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Boise Cascade Says Bottom Behind It

Boise Cascade (BCC) reported relatively flat fourth-quarter earnings Thursday on a jump in total sales, even though operating results in its paper division swung to a loss.

The company earned $6.9 million, or 5 cents a share, from $6.2 million, or 5 cents a share, in the comparable quarter. Sales were $2.4 billion, up 31%. The company cited strong prices for wood products.

Earnings before the impact of the company's acquisition of OfficeMax (OMX), which was completed on Dec. 9, were $18.5 million, or 24 cents a share, falling short of analysts' projections for 27 cents a share. The results compare with a profit of $30 million, or 43 cents a share, in the year-ago quarter.

The company's different divisions had varying results. Its paper division had an operating loss of $14.4 million, compared with operating earnings of $23.4 million a year ago. Meanwhile, its office segment had operating earnings of $40 million, from $32.4 million in the prior-year quarter. And building solutions net operating income soared to $37.6 million, from $2.3 million a year ago.

Analysts from Credit Suisse First Boston and J.P. Morgan said the company's results fell largely in line with their expectations.

"We're happy to see good results in office products, and expected the rest to be weak," wrote Credit Suisse First Boston analyst Mark Connelly in a research report.

"The results were solid," said J.P. Morgan analyst Lise Shonfield. "No major surprises here. We expect a broadly neutral reaction from the stock today."

Shares of Boise, Idaho-based Boise Cascade were lately down 13 cents, or 0.4%, at $33.69.

In full-year 2003, the company had a loss of $8.3 million, or 8 cents a share. Profit not including the acquisition of OfficeMax, however, was $31.8 million, or 32 cents a share. Sales were $8.2 billion, up 11%.

The company said it expects sales and earnings in 2004 to "increase substantially," citing an expected boost from the OfficeMax acquisition. Analysts are expecting first-quarter results of 17 cents a share and a profit of $1.36 a share in the full-year.

"However, operating margins will be lower in 2004 than in 2003, as we integrate the lower-margin retail business [OfficeMax] into our operations," the company said in a press release.

The company also noted that plywood and lumber prices in January are currently well above levels than at this time last year and recently have been rising.

"We believe the very difficult year Boise Paper Solutions experienced in 2003 was the cyclical low," Boise Cascade said. "A recovery should begin this year, driven by recovery in white-collar employment, and hence improving demand, and a weak U.S. dollar, which should discourage imports. Over the course of the year, Boise Paper Solutions should move from its current loss position to positive quarterly operating income."

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