing the Bank to release a specified principal amount of
Pledged Bonds held by the Bank or its designated pledge agent for
remarketing pursuant to the Indenture. Each such notice of
prepayment shall be irrevocable and shall specify the Tender
Advance to be prepaid and the amount of the Tender Advance to be
prepaid and the date of prepayment (which date shall be a
Business Day). Upon payment to the Bank of the amount to be
prepaid pursuant to clause (i) or (ii) above, together with
accrued interest, as set forth in Section 2.6(b)(ii) hereof, to
the date of such prepayment on the amount to be prepaid, the
outstanding obligations of the Applicant under the Reimbursement
Note shall be reduced by the
<PAGE>
amount of such prepayment, interest shall cease to accrue on the
amount prepaid, and the Bank shall release from the pledge and
security interest created under Section 7.1 hereof a principal
amount of Pledged Bonds equal to the amount of such prepayment;
provided that prior to such release the Applicant shall have paid
to the Bank the amount owing in respect of Section 2.6(b)(ii)
hereof. Such Bonds shall be delivered to the Applicant, in the
event of a prepayment pursuant to clause (i) above, or to the
Paying Agent pursuant to the Indenture, in the event of a
prepayment pursuant to clause (ii) above, as appropriate.
Section 2.7. Form and Place of Payments; Computation of
Interest. All payments by the Applicant to the Bank hereunder
shall be made in lawful currency of the United States and in
immediately available funds at the Bank's office located at 191
Peachtree Street, N.E., Atlanta, Georgia 30303 or at such other
location of the Bank as the Bank directs in writing to the
Applicant. Payments may also be made by wire transfer of
immediately available funds to Wachovia Bank, N.A., ABA#
0531-00-494, Account #8726-800300, Attention: Standby L/C Unit.
Whenever any payment hereunder shall be due on a day which is not
a Business Day, the date for payment thereof shall be extended to
the next succeeding Business Day, and any interest payable
thereon shall be payable for such extended time at the specified
rate. All interest (including, without limitation, interest on
Tender Advances) and fees (excluding the letter of credit fee)
hereunder shall be computed on the basis of a 360 day year for
the actual number of days elapsed and shall include the first day
but exclude the last day of the relevant period.
Section 2.8. Conditions Precedent to Issuance of Letter of
Credit. Each of the following is a condition precedent to the
obligation of the Bank to issue the Letter of Credit.
(a) The Bank shall have received on or before the Date
of Issuance the following in form and substance satisfactory to
the Bank:
(i) the duly executed original Reimbursement
Note, together with a duly executed original counterpart of this
Agreement, the Guaranty and each of the other Related Documents;
(ii) the opinion of counsel to the Applicant and
the Guarantors dated the Date of Issuance, addressed to the Bank,
in form and substance satisfactory to the Bank;
(iii) the opinion of bond counsel, dated the
Date of Issuance, required pursuant to Section 505 of the
Indenture;
(iv) a copy of the resolutions of the Board of
Directors of the Applicant authorizing execution and delivery by
the Applicant of this Agreement and the Reimbursement Note,
certified by the Secretary of the Applicant;
(v) a certificate of good standing for the
Applicant from the state of its incorporation and a certificate
of authority to transact business as a foreign corporation from
the state in which the Project is located;
<PAGE>
(vi) a certificate of incumbency of the Applicant,
signed by the Secretary of the Applicant, certifying as to the
names, true signatures and incumbency of the officer or officers
of the Applicant authorized to execute and deliver this Agreement
and the Reimbursement Note;
(vii) copies of (A) the certificate of
incorporation of the Applicant certified by the Secretary of
State of the state of the Applicant's incorporation, and (B) the
bylaws of the Applicant certified by the Secretary of the
Applicant;
(viii) copies of all documents which the Bank
may reasonably request relating to the existence of the
Guarantors, the corporate or partnership authority, as
applicable, for and the validity of the Guaranty and any other
matters relevant thereto, all in form and substance satisfactory
to the Bank, including, without limitation, a certificate of
incumbency of each of the Guarantors, signed by the Secretary or
an Assistant Secretary of each of the Guarantors or their general
partners, as applicable, certifying as to the names, true
signatures and incumbency of the officer or officers of the
Guarantors or their general partners, as applicable, authorized
to execute and deliver the Guaranty, and certified copies of the
following items, for each of the Guarantors: (i) Certificate or
Articles of Incorporation or partnership certificate, (ii) Bylaws
(if a corporation), (iii) a certificate of the Secretary of State
(or other appropriate issuer) of the state (or province) of
incorporation of each as to the good standing of each in that
state (or province) (if a corporation), and (iv) the action taken
by the Board of Directors authorizing the execution, delivery and
performance of the Guaranty;
(ix) certified copies of all approvals,
authorizations, or consents of, or notices to or registrations
with, any Governmental Authority required to be obtained, given
or effected by the Applicant with respect to the extension of the
maturity of the Bonds;
(x) a certificate, dated the Date of Issuance,
signed by authorized officers of the Applicant, to the effect
that this Agreement and the Reimbursement Note have been executed
by duly authorized officials, that the signatures appearing
thereon are true and that there is no action, suit, proceeding,
inquiry or investigation known to the Applicant before or by any
court, public board or body pending or threatened against or
affecting the Applicant wherein an unfavorable decision, ruling
or finding would have a Material Adverse Effect; and
(xi) such other certificates, documents,
instruments, approvals, consents or opinions as the Bank may
reasonably request.
(b) On or before the Date of Issuance and the date of
each Tender Advance the Bank shall be satisfied that (i) there
has been no material adverse change in the financial condition,
manner of operation, properties or prospects of the Applicant and
(ii) all information,
<PAGE>
representations and materials submitted to the Bank by the
Applicant in connection with the issuance of the Letter of Credit
are accurate in all material respects;
(c) The following statements shall be true and correct
on the Date of Issuance and the date of each Tender Advance and
the Bank shall have received a certificate signed by a duly
authorized officer of the Applicant, dated the Date of Issuance,
stating that:
(i) the representations and warranties contained
in Article IV hereof are correct on and as of the Date of
Issuance as though made on and as of such date; and
(ii) no Default has occurred and is continuing or
would result from the execution and delivery of this Agreement or
the issuance of the Letter of Credit.
(d) On or before the Date of Issuance all requirements
relating to the issuance of the Letter of Credit as an "Alternate
Credit Facility" pursuant to the Indenture shall have been
satisfied.
ARTICLE III. OBLIGATIONS ABSOLUTE
Section 3.1. Obligations Absolute, Unconditional and
Irrevocable. The obligations of the Applicant under this
Agreement and the Related Documents shall be absolute,
unconditional and irrevocable, and shall be performed strictly in
accordance with the terms hereof and thereof, under all
circumstances whatsoever, irrespective of any of the following
circumstances:
(a) any lack of validity or enforceability of this
Agreement, the Letter of Credit, the Bonds or any of the Related
Documents;
(b) any amendment or waiver of or any consent to
departure from this Agreement, the Letter of Credit, the Bonds or
all or any of the Related Documents;
(c) the existence of any claim, setoff, defense or
other rights which the Applicant or any other Person may have at
any time against the Trustee, the Remarketing Agent, any
beneficiary or any transferee of the Letter of Credit (or any
Person for whom the Trustee, the Remarketing Agent, any such
beneficiary or any such transferee may be acting), the Bank, or
any Person other than the Bank, whether in connection with this
Agreement, the Letter of Credit, the Bonds or any of the Related
Documents or any unrelated transaction;
(d) any statement or any other document presented
under the Letter of Credit proving to be forged, fraudulent or
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever;
(e) payment by the Bank under the Letter of Credit
against presentation of a draft or certificate which does not
comply with the terms of such Letter of Credit; and
<PAGE>
(f) any other circumstance or happening whatsoever
whether or not similar to any of the foregoing.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
The Applicant represents and warrants to the Bank as
follows:
Section 4.1. Organization and Existence. The Applicant is
a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and legal authority to own its property
and to carry on its business as now being conducted, is duly
qualified to do business in every jurisdiction in which the
nature of its business or property makes such qualification
necessary and has all governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted, except where noncompliance would not have a Material
Adverse Effect.
Section 4.2. Authority; No Conflict. The execution,
delivery and performance of this Agreement and each of the
Related Documents to which the Applicant is a party and the
consummation of the transactions contemplated hereby and thereby,
(i) are within the legal power and authority of the Applicant,
(ii) have been duly authorized by all requisite actions, (iii) do
not and will not conflict with, contravene or violate any
material provision of, or result in a material breach of or
default under, or require the waiver (not already obtained) of
any material provision of or the consent (not already given) of
any Person under the terms of, its articles of incorporation or
bylaws, or any material indenture, mortgage, deed of trust, loan
or credit agreement or other agreement or instrument to which the
Applicant is a party or by which it is bound or to which any of
its properties are subject; (iv) will not violate, conflict with,
give rise to any liability under, or constitute a default under
any law, regulation, order (including, without limitation, all
applicable state and federal securities laws) or any other
requirement of any court, tribunal, arbitrator, or Governmental
Authority; and (v) will not result in the creation, imposition,
or acceleration of any indebtedness or tax or any mortgage, Lien
(except as otherwise contemplated in this Agreement),
reservation, covenant, restriction, or other encumbrance of any
nature upon, or with respect to, the Applicant or any of its
properties which creation, imposition or acceleration would have
a material adverse impact upon the business operations or the
financial condition of the Applicant.
Section 4.3. Binding Effect. This Agreement constitutes,
and each Related Document to which the Applicant is a party when
executed and delivered by each of the other parties thereto will
constitute, the legal, valid and binding obligation of the
Applicant enforceable against the Applicant in accordance with
its terms except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws,
statutes or rules of general application affecting the
enforcement of creditors rights or general principles of equity.
Section 4.4. Governmental Approval. The execution,
delivery and performance by the Applicant of this Agreement and
the Related Documents to which the Applicant is a party and the
transactions contemplated hereby and thereby do not require any
further action, approval or consent of, or filing with, any
Governmental Authority by or with respect to the Applicant.
<PAGE>
Section 4.5. Litigation. There is no action, suit, claim
or proceeding pending against or affecting the Applicant, nor to
the knowledge of the officers of the Applicant threatened, before
any court, commission, panel, board, bureau or arbitrator or
before or by any Governmental Authority and which, in any one
case or in the aggregate, if determined adversely to the
interests of the Applicant would (i) have a Material Adverse
Effect, (ii) materially and adversely affect the ability of the
Applicant to perform its obligations under this Agreement or any
Related Document to which the Applicant is a party, or (iii)
question the validity or enforceability of this Agreement or any
Related Document to which the Applicant is a party.
Section 4.6. Compliance with ERISA. (a) The Applicant and
each member of the Controlled Group has fulfilled its obligations
under the minimum funding standards of ERISA and the Code with
respect to each Plan and are in compliance in all material
respects with the presently applicable provisions of ERISA and
the Code, and have not incurred any liability to the PBGC (other
than premiums due and not delinquent under Section 4007 of ERISA)
or a Plan under Title IV of ERISA. The representations and
warranties set forth in this Section 4.6(a) (other than as to the
incurrence of any liability to a Plan under Title IV of ERISA)
are made to the best of the Applicant's knowledge to the extent
they apply to any Multiemployer Plan.
(b) Neither the Applicant nor any member of the
Controlled Group has incurred any withdrawal liability with
respect to any Multiemployer Plan under Title IV of ERISA, and no
such liability is expected to be incurred.
Section 4.7. Official Statement. The information relating
to the Applicant, the Operator or the Project, or any other
information supplied by the Applicant in writing, that is
contained in the Official Statement is true, correct and complete
in all material respects as of the Date of Issuance.
Section 4.8. Financial Information. The audited annual
financial statements of the Applicant for the most recently
completed fiscal year (such annual financial statements,
including the notes thereto, hereinafter collectively called the
"Financial Statements"), fairly reflect the financial condition
of the Applicant as of the dates and for the periods stated.
Since the dates of the Financial Statements, there has been no
material adverse change in the financial condition, the business
or operations of the Applicant from that set forth on the
Financial Statements.
Section 4.9. Material Liabilities. The Applicant has no
material liabilities, direct or contingent, except: (i) those
disclosed in the Financial Statements, and (ii) those arising in
the ordinary course of business since the date of the Financial
Statements which in the aggregate have no materially adverse
affect on the financial condition of the Applicant.
Section 4.10. Taxes. The Applicant has filed all required
federal, state and local tax returns and have paid all taxes as
shown on such returns or as assessed as such taxes have become
due (except as such taxes or assessments are being contested in
good faith by appropriate proceedings and for which reserves
consistent with GAAP have been established on the Applicant's
books). No claims have been assessed and are unpaid with respect
to such taxes except as shown in the Financial Statements. The
charges, accruals and reserves on the books of
<PAGE>
the Applicant in respect of taxes and other governmental charges
are, in the opinion of the Applicant, adequate.
Section 4.11. Representations and Warranties True. None of
the representations or warranties made by the Applicant in this
Agreement or in any Related Document contains any untrue
statement of material fact or omits any material fact necessary
to make the statements made not misleading.
Section 4.12. Environmental Matters. (a) The Applicant is
not subject to any Environmental Liability which could have or
cause a Material Adverse Effect and the Applicant has not been
designated as a potentially responsible party under CERCLA or
under any state statute similar to CERCLA. None of the
Properties have been identified on any current or proposed (i)
National Priorities List under 40 C.F.R. Section 300, (ii)
CERCLIS list or (iii) any list arising from a state statute
similar to CERCLA.
(b) No Hazardous Materials have been or are being
used, produced, manufactured, processed, generated, stored,
disposed of, managed at, or shipped or transported to or from the
Properties or are otherwise present at, on, in or under the
Properties, or, to the best of the knowledge of the Applicant, at
or from any adjacent site or facility, except for Hazardous
Materials, such as cleaning solvents, pesticides and other
materials used, produced, manufactured, processed, generated,
stored, disposed of, and managed in the ordinary course of
business in compliance with all applicable Environmental
Requirements.
Section 4.13. No Default. The Applicant is not in default
under or in violation of any material agreement, instrument,
contract or other document to which the Applicant is a party or
by which any of its assets are bound.
Section 4.14. Margin Stock. The Applicant is not engaged
principally or as one of its important activities in the business
of extending credit for the purpose of purchasing or carrying
"margin stock" (as defined in Regulations T, U or X of the Board
of Governors of the Federal Reserve System, as in effect from
time to time, together with all official rulings and
interpretations issued thereunder). The execution, delivery and
performance of this Agreement and the use of the proceeds of the
Bonds or any extension of credit hereunder, do not and will not
constitute a violation of said Regulations.
Section 4.15. Investment Company. The Applicant is not an
"investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of
1940, as amended.
Section 4.16. Public Utility Holding Company. The
Applicant is not a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company"
or a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as
amended.
Section 4.17. Full Disclosure. All information heretofore
furnished by the Applicant to the Bank for purposes of or in
connection with this Agreement or any transaction contemplated
<PAGE>
hereby is, and all such information hereafter furnished by the
Applicant to the Bank will be, true, accurate and complete in
every material respect or based on reasonable estimates on the
date as of which such information is stated or certified. The
Applicant has disclosed to the Bank in writing any and all facts
which (to the extent the Applicant can now reasonably foresee)
could have or cause a Material Adverse Effect.
Section 4.18. Year 2000 Compliance. The Applicant and each
Subsidiary has (a) initiated a review and assessment of all areas
within its and each of its Subsidiaries' business and operations
(including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk
that computer applications used by the Applicant or any of its
Subsidiaries (or their respective suppliers and vendors) may be
unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31,
1999), (b) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis, and as of the date of this
agreement is implementing that plan in accordance with that
timetable (the "Y2K Plan"). The Applicant and each Subsidiary
reasonably believes that all computer applications (including
those of its suppliers and vendors) that are material to its or
any of its Subsidiaries' business and operations will on a timely
basis be able to perform properly date-sensitive functions for
all dates before and after January 1, 2000, except to the extent
that a failure to do so could not reasonably be expected to have
a Material Adverse Effect.
Section 4.19. Compliance with Laws. The Applicant and its
Subsidiaries' are in compliance with all applicable laws,
including, without limitation, all Environmental Laws, except
where any failure to comply with any such laws would not, alone
or in the aggregate, have or cause a Material Adverse Effect.
ARTICLE V. COVENANTS
Section 5.1 Incorporation of Covenants. The Applicant
covenants and agrees that during the term of this Agreement,
unless the Bank otherwise consents in writing, the Applicant
shall comply with the covenants and agreements of the Applicant
set forth in Article V of the Credit Agreement as in effect on
the date of this Agreement, which covenants and agreements and,
for the sole purpose of giving meaning to such covenants and
agreements, the definitions of the terms used in such covenants
and agreements, are and shall be incorporated herein by this
reference and such covenants and agreements and definitions so
incorporated shall have the same force and effect as if they were
individually set forth in this Agreement. If the Credit
Agreement is amended subsequent to the date of this Agreement and
the Bank has voted in favor of such amendment(s), such
amendment(s) shall be deemed to modify the covenants and
agreements as incorporated herein and shall be binding upon the
Applicant and the Bank hereunder.
Section 5.2. Year 2000 Covenant. Within five (5) Business
Days after the Applicant becomes aware of any deviations from the
Y2K Plan which would cause compliance with the Y2K Plan to be
delayed or not achieved, the Applicant will deliver to the Bank a
statement of the chief executive officer, chief financial
officer, or chief technology officer of the Applicant setting
forth the details thereof and the action which the Applicant is
taking or proposes to take with respect thereto.
<PAGE>
ARTICLE VI. EVENTS OF DEFAULT; REMEDIES
Section 6.1. Events of Default. Each of the following
shall constitute an Event of Default hereunder:
(a) The Applicant shall fail to pay (i) any amount
payable under Section 2.5(a)(i) or Section 2.6(a) of this
Agreement when due or (ii) any interest, fee or other amount
payable under this Agreement within 5 Business Days after such
interest, fee or other amount becomes due.
(b) The Applicant shall fail to observe or perform any
covenant or agreement contained in Sections 5.01, 5.02(ii), 5.03
to 5.15, inclusive, Sections 5.18, 5.19, 5.20, 5.22 through 5.23,
inclusive, of the Credit Agreement, which Sections, among others,
are incorporated by reference in this Agreement pursuant to
Article V of this Agreement.
(c) The Applicant shall fail to observe or perform any
covenant or agreement contained or incorporated by reference in
this Agreement (other than those covered by paragraph (a) or (b)
above) and such failure shall not have been cured within thirty
(30) days after the earlier to occur of (i) written notice
thereof has been given to the Applicant by the Bank or (ii) the
Applicant otherwise becomes aware of any such failure.
(d) Any representation, warranty, certification or
statement made by the Applicant in Article IV of this Agreement
or by any Guarantor in the Guaranty or by the Applicant or any
Guarantor in any certificate, financial statement or other
document delivered pursuant to this Agreement or the Guaranty
shall prove to have been incorrect or misleading in any material
respect when made (or deemed made).
(e) The Applicant or any Subsidiary shall fail to make
any payment in respect of Debt outstanding in an aggregate amount
equal to or exceeding $5,000,000 when due or within any
applicable grace period.
(f) Any event or condition shall occur which results
in the acceleration of the maturity of Debt outstanding in an
aggregate amount exceeding $10,000,000 of the Applicant or any
Subsidiary (including, without limitation, any mandatory
prepayment or "put" of such Debt to the Applicant or any
Subsidiary) or enables (or, with the giving of notice or lapse of
time or both, would enable) the holders of such Debt or any
Person acting on such holders' behalf to accelerate the maturity
thereof (including, without limitation, any mandatory prepayment
or "put" of such Debt to the Applicant or any Subsidiary).
(g) The Applicant or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any
such official in an involuntary case oar other proceeding
commenced against it, or shall make a general assignment
<PAGE>
for the benefit of creditor, or shall a general assignment for
the benefit of creditor, or shall fail generally to pay its debts
as they become due, or shall take any corporate action to
authorize any of the foregoing.
(h) An involuntary case or other proceeding shall be
commenced against the Applicant or any Subsidiary seeking
liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of its or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and
unstayed for a period of sixty (60) days; or an order for relief
shall be entered against the Applicant or any Subsidiary under
the federal bankruptcy laws as now or hereafter in effect.
(i) One or more of the following events shall have
occurred and created a potential liability for the Applicant or
any member of the Controlled Group, singularly or in the
aggregate, in excess of $5,000,000: the Applicant or any member
of the Controlled Group shall fail to pay when due any material
amount which it shall have become liable to pay to the PBGC or to
a Plan under Title IV of ERISA; or notice of intent to terminate
a Plan or Plans pursuant to a distress termination under Section
4041(c) of ERISA shall be filed under Title IV of ERISA by the
Applicant, any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate
or to cause a trustee to be appointed to administer any such Plan
or Plans or a proceeding shall be instituted by a fiduciary of
any such Plan or Plans to enforce Section 515 or 4219(c)(5) of
ERISA and such proceeding shall not have been dismissed within
thirty (30) days thereafter; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated.
(j) One or more judgments or orders for the payment of
money in an aggregate amount in excess of $5,000,000 shall be
rendered against the Applicant or any Subsidiary and such
judgment or order shall continue unsatisfied and unstayed for a
period of thirty (30) days.
(k) A federal tax lien shall be filed against the
Applicant under Section 6323 of the Code or a lien of the PBGC
shall be filed against the Applicant or any Subsidiary under
Section 4068 of ERISA and in either case such lien shall remain
undischarged for a period of twenty-five (25) days after the date
of filing.
(l) (i) Any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of fifty percent (50%)
or more of the outstanding shares of the voting stock of the
Applicant; or (ii) as of any date a majority of the Board of
Directors of the Applicant shall consist of individuals who were
not either (A) directors of the Applicant as of the corresponding
date of the previous year, (B) selected or nominated to become
directors by the Board of Directors of the Applicant of which a
majority consisted of individuals described in clause (A), or (C)
selected or nominated to become directors by the Board of
Directors of the Applicant of which a majority consisted of
individuals described in
<PAGE>
clause (B); or (iii) the Applicant shall cease to serve as the
General Partner of Trus Joist MacMillan a Limited Partnership; or
(iv) the Applicant shall cease to beneficially own fifty-one
percent (51%) or more of the ownership interests of Trus Joist
MacMillan, a Limited Partnership.
(m) The occurrence of any event, act, occurrence, or
condition which the Bank determines either does or has a
reasonable probability of causing a Material Adverse Effect.
Section 6.2. Remedies. If an Event of Default occurs and
is continuing hereunder, the Bank may, in its sole discretion,
(a) declare all Tender Advances and all other amounts due
hereunder and all interest accrued thereon to be immediately due
and payable, and upon such declaration the same shall become and
be immediately due and payable, without presentment, protest or
other notice of any kind, all of which are hereby waived by the
Applicant, and (b) notify the Trustee of such occurrence and
thereby require the Trustee immediately to declare the principal
of all Bonds then outstanding and the interest accrued thereon
immediately due and payable pursuant to the Indenture and (c)
may pursue all remedies available to it at law, by contract, at
equity or otherwise.
No failure or delay by the Bank to exercise any right,
power or privilege hereunder shall operate as a waiver of any
such right, power or privilege nor shall any single or partial
exercise of any right, power or privilege preclude any other or
further exercise thereof. The rights and remedies herein
provided are cumulative and not exclusive of any rights or
remedies provided by law.
ARTICLE VII. PLEDGED BONDS
Section 7.1. The Pledge. The Applicant and the
Operator each hereby pledges, assigns, hypothecates, transfers,
and delivers to the Bank all of its right, title and interest to,
and hereby grant to the Bank a first lien on, and security
interest in, all right, title and interest of the Applicant and
the Operator in and to the following (hereinafter collectively
called the "Collateral"):
(a) all Pledged Bonds;
(b) all income, earnings, profits, interest, premium
or other payments in whatever form in respect of the Pledged
Bonds;
(c) all proceeds (cash and non-cash) arising out of
the sale, exchange, collection, enforcement or other disposition
of all or any portion of the Pledged Bonds.
The Collateral shall serve as security for the payment and
performance when due of any and all duties, debts, liabilities
and obligations of the Applicant and the Operator (either
directly, as maker, or indirectly, as guarantor, surety, endorser
or otherwise) to the Bank, whether now or hereafter existing,
howsoever arising or incurred or evidenced including
specifically, but without limitation, the Reimbursement
Obligations and the Reimbursement Note (hereinafter collectively
called the "Obligations"). The Applicant and the Operator shall
deliver, or cause to be delivered,
<PAGE>
the Pledged Bonds to the Bank or to a pledge agent designated by
the Bank immediately upon receipt thereof.
Section 7.2. Remedies Upon Default. If any Event of
Default shall have occurred and be continuing, the Bank, without
demand of performance or other demand, advertisement or notice of
any kind (except the notice specified below of time and place of
public or private sale) to or upon the Applicant, the Operator or
any other person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), may forthwith
collect, receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, assign, give option
or options to purchase, contract to sell or otherwise dispose of
and deliver said Collateral, or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange,
broker's board or at any of the Bank's offices or elsewhere upon
such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk, with the right to
the Bank upon any such sale or sales, public or private, to
purchase the whole or any part of said Collateral so sold, free
of any right or equity of redemption in the Applicant or the
Operator, which right or equity is hereby expressly waived or
released. The Bank shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or
sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care, safekeeping or
otherwise of any and all of the Collateral or in any way relating
to the rights of the Bank hereunder, including reasonable
attorney's fees and legal expenses, to the payment in whole or in
part of the Obligations in such order as the Bank may elect, the
Applicant and the Operator remaining liable for any deficiency
remaining unpaid after such application, and only after so
applying such net proceeds and after the payment by the Bank of
any other amount required by any provision of law, including,
without limitation, Section 9-504(1)(c) of the Uniform Commercial
Code, need the Bank account for the surplus, if any, to the
Applicant and the Operator. The Applicant and the Operator agree
that the Bank need not give more than ten (10) days notice of the
time and place of any public sale or of the time after which a
private sale or other intended disposition is to take place and
that such notice is reasonable notification of such matters. No
notification need be given to the Applicant or the Operator if it
has signed after Default a statement renouncing or modifying any
right to notification of sale or other intended disposition. In
addition to the rights and remedies granted to the Bank in this
Agreement and in any other instrument or agreement securing,
evidencing or relating to any of the Obligations, the Bank shall
have all the rights and remedies of a secured party under the
Uniform Commercial Code in effect in the State of Georgia at that
time.
If the Bank sells any of the Collateral pursuant to
this Section 7.2, the Bank agrees that it will reinstate the
Letter of Credit in an amount sufficient to cover all principal
and accrued interest on the Bonds so sold for up to one hundred
twenty-four (124) days at twelve percent (12%) per annum
(computed on the basis of a 365/366day year).
Section 7.3. Valid Perfected First Lien. The
Applicant and the Operator covenant that the pledge, assignment
and delivery of the Collateral hereunder will create a valid,
perfected, first priority security interest in all right, title
or interest of the Applicant and the Operator in or to such
Collateral, and the proceeds thereof, subject to no prior pledge,
lien, mortgage, hypothecation, security interest, charge, option
or encumbrance or to any agreement
<PAGE>
purporting to grant to any third party a security interest in the
property or assets of the Applicant or the Operator which would
include the Collateral. The Applicant and the Operator covenant
and agree that they will defend the Bank's right, title and
security interest in and to the Collateral and the proceeds
thereof against the claims and demands of all persons whomsoever.
Section 7.4. Release of Pledged Bonds. Pledged Bonds
shall be released from the security interest created hereunder
upon satisfaction of the Obligations with respect to such Pledged
Bonds.
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Notices. All notices, requests and other
communications to either party hereunder shall be in writing and
shall be given to such party at its address set forth below or at
such other address as such party may hereafter specify for the
purpose by notice to the other party. Each such notice, request
or other communication shall be effective (a) if given by mail
five (5) days after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or (b)
if given by any other means, when delivered at the address
specified below:
Party Address
TJ International, Inc. 200 East Mallard Drive
Boise, Idaho 83706
Attention: Treasurer
Wachovia Bank, N.A. 401 Linden Street
Winston-Salem, NC 27101
Attention: International
Operations, Standby Letters
of Credit, NC 30034
with copies to: Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Mr. John A.
Whitner
Section 8.2. Amendments, Consents and Waivers. No
amendment or waiver of any provision of this Agreement nor any
consent to any departure by the Applicant therefrom shall in any
event be effective unless the same shall be in writing and signed
by the Bank. Any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given.
Section 8.3. No Waiver; Remedies. No failure on the part
of the Bank to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof nor shall any single
or partial exercise of any right hereunder preclude any other or
further exercise thereof or the
<PAGE>
exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 8.4. Indemnification. The Applicant hereby
indemnifies and holds harmless the Bank from and against any and
all claims, damages, losses, liabilities, costs or expenses
whatsoever which the Bank may incur (or which may be claimed
against the Bank by any Person) (a) by reason of any untrue
statement or alleged untrue statement of any material fact
contained or incorporated by reference in the Official Statement,
or in any supplement or amendment thereto, or the omission to
state therein a material fact necessary to make such statements,
in the light of the circumstances under which they are or were
made, not misleading; or (b) by reason of or in connection with
the execution and delivery or transfer of, or payment or failure
to pay under, the Letter of Credit; provided that the Applicant
shall not be required to indemnify the Bank for any such claims,
damages, losses, liabilities, costs or expenses in the case of
indemnification pursuant to clause (a) above, to the extent, but
only to the extent, caused by any statements or information
supplied by the Bank for incorporation in the Official Statement;
provided further that the Applicant shall not be required to
indemnify the Bank for any such claims, damages, losses,
liabilities, costs or expenses in the case of indemnification
pursuant to clause (b) above, to the extent, but only to the
extent, caused by the willful misconduct or gross negligence of
the Bank. Nothing in this Section 8.4 is intended to limit the
Applicant's Reimbursement Obligations contained in Section 2.5
hereof.
Section 8.5. Continuing Obligations. The obligations of
the Applicant and the Operator under this Agreement shall
continue until the later of (a) the Termination Date or (b) the
date upon which all amounts due and owing to the Bank hereunder
shall have been paid in full. This Agreement shall be binding
upon the parties hereto and their respective successors and
assigns and inure to the benefit of and be enforceable by the
parties hereto and their respective successors, transferees and
assigns; provided, however, that (i) neither the Applicant nor
the Operator may assign all or any part of this Agreement without
the prior written consent of the Bank and (ii) the obligations of
the Applicant pursuant to Section 8.4 hereof shall survive the
termination of this Agreement.
<PAGE>
Section 8.6. Waiver of Right of Set-Off; Limitation on
Collateral.
(a) The Bank hereby irrevocably waives any banker's
lien or right of set-off that it may have at law or otherwise in
order to appropriate and apply to the payment of any and all of
the obligations of the Applicant now or hereafter existing in
respect of the Reimbursement Obligations of the Applicant set
forth in this Agreement, any balances, credits, deposits,
accounts or moneys of the Applicant at any time with the Bank
when and if there shall be a drawing under the Letter of Credit
(or as a result thereof) during the pendency of any proceeding by
or against the Applicant seeking relief in respect of the
Applicant under Title 11 of the United States Code, as now
constituted or hereafter amended; provided, however, that such
waiver shall not be operative if (i) it has been determined by
the court in such proceeding that the exercise of the Bank's
right of set-off or banker's lien will not lead to the Bank's
being released, prevented, enjoined or restrained, permanently,
preliminarily or temporarily, from fulfilling its obligations
under the Letter of Credit and (ii) the exercise of such banker's
lien or right of set-off would not constitute any payment
(including pursuant to the Letter of Credit) to the Trustee a
voidable preference payment under federal bankruptcy law then in
effect.
(b) The Bank agrees that, except as to its security
interest in Pledged Bonds, it will not at any time accept any
collateral as security for the payment of the Reimbursement
Obligations of the Applicant or the Operator set forth in this
Agreement unless provision is made prior to or simultaneously
with the taking of such collateral security by the Bank for an
equal and ratable security interest in such collateral security
to be granted to the Trustee for the benefit of the holders from
time to time of the Bonds.
(c) The Bank agrees that any payments under the
Letter of Credit will be made with the Bank's own funds and not
with funds of the Issuer, the Applicant or the Operator.
Section 8.7. Limited Liability of the Bank. The Applicant
agrees to assume all risk of the acts or omissions of the Trustee
and any transferee of the Letter of Credit with respect to its
use of the Letter of Credit. Neither the Bank nor any of its
officers or directors shall be liable or responsible for: (a) the
use which may be made of the Letter of Credit or for any acts or
omissions of the Trustee and any beneficiary or transferee in
connection therewith; (b) the validity, or genuineness of
documents, or of any endorsement(s) thereon, even if such
documents should in fact prove to be in any or all respects
invalid, fraudulent or forged; or (c) any other circumstances
whatsoever in making or failing to make payment under the Letter
of Credit, except only that the Applicant shall have a claim
against the Bank, and the Bank shall be liable to the Applicant,
to the extent, but only to the extent, of any direct, as opposed
to consequential, damages suffered by the Applicant which the
Applicant proves were caused by (i) the Bank's willful misconduct
or gross negligence in determining whether documents presented
under the Letter of Credit comply with the terms thereof or (ii)
the Bank's willful failure to pay under the Letter of Credit
after the presentation to it by the Trustee (or a successor
trustee under the Indenture to whom the Letter of Credit has been
transferred in accordance with its terms) of a draft and
certificate strictly complying with the terms and conditions of
the Letter of Credit. In furtherance and not in limitation of
the foregoing, the Bank may accept documents that appear on
<PAGE>
their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the
contrary.
Section 8.8. Costs, Expenses and Taxes. The Applicant
agrees to pay on demand all reasonable out-of-pocket expenses of
the Bank, including fees and disbursements of counsel, in
connection with: (a) the preparation, execution, delivery,
filing and administration of this Agreement, the Letter of
Credit, the Related Documents and otherwise in connection with
the issuance of the Bonds, (b) any amendments, supplements,
consents or waivers hereto or thereto, and (c) the enforcement of
this Agreement, the Bonds, the Letter of Credit and the Related
Documents and any other documents which may be delivered in
connection herewith or therewith. In addition, the Applicant
shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement and such other
documents and agrees to save the Bank harmless from and against
any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees. It is
the intention of the parties hereto that the Applicant shall pay
amounts referred to in this Section directly. In the event the
Bank pays any of the amounts referred to in this Section
directly, the Applicant will reimburse the Bank for such advances
and interest on such advance shall accrue until reimbursed at the
Default Rate.
Section 8.9. Severability. Any provision of this Agreement
which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or
nonauthorization without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.
Section 8.10. Governing Law. This Agreement shall be
governed by, and construed and interpreted in accordance with,
the laws of the State of Georgia.
Section 8.11. Consent to Jurisdiction. The Applicant
irrevocably submits to the jurisdiction of any Georgia State or
federal court sitting in said State over any suit, action, or
proceeding arising out of or relating to this Agreement. The
Applicant irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action, or proceeding
brought in such a court and any claim that any such suit, action,
or proceeding has been brought in an inconvenient forum.
Section 8.12. Headings. Section headings in this Agreement
are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first above
written.
TJ INTERNATIONAL, INC.
By: /s/ Richard B. Drury (SEAL)
----------------------------
Name: Richard B. Drury
Title: Corporate Secretary &
Treasurer
TRUS JOIST MACMILLAN A
LIMITED PARTNERSHIP
By: TJ International, Inc., its
sole General Partner
/s/ Richard B. Drury (SEAL)
--------------------------
Name: Richard B. Drury
Title: Corporate Secretary
& Treasurer
[Execution by the Bank appears on the following page]
<PAGE>
WACHOVIA BANK, N.A.
By: /s/ J. S. Wright (SEAL)
---------------------------------
Name: Jessica S. Wright
Title: Vice President
<PAGE>
ANNEX I
IRREVOCABLE DIRECT-PAY LETTER OF CREDIT
Date: December 1, 1998
LETTER OF CREDIT NO. LC____________
Bank One Trust Company, N. A.
Bank One Tower
400 Texas Street, 7th Floor
Shreveport, LA 71101
Dear Sirs:
SECTION 1. At the request and for the account of our
customer TJ International, Inc. (the "Borrower"), on whose behalf
the Parish of Natchitoches, State of Louisiana (the "Issuer") has
issued its Variable Rate Demand Refunding Bonds (Trus Joist
Corporation Project) Series 1988 (the "Bonds") pursuant to a
trust indenture dated as of September 1, 1988 (including all
amendments and supplements thereto, the "Indenture") by and
between the Issuer and Bank One Trust Company, N.A., formerly
known as The First National Bank of Shreveport, as Premier Bank,
National Association and as Bank One Louisiana, N. A., as trustee
and paying agent (the "Trustee" and "Paying Agent"), Wachovia
Bank, N.A. (the "Bank"), does hereby establish in your favor, as
Paying Agent under the Indenture, this Irrevocable Direct-Pay
Letter of Credit in the aggregate amount of TEN MILLION FOUR
HUNDRED SEVEN THOUSAND SIX HUNDRED SEVENTY-ONE DOLLARS
($10,407,671) (hereinafter, as reduced or reinstated from time to
time in accordance with the provisions hereof, the "Stated
Amount") of which an amount not exceeding TEN MILLION DOLLARS
($10,000,000) (as reduced from time to time in accordance with
the terms hereof, the "Principal Component") may be drawn upon
with respect to payment of the unpaid principal amount or the
portion of the Purchase Price, as hereinafter defined,
corresponding to the unpaid principal amount of the Bonds and an
initial amount not exceeding FOUR HUNDRED SEVEN THOUSAND SIX
HUNDRED SEVENTY-ONE DOLLARS ($407,671) (as reduced or reinstated
from time to time in accordance with the terms hereof, the
"Interest Component") may be drawn upon with respect to payment
of interest accrued and unpaid or the portion of the Purchase
Price corresponding to interest accrued and unpaid on the Bonds
on or prior to their stated maturity date, but in no event more
than the actual interest accrued and unpaid, at an interest rate
on the Bonds of 12% per annum (calculated on the basis of a
365/366-day year) for the 124 days' immediately preceding any
Drawing made with respect to the Bonds to and including the
Conversion Date (as defined in the Indenture) with respect to
such Bonds; provided, however, that the amount of the Principal
Component or Interest Component which may be drawn with respect
to the Bonds shall not exceed the initial aggregate principal
amount of the Bonds or the maximum amount available for an
interest drawing with respect to the Bonds.
<PAGE>
SECTION 2. This Letter of Credit shall expire at 4:00 p.m.
local time in Winston-Salem, North Carolina, on the date (the
"Termination Date") which is the earliest of: (i) December 5,
2001, unless extended in accordance with Section 2.2(b) of the
Reimbursement and Security Agreement dated as of November 1, 1998
(the "Reimbursement Agreement") among the Borrower, Trus Joist
MacMillan a Limited Partnership (the "Operator") and the Bank
(the "Scheduled Expiration Date"), (ii) the date of payment of a
Principal Component Drawing which when added to all other
Principal Component Drawings honored hereunder and not subject to
reinstatement in the aggregate equals the initial amount of the
Principal Component of the Stated Amount (a "Final Payment
Drawing"), (iii) the first Business Day which is fifteen (15)
calendar days after the date of receipt of notice from us by the
Trustee stating that an Event of Default has occurred under the
Reimbursement Agreement and directing the Trustee to declare the
principal amount of all Bonds then outstanding and interest
accrued thereon immediately due and payable pursuant to the
Indenture, (iv) the first Business Day that is fifteen (15)
calendar days after our receipt of a certificate signed by one
purporting to be your duly authorized officer in the form of
Exhibits F or G ("Termination Certificates") attached hereto,
appropriately completed stating that this Letter of Credit shall
terminate with respect to the Bonds on the first Business Day
which is fifteen (15) calendar days after the date of receipt of
said notice, or (v) the date when you surrender this Letter of
Credit to the Bank for cancellation. You agree to surrender this
Letter of Credit to the Bank, and not to make any Drawing, after
(a) the Expiration Date, or (b) the date on which there are no
Bonds outstanding under the Indenture.
SECTION 3. Funds under this Letter of Credit will be made
available to you against receipt by us of a sight draft in the
form attached hereto as Exhibit I, together with the following
items, at the time required below: (A) if the Drawing is being
made with respect to payment of the principal portion of the
Purchase Price of the Bonds pursuant to Sections 210, 211, 214
and 215 of the Indenture (an "A Drawing"), receipt by us of your
written certificates in the form of Exhibit A and Exhibit D
attached hereto appropriately completed and signed by one
purporting to be your duly authorized officer; (B) if the Drawing
is being made with respect to the principal of the Bonds due on a
principal payment date or upon maturity, acceleration or
redemption (a "B Drawing"), receipt by us of your written
certificate in the form of Exhibit B attached hereto
appropriately completed and signed by one purporting to be your
duly authorized officer; (C) if the Drawing is being made with
respect to the payment of the interest portion of the Purchase
Price of the Bonds, if any, or to pay interest due on an interest
payment date or upon maturity, acceleration or redemption of the
Bonds (a "C Drawing"), receipt by us of your written certificate
in the form of Exhibit C attached hereto appropriately completed
and signed by one purporting to be your duly authorized officer.
"Drawing" as used herein shall mean an "A Drawing," "B Drawing"
or "C Drawing" as the context may require.
SECTION 4. If a Drawing is made by you hereunder at or prior
to 11:00 A.M., Winston-Salem, North Carolina time, on a Business
Day (as defined herein), and provided that such Drawing and the
documents and other items presented in connection therewith are
in strict conformance with the terms and conditions hereof,
payment shall be made to you or your designee, of the amount
specified, in immediately available funds, not later than 3:00
P.M., Winston-Salem, North Carolina time, on the same Business
Day or not later than 1:00 P.M., Winston-Salem, North Carolina
time, on such later Business Day, as you may specify. If a
Drawing is made by you hereunder after 11:00 A.M., Winston-Salem,
North Carolina time, on a
<PAGE>
Business Day and provided that such Drawing and the documents and
other items presented in connection therewith are in strict
conformance with the terms and conditions hereof, payment shall
be made to you or your designee, of the amount specified, in
immediately available funds, not later than 1:00 P.M.,
Winston-Salem, North Carolina time, on the next succeeding
Business Day or not later than 1:00 P.M., Winston-Salem, North
Carolina time, on such later Business Day as you may specify.
Payment under this Letter of Credit will be made by wire
transfer of Federal Funds into any account at the Paying Agent.
The Bank agrees to honor all Drawings under this Letter of Credit
with its own funds and not with any funds of the Borrower.
SECTION 5. Demands for payment hereunder honored by us shall
not, in the aggregate, exceed the Stated Amount, as the Stated
Amount may have been increased, reduced or reinstated by us as
herein provided. Subject to the preceding sentence, each "A
Drawing" or "B Drawing" honored by the Bank hereunder shall pro
tanto reduce the Principal Component and each "C Drawing" honored
by the Bank hereunder shall pro tanto reduce the Interest
Component, and any such reduction shall result in a corresponding
reduction in the Stated Amount, it being understood that after
the effectiveness of any such reduction you shall no longer have
any right to make a Drawing hereunder in respect of the amount of
such principal and/or interest on the Bonds or the payment of the
Purchase Price corresponding thereto causing or corresponding to
such reduction unless the amount of such Drawing is subject to
reinstatement and has been reinstated as provided in Paragraph 7
of this Letter of Credit.
SECTION 6. Upon receipt by us of a certificate in the form
of Exhibit E (a "Reduction Certificate") attached hereto
appropriately completed and signed by one purporting to be your
duly authorized officer the Stated Amount, the Principal
Component and the Interest Component will be reduced to the
amounts set forth therein. If the amount available hereunder
shall be so reduced or, if the amount available hereunder shall
be reduced pursuant to Paragraph 5 of this Letter of Credit, we
may require you to surrender this Letter of Credit to us on the
tenth Business Day after prior written notice by us to you and to
accept on such date, in substitution for this Letter of Credit,
an irrevocable direct-pay letter of credit, dated such date, for
an amount equal to the amount to which the amount available to be
drawn hereunder shall have been so reduced, but otherwise in a
form and having terms identical to this Letter of Credit.
SECTION 7. The amount of Drawings made hereunder with
respect to the Borrower for which such Drawings have been made
will be reinstated by us under this Letter of Credit to the
amount of such Drawings under the following conditions:
a. With respect to our honoring an "A Drawing," the Stated
Amount shall be automatically reinstated in the amount of said
Drawing as to the Principal Component and, if applicable, the
Interest Component (subject to any reduction in said amounts as
provided in the first paragraph of Paragraph 6) unless you shall
have received, on or prior to the close of business on the tenth
Business Day after any payment in respect of an "A Drawing," a
notice from us stating that an Event of Default has occurred
under the Reimbursement Agreement and directing the Trustee to
declare the principal amount of
<PAGE>
all Bonds then outstanding and interest accrued thereon
immediately due and payable pursuant to the Indenture.
b. With respect to our honoring a "C Drawing," the amount
of said Drawing will automatically be reinstated in the amount of
such Drawing (subject to any reduction in said Interest Component
as above provided in the first paragraph of Paragraph 6) unless
you shall have received, on or prior to the close for business on
the tenth Business Day after any payment in respect of a "C
Drawing," a notice from us stating that an Event of Default has
occurred under the Reimbursement Agreement and directing the
Trustee to declare the principal amount of all Bonds then
outstanding and interest accrued thereon immediately due and
payable pursuant to the Indenture.
SECTION 8. Only the Paying Agent may make a Drawing under
this Letter of Credit. Upon the payment to you, your account,
your designee or the account of your designee of the amount
demanded pursuant to presentation of a sight draft and
accompanying certifications, we shall be fully discharged of our
obligation under this Letter of Credit with respect to payment of
the amount demanded and we shall not thereafter be obligated to
make any further payments under this Letter of Credit in respect
of such demand for payment to you or any other person who may
have made to you or makes to you a demand for payment of
principal of, premium, if any, Purchase Price of, or interest on,
any Bond. By paying to you an amount demanded in accordance
herewith, we make no representation as to the correctness of the
amount demanded or your calculations and representations on the
certificates required of you by this Letter of Credit.
If your sight draft and accompanying Exhibits are not, in
any instance, in strict conformance with the terms and conditions
of this Letter of Credit, we shall give you prompt notice that
the purported negotiation was not effected in accordance with
this Letter of Credit, stating the reasons therefor and that we
are holding any documents at your disposal or are returning them
to you, as we may elect. Upon being notified that the purported
negotiation was not effected in conformity with this Letter of
Credit, you may attempt to correct any such nonconforming sight
draft and accompanying Exhibits if, and to the extent that, you
are entitled (without regard to the provisions of this sentence)
and able to do so.
SECTION 9. Upon receipt of your Reduction Certificate by
the Bank, the Stated Amount of this Letter of Credit shall be
permanently reduced as provided in such Reduction Certificate.
Upon receipt of your Termination Certificate in the form of
Exhibit F by the Bank this Letter of Credit shall be surrendered
for cancellation in accordance with its terms.
SECTION 10. All demands for payment, Bonds and certificates
to be presented to the Bank hereunder, as well as all
communications to the Bank in respect of this Letter of Credit,
shall be in writing and shall be timely delivered in writing or
by tested telex or identifiable telecopy confirmed in writing to
the address shown at the foot hereof or at such other address as
may be designated by us in a written notice delivered to you and
shall make specific reference to Wachovia Bank, N. A. Irrevocable
Direct-Pay Letter of Credit No. LC________, Attention: Standby
Letter of Credit Unit re: TJ International, Inc.
<PAGE>
SECTION 11. As used herein (a) "Purchase Price" shall mean
the principal amount of, together with accrued interest, if any,
on, any Bonds to be purchased with proceeds of an "A Drawing"
and, if applicable, a "C Drawing;" (b) "Business Day" shall mean
any day other than a Saturday, a Sunday, or a day on which banks
located in the city in which the principal office of the Trustee
or the office of the Bank at which drawing documents are required
to be presented under this Letter of Credit are required or
authorized to close, or on which the New York Stock Exchange is
closed, (c) "Payment Date" shall mean any day on which the
principal of premium, if any, and interest on the Bonds shall be
due on or prior to their stated maturity or as a result of
acceleration or redemption; (d) "Purchase Payment Date" shall
mean any day on which the Purchase Price of the Bonds shall be
due and payable.
SECTION 12. This Letter of Credit is subject to the Uniform
Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce, Publication No. 500 or any
successor publication which may be in effect from time to time
(the "UCP"), except that Article 41 of the UCP or any successor
Article which is substantially similar shall not be included in
the reference to the UCP. This Letter of Credit shall be deemed
to be a contract made under the laws of the State of Georgia and
shall, as to matters not governed by the UCP, be governed by and
construed in accordance with the laws of the State of Georgia.
SECTION 13. Notwithstanding anything in the UCP to the
contrary, and particularly Article 54 thereof or any successor
Article which is substantially similar, this Letter of Credit may
be successively transferred in its entirety (but not in part).
Transfer of the available Drawing(s) under this Letter of Credit
to such transferee shall be effected by the presentation to us at
our address set forth at the foot of this Letter of Credit
accompanied by the transfer form attached hereto as Exhibit H (a
"Transfer Demand") appropriately completed and the payment to the
Bank of its customary transfer fee.
SECTION 14. This Letter of Credit is intended to remain in
full force and effect until it expires in accordance with its
terms. Any failure by you or any successor paying agent to draw
upon this Letter of Credit with respect to any payment of
principal of or interest with respect to the Bonds in accordance
with the terms and conditions of the Indenture shall not cause
this Letter of Credit to be unavailable for any future drawing in
accordance with the terms and conditions of the Indenture.
<PAGE>
SECTION 15. This Letter of Credit sets forth in full our
undertaking, and such undertaking shall not in any way be
modified, amended, amplified or limited by reference to any
document, instrument or agreement referred to herein (including,
without limitation, the Bonds), except only the sight draft and
Exhibits referred to herein; and any such reference shall not be
deemed to incorporate herein by reference any document,
instrument or agreement except for such sight draft and Exhibits.
Very truly yours,
WACHOVIA BANK, N. A.
By:
----------------------------
Authorized Officer
Delivery Address:
401 Linden Street
Winston-Salem, North Carolina 27101
Attention: International
Operations, Standby Letter of
Credit Unit, NC30034
Telecopier No. (336) 735-0950
Telephone No. (336) 735-3367
<PAGE>
EXHIBIT A
PAYING AGENT'S CERTIFICATE FOR "A DRAWING"
The undersigned, a duly authorized officer of ____________,
as Paying Agent (the " Paying Agent"), hereby certifies to
Wachovia Bank, N. A. (the "Bank"), with reference to Irrevocable
Direct-Pay Letter of Credit No. LC_________ (the "Letter of
Credit") issued by the Bank in favor of the Paying Agent under
the Indenture, that:
SECTION 1. The Paying Agent is the Paying Agent under the
Indenture for the owners of the Bonds.
SECTION 2. Pursuant to Section __________ of the Indenture,
the Paying Agent has concurrently herewith presented its sight
draft drawn on you in the amount of $____________. The Paying
Agent is making a Drawing under the Letter of Credit with respect
to paying of the Purchase Price on the Bonds to be purchased
pursuant to Section ________ of the Indenture.
SECTION 3. The amount demanded hereby is $ __________.
Such amount represents the principal portion in the amount of $
__________ of the Purchase Price of the Bonds tendered or deemed
tendered to the Paying Agent pursuant to Section _________ of the
Indenture, less the proceeds of the remarketing of such Bonds.
Said amount does not exceed the amount permitted to be drawn
under the Letter of Credit in accordance with the Letter of
Credit and the Indenture.
SECTION 4. The amount demanded hereby does not include any
amount in respect of the purchase of any Pledged Bonds (as
defined in the Reimbursement Agreement) or any Bonds registered
in the name of the Borrower or the Operator.
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and
delivered this Certificate as of the _____ day of __________, 19
___.
---------------------------------
as Paying Agent
By:
------------------------------
Title:
--------------------------
<PAGE>
EXHIBIT B
PAYING AGENT'S CERTIFICATE FOR "B DRAWING"
The undersigned, ____________________, as Paying Agent (the
"Paying Agent"), hereby certifies to Wachovia Bank, N. A. (the
"Bank"), with reference to Irrevocable Direct-Pay Letter of
Credit No. LC____________ (the "Letter of Credit") issued by the
Bank in favor of the Paying Agent under the Indenture, that:
SECTION 1. The Paying Agent is the Paying Agent under the
Indenture for the owners of the Bonds, and the person executing
this Certificate on behalf of the Paying Agent is a duly
authorized officer of the Paying Agent.
SECTION 2. Pursuant to Section ____ of the Indenture, the
Paying Agent has concurrently presented its sight draft drawn on
you in the amount of $__________. The Paying Agent is making a
Drawing under the Principal Component of the Letter of Credit
with respect to paying of principal on the Bonds which amount
has, or will within two (2) Business Days, become due and payable
pursuant to the applicable Indenture, on or prior to their stated
maturity or as a result of acceleration or redemption of the
Bonds.
SECTION 3. The amount demanded hereby is $ __________. Said
amount does not exceed the amount permitted to be drawn under the
Letter of Credit in accordance with the Letter of Credit and the
Indenture.
SECTION 4. The amount demanded hereby does not include any
amount in respect of the payment of principal on any Pledged
Bonds (as defined in the Reimbursement Agreement) or Bonds
registered in the name of the Borrower or the Operator.
SECTION 5. Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly
to the payment when due of the principal amount owing on the
Bonds pursuant to the Indenture, (b) no portion of said amount
shall be applied by the undersigned for any other purpose and (c)
no portion of said amount shall be commingled with other funds
held by the undersigned.
SECTION 6. The Principal Component available under the
Letter of Credit (immediately prior to the Drawing requested
hereby and taking into account any other Drawing previously or
concurrently requested by the Paying Agent which has not been
paid or rejected by the Bank prior to the time of presentation of
this Certificate and assuming no subsequently presented Drawing
is honored prior to the time of payment of this Drawing) is $
____________. After payment of the Drawing requested hereby (and
any other Drawing previously or concurrently requested by the
Paying Agent which has not been paid or rejected by the Bank
prior to the time of presentation of this Certificate and
assuming no subsequently presented Drawing is honored prior to
the time of payment of this Drawing), the Principal Component
will be $ __________.
<PAGE>
SECTION 7. [The amount of the Drawing requested to pay the
Principal Component of the Bonds for an optional redemption
pursuant to Section [ __________ ]* of the Indenture does not
exceed the amount deposited with the Paying Agent for
reimbursement to the Bank for the Drawing to pay such optional
redemption. ]* OR [The amount of the Drawing requested to pay the
Principal Component of the Bonds for mandatory redemption is
being made pursuant to Section [ __________]* of the Indenture. ]
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and
delivered this Certificate as of the ____ day of __________, 19
___.
----------------------------
as Paying Agent
By:
--------------------------
Title:
-----------------------
*Strike inapplicable language.
<PAGE>
EXHIBIT C
PAYING AGENT'S CERTIFICATE FOR "C DRAWING"
The undersigned, _____________________________, as Paying
Agent (the "Paying Agent"), hereby certifies to Wachovia Bank, N.
A. (the "Bank"), with reference to Irrevocable Direct-Pay Letter
of Credit No. LC_____________ (the "Letter of Credit") issued by
the Bank in favor of the Paying Agent under the Indenture, that:
SECTION 1. The Paying Agent is the Paying Agent under the
Indenture for the owners of the Bonds and the person executing
this Certificate on behalf of the Paying Agent is a duly
authorized officer of the Paying Agent.
SECTION 2. Pursuant to Section [ __________]* of the
Indenture, the Paying Agent has concurrently presented its sight
draft drawn on you in the amount of $ __________. The Paying
Agent is making a Drawing under the Interest Component of the
Letter of Credit with respect to payment of interest due on the
Bonds identified below on a [ Payment Date or a Purchase Payment
Date]* for payment of the accrued interest portion of the
Purchase Price of the Bonds identified below or the accrued
interest to be paid on the Bonds on or prior to their stated
maturity or as a result of the acceleration or redemption of the
Bonds, which amount has, or will within two (2) Business Days,
become due and payable pursuant to the Indenture.
SECTION 3. The amount demanded hereby is $ __________. Said
amount does not exceed the amount permitted to be drawn under the
Letter of Credit in accordance with the Letter of Credit and the
Indenture.
SECTION 4. The amount demanded hereby does not include any
amount in respect of the payment of interest or in respect of the
payment of the accrued interest portion of the purchase price of
Pledged Bonds (as defined in the Reimbursement Agreement) or
Bonds registered in the name of the Borrower or the Operator.
SECTION 5. Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will either (i) apply the
same directly to the payment when due of the accrued interest
portion of the Purchase Price of the Bonds or to the payment when
due of the interest accrued and owing on the Bonds pursuant to
the Indenture, (ii) pay such amounts directly to the Paying
Agent, (b) no portion of said amount shall be applied by the
undersigned for any other purpose and (c) no portion of said
amount shall be commingled with other funds held by the
undersigned.
SECTION 6. The Interest Component available under the
Letter of Credit (immediately prior to the Drawing requested
hereby and taking into account any other Drawing previously or
concurrently requested by the Paying Agent which has not been
paid or rejected by the Bank prior to the time of presentation of
this Certificate and assuming no subsequently presented Drawing
is honored prior to the time of payment of this Certificate) is
$____________.
<PAGE>
SECTION 7. After payment of the Drawing requested hereby
(and any other Drawing previously or concurrently requested by
the Paying Agent which has not been paid or rejected by the Bank
prior to the time of presentation of this Certificate and
assuming (a) no subsequently presented Drawing is honored prior
to the time of payment of this Drawing, and (b) reinstatement of
the Interest Component in accordance with the terms of the Letter
of Credit) the Interest Component will be $_____________.
SECTION 8. [The amount of the Drawing requested to pay the
Interest Component of the Bonds for an optional redemption
pursuant to Section __________ of the Indenture does not exceed
the amount deposited with the Paying Agent for reimbursement to
the Bank for the Drawing to pay such optional redemption.]*
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and
delivered this certificate as of the _____ day of __________,
19____.
-------------------------------
as Paying Agent
By:
----------------------------
Title:
----------------------
* Strike inapplicable language
<PAGE>
EXHIBIT D
PAYING AGENT'S CERTIFICATE FOR RECEIPT OF PLEDGED BONDS
The undersigned, a duly authorized officer of
_______________________ (the "Paying Agent"), hereby certifies to
Wachovia Bank, N. A. (the "Bank"), with reference to the
Irrevocable Direct-Pay Letter of Credit No. LC__________ (the
"Letter of Credit") issued by the Bank in favor of
____________________, as Paying Agent, that the Paying Agent has
received and is holding as agent for the Bank under the terms of
the Reimbursement and Security Agreement, dated as of November 1,
1998 among TJ International, Inc., Trus Joist MacMillan a Limited
Partnership, and the Bank, Bonds in the principal amount of $
_________, which amount represents the amount of the principal
portion of the Bonds drawn upon the Letter of Credit pursuant to
the "A Drawing" presented to you concurrently herewith.
Any capitalized term used herein and not defined shall have
the respective meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and
delivered this certificate as of the ____ day of __________, 19
__.
--------------------------------
as Paying Agent
By:
----------------------------
Title:
----------------------------
<PAGE>
EXHIBIT E
PAYING AGENT'S CERTIFICATE OF REDUCTION
OF AMOUNT OF LETTER OF CREDIT
The undersigned, _____________________, as Paying Agent (the
"Paying Agent"), hereby certifies to Wachovia Bank, N. A. (the
"Bank"), with reference to Irrevocable Direct-Pay Letter of
Credit No. LC__________ (the "Letter of Credit") issued by the
Bank in favor of the Paying Agent under the Indenture, that:
SECTION 1. The Paying Agent is the Paying Agent under the
Indenture for the owners of the Bonds and the person executing
this Certificate on behalf of the Paying Agent is a duly
authorized officer of the Paying Agent.
SECTION 2. The Paying Agent hereby notifies you that on or
prior to the date hereof $ ________ principal amount of the Bonds
have been redeemed, defeased or converted to the Fixed Rate
pursuant to the Indenture.
SECTION 3. Following the redemption, the defeasance or the
conversion to the Fixed Rate of the Bonds, the aggregate
principal amount of Bonds outstanding is $ _____________.
SECTION 4. The maximum amount required for an interest
Drawing on the Bonds referred to in paragraph 3 above is $
_______.
SECTION 5. The amount available to be drawn by the Paying
Agent under the Letter of Credit in respect of accrued and unpaid
interest on the Bonds or the portion of the Purchase Price of the
Bonds equal to accrued and unpaid interest is reduced to $
_______ (such amount being equal to the amount specified in
paragraph 4 above) upon receipt by the Bank of this Certificate.
SECTION 6. The Stated Amount of the Letter of Credit is
reduced to $ ________ (such amount being equal to the sum of the
amounts specified in paragraphs 3 and 4 above) upon receipt by
the Bank of this Certificate, of which amount $ _______ (the
amount specified in paragraph 3 above) constitutes the revised
Principal Component and $ ______________ (the amount specified in
paragraph 4 above) constitutes the revised Interest Component.
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit.
<PAGE>
IN WITNESS WHEREOF, the Paying Agent has executed and
delivered this Certificate as of the ______ day of __________,
19___.
-------------------------------
as Paying Agent
By:
----------------------------
Title:
----------------------
<PAGE>
EXHIBIT F
PAYING AGENT'S CERTIFICATE FOR TERMINATION OF
LETTER OF CREDIT (ACCEPTANCE OF
SUBSTITUTE LETTER OF CREDIT)
The undersigned, __________________________ as Paying Agent
(the "Paying Agent"), hereby certifies to Wachovia Bank, N. A.
(the "Bank"), with reference to Irrevocable Direct-Pay Letter of
Credit No. LC__________ (the "Letter of Credit") issued by the
Bank in favor of the Paying Agent, that:
SECTION 1. The Paying Agent is the Paying Agent under the
Indenture for the owners of the Bonds and the person executing
this Certificate on behalf of the Paying Agent is a duly
authorized officer of the Paying Agent.
SECTION 2. The conditions precedent to the acceptance of an
"Alternate Credit Facility" set forth in the Indenture have been
satisfied.
SECTION 3. As Paying Agent under the Indenture, the Paying
Agent has received an "Alternate Credit Facility."
SECTION 4. Upon receipt by the Bank of this Certificate the
Letter of Credit shall terminate with respect to the Bonds on the
first Business Day which is fifteen (15) calendar days after the
date of receipt of this notice, all as provided in clause (iv) of
paragraph 2 of the Letter of Credit.
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and
delivered this Certificate as of the _____ day of ______________,
19____.
-------------------------------
as Paying Agent
By:
----------------------------
Title:
----------------------
<PAGE>
EXHIBIT G
PAYING AGENT'S CERTIFICATE FOR TERMINATION OF
LETTER OF CREDIT (NO BONDS OUTSTANDING OR
CONVERSION OF ALL BONDS TO FIXED RATE OR
EXPIRATION OF THE LETTER OF CREDIT)
The undersigned, ____________________, as Paying Agent (the
"Paying Agent"), hereby certifies to Wachovia Bank, N. A. (the
"Bank"), with reference to Irrevocable Direct-Pay Letter of
Credit No. LC_____________ (the "Letter of Credit") issued by the
Bank in favor of the Paying Agent, that:
SECTION 1. The Paying Agent is the Paying Agent under the
Indenture for the owners of the Bonds and the person executing
this Certificate on behalf of the Paying Agent is a duly
authorized officer of the Paying Agent.
SECTION 2. [No Bonds remain outstanding under the
Indenture]* OR [ All Bonds remaining outstanding under the
Indenture have been converted to the Fixed Rate as of ________,
____________________ (the "Final Fixed Rate Date")]* OR [The
Expiration Date of the Letter of Credit will occur on
________________, _______] the date which is 123 days after the
Final Fixed Rate Date or Expiration Date ]*.
SECTION 3. Upon receipt by the Bank of this Certificate the
Letter of Credit shall terminate as provided in the Letter of
Credit.
Any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and
delivered this Certificate as of the _____ day of
________________, 19 _____.
--------------------------------
as Paying Agent
By:
----------------------------
Title:
-------------------------
* Strike inapplicable language.
<PAGE>
EXHIBIT H
TRANSFER DEMAND
Wachovia Bank, N. A.
401 Linden Street
Winston-Salem, North Carolina 27101
Attn: International Operations, Standby Letters of Credit,
NC30034
Re: Wachovia Bank, N. A. Irrevocable Direct-Pay Letter of
Credit No.LC__________
Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above
Letter of Credit in its entirety. The transferee has succeeded
the undersigned as Paying Agent under the Indenture (as defined
in the Letter of Credit).
By this transfer, all rights of the undersigned beneficiary
in such Letter of Credit are transferred to the transferee and
the transferee shall have the sole rights as beneficiary thereof,
including sole rights relating to any amendments, whether
increases or extensions or other amendments and whether now
existing or hereafter made. All amendments are to be advised
direct to the transferee without necessity of any consent of or
notice to the undersigned beneficiary.
The Letter of Credit is returned herewith, and we ask you to
endorse the transfer on the reverse thereof and forward it
directly to the transferee with your customary notice of
transfer.
Very truly yours,
Signature Authenticated
-------------------------------
- ----------------------- Signature of Beneficiary
(Authorized Signature)
We certify that we have succeeded (name of beneficiary) as
Paying Agent under the Indenture (as defined in the Letter of
Credit).
<PAGE>
Signature Authenticated
- ----------------------- ----------------------------
(Authorized Signature) Signature of Transferee
<PAGE>
EXHIBIT I
FORM OF SIGHT DRAFT
Wachovia Bank, N. A.
401 Linden Street
Winston-Salem, North Carolina 27101
Attn: International Operations, Standby Letters of Credit,
NC30034
This sight draft is presented to you for the amount of $
__________ for the purposes set forth in the accompanying
Certificate.
-------------------------------------
as Paying Agent for the Parish of
Natchitoches, State of Louisiana
Variable Rate Demand Refunding Bonds
(Trus Joist Corporation Project)
Series 1988
By:
----------------------------------
Title:
----------------------------
<PAGE>
ANNEX II
November 1, 1998
PROMISSORY NOTE
1. FOR VALUE RECEIVED, the undersigned, TJ INTERNATIONAL,
INC., a corporation organized and existing under the laws of the
State of Delaware (the "Applicant"), promises to pay to the order
of WACHOVIA BANK, N.A. (the "Bank"), at the office of the Bank at
191 Peachtree Street, N.E., Atlanta, Georgia 30303, or at such
other place as the Bank hereafter may direct in writing, in legal
tender of the United States of America, the principal sum of TEN
MILLION AND NO/100'S DOLLARS ($10,000,000) or so much thereof as
may be disbursed and remain outstanding from time to time
hereafter as Tender Advances (as defined below) on the
Termination Date (as defined below) with interest thereon
(computed on the daily outstanding principal balance, for the
actual number of days outstanding, and on the basis of a 360-day
year) on each advance made hereunder from date of advance until
paid in full at a rate per annum equal to the Prime Rate (as
defined below), with any change in such interest rate resulting
from a change in the Prime Rate to become effective as of the
opening of business on each date on which such change in the
Prime Rate has occurred. Each Tender Advance may be endorsed on
the schedule attached hereto and by this reference incorporated
herein by the Bank (provided, however, that any failure by the
Bank to make any such endorsement shall not limit, modify or
affect the obligations of the Applicant hereunder). Accrued
interest on the unpaid principal balance hereof from time to time
outstanding shall be due and payable (a) on each Payment Date (as
defined below), and (b) upon payment or prepayment of any Tender
Advance (but only on the principal so paid or prepaid), and (c)
at maturity. All principal hereunder shall be due and payable on
the Termination Date.
2. This Promissory Note evidences borrowings under, is
subject to and secured by, and shall be paid and enforced in
accordance with, the terms of that certain Reimbursement and
Security Agreement dated as of November 1, 1998 among the Bank,
the Applicant and Trus Joist MacMillan a Limited Partnership
(hereinafter, as it may be amended or supplemented from time to
time, called the "Reimbursement Agreement"), the terms and
provisions of which are hereby incorporated herein by reference
and made a part hereof, and is the "Reimbursement Note" as that
term is defined in Article I of the Reimbursement Agreement. The
Reimbursement Agreement relates to the $10,000,000 Parish of
Natchitoches, State of Louisiana Variable Rate Demand Refunding
Bonds (Trus Joist Corporation Project) Series 1988.
3. Nothing herein shall limit any right granted to the
Bank by any other instrument or by law or equity.
4. The Applicant hereby waives demand, protest, notice of
demand, protest and nonpayment and any other notice required by
law relative hereto, except to the extent as otherwise may be
provided for in the Reimbursement Agreement.
<PAGE>
5. The Applicant may prepay any Tender Advance at any time
or from time to time without penalty or premium, provided that
the Applicant shall give the Bank notice of each prepayment as
set forth in the Reimbursement Agreement.
6. The Applicant agrees, in the event that this Promissory
Note or any portion hereof is collected by law or through an
attorney at law, to pay all reasonable costs of collection,
including, without limitation, reasonable attorneys' fees.
As used herein, the terms "Tender Advances", "Termination
Date", "Prime Rate" and "Payment Date" shall have the same
meaning given each such term in Article I of the Reimbursement
Agreement.
IN WITNESS WHEREOF, the Applicant has caused this Promissory
Note to be duly executed under seal as of the day and year first
above written.
TJ INTERNATIONAL, INC.
By:
------------------------------
Title:
--------------------------
<PAGE>
SCHEDULE
AMOUNT OF PAYMENT
DATE TENDER ADVANCE OR REPAYMENT
- -----------------------------------------------------------------
<PAGE>
ANNEX III
GUARANTY AGREEMENT
GUARANTY AGREEMENT (this "Agreement" or this "Guaranty")
dated as of November 1, 1998, among each Subsidiary listed on the
signature pages hereto (each such Subsidiary individually, a
"Guarantor" and, if more than one such Subsidiary is party to
this Agreement, collectively, the "Guarantors") of TJ
INTERNATIONAL, INC., a Delaware corporation (the "Borrower"), and
WACHOVIA BANK, N.A., and its successors and assigns (the "Bank").
Reference is made to the Reimbursement and Security
Agreement dated as of November 1, 1998 (as amended, supplemented
or otherwise modified from time to time, the "Reimbursement
Agreement"), among the Borrower, Trus Joist MacMillan a Limited
Partnership and the Bank. Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in
the Reimbursement Agreement.
The Bank has agreed to issue its irrevocable letter of
credit (the "Letter of Credit") for the account of the Borrower
pursuant to, and upon the terms and subject to the conditions
specified in, the Reimbursement Agreement. Each of the Guarantors
is a Subsidiary of the Borrower and acknowledges that it will
derive substantial benefit from the issuance of the Letter of
Credit by the Bank. The obligation of the Bank to issue its
Letter of Credit is conditioned on, among other things, the
execution and delivery by the Guarantors of a Guaranty Agreement
in the form hereof. As consideration therefor and in order to
induce the Bank to issue its Letter of Credit, the Guarantors are
willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally
guarantees, jointly with the other Guarantors and severally, as a
primary obligor and not merely as a surety, (a) the due and
punctual payment of (i) the principal of and interest (including
interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless
of whether allowed or allowable in such proceeding) on the
Reimbursement Obligations, when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or
otherwise and (ii) all other monetary obligations, including
fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding),
of the Borrower to the Bank under the Reimbursement Agreement and
the Reimbursement Note and (b) the due and punctual performance
of all covenants, agreements, obligations and liabilities of the
Borrower under or pursuant to the Reimbursement Agreement and the
Reimbursement Note (all the monetary and other obligations
referred to in the preceding clauses (a) and (b) being
collectively called the "Obligations"). Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole
or in part, without notice to or further assent from it, and that
it will remain bound upon its guarantee notwithstanding any
extension or renewal of any Obligation.
<PAGE>
Anything contained in this Agreement to the contrary
notwithstanding, the obligations of each Guarantor hereunder
shall be limited to a maximum aggregate amount equal to the
greatest amount that would not render such Guarantor's
obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the
United States Code or any provisions of applicable state law
(collectively, the "Fraudulent Transfer Laws"), in each case
after giving effect to all other liabilities of such Guarantor,
contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities
of such Guarantor (a) in respect of intercompany indebtedness to
the Borrower or Affiliates of the Borrower to the extent that
such indebtedness would be discharged in an amount equal to the
amount paid by such Guarantor hereunder and (b)_under any
Guarantee of senior unsecured indebtedness or Debt subordinated
in right of payment to the Obligations which Guarantee contains a
limitation as to maximum amount similar to that set forth in this
paragraph, pursuant to which the liability of such Guarantor
hereunder is included in the liabilities taken into account in
determining such maximum amount) and after giving effect as
assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, contribution, reimbursement, indemnity or similar
rights of such Guarantor pursuant to (i) applicable law or
(ii)_any agreement providing for an equitable allocation among
such Guarantor and other Affiliates of the Borrower of
obligations arising under Guarantees by such parties.
SECTION 2. Obligations Not Waived. To the fullest extent
permitted by applicable law, each Guarantor waives presentment
to, demand of payment from and protest to the Borrower of any of
the Obligations, and also waives notice of acceptance of its this
Guaranty and notice of protest for nonpayment. To the fullest
extent permitted by applicable law, the obligations of each
Guarantor hereunder shall not be affected by (a) the failure of
the Bank to assert any claim or demand or to enforce or exercise
any right or remedy against the Borrower or any other Guarantor
under the provisions of the Reimbursement Agreement, the
Reimbursement Note, or otherwise, (b) any rescission, waiver,
amendment or modification of, or any release from any of the
terms or provisions of this Agreement, the Reimbursement
Agreement, the Reimbursement Note, any other Related Document,
any Guarantee or any other agreement, including with respect to
any other Guarantor under this Agreement or (c) the failure to
perfect any security interest in, or the release of, any of the
security held by or on behalf of the Bank.
SECTION 3. Security. Each of the Guarantors authorizes the
Bank to (a) take and hold security for the payment of this
Guaranty and the Obligations and exchange, enforce, waive and
release any such security, (b) apply such security and direct the
order or manner of sale thereof as the Bank in its sole
discretion may determine and (c) release or substitute any one or
more endorsees, other guarantors or other obligors.
SECTION 4. Guarantee of Payment. Each Guarantor further
agrees that this Guaranty constitutes a guarantee of payment when
due and not of collection, and waives any right to require that
any resort be had by the Bank to any of the security held for
payment of the Obligations or to any balance of any deposit
account or credit on the books of the Bank in favor of the
Borrower or any other Person.
<PAGE>
SECTION 5. No Discharge or Diminishment of Guarantee. The
obligations of each Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any
reason (other than the indefeasible payment in full in cash of
the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations
of each Guarantor hereunder shall not be discharged or impaired
or otherwise affected by the failure of the Bank to assert any
claim or demand or to enforce any remedy under the Reimbursement
Agreement, the Reimbursement Note, any other Related Document or
any other agreement, by any waiver or modification of any
provision of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or
by any other act or omission that may or might in any manner or
to any extent vary the risk of any Guarantor or that would
otherwise operate as a discharge of any Guarantor as a matter of
law or equity (other than the indefeasible payment in full in
cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest
extent permitted by applicable law, each of the Guarantors waives
any defense based on or arising out of any defense of the
Borrower or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the
liability of the Borrower, other than the final and indefeasible
payment in full in cash of the Obligations. The Bank may, at its
election, foreclose on any security held by it by one or more
judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of
the Obligations, make any other accommodation with the Borrower
or any other Guarantor or exercise any other right or remedy
available to it against the Borrower or any other Guarantor,
without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly paid in cash. Pursuant to
applicable law, each of the Guarantors waives any defense arising
out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right
of reimbursement or subrogation or other right or remedy of such
Guarantor against the Borrower or any other Guarantor, as the
case may be, or any security.
SECTION 7. Agreement To Pay; Subordination. In furtherance
of the foregoing and not in limitation of any other right that
the Bank has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower to pay any Obligation
when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each
Guarantor hereby promises to and will forthwith pay, or cause to
be paid, to the Bank as designated thereby in cash the amount of
such unpaid Obligations. Upon payment by any Guarantor of any
sums to the Bank as provided above, all rights of such Guarantor
against the Borrower arising as a result thereof by way of right
of subrogation, contribution, reimbursement, indemnity or
otherwise shall in all respects be subordinate and junior in
right of payment to the prior indefeasible payment in full in
cash of all the Obligations. In addition, any indebtedness of the
Borrower or any Guarantor now or hereafter held by any Guarantor
is hereby subordinated in right of payment to the prior payment
in full of the Obligations. If any amount shall erroneously be
paid to any Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii)
any such indebtedness of the Borrower or any other Guarantor,
<PAGE>
such amount shall be held in trust for the benefit of the Bank
and shall forthwith be paid to the Bank to be credited against
the payment of the Obligations, whether matured or unmatured, in
accordance with the terms of the Reimbursement Agreement and the
Reimbursement Note.
SECTION 8. Information. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the
Borrower's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks that
such Guarantor assumes and incurs hereunder, and agrees that the
Bank will not have any duty to advise any of the Guarantors of
information known to it regarding such circumstances or risks.
SECTION 9. Representations and Warranties. Each of the
Guarantors represents and warrants as to itself that:
(a) it (i) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its creation; (ii)
has all requisite power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed
to be conducted; and (iii) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it
makes such qualification necessary and where failure so to
qualify would have a material adverse effect on its condition
(financial or otherwise), assets, nature of assets, liabilities
(including, without limitation, tax, ERISA and environmental
liabilities) or prospects.
(b) it has all necessary power and authority to execute,
deliver and perform its obligations under this Guaranty; the
execution, delivery and performance by the Guarantor of this
Guaranty have been duly authorized by all necessary action; and
this Guaranty has been duly and validly executed and delivered by
it and constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or moratorium or other similar laws relating to
the enforcement of creditors' rights generally and by general
equitable principles.
(c) neither the execution and delivery by it of this
Guaranty nor compliance with the terms and provisions hereof by
the Guarantor will conflict with or result in a breach of, or
require any consent under, its organizational documents and
agreements or any applicable law or regulation, or any order,
writ, injunction or decree of any court or governmental authority
or agency, or any material agreement or instrument to which it is
a party or by which it is bound or to which it is subject, or
constitute a default under any such agreement or instrument, or
result in the creation or imposition of any Lien upon any of its
revenues or assets pursuant to the terms of any such agreement or
instrument.
(d) it is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(e) after giving effect to the execution and delivery of
this Guaranty and the incurring of its obligations hereunder, it
will not be "insolvent," within the meaning of such term as used
in O.C.G.A. Section 18-2-22 or as defined in Section 101 of Title
11 of the United States Code or Section 2
<PAGE>
of the Uniform Fraudulent Transfer Act, as each is amended from
time to time, or be unable to pay its debts generally as such
debts become due, or have an unreasonably small capital to engage
in any business or transaction, whether current or contemplated.
(f) it is not a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," as
such terms are defined in the Public Utility Holding Company Act
of 1935, as amended.
SECTION 10. Termination. This Guaranty (a) shall terminate
when all the Obligations have been indefeasibly paid in full and
the Letter of Credit has terminated and (b) shall continue to be
effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or
must otherwise be restored by the Bank or any Guarantor upon the
bankruptcy or reorganization of the Borrower, any Guarantor or
otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and agreements
by or on behalf of the Guarantors that are contained in this
Agreement shall bind and inure to the benefit of each party
hereto and their respective successors and assigns. This
Agreement shall become effective as to any Guarantor when a
counterpart hereof executed on behalf of such Guarantor shall
have been delivered to the Bank, and a counterpart hereof shall
have been executed on behalf of the Bank, and thereafter shall be
binding upon such Guarantor and the Bank and their respective
successors and assigns, and shall inure to the benefit of such
Guarantor, and the Bank, and their respective successors and
assigns, except that no Guarantor shall have the right to assign
its rights or obligations hereunder or any interest herein (and
any such attempted assignment shall be void). This Agreement
shall be construed as a separate agreement with respect to each
Guarantor and may be amended, modified, supplemented, waived or
released with respect to any Guarantor without the approval of
any other Guarantor and without affecting the obligations of any
other Guarantor hereunder.
SECTION 12. Waivers; Amendment.
(a) No failure or delay of the Bank in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of
the Bank hereunder are cumulative and are not exclusive of any
rights or remedies that the Bank would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by
any Guarantor therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) below, and then such
waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand
on any Guarantor in any case shall entitle such Guarantor to any
other or further notice or demand in similar or other
circumstances.
<PAGE>
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written
agreement entered into between the Guarantors with respect to
which such waiver, amendment or modification relates and the
Bank.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
GEORGIA.
SECTION 14. Notices. All communications and notices
hereunder shall be in writing and given as provided in Section
8.1 of the Reimbursement Agreement. All communications and
notices hereunder to each Guarantor shall be given to it in care
of the Borrower at the address set forth in Section 8.1 of the
Reimbursement Agreement.
SECTION 15. Survival of Agreement, Severability.
(a) All covenants, agreements, representations and
warranties made by the Guarantors herein and in the certificates
or other instruments prepared or delivered in connection with or
pursuant to this Agreement or the Reimbursement Agreement shall
be considered to have been relied upon by the Bank and shall
survive regardless of any investigation made by the Bank on its
behalf, and shall continue in full force and effect as long as
any Reimbursement Obligation or any other fee or amount payable
under this Agreement or the Reimbursement Agreement is
outstanding and unpaid and as long as the Letter of Credit has
not been terminated.
(b) In the event any one or more of the provisions contained
in this Agreement or in the Reimbursement Agreement should be
held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 16. Counterparts. This Agreement may be executed
in counterparts, each of which shall constitute an original, but
all of which when taken together shall constitute a single
contract, and shall become effective as provided in Section 11.
Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Agreement.
<PAGE>
SECTION 17. Jurisdiction; Consent to Service of Process.
(a) Each Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of any Georgia State court or Federal court of the
United States of America sitting in Atlanta, Georgia, and any
appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, the Reimbursement
Agreement, the Reimbursement Note or the Letter of Credit, or for
recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be
heard and determined in such Georgia State or, to the extent
permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right
that the Bank may otherwise have to bring any action or
proceeding relating to this Agreement, the Reimbursement
Agreement or the Reimbursement Note against any Guarantor or its
properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or
relating to this Agreement, the Reimbursement Agreement or the
Reimbursement Note in any Georgia State or Federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section
14. Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner permitted
by law.
SECTION 18. Right of Setoff. If an Event of Default shall
have occurred and be continuing, the Bank is hereby authorized at
any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held
and other Debt at any time owing by the Bank to or for the credit
or the account of any Guarantor against any or all the
obligations of such Guarantor now or hereafter existing under
this Agreement, the Reimbursement Agreement or the Reimbursement
Note held by the Bank, irrespective of whether or not the Bank
shall have made any demand under this Agreement, the
Reimbursement Agreement or the Reimbursement Note and although
such obligations may be unmatured. The rights of the Bank under
this Section 18 are in addition to other rights and remedies
(including other rights of setoff) which the Bank may have.
SECTION 19. Additional Guarantors. Pursuant to the
Reimbursement Agreement, additional Subsidiaries may enter into
this Agreement as a Guarantor. Upon execution and delivery,
after the date hereof, by the Bank and such a Subsidiary of an
instrument in form and substance satisfactory to the Bank, such
Subsidiary shall become a Guarantor hereunder with the same force
and effect as if originally named as a Guarantor herein. The
execution and delivery of any instrument adding an additional
Guarantor as a party to this Agreement shall not require the
consent of any other Guarantor hereunder. The rights and
obligations of each Guarantor
<PAGE>
hereunder shall remain in full force and effect notwithstanding
the addition of any new Guarantor as a party to this Agreement.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
TRUS JOIST MACMILLAN A LIMITED PARTNERSHIP
By: TJ International, Inc., its sole General
Partner
By:
(SEAL)
---------------------------------------------
Name:
Title:
NORCO WINDOWS, INC.
By:
(SEAL)
--------------------------------------------
Name:
Title:
TRUS JOIST MACMILLAN LIMITED
By:
(SEAL)
--------------------------------------------
Name:
Title:
TRUS JOIST (WESTERN) LTD.
By:
(SEAL)
---------------------------------------------
Name:
Title:
TRUS JOIST CORPORATION
By:
(SEAL)
--------------------------------------------
Name:
Title:
<PAGE>
TJM FACILITIES CORPORATION
By:
(SEAL)
--------------------------------------------
Name:
Title:
WACHOVIA BANK, N.A.
By:
(SEAL)
--------------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 21
TJ INTERNATIONAL,INC.
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
The significant subsidiaries of the Company are as follows:
<S> <C> <C>
State or Other Percentage
Jurisdiction of Voting
Of Incorporation Securities
Or Organization Owned
---------------- ----------
Trus Joist MacMillan, A Limited
Partnership Delaware 51% (1)
Trus-Joist (Western) Ltd. New Brunswick 100%
Norco Windows, Inc. Wisconsin 100%
<FN>
(1) The Company has a 51% interest in this partnership
</FN>
</TABLE>
<PAGE>
EXHIBIT 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated February 2, 1999, included in
this Form 10-K for the year ended January 2, 1999, 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
---------------------------------
Boise, Idaho
April 2, 1999
<PAGE>
EXHIBIT 25
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 2, 1999 to be
filed with the Securities and Exchange Commission on or
before April 2, 1999, 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 12th day of February, 1999.
/s/ J. L. Scott
------------------------------
STATE OF IDAHO )
) ss
County of Ada )
On this 12th day of February, 1999, 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/ Sandi Kaye Mick
------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
Commission Expires: 9-29-1999
<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 2, 1999 to be
filed with the Securities and Exchange Commission on or
before April 2, 1999, 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 12th day of February, 1999.
/s/ Joyce A. Godwin
------------------------------
STATE OF IDAHO )
) ss
County of Ada )
On this 12th day of February, 1999, 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/ Sandi Kaye Mick
------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
Commission Expires: 9-29-2000
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Richard L. King,
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 2, 1999 to be
filed with the Securities and Exchange Commission on or
before April 2, 1999, 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 12th day of February, 1999.
/s/ Richard L. King
------------------------------
STATE OF IDAHO )
) ss
County of Ada )
On this 12th day of February, 1999, before me, the
undersigned, a Notary Public in and for said State, personally
appeared Richard L. King, 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/ Sandi Kaye Mick
------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
Commission Expires: 9-29-2000
<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 2, 1999 to be
filed with the Securities and Exchange Commission on or
before April 2, 1999, 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 12th day of February, 1999.
/s/ Jerre L. Stead
------------------------------
STATE OF IDAHO )
) ss
County of Ada )
On this 12th day of February, 1999, 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/ Sandi Kaye Mick
------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
Commission Expires: 9-29-2000
<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 2, 1999 to be
filed with the Securities and Exchange Commission on or
before April 2, 1999, 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 12th day of February, 1999.
/s/ Harold E. Thomas
------------------------------
STATE OF IDAHO )
) ss
County of Ada )
On this 12th day of February, 1999, 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/ Sandi Kaye Mick
------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
Commission Expires: 9-29-2000
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Dr. 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 2, 1999 to be
filed with the Securities and Exchange Commission on or
before April 2, 1999, 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 12th day of February, 1999.
/s/ Dr. Steven C. Wheelwright
-------------------------------
STATE OF IDAHO )
) ss
County of Ada )
On this 12th day of February, 1999, before me, the
undersigned, a Notary Public in and for said State, personally
appeared Dr. 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/ Sandi Kaye Mick
------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
Commission Expires: 9-29-2000
<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 2, 1999 to be
filed with the Securities and Exchange Commission on or
before April 2, 1999, 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 12th day of February, 1999.
/s/ William J. White
------------------------------
STATE OF IDAHO )
) ss
County of Ada )
On this 12th day of February, 1999, 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/ Sandi Kaye Mick
------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
Commission Expires: 9-29-2000
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S><C><C>
<LEGEND>
EXHIBIT 27
THIS DATA SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM
THE TJ INTERNATIONAL, INC. BALANCE SHEET AT JANUARY 2, 1999, AND
FROM ITS STATEMENT OF INCOME ENDED JANUARY 2, 1999. THE
INFORMATION PRESENTED IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> JAN-02-1999
<CASH> 140,060
<SECURITIES> 9,091
<RECEIVABLES> 70,364
<ALLOWANCES> 374
<INVENTORY> 78,827
<CURRENT-ASSETS> 312,409
<PP&E> 642,690
<DEPRECIATION> 260,123
<TOTAL-ASSETS> 730,939
<CURRENT-LIABILITIES> 70,566
<BONDS> 142,390
0
13,271
<COMMON> 18,069
<OTHER-SE> 201,465
<TOTAL-LIABILITY-AND-EQUITY> 730,939
<SALES> 778,063
<TOTAL-REVENUES> 778,063
<CGS> 572,194
<TOTAL-COSTS> 572,194
<OTHER-EXPENSES> 115,004
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,846
<INCOME-PRETAX> 45,844
<INCOME-TAX> 17,002
<INCOME-CONTINUING> 28,842
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,842
<EPS-PRIMARY> 1.69
<EPS-DILUTED> 1.57
</TABLE>
