BOISE INC. (NYSE:BZ) filed Quarterly Report for the period ended 2009-06-30.
Headquartered in Boise Idaho Boise manufactures premium and specialty products including papers for pressure sensitive and flexible packaging applications containerboard and corrugated products imaging papers for the office and home printing and converting papers newsprint and market pulp. BOISE INC. has a market cap of $218.8 million; its shares were traded at around $2.59 with and P/S ratio of 0.1.
Highlight of Business Operations:We continue to invest in our assets and improve our operating practices to reduce consumption of fossil fuels. Between 2002 and 2008, our mills reduced fossil fuel use by 21% per ton primarily through conservation and increased use of biomass fuels. Approximately 65% of the energy we use in our manufacturing process is derived from renewable biomass, including waste byproducts from our production process. Substantially all of our biomass fiber is sourced under the rigorous procurement standards and requirements of the Sustainable Forestry Initiative (SFI). The U.S. Internal Revenue Code allows an excise tax credit for taxpayers who use alternative fuels in the taxpayers trade or business. Each year, under normal operating conditions, we produce and use approximately 500 million gallons of liquid fuel produced from biomass to provide energy to four of our five paper mills. The credit, equal to $0.50 per gallon of the alternative fuel mixture, is refundable to the taxpayer. In first quarter 2009, we filed to be registered as an alternative fuel mixer and, in April, received notification that the registration was approved by the Internal Revenue Service. We became eligible to claim credits for black liquor produced at our four pulp and paper mills beginning at various dates from late January to late March 2009. Our first quarter 2009 results do not include any effects of the alternative fuel mixture credits; however, had our registration been approved by the Internal Revenue Service when we began mixing black liquor, we would have recorded approximately $18 million, net of fees and expenses, in our first quarter 2009 Consolidated Statement of Income (Loss). Although there is some uncertainty as to the continued existence and availability of the alternative fuel mixture tax credit, we are reasonably assured that the tax credit for the alternative fuel mixture used by us through June 30, 2009, has been earned and will be collected from the U.S. government. Accordingly, during the three and six months ended June 30, 2009, we recorded $75.3 million of alternative fuel mixture tax credits, which is net of $3.8 million of associated fees and expenses and before taxes. We recorded these amounts, during both periods, in Alternative fuel mixture credits, net in our Consolidated Statements of Income (Loss). As of June 30, 2009, we had received $58.7 million of alternative fuel mixture cash payments and had recorded a receivable of $20.4 million in Receivables, other on our Consolidated Balance Sheet. The credit is scheduled to expire on December 31, 2009. The future amount of credits we ultimately file for, receive, and recognize as income is dependent on, among other things, our future production levels, tax legislation and regulation, and income recognition criteria under generally accepted accounting principles. We do not know whether the U.S. government will amend the tax credit to eliminate or reduce its benefits for pulp and paper companies, but there is the possibility that such action may be taken. Any such amendment of the tax credit could have a material effect on our financial position, results of operations, and cash flows.
During the three and six months ended June 30, 2009, we recorded a pretax charge of $1.1 million and $4.8 million associated with the restructuring in St. Helens mill restructuring in the Consolidated Statements of Income (Loss). These costs are recorded in our Paper segment. These charges included decommissioning costs and other miscellaneous costs related to the restructuring of the mill. At June 30, 2009, and December 31, 2008, we had $2.0 million and $8.4 million of severance liabilities recorded in Accrued liabilities, Compensation and benefits on the Consolidated Balance Sheets. We expect to pay the majority of these severance costs during the remainder of 2009.
recorded $1.9 million of expense related to the indefinite idling of the D-2 machine in our Packaging segment. These costs were recorded in Other (income) expense, net in our Consolidated Statements of Income (Loss). These charges included severance costs, preservation and maintenance costs, and other miscellaneous costs related to the D-2 idling. The D-2 indefinite idling resulted in the termination of 15 salaried employees at the DeRidder mill, as well as 95 hourly employees who remain on layoff status as of June 30, 2009. We employ approximately 430 employees at the mill after idling D-2. At June 30, 2009, we had $0.6 million of severance liabilities recorded in Accrued liabilities, Compensation and benefits on the Consolidated Balance Sheet. We expect to pay the remainder of these severance costs by first quarter 2010.
Corporate and Other. Our Corporate and Other segment includes primarily corporate support services, related assets and liabilities, and foreign exchange gains and losses. During the Predecessor period presented, the Corporate and Other segment included primarily an allocation of Boise Cascade corporate support services and related assets and liabilities. These support services include but were not limited to finance, accounting, legal, information technology, and human resources functions. This segment also includes transportation assets, such as rail cars and trucks, which we use to transport our products from our manufacturing sites. Rail cars and trucks are generally leased. We provide transportation services not only to our own facilities but also, on a limited basis, to third parties when geographic proximity and logistics are favorable. During the three and six months ended June 30, 2009, segment sales primarily related to our rail and truck business were $15.2 million and $30.4 million.
and six months ended June 30, 2009, we recorded $3.6 million and $7.2 million in Sales, Related parties and the same amounts in Costs and expenses in our Consolidated Statements of Income (Loss) related to this agreement.
Read the The complete ReportBZ is in the portfolios of John Keeley of Keeley Fund Management.