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Boise Cascade Holdings, L.L.C. – IPO: ‘S-1/A’ on 4/1/05

On:  Friday, 4/1/05, at 9:36pm ET   ·   As of:  4/4/05   ·   Accession #:  1047469-5-8846   ·   File #:  333-122770

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/04/05  Boise Cascade Holdings, L.L.C.    S-1/A       4/01/05    5:1.8M                                   Merrill Corp/New/FA

Initial Public Offering (IPO):  Pre-Effective Amendment to Registration Statement (General Form)   —   Form S-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Pre-Effective Amendment to Registration Statement   HTML   1.53M 
                          (General Form)                                         
 2: EX-10.2     Material Contract                                     37    145K 
 3: EX-10.21    Material Contract                                     23     77K 
 4: EX-10.22    Material Contract                                      9     29K 
 5: EX-23.1     Consent of Experts or Counsel                          2      6K 


S-1/A   —   Pre-Effective Amendment to Registration Statement (General Form)
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
"Prospectus Summary
"Our Company
"Our Competitive Strengths
"Our Strategy
"Our Challenges
"Our Industry
"Equity Sponsor
"General
"The Offering
"Summary Historical and Unaudited Pro Forma Financial Data
"Risk Factors
"Risks Related to Our Business
"Risks Relating to this Offering
"Forward-Looking Statements
"Industry and Market Data
"Reorganization as A Corporation
"Use of Proceeds
"Dividend Policy and Restrictions
"Dilution
"Capitalization
"Unaudited Pro Forma Financial Data
"Notes to Unaudited Pro Forma Condensed Financial Data
"Selected Historical Financial Data
"Management's Discussion and Analysis of Financial Condition and Results of Operations
"Industry
"Business
"Management
"Salaried Pension Plan Table
"Principal Stockholders
"Certain Relationships and Related Transactions
"The Acquisition
"Description of Certain Debt
"Description of Capital Stock
"Material U.S. Federal Income Tax Consequences
"Shares Eligible for Future Sale
"Underwriting
"Validity of Class A Common Stock
"Experts
"Where You Can Find More Information
"Index to Consolidated Financial Statements
"Report of Independent Registered Public Accounting Firm
"Boise Cascade Holdings, L.L.C. Consolidated Balance Sheets
"Boise Cascade Holdings, L.L.C. Consolidated Statements of Income (Loss)
"Boise Cascade Holdings, L.L.C. Consolidated Statements of Cash Flows
"Boise Cascade Holdings, L.L.C. Consolidated Statements of Capital
"Boise Cascade Holdings, L.L.C. Notes to Consolidated Financial Statements
"Part Ii Information Not Required in Prospectus
"Signatures
"Exhibit Index
"QuickLinks

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As filed with the Securities and Exchange Commission on April 1, 2005

No. 333-122770



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933


BOISE CASCADE HOLDINGS, L.L.C.*
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  5030
(Primary Standard Industrial
Classification Code Number)
  20-1478587
(I.R.S. Employer Identification Number)

1111 West Jefferson Street, Boise, Idaho 83702, Telephone: (208) 384-6161
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)


John W. Holleran
Karen E. Gowland
Boise Cascade Holdings, L.L.C.
1111 West Jefferson Street
Boise, Idaho 83702
Telephone: (208) 384-6161
(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copies of all communications, including communications sent to agent for service, should be sent to:

Dennis M. Myers, P.C.
Carol Anne Huff
Kirkland & Ellis LLP
200 East Randolph Drive
Chicago, Illinois 60601
Telephone: (312) 861-2000
  William V. Fogg
Cravath, Swaine & Moore LLP
825 Eighth Avenue
New York, New York 10019
Telephone: (212) 474-1000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.


            If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: o

            If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

            If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

            If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

            If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

*
The registrant will be converted to a corporation and will be renamed Boise Cascade Company prior to the offering.

            The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.




The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated April 1, 2005.

                    Shares

BOISE LOGO

Boise Cascade Company

Class A Common Stock


          This is the initial public offering of shares of Class A common stock of Boise Cascade Company. All of the             shares of Class A common stock are being sold by Boise Cascade Company. Boise Cascade Company expects that all of the net proceeds from this offering will be paid to its existing stockholders and affiliates, Forest Products Holdings, L.L.C., an entity controlled by Madison Dearborn Partners, LLC, and OfficeMax Incorporated.

          Prior to this offering, there has been no public market for the Class A common stock. It is currently estimated that the initial public offering price per share will be between $             and $             . Boise Cascade Company intends to list the Class A common stock on the New York Stock Exchange under the symbol "BCC."

          See "Risk Factors" beginning on page 15 to read about factors you should consider before buying shares of the Class A common stock.


          Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


 
  Per Share
  Total
Initial public offering price   $     $  
Underwriting discount   $     $  
Proceeds, before expenses, to Boise Cascade Company   $     $  

          To the extent that the underwriters sell more than             shares of Class A common stock, the underwriters have the option to purchase up to an additional              shares of Class A common stock from Boise Cascade Company at the initial public offering price less the underwriting discount.


          The underwriters expect to deliver the shares against payment in New York, New York on             , 2005.

Goldman, Sachs & Co.            
    JPMorgan        
        Lehman Brothers    
            Deutsche Bank Securities

Prospectus dated             , 2005.



PROSPECTUS SUMMARY

          This summary might not contain all of the information that is important to you. Before investing in our Class A common stock, you should read this entire prospectus carefully, including the "Risk Factors" section and the consolidated financial statements and the accompanying notes included elsewhere in this prospectus.


Our Company

          We are a diversified North American paper and forest products company. We conduct our business in the following four operating segments:


          Historically, our paper and forest products businesses were operated as business units of OfficeMax Incorporated, or OfficeMax, formerly known as Boise Cascade Corporation. On October 29, 2004, these businesses were acquired by us, and OfficeMax's timberlands operations, or the "timberlands operations," were acquired by Boise Land & Timber Corp., an entity that is majority-owned by our majority shareholder, Forest Products Holdings, L.L.C., or FPH. FPH is controlled by Madison Dearborn Partners, LLC. On February 4, 2005, the timberlands operations were sold to an unaffiliated third party for cash, and the proceeds were used to repay borrowings incurred in connection with these acquisitions. We refer to the October 2004 acquisition from OfficeMax of its paper and forest products businesses (other than the timberlands operations) and related financing transactions as the "Acquisition," and to the February 2005 sale of the timberlands operations as the "Timberlands Sale." See "Certain Relationships and Related Transactions — The Acquisition" and "— Timberlands Sale."

          We generated sales, pro forma net income and pro forma EBITDA of $5.7 billion, $156.8 million and $490.1 million, respectively, in 2004 after giving pro forma effect to, among other things, the Acquisition, the Timberlands Sale and our conversion to a corporation. For an explanation of our pro forma adjustments and a reconciliation of pro forma EBITDA to pro forma net income (loss), see "— Summary Historical and Unaudited Pro Forma Financial Data."

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          The following charts illustrate our 2004 sales and pro forma EBITDA by operating segment:(1)

GRAPHIC


(1)
For purposes of calculating segment percentages, we have excluded intersegment eliminations and our Corporate and Other segment.

For a discussion of our EBITDA by segment, see Note 16 to our historical financial statements, and for a reconciliation of our EBITDA by segment to pro forma EBITDA by segment, see Note 10 to "Unaudited Pro Forma Condensed Financial Data."

          Paper.    According to the 2003-2004 Pulp & Paper Global Fact & Price Book, we are the fourth-largest manufacturer of uncoated free sheet in North America, with annual production capacity of approximately 1.6 million tons and market share of approximately 10% in 2003. Our uncoated free sheet products include cut-size office paper, commercial printing paper, business forms and envelopes, and a wide range of value-added papers. Our value-added grades include bright and colored cut-size office papers and specialty papers that are custom-developed for various uses, including label and release, security and food wrap applications. We manufacture our paper products at four integrated pulp and paper mills, which are complemented by sheeting and converting operations and an efficient logistics network. Our larger paper machines produce primarily commodity grades in long, high-volume production runs that achieve economies of scale. We are increasingly focused on the production of higher-margin, higher-growth value-added grades on our smaller machines, on which we are able to cost-effectively accommodate shorter production runs and more frequent grade changes. Our sales of value-added grades increased by 14%, from 374,000 tons in 2003 to 426,000 tons in 2004. During 2004, our Paper segment generated sales, pro forma segment income and pro forma EBITDA of $1.37 billion, $81.4 million and $131.4 million, respectively.

          As part of the Acquisition, OfficeMax agreed to purchase from us all of its North American requirements for cut-size office paper, to the extent we choose to supply such paper to them, through December 2012. This supply agreement provides us with access to one of North America's largest office products sales and distribution networks. We also have an agreement with OfficeMax that reduces our exposure to cut-size office paper price volatility through October 2010. See "Certain Relationships and Related Transactions — The Acquisition — Paper Supply Agreement" and "— Additional Consideration Agreement" for additional information on these agreements.

          Packaging & Newsprint.    We manufacture containerboard and newsprint at our DeRidder, Louisiana mill. Our DeRidder mill has an annual production capacity of 555,000 tons of linerboard and 448,000 tons of newsprint as of December 31, 2004. We also operate five corrugated

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container plants in the Pacific Northwest that collectively consumed, either directly or through trades with other producers, approximately 54% of our linerboard and corrugating medium production in 2004. During 2004, our Packaging & Newsprint segment generated sales, pro forma segment income and pro forma EBITDA of $694.5 million, $15.4 million and $51.4 million, respectively.

          Wood Products.    According to Resource Information Systems, Inc., or RISI, we are a leading producer of engineered wood products, or EWP, comprised of laminated veneer lumber, or LVL, a high-strength engineered lumber often used in beams; I-joists, a structural support typically used in floors and roofs; and laminated beams. As a result of a strong housing market in North America and substitution trends away from traditional wide-dimension lumber to EWP, our LVL and I-joist sales grew from 1997 to 2004 at a compound annual rate of 18%. We also produce plywood, dimension lumber and high-quality ponderosa pine lumber, a premium lumber grade sold primarily to manufacturers of specialty wood windows, moldings and doors. Our wood products are used in new residential and light commercial construction and in residential repair and remodeling. Our 20 manufacturing facilities are located primarily in integrated clusters in areas with ample timber resources, increasing our access to fiber and limiting inbound freight costs. Approximately 37% of the wood products we manufactured in 2004, including more than half of our EWP, were sold at market prices to our Building Materials Distribution segment. During 2004, our Wood Products segment generated sales, pro forma segment income and pro forma EBITDA of $1.36 billion, $178.4 million and $251.2 million, respectively.

          Building Materials Distribution.    We are a leading national inventory-carrying wholesale distributor of building materials, according to Home Channel News. Through selective acquisitions and organic growth, our building materials distribution sales increased from $289 million in 1990 to $2.8 billion in 2004, representing a compound annual growth rate of 18%. Our nationwide network of 28 strategically located distribution facilities markets a wide range of building materials, primarily to customers that resell building materials to professional builders in the residential, light commercial construction and repair and remodeling markets. We distribute a broad line of building materials, most of which we purchase from third parties, such as EWP, oriented strand board, plywood, lumber, siding and general line items such as framing accessories, composite decking, roofing and insulation. During 2004, our Building Materials Distribution segment generated approximately 13% of its sales from EWP, a high-growth product category with higher margins than most building materials we distribute. Approximately 21% of the products purchased by this segment during 2004 were manufactured by our Wood Products segment. During 2004, our Building Materials Distribution segment generated sales, pro forma segment income and pro forma EBITDA of $2.84 billion, $93.5 million and $102.3 million, respectively.


Our Competitive Strengths

          According to the 2003-2004 Pulp & Paper Global Fact & Price Book, we are the fourth- largest manufacturer of uncoated free sheet in North America, with annual production capacity of approximately 1.6 million tons and market share of approximately 10% in 2003. We are also the second-largest manufacturer of EWP in North America, with an estimated market share of approximately 20% in 2003, according to RISI, and a leading national inventory-carrying wholesale distributor of building materials, according to Home Channel News. In addition, we believe we have leading market positions in the manufacture of plywood and ponderosa pine lumber.

          The most significant portion of our paper business is the manufacturing of cut-size office paper. Our two newest paper machines, which became operational in 1990 and 1997 as part of a

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$1.1 billion expansion, are among the largest in North America. We have a long-term paper supply agreement with OfficeMax, our largest customer. Our sales to OfficeMax have grown at a compound annual rate of 11% since 2000 and represented approximately 47% of our uncoated free sheet sales in 2004. Our relationship with OfficeMax allows us to maximize utilization of our largest machines, optimize production runs and achieve supply chain efficiencies throughout our system.

          Our assets are well-suited to the efficient production of value-added papers and EWP, two attractive markets within the paper and forest products industry. We produce higher-margin value-added papers on our smaller machines within integrated mills, which we believe provides us with a cost advantage over many of our competitors. Our large-scale EWP production facilities are integrated with our plywood operations to optimize our veneer utilization, which we believe positions us as a cost-effective producer in the growing, higher-margin EWP business.

          Our Building Materials Distribution segment has achieved double-digit growth rates over the past decade, becoming a leading national inventory-carrying wholesale distributor of building materials, according to Home Channel News, and generating returns significantly in excess of our cost of invested capital. This growth has provided our Wood Products segment, which in 2004 sold approximately 37% of its manufactured products and more than half of its EWP through our Building Materials Distribution segment, with access to one of the industry's broadest and fastest-growing distribution channels.

          We expect the terms and structure of the Acquisition to improve our cash flows compared to historical periods. Key benefits include a stepped-up asset tax basis that we expect will reduce our future cash tax payments, a well-funded pension plan transferred by OfficeMax, and OfficeMax's agreement to limit our exposure to pre-Acquisition liabilities.

          Our senior management team has a track record of financial and operational excellence in the paper and forest products industry. Tom Stephens, our chief executive officer since October 2004, has served as chief executive officer of MacMillan Bloedel, Manville Corporation and Riverwood Corp. over the last 25 years. Our newly appointed senior management team also has extensive industry experience and deep knowledge of our businesses and assets. Approximately 170 of our key managers invested a total of $18.6 million in our company and received additional equity incentives in connection with the Acquisition.

          Our equity sponsor, Madison Dearborn, is one of the most active global investors in the paper, packaging and forest products industries. Since 1993, Madison Dearborn has consummated approximately $15.5 billion of management buyout transactions in these industries, several of which are now public companies, including Packaging Corporation of America and Buckeye Technologies, Inc.


Our Strategy

          Our new management team is committed to transforming our company by creating a culture of empowerment and accountability in a flat, decentralized organization. We seek to enhance our

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cash flow by optimizing the use of our assets, improving our operational efficiencies, reducing our costs and taking advantage of selective growth opportunities. Immediately after the Acquisition, our management completed an in-depth business review and developed the strategies outlined below.

          We have identified significant potential operating cash flow improvements that we expect to aggressively pursue over the next two years. Major elements of this plan include energy efficiency projects, operational optimization of our paper and wood products facilities, productivity and technology enhancements and reduction of overhead. Furthermore, our management is focused on managing capital expenditures and working capital and aggressively monetizing non-core and non-operating assets.

          Our long-term supply agreement with OfficeMax allows us to focus our largest paper machines on producing commodity products in long, high-volume production runs. This relationship allows us to continue to improve the capacity utilization of our largest paper machines, leverage supply-chain efficiencies, and develop and test product and packaging innovations. We plan on leveraging the cost efficiencies and expertise derived from this relationship to better service our other customers and develop new customers and products.

          To grow our sales of higher-margin, value-added papers, we seek to work closely with our customers to develop innovative value-added papers and service programs that respond to their changing needs and technical requirements. On our smaller machines, we will continue to displace the production of commodity grades with higher-margin value-added grades, which we believe we can produce cost competitively. By leveraging our existing customer relationships, design capabilities, cost-competitive position and efficient logistics network, we seek to become a leading North American supplier of these products.

          We are focused on leveraging our competitive cost structure, comprehensive customer service offering, design support capabilities and efficient distribution network to continue gaining share in the growing, higher-margin EWP market. For example, we are expanding our LVL capacity by 7.5 million cubic feet, or approximately 40%, 4.7 million cubic feet of which we expect to be available in 2005. We plan to take advantage of further opportunities to cost-effectively increase our capacity in the future.

          We intend to continue expanding our building materials distribution network into new geographic markets and aggressively grow our presence in existing markets. Since 1999, we have expanded our distribution network from 15 to 28 facilities, with much of this expansion occurring in the eastern United States, providing us with a national footprint. We expect to continue to grow sales and profitability at our existing facilities by expanding our product line, improving marketing, adding value-added services and growing the proportion of higher-margin products in our business mix.

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Our Challenges

          In consideration of our competitive strengths and business strategies, you should also consider the following challenges we face. Our industry is highly cyclical, and the prices of and demand for many of our products are subject to wide fluctuations. The fact that we are more highly leveraged than some of our competitors may exacerbate this risk. We also depend to a significant degree on our ability to obtain raw materials, particularly wood fiber, energy and chemicals, at favorable prices. In addition, we face intense competition in many of our businesses, including the distribution of building materials and the manufacturing of our value-added paper and building products, where a shift in market tastes in favor of competing products and/or competing distribution networks would slow our growth. We also depend on OfficeMax, both as a purchaser of uncoated free sheet and insofar as it indemnifies us against losses we may incur related to our business during periods prior to the Acquisition. For additional information on these and other risks relating to our business and an investment in our Class A common stock, see "Risk Factors" beginning on page 15.


Our Industry

          We believe the following industry conditions and trends have benefited our business:

          For additional detail on the industries in which we operate and how we derived the industry data set forth in this prospectus, see "Industry" and "Industry and Market Data."


Equity Sponsor

          Madison Dearborn is a leading private equity investment firm based in Chicago, Illinois. Madison Dearborn, through limited partnerships of which it is a general partner, has approximately $8 billion of capital under management. Madison Dearborn focuses on investments in several industry sectors, including basic industries, communications, consumer, financial services and

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health care. Madison Dearborn has over 100 companies in its investment portfolio and is considered to be among the most active private equity investors in the United States in the paper, packaging and forest products industries. Since 1993, Madison Dearborn has consummated approximately $15.5 billion of management buyout transactions in these industries, including buyouts of Jefferson Smurfit Group, Packaging Corporation of America, Riverwood Holding Corp. (now known as Graphic Packaging Corporation) and Buckeye Technologies, Inc. Madison Dearborn was the lead sponsor in each of these transactions, other than Graphic Packaging Corporation.


General

          Our principal executive offices are located at 1111 West Jefferson Street, Boise, Idaho 83702. The telephone number for our principal executive offices is (208) 384-6161. Our internet address is www.bc.com. This internet address is provided for informational purposes only. The information at this internet address is not a part of this prospectus.

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The Offering

Class A Common Stock Offered                 shares of Class A common stock.

Total Common Stock Outstanding After this Offering

 

              shares, consisting of              shares of Class A common stock and              shares of Class B common stock.

Use of Proceeds

 

We expect that all of the net proceeds from this offering will be paid, either directly or indirectly, to FPH and OfficeMax and its subsidiary, which we refer to in this prospectus as our existing stockholders. Madison Dearborn and members of our management own substantially all of the equity interests in FPH. Specifically, we intend to use the net proceeds of this offering to (1) redeem from OfficeMax all of our outstanding preferred stock, which has a liquidation preference value of $36.4 million, plus accrued and unpaid dividends; (2) repay a loan with a principal amount as of December 31, 2004 of $251.3 million, plus accrued and unpaid interest of 8% per annum, from Boise Land & Timber Corp., a sister corporation; (3) pay fees and expenses and (4) to the extent of any remaining proceeds, pay a special one-time dividend on our Class B common stock, all of which will be held by our existing stockholders, which we estimate will be approximately $176.8 million (assuming an initial public offering price of $         , the mid-point of the range set forth on the cover page of this prospectus). We expect Boise Land & Timber Corp. will distribute the proceeds from the repayment of the loan to Boise Land & Timber Holdings Corp., which will in turn use the proceeds of the distribution to redeem its Series A common stock held by a subsidiary of OfficeMax and make a distribution to FPH and a subsidiary of OfficeMax, as its only stockholders. We expect FPH will distribute all of the proceeds it receives to its equityholders, including members of our management. We intend to amend and restate our senior credit facilities prior to this offering to permit the contemplated use of proceeds. See "Use of Proceeds," "Reorganization as a Corporation" and "Certain Relationships and Related Transactions — Proceeds of this Offering."
     

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Dividends

 

We currently intend to declare and pay quarterly dividends of approximately $         per share on all outstanding shares of our Class A common stock and Class B common stock. We currently expect that the first quarterly dividend will be declared and paid in the         quarter of 2005. The declaration and payment of this and any future dividends will be at the discretion of our board of directors, subject to our actual future earnings and capital requirements, as well as contractual and legal restrictions. The terms of our senior credit facilities currently preclude us from declaring or paying cash dividends on our common stock. We intend to amend and restate our senior credit facilities prior to this offering to permit the payment of the quarterly dividends based upon a formula tied to our consolidated net income following the date of the Acquisition. For a discussion of the factors that will affect the determination by our board of directors to declare and pay dividends, see "Dividend Policy and Restrictions."

Voting Rights

 

The holders of our Class A common stock and Class B common stock will be entitled to one vote per share on all matters submitted to a vote of our stockholders and will vote together as a single class.

Class B Common Stock

 

Our existing stockholders will hold all of the Class B common stock. Holders of the Class B common stock will receive a special, one-time dividend, which we refer to as the Special Dividend, from the net proceeds of this offering, as described under "Description of Capital Stock — Common Stock — Dividend Rights." Except for the Special Dividend and the right of the holders of Class B common stock to consent to any changes to our governing documents that would adversely affect the Class B common stock, shares of Class A common stock and shares of Class B common stock will be identical, including with respect to voting rights. Each share of Class B common stock may be converted into a share of Class A common stock at any time at the option of the holder, and will be automatically converted upon the conversion of a majority of the Class B common stock. As used in this prospectus, the term "common stock" means the Class A common stock and the Class B common stock, unless otherwise specified.

Proposed NYSE Symbol

 

"BCC"

Risk Factors

 

You should carefully read and consider the information set forth under "Risk Factors" and all other information set forth in this prospectus before investing in our Class A common stock.

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          Except as otherwise noted, the number of shares of common stock to be outstanding after this offering excludes         shares of Class A common stock reserved for issuance under our equity incentive plan. See "Management — Boise Incentive and Performance Plan."

          Except as otherwise noted, all information in this prospectus assumes:

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Summary Historical and Unaudited Pro Forma Financial Data

          The following table sets forth our historical and pro forma financial data for the periods ended and at the dates indicated below. We have derived the historical financial data set forth below as of December 31, 2002 and 2003 and October 28, 2004, for the years ended December 31, 2002 and 2003 and for the period January 1 through October 28, 2004 from the audited financial statements of Boise Forest Products Operations, which we refer to as our "predecessor," included elsewhere in this prospectus. We have derived the historical financial data as of December 31, 2004 and for the period October 29 through December 31, 2004 from our audited financial statements included elsewhere in this prospectus. We have derived the pro forma financial data set forth below from our audited financial statements and the audited financial statements of our predecessor included elsewhere in this prospectus.

          The unaudited pro forma financial data set forth below give effect to:

in each case as if these transactions had occurred on January 1, 2004 for statement of income purposes and December 31, 2004 for balance sheet purposes. The pro forma data are unaudited, are provided for informational purposes only and are not necessarily indicative of what our financial position or results of operations would have been had these transactions been completed as of the dates indicated. Furthermore, the pro forma data do not purport to represent what our financial position or results of operations might be for any future period. For additional information on the pro forma adjustments, see "Unaudited Pro Forma Financial Data."

          The following summary financial data should be read in conjunction with "Selected Historical Financial Data," "Unaudited Pro Forma Financial Data," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the accompanying notes included elsewhere in this prospectus.

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  Predecessor
  Boise Holdings
   
 
 
  Year ended
December 31,

   
  October 29
(inception)
through
December 31,
2004

   
 
 
  January 1
through
October 28,
2004

  Pro forma
Year ended
December 31,
2004

 
 
  2002
  2003
 
 
  (dollars in millions, except per share data)

 
Statements of income (loss) data:                                
Sales   $ 4,276.3   $ 4,653.7   $ 4,862.0   $ 872.7   $ 5,734.8  
Costs and expenses(1)     4,287.1     4,652.7     4,727.3     828.7     5,427.1  
   
 
 
 
 
 
Income (loss) from operations     (10.8 )   1.0     134.7     44.0     307.7  
Equity in net income (loss) of affiliates(2)     (1.5 )   8.7     6.3         6.3  
Gain on sale of equity affiliate(3)             46.5         46.5  
Foreign exchange gain (loss)     (0.1 )   2.7     0.9     1.2     2.1  
Interest expense(4)     (94.8 )   (92.9 )   (72.1 )   (22.2 )   (105.6 )
Interest income     1.0     0.8     0.5     2.0     2.6  
   
 
 
 
 
 
Income (loss) before income taxes and cumulative effect of accounting change     (106.2 )   (79.7 )   116.8     25.0     259.6  
Income tax (provision) benefit     45.3     36.5     (47.3 )   (0.3 )   (102.8 )
   
 
 
 
 
 
Income (loss) before cumulative effect of accounting change     (60.9 )   (43.2 )   69.5     24.7     156.8  
Cumulative effect of accounting change, net of income tax(5)         (4.1 )            
   
 
 
 
 
 
Net income (loss)   $ (60.9 ) $ (47.3 ) $ 69.5   $ 24.7   $ 156.8  
   
 
 
 
 
 
  Net income (loss) attributable per common share:(6)                                
    Basic   $          
    Diluted   $          
Balance sheet data (at end of period):                                
Working capital(7)   $ 169.8   $ 204.6   $ 347.8   $ 673.4   $ 653.5  
Property and equipment and fiber farms, net     2,299.9     2,251.9     2,191.1     1,510.5     1,510.5  
Total assets     3,164.8     3,123.8     3,365.5     2,932.1     2,707.1  
Total long-term debt, including current portion and short-term borrowings     1,270.4     1,271.3     1,289.1     1,980.0     1,490.0  
Total capital     803.7     728.7     864.8     369.8     618.6  
Other financial data:                                
Depreciation, amortization and depletion   $ 233.8   $ 229.8   $ 193.8   $ 20.0   $ 127.5  
Capital expenditures     152.2     175.1     140.2     2,382.9     169.1  
EBITDA(8)     221.4     238.1     382.2     65.2     490.1  
Additional items included in EBITDA(9)     12.8  
Pro forma data:                                
Ratio of net debt to EBITDA(8)(10)     2.9  

(1)
Costs and expenses include the following amounts, which are reflected in our statement of income (loss) as other (income) expense, net: (i) $12.7 million of costs related primarily to a one-time retention bonus OfficeMax granted our employees; (ii) $7.1 million of costs related to the sale of our predecessor's plywood and lumber facilities in Yakima, Washington in February 2004; (iii) a $14.7 million pretax charge recorded in December 2003 for the write-down of impaired assets at our predecessor's Yakima, Washington facilities; (iv) $3.6 million of costs recorded in 2003 due to the early termination of an operating lease used in connection with our predecessor's paper business; and (v) the reversal of prior restructuring charges of $0.8 million in 2002 and 2003. Additionally, we recorded $20.2 million of costs for the period October 29 (inception) through December 31, 2004 for a noncash inventory purchase price adjustment in connection with the Acquisition, which is reflected in our statement of income (loss) as materials, labor and other operating expenses. We also recorded $14.6 million of costs for the period January 1 through October 28, 2004 for a noncash restricted stock issue, which is reflected in our statement of income (loss) as general and administrative expenses.

(2)
Includes our predecessor's 47% interest in Voyageur Panel, which it sold in May 2004.

(3)
Includes a $46.5 million pretax gain ($28.4 million after tax) on the May 2004 sale of our predecessor's interest in Voyageur Panel.

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(4)
In the predecessor periods presented, interest expense was allocated to our predecessor based on its average asset balances, which is not necessarily indicative of what interest expense would have been had our predecessor operated as a stand-alone company during these periods. For a discussion of interest on borrowings, see Note 11, Debt, to the financial statements included elsewhere in this prospectus.

(5)
Our predecessor recorded a one-time after-tax charge of $4.1 million as a cumulative effect adjustment relating to its adoption in January 2003 of SFAS No. 143, Accounting for Asset Retirement Obligations, which affected the way it accounted for landfill closure costs.

(6)
Net income (loss) per common share is not applicable for the historical periods, as there were no shares outstanding during these periods.

(7)
In the predecessor periods presented, working capital would have been $385.8 million, $402.6 million and $528.1 million at December 31, 2002 and 2003 and October 28, 2004, respectively, and at December 31, 2004, working capital would have been $686.7 million, including at each date receivables sold in connection with OfficeMax's receivables sales program and excluding at each date the current portion of long-term debt and short-term borrowings.

(8)
EBITDA represents net income (loss) before interest expense, interest income, income tax provision (benefit), depreciation, amortization and depletion. EBITDA is the primary measure used by our chief operating decision makers to evaluate segment operating performance and to decide how to allocate resources to segments. We believe EBITDA is useful to investors because it provides a means to evaluate the operating performance of our segments and our company on an ongoing basis using criteria that is used by our internal decision makers and because it is frequently used by investors and other interested parties in the evaluation of companies with substantial financial leverage. We believe EBITDA is a meaningful measure because it presents a transparent view of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance. For example, we believe that the inclusion of items such as taxes, interest expense and interest income distorts management's ability to assess and view the core operating trends in our segments. EBITDA, however, is not a measure of our liquidity or financial performance under GAAP and should not be considered as an alternative to net income (loss), segment income (loss), or income (loss) from operations or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. The use of EBITDA instead of net income (loss) has limitations as an analytical tool, including the inability to determine profitability, the exclusion of interest expense and associated significant cash requirements and the exclusion of depreciation, amortization and depletion, which represent significant and unavoidable operating costs given the level of our indebtedness and the capital expenditures needed to maintain our businesses. Management compensates for these limitations by relying primarily on our GAAP results and by using EBITDA only supplementally. Our measures of EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation. EBITDA also closely tracks, after specified adjustments, the defined term "Consolidated EBITDA" that is the basis for calculating our financial debt covenants and restrictions under our senior credit facilities and the indenture governing our senior floating rate notes and senior subordinated notes. These adjustments include those listed in note (9) below, as well as others. For example, our senior credit facilities and the indenture governing our notes permit us to add to EBITDA payments that are received by us from OfficeMax under the additional consideration agreement, although such payments are treated as a purchase price adjustment rather than income in our financial statements. See "Certain Relationships and Related Transactions—Additional Consideration Agreement."


The following is a reconciliation of net income (loss) to EBITDA:

 
  Predecessor
  Boise
Holdings

   
 
 
  Year ended
December 31,

   
   
 
 
  January 1
through
October 28,
2004

  October 29
(inception) through
December 31,
2004

  Pro forma
Year ended
December 31,
2004

 
 
  2002
  2003
 
 
  (dollars in millions)

 
Net income (loss)   $ (60.9 ) $ (47.3 ) $ 69.5   $ 24.7   $ 156.8  
Interest expense     94.8     92.9     72.1     22.2     105.6  
Interest income     (1.0 )   (0.8 )   (0.5 )   (2.0 )   (2.6 )
Income tax provision (benefit)     (45.3 )   (36.5 )   47.3     0.3     102.8  
Depreciation, amortization and depletion     233.8     229.8     193.8     20.0     127.5  
   
 
 
 
 
 
EBITDA   $ 221.4   $ 238.1   $ 382.2   $ 65.2   $ 490.1  
   
 
 
 
 
 

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(9)
Our EBITDA on a pro forma basis for the year ended December 31, 2004 includes the effects of the following additional items:

 
  Pro forma
Year ended
December 31, 2004

 
 
  (dollars in millions)

 
Loss on sale of mill(a)   $ (7.1 )
Gain on sale of Voyageur Panel(b)     46.5  
Equity in net income of affiliates(c)     6.3  
Inventory purchase price adjustments(d)     (20.2 )
Retention bonus(e)     (12.7 )
   
 
Total   $ 12.8  
   
 

(10)
Pro forma net debt is defined as pro forma total debt less pro forma cash and cash equivalents of $79.9 million, as of December 31, 2004.

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RISK FACTORS

          You should carefully consider the following risks and all of the other information set forth in this prospectus before investing in our Class A common stock.


Risks Related to Our Business

The paper and forest products industry is highly cyclical. Fluctuations in the prices of and the demand for our products could result in smaller profit margins and lower sales volumes.

          The paper and forest products industry is highly cyclical. Historically, economic and market shifts, fluctuations in capacity and changes in foreign currency exchange rates have created cyclical changes in prices, sales volume and margins for our products. The length and magnitude of industry cycles have varied over time and by product, but generally reflect changes in macroeconomic conditions and levels of industry capacity. Most of our paper products, including our cut-size office paper, containerboard and newsprint, and many of our wood products, including our plywood, lumber and particleboard, are commodities that are widely available from other producers. Even our non-commodity products, such as value-added papers and EWP, are susceptible to commodity dynamics. Because commodity products have few distinguishing qualities from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand.

          The overall levels of demand for the commodity products we make and distribute, and consequently our sales and profitability, reflect fluctuations in levels of end-user demand, which depend in large part on general macroeconomic conditions in North America and regional economic conditions in our markets, as well as foreign currency exchange rates. For example, demand for cut-size office paper fluctuates with levels of white-collar employment, and demand for containerboard depends on the state of the durable and non-durable goods industries. Demand for newsprint depends upon prevailing levels of newspaper advertising and circulation. Demand for wood products depends on new residential and light commercial construction and residential repair and remodeling activity, which are impacted by demographic trends, interest rate levels, weather and general economic conditions. Demand for many of our products was materially and negatively impacted by the global economic downturn in the early part of this decade, and we expect to be sensitive to such downturns in the future.

          Industry supply of commodity paper and wood products is also subject to fluctuation, as changing industry conditions can influence producers to idle or permanently close individual machines or entire mills. In addition, to avoid substantial cash costs in connection with idling or closing a mill, some producers will choose to continue to operate at a loss, sometimes even a cash loss, which could prolong weak pricing environments due to oversupply. Oversupply in these markets can also result from producers introducing new capacity in response to favorable short-term pricing trends.

          Industry supply of commodity papers and wood products is also influenced by overseas production capacity, which has grown in recent years and is expected to continue to grow. While the weakness of the U.S. dollar has mitigated the levels of imports in recent years, a strengthening in the U.S. dollar is likely to increase imports of commodity papers and wood products from overseas, putting downward pressure on prices.

          As a result, prices for all of our products are driven by many factors outside of our control, and we have little influence over the timing and extent of price changes, which are often volatile. Because market conditions beyond our control determine the prices for our commodity products, the price for any one or more of these products may fall below our cash production costs, requiring us to either incur short-term losses on product sales or cease production at one or more of our manufacturing facilities. Therefore, our profitability with respect to these products depends on

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managing our cost structure, particularly raw materials and energy prices, which represent the largest components of our operating costs and can fluctuate based upon factors beyond our control, as described below. If the prices of our products decline, or if our raw materials or energy costs increase, or both, demand for our products may decline, and our sales and profitability could be materially and adversely affected.

Our manufacturing businesses may have difficulty obtaining timber at favorable prices, or at all.

          Wood fiber is our principal raw material, comprising approximately 17%, 13% and 30% of the aggregate amount of materials, labor and other operating expenses and fiber costs from related parties for our Paper, Packaging & Newsprint and Wood Products segments, respectively, during 2004. Wood fiber is a commodity, and prices historically have been cyclical. Environmental litigation and regulatory developments have caused, and may cause in the future, significant reductions in the amount of timber available for commercial harvest in the United States. These reductions have caused the closure of plywood and lumber operations in some of the geographic areas in which we operate, including the closure of two facilities previously operated by OfficeMax. In addition, future domestic or foreign legislation and litigation concerning the use of timberlands, the protection of endangered species, the promotion of forest health and the response to and prevention of catastrophic wildfires could also affect timber supplies. Availability of harvested timber may further be limited by fire, insect infestation, disease, ice storms, wind storms, flooding and other natural and man made causes, thereby reducing supply and increasing prices. Wood fiber pricing is subject to regional market influences, and our cost of wood fiber may increase in particular regions due to market shifts in those regions. In addition, our ability to obtain wood fiber from Brazil, may be impacted by legal and political conditions in that country as well as transportation difficulties. Any sustained increase in wood fiber prices would increase our operating costs, and we may be unable to increase prices for our products in response to increased wood fiber costs due to additional factors affecting the demand or supply of these products.

          Over the past three years, the timberlands operations provided, on average, approximately 47% of our wood fiber requirements. In connection with the Timberlands Sale, we entered into long-term supply contracts pursuant to which we expect to obtain a significant portion of our future timber requirements. We purchase substantially all of our wood fiber from third parties, either pursuant to these supply agreements or in the open market. If any of our major suppliers of wood fiber stops selling or is unable to sell wood fiber to us, our financial condition and operating results would suffer. As a result of the Timberlands Sale, we have increased our open-market purchases of wood fiber. Since we have not historically made open-market purchases of wood fiber in such large amounts, our wood fiber costs may exceed our historical costs. For example, due to increased costs associated with the procurement of fiber, such as higher transportation costs and costs related to identifying potential vendors, we estimate that our wood fiber costs would have been $8 million to $12 million higher in 2004 had the Timberlands Sale been completed on January 1, 2004. Furthermore, as the amount of fiber we purchase pursuant to existing supply agreements declines, our wood fiber costs may increase further as we increase our reliance on open market purchases. In addition, our limited access to an internal supply of timber could expose us to the effects of short-term price volatility and limit our flexibility in responding to shortages in wood fiber supply, and could cause our operating costs to increase to a greater extent than those of our competitors that own timberlands. If we experience constraints on our timber supply for any of these or other reasons, we would be required to limit production in and/or close manufacturing facilities.

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An increase in the cost of our purchased energy or chemicals would lead to higher manufacturing costs, thereby reducing our margins.

          Energy is one of our most significant raw materials, comprising approximately 13%, 12% and 3% of the aggregate amount of materials, labor and other operating expenses and fiber costs from related parties for our Paper, Packaging & Newsprint and Wood Products segments, respectively, during 2004. Energy prices, particularly for electricity, natural gas and fuel oil, have been volatile in recent years and currently exceed historical averages. These fluctuations impact our manufacturing costs and contribute to earnings volatility. While we purchase substantial portions of our energy under supply contracts, many of these contracts rely on market pricing. We estimate that a hypothetical 10% increase in electricity, natural gas and fuel oil costs would have reduced our operating income by approximately $26 million for the year ended December 31, 2004.

          Other raw materials we use include various chemical compounds, such as precipitated calcium carbonate, sodium chlorate, sodium hydroxide, dyes, resins and adhesives. Purchases of chemicals comprised approximately 12%, 3% and 5% of the aggregate amount of materials, labor and other operating costs and fiber costs from related parties for our Paper, Packaging & Newsprint and Wood Products segments, respectively, during 2004. The costs of these chemicals have been volatile historically, and are influenced by capacity utilization, energy prices and other factors beyond our control, including energy prices.

          For our commodity products, the relationship between industry supply and demand, rather than changes in the cost of raw materials, determines our ability to increase prices. Consequently, we may be unable to pass increases in our operating costs to our customers in the short term. Any sustained increase in chemical or energy prices would reduce our operating margins and potentially require us to limit or cease operations of one or more of our machines.

We face strong competition in our markets.

          The paper and forest products industry is highly fragmented, and we face competition from numerous competitors, domestic as well as foreign. Some of our competitors in each of our businesses are large, vertically integrated companies that have greater financial and other resources, greater manufacturing economies of scale, greater energy self-sufficiency and/or lower operating costs than we do. In addition, some of our competitors have less indebtedness than we do, and therefore more of their cash is available for business purposes other than debt service. We may be unable to compete, particularly in our commodity products, during the various stages of the business cycle.

Failure to implement any of our business strategies could result in decreased future sales and net income.

          We may be unable to implement fully our strategies or achieve the anticipated results. Our strategies are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. For example, we intend to expand our leadership in the production of higher-growth, higher-margin products such as value-added papers and EWP. This strategy will require us to develop new and innovative product and service characteristics and respond to shifts in customer demand. In addition, we plan to continue to expand our building materials distribution business into new geographical regions, which will require us to identify growing markets and deliver superior customer service. If our manufacturing businesses fail to deliver quality products at competitive costs, or if our distribution business fails to acquire market share in new markets or if we are unable to implement our other key business strategies, our future sales and net income could decrease.

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A material disruption at one of our manufacturing facilities could prevent us from meeting customer demand, reduce our sales and/or negatively impact our net income.

          One or more of our major paper or EWP manufacturing facilities, or one of our larger machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including:

          Events such as those listed above have resulted in operating losses in the past. For example, in September 2004, damage caused by Hurricane Ivan to our Jackson, Alabama paper mill and the surrounding area led to a temporary shutdown of that facility, resulting in 1.7 days of downtime and a reduction in operating income of approximately $2.8 million. In addition, a fire at our Medford plywood plant in 1998 resulted in significant downtime and caused our plywood sales to drop 20% as compared to sales volumes of the prior year. Future events may cause similar shutdowns, which may result in additional downtime and/or cause additional damage to our facilities. Any such downtime or facility damage could prevent us from meeting customer demand for our products and/or require us to make unplanned capital expenditures. If one of these machines or facilities were to incur significant downtime, our ability to meet our production capacity targets and satisfy customer requirements would be impaired, resulting in lower sales and net income.

Some of our paper and wood products are vulnerable to long-term declines in demand due to competing technologies or materials.

          Our uncoated free sheet and newsprint compete with electronic transmission and document storage alternatives, as well as with grades we do not produce. As the use of these alternatives grows, demand for paper products may decline or shift from one grade of paper to another. For example, demand for newsprint has declined and may continue to decline as newspapers are replaced with electronic media, and demand for our uncoated free sheet for use in pre-printed forms has declined and may continue to decline as the use of desktop publishing and on-demand printing continues to displace traditional forms. Demand for our containerboard may decline as corrugated paper packaging is replaced with reusable plastic alternatives, particularly with respect to end-uses for perishable food products. Demand for plywood may also decline as customers continue to shift to oriented strand board, a product we do not manufacture. Any substantial shift in demand from our products to competing technologies or materials could result in a material decrease in sales of our products.

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Our operations require substantial capital, and we may not have adequate capital resources to provide for all of our capital requirements.

          Our businesses are capital intensive, and we regularly incur capital expenditures to expand our operations, maintain our equipment, increase our operating efficiency and comply with environmental laws. Our total capital expenditures, excluding acquisitions, were approximately $169 million during 2004, including approximately $114 million for maintenance capital and approximately $8 million for environmental expenditures, and we expect to spend approximately $185 million on capital expenditures during 2005, including approximately $98 million for maintenance capital and approximately $18 million for environmental expenditures. We anticipate our available cash resources and cash generated from operations will be sufficient to fund our operating needs and capital expenditures for at least the next year. However, if we require additional funds, we may not be able to obtain them on favorable terms, or at all. In addition, our debt service obligations reduce our available cash flows. If we cannot maintain or upgrade our equipment as we require or ensure environmental compliance, we could be required to cease or curtail some of our manufacturing operations, or we may become unable to manufacture products that can compete effectively in one or more of our markets.

Our operations are impacted by our relationship with OfficeMax.

          Until October 2004, we operated as business units of OfficeMax and not as a stand-alone company. During 2004, which period includes the ramp-up of sales to OfficeMax's retail network, OfficeMax purchased approximately 47% of our uncoated free sheet production. We anticipate that OfficeMax will continue to be our largest customer and that we will continue to depend on its distribution network for a substantial portion of our uncoated free sheet sales for the foreseeable future. In connection with the Acquisition, OfficeMax retained and indemnified us against certain liabilities related to our business. Furthermore, we and OfficeMax entered into an additional consideration agreement pursuant to which OfficeMax may be required to make payments to us. Any significant deterioration in OfficeMax's financial condition or our relationship with OfficeMax, or a significant change in OfficeMax's business strategy, could result in OfficeMax's ceasing to be our customer or failing to satisfy its contractual obligations to us, which, in turn, could reduce our sales and subject us to additional material liabilities.

We are subject to significant environmental regulation and environmental compliance expenditures, as well as other potential environmental liabilities.

          We are subject to a wide range of general and industry-specific environmental laws and regulations, particularly with respect to air emissions, wastewater discharges, solid and hazardous waste management, site remediation, forestry operations and endangered species habitats. Our capital expenditures for environmental compliance were approximately $12 million and $8 million in 2003 and 2004, respectively, and we expect to incur approximately $18 million in 2005. We expect to continue to incur significant capital and operating expenditures in order to maintain compliance with applicable environmental laws and regulations. On July 30, 2004, the U.S. Environmental Protection Agency, or EPA, promulgated rules regulating toxic air emissions from wood panel plants. A second rule regulating toxic air emissions from industrial boilers at wood products plants and paper mills was promulgated on September 13, 2004. We are currently evaluating these rules and the amount of capital expenditures that will be required for compliance. We expect to incur capital expenditures ranging from $13 million to $37 million for the period from 2005 to 2007, to comply with these regulations. We may also be required to incur substantial additional capital expenditures to comply with future environmental regulations. If we fail to comply with applicable environmental laws and regulations, we may face civil or criminal fines or penalties or enforcement actions, including orders limiting our operations or requiring corrective measures, installation of pollution control equipment or other remedial actions.

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          As owners and operators of real estate, we may be liable under environmental laws for cleanup and other damages, including tort liability, resulting from releases of hazardous substances on or from our properties, including asbestos. We may have liability under these laws whether or not we knew of, or were responsible for, the presence of these substances on our property, and, in some cases, our liability may not be limited to the value of the property. OfficeMax retains responsibility for environmental liabilities that occurred with respect to businesses, facilities and other assets not purchased by us in the Acquisition. In addition, OfficeMax generally indemnifies us for hazardous substance releases and other environmental violations that occurred prior to the closing of the Acquisition or arise out of pre-closing operations at the businesses, facilities and other assets purchased by us. However, OfficeMax may not have sufficient funds to fully satisfy its indemnification obligations when required, and, in some cases, we may not contractually be entitled to indemnification by OfficeMax. Furthermore, we are not entitled to indemnification for liabilities incurred due to releases and violations of environmental laws occurring after the closing of the Acquisition. With respect to the timberlands operations, we may have responsibility for certain environmental liabilities that occurred in the period following the Acquisition but prior to the Timberlands Sale. Any material liability we incur would adversely impact our financial condition and could preclude us from making capital expenditures that would otherwise benefit our business.

          Enactment of new environmental laws or regulations or changes in existing laws or regulations might require significant expenditures. We may be unable to generate funds or other sources of liquidity and capital to fund unforeseen environmental liabilities or expenditures.

Labor disruptions or increased labor costs could adversely affect our business.

          We could experience a material labor disruption or significantly increased labor costs at one or more of our facilities, either in the course of negotiations of a labor agreement or otherwise, any of which could prevent us from meeting customer demand, reducing our sales and profitability. As of December 31, 2004, we had 10,494 employees. Approximately 4,990, or 48%, of our employees work pursuant to collective bargaining agreements. Several of these agreements have expired or will expire in 2005. In December 2004, an agreement covering approximately 100 workers in our corrugated container facility in Salem, Oregon expired, and in March 2005, an agreement covering approximately 890 workers in our paper facilities in St. Helens, Oregon, Vancouver, Washington, Salem, Oregon, and Wallula, Washington expired. We are currently in negotiations with respect to agreements covering these matters. Agreements covering approximately 100 employees in our Jackson, Alabama sheeter facility and approximately 710 workers in our Oakdale, Louisiana and Florien, Louisiana wood products facilities will expire in July 2005. In addition, an agreement covering approximately 100 workers in our Salt Lake City, Utah corrugated container plant will expire in October 2005. We expect the key issues in the negotiations for new collective bargaining agreements to be pensions, health care and work rules and other contract requirements that we believe inhibit our ability to reduce operational costs. We may be unable to renew these agreements without work stoppages or significant increases in costs, which would reduce our operating margins or require us to limit or cease manufacturing operations at one or more of our facilities.

We depend on third parties for transportation services.

          We rely primarily on third parties for transportation of the products we manufacture and/or distribute, as well as delivery of our raw materials, including the delivery of our Brazilian veneer to our Alexandria, Louisiana facility. In particular, a significant portion of the goods we manufacture and raw materials we use are transported by railroad or trucks, which are highly regulated. For example, recent Federal Motor Carrier Safety Administration rules limited the maximum hours of service for motor carrier drivers, which may tighten the market for qualified truck drivers and negatively impact transportation rates and delivery times. If any of our third-party transportation

20



providers were to fail to deliver the goods we manufacture or distribute in a timely manner, we may be unable to sell those products at full value, or at all. Similarly, if any of these providers were to fail to deliver raw materials to us in a timely manner, we may be unable to manufacture our products in response to customer demand. In addition, if any of these third parties were to cease operations or cease doing business with us, we may be unable to replace them at reasonable cost. Any failure of a third-party transportation provider to deliver raw materials or finished products in a timely manner could harm our reputation, negatively impact our customer relationships and have a material adverse effect on our financial condition and operating results.

We depend upon the continued services of our senior management team.

          Our success depends, in part, on the efforts of our senior management and other key employees. Our senior management team, led by Tom Stephens, our chief executive officer, has significant industry experience and would be difficult to replace. These individuals possess sales, marketing, engineering, manufacturing, financial and administrative skills that are critical to the operation of our business. While we are party to an employment agreement with Mr. Stephens until 2007, if he were to resign prior to the expiration of the initial agreement term or fail to renew the agreement upon expiration, the implementation of our business strategy may be slowed. If we lose or suffer an extended interruption in the services of Mr. Stephens or one of our other senior officers, we may become unable to implement our business strategy, resulting in lower profitability. Moreover, the market for qualified individuals is highly competitive, and we may not be able to attract and retain qualified personnel to replace or succeed members of our senior management or other key employees should the need arise. We do not maintain any key-man or similar insurance policies covering any of our senior management or other key employees.

Our substantial indebtedness could adversely affect our financial condition and impair our ability to operate our business.

          We are a highly leveraged company. As of December 31, 2004, we had $2 billion of outstanding indebtedness, including $1.3 billion of indebtedness under our senior credit facilities (excluding unused availability under our revolving credit facility and outstanding and undrawn letters of credit) and $250.0 million of senior floating rate notes and $400.0 million of senior subordinated notes. This level of indebtedness could have important consequences to our business, financial condition and operating results, including the following:

21


We may not be able to generate sufficient cash flows to meet our debt service obligations.

          Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures depends on our ability to generate cash from our future operations. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

          Our business may not generate sufficient cash flow from operations, or future borrowings under our senior credit facilities or from other sources may not be available to us in an amount sufficient, to enable us to repay our indebtedness or to fund our other liquidity needs, including capital expenditure requirements. A substantial portion of our indebtedness bears interest at floating rates and, accordingly, if interest rates rise, our debt service requirements will increase. We may not be able to refinance any of our indebtedness on commercially reasonable terms, or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances, any of which could impede the implementation of our business strategy or prevent us from entering into transactions that would otherwise benefit our business. Additionally, we may not be able to effect such actions, if necessary, on commercially reasonable terms, or at all.

The terms of our senior credit agreement and the indenture governing our notes restrict our ability to operate our business and to pursue our business strategies.

          Our senior credit agreement and the indenture governing our notes contain, and any future indebtedness of ours would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us. Our senior credit agreement and the indenture governing our notes limit our ability, among other things, to:

          Our senior credit agreement also requires us to achieve specified financial and operating results and maintain compliance with specified financial ratios. Our ability to comply with these ratios may be affected by events beyond our control.

          The restrictions contained in our senior credit agreement and the indenture could:

22



Risks Relating to this Offering

The price of our Class A common stock may be volatile, and you may not be able to sell your shares at or above the initial public offering price.

          Prior to this offering, there has been no public market for our Class A common stock. An active and liquid trading market for our Class A common stock may not develop or be sustained following this offering. We will establish the initial public offering price through negotiations with the representatives of the underwriters. You should not view the price they and we establish as any indication of the price that will prevail in the trading market. The market price for our Class A common stock may decline below the initial public offering price, and our stock price is likely to be volatile.

          The market price of our Class A common stock may be influenced by many factors, some of which are beyond our control, including those described above under "Risks Related to Our Business" and the following:

          In addition, there has been significant volatility in the market price and trading volume of securities of companies operating in the paper and forest products industry, which has often been unrelated to operating performance of particular companies. As a result of these factors, you may not be able to resell your shares at or above the initial public offering price.

          Some companies that have had volatile market prices for their securities have had securities litigation brought against them. If litigation of this type is brought against us, it could result in substantial costs and would divert management's attention and our resources.

You may not receive dividends because our board of directors could, in its discretion, depart from or change our dividend policy at any time.

          We are not required to pay dividends, and our stockholders will not be guaranteed, or have contractual or other rights, to receive dividends. Our board of directors may decide at any time, in its discretion, to decrease the amount of dividends, otherwise change or revoke the dividend policy or discontinue entirely the payment of dividends. For example, our board of directors could depart from or change our dividend policy if it were to determine that we had insufficient cash to take advantage of other opportunities with attractive rates of return. If we do not pay dividends, for whatever reason, your shares could become less liquid and their market price could decline.

23



We might not have cash in the future to pay dividends in the intended amounts, or at all.

          Our ability to pay dividends, and our board of directors' determination to maintain our dividend policy, will depend on numerous factors, including the following:

          If our estimated cash available to pay dividends following the closing of the offering were to fall below our expectations, our assumptions as to estimated cash needs are too low or if other applicable assumptions were to prove incorrect, we may need to:

          Over time, our capital and other cash needs will invariably be subject to uncertainties, which could affect whether we pay dividends and the level of any dividends we may pay in the future. In addition, to the extent that we would seek to raise additional cash from additional debt incurrence or equity security issuances, we cannot assure you that such financing will be available on reasonable terms or at all.

You may not receive dividends because of restrictions in our debt agreements, Delaware law and state regulatory requirements.

          Our ability to pay dividends will be restricted by current and future agreements governing our and our subsidiaries' debt, including our senior credit facilities and the indenture governing our notes, as well as Delaware law and state regulatory authorities.

          Our senior credit facilities and the indenture governing our notes restrict our ability to pay dividends. As of December 31, 2004, our indenture permitted us to pay $35.0 million in dividends based upon a formula tied to consolidated net income. See "Description of Certain Debt — Senior Credit Facilities" and "— Senior Floating Rate Notes and Senior Subordinated Notes — Covenants." Our ability to pay cash dividends on our common stock is currently precluded by the terms of our senior credit facilities. We intend to enter into an amended and restated senior credit agreement prior to this offering that will permit the declaration and payment of quarterly dividends based upon a formula tied to our consolidated net income. Our ability to declare and pay dividends

24



in the future will therefore be limited by the terms of these debt agreements and to the extent we do not generate sufficient net income. In addition, we and our subsidiaries are permitted under the terms of our debt instruments to incur additional indebtedness that may restrict or prohibit the payment of dividends.

          Under Delaware law, our board of directors may not authorize payment of a dividend unless it is either paid out of our surplus, as calculated in accordance with the Delaware General Corporation Law, or, if we do not have a surplus, it is paid out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. We believe that we are currently permitted to declare dividends under Delaware law. However, to the extent we do not have adequate surplus or net profits, we may be prohibited from paying dividends.

Our dividend policy may limit our ability to pursue growth opportunities.

          We believe our dividend policy may limit, but not preclude, our ability to grow. If we continue paying dividends at the level currently anticipated under our dividend policy, we may need to seek financing to fund a material expansion of our business, including any significant acquisitions, or to pursue growth opportunities requiring capital expenditures significantly beyond our current expectations. We cannot assure you that such financing will be available to us on reasonable terms, or at all.

If you purchase our Class A common stock in this offering, you will incur immediate and substantial dilution in the book value of your shares.

          If you purchase shares in this offering, the value of your shares based on our actual book value will immediately be less than the price you paid. This reduction in the value of your equity is known as dilution. This dilution occurs in large part because our earlier investors paid substantially less than the initial public offering price when they purchased their shares of our common stock. Based upon the issuance and sale of          million shares of our Class A common stock by us at an assumed initial public offering price of $             per share (the midpoint of the price range set forth on the cover page of this prospectus), you will incur immediate dilution of $    in the net tangible book value per share if you purchase shares in this offering.

Approximately     % of our voting stock is controlled by one principal stockholder whose interests may conflict with those of our other stockholders.

          Upon completion of this offering, FPH, which is controlled by Madison Dearborn, will hold approximately    % of our voting power. As a result of this ownership, FPH will have the ability to control our affairs and matters requiring stockholder approval, including the nomination, election and removal of directors, any proposed merger, consolidation or sale of substantially all of our assets, or other material corporate transaction, such as the determination of corporate policy. FPH and OfficeMax together will hold approximately    % of our common stock. This concentration of ownership may also have the effect of delaying or preventing an acquisition transaction, merger or other change in control of our company or discouraging others from making tender offers for our shares, even if the transaction would be in the best interests of the minority stockholders. Moreover, this concentration of ownership may make it difficult for you and the other holders of Class A common stock to replace management. So long as FPH continues to own a significant amount of the outstanding shares of our common stock, it will continue to be able to strongly influence our decisions.

We are a "controlled company" within the meaning of the New York Stock Exchange rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements.

          Following the completion of this offering we will be deemed to be a "controlled company" under the rules of the NYSE. Under these rules, a company of which more than 50% of the voting

25



power is held by a group is a "controlled company" and may elect not to comply with certain NYSE corporate governance requirements, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that the nominating committee be composed entirely of independent directors, (3) the requirement that the compensation committee be composed entirely of independent directors, and (4) the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees. We intend to rely on this exemption, and therefore we do not intend to have a majority of independent directors or nominating and compensation committees consisting entirely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE's corporate governance requirements.

Conflicts of interest may arise because some of our directors are principals of our largest stockholder.

          Upon completion of this offering, four representatives of Madison Dearborn will serve on our seven-member board of directors. Madison Dearborn and its affiliates currently have interests in other companies that, to a limited degree, compete with us in the packaging industry. Madison Dearborn and its affiliates may continue to invest in entities that directly or indirectly compete with us or companies in which they currently invest may begin competing with us. As a result of these relationships, when conflicts between the interests of Madison Dearborn and the interests of our other stockholders arise, these directors may not be disinterested. Although our directors and officers have a duty of loyalty to us, under Delaware law and our amended and restated certificate of incorporation that will be adopted in connection with this offering, transactions that we enter into in which a director or officer has a conflict of interest are permissible so long as (1) the material facts relating to the director's or officer's relationship or interest as to the transaction are disclosed to our board of directors and a majority of our disinterested directors approves the transaction, (2) the material facts relating to the director's or officer's relationship or interest as to the transaction are disclosed to our stockholders and a majority of our disinterested directors approves the transaction or (3) the transaction is otherwise fair to us. Our amended and restated certificate of incorporation will also provide that Madison Dearborn and its representatives will not be required to offer any transaction opportunity of which they become aware to us and could take any such opportunity for themselves or offer it to other companies in which they have an investment.

Shares eligible for future sale may cause the market price of our Class A common stock to decline, even if our business is doing well.

          Sales of substantial amounts of our common stock in the public market after this offering, or the perception that these sales may occur, could adversely affect the price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities. Upon completion of this offering, we will have outstanding               million shares of common stock, assuming no exercise of the underwriters' over-allotment option. Of these shares, the              million shares of Class A common stock sold in this offering will be freely tradable, without restriction, in the public market. We and certain of our current stockholders have agreed with the underwriters not to sell, dispose of or hedge any shares of our common stock or securities convertible into or exchangeable for shares of our common stock, subject to specified exceptions, for 180 days from the date of this prospectus, except with the consent of Goldman, Sachs & Co. After these lockup agreements expire, an additional              million shares will be eligible for sale in the public market, subject to applicable manner of sale and other limitations under Rule 144 under the Securities Act of 1933, as amended, or the Securities Act. Some of our stockholders may be entitled, subject to limited exceptions, to demand registration rights with respect to the registration of shares under the Securities Act. By exercising their registration rights, and selling a large number of shares, these holders could cause the price of our common stock to decline. An estimated              million shares

26



of common stock will be entitled to registration rights upon completion of this offering. See "Shares Eligible for Future Sale," "Certain Relationships and Related Transactions — Registration Rights Agreement" and "Underwriting."

Delaware law and our charter documents may impede or discourage a takeover that you may consider favorable.

          The anti-takeover provisions of the Delaware General Corporation Law impose various impediments on the ability of a third-party to acquire control of us, even if a change in control would be beneficial to our stockholders.

          In addition, provisions of our amended and restated certificate of incorporation and by-laws may also deter, delay or prevent a third-party from acquiring us. These provisions include:

          We will also be afforded the protections of Section 203 of the Delaware General Corporation Law, which will prevent us from engaging in a business combination with a person who acquires at least 15% of our common stock for a period of three years from the date such person acquired such common stock, unless board or stockholder approval were obtained. See "Description of Capital Stock."

          These provisions could have the effect of delaying, deferring or preventing a change in control of our company, discourage others from making tender offers for our shares, lower the market price of our stock or impede the ability of our stockholders to change our management, even if such changes would be beneficial to our stockholders.

The requirements associated with being a public company will require significant company resources and management attention.

          Following this offering, we will become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or Exchange Act, and the Sarbanes-Oxley Act of 2002. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls for financial reporting. We are a new company, and have not established many of the procedures and practices we will be required to have as a public company. As a result, we will incur significant legal, accounting and other expenses that we did not incur, either as a nonpublic company or as business units of OfficeMax. Further, the need to establish the corporate infrastructure demanded of a public company may divert management's attention from implementing our growth strategy, which could prevent us from growing our sales and improving our financial condition. We have made, and will continue to make, changes to our corporate governance standards, disclosure controls and financial reporting and accounting systems to meet our reporting obligations. However, the measures we take may not be sufficient to satisfy our obligations as a public company. In addition, we cannot predict or estimate the amount of additional costs we may incur in order to comply with these requirements.

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FORWARD-LOOKING STATEMENTS

          This prospectus contains forward-looking statements. Statements that are predictive in nature or that depend upon or refer to future events or conditions are forward-looking statements. These statements are often identified by the words "will," "should," "anticipate," "believe," "expect," "intend," "estimate" or similar expressions. These statements reflect management's current views with respect to future events and are subject to risks and uncertainties, both known and unknown. There are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control. These factors, risks and uncertainties include, among others, the following:


          Our actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, we can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations or financial condition. In view of these uncertainties, investors are cautioned not to place undue reliance on these forward-looking statements. Subject to our obligations under the Securities Act, we expressly disclaim any obligation to revise publicly any forward-looking statements that have been made to reflect the occurrence of events after the date hereof. For a discussion of other factors that may affect our business, you should read carefully the factors described in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of this prospectus. We note that the safe harbor for forward-looking statements provided by the Private Securities Litigation & Reform Act of 1995 does not apply to statements made in connection with any initial public offering.

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INDUSTRY AND MARKET DATA

          Unless otherwise indicated, information contained in this prospectus concerning the paper and forest products industry, its segments and related markets (including end-use markets), our general expectations concerning such industry and its segments and related markets and our market position and market share within such industry and its segments and related markets are based on information from independent industry analysts and publications, such as Resource Information Systems, Inc., Home Channel News, 2003-2004 Pulp & Paper Global Fact & Price Book and management estimates. Management estimates are derived from publicly available information released by third-party sources, as well as data from our internal research, and are based on assumptions made by us based on such data and our knowledge of such industry and markets, which we believe to be reasonable. None of the independent industry publications used in this prospectus was prepared on our or our affiliates' behalf and none of the sources cited in this prospectus has consented to the inclusion of any data from its reports, nor have we sought their consent. Market share data is based on sales, in the case of our Building Materials Distribution segment, and, in the case of our other segments, production capacity, unless otherwise indicated. Estimates of historical growth rates in the markets in which we operate are not necessarily indicative of future growth rates in such markets.


REORGANIZATION AS A CORPORATION

          Prior to the completion of this offering, we intend to convert from a Delaware limited liability company to a Delaware corporation. In connection with the conversion, all of our Series A common units will be converted into preferred stock, all of our Series B common units will be converted into Class B common stock and all of our Series C common units will be converted into Class A common stock, according to their relative rights and preferences and using a conversion ratio based upon an initial public offering price of $                    , the midpoint of the range set forth on the cover page of this prospectus. The shares sold in this offering will be our Class A common stock. FPH and OfficeMax will hold all of our Class B common stock at the time of this offering. Our amended and restated certificate of incorporation will provide that in                          2005, our board of directors will declare, and we will pay, a Special Dividend to holders of our Class B common stock in the amount of $176.8 million (assuming an initial public offering price of $                    , the midpoint of the range set forth on the cover page of this prospectus). Except for the Special Dividend, and the right of the holders of the Class B common stock to consent to any changes to our governing documents that would adversely affect the Class B common stock, shares of Class A common stock and shares of Class B common stock will be identical, including with respect to voting rights. Each share of Class B common stock may be converted into a share of Class A common stock at any time at the option of the holder and will be automatically converted upon the conversion of a majority of the Class B common stock.

          Members of our management currently hold equity in FPH that would entitle them to receive approximately $              million of the Special Dividend (assuming an initial public offering price of $              , the midpoint of the range set forth on the cover page of this prospectus). Following the completion of this offering and the payment of the Special Dividend, we expect that FPH will distribute to members of management who hold FPH equity interests, shares of our Class A common stock and Class B common stock that are held by FPH in proportion to management's equity interest in FPH in exchange for the redemption of management's existing FPH equity interests. As a result, management would cease to have an equity interest in FPH and would instead hold approximately              million shares of our Class A common stock and              million shares of our Class B common stock, representing an approximately    % interest in our common stock following the completion of this offering.

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          The following chart illustrates the ownership of our voting equity following the offering.

GRAPHIC

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USE OF PROCEEDS

          Based upon an initial public offering price of $         per share (the midpoint of the price range set forth on the cover page of this prospectus), we will receive from this offering net proceeds of approximately $          million, after deducting estimated underwriting discounts and commissions and estimated offering expenses, which are payable by us.

          We expect that all of the net proceeds from this offering will be paid to our existing stockholders. We intend to redeem all of our preferred stock from OfficeMax for its liquidation preference value of $36.4 million, plus accrued and unpaid dividends. Our preferred stock accrues (and our Series A common units outstanding prior to the conversion accrued) dividends at a rate of 8% per annum on the liquidation preference value, which yield accumulates semi-annually on June 30 and December 31, beginning on December 31, 2004.

          In addition, we intend to repay our loan from Boise Land & Timber Corp., a sister corporation, with a principal amount on a pro forma basis as of December 31, 2004 of $251.3 million, plus accrued interest. This loan bears interest at 8% per annum and matures on February 4, 2015. We used the proceeds from this loan to repay a portion of our outstanding borrowings under our senior credit facilities incurred to finance the Acquisition. We expect that Boise Land & Timber Corp. will distribute the proceeds from the repayment of this loan to Boise Land & Timber Holdings Corp., which will use the proceeds to redeem its Series A common stock from a subsidiary of OfficeMax and to make a distribution to FPH and a subsidiary of OfficeMax. We expect that FPH will distribute all of the proceeds it receives to its equityholders, including members of our management.

          .We intend to use the remaining net proceeds to pay the Special Dividend to holders of our Class B common stock. We estimate that this dividend will be approximately $176.8 million (assuming an initial public offering price of $   million, the mid-point of the range set forth on the cover page of this prospectus). We expect that FPH will distribute this dividend to its equityholders, including members of our management. We intend to amend and restate our senior credit facilities prior to this offering to permit the intended use of proceeds.

          As a result of these transactions, we expect that members of our management will receive an aggregate of approximately $          million of the proceeds of this offering. See "Certain Relationships and Related Transactions — Proceeds of this Offering" for the amounts that will be paid to our principal stockholders and our executive officers in connection with our intended use of proceeds.

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DIVIDEND POLICY AND RESTRICTIONS

          We currently intend to declare and pay quarterly dividends of approximately $         per share on all outstanding shares of Class A common stock and Class B common stock. We currently expect the first quarterly dividend will be declared and paid in the    quarter of 2005. The declaration and payment of this and any future dividends will be at the discretion of our board of directors, subject to our actual future earnings and capital requirements and contractual and legal restrictions. In determining whether to declare a dividend, our board of directors may take into account matters such as general business conditions, our financial results, capital requirements, contractual, legal and regulatory restrictions and other factors that our board of directors may deem relevant. Our ability to declare and pay cash dividends on our common stock is currently precluded by the terms of our senior credit facilities. We intend to amend and restate our senior credit facilities prior to this offering to permit the payment of the quarterly dividends based upon a formula tied to our consolidated net income following the date of the Acquisition. In addition, our amended and restated senior credit facilities will permit us to declare and pay dividends in an aggregate amount of up to $35.0 million, whether or not we have the ability to declare and pay dividends based upon the formula. However, the payment of dividends pursuant to this exception would reduce the amount of dividends that may be payable pursuant to such formula in the future. See "Description of Certain Debt — Senior Credit Facilities — Amendment and Restatement." In addition, our ability to declare and pay dividends is limited by the indenture governing our senior floating rate notes and senior subordinated notes and may be limited by the terms of any future debt. Under the terms of the indenture governing our senior floating rate notes and senior subordinated notes, we are permitted to declare and pay dividends based upon a formula tied to our consolidated net income following the date of the Acquisition. The indenture also permits us to declare and pay dividends in an aggregate amount of up to $35.0 million, whether or not we have the ability to declare and pay dividends based upon the formula. However, the payment of dividends pursuant to this exception would reduce the amount of dividends that may be payable pursuant to such formula in the future. As of December 31, 2004, our indenture permitted us to pay dividends of $35.0 million. For a more detailed description of these limitations, see "Description of Certain Debt — Senior Floating Rate Notes and Senior Subordinated Notes — Covenants."

          We are a holding company and have no direct operations. Our ability to pay cash dividends depends, in part, on the ability of our subsidiaries to pay cash dividends. We expect to cause our subsidiaries to make distributions to us to fund our expected dividend payments, subject to applicable law and any restrictions contained in our subsidiaries' current or future debt agreements.

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DILUTION

          Our net tangible book value as of December 31, 2004, determined on a pro forma basis as described below, was $          million, or $         per share of common stock. Pro forma net tangible book value represents the amount of our total tangible assets, less our total liabilities, divided, in the case of pro forma net tangible book value per share, by the pro forma number of shares of common stock outstanding giving effect to our conversion to a corporation as described under "Reorganization as a Corporation." Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by investors in this offering and the pro forma net tangible book value per share of our common stock immediately after this offering.

          After giving effect to our sale of             shares of Class A common stock in this offering, based upon an assumed initial public offering price of $         per share, the midpoint of the range set forth on the cover page of this prospectus, and before deducting the estimated underwriting discounts and estimated offering expenses payable by us, our adjusted pro forma net tangible book value as of December 31, 2004 would have been approximately $          million, or $         per share of common stock, on a pro forma basis after giving effect to (1) the payment of the Special Dividend, (2) the redemption of our preferred stock, (3) the repayment of the loan from Boise Land & Timber Corp. and (4) the effect of the other pro forma adjustments described under "Unaudited Pro Forma Financial Data." This represents an immediate increase in pro forma net tangible book value to existing stockholders of $         per share and an immediate dilution to new investors in this offering of $         per share. The following table illustrates the per share dilution in pro forma net tangible book value to new investors:

Assumed initial public offering price per share         $  
  Pro forma net tangible book value per share as of December 31, 2004   $        
  Increase in pro forma net tangible book value per share attributable to new investors            
  Pro forma adjusted net tangible book value per share as of December 31, 2004            
         
Dilution per share to new investors         $  
         

          The following table summarizes, as of December 31, 2004, as adjusted to give effect to this offering, the differences between the number of shares of Class A common stock purchased from us, the aggregate cash consideration paid to us and the average price per share paid by existing stockholders since our inception and new investors purchasing shares of common stock in this offering. The calculation below is based on an assumed initial public offering price of $         per share, the midpoint of the range set forth on the cover page of this prospectus, before deducting the estimated underwriting discounts and estimated offering expenses payable by us:

 
  Shares Purchased
  Total Consideration
  Average
Price

 
  Number
  Percent
  Amount
  Percent
  Per Share
Existing stockholders         % $       % $  
New investors                        
   
 
 
 
 
  Total       100 % $     100 % $  
   
 
 
 
 

          There are         shares of our Class A common stock reserved for future issuance under the Boise Incentive and Performance Plan. To the extent that such equity incentives are exercised, there will be further dilution to our new investors. In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

          If the underwriters exercise their over-allotment option in full, our existing stockholders would own approximately    % and our new investors would own approximately    % of the total number of shares of our common stock after this offering.

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CAPITALIZATION

          The following table sets forth our capitalization as of December 31, 2004:

          This table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Financial Data" and the financial statements and the notes thereto included elsewhere in this prospectus.

 
  As of
December 31, 2004

 
  Pro forma
  Pro forma,
as adjusted

 
  (dollars in millions)
(unaudited)

Long-term debt, including current maturities:            
  Senior credit facilities:(1)            
    Revolving credit facility   $   $
    Tranche D term loan     840.0     840.0
  Senior floating rate notes due 2012     250.0     250.0
  71/8% senior subordinated notes due 2014     400.0     400.0
  Loan from affiliate(2)     251.3    
   
 
Total debt     1,741.3     1,490.0
   
 
Stockholders' equity:            
Preferred stock, $0.01 par value per share,             shares authorized;              shares issued and outstanding pro forma; no shares outstanding pro forma, as adjusted     36.9    
Class A common stock, $0.01 par value per share,             shares authorized pro forma and pro forma, as adjusted;             shares issued and outstanding pro forma;             shares issued and outstanding pro forma, as adjusted          
Class B common stock, $0.01 par value per share,             shares authorized;             shares issued and outstanding, pro forma and pro forma, as adjusted     332.9      
Additional paid in capital          
Retained earnings          
   
 
Total stockholders' equity     369.8     618.6
   
 
  Total capitalization   $ 2,111.1   $ 2,108.6
   
 

(1)
As of December 31, 2004, we had $331.7 million of availability under our $400.0 million revolving credit facility, net of $68.3 million of outstanding and undrawn letters of credit.

(2)
Represents a loan from a subsidiary of Boise Land & Timber Holdings Corp., our sister corporation, from the proceeds it received in connection with the Timberlands Sale. We used the proceeds of this loan to repay a portion of our outstanding borrowings under our senior credit facilities. We intend to repay this loan using a portion of the net proceeds from this offering.

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UNAUDITED PRO FORMA FINANCIAL DATA

          We derived the following unaudited pro forma financial data by applying pro forma adjustments to our audited December 31, 2004 balance sheet and the audited statement of income of our predecessor for the period January 1, 2004 through October 28, 2004 and our audited statement of income for the period October 29, 2004 through December 31, 2004 included elsewhere in this prospectus. The unaudited pro forma data for the periods presented give effect to:

in each case, as if these transactions had occurred on December 31, 2004 for balance sheet purposes and January 1, 2004 for statement of income purposes. We describe the assumptions underlying the pro forma adjustments in the accompanying notes, which should be read in conjunction with these unaudited pro forma financial statements.

          The unaudited pro forma financial data are for informational purposes only and should not be considered indicative of actual results that would have been achieved had the Acquisition, the Timberlands Sale, the amendment and restatement of our senior credit facilities, our conversion to a corporation and/or this offering been consummated on the date or for the periods indicated and do not purport to indicate consolidated balance sheet data or results of operations as of any future date or any future period. The unaudited pro forma condensed financial data should be read in conjunction with the information contained in "Use of Proceeds," "Capitalization," "Selected Historical Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and accompanying notes included elsewhere in this prospectus.

35


Unaudited Pro Forma Condensed Balance Sheet as of December 31, 2004

 
  Boise
Holdings
Historical

  Timberlands
Sale
Adjustments(4)

  Pro Forma for
Timberlands Sale

  Other
Adjustments(6)

  Boise
Cascade
Company
Pro Forma

 
  (dollars in thousands)

ASSETS                              
Current                              
Cash   $ 163,345   $ (3,413) (a) $ 159,932   $
838,000
(918,000)
 (a)
(b)
$ 79,932
Receivables                              
  Trade, less allowances     276,668         276,668         276,668
  Related parties     42,055         42,055         42,055
  Other     19,174         19,174         19,174
Inventories     594,869         594,869         594,869
Deferred income taxes                 41,078
17,239
 (i)
 (c)
  58,317
Other     15,621         15,621         15,621
   
 
 
 
 
      1,111,732     (3,413 )   1,108,319     (21,683 )   1,086,636
   
 
 
 
 
Property                              
Property and equipment, net     1,465,849         1,465,849         1,465,849
Fiber farms and timber deposits     44,646         44,646         44,646
   
 
 
 
 
      1,510,495         1,510,495         1,510,495
   
 
 
 
 
Goodwill     18,390         18,390         18,390
Intangibles     34,357         34,357         34,357
Deferred finance costs     84,054         84,054     2,000
(44,316)
 (a)
(c)
  41,738
Note receivable from related party     157,509     (157,509) (b)          
Other assets     15,532         15,532         15,532
   
 
 
 
 
Total assets   $ 2,932,069   $ (160,922 ) $ 2,771,147   $ (63,999 ) $ 2,707,148
   
 
 
 
 

See the accompanying notes to the unaudited pro forma condensed financial statements, which are an integral part of these statements.

36


Unaudited Pro Forma Condensed Balance Sheet as of December 31, 2004 (Continued)

 
  Boise Holdings Historical
  Timberlands
Sale
Adjustments(4)

  Pro Forma for
Timberlands Sale

  Other
Adjustments(6)

  Boise
Cascade
Company
Pro Forma

 
  (dollars in thousands)

LIABILITIES AND CAPITAL                              
Current                              
Short-term borrowings   $   $   $   $   $
Current portion of long-term debt     13,300     (13,300) (d)       8,400  (a)   8,400
Accounts payable                              
  Trade     310,148         310,148         310,148
  Related parties     150         150         150
Accrued liabilities                              
  Compensation and benefits     62,495         62,495         62,495
  Interest payable     8,584     (222) (e)   8,362         8,362
  Other     43,631         43,631         43,631
   
 
 
 
 
      438,308     (13,522 )   424,786     8,400     433,186
   
 
 
 
 
Debt                              
Long-term debt, less current portion     1,966,700     13,300
(412,000
 (d)
)(f)
  1,568,000     831,600
(918,000
 (a)
)(b)
  1,481,600
Note payable to related party, net         251,300  (c)   251,300     (251,300) (h)  

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Deferred income taxes                 16,561  (i)   16,561
Compensation and benefits     133,648         133,648         133,648
Other long-term liabilities     23,573         23,573         23,573
   
 
 
 
 
      157,221         157,221     16,561     173,782
   
 
 
 
 
Capital                              
Business unit equity                    
Series A common units     36,868         36,868     (36,868) (d)  
Series B common units     332,972         332,972     (326,711)
(6,261)
(d)
(d)
 
Class C common units                    
Preferred stock                 36,868
(36,868)
 (d)
(f)
 
Class A common stock                 465,000  (e)   465,000
Class B common stock                 326,711
(44,316)
 (d)
(c)
  149,754
Retained deficit                 (176,832
17,239
26,952
)(g)
 (c)
 (i)
 
Accumulated other comprehensive income (loss)                 6,261
(2,435)
 (d)
(i)
  3,826
   
 
 
 
 
Total capital     369,840         369,840     248,740     618,580
   
 
 
 
 
Total liabilities and capital   $ 2,932,069   $ (160,922 ) $ 2,771,147   $ (63,999 ) $ 2,707,148
   
 
 
 
 

See the accompanying notes to the unaudited pro forma condensed financial statements, which are an integral part of these statements.

37


Unaudited Pro Forma Condensed Statement of
Income (Loss) for the Year Ended December 31, 2004

 
  Predecessor
  Boise
Holdings

   
   
   
   
   
 
 
  Historical
   
   
   
   
   
 
 
  January 1
through
October 28,
2004

  October 29
(inception)
through
December 31,
2004

  Acquisition
Adjustments(3)

  Timberlands
Sale
Adjustments(5)

  Pro Forma for
Acquisition and
Timberlands Sale

  Other
Adjustments(7)

  Boise
Cascade
Company
Pro Forma

 
 
   
  (dollars in thousands)

   
 
Sales                                            
  Trade   $ 4,417,440   $ 779,953   $   $   $ 5,197,393   $   $ 5,197,393  
  Related parties     444,608     92,774             537,382         537,382  
   
 
 
 
 
 
 
 
      4,862,048     872,727             5,734,775         5,734,775  
   
 
 
 
 
 
 
 

Materials, labor and other operating expenses

 

 

4,122,045

 

 

733,509

 

 

(2,245)
(30,459)
(1,634)

(a)
(b)
(c)

 

119,988
10,000

 (d)
 (e)

 

4,951,204

 

 


 

 

4,951,204

 

Fiber costs from related parties

 

 

95,537

 

 

24,451

 

 


 

 

(119,988)

(d)

 


 

 


 

 


 
Depreciation, amortization and depletion     193,816     20,037     (87,958)
1,573
(e)
 (f)
        127,468         127,468  

Selling and distribution expenses

 

 

211,319

 

 

40,118

 

 

(2,575)
(569)

(b)
(c)

 


 

 

248,293

 

 


 

 

248,293

 

General and administrative expenses

 

 

79,317

 

 

10,608

 

 

(7,806)
3,153
(2,539)
3,984
(9,772)

(b)
 (d)
(c)
 (g)
(h)

 


 

 

76,945

 

 


 

 

76,945

 

Other (income) expense, net

 

 

25,348

 

 

(23

)

 

(2,176)

(i)

 


 

 

23,149

 

 


 

 

23,149

 
   
 
 
 
 
 
 
 
      4,727,382     828,700     (139,023 )   10,000     5,427,059         5,427,059  

Income from operations

 

 

134,666

 

 

44,027

 

 

139,023

 

 

(10,000

)

 

307,716

 

 


 

 

307,716

 
   
 
 
 
 
 
 
 

Equity in net income of affiliates

 

 

6,308

 

 


 

 


 

 


 

 

6,308

 

 


 

 

6,308

 
Gain on sale of affiliate     46,498                 46,498         46,498  
Foreign exchange gain     912     1,181             2,093         2,093  

Interest expense

 

 

(72,124

)

 

(22,182

)

 

(22,774)
(7,730)

 (j)
 (k)

 

(16,753)
14,969

 (b)
 (c)

 

(126,594

)

 

16,753
4,200

 (a)
 (b)

 

(105,641

)

Interest income

 

 

557

 

 

2,005

 

 

8,021

 (l)

 

(8,021)

(a)

 

2,562

 

 


 

 

2,562

 
   
 
 
 
 
 
 
 
      (17,849 )   (18,996 )   (22,483 )   (9,805 )   (69,133 )   20,953     (48,180 )
   
 
 
 
 
 
 
 

Income (loss) before income taxes

 

 

116,817

 

 

25,031

 

 

116,540

 

 

(19,805

)

 

238,583

 

 

20,953

 

 

259,536

 
Income tax (provision) benefit     (47,351 )   (329 )   47,680  (m)             (102,769) (c)   (102,769 )
   
 
 
 
 
 
 
 

Net income (loss)

 

$

69,466

 

$

24,702

 

$

164,220

 

$

(19,805

)

$

238,583

 

$

(81,816

)

$

156,767

 
   
 
 
 
 
 
 
 

See the accompanying notes to the unaudited pro forma condensed financial statements, which are an integral part of these statements.

38



NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA

Notes to Pro Forma Adjustments Related to the Acquisition

1.     Sources and Uses

        The following table reflects the sources and uses of cash related to the Acquisition (dollars in millions).

Sources

   
  Uses

   
Revolving credit facility(a)   $ 40.0   Acquisition consideration(b)   $ 2,052.6
Tranche B term loan     1,330.0   Fees and expenses     140.3
Senior floating rate notes     250.0   Working capital     2.0
Senior subordinated notes     400.0   Loan to Boise Land & Timber Corp.(c)      164.0
Series A common units     36.4          
Series B common units     302.5          
   
     
Total sources   $ 2,358.9   Total uses   $ 2,358.9
   
     

(a)
Our revolving credit facility provides for borrowings and issuances of letters of credit of up to $400.0 million. As of December 31, 2004, we had $331.7 million of availability under our revolving credit facility, net of $68.3 million of outstanding and undrawn letters of credit.

(b)
The purchase price may be adjusted upward or downward based on paper sales prices during the six years following the closing date pursuant to the additional consideration agreement. Over that period, we could pay OfficeMax a maximum aggregate amount of $125.0 million or OfficeMax could pay us a maximum aggregate amount of $125.0 million, in each case, net of payments received. The calculation of the purchase price does not include the effect, if any, of these potential adjustments.

(c)
In connection with the Acquisition, we loaned $164 million to Boise Land & Timber Corp., a subsidiary of Boise Land & Timber Holdings Corp., a sister corporation that is majority-owned by FPH. This loan bore interest at a rate of 6% per annum. The principal amount of the loan was adjusted from time to time to reflect the payments between these companies for allocated costs and expenses. This loan had an outstanding principal amount of $157.5 million as of December 31, 2004, and was repaid with proceeds from the Timberlands Sale.

2.     Purchase Price Allocation

        As of December 31, 2004, the allocation of the purchase price of the Acquisition is reflected in our balance sheet. The purchase price was determined based on negotiations between Madison Dearborn and OfficeMax, plus fees and expenses. We allocated the purchase price to the assets acquired by us and the liabilities assumed by us in accordance with the asset purchase agreement based on their estimated fair values as of the date of the Acquisition. Estimated fair values were derived through consideration and application of standard valuation approaches and techniques. The initial purchase price allocation may be adjusted within one year of the date of the Acquisition for changes in estimates of the fair value of assets acquired and liabilities assumed. We have not completed the assessment of the fair value of our fiber farms and may allocate a higher portion of the purchase price to those assets. An increase in those values would reduce goodwill.

          In connection with the Acquisition, we are evaluating the acquired facilities and organizational structure. In accordance with the provisions of Emerging Issues Task Force, or EITF, 95-3, Recognition of Liabilities in Connection With a Purchase Business Combination, exit activities in connection with the Acquisition will increase goodwill. We have one year from the date of the

39



Acquisition to develop our restructuring plans and adjust goodwill. As of December 31, 2004, we had finalized a portion of our plans in sufficient detail to meet the requirements of EITF 95-3 to record a liability. Accordingly, we recorded a reserve of $14.3 million, most of which related to severance costs for 310 of our employees. Of that amount, we recorded $7.3 million in our Paper segment, $0.6 million in our Packaging & Newsprint segment, $1.8 million in our Wood Products segment and $4.6 million in our Corporate and other segment. Most of these costs are expected to be paid in 2005. Cost savings related to these restructuring activities will result primarily from lower salaries and benefits.

          At December 31, 2004, approximately $12.8 million of the 2004 restructuring reserves were included in accrued liabilities, compensation and benefits, and $0.5 million was included in accrued liabilities, other. Restructuring reserve liability account activity related to these 2004 charges is as follows:

 
  Severance
  Other
  Total
 
 
  (dollars in millions)

 
2004 restructuring reserve   $ 13.8   $ 0.5   $ 14.3  
Charges against reserve     (1.0 )       (1.0 )
   
 
 
 
Restructuring reserve at December 31, 2004   $ 12.8   $ 0.5   $ 13.3  
   
 
 
 

          We expect to complete our restructuring plans by the end of the second quarter of 2005. When those plans are finalized, we expect to record additional restructuring liabilities and increase goodwill.

3.     Adjustments to Unaudited Pro Forma Condensed Statements of Income (Loss) for the Acquisition

(a)
To adjust for the elimination of LIFO reserves as a result of the change to a FIFO basis.

(b)
To reduce pension and other post-retirement expense as a result of OfficeMax retaining the obligation for all former employees and to reduce pension expense to reflect the contribution of additional assets to the plans. Approximately $22.8 million of the reduction in expense is due to the reduced liability and approximately $18.0 million is due to the increased funding.

(c)
To reduce excess defined contribution benefit expense related to OfficeMax's Employee Stock Ownership Plan.

(d)
To eliminate income from company-owned life insurance (COLI) retained by OfficeMax.

(e)
To reduce depreciation and depletion expense as a result of reducing the value of property and equipment and fiber farms as part of the purchase price allocation. The decrease is the result of allocating a lower value to the acquired assets than their historical carrying value based on our assessment of fair value. We also assigned new estimated useful lives resulting in an average remaining useful life of 11.5 years, compared with nine years for our predecessor.

40


(f)
To increase amortization expense as a result of recording intangible assets as part of the purchase price allocation. Intangible assets arising from the Acquisition are as follows (dollars in millions):

Description

  Amount
  Amortization period
Trade names and trademarks   $ 22.8   N/A
Customer relationships     6.8   5 years
Technology     5.1   3 to 5 years
   
   
    $ 34.7    
   
   
(g)
To eliminate income from a captive insurance company retained by OfficeMax.

(h)
To eliminate the expenses associated with the OfficeMax restricted stock program net of the cost of our new management equity units.

(i)
To eliminate expenses associated with OfficeMax's historical receivable sales program.

(j)
To record additional interest expense, excluding amortization of deferred financing costs, as follows:

 
   
  Assumed rate
  Interest expense
 
  Principal
amount

  January 1 through October 28,
2004

  January 1 through October 28,
2004

 
  (dollars in millions)

Revolving credit facility   $   % $
Tranche B term loan(1)     1,330.0   4.895 %   54.3
Senior floating rate notes(1)     250.0   6.593 %   13.7
Senior subordinated notes     400.0   7.125 %   23.8
   
         
    $ 1,980.0          
Interest on notes and senior credit facilities, excluding amortization of deferred financing costs               91.8
Ongoing fees on senior credit facilities               3.1
             
Total new cash interest expense               94.9
Less historical interest expense               72.1
             
Adjustment             $ 22.8
             
Increase in interest expense if rates on variable rate debt increased by 25 basis points   $ 780.0   0.25 % $ 2.0
   
 
 

(k)
To record the amortization of additional deferred financing costs.

(l)
To record interest income on the loan to Boise Land & Timber Corp. at an annual rate of 6%.

(m)
To eliminate the historical income tax provision/benefit to reflect the status of Boise Cascade Holdings, L.L.C. as a pass through tax entity.

41


Notes to Pro Forma Adjustments Related to the Timberlands Sale

4.     Adjustments to Unaudited Pro Forma Condensed Balance Sheet for the Timberlands Sale

        

(a)
To reflect the use of cash to repay a portion of the Tranche B term loan.

(b)
To record the repayment by Boise Land & Timber Corp. of our loan.

(c)
To record a loan from Boise Land & Timber Corp. The principal amount of this loan is subject to adjustment based on transactions between Boise Land & Timber Corp. and us. This loan bears interest at 8% per annum.

(d)
To reclassify the current portion of long-term debt as a result of the mandatory prepayment of the Tranche B term loan as a result of the Timberlands Sale.

(e)
To reflect the payment of accrued interest on the Tranche B term loan.

(f)
To record a $412 million prepayment of the Tranche B term loan with the proceeds received from the loan repayment by Boise Land & Timber Corp. and the new loan from Boise Land & Timber Corp.

5.     Adjustments to Unaudited Pro Forma Condensed Statement of Income (Loss) for the Timberlands Sale

        

(a)
To eliminate interest income on our loan to Boise Land & Timber Corp. due to its repayment in full from the proceeds from the Timberlands Sale.

(b)
To record interest expense on the new loan from Boise Land & Timber Corp. at an annual rate of 8%.

(c)
To reduce interest expense related to the Tranche B term loan repaid with the proceeds received by us from Boise Land & Timber Corp. in connection with the Timberlands Sale.

(d)
To reclassify "Fiber costs from related parties" to "Materials, labor, and other operating expenses."

(e)
To increase wood fiber costs for the effect of increased open-market purchases following the Timberlands Sale.

Notes to the Pro Forma Adjustments Related to the Amendment and Restatement of Our Senior Credit Facilities, Conversion to a Corporation and this Offering

6.     Adjustments to Unaudited Pro Forma Condensed Balance Sheet for the Conversion to a Corporation, this Offering and the Amendment and Restatement of Our Senior Credit Facilities

        

(a)
To record the new Tranche D term loan, net of financing costs, and to reflect current portion.

(b)
To record the prepayment of the Tranche B term loan.

(c)
To reflect the write-off of the Tranche B term loan deferred financing costs. No adjustment was made to the pro forma statement of income (loss) for this write-off since this expense represents a material nonrecurring charge resulting directly from the amendment and restatement of our senior credit facilities. This charge will be reflected in the second quarter of 2005 statement of income (loss).

(d)
To convert the Series A common units into preferred stock and to convert the Series B common units into Class B common stock.

42


(e)
To reflect receipt of the proceeds, net of fees and expenses and underwriters' discounts, from the sale of the Class A common stock.

(f)
To reflect the redemption of the preferred stock held by OfficeMax, which has a liquidation preference value of $36.4 million plus accrued and unpaid dividends.

(g)
To reflect the Special Dividend to holders of the Class B common stock.

(h)
To reflect the repayment of the loan from Boise Land & Timber Corp.

(i)
To record deferred income tax benefits and deferred income tax liabilities.

7.     Adjustments to Unaudited Pro Forma Condensed Statement of Income (Loss) for the Conversion to a Corporation, this Offering and the Amendment and Restatement of Our Senior Credit Facilities

        

(a)
To eliminate interest expense on the loan from Boise Land & Timber Corp.

(b)
To reduce interest expense to reflect a 50 basis point reduction in the annual interest rate on the new Tranche D term loan compared to the Tranche B term loan.

(c)
To reflect the recording of an income tax provision giving effect to our conversion.

8.     Management Equity Units

        Upon completion of this offering, all of the Series B common units of FPH will vest. In addition, of the one-half of the Series C common units that vest based solely on time served as an employee, those that were scheduled to vest within two years of this offering will vest immediately upon completion of this offering. The remaining one-half of the Series C common units vest based on performance, measured with regard to the internal rate of return earned on the investment in the Series B common units. Because all of the Series C common units are profits interest and, as such, are entitled to a share of the appreciation in our company, management will receive a number of shares of our Class A common stock in exchange for their FPH Series C common units based upon the value of our Series C common units as of the time of the offering based on an assumed initial public offering price of $            per share (the midpoint of the range set forth on the cover page of this prospectus). These shares of Class A common stock will be vested or unvested depending on whether the Series C common units for which they are exchanged are vested or unvested. The exchange does not result in additional compensation expense since it does not represent a modification of the original award. We calculated the fair value of the award as of the date of grant and are recognizing expense over the vesting periods. However, the accelerated vesting will result in the recognition of approximately $4 million of expense upon completion of this offering. This expense is a nonrecurring charge resulting directly from this offering and is not included in the pro forma adjustments.

43



9.     Pro Forma Earnings Per Share, After Giving Effect to this Offering

 
  Year ended
December 31, 2004

Pro forma net income    
Pro forma shares outstanding:    
  Basic    
  Diluted    
Pro forma earnings per share:    
  Basic    
  Diluted    

10.  Reconciliation of EBITDA by Segment to Pro Forma EBITDA by Segment

        EBITDA is the primary measure used by our chief operating decision makers to evaluate segment operating performance. The following is a reconciliation of EBITDA by segment as set forth in Note 16, Segment Information, to our audited financial statements included elsewhere in this prospectus, to Pro Forma EBITDA by segment.

 
  Paper
  Packaging and Newsprint
  Wood Products
  Building Materials Distribution
  Corporate and Other
  Boise Holdings
 
EBITDA   $ 110.4   $ 46.8   $ 245.4   $ 96.5   $ (51.7 ) $ 447.4  
Benefit costs(a)     14.2     6.5     12.0     3.5     4.6     40.8  
ESOP(b)     1.0     0.3     0.5     0.9     2.1     4.8  
COLI(c)                     (3.1 )   (3.1 )
LIFO(d)     3.8         (1.6 )           2.2  
Captive insurance(e)                     (4.0 )   (4.0 )
Restricted stock(f)     2.7     0.3     1.7     1.4     3.7     9.8  
Receivables securitization(g)                     2.2     2.2  
Wood fiber adjustment(h)     (0.7 )   (2.5 )   (6.8 )           (10.0 )
   
 
 
 
 
 
 
Pro forma EBITDA   $ 131.4   $ 51.4   $ 251.2   $ 102.3   $ (46.2 ) $ 490.1  
   
 
 
 
 
 
 

(a)
See Note 3(b) above.

(b)
See Note 3(c) above.

(c)
See Note 3(d) above.

(d)
See Note 3(a) above.

(e)
See Note 3(g) above.

(f)
See Note 3(h) above.

(g)
See Note 3(i) above.

(h)
See Note 5(e) above.

44



SELECTED HISTORICAL FINANCIAL DATA

          We have derived the selected historical financial data as of December 31, 2000 and 2001 and for the year ended December 31, 2000 and 2001 from the unaudited financial statements of Boise Forest Products Operations, which we refer to as our "predecessor," which are not included in this prospectus. We have derived the selected historical financial data as of December 31, 2002 and 2003 and October 28, 2004, for the years ended December 31, 2002 and 2003 and for the period January 1 through October 28, 2004 from the audited financial statements of our predecessor included elsewhere in this prospectus. We have derived the selected historical financial data as of December 31, 2004 and for the period October 29 through December 31, 2004 from our audited financial statements included elsewhere in this prospectus.

          The selected historical financial data set forth below should be read in conjunction with the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and accompanying notes included elsewhere in this prospectus.

 
  Predecessor
  Boise Holdings
 
 
   
   
   
   
   
  October 29
(inception)
through
December 31,
2004

 
 
  Year ended December 31,
  January 1
through
October 28,
2004

 
 
  2000
  2001
  2002
  2003
 
 
  (dollars in millions)

 
Statements of income (loss) data:                                      
Sales   $ 4,467.9   $ 4,251.7   $ 4,276.3   $ 4,653.7   $ 4,862.0   $ 872.7  
Costs and expenses(1)     4,307.3     4,292.9     4,287.1     4,652.7     4,727.3     828.7  
   
 
 
 
 
 
 
Income (loss) from operations     160.6     (41.2 )   (10.8 )   1.0     134.7     44.0  
Equity in net income (loss) of affiliates(2)     2.3     (2.8 )   (1.5 )   8.7     6.3      
Gain on sale of equity affiliate(3)                     46.5      
Foreign exchange gain (loss)     (1.1 )   (0.6 )   (0.1 )   2.7     0.9     1.2  
Interest expense(4)     (109.5 )   (93.5 )   (94.8 )   (92.9 )   (72.1 )   (22.2 )
Interest income     2.5     1.5     1.0     0.8     0.5     2.0  
   
 
 
 
 
 
 
Income (loss) before income taxes and cumulative effect of accounting change     54.8     (136.6 )   (106.2 )   (79.7 )   116.8     25.0  
Income tax (provision) benefit     (8.6 )   58.2     45.3     36.5     (47.3 )   (0.3 )
   
 
 
 
 
 
 
Income (loss) before cumulative effect of accounting change     46.2     (78.4 )   (60.9 )   (43.2 )   69.5     24.7  
Cumulative effect of accounting change, net of income tax(5)                 (4.1 )        
   
 
 
 
 
 
 
Net income (loss)(6)   $ 46.2   $ (78.4 ) $ (60.9 ) $ (47.3 ) $ 69.5   $ 24.7  
   
 
 
 
 
 
 
Balance sheet data (at end of period):                                      
Property and equipment and fiber farms, net   $ 2,404.1   $ 2,397.4   $ 2,299.0   $ 2,251.9   $ 2,191.2   $ 1,510.5  
Total assets     3,301.5     3,225.8     3,164.8     3,123.8     3,365.5     2,932.1  
Total long-term debt, including current portion and short term borrowings     1,387.5     1,276.8     1,270.4     1,271.3     1,289.1     1,980.0  
Total capital     820.1     871.2     803.7     728.7     864.8     369.8  

(1)
Costs and expenses include the following amounts, which are reflected in our statement of income (loss) as other (income) expense, net: (i) $12.7 million of costs related primarily to a one-time retention bonus OfficeMax granted our employees; (ii) 7.1 million of costs related to the sale of our predecessor's plywood and lumber facilities in Yakima, Washington in February 2004; (iii) a $14.7 million pretax charge recorded in December 2003 for the write-down of impaired assets at our predecessor's Yakima, Washington facilities; (iv) $3.6 million of costs recorded in 2003 due to the early termination of an operating lease used in connection with our predecessor's paper business; (v) a $10.9 million pretax non-cash charge in 2001 to accrue for a one-time liability related to postretirement benefits for some of our hourly workers and (vi) restructuring charges of $57.9 million in 2001 and the reversal of prior restructuring charges of $0.8 million in 2002 and 2003. Additionally, we recorded $20.2 million of costs for the period October 29 (inception)

45


(2)
Includes our predecessor's 47% interest in Voyageur Panel, which it sold in May 2004.

(3)
Includes a $46.5 million pretax gain ($28.4 million after tax) on the May 2004 sale of our predecessor's interest in Voyageur Panel.

(4)
In the predecessor periods presented, interest expense was allocated to our predecessor based on its average asset balances, which is not necessarily indicative of what interest expense would have been had our predecessor operated as a stand-alone company during these periods. For a discussion of interest on borrowings, see Note 11, Debt, to the financial statements included elsewhere in this prospectus.

(5)
Our predecessor recorded a one-time after-tax charge of $4.1 million as a cumulative effect adjustment relating to its adoption in January 2003 of SFAS No. 143, Accounting for Asset Retirement Obligations, which affected the way it accounted for landfill closure costs.

(6)
Net income (loss) per common share is not applicable for the historical periods, as there were no shares outstanding during these periods.

46



MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          As used in this Management's Discussion and Analysis of Financial Condition and Results of Operations, the term "Boise Holdings" means Boise Cascade Holdings, L.L.C. and its consolidated subsidiaries, and the terms "Boise Forest Products Operations" and "predecessor" mean the paper and forest products assets of OfficeMax Incorporated, or OfficeMax, that we acquired in the Acquisition. The terms "we," "us" and "our" mean Boise Holdings with respect to periods after the Acquisition and Boise Forest Products Operations with respect to periods prior to the Acquisition.

          The statements regarding industry outlook and our expectations with respect to our performance, liquidity and capital resources and any other non-historical statements in the discussion and analysis are forward-looking. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Risk Factors." Our actual results may differ materially from those contained in or implied by any of these forward-looking statements. You should read the following discussion together with the sections entitled "Risk Factors," "Forward-Looking Statements," "Unaudited Pro Forma Financial Data" and "Selected Historical Financial Data."

Overview

          We are a diversified North American paper and forest products company. We conduct our business in the following four operating segments:

          Historically, our businesses were operated by OfficeMax. On October 29, 2004, we acquired OfficeMax's paper and forest products assets, other than its timberland operations, for an aggregate purchase price of $2,196.5 million, including approximately $140 million of related fees and expenses (the "Acquisition"). The purchase price is subject to adjustment based on amounts paid under the additional consideration agreement that we entered into as part of the Acquisition. For information on the additional consideration agreement, see "—Effects of the Acquisition—Material Ongoing Agreements with OfficeMax—Additional Consideration Agreement." Concurrently with the Acquisition, Boise Land & Timber Holdings Corp., an entity that is majority owned by our majority shareholder, Forest Products Holdings, L.L.C., or FPH, acquired OfficeMax's timberlands operations. Since the timberlands operations were not acquired by us and were never part of our business, we do not discuss the results of the timberlands operations in this Management's Discussion and Analysis of Financial Condition and Results of Operations and they are not included in the financial statements included elsewhere in this prospectus.

Effects of the Acquisition

          We accounted for the Acquisition using the purchase method of accounting. As a result, the purchase price of $2,196.5 million (including fees and expenses) was allocated to the tangible and

47


intangible assets acquired and liabilities assumed based on their respective fair values as of the date of the Acquisition. The initial purchase price allocations may be adjusted within one year of the purchase date for changes in estimates of the fair value of assets acquired and liabilities assumed. We have not completed the assessment of the fair value of our fiber farms and may allocate a higher portion of the purchase price to those assets. An increase in those values would reduce goodwill. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of October 29, 2004.

 
  (millions)

Current assets   $ 1,045.8
Property and equipment     1,456.2
Fiber farms and timber deposits     43.5
Deferred financing costs     85.9
Goodwill     4.1
Intangible assets     34.7
Other assets     9.9
   
  Assets acquired     2,680.1
   

Current liabilities

 

 

326.2
Long-term liabilities     157.4
   
  Liabilities assumed     483.6
   
Net assets acquired   $ 2,196.5
   

          The excess of the purchase price over the fair values of assets acquired and liabilities assumed was allocated to goodwill. We recorded $1.5 million, $0.9 million, $1.4 million and $0.3 million of goodwill in our Paper, Packaging & Newsprint, Wood Products and Building Materials Distribution segments, respectively.

          The amount allocated to intangible assets was attributed to the following categories:

 
  (millions)

Trade names and trademarks   $ 22.8
Customer relationships     6.8
Technology     5.1
   
    $ 34.7
   

          Compared with the predecessor periods presented, the allocation of the purchase price has resulted in a decrease in depreciation expense related to our acquired assets, because we allocated a lower value to the acquired assets. We also assigned new estimated useful lives, resulting in an average of 11.5 years, compared with nine years for our predecessor. We wrote up the value of the inventory by $20.2 million, resulting in increased costs and expenses recognized by us upon the sale of the inventory during the period October 29 through December 31, 2004.

          In connection with the Acquisition, we are evaluating the acquired facilities and organizational structure. In accordance with the provisions of Emerging Issues Task Force, or EITF, 95-3, Recognition of Liabilities in Connection With a Purchase Business Combination, exit activities in connection with the Acquisition will increase goodwill. We have one year from the date of the Acquisition to develop our restructuring plans and adjust goodwill. As of December 31, 2004, we had finalized a portion of our plans in sufficient detail to meet the requirements of EITF 95-3 to

48


record a liability. Accordingly, we recorded a reserve of $14.3 million, most of which related to severance costs for 310 employees. Of that amount, we recorded $7.3 million in our Paper segment, $0.6 million in our Packaging & Newsprint segment, $1.8 million in our Wood Products segment and $4.6 million in our Corporate and Other segment. Most of these costs are expected to be paid in 2005.

          At December 31, 2004, approximately $12.8 million of the 2004 restructuring reserves were included in accrued liabilities, compensation and benefits and $0.5 million was included in accrued liabilities, other. Restructuring reserve liability account activity related to these 2004 charges is as follows:

 
  Severance
  Other
  Total
 
 
  (millions)

 
2004 restructuring reserve   $ 13.8   $ 0.5   $ 14.3  
Charges against reserve     (1.0 )       (1.0 )
   
 
 
 
Restructuring reserve at December 31, 2004   $ 12.8   $ 0.5   $ 13.3  
   
 
 
 

          We expect to complete our restructuring plans by the end of the second quarter of 2005. When those plans are finalized, we expect to record additional restructuring liabilities and increase goodwill.

          To finance the Acquisition, we incurred $1,330.0 million of term borrowings under our senior credit facilities and issued $250.0 million of senior floating rate notes and $400.0 million of senior subordinated notes. In February 2005, we prepaid $412.0 million of our term borrowings, primarily with the proceeds of a related-party loan from Boise Land & Timber Corp., an affiliate that is majority owned by FPH, and the repayment by Boise Land & Timber Corp. of a loan we had previously made to it. The principal amount of the related-party loan, which initially was $264.8 million, is subject to adjustment based on transactions between us and Boise Land & Timber Corp. Our leverage may make us more vulnerable to a downturn in our business, the paper and forest products industry or the economy in general.

          In connection with the Acquisition, we entered into the following agreements with OfficeMax that could affect our results of operations in future periods:

          Paper Supply Agreement.    Under this agreement, OfficeMax is required to purchase from us all of its North American requirements for cut-size office paper, to the extent we choose to supply such paper to them, through December 2012, at prices approximating market prices. OfficeMax's purchase obligations under the agreement will phase out over a four-year period beginning one year after the delivery of notice of termination, but not prior to December 31, 2012.

          Additional Consideration Agreement.    Under this agreement, we will adjust the purchase price for the Acquisition based on changes in paper prices over the six-year period following the closing of the Acquisition. OfficeMax has agreed to pay us $710,000 for each dollar by which the average market price per ton of a specified benchmark grade of cut-size office paper during any twelve-month period ending on an anniversary of the closing of the Acquisition, or the annual paper price, is less than $800 per ton, and we have agreed to pay $710,000 to OfficeMax for each dollar by which the annual paper price exceeds $920 per ton. Neither party will be obligated to make a payment under the agreement in excess of $45 million in any one year. Payments are also subject to an aggregate cap of $125 million, which declines to $115 million for the period ending on

49



October 29, 2009, and $105 million for the period ending on October 29, 2010, and, in each case, are calculated on a net basis. Any payments made or received pursuant to the additional consideration agreement will be treated as adjustments to the purchase price for the Acquisition and, therefore, will not be reported in our statement of income (loss) but will be included in consolidated EBITDA for purposes of certain covenants under our debt instruments.

          We operate our business using five reportable segments: Paper, Packaging & Newsprint, Wood Products, Building Materials Distribution and Corporate and Other. These segments represent distinct businesses that are managed separately because of differing products and services. Each of these businesses requires distinct operating and marketing strategies. Management reviews the performance of the company based on these segments.

          Prior to the Acquisition, OfficeMax operated our business within three of its reportable segments: Boise Paper Solutions (which included both the paper and packaging and newsprint businesses), Boise Building Solutions (which included both the building products manufacturing and building materials distribution businesses) and Corporate and Other. We have recast the financial information of our predecessor in this prospectus to conform to our current segments.

          The predecessor financial statements treat our participants in OfficeMax's pension plans as participants in multiemployer plans. Accordingly, no assets or liabilities related to OfficeMax's defined benefit pension plans in the predecessor balance sheet. OfficeMax transferred sufficient assets from its employee defined benefit pension plans to fund our accumulated benefit obligation for the employees of the acquired businesses at a 6.25% discount rate, and as a result, we are not required to make any contributions in 2005. However, we may elect to make voluntary contributions in 2005. At December 31, 2004, our balance sheet reflects an unfunded net projected benefit obligation of $114.4 million, assuming a 5.75% discount rate and a 4.25% rate of compensation increase. In addition, under the terms of the asset purchase agreement, OfficeMax retained all pension costs related to employees who retired or were terminated on or before July 31, 2004, postretirement benefits costs related to employees who retired or were terminated prior to the Acquisition, and all pension and postretirement benefit costs related to active OfficeMax employees. As a result, we expect that our annual pension expense in future periods will be less than amounts included in the predecessor financial statements.

          We have historically operated as business units of OfficeMax and not as a stand-alone company. Financial information for Boise Forest Products Operations that is included in this Management's Discussion and Analysis of Financial Condition and Results of Operations has been derived from the historical consolidated financial statements of OfficeMax and includes the assets, obligations and activities of OfficeMax for Boise Forest Products Operations. The predecessor financial information included herein may not reflect what our results of operations, financial position and cash flows would have been had we operated as a separate, stand-alone company without the shared resources of OfficeMax for the periods presented and may not be indicative of our future results of operations, financial position and cash flows.

          The predecessor financial information included in this Management's Discussion and Analysis of Financial Condition and Results of Operations includes amounts specifically attributable to Boise Forest Products Operations and a portion of OfficeMax's shared corporate general and administrative expenses. These shared services include, but are not limited to, finance, accounting,

50



legal, information technology and human resource functions. Some OfficeMax corporate costs relate solely to Boise Forest Products Operations and were allocated totally to these operations in the predecessor financial information included in this Management's Discussion and Analysis of Financial Condition and Results of Operations. Shared corporate general and administrative expenses that were not specifically attributable to Boise Forest Products Operations were allocated based on average sales, assets and labor costs. We believe these allocations are a reasonable reflection of the use of the shared services of OfficeMax. However, the amounts could differ from amounts that would have resulted if we had operated on a stand-alone basis and are not necessarily indicative of costs to be incurred in the future.

          OfficeMax transferred substantially all of the legacy corporate functions that were employed with respect to Boise Forest Products Operations to us in connection with the Acquisition. We and OfficeMax entered into a mutual administrative services agreement, pursuant to which we and OfficeMax exchange certain accounting and financial management, legal and human resource services for terms ending between two and fourteen months after the Acquisition. Substantially all of these services are provided by us for OfficeMax. Fees for substantially all of the services provided under this agreement equal the provider's cost. We eliminated some of the costs of these functions at or immediately following closing and expect to eliminate additional costs currently being charged to OfficeMax upon the termination of the transition service period. Our reductions in costs have been reflected in the predecessor financial information through the allocation of costs to OfficeMax. However, there can be no assurance that we will be able to terminate the costs associated with these functions as planned. In the event we are unable to eliminate such functions, our actual operating costs will be higher than those reflected in the predecessor financial information.

          Our predecessor participated in OfficeMax's centralized cash management system. Cash receipts attributable to our operations were collected by OfficeMax, and cash disbursements were funded by OfficeMax. Cash advances necessary to fund our major improvements to, and replacements of, assets, acquisitions and expansion, to the extent not provided through internally generated funds, were provided by OfficeMax's cash or funded with debt. As such, the amounts of cash and cash equivalents recorded on our predecessor balance sheet do not represent the amounts required or generated by our businesses. In each of the periods presented in the predecessor financial information, OfficeMax's total debt and related interest expense were allocated to us based on our average asset balances. We believe the allocations of debt and interest expense are a reasonable reflection of our debt position and interest costs. However, the amounts are not necessarily indicative of debt balances and interest costs in the future. In connection with the Acquisition, we incurred a substantial amount of indebtedness, interest expense and repayment obligations. For more information, see "—Liquidity and Capital Resources" in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

          For the period October 29 through December 31, 2004, most of our businesses were held and operated by limited liability companies, which are not subject to entity-level federal income taxation. The taxes in respect to these operations are payable by our equity holders in accordance with their respective ownership percentage. Boise Holdings and affiliates have made cash distributions to permit the members of Boise Holdings and affiliates to pay these taxes. Both our senior credit facilities and the indenture governing our notes permit these distributions.

          In addition to the businesses and assets held and operated by limited liability companies, there are small corporations that are subject to state and local income taxes. For the period October 29 through December 31, 2004, these corporations accrued income taxes of $329,000, which consisted of $207,000 accrued for U.S. federal taxes, $58,000 accrued for U.S. state taxes

51



and $64,000 accrued for Canadian taxes. There are no deferred tax assets or liabilities for these corporations.

          In the predecessor periods presented, Boise Forest Products Operations results were included in the consolidated income tax returns of OfficeMax. However, in the predecessor financial statements, income taxes were provided based on a calculation of the income tax expense that would have been incurred if we had operated as a separate taxpayer. Income taxes have been provided for all items included in the statements of income (loss), regardless of when such items were reported for tax purposes or when the taxes were actually paid or refunded.

          Historically, we have met a significant part of our fiber needs through purchases, at prices that approximated market prices, from OfficeMax's timberlands operations, which in October 2004 were acquired from OfficeMax by Boise Land & Timber Holdings Corp., or Timber Holdings, an affiliate that is majority owned by FPH. In February 2005, Timber Holdings sold the timberlands operations to Forest Capital Partners, LLC, an unaffiliated party (the "Timberlands Sale"). In connection with the Timberlands Sale, we entered into a series of fiber supply agreements with Forest Capital. These fiber supply agreements require Forest Capital to sell specified amounts of timber to us at prices that approximate market prices. However, we believe that our future cost of fiber may exceed those incurred during historical periods due primarily to increased costs associated with the procurement of fiber, such as higher transportation costs and costs related to identifying potential vendors. We estimate that our wood fiber costs would have been $8 million to $12 million higher in 2004 had the Timberlands Sale occurred on January 1, 2004. We believe that we will be able to satisfy our timber requirements through a combination of purchases under supply agreements, including our fiber supply agreements with Forest Capital, and open-market purchases.

Factors that Affect our Operating Results

          The paper and forest products industry is highly cyclical. Over the past two decades, demand for our products has correlated with general economic conditions. The majority of our products are commodities whose prices are determined by industry supply and demand. In addition, our businesses are capital intensive and a large portion of our operating costs is fixed. As a result, relatively modest changes in our sales volumes can have a significant impact on our overall operating profitability.

          Our cash flows and earnings are influenced by a variety of factors, including the following:

          These factors have historically produced cyclicality in our results of operations, and we expect this cyclicality to continue in future periods.

          Most of our products are widely available and can be readily produced by our competitors. Because commodity products have few distinguishing qualities from producer to producer, competition for these products is primarily based on price, which is determined by supply relative to demand. Generally, market conditions beyond our control determine the price for our commodity products, and the price for any one or more of these products may fall below our cash production

52


costs. Therefore, our profitability with respect to these products depends on managing our cost structure, particularly raw materials and energy prices, which also exhibit commodity characteristics.

          Not all of our products are commodities. Our value-added papers and EWP are differentiated from competing products based on superior quality and product design, as well as related customer service. In the case of these value-added products, we are generally able to influence price based on the strength of differentiation and levels of customer service, and are generally able to sell these products at higher margins than our commodity products. In order to reduce our sensitivity to the cyclicality of our industry, a fundamental component of our strategy is to increase production of value-added papers and EWP. However, even value-added papers and EWP are susceptible to commodity dynamics.

          The overall level of demand for the products we make and distribute, and consequently our financial results, are affected by, among other things, manufacturing activity, construction, employment and consumer spending. Accordingly, we believe that our financial results depend in large part on general macroeconomic conditions in North America, as well as on regional economic conditions in the geographic markets in which we operate. While no single product line drives our overall financial performance, individual product lines are influenced by conditions in their respective industries. For example:

          Industry supply of commodity paper and wood products is affected by the number of operational or idled facilities, the building of new capacity or the shutting down of existing capacity. Capacity also tends to increase gradually over time without significant capital expenditures, as

53


manufacturers implement production efficiencies. Generally, more capacity is added or employed when supply is tight and margins are relatively high, and capacity is idled or eliminated when supply significantly exceeds demand and margins are poor. Margins tend to decrease with lower capacity utilization because of downward price pressure and because fixed costs attributable to a product are spread across lower volumes.

          While new capacity additions are constrained by the high capital investment and long lead times required to plan, obtain regulatory approvals for and build a new mill, a favorable pricing environment may prompt manufacturers to initiate expansion projects. For example, in response to the strong demand for EWP, some EWP manufacturers, including us, have initiated capacity expansion projects.

          In a weak pricing environment, capacity rationalization is typically determined on a mill-by-mill basis. In order to avoid substantial cash costs in connection with idling or closing a mill, some producers will choose to continue to operate at a loss, sometimes even a cash loss, which can prolong weak pricing environments due to oversupply. Large producers with a mix of high and low cost mills have the financial strength to withstand prolonged market downturns, either operating or idling their higher cost mills based on their expectations of realizing profits from a market recovery. Larger producers have become more disciplined and have responded to the most recent economic decline by rationalizing capacity. From 2000 to 2003, North American uncoated free sheet, containerboard and newsprint capacities have declined by 7%, 3% and 6%, respectively, according to the 2003-2004 Pulp & Paper Global Fact & Price Book.

          Industry supply of commodity papers and wood products is also influenced by the level of imports and overseas production capacity, which has grown in recent years and is expected to continue to grow. While the weakness of the U.S. dollar has mitigated the level of imports in recent years, a strengthening in the U.S. dollar is likely to increase imports of commodity papers and wood products from overseas, thereby offsetting domestic capacity rationalization and putting downward pressure on prices.

          Improving economic trends have increased demand for uncoated free sheet and, combined with the reduction in North American uncoated free sheet capacity and the negative impact on imports of the weak U.S. dollar, have recently led to an improvement in uncoated free sheet prices. According to RISI, the price of 20 lb. copy paper, a benchmark grade of uncoated free sheet, increased from $730 per ton in December 2003 to $805 per ton in February 2005, an increase of 10%. Prices for building products, especially plywood and lumber, were at or near historical highs during 2004, primarily due to strong new housing starts.

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          Set forth below are sales volumes and average net selling prices for our principal products by segment for the years ended December 31, 2002, 2003 and 2004:

 
  Year ended December 31,
 
  2002
  2003
  2004
Sales Volumes                  
Paper     (thousands of short tons)
Uncoated free sheet     1,425     1,396     1,495
Containerboard (medium)     123     126     133
Market pulp and other     179     146     165
   
 
 
      1,727     1,668     1,793
   
 
 

Packaging & Newsprint

 

 

 

 

 

 

 

 

 
Containerboard (linerboard)     532     524     521
Newsprint     406     416     430
   
 
 
      938     940     951
   
 
 

Wood Products

 

 

(millions)
LVL (cubic feet)     7.8     9.8     11.9
I-joists (equivalent lineal feet)     166     200     223
Plywood (sq. ft.) (3/8" basis)     1,788     1,890     1,758
Lumber (board feet)     395     364     363
Particleboard (sq. ft.) (3/4" basis)     189     153     156

Building Materials Distribution

 

 

(dollars in millions)
Sales   $ 1,696.1   $ 2,047.8   $ 2,844.1

Average Net Selling Prices

 

 

 

 

 

 

 

 

 
Paper     (dollars per short ton)
Uncoated free sheet   $ 722   $ 721   $ 727
Containerboard (medium)     371     360     399
Market pulp and other     324     355     399

Packaging & Newsprint

 

 

 

 

 

 

 

 

 
Containerboard (linerboard)   $ 336   $ 331   $ 367
Newsprint     363     397     436

Wood Products

 

 

(dollars per unit)
LVL (100 cubic feet)   $ 1,483   $ 1,463   $ 1,673
I-joists (1,000 equivalent lineal feet)     886     874     986
Plywood (1,000 sq. ft.) (3/8" basis)     229     267     325
Lumber (1,000 board feet)     466     431     546
Particleboard (1,000 sq. ft.) (3/4" basis)     239     236     304

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          Our major costs of production are labor, wood fiber, energy and chemicals. The relative importance of these costs varies by segment. Given the significance of raw materials and energy costs to our total operating expenses and our limited ability to control these costs as compared to other operating costs, volatility in these costs can materially affect our margins. In addition, the timing and degree of price cycles of raw materials and energy differ with respect to each type of raw material and energy we use.

          Labor.    Our labor costs tend to increase steadily due to inflation in health care as well as wage costs. However, labor costs are not as volatile as our energy and wood fiber costs. See "Business — Employees."

          Wood fiber.    Our primary raw material is wood fiber, which, during 2004, accounted for 17%, 13% and 30% of the aggregate amount of materials, labor and other operating expenses and fiber costs from related parties for our Paper, Packaging & Newsprint and Wood Products segments, respectively. Our primary sources of wood fiber are timber and byproducts of timber, such as wood chips, wood shavings and sawdust. Historically, we acquired fiber from the timberlands operations and from outside sources. Since the Timberlands Sale, we have acquired substantially all of our fiber from outside sources, including pursuant to supply agreements with the buyer of the timberlands operations. We believe that our future cost of fiber may exceed that of historical periods due primarily to increased costs associated with the procurement of fiber, such as higher transportation costs and costs related to identifying potential vendors. We convert the wood fibers to pulp at our paper mills. On an aggregate basis, we are able to produce all of our pulp needs, generally purchasing and selling similar amounts on the open market. During 2003, we met 47% of our wood fiber requirements through the timberlands operations and internal wood fiber sources, 42% through private sources and 11% through government sources. During 2002, these percentages were 49%, 39% and 12%, respectively, and in 2001, they were 44%, 47% and 9%, respectively. Wood fiber is a commodity and prices for wood fiber have historically been cyclical due to changing levels of demand. In addition, timber supply may be limited by fire, insect infestation, disease, ice storms, wind storms, flooding, other weather conditions and other natural and man-made causes. In recent years, declines in the timber supply have been severe enough to cause the closure of numerous facilities in some of the regions in which we operate. Any sustained undersupply and resulting increase in wood fiber prices would increase our operating costs. Prices for our products might not reflect increases in wood fiber prices and, as a result, our operating margins would decrease. Our sensitivity to these fluctuations may materially increase due to the Timberlands Sale.

          Energy.    Energy prices, particularly for electricity, natural gas and fuel oil, have been volatile in recent years and currently exceed historical averages. During 2004, energy costs comprised approximately 13%, 12% and 3% of materials, labor and other operating expenses for our Paper, Packaging & Newsprint and Wood Products segments, respectively. When energy prices rise, our fuel costs increase, leading to higher costs and lower margins.

          Chemicals.    Important chemicals we use in the production of our products include precipitated calcium carbonate, sodium chlorate, sodium hydroxide, dyes, resins and adhesives. During 2004, purchases of chemicals comprised approximately 12%, 3% and 5% of materials, labor and other operating expenses for our Paper, Packaging & Newsprint and Wood Products segments, respectively.

          Raw material and energy purchasing and pricing.    We purchase raw materials and energy used in the manufacture of our products in both open market sales and through long-term requirements contracts. These contracts are generally with regional suppliers, who agree to supply

56



all of our needs for a certain raw material or energy at one of our facilities. These contracts normally contain minimum purchase requirements and are for terms of various length. They also contain price adjustment mechanisms which take into account changes in market prices. Therefore, although our long-term contracts provide us with more stable supplies of raw materials and energy, in many cases they will not alleviate fluctuations in market prices, and our costs will rise if prices for our raw materials or energy rise.

          Our margins are impacted by how much and how quickly we can pass price increases in raw materials and energy through to our customers. Our ability to pass through price increases depends on several factors which vary based on product line. Generally, if energy prices rise, we are not able to pass the incremental cost to customers. However, if wood fiber prices rise, we can generally increase our prices for our products.

Divestitures

          In May 2004, we sold our 47% interest in Voyageur Panel, which owned an oriented strand board plant in Barwick, Ontario, Canada, to Ainsworth Lumber Co. Ltd. for $91.2 million in cash. We recorded a $46.5 million pretax gain in other (income) expense, net in the Wood Products segment. This item increased net income after tax by $28.4 million during 2004.

          We had an agreement with Voyageur Panel under which we operated its plant and marketed its product. We have historically accounted for Voyageur Panel under the equity method. Accordingly, our results do not include Voyageur Panel sales. For the years ended December 31, 2004 and 2003, segment results included $6.3 million and $8.7 million, respectively, of equity in earnings, compared with $0.6 million of equity losses during 2002.

          In February 2004, we sold our plywood and lumber facilities in Yakima, Washington. In connection with the sale, we recorded $7.1 million of costs and a $7.4 million reduction in our estimated LIFO reserve for the year ended December 31, 2004. In December 2003, we recorded a $14.7 million pretax charge for the write-down of impaired assets at these facilities after our internal review of the operations and indications of the current market value of such operations.

Results of Operations

          The following tables set forth our results of operations in dollars and as a percentage of sales for the predecessor years ended December 31, 2003 and 2002 and for the predecessor period January 1 through October 28, 2004; and of Boise Holdings for the period October 29 through December 31, 2004. We have not included period-to-period comparisons for net income (loss) or

57



other items below income (loss) from operations, as we believe the comparisons with predecessor periods are not relevant for an understanding of our business following the Acquisition.

 
  Predecessor
  Boise Holdings
   
 
 
  Year ended
December 31

   
  October 29 (inception) through December 31, 2004
   
 
 
  January 1 through October 28, 2004
  Combined Year ended December 31, 2004
 
 
  2002
  2003
 
 
  (in millions)

 
Sales                                
Trade   $ 3,864.3   $ 4,217.3   $ 4,417.4   $ 780.0   $ 5,197.4  
Related parties     412.0     436.4     444.6     92.7     537.3  
   
 
 
 
 
 
      4,276.3     4,653.7     4,862.0     872.7     5,734.7  
   
 
 
 
 
 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Materials, labor and other operating expenses     3,653.5     3,982.2     4,122.1     733.5     4,855.6  
Fiber costs from related parties     110.8     113.8     95.5     24.5     120.0  
Depreciation, amortization and depletion     233.8     229.8     193.8     20.0     213.8  
Selling and distribution expenses     203.6     224.4     211.3     40.1     251.4  
General and administrative expenses     73.6     69.7     79.3     10.6     89.9  
Other (income) expense, net     11.8     32.8     25.3         25.3  
   
 
 
 
 
 
      4,287.1     4,652.7     4,727.3     828.7     5,556.0  
   
 
 
 
 
 
Income (loss) from operations   $ (10.8 ) $ 1.0   $ 134.7   $ 44.0   $ 178.7  
   
 
 
 
 
 

 


 

(percentage of sales)


 
Sales                                
Trade     90.4 %   90.6 %   90.9 %   89.4 %   90.6 %
Related parties     9.6     9.4     9.1     10.6     9.4  
   
 
 
 
 
 
      100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
   
 
 
 
 
 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Materials, labor and other operating expenses     85.4 %   85.6 %   84.8 %   84.1 %   84.7 %
Fiber costs from related parties     2.6     2.4     2.0     2.8     2.1  
Depreciation, amortization and depletion     5.5     4.9     4.0     2.3     3.7  
Selling and distribution expenses     4.8     4.8     4.3     4.6     4.4  
General and administrative expenses     1.7     1.5     1.6     1.2     1.6  
Other (income) expense, net     0.3     0.8     0.5         0.4  
   
 
 
 
 
 
      100.3 %   100.0 %   97.2 %   95.0 %   96.9 %
   
 
 
 
 
 
Income (loss) from operations     (0.3 )%       2.8 %   5.0 %   3.1 %
   
 
 
 
 
 

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          The financial statements for the year ended December 31, 2004 present the financial results of Boise Holdings for the period October 29 (inception) through December 31, 2004, and the financial results of Boise Forest Products Operations for the years prior to 2004 and for the period January 1 through October 28, 2004. When we refer to 2004 results in this prospectus, we are referring to the combined results of Boise Holdings for the period October 29 through December 31, 2004 and Boise Forest Products Operations for the period January 1 to October 28, 2004.

          Total sales increased $1.1 billion, or 23%, to $5.7 billion in 2004 from $4.7 billion in 2003. Sales in all of our segments increased during 2004, compared to 2003. Paper sales increased 9% due to increased sales volumes and an increase in weighted average paper prices. Packaging & Newsprint sales increased 9% due primarily to a 10% increase in weighted average prices. Wood Products sales increased 22% due to plywood and lumber prices that were 22% and 27%, respectively, higher than 2003 prices, as well as increased prices for and sales volumes of our engineered wood products. Building Materials Distribution sales rose 39% due to a 15% increase in sales volume and 21% higher prices.

          Paper.    Sales increased $113.4 million, or 9%, to $1.4 billion in 2004 from $1.3 billion in 2003. The increase was due primarily to a 7% increase in sales volume, as sales volumes were up for all of our paper product categories. Sales volumes increased in 2004 compared to 2003 due to a stronger economy and weaker U.S. dollar, which resulted in lower paper imports. In addition, in 2004 we began to sell our paper products to OfficeMax's retail operation. The volume of our office paper sold through OfficeMax increased 23% in 2004 to approximately 701,000 tons. The increase in sales volume, including the increase in our sales to OfficeMax, led to a 71% decrease in market-related downtime, from 172,000 tons of market-related downtime in 2003 to 50,000 tons of market-related downtime in 2004. All market-related downtime in 2004 and 2003 related to uncoated free sheet. Consistent with our strategy, the volume of value-added papers sold increased 14% in 2004 to approximately 426,000 tons. Average paper prices rose 2% in 2004 compared to 2003. Average prices for uncoated free sheet and containerboard increased 1% and 11%, respectively, in 2004 compared to 2003 prices.

          Packaging & Newsprint.    Sales increased $56.4 million, or 9%, to $694.5 million in 2004 from $638.1 million in 2003. The increase was due to a 10% increase in average linerboard and newsprint prices. Sales volume of corrugated containers and newsprint increased 1% in 2004 over 2003, while containerboard sales volume increased 2%. Maintenance downtime in linerboard more than doubled to 24,000 tons in 2004 due to a planned replacement of the linerboard machine dryer hood at our DeRidder, Louisiana mill.

          Wood Products.    Sales increased $244.3 million, or 22%, to $1.4 billion in 2004 from $1.1 billion in 2003. The increase was due to strong product pricing. Sales of engineered wood products increased 36% in 2004 due to increased prices and sales volume. As a result of increased demand from new residential construction and historically low interest rates in 2004, average plywood prices rose 22%, and average lumber prices rose 27%, compared with 2003. At the same time, unit sales volume for plywood decreased 7% and the volume of lumber sold remained relatively flat with 2003. The decrease in the volume of plywood sold was due to the sale of the Yakima, Washington, facilities in February 2004. The sale of the Yakima facilities did not have a material impact on our 2004 results of operations.

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          Building Materials Distribution.    Sales increased $796.4 million, or 39%, to $2.8 billion in 2004 from $2.0 billion in 2003. Prices increased 21%, and sales volume increased 15%. The increase in sales volume and prices resulted from a strong housing market and increased volume from new and upgraded facilities.

          Materials, labor and other operating expenses increased $873.3 million, or 22%, to $4.9 billion in 2004 from $4.0 billion in 2003. Total manufacturing costs increased 1% and 2% in our Paper and Packaging & Newsprint segments, respectively, primarily because of increased fiber costs. In 2004, Wood Products also experienced higher delivered-log costs. As a percentage of sales, however, materials, labor and other operating expenses decreased to 84.7% in 2004 from 85.6% in 2003. The percentage decrease was primarily attributable to increased sales in our Wood Products segment.

          Selling and distribution expenses increased $27.1 million, or 12%, to $251.4 million in 2004 from $224.4 million in 2003. As a percentage of sales, however, selling and distribution expenses decreased to 4.4% in 2004 from 4.8% in 2003 because of higher sales in our Wood Products and Building Materials Distribution segments.

          General and administrative expenses increased $20.2 million, or 29%, to $89.9 million in 2004 from $69.7 million in 2003, due primarily to higher pension, healthcare and benefit expenses. Because of the significant increase in sales in 2004 compared to 2003, general and administrative expenses as a percentage of sales increased only 0.1% in 2004, from 1.5% in 2003 to 1.6% in 2004.

          Other (income) expense, net, decreased $7.5 million, from $32.8 million of expense in 2003 to $25.3 million of expense in 2004. Other (income) expense, net, in 2004 included $12.7 million of expense related to a one-time retention bonus OfficeMax granted to our employees and associated incremental ESOP expense, $7.1 million of expenses related to the sale of our plywood and lumber operations in Yakima, Washington, and a $3.0 million loss on sale of assets, offset by other miscellaneous income and expense items. Other (income) expense, net, in 2003 included a $14.7 million pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington, $3.6 million of costs associated with the September 2003 early termination of an operating lease used in connection with our Paper segment, $4.6 million for the write-down of miscellaneous assets and a $4.6 million loss on sale of assets, offset by other miscellaneous income and expense items.

          Each of our operating segments reported increased income in 2004, despite higher pension, healthcare and benefit expenses. Our Wood Products segment increased its income in 2004 over 2003 at a greater percentage than any of our other operating segments. In our Wood Products segment, income increased by $175.1 million, due primarily to increased prices for plywood, lumber and engineered wood products. In addition, Wood Products included a $46.5 million pretax gain for the sale of our 47% interest in Voyageur Panel, which was completed in 2004. Income also increased in our Building Materials Distribution segment, due to increased prices and sales volume. Improved results in our Paper segment resulted primarily from increased sales volumes and paper prices.

          Paper.    Segment results improved $7.3 million, or 31%, to a $16.4 million loss in 2004 from a $23.7 million loss in 2003. The improved results were primarily attributable to a 7% increase in sales volume and a 2% increase in paper prices. Offsetting the price and volume increases were $2.8 million of costs and/or lost income due to mill damage and lost production at our Alabama paper mill related to disruption from hurricanes in September, adverse weather conditions and

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operating difficulties experienced in first quarter 2004 and increased year-over-year manufacturing costs. Relative to the prior year, the largest manufacturing cost increases were fiber costs, which increased 9% due to higher purchased pulp and wood prices.

          Packaging & Newsprint.    Segment results improved $21.1 million, or 141%, to $6.1 million of income in 2004 compared to a $15.0 million loss in 2003. The weighted average selling prices for linerboard and newsprint were 10% greater than in 2003. Partially offsetting the favorable price and volume increases were increased total manufacturing costs.

          Wood Products.    Fueled by continued strong plywood and lumber markets, Wood Products income increased $175.1 million to $218.6 million of income in 2004, compared with $43.5 million of income in 2003. In 2004, we recorded a $46.5 million pretax gain for the sale of our predecessor's 47% interest in Voyageur Panel to Ainsworth Lumber Co. Ltd. for $91.2 million of cash. This item increased net income after taxes by $28.4 million. This gain was offset by $7.1 million of expenses related to the sale of our Yakima, Washington, plywood and lumber facilities. Prior to the sale of Voyageur Panel, our predecessor accounted for our interest in Voyageur Panel under the equity method. Accordingly, segment results do not include the gain on this sale but do include $6.3 million of equity in earnings in 2004, compared with $8.7 million of equity in earnings in 2003 and $0.6 million of equity in losses in 2002. Before the gain recorded for the sale of our interest in Voyageur Panel, segment income increased 296% to $172.0 million, primarily due to increased product prices.

          Building Materials Distribution.    Segment results improved $41.2 million, or 86%, to $88.9 million of income in 2004 from $47.7 million of income in 2003. The increase resulted from strong plywood and lumber markets. Prices increased 21%, and sales volumes increased 15%.

          Total sales increased $377.5 million, or 9%, to $4.7 billion in 2003 from $4.3 billion in 2002. The increase was due to increased sales in our Wood Products and Building Materials Distribution businesses and a slight increase in our Packaging & Newsprint segment, offset by a 2% decline in sales in our Paper business due primarily to lower sales volume. Packaging & Newsprint sales increased 1% because average paper prices increased 3%. Wood Products sales increased 11% because of higher plywood prices and increased EWP sales (due primarily to increased volume). Building Materials Distribution sales increased 21% due to increased commodity prices and volume.

          Paper.    Sales decreased $28.0 million, or 2%, to $1,257.1 million in 2003 from $1,285.1 million in 2002, primarily because weak demand led to a 2% decrease in sales volume. Sales volume decreased despite a 4% increase in the volume of our office paper sold through OfficeMax in 2003. Weak demand throughout 2003 led to market-related downtime of nearly 172,000 tons, up 64% from the downtime taken in 2002. The market-related downtime related to uncoated free sheet. Average prices were relatively flat in 2003, compared to 2002 prices.

          In 2003, volume of specialty papers sold increased 3% to approximately 374,000 tons. Overall, the average net selling price of the specialty grades we sold in 2003 was $181 per ton higher than the average net selling price of our uncoated commodity grades.

          Packaging & Newsprint.    Sales increased $4.7 million, or 1%, to $638.1 million in 2003, compared to $633.4 million in 2002, primarily because average sales prices increased 3%. Sales volume for newsprint increased 3%, while linerboard sales volume decreased 2%. Average prices for newsprint increased 9% from 2002 prices, while linerboard prices decreased 1%.

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          Wood Products.    Sales increased $111.5 million, or 11%, to $1.1 billion in 2003 from $1.0 billion in 2002. This increase was due to a strong building season beginning late in the second quarter of 2003 and continuing through the first two months of the fourth quarter of 2003, after a slow start earlier in the year due to adverse weather conditions, particularly in the eastern United States. Sales of EWP increased 20% in 2003, compared with 2002, due to increased sales volume. As a result of increased demand from housing construction, prices for our major grades of structural panels reached record levels in 2003. Average plywood prices and sales volume increased 17% and 6%, respectively, in 2003. In contrast, average prices and sales volume for our lumber products, which are mostly ponderosa pine, declined 8% due to an unfavorable balance of supply and demand during the first half of 2003. Lumber prices began to recover late in 2003.

          Building Materials Distribution.    Sales increased 21% in 2003, compared with 2002, due to strong pricing coupled with an 11% increase in unit sales volume. The increase in unit sales volume resulted from a stronger building season in 2003, compared with 2002.

          Materials, labor and other operating expenses increased $328.7 million, or 9%, to $4.0 billion for 2003 compared to $3.7 billion in 2002, because of increased unit manufacturing costs in our Paper and Packaging & Newsprint segments due to higher wood fiber, chemical and pension costs, partially offset by favorable wood fiber costs in our Wood Products segment. As a percentage of sales, materials, labor and other operating expenses increased to 85.6% in 2003 from 85.4% in 2002.

          Selling and distribution expenses increased $20.8 million, or 10%, to $224.4 million in 2003 from $203.6 million in 2002. As a percentage of sales, selling and distribution expenses in 2003 were relatively consistent with 2002, despite higher pension, healthcare and benefit expenses.

          General and administrative expenses decreased $3.9 million, or 5%, to $69.7 million in 2003 from $73.6 million in 2002. As a percentage of sales, general and administrative expenses decreased to 1.5% in 2003, compared to 1.7% in 2002, due to improved cost controls, despite higher pension, healthcare and benefit expenses.

          Other (income) expense, net, increased $21.0 million, or 177%, to $32.8 million of expense in 2003 from $11.8 million of expense in 2002. In 2003, other (income) expense, net, included a $14.7 million pretax charge for the write-down of impaired assets at our predecessor's plywood and lumber operations in Yakima, Washington, a $3.6 million loss on the termination of a cottonwood fiber farm lease and a $7.7 million loss on the sale and write-down of assets and other miscellaneous income and expense items.

          Income (loss) from operations increased $11.8 million to $1.0 million of income in 2003, compared to a $10.8 million loss in 2002. The increase in 2003 resulted from increased plywood prices, equity in earnings and favorable wood fiber costs in our Wood Products segment, increased sales in our Building Materials Distribution segment and improved results in our Packaging & Newsprint segment, offset by the pretax charge for the write-down of impaired assets at our plywood and lumber operations in Yakima, Washington, and operating losses in our Paper segment.

          Paper.    Segment results decreased $57.6 million, or 170%, to a $23.7 million loss in 2003 from $33.9 million of income in 2002. The decrease resulted from lower unit sales volumes, more market-related curtailment and increased unit manufacturing costs. Total paper manufacturing cost

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of sales increased $19 per ton, or 3.2%, compared to 2002. The increase was due to higher wood fiber, chemical, and energy costs.

          Packaging & Newsprint.    Segment results improved $5.1 million, or 26%, to a $15.0 million loss in 2003, compared with a $20.1 million loss in 2002. Improved results were primarily attributable to a 3% increase in average sales prices. A 3% increase in newsprint sales volume, which was primarily the result of capacity closures by other major producers, was partially offset by a 1% decrease in linerboard sales volume. Offsetting the favorable price and volume increases were total unit manufacturing costs that increased $7 per ton, or 2%.

          Wood Products.    Segment results increased $42.3 million to $43.5 million of income in 2003 from $1.2 million of income in 2002. As discussed above, the increase was due to a strong building season that began late in the second quarter of 2003, after a slow start earlier in the year. The primary reasons for the increase were increased structural panel prices and favorable wood costs, partially offset by a $14.7 million pretax charge for the write-down of impaired assets at the plywood and lumber operations in Yakima, Washington. The write-down resulted from our internal review of the operations and indications of current market value. The write-down was recorded in other (income) expense, net. For the year ended December 31, 2003, the write-down decreased net income by $9.0 million.

          Building Materials Distribution.    Segment results increased $22.6 million, or 90%, to $47.7 million of income in 2003 from $25.1 million of income in 2002. The increase was due to strong pricing coupled with an 11% increase in unit sales volume. The increase in unit sales volume resulted from a stronger building season, driven by higher housing starts, which are estimated by RISI to have been 8% higher in 2003 compared to 2002.

Liquidity and Capital Resources

          Our operating activities generated $182.7 million, $219.3 million and $160.2 million of cash flow in 2004, 2003 and 2002, respectively. In 2004, items included in net income provided $324.7 million of cash, and unfavorable changes in working capital items used $142.0 million of cash from operations. In 2003, items included in net income provided $258.6 million of cash, and unfavorable changes in working capital items used $39.3 million of cash from operations. Net income items provided $207.6 million of cash in 2002, and changes in working capital items used $47.4 million of cash from operations.

          During the predecessor periods presented, Boise Forest Products Operations participated in OfficeMax's receivable sales program. Under that program, OfficeMax sold fractional ownership interests in a defined pool of trade accounts receivable. In anticipation of the Acquisition, we ceased to participate in OfficeMax's receivable sales program. Accordingly, at October 28, 2004, no sold accounts receivable were excluded from receivables on our balance sheet, compared with $148.8 million and $105.4 million of receivables excluded at December 31, 2003 and 2002. The decrease of $148.8 million in sold accounts receivable at October 28, 2004 compared to the amount of sold accounts receivable at December 31, 2003, used cash from operations for the period ended October 28, 2004. The increase at December 31, 2003 in sold accounts receivable of $43.4 million at December 31, 2003 compared to the amount of sold accounts receivable at December 31, 2002, provided cash from operations in 2003. The portion of fractional ownership interest we retain is included in receivables in our balance sheet.

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          Our cash investing activities used $2.42 billion in 2004, $192.6 million in 2003 and $146.2 million in 2002. In 2004, investing activities included $2.2 billion for the acquisition of OfficeMax's paper and forest products assets and $157.5 million for our investment in Timber Holdings, offset by $103.2 million of proceeds from the sale of our predecessor's Yakima, Washington, plywood and lumber facilities in February 2004 and the sale of our Voyageur Panel interest in May 2004. For more information related to the purchase of the paper and forest products and timberland assets, see the discussion under "—Overview."

          In 2003 and 2002, cash investing activities included $175.1 million and $146.1 million, respectively, for property and equipment and fiber farm purchases. Additionally, in 2002, investing activities included $6.1 million for the acquisition of assets of a wholesale building products distribution and reload operation in Riverside, California. In all three years, capital expenditures for property and equipment consisted primarily of facility and equipment modernization, energy and cost-saving projects and environmental compliance.

          Details of 2004 capital investment by segment are included in the table below:

 
  Boise Holdings
 
  October 29 (inception) through December 31, 2004
 
  Acquisition/Expansion
  Quality/Efficiency(a)
  Replacement, Environmental and Other
  Total
 
  (millions)

Paper   $ 0.5   $ 4.4   $ 11.6   $ 16.5
Packaging & Newsprint         0.9     1.9     2.8
Wood Products     5.4     0.5     1.7     7.6
Building Materials Distribution     0.5         0.6     1.1
Corporate and Other         0.1     0.8     0.9
Acquisition of paper and forest products businesses     2,196.5             2,196.5
Loan to related party     157.5             157.5
   
 
 
 
    $ 2,360.4   $ 5.9   $ 16.6   $ 2,382.9
   
 
 
 

 


 

Predecessor

 
  January 1 through October 28, 2004
 
  Acquisition/Expansion
  Quality/Efficiency(1)
  Replacement, Environmental and Other
  Total
 
  (millions)

Paper   $ 0.6   $ 8.2   $ 47.4   $ 56.2
Packaging & Newsprint     0.2     5.2     21.7     27.1
Wood Products     11.4     4.0     25.9     41.3
Building Materials Distribution     3.1         6.7     9.8
Corporate and Other     0.4     0.7     4.7     5.8
   
 
 
 
    $ 15.7   $ 18.1   $ 106.4   $ 140.2
   
 
 
 

(1)
Quality and efficiency projects include quality improvements, modernization, energy and cost-saving projects.

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          We expect capital investments in 2005 to total approximately $185 million, excluding acquisitions. Our capital spending in 2005 will be for quality and efficiency projects, replacement projects and ongoing environmental compliance. We expect that approximately $18 million of the anticipated capital spending will relate to environmental compliance. During 2004, we spent $8 million on environment compliance. See the section titled "—Environmental" in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

          Our primary source of liquidity for our business is cash flow generated from operations and borrowing capacity available under our revolving credit facility. We expect that our primary liquidity requirements will be debt service, working capital and capital expenditures.

          As a result of the Acquisition, we incurred $2.0 billion of indebtedness. At December 31, 2004, long-term debt consisted of the following:

 
  (in thousands)

 
Revolving credit facility, due 2010   $  
Tranche B term loan, due 2011     1,330,000  
Senior floating rate notes, due 2012     250,000  
7.125% senior subordinated notes, due 2014     400,000  
   
 
      1,980,000  
Less current portion     (13,300 )
   
 
    $ 1,966,700  
   
 

          Our senior secured credit facilities, which we entered into in October 2004 in connection with the Acquisition, consist of a six-year senior secured revolving credit facility and a seven-year senior secured Tranche B term loan.

          Under the revolving credit facility, we may borrow up to $400.0 million for general corporate purposes at variable interest rates based on LIBOR, the prime rate or the federal funds effective rate, plus an interest rate spread based upon our leverage ratio. At December 31, 2004, we had no loans and $68.3 million of undrawn letters of credit outstanding under the revolving credit facility, and had remaining borrowing capacity of $331.7 million. Letters of credit are subject to a 0.25% fronting fee, payable to the issuing bank, and a fee payable to the lenders equal to the product of the interest rate spread applicable to LIBOR borrowings under our revolving credit facility and the daily average amount available for drawing under the outstanding letters of credit. In addition, the revolving credit facility provides for a commitment fee of 0.50% per annum, payable to the lenders on the average daily unused portion of the revolving credit facility.

          We used the proceeds of our $1,330.0 million senior secured Tranche B term loan to fund a portion of the purchase price for the Acquisition. The Tranche B term loan bears interest at a variable interest rates based on LIBOR, the prime rate or the federal funds effective rate, plus a fixed interest rate spread. At December 31, 2004, our borrowing rate under the Tranche B term loan was 4.7% per annum. We have entered into interest rate swaps to hedge the cash flow risk from the variable interest payments on $550.0 million of the Tranche B term loan, which gave us an effective interest rate of 5.0% at December 31, 2004. For additional information on these interest rate swaps, see "—Disclosures of Financial Market Risk".

          In October 2004, we issued $250.0 million of senior unsecured floating-rate notes due 2012 and $400.0 million of 7.125% senior subordinated notes due 2014. We may redeem all or part of

65


the notes at any time at redemption prices defined in the indenture. Net proceeds from the notes were used to fund a portion of the purchase price for the Acquisition. If we sell specific assets or experience specific kinds of changes in control, we must offer to purchase the notes. At December 31, 2004, our borrowing rate for the $250.0 million senior floating rate notes was 5.0%. We have entered into interest rate swaps to hedge the cash flow risk from the variable interest payments on the $250.0 million senior floating rate notes, which gave us an effective interest rate of 6.6% at December 31, 2004.

          We paid approximately $85.9 million in fees and expenses associated with the foregoing debt transactions. The fees are being amortized over the shorter of the call period or the term of the loan. At December 31, 2004, we had $84.1 million of costs recorded in deferred financing costs on our balance sheet.

          At December 31, 2004, the scheduled payments of long-term debt were $13.3 million in 2005, 2006, 2007, 2008 and 2009 and $1.9 billion thereafter. In February 2005, however, we prepaid $412.0 million of our Tranche B term loan, primarily with the proceeds of a related-party loan from a subsidiary of Timber Holdings and the repayment by such subsidiary of a loan we had previously made to it. This prepayment eliminated our scheduled payments of long-term debt through 2009, and reduced the payments thereafter to $1.6 billion. The principal amount of the related-party loan we received from a subsidiary of Timber Holdings, which initially was $264.8 million, is subject to adjustment based on transactions between such subsidiary and us.

          Prior to this offering, we intend to amend and restate our senior credit facilities, which will consist of a $840.0 million Tranche D term loan and a $400.0 million revolving credit facility. In connection therewith, we will repay the remainder of our Tranche B term loan. The final terms of the amended and restated senior credit facilities are still being discussed with our lenders. However, based on discussions with our lenders, we believe the terms of the amended and restated senior credit facilities will be as described herein. We will be required to make scheduled principal payments on the Tranche D term loan in the amount of approximately $6.3 million in 2005 and $8.4 million in each of 2006 through 2010. The Tranche D term loan will mature in 2011. The maturity on our revolving credit facility is not expected to change. See "Description of Certain Debt—Senior Credit Facilities—Amendment and Restatement."

          For the periods October 29 through December 31, 2004; January 1 through October 28, 2004, and the years ended December 31, 2003 and 2002, cash payments for interest, net of interest capitalized, were $11.3 million, $64.8 million, $90.0 million and $91.6 million, respectively.

          During the predecessor periods, our principal source of liquidity in excess of that provided by cash flow generated from operations was borrowings from OfficeMax. Since our predecessor's financing activities have been represented historically by borrowings from OfficeMax, Boise Forest Products Operations financing activities are not comparable with our current operations.

          On October 29, 2004, FPH and OfficeMax made a cash equity investment in us of $338.9 million. The equity investment consisted of $242.4 million invested by FPH in exchange for 440 million Class B equity units and $96.5 million invested by OfficeMax in exchange for 109 million and 66 million Class B and Class A equity units. See our statement of capital and Note 14, Equity, to the financial statements included in this prospectus for a discussion of the change in equity units and their holders since the date of the Acquisition and a discussion of the rights and privileges of the equity units.

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          We believe that funds generated from operations and planned borrowing capacity will be adequate to fund debt service requirements, capital expenditures and working capital requirements for the foreseeable future. Our ability to continue to fund these items may be affected by general economic, financial, competitive, legislative and regulatory factors.

          We believe that our current financial position and financing plans will provide flexibility in financing activities and permit us to respond to changing conditions in credit markets. We cannot assure you, however, that our business will generate sufficient cash flow from operations or that future borrowings will be available for use under our revolving credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.

          In the table below, we set forth our contractual obligations. Some of the amounts we include in this table are based on management's estimates and assumptions about these obligations, including their duration, the possibility of renewal, anticipated actions by third parties and other factors. Because these estimates and assumptions are necessarily subjective, the enforceable and legally binding obligations we will actually pay in future periods may vary from those reflected in the table.

 
  Payments Due by Period
 
  2005
  2006-2007
  2008-2009
  Thereafter
  Total
 
  (millions)

Long-term debt, including current portion(a)   $ 13.3   $ 26.6   $ 26.6   $ 1,913.5   $ 1,980.0
Interest     112.3     222.7     211.5     245.0     791.5
Operating leases(b)     11.7     18.4     14.9     26.5     71.5
Purchase obligations                              
  Raw materials(c)     151.8     228.4     212.4     458.9     1,051.5
  Utilities(d)     97.9     15.1     5.2         118.2
  Capital spending     20.5     26.6     13.4         60.5
  Other     0.7     0.6     0.4         1.7
Other long-term liabilities reflected on our balance sheet                              
  Compensation and benefits(e)     0.4     1.7     29.6     101.9     133.6
  Other         5.0     2.6     16.0     23.6
   
 
 
 
 
    $ 408.6   $ 545.1   $ 516.6   $ 2,761.8   $ 4,232.1
   
 
 
 
 

(a)
These borrowings are further explained in Note 11, Debt, to the financial statements included in this prospectus. The table assumes our long-term debt is held to maturity. However, we will amend and restate our senior credit facilities prior to this offering, and will repay our Tranche B term loan in the amount of $918.0 million and enter into a new $840.0 million Tranche D term loan. The Tranche D term loan is expected to provide for scheduled payments of approximately $6.3 million in 2005, approximately $8.4 million in each of 2006, 2007, 2008 and 2009 and to have a final maturity in 2010. Additionally, concurrent with the Timberlands Sale, we incurred a $264.8 million related-party loan from Boise Land & Timber Corp., which will be repaid with a portion of the proceeds of this offering.

(b)
In the normal course of business, we enter into operating leases for the lease of property and equipment. Some lease agreements provide us with the option to renew the lease or purchase

67


(c)
Included in raw materials is $1.0 billion for contracts to purchase timber. This includes the obligations related to the long-term supply agreements entered into in February 2005 in connection with the Timberlands Sale. Under these supply contracts, we have the right to cancel or reduce our commitment in the event of a mill curtailment or shutdown. The price for these contracts is set quarterly or semiannually based on regional market prices. These agreements expire on December 31, 2014. Estimates are based on contract terms or first quarter 2005 pricing. These obligations are subject to change based on, among other things, the effect of governmental laws and regulations, our manufacturing operations not operating in the normal course of business, timber availability and the status of environmental appeals. Except for deposits required pursuant to wood supply contracts, these obligations are not recorded in our financial statements until contract payment terms take effect.

(d)
We enter into utility contracts for the purchase of electricity and natural gas. We also purchase these services under utility tariffs. The contractual and tariff arrangements include multiple-year commitments and minimum annual purchase requirements. Our payment obligations were valued at prices in effect on December 31, 2004, or contract language, if available. These obligations represent the face value of the contracts and do not consider resale value, as we use the energy to manufacture our products.

(e)
Compensation and benefits include $114.4 million for pensions, $19.1 million for postretirement benefits other than pensions and $0.1 million for employee deferred compensation.

          In addition to the contractual obligations quantified in the table above, we have other obligations for goods and services and raw materials entered into in the normal course of business. In addition, we expect to make tax distributions to our equityholders equal to 38.9% of our taxable income. In addition, pursuant to our additional consideration agreement between us and OfficeMax, we may be required to make substantial cash payments to, or receive substantial cash payments from, OfficeMax. Under the additional consideration agreement, the purchase price may be adjusted upward or downward based on paper prices during the six years following the closing date, subject to annual and aggregate caps. Neither party will be obligated to make a payment under the additional consideration agreement in excess of $45 million in any one year. Payments are also subject to an aggregate cap of $125 million that declines to $115 million in the fifth year and $105 million in the sixth year.

          The Series A common units issued to OfficeMax in connection with the Acquisition accrue dividends daily at a rate of 8% per annum on the holder's capital contributions (net of any distributions previously received by such holder) plus any accumulated dividends. Accrued and unpaid dividends accumulate on the Series A common units on June 30 and December 31 of each year. At December 31, 2004, $0.5 million of dividends were accrued in our balance sheet.

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          At December 31, 2004, we did not have any off-balance-sheet arrangements with unconsolidated entities.

          In the predecessor periods presented, Boise Forest Products Operations participated in OfficeMax's receivable sales program. This program consisted of selling fractional ownership interests in a defined pool of accounts receivable. The sales program was accounted for under Statement of Financial Accounting Standards, or SFAS, No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. Our predecessor entered into this program to provide funding at rates favorable to other borrowing arrangements. Under this program, OfficeMax sold substantially all of its domestic trade accounts receivable on a revolving basis to a fully consolidated, wholly owned subsidiary. The subsidiary in turn sold a fractional ownership interest in the receivables to affiliates of two banks. Based on the terms of the sale, OfficeMax recorded the sales as true sales and not as loans secured by the receivables. At October 28, 2004, no sold accounts receivable were excluded from receivables, compared with $148.8 million and $105.4 million at December 31, 2003 and 2002, respectively. The portion of fractional ownership interest our predecessor retained is included in receivables in our balance sheet. A portion of the retained interest is subordinate to the interests of the bank affiliates, providing them credit support if the receivables become uncollectible. The anticipated impact of the credit support is reflected in the allowance for uncollectible receivables. The proceeds available under this program could be reduced, based on the level of eligible receivables, restrictions on the concentrations of receivables and the historical performance of the receivables. Costs under this program vary based on changes in interest rates. Costs incurred related to Boise Forest Products Operations totaled $2.2 million, $1.9 million, and $2.3 million for the period January 1 through October 28, 2004, and for the years ended December 31, 2003 and 2002, respectively.

          In anticipation of the Acquisition, during third quarter 2004, OfficeMax stopped selling receivables related to Boise Forest Products Operations' businesses. We do not currently participate in a receivable sales program. Compared with the predecessor period financial statements, not participating in a securitization program may increase interest expense and assets and liabilities.

          See Note 17, Commitments and Guarantees, to the financial statements included in this prospectus, for a description of our guarantees and the nature of our guarantees, including the approximate terms of the guarantees, how the guarantees arose, the events or circumstances that would require us to perform under the guarantees and the maximum potential undiscounted amounts of future payments we could be required to make.

          We believe inflation has not had a material effect on our financial condition or results of operations. However, there can be no assurance that we will not be affected by inflation in the future. Seasonal changes in levels of building activity affect our building products businesses, and we typically have higher sales and working capital in the second and third quarters. In addition, cold weather may affect our operating costs (including energy) at our manufacturing facilities.

          At December 31, 2004, the estimated current market value of our debt, based on then-current interest rates for similar obligations with like maturities, was approximately $9.7 million more than the amount of debt reported on our balance sheet. The estimated fair values of our other financial

69


instruments, cash and cash equivalents and receivables are the same as their carrying values. In 2004, $534.8 million, or 9% of our total sales, were to OfficeMax, which represents a concentration in the volume of business transacted and the revenue generated from these transactions. Apart from these sales, concentration of credit risks with respect to trade receivables is limited due to the wide variety of customers and channels to and through which our products are sold, as well as their dispersion across many geographic areas.

          Changes in interest and currency rates expose the company to financial market risk. We occasionally use derivative financial instruments, such as interest rate swaps, rate hedge agreements, forward purchase contracts and forward exchange contracts, to hedge underlying debt obligations or anticipated transactions. We do not use them for trading purposes. For qualifying interest hedges, the interest rate differential is reflected as an adjustment to interest expense over the life of the swap or underlying debt.

          Our obligations under our senior credit facilities and senior floating rate notes expose us to changes in short-term interest rates because interest rates on this debt are variable. In November 2004, we entered into four interest rate swaps with a total notional amount of $550 million to hedge the exposure to floating-rate interest rate risks associated with our Tranche B term loan. The swaps on $300 million of our Tranche B term loan were fixed at an average pay rate of 3.3% and expire in December 2007, while the swaps on $250 million of the loan were fixed at an average pay rate of 3.5% and expire in December 2008. We also entered into two 3.7% interest rate swaps with an aggregate notional amount of $250 million to hedge the exposure to floating-rate interest rate risks associated with our senior floating-rate notes. These swaps expire in October 2009. All of the swaps were designated as cash flow hedges. Accordingly, changes in the fair value of the swaps, net of taxes, were recorded in Series B equity units and reclassified to interest expense, as interest expense was recognized on the LIBOR-based debt. Amounts reclassified in the period October 29 through December 31, 2004 increased interest expense by $1.8 million. Assuming no change in interest rates, $1.7 million would be reclassified in 2005. Ineffectiveness related to these hedges was not significant.

          As described in Note 11, Debt, to the financial statements included in this prospectus, in each of the predecessor periods presented, OfficeMax allocated debt and interest costs to us based on our average asset balances. OfficeMax occasionally used derivative financial instruments, such as interest rate swaps, rate hedge agreements and forward exchange contracts, to hedge underlying debt obligations or anticipated transactions. The effects of these financial instruments are not included in the predecessor financial statements other than through OfficeMax's allocations to us.

          The table below provides information about our financial instruments that are sensitive to changes in interest rates or utility indexes. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For obligations with variable interest rates and sensitivity to energy market risk, the table sets forth payout amounts based on current rates and does not attempt to project future rates. Other instruments subject to market risk, such as obligations for pension plans and other postretirement benefits, are not reflected in the table.

70



 
   
   
   
   
   
   
   
   
  Predecessor
 
   
   
   
   
   
   
  2004
  2003
 
  2005
  2006
  2007
  2008
  2009
  There
-after

  Total
  Fair
Value

  Total
  Fair
Value

 
  (millions)

Debt                                                            
Short-term borrowings   $   $   $   $   $   $   $   $   $ 2.9   $ 2.9
  Average interest rates                                        
Long-term debt                                                            
  Fixed-rate debt payments   $   $   $   $   $   $ 400.0   $ 400.0   $ 409.7   $ 1,042.5   $ 1,074.9
  Average interest rates                         7.1 %   7.1 %       7.3 %  
Variable-rate debt payments(a)   $ 13.3   $ 13.3   $ 13.3   $ 13.3   $ 13.3   $ 1,513.5   $ 1,580.0   $ 1,580.0   $ 225.9   $ 225.9
Average interest rates(b)     4.7 %   4.7 %   4.7 %   4.7 %   4.7 %   4.7 %   4.7 %       3.3 %  

Interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Notional principal amount of interest rate exchange agreements maturing                                                            
  Variable to fixed   $   $   $ 300.0   $ 250.0   $ 250.0   $   $ 800.0   $ 6.3   $   $
    Average pay rate             3.3 %   3.5 %   3.7 %       3.5 %          
    Average receive rate             2.4 %   2.4 %   2.2 %       2.3 %          

Energy swaps

 

$


 

$


 

$


 

$


 

$


 

$


 

$


 

$


 

$

1.4

 

$

1.4

(a)
These borrowings are further explained in Note 11, Debt, to the financial statements included in this prospectus. The table assumes our long-term debt is held to maturity. However, we will amend and restate our senior credit facilities prior to this offering, and will repay our Tranche B term loan in the amount of $918.0 million and enter into a new $840.0 million Tranche D term loan. The Tranche D term loan is expected to provide for scheduled payments of approximately $6.3 million in 2005, approximately $8.4 million in each of 2006, 2007, 2008 and 2009 and to have a final maturity in 2010. Additionally, concurrent with the Timberlands Sale, we incurred a $264.8 million related-party loan from Boise Land & Timber Corp., which will be repaid with a portion of the proceeds of this offering.

(b)
Does not include the effect of swaps.

          Our businesses are subject to a wide range of general and industry-specific environmental laws and regulations. In particular, we are affected by laws and regulations covering air emissions, wastewater discharges, solid and hazardous waste management and site remediation. Compliance with these laws and regulations is a significant factor in the operation of our businesses. We believe that we have created a corporate culture of strong compliance by taking a conservative approach to environmental issues in order to assure that we are operating well within the bounds of regulatory requirements. However, we cannot assure you that we will at all times be in full compliance with environmental requirements, and we cannot assure you that we will not incur fines and penalties in the future.

          In 2002, OfficeMax entered into a consent decree with the Environmental Protection Agency, or EPA, to settle alleged air permit violations at eight of the plywood and particleboard manufacturing facilities that we now own. The EPA alleged these plants failed to obtain New Source Review air permits. The final installation of control equipment required under the Consent Decree will be completed in May 2005. Once the control equipment has been operated for 12 months, we will move to terminate the Consent Decree.

          We incur substantial capital and operating expenditures to comply with federal, state and local environmental laws and regulations. Failure to comply with these laws and regulations could result in civil or criminal fines or penalties or in enforcement actions. Our failure to comply could also result in governmental or judicial orders that stop or interrupt our operations or require us to take

71



corrective measures, install additional pollution control equipment or take other remedial actions. During 2004, we made approximately $8.0 million in capital expenditures to comply with environmental requirements. We anticipate capital expenditures of approximately $18.0 million in 2005 to comply with environmental requirements, and we expect to spend similar or greater amounts on environmental capital expenditures in the years ahead.

          In 2004, the EPA promulgated rules to control air toxics emissions from wood and panel plants and industrial boilers. Compliance with these rules is required in 2007. The rules will require capital spending at our wood panel plants and paper mills. We are currently evaluating the rules and the amount of capital spending that will be required to comply with them. We expect capital spending to range from $13.0 million to $37.0 million for the period from 2005 to 2007. This range will be refined as mills develop their detailed compliance strategies.

          As an owner and operator of real estate, we may be liable under environmental laws for the cleanup of past and present spills and releases of hazardous or toxic substances on or from our properties and operations. We can be found liable under these laws if we knew of, or were responsible for, the presence of such substances. In some cases, this liability may exceed the value of the property itself.

          Some of our properties have been the subject of investigation or cleanup in connection with environmental contamination. In 2001, the EPA and the Oregon Department of Environmental Quality began an investigation at our paper mill in St. Helens, Oregon. The investigation is being conducted under Oregon's Voluntary Cleanup Program. The investigation has focused on polychlorinated biphenyls from leaking transformers, pentachlorophenol and arsenic near a demolition landfill and possible contamination in sediment in the adjacent Columbia River. Although we cannot assure you regarding the outcome of this investigation, based on current information, we do not expect it to result in material liabilities. Given that the investigation concerns hazardous substance releases that occurred prior to closing of the Acquisition, OfficeMax retained responsibility for this matter pursuant to the asset purchase agreement, as described below.

          OfficeMax retains responsibility for environmental liabilities incurred with respect to businesses, facilities and other assets not purchased by us in connection with the Acquisition, and indemnifies us for hazardous substance releases and other environmental regulatory violations related to our business that occurred prior to the closing of the Acquisition or arise out of pre-closing operations. However, OfficeMax may not have sufficient funds to satisfy in full its indemnification obligations when required, and, in some cases, we may not be entitled to indemnification under the asset purchase agreement.

Critical Accounting Estimates

          Critical accounting estimates as those that are most important to the portrayal of our financial condition and results. These estimates require management's most difficult, subjective, or complex judgments, often as a result of the need to estimate matters that are inherently uncertain. We reviewed the development, selection and disclosure of the following critical accounting estimates with our board of directors. Our current critical accounting estimates are as follows:

          On October 29, 2004, we acquired the paper, forest products and timberland assets of OfficeMax. We accounted for the business combination under the purchase method of accounting in accordance with SFAS No. 141, Business Combinations, and allocated the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The determination of the fair values of the assets acquired and liabilities assumed, as well as associated asset useful

72


lives, required management to make estimates. Estimated fair values were derived through consideration and application of standard valuation approaches and techniques.

          We estimated the value of property, plant and equipment assets based on the application of either a cost, market or income approach. Under the cost approach, replacement cost new was estimated and then adjusted for depreciation due to physical, functional and economic obsolescence. The market approach derived value was based on an analysis of comparable asset sale information. The income approach derived value was based on the forecasted cash flow potential of the asset. We estimated the fair value of the trade names and trademarks and technology based on the application of the income approach. The critical assumptions involved with valuing the trade names and trademarks and technology were the expected revenue and cash flow levels anticipated over the assets' expected lives and the risk profile of the assets. The fair value of the customer relationships was based on the application of the cost approach. The critical assumptions involved with valuing the customer relationships were associated with estimating the costs required to replicate these assets to their current condition.

          Liabilities subjective in nature primarily include estimates of costs to restructure the operations of the acquired company. We have not completed our restructuring plans for the acquired company. In accordance with the provision of EITF 95-3, Recognition of Liabilities in Connection With a Purchase Business Combination, restructuring activities in connection with the Acquisition will increase goodwill. We have one year from the acquisition date to develop our restructuring plans and adjust for changes in estimates of the fair value of assets acquired and liabilities assumed. The initial purchase price allocations may be adjusted within one year of the purchase date for changes in estimates of the fair value of assets acquired and liabilities assumed. We have not completed the assessment of the fair value of our fiber farms and may allocate a higher portion of the purchase price to those assets. An increase in those values would reduce goodwill.

          The purchase price may also be adjusted upward or downward based on paper sales prices during the six years following the closing date pursuant to the additional consideration agreement. Over that period, we could pay OfficeMax a maximum aggregate amount of $125.0 million, or OfficeMax could pay us a maximum aggregate amount of $125.0 million, in each case net of payments received. The purchase price allocation does not include the effect, if any, of this contingent consideration.

          Due to the numerous variables associated with our judgments and assumptions relating to the valuation of the assets acquired and liabilities assumed, both the precision and reliability of the resulting estimates are subject to uncertainty.

          We account for awards granted under our management equity agreement in accordance with SFAS No. 123 (revised 2004), Share Based Payment. In December 2004, select key managers purchased 18.6 million Class B common units in FPH at $1.00 per unit, which was equal to or more than the fair value on the date of purchase. Those who purchased Class B common units received a grant of 35.6 million Class C common units (profit interests) that represent the right to participate in profits after capital is returned to the holders of the FPH Class B common units. The Class C common units had no value to the holder on the date of grant and will have no value to the holder until the equity value appreciates above a specified level. Generally, the Class B common units to the holder and 50% of the Class C common units vest 20% each year on December 31, 2005 through 2009. Upon either the sale of the company (as defined in the agreement) or an initial public offering, all of the Series B common units will vest. In addition, of the one-half of the Series C common units that vest solely on time served as an employee, those that were scheduled to vest within two years will vest. The other 50% of the Class C common units vest at the end of 2009 if

73


specific criteria tied to internal rates of return are met. The vesting schedules are shortened for managers who were at least 60 years old as of December 31, 2004, so that the units fully vest by December 31 of the year in which the manager reaches age 65 and at least two vesting periods have been met. We did not recognize compensation expense for the Class B common units on the date of grant because the purchase price paid by management was equal to or more than the fair value of the units. The Class C common units are accounted for as restricted stock. We will accrue compensation expense over the vesting periods for the Class C common units based on the fair value on the date of the grant. We determined the fair value of the Class C common units on the date of grant to be approximately $12.4 million. The valuations used to determine the fair values of the Class B and Class C common units were retrospective.

          The determination of the fair values of the common units is complex, requiring the use of valuation professionals, and represents a critical accounting estimate. Due to time constraints in December, we did not perform a contemporaneous valuation as of the grant date. We obtained a retrospective valuation as soon as practicable in the first quarter following the grant date.

          We determined that the $1.00 purchase price paid by management for the Class B common units was equal to or more than fair value on the date of purchase. This determination was made through application of valuation techniques that included an income approach, and event analysis and trend analysis methods. It included an analysis of financial metrics and multiples and review of industry and macroeconomic factors that may have influenced the fair value. A discount analysis was also performed.

          The estimation of the fair value of the Class C common units as of the grant date was calculated by constructing an event diagram to consider the likely scenarios incorporating employee departure; whether the company is sold, undergoes an initial public offering, or remains private; and paths to liquidity for the management investor. The liquidation proceeds to the Class C common units at each node were then calculated and discounted to present value based on an appropriate cost of equity of 20%, which considered the risks of the Class C common units. Estimated future financial results were based on commodity price assumptions which management believes to be reasonable. However, future prices may vary significantly in the cyclical paper and wood products business.

          Based on estimated probabilities on each of the nodes of the event diagram, a Monte-Carlo simulation analysis with 100,000 iterations was performed to simulate the range of likely values for the Class C common units. The calculation of fair value was done for both the 50% of the Class C common units that vest over time and the 50% that vest based on internal rates of return. Vesting based on internal rates of return was assumed to be a market condition as defined in SFAS 123 (revised 2004).

          During the predecessor periods, most of Boise Forest Products Operations employees, along with some other employees of OfficeMax, participated in OfficeMax's defined benefit pension plans, and were treated as participants in multiemployer plans. Accordingly, there are no assets or liabilities related to defined benefit pension plans in the predecessor balance sheet. Our predecessor did, however, incur costs associated with the employees who participated in OfficeMax's plans in the statements of income (loss). For the periods October 29 through December 31, 2004, and January 1 through October 28, 2004, and the years ended December 31, 2003 and 2002, pension expense was $2.6 million, $60.9 million, $52.9 million and $19.2 million, respectively. In connection with the Acquisition, OfficeMax transferred to us the portion of the pension plan liability that was attributable to active employees who became employed by us immediately following the Acquisition. Pension assets transferred by OfficeMax were sufficient to

74


fund our accumulated benefit obligation at a 6.25% discount rate. At December 31, 2004 Acquisition, our balance sheet reflected a projected benefit obligation of $114.4 million, assuming a 5.75% discount rate and a 4.25% rate of compensation increase. Under the terms of the Acquisition, OfficeMax also retained all pension costs related to employees who retired or were terminated on or before July 31, 2004, all postretirement benefits costs related to employees who retired or were terminated before the Acquisition, and all pension and postretirement benefit costs related to active OfficeMax employees. As a result, we expect that our annual pension expense going forward will be less than amounts included in our predecessor's financial statements.

          We account for pension expense in accordance with SFAS No. 87, Employer's Accounting for Pensions. This statement requires us to calculate pension expense and liabilities using actuarial assumptions, including a discount rate assumption and a long-term asset return assumption. We base our discount rate assumption on the rates of return on high-quality bonds currently available and expected to be available during the period to maturity of the pension benefits. We base our long-term asset return assumption on the average rate of earnings expected on invested funds. We believe that the accounting estimate related to pensions is a critical accounting estimate because it is highly susceptible to change from period to period, based on the performance of plan assets, actuarial valuations and changes in interest rates, and the effect on our financial position and results of operations could be material. The estimate for pensions is a critical accounting estimate for all of our segments.

          Our discount rate assumption was 5.75% for the period October 29 through December 31, 2004, and 6.25% for the predecessor period January 1 through October 28, 2004, and our long-term asset return assumption was 7.25% and 8.25%, respectively. Using these assumptions, our 2004 pension expense was $63.5 million, compared with $52.9 million and $19.2 million of expense in 2003 and 2002. If we had used a 6.0% estimated discount rate and a 7.75% expected return on plan assets during all of 2004, our 2004 pension expense would have been $67.8 million, and net income would have decreased approximately $4.3 million.

          For 2005, our discount rate assumption is 5.75%, and our expected return on plan assets is 7.25%. Using these assumptions, we estimate that our 2005 pension expense will be approximately $28.7 million. If we were to decrease our estimated discount rate assumption to 5.5% and our expected return on plan assets to 7.0%, our 2005 pension expense would be approximately $31 million. If we were to increase our discount rate assumption to 6.0% and our expected return on plan assets to 7.5%, our 2005 pension expense would be approximately $27 million.

          In 2005, there is no required minimum contribution to our pension plans. However, we may make voluntary contributions.

          We account for the impairment of long-lived assets in all of our segments in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. An impairment of a long-lived asset exists when the carrying value of an asset exceeds its fair value and when the carrying value is not recoverable through future operations. We review the carrying value of long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of assets may not be recoverable.

          Long-lived asset impairment is a critical accounting estimate, as it is susceptible to change from period to period. To estimate whether the carrying value of an asset or asset group is impaired, we estimate the cash flows that could be generated under a range of possible outcomes, and we estimate the likelihood of possible outcomes. To measure future cash flows, we are required to make assumptions about future production volumes, future product pricing and future expenses to be incurred. In addition, estimates of future cash flows may change based on the

75



availability of timber, environmental requirements, capital spending and other strategic management decisions. We estimate the fair value of an asset or asset group based on quoted market prices (the amount for which the asset(s) could be bought or sold in a current transaction with a third party) when available. When quoted market prices are not available, we use a discounted cash flow model to estimate fair value.

          Due to the numerous variables associated with our judgments and assumptions relating to the valuation of assets and the effects of changes in circumstances (timber availability, environmental requirements, capital spending and other management decisions) on these valuations, both the precision and reliability of our estimates are subject to uncertainty. As additional information becomes known, we may change our estimates.

76



INDUSTRY

          The paper and forest products industry is capital intensive and highly cyclical. The North American industry is mature, and long-term demand and financial performance tend to correlate with changes in U.S. gross domestic product. Over the last several years, the industry has seen significant consolidation and disciplined capital management, resulting in improving industry fundamentals, as described below.

Paper

          We compete in the uncoated paper segment of the paper industry. According to the 2003-2004 Pulp & Paper Global Fact & Price Book, uncoated free sheet accounted for approximately 13% of all paper and paperboard production in North America in 2003. Uncoated free sheet is uncoated white paper primarily produced from bleached hardwood chemical pulp. End uses for uncoated free sheet include cut-size office paper, commercial printing paper, business forms and envelopes and a wide range of value-added grades. Value-added grades include bright and colored cut-size office papers and specialty papers such as label and release, security and other custom applications.

          According to RISI, North America is the world's largest consumer of uncoated free sheet, with production capacity of approximately 15.4 million tons in 2004. Historically, demand for uncoated free sheet, like demand for paper products generally, has correlated positively with general economic activity. In addition, demand for cut-size office paper, which, according to RISI, comprised approximately 42% of U.S. uncoated free sheet production in 2004, fluctuated historically with white-collar employment. In recent years, demand for uncoated free sheet has been negatively impacted by the global economic downturn and the increased use of electronic transmission and document storage alternatives. In response, North American uncoated free sheet capacity declined from 2000 through 2004 by approximately 1.5 million tons, according to RISI. Consolidation has played a major role in capacity rationalization, enabling companies to reallocate production more efficiently by closing higher-cost facilities. The four largest producers of uncoated free sheet in North America comprised approximately 68% of the North American uncoated free sheet market in 2003, according to the 2003-2004 Pulp & Paper Global Fact & Price Book, compared to approximately 44% in 1997, according to Pulp & Paper 1998.

          Recent economic improvements have increased demand for uncoated free sheet and, combined with the reduction in North American uncoated free sheet capacity and the negative impact the weak U.S. dollar has had on imports, led to an improvement in uncoated free sheet prices. According to RISI, the price of 20 lb. copy paper, a benchmark grade of uncoated free sheet, increased from $730 per ton in December 2003 to $805 per ton in February 2005, or 10%.

Packaging & Newsprint

          We compete in the following segments of the packaging and newsprint industries:

          According to the 2003-2004 Pulp & Paper Global Fact & Price Book, containerboard accounted for approximately 33% of all paper and paperboard production in North America in 2003. Containerboard, which includes both linerboard and corrugating medium, can be manufactured from virgin or recycled fiber, and is used to make corrugated containers. Linerboard is the material used as the inside and outside facing surfaces in corrugated containers. Corrugating medium is the fluting material that is laminated between linerboard to form sheets that are then printed, cut, folded and glued at converting plants to produce corrugated containers. In 2003, approximately 25% of U.S. containerboard production was exported or sold in the open market to independent corrugated

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container producers, according to the 2003-2004 Pulp & Paper Global Fact & Price Book. The remaining 75% was sold by integrated producers to their own corrugated container plants. Corrugated containers are used primarily for packaging in the food and beverage, agricultural and durable and non-durable goods industries, and is the most widely used form of packaging for the transportation of manufactured and bulk goods. According to the 2003-2004 Pulp & Paper Global Fact & Price Book, the United States is the world's largest corrugated container producer and, in 2003, accounted for approximately 28% of global production.

          Containerboard and corrugated container demand is influenced by growth in non-durable industrial output and consumer spending, as well as foreign currency exchange rates. During the early part of this decade, the North American containerboard market was adversely affected by overcapacity and reduced economic activity, which negatively impacted prices and resulted in the closure of a number of inefficient production facilities. From 2000 through 2003, according to the 2003-2004 Pulp & Paper Global Fact & Price Book, approximately 4.0 million tons of North American containerboard capacity were permanently closed or indefinitely idled. The significant consolidation experienced in the containerboard industry in recent years has contributed to this reduction in capacity. The four largest producers of linerboard in North America collectively comprised approximately 59% of the North American market in 2003, according to the 2003-2004 Pulp & Paper Global Fact & Price Book, compared to approximately 38% in 1997, according to Pulp & Paper 1998.

          Industry conditions improved during 2004, as the strengthening economy led to greater box shipments and increased demand for corrugated containers. As a result of the increased demand and reduced capacity, the transaction price of 42 lb. eastern, a benchmark linerboard grade, increased, according to RISI, from $350 per ton in December 2003 to $440 per ton in February 2005, or 26%.

          According to the 2003-2004 Pulp & Paper Global Fact & Price Book, newsprint accounted for approximately 14% of all paper and paperboard production in North America in 2003. The primary customers for North American newsprint are daily newspapers, which, according to Conservatree, consumed approximately 80% of North American production. Other uses for newsprint include weekly newspapers, pre-printed newspaper inserts and paperback books. National newsprint consumption by daily newspapers is affected primarily by advertising levels, which correlate positively with economic growth. Demand for newsprint in North America declined approximately 15% between 2000 and 2004, according to RISI, due in part to the growth of online media and substitution towards other uncoated groundwood grades. In response to declining demand, North American producers have permanently closed, indefinitely idled or converted to other groundwood specialties approximately 1.8 million metric tonnes of capacity from 2000 through 2003, according to data provided by the 2003-2004 Pulp & Paper Global Fact & Price Book. Consolidation has also increased capacity concentration. The four largest producers of newsprint in North America collectively comprised approximately 66% of the North American market in 2003, according to Paperloop, compared to approximately 52% in 1997, according to Pulp & Paper 1998.

          The reduction in capacity has allowed the newsprint industry to effect several price increases during 2004, notwithstanding a decline in demand. According to RISI, the price of 48.8 gram, a benchmark newsprint grade, increased from $515 per metric tonne in December 2003 to $570 per metric tonne in February 2005, or 11%.

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Wood Products

          Consumption of wood products and other building materials is primarily driven by new housing starts, which in turn depend on, among other things, demographic trends and interest rates. In recent years, the housing starts have been very strong, in part due to historically low interest rates. According to RISI, the housing starts were 1.94 million units in 2004, 1.85 million units in 2003 and 1.71 million units in 2002, compared to the average of 1.4 million units per year during the 1990s. While the anticipated rise in interest rates is expected to negatively impact the growth in new housing starts, RISI projects that new housing starts will average 1.7 million units per year during the period from 2005 to 2009, driven principally by favorable demographic trends. Demand for wood products and other building materials is also influenced by the size of new homes built, light commercial construction and repair and remodeling activity. In that regard, according to RISI, the average size of new homes is also increasing, with the average square footage of new homes built in 2003 more than 12% greater than of homes constructed in 1990.

          We compete in the EWP and commodity wood product segments of the wood products industry.

          EWP consists of LVL, a high-strength engineered lumber often used in beams, and I-joists, a structural support typically used in floors and roofs; and laminated beams. These products are manufactured in a manner that maximizes physical strength and dimensional stability while minimizing the amount of wood used as a raw material. For example, I-joists are an attractive replacement product for solid wide-dimension lumber joists because they have lower installed costs and are generally stronger, straighter and lighter. According to RISI, LVL consumption has increased from about 27.4 million cubic feet in 1995 to 84.9 million cubic feet in 2004, resulting in a compound annual growth rate of 13%. RISI also estimates that I-joist consumption increased from approximately 390 million lineal feet to approximately 1.3 billion lineal feet in 2004, representing a compound annual growth rate of 14%.

          In response to the strong demand for EWP, several of EWP manufacturers, including us, have initiated capacity increases. This increase in capacity could create downward pressure on EWP prices.

          Commodity wood products include structural panels, lumber and non-structural panels. Structural panels, including plywood and OSB, are used in new residential construction, residential repair and remodeling, and industrial applications such as truck floors, fruit bins and walls. Historically, plywood has been the preferred structural panel, but as OSB quality has improved and production methods have become less expensive, plywood's market share has eroded. We do not manufacture OSB. Lumber is manufactured from both softwoods and hardwoods. Structural softwood lumber is used in framing roofs, walls and floors, and hardwood lumber is used in the production of flooring, furniture and other home furnishings. Non-structural panels, including medium density fiberboard, or MDF, and particleboard, are less sturdy than structural panels, and consequently are used in non-load bearing applications such as furniture, cabinets and bookshelves. We do not manufacture MDF.

          General line products include reinforcement materials, framing accessories, insulation, roofing, brick, stucco, composite decking and other specialty materials. We do not manufacture any general line products.

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Building Materials Distribution

          While building products manufacturers may distribute their products directly to home builders, industrial users and retailers, a significant portion of building products is distributed through wholesale distributors in a two-step distribution model. Two-step distributors, such as our Building Materials Distribution segment, buy building products from manufacturers and sell these products to industrial users and building materials dealers and retailers, who in turn sell these products directly to the ultimate end user. Distributors generally add value by creating flexibility in the supply chain, breaking bulk shipments down into smaller lots, providing product assortment and storage capabilities, performing just-in-time service and providing "one-stop" shopping for a variety of products. Building products may be either manufacturer controlled, like us, or independent. Manufacturer controlled distributors are generally able to capitalize on a stable supply of products.

          National building products distributors have gained market share in recent years due to the significant economies of scale they can employ to better serve their customers. Nationwide distributors have the ability to serve multi-regional accounts, as well as leverage greater purchasing power, a broader offering of products and services, real-time nationwide market intelligence and sophisticated operating systems that offer value-added service to customers. National distributors also provide manufacturers with greater access to sales and distribution resources. Due in large part to significant consolidation among building products retailers and retailers' demand for nationwide service, there is considerable pressure among wholesalers to consolidate. As of 2003, the 150 largest wholesale distributors of building materials had aggregate sales of $50.0 billion, according to Home Channel News, with the top ten accounting for 54% of that total.

          Sales volumes of building materials distributors are influenced by many of the same factors that influence sales volumes of building products manufacturers, including new housing starts and the strength of the repair and remodeling market. The operating results of inventory-carrying distributors also depend on volatility of prices for the underlying products held in inventory.

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BUSINESS

Company Overview

          We are a diversified North American paper and forest products company. We conduct our business in the following four operating segments:

          For additional information about the segments in which we operate, see Note 16, Segment Information, to our consolidated financial statements included elsewhere in this prospectus.

          Historically, our paper and building products businesses were operated as business units of OfficeMax, formerly known as Boise Cascade Corporation. On October 29, 2004, shortly after our incorporation, we acquired these businesses, and the timberlands operations of OfficeMax were acquired by Boise Land & Timber Corp., an entity that is majority-owned by FPH, our majority shareholder, which is in turn controlled by Madison Dearborn. On February 4, 2005, the timberlands operations were sold to an unaffiliated third party for cash, and the net proceeds were used to repay borrowings incurred in connection with these acquisitions. See "Certain Relationships and Related Transactions—the Acquisition" and "—Timberlands Sale."

Our Competitive Strengths

          We are among the industry's largest producers in many of our key product categories, holding what we believe to be strong competitive positions in some of the most attractive market segments within the paper and forest products industry. According to the 2003-2004 Pulp & Paper Global Fact & Price Book, we are the fourth-largest manufacturer of uncoated free sheet in North America, with annual production capacity of approximately 1.6 million tons and market share of approximately 10% in 2003. We are the second-largest manufacturer of EWP in North America, with an estimated market share of approximately 20% in 2004, according to RISI. In addition, we believe we have leading market positions in the manufacture of plywood and ponderosa pine lumber. We are a leading national inventory-carrying wholesale distributors of building materials, according to Home Channel News, and one of a small number of distributors with a national presence.

          The most significant portion of our uncoated free sheet business is the manufacture of cut-size office paper. Our two newest paper machines, which became operational in 1990 and 1997 as part of a $1.1 billion expansion and modernization of our International Falls, Minnesota and Jackson, Alabama mills, are among the largest in North America. Our supply relationship with OfficeMax allows us to maximize utilization of these machines, optimize production runs and achieve supply chain efficiencies such as maintenance of lower inventories through the system and more efficient distribution. The operating benefits we enjoy as a result of our relationship with OfficeMax have increased with the growth in our sales to OfficeMax from $356.2 million in 2000 to $534.8 million in 2004, representing a compound annual growth rate of 11%. During 2004, which period includes the

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ramp-up of sales to OfficeMax's retail network, OfficeMax accounted for $534.8 million of our sales and approximately 47% of our uncoated free sheet sales volume. We believe the growth and stability provided by our relationship with OfficeMax will allow us to further streamline our cut-size office paper production in the future.

          Our assets are well suited to the efficient production of value-added papers and EWP, two attractive markets within the paper and forest products industry. Leveraging our existing assets and knowledge of value-added papers, we continue to increase production of these higher-margin grades on our smaller machines, displacing production of lower-margin commodity grades. We operate these machines within integrated mills that produce pulp and energy, which we believe provides us with a cost advantage over many of our competitors. EWP commands premium pricing and higher margins than traditional alternatives and continues to grow in popularity due to its superior performance characteristics, ease of use and competitive installed cost. Our large-scale EWP production facilities in Louisiana and Western Oregon are integrated with our plywood operations to optimize our veneer utilization and are located near attractive fiber baskets, which we believe positions us as a cost-effective producer of LVL and I-joists.

          Our Building Materials Distribution segment grew from $1.3 billion of sales in 1999 to $2.8 billion of sales in 2004, establishing its position as a leading national inventory-carrying wholesale distributor of building materials. During this period, our growth, operational excellence and decentralized business model have allowed us to generate returns significantly in excess of our cost of invested capital. This growth has also provided our Wood Products segment, which sells approximately 37% of its manufactured products through our Building Materials Distribution segment, with access to one of the industry's broadest and fastest-growing distribution channels. This channel has been particularly effective in driving the growth of our EWP, more than half of which is sold through our Building Materials Distribution segment. Total sales from our Wood Products segment to our Building Materials Distribution segment grew at a compound annual rate of 19% from 1999 to 2004, from $171.6 million to $409.4 million.

          As compared to the historical expenditures in our businesses, we expect the terms and structure of the Acquisition to reduce our future cash tax payments, pension and other postretirement benefit obligations and exposure to pre-Acquisition liabilities. Since the Acquisition was structured as an asset purchase, our assets were written-up for tax purposes and their depreciable lives were reset, potentially reducing our future cash tax payments. In addition, the asset purchase agreement relating to the Acquisition limits our exposure to many of the legacy obligations typically associated with companies in our industry. For example, we did not assume pension and post-retirement benefit obligations related to former employees, and OfficeMax funded a significant portion of our accumulated benefits obligations. Consequently, we do not expect to be required to make contributions to our pension plan in 2005. Similarly, OfficeMax retained and indemnified us against substantially all of the pre-Acquisition environmental liabilities related to our businesses, limiting the future earnings and cash flow impact of these liabilities.

          Our senior management team has a track record of financial and operational excellence in the paper and forest products industry. Tom Stephens, our chief executive officer since October 2004, served as chief executive officer of MacMillan Bloedel from 1997 to 1999, Manville Corporation from

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1986 to 1996 and Riverwood Corp. from 1982 to 1985. Our newly-appointed senior management team has extensive industry experience and deep knowledge of our businesses and assets. Approximately 170 of our key managers purchased a total of $18.6 million of common equity of FPH, our majority owner, and received substantial equity incentives in FPH in connection with the Acquisition. Our management's equity interests in FPH will be exchanged for shares of our Class A common stock and Class B common stock in connection with this offering, representing approximately        % of our common stock on a fully-diluted pro forma basis. For more information, see "Management—Management Equity Arrangements," "Reorganization as a Corporation" and "Certain Relationships and Related Transactions—Proceeds of this Offering."

          Our equity sponsor, Madison Dearborn, is one of the most active global investors in the paper, packaging and forest products industries. Since 1993, Madison Dearborn has consummated approximately $15.5 billion of management buyout transactions in these industries, including buyouts of Jefferson Smurfit Group, Packaging Corporation of America, Riverwood Holding Corp. (now known as Graphic Packaging Corporation) and Buckeye Technologies, Inc. Madison Dearborn was the lead sponsor in each of these transactions, other than Graphic Packaging Corporation.

Our Strategy

          Our new management team intends to generate shareholder value by implementing focused business strategies, streamlining our organization and maximizing free cash flow. Our business strategies revolve around growing our leadership position in value-added products and services and focusing on efficiency and cost reduction in commodity product areas. We are committed to transforming our company by creating a culture of empowerment and accountability in a flat, decentralized organization. We seek to enhance our cash flow by optimizing the use of our assets, improving our operational efficiencies, reducing our costs and taking advantage of selective growth opportunities.

          Immediately after the Acquisition, our management completed an in-depth business review and developed the strategies outlined below.

          Our management, through its in-depth business review, has identified a range of potential operating cash flow improvements across our business segments and corporate organization. Management has reduced headcount by approximately 700 since the announcement of the Acquisition in 2004. We intend to aggressively pursue substantial additional profit improvement initiatives over the next two years. Major elements of this plan include energy efficiency projects, operational optimization of our paper and wood products facilities, productivity and technology enhancements, and reduction of overhead. Furthermore, our management is focused on managing capital expenditures and working capital and aggressively monetizing non-core and non-operating assets.

          We intend to build on our successful customer relationship with OfficeMax. Our long-term supply agreement with OfficeMax allows us to focus our largest paper machines on producing commodity products in long, high-volume production runs, resulting in improved capacity utilization and supply-chain efficiencies. This relationship allows us to gain a deeper understanding of end-user needs and provides us with a unique channel to develop and test product and packaging innovations. We intend to leverage the expertise developed through this relationship to better

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service our other customers and develop new customers and products. We also intend to apply the operational expertise acquired as a result of our relationship with OfficeMax to achieve further productivity improvements, cost reductions and inventory and distribution efficiencies.

          We believe that our smaller paper machines are well suited to the competitive production of value-added papers and our paper marketing and development organization is well positioned to support the growth and innovation of these products. To grow our sales of higher-margin value-added papers, we continue to work closely with our customers to develop and manufacture innovative value-added papers and service programs that respond to their changing needs and technical requirements. We will support this increased demand by displacing the production of commodity grades on our smaller machines with higher-margin value-added grades. By leveraging our existing customer relationships, design capabilities, cost-competitive position and efficient logistics network, we intend to become a leading North American supplier of these products.

          We seek to further expand our market position in EWP. We believe EWP will continue to gain market share from traditional building products and that margins for EWP, on average, will continue to exceed those for most commodity wood-based building products. We are focused on leveraging our competitive cost structure, comprehensive customer service offering, design support capabilities and efficient distribution network to continue gaining market share among homebuilders, building products retailers and other distributors. To that end, we seek to expand our presence in EWP by adding capacity in a cost-effective manner. With demand for EWP at record levels over the last year and North American producers straining to meet demand, according to RISI, EWP markets have been operating on an allocation basis. We are currently expanding our LVL capacity by 7.5 million cubic feet, or approximately 40%, 4.7 million cubic feet of which we expect to be available in 2005. We have entered into new customer relationships and increased our volume commitments to our existing customers based on this expected increase in capacity. We believe we have further opportunities to increase our EWP capacity with low capital requirements due to the design of our EWP production facilities and their integration with our plywood plants.

          We intend to continue expanding our building materials distribution network into new geographic markets and aggressively grow in our existing markets. Since 1999, we have expanded our distribution network from 15 to 28 facilities, with much of this expansion occurring in the eastern United States, providing us with a national footprint. As a result, our sales in this segment grew from $1.3 billion in 1999 to $2.8 billion in 2004. We have grown successfully by acquiring facilities, opening new locations, relocating and expanding existing facilities and capturing local market share through superior customer service and broadening of our product and service offering. We expect to continue to grow sales and profitability at our existing facilities by expanding our product line, improving marketing, adding value-added services, and growing the proportion of higher-margin products, such as EWP, in our business mix.

Paper

          We manufacture and sell uncoated free sheet, including commodity and value-added papers, as well as market pulp and corrugating medium. According to the 2003-2004 Pulp & Paper Global Fact & Price Book, we are the fourth-largest manufacturer of uncoated free sheet in North America,

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with annual uncoated free sheet production capacity of approximately 1.6 million tons and market share of approximately 10% in 2003. During 2004, our Paper segment generated sales, pro forma segment income and pro forma EBITDA of $1.37 billion, $81.4 million and $131.4 million, respectively.

          Our uncoated free sheet products include cut-size office paper, commercial printing paper, papers for business forms and envelopes and value-added papers. Our value-added grades include bright and colored cut-size office papers and specialty papers that are custom-developed for various uses, including label and release, security and food wrap applications. Our larger paper machines produce primarily commodity grades in long, high-volume production runs that achieve economies of scale. On our smaller paper machines, which allow us to cost-effectively accommodate shorter production runs and more frequent grade changes, production of value-added grades is displacing the production of commodity grades. Value-added grades tend to require shorter production runs, and they also tend to generate higher and more stable prices and higher margins than commodity grades. Sales volumes of value-added grades increased by 14%, from 374,000 tons in 2003 to 426,000 tons in 2004. This increased focus on value-added grades is an important component of our strategy.

          Since we produce market pulp in volumes approximately equivalent to the market pulp we purchase, we are largely insulated from the cyclical price changes in this product. We also produce corrugating medium for use by our Packaging & Newsprint segment.

          We manufacture our uncoated free sheet at four mills in the United States. Our mills had a total annual capacity of 1.9 million short tons as of December 31, 2004. Our uncoated free sheet paper mills are supported by converting machines that have the capacity to convert 994,000 tons of roll paper into cut- and folio-sized sheets annually. From 1999 to 2004, approximately $483 million was invested in these mills to improve their cost position, expand capacity, enhance product capabilities, maintain facilities and comply with environmental regulations.

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          The following table sets forth annual capacities of manufacturing locations in our Paper segment as of, and production for the year ended, December 31, 2004:

 
  Number of
Machines

  Capacity(1)
  Production
 
   
  (short tons in thousands)

Pulp and paper mills            
Jackson, Alabama            
  Uncoated free sheet   2   519   451
International Falls, Minnesota            
  Uncoated free sheet   4   563   523
St. Helens, Oregon            
  Uncoated free sheet   3   251   249
  Market pulp     103   119
Wallula, Washington            
  Uncoated free sheet   1   243   236
  Market pulp   1   129   104
  Containerboard (corrugating medium)   1   134   132
Annual capacity by product            
Uncoated free sheet   10   1,576   1,459
Containerboard (corrugating medium)   1   134   132
Market pulp   1   232   223

(1)
Capacity assumes production 24 hours per day, 365 days per year, less days allotted for planned maintenance.

          Wood fiber is the principal raw material in this segment. The primary sources of wood fiber are timber and its byproducts, such as wood chips, wood shavings and sawdust. Prior to the Timberlands Sale, we supplied our paper mills with fiber from the timberlands operations, as well as from third parties. Concurrent with the Timberlands Sale, we entered into long-term supply contracts with Forest Capital for a portion of our fiber needs. These agreements expire on December 31, 2014, and fiber purchased under these agreements is purchased at prices that approximate market levels. We currently supply our paper mills with fiber pursuant to these contracts, as well as pursuant to agreements with other third parties and open-market purchases. As a result of the Timberlands Sale, we increased our open-market purchases of wood fiber. Since most of our manufacturing facilities are located in close proximity to active wood markets, we believe the Timberlands Sale will not adversely affect our access to fiber at competitive prices. However, we may incur costs associated with the procurement of fiber, such as higher transportation costs and costs related to identifying potential vendors, that exceed historical levels. We obtain some of our wood byproducts from our sawmills and panel plants in the Northwest and, to a lesser extent, in the South, and purchase the remainder from outside sources. We also obtain fiber for our pulp mills in the Pacific Northwest from our cottonwood fiber farm near Wallula, Washington.

          All of our paper mills have onsite pulp production facilities. Some of our paper mills also purchase pulp from third parties. In addition to wood fiber and market pulp, we purchase waste paper to convert into recycled pulp for use in our paper products. Other important raw materials used in this segment include precipitated calcium carbonate, sodium chlorate, sodium hydroxide and dyes.

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          Our Paper segment consumes substantial amounts of energy, such as electricity, natural gas and fuel oil. During 2004, energy costs comprised approximately 13% of the aggregate amount of materials, labor and other operating expenses and fiber costs from related parties in this segment. We purchase substantial portions of our natural gas and electricity under supply contracts, most of which are between a specific plant and a specific local provider. Under most of these contracts, the providers are bound to provide us with all of our needs for a particular type of energy at a specific facility. Most of these contracts have pricing mechanisms that adjust or set prices based on current market prices.

          Our uncoated free sheet is sold primarily by our own sales personnel. We sell to end users both directly from our mills and through distribution centers. This allows us to respond quickly to customer demands. During 2004, we processed 42% of our uncoated free sheet orders electronically, either over the internet or using Electronic Data Interchange, a computer-to-computer purchase ordering and tracking system.

          In 2004, OfficeMax accounted for $534.8 million of paper segment sales, including 47% of our uncoated free sheet sales volume. In October 2004, OfficeMax agreed to purchase from us its full North American requirements for cut-size office paper, to the extent we choose to supply such paper to them, through December 2012. The price for paper sold under this supply agreement approximates market levels. OfficeMax's purchase obligations under the agreement will phase out over a four-year period beginning one year after the delivery of notice of termination, but not prior to December 31, 2012. This supply agreement provides us with access to one of North America's largest office products sales and distribution networks, giving us a competitive advantage of market access and customer supply chain management. For additional details on our contracts with OfficeMax, see "Certain Relationships and Related Transactions."

          In addition to Office Max, we have over 1,100 uncoated free sheet paper customers, none of which individually represents a material portion of our sales. Our customers include paper merchants, commercial and financial printers, paper converters, such as envelope and form manufacturers, and customers who use our paper for specialty applications, such as label and release products or food wrap. The majority of these customers purchase products through individual purchase orders. In addition to our paper supply agreement with OfficeMax, we have long-term agreements with certain of our other customers, including contracts establishing terms and, in some cases, pricing mechanisms for future orders and sales.

          The markets in which our Paper segment competes are large and highly competitive. Commodity grades of uncoated free sheet are globally traded, with numerous worldwide manufacturers. All of our paper manufacturing facilities are located in the United States. Although we compete largely in the domestic market, we do face competition from foreign producers, many of which have lower operating costs than we do. The level of this competition varies, depending on domestic and foreign demand and foreign currency exchange rates. In general, paper production does not rely on proprietary processes or formulas, except in highly specialized or custom grades.

          About a dozen major manufacturers compete in the North American uncoated free sheet market. Some of our competitors in this segment are more vertically integrated than we are, and/or have access to internal sources of wood fiber, which may allow them to subsidize their base manufacturing business in periods of rising fiber prices. Although price is the primary basis for

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competition in most of our paper grades, quality and service are important competitive determinants, especially in value-added grades. Our paper products also compete with other paper grades, electronic transmission and document storage alternatives. As the use of these alternative products continues to grow, we may see variances in the overall demand for paper products or shifts from one type of paper to another.

Packaging & Newsprint

          We manufacture and sell containerboard and corrugated containers, as well as newsprint. During 2004, our Packaging & Newsprint segment generated sales, pro forma segment income and pro forma EBITDA of $694.5 million, $15.4 million and $51.4 million, respectively.

          Containerboard is used in the production of corrugated containers. Our corrugated containers are used in the packaging of fresh fruit and vegetables, processed food, beverages and other industrial and consumer products. During 2004, we produced approximately 521,000 tons of linerboard and approximately 4.7 billion square feet of corrugated containers, and our corrugated container plants consumed (either directly or through trades with other containerboard producers) approximately 54% of our containerboard production, including the corrugating medium manufactured in our Paper segment.

          We manufactured approximately 427,000 tons of newsprint during 2004, primarily for use in printing daily newspapers and other publications in North America.

          We manufacture containerboard and newsprint at our mill in DeRidder, Louisiana. This mill had an annual production capacity of 1.0 million short tons as of December 31, 2004. From 1999 to 2004, our Packaging & Newsprint segment invested approximately $209 million in the DeRidder mill to improve its cost position, expand capacity, enhance product capabilities, maintain the facility and comply with environmental regulations. We also manufacture corrugated containers at five plants in the Pacific Northwest, with an aggregate annual capacity of approximately 4.5 billion square feet, based on operating the plants five days a week, 24 hours a day.

          The following table sets forth annual capacities of our containerboard and newsprint mill in DeRidder, Louisiana as of, and production for the year ended, December 31, 2004:

 
  Number of
Machines

  Capacity(1)
  Production
 
   
  (short tons in thousands)

DeRidder, Louisiana            
  Containerboard (linerboard)   1   555   521
  Newsprint   2   448   427

(1)
Capacity assumes production 24 hours per day, 365 days per year, less days allotted for planned maintenance.

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          Wood fiber is the principal raw material in this segment. The primary sources of wood fiber are timber and its byproducts, such as wood chips, wood shavings and sawdust. Prior to the Timberlands Sale, we supplied our DeRidder mill with fiber from the timberlands operations, as well as from third parties. Concurrent with the Timberlands Sale, we entered into long-term supply contracts with the buyer of the timberlands operations for a portion of our fiber needs. These agreements expire on March 31, 2014, and fiber purchased under these agreements is purchased at prices that approximate market levels. We currently supply our DeRidder mill with fiber pursuant to these contracts, as well as pursuant to agreements with other third parties and open-market purchases. As a result of the Timberlands Sale, we have increased our open-market purchases of wood fiber. Since most of our manufacturing facilities are located in close proximity to active wood markets, we believe the Timberlands Sale will not adversely affect our access to fiber at competitive prices. However, we may incur costs associated with the procurement of fiber, such as higher transportation costs and costs related to identifying potential vendors, that exceed historical levels. We obtain some of our wood byproducts from our wood product plants in the South, and purchase the remainder from outside sources.

          Our Packaging & Newsprint segment consumes substantial amounts of energy, such as electricity and natural gas. During 2004, energy costs accounted for approximately 12% of the sum of materials, labor and other expenses and fiber costs from related third parties in this segment. We purchase substantial portions of our natural gas and electricity under supply contracts. Under most of these contracts, the providers are bound to provide us with all of our needs for a particular type of energy at a specific facility. Our gas supply contracts have pricing mechanisms based primarily on current market prices, and our electricity supply contracts have pricing mechanisms based primarily on published tariffs.

          Our containerboard and corrugated container products are sold by brokers and our own sales personnel. We market our newsprint through Abitibi-Consolidated, the world's largest producer and marketer of newsprint, pursuant to an arrangement whereby Abitibi purchases all of the newsprint we produce, at price equal to the price at which Abitibi sells newsprint produced at its mills located in the southern United States, less associated expenses and a sales and marketing discount. We recently extended our contract with Abitibi through 2008.

          During 2004, we sold approximately 60% of our linerboard in the open market, of which approximately 34% was sold domestically. We sell our corrugated containers to over 1,300 active customers, including large agricultural producers and food and beverage processors. We sell our newsprint to Abitibi-Consolidated, which sells it primarily to newspaper publishers located near our DeRidder, Louisiana mill.

          Containerboard and newsprint are globally traded commodities with numerous worldwide manufacturers and, as a result, these products compete primarily on the basis of price. The intensity of competition in these industries fluctuates based on demand levels and prevailing foreign currency exchange rates. Our corrugated container business, based in the Pacific Northwest, has a leading regional market position and competes with several national and regional manufacturers. Some of our competitors have lower operating costs than we do, and/or enjoy greater integration between their containerboard production and corrugated container production. During 2004, we

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had market shares of approximately 2% and 3% in the North American linerboard and newsprint markets, respectively.

Wood Products

          According to RISI, we are a leading producer of engineered wood products, or EWP, comprised of laminated veneer lumber, or LVL, a high-strength engineered lumber often used in beams; I-joists, a structural support typically used in floors and roofs; and laminated beams. We believe we are the second-largest EWP manufacturer in North America, with an estimated market share of approximately 20% in 2004, according to RISI. Over the past ten years, we have shifted our product focus from commodity products such as plywood and lumber, to more stable, higher-margin EWP. EWP accounted for 34% of our sales in this segment in 2004. As a result of growth in new housing construction and substitution trends away from traditional wide-dimension lumber to EWP, our EWP sales grew from 1997 through 2004 at a compound annual rate of 18%. We also produce plywood, dimension lumber and high-quality ponderosa pine lumber, a premium lumber grade sold primarily to manufacturers of specialty wood windows, moldings and doors. Our wood products are used in new residential and light commercial construction and in residential repair and remodeling. During 2004, our Wood Products segment generated sales, pro forma segment income and pro forma EBITDA of $1.36 billion, $178.4 million and $251.2 million, respectively.

          We currently operate an integrated network of three EWP facilities and ten plywood and veneer plants, some of which manufacture inputs used in our EWP facilities. We also operate five sawmills and one particleboard plant. The following table lists annual capacities of our Wood Products facilities as of, and production for the year ended December 31, 2004:

 
  Number of
Mills

  Capacity(1)
  Production
 
   
  (in millions)

Engineered wood products(2)   3        
  Laminated veneer lumber (LVL) (cubic feet)       20   18
  I-joists (equivalent lineal feet)         229
Plywood and veneer (sq. ft.) (3/8" basis)(3)   10   1,600   1,666
Lumber (board feet)(4)   6   275   288
Particleboard (sq. ft.) (3/4" basis)   1   200   156
Brazilian veneer (sq. ft.) (3/8" basis)(5)   1   150   85

(1)
Capacity is production assuming normal operating shift configurations. Accordingly, production can exceed capacity under some operating conditions.

(2)
A portion of LVL production is used to manufacture I-joists at two EWP plants. Capacity is based on LVL production only. We are currently expanding capacity at our Alexandria, Louisiana facility by an additional 7.5 million cubic feet. We anticipate that 4.7 million cubic feet of that additional capacity will become available in 2005.

(3)
Production and capacity applicable to plywood only.

(4)
We own one sawmill in Jackson, Alabama that is managed as part of our Jackson pulp and paper mill complex. The financial results for this mill are reported in our Paper segment, and the production and capacity data in this table exclude this facility.

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(5)
Most of the veneer is used for production of LVL at our plant in Alexandria, Louisiana. The remainder is processed into plywood in Brazil or sold in the open market.

          Our manufacturing facilities are located primarily in integrated clusters in areas with ample timber resources, increasing our access to fiber and limiting inbound freight costs.

          Our domestic plywood and veneer facilities use Douglas fir, spruce and white fir, and southern pine logs as raw materials. We use ponderosa pine, spruce and white fir logs to manufacture various grades of lumber. Our EWP facilities in Louisiana and Oregon use veneers and parallel laminated veneer panels produced by our facilities and purchased from third parties, together with OSB purchased from third parties, to manufacture LVL and I-joists. Concurrent with the Timberlands Sale, we entered into long-term supply agreements with the buyer of the timberlands operations in most of the areas where we still have significant manufacturing capacity. These agreements expire on December 31, 2014, and the prices for fiber purchased under these agreements approximate market levels. We believe that we will be able to access sufficient wood resources for our facilities through our supply agreements and open-market purchases from third parties. As a result of the Timberlands Sale, we increased our open-market purchases of wood fiber. Since all of our Wood Products manufacturing facilities are located in active wood markets, we believe the Timberlands Sale will not adversely affect our access to raw materials at competitive prices. However, we may incur costs associated with the procurement of fiber, such as higher transportation costs and costs related to identifying potential vendors, that exceed historical levels.

          Other important materials used to manufacture and prepare our wood products for sale include resins, adhesives, plastic strapping and lumber wrap, which we purchase both on the open market and through long-term requirement contracts.

          During 2004, energy, primarily electricity, natural gas and fuel oil accounted for approximately 3% of the sum of our materials, labor and other operating expenses and fiber costs from related parties in this segment. We purchase substantial portions of our natural gas and electricity under supply contracts, most of which are with local providers in regions in which our facilities are located. Most of these contracts are requirements contracts, whereby the providers are bound to provide us with all of our needs for a particular type of energy at a specific facility. Our gas supply contracts have pricing mechanisms based primarily on current market prices, and our electricity supply contracts have pricing mechanisms based primarily on published tariffs.

          Sales of plywood, lumber and particleboard are managed centrally by product. Our EWP sales force is managed centrally through a main office that oversees regional sales teams. Our sales force provides a variety of technical support services for our EWP, including integrated design, engineering, product specification software, distributor inventory management software and job-pack preparation systems.

          Our largest customer in this segment in 2004 was our Building Materials Distribution segment, representing approximately 37% of the products we manufacture, including 58% of our EWP sales. Our third-party customers in this segment include integrated and independent wholesalers, major retailers and industrial converters in both domestic and export markets.

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          Our markets in this segment are large, fragmented and highly competitive. There are several major producers for most of our products, including EWP and plywood, as well as numerous local and regional manufacturers. According to RISI, we have leading market positions in the manufacture of EWP, plywood and ponderosa pine lumber. We hold much smaller competitive positions with respect to our other building products. Some of our competitors, though, enjoy strong reputations for product quality and customer service, and these competitors may have strong relationships with certain distributors, making it difficult for our products to gain additional market share. Most of our competitors are located in the United States and Canada, although competition from manufacturers in other countries has increased in recent years. Many of these foreign competitors have lower operating costs than we do. We compete not only with manufacturers and distributors of similar building products but also with products made from alternative materials, such as steel and plastic. Our products in this segment compete primarily on the basis of price, quality and, particularly with respect to EWP, levels of customer service. We believe our cost-competitive production facilities and our customer service are our principal competitive advantages in this segment.

Building Materials Distribution

          We are a leading national inventory-carrying wholesale distributor of building materials, according to Home Channel News. We distribute a broad line of building materials, most of which we purchase from third parties, including EWP, OSB, plywood, lumber, siding and general line items such as framing accessories, composite decking, roofing and insulation. In 2004, our Building Materials Distribution segment generated approximately 13% of its sales from EWP, a high-growth product category with higher margins than most building materials we distribute. We believe our broad product line provides our customers with a one-stop resource for their needs and lowers per-unit freight costs. We also have expertise in special-order sourcing and merchandising support, and our nationwide supplier relationships allow us to offer excellent customer service on top brands in the building materials industry. During 2004, our Building Materials Distribution segment generated sales, pro forma segment income and pro forma EBITDA of $2.84 billion, $93.5 million and $102.3 million, respectively.

          We operate a network of 28 strategically located distribution facilities in this segment, located throughout the United States. We have expanded from 15 to 28 facilities since 1999, with much of this growth occurring in the eastern United States, providing us with a national footprint. This expansion has occurred through both acquisitions and organic growth.

          We purchase the majority of the building materials we distribute from third-party suppliers. Approximately 21% of the products purchased by Building Materials Distribution during 2004 were purchased from our Wood Products segment. Our vendor base includes over 1,300 suppliers. Because we purchase large volumes of products from certain of our suppliers, we believe we are able to obtain favorable price and term arrangements. We generally do not have long-term supply contracts with our vendors, which allows us to use the leverage provided by our national presence to obtain favorable vending relationships on a constant basis.

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          Each of our distribution centers implements its own distribution and logistics model tailored to the customers it serves. We operate a fleet of trucks to deliver materials on a regularly scheduled basis. We have a large decentralized sales force that uses timely and accurate market information and local product knowledge to support customers.

          Our customer base in this segment includes a wide range of customers across multiple market segments and various end markets. In 2004, a majority of our sales in this segment were to "pro dealers," retail distributors that sell building materials to professional builders in the residential, light commercial construction and repair and remodeling markets. We also service retail lumber yards, home improvement centers and other industrial accounts.

          The building materials distribution markets in which we operate are highly fragmented, and we compete in each of our geographic and product markets with national, regional and local distributors, wholesale brokers and/or buying cooperatives, some of which are larger than we are and/or have more extensive relationships with professional builders. We compete on the basis of delivery cost and speed, quality of service and compatibility with customers' needs. If one or more of our competitors is able to leverage its geographic coverage and/or customer relationships into expansion in new markets, our growth strategy in this segment could be impeded. Proximity to customers is an important factor in minimizing shipping costs and facilitating quick order turnaround and on-time delivery. We believe our ability to obtain quality materials, from both internal and external sources, and our focus on customer service are our primary competitive advantages in this segment.

Employees

          As of December 31, 2004, we had 10,494 employees, approximately 90 of whom worked part-time. Approximately 4,990, or 48%, of these employees were covered by collective bargaining agreements. Several of these agreements have expired or will expire in 2005. In March 2005, an agreement covering 890 workers in our paper facilities in St. Helens, Oregon; Vancouver, Washington, Salem, Oregon, and Wallula, Washington expired. Negotiations continue with these groups. In July 2005, agreements covering approximately 100 employees in our Jackson, Alabama sheeter facility and 710 workers in our Oakdale, Louisiana and Florien, Louisiana plywood facilities will expire. In addition, an agreement covering approximately 100 workers in our Salt Lake City, Utah corrugated container plant will expire in October 2005.

Properties

          We own substantially all of our facilities. Our properties are in good operating condition and are suitable and adequate for the operations for which they are used. We own substantially all of the equipment used in our facilities. The following is a list of our facilities by segment as of December 31, 2004.

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          The following table summarizes facilities in our Paper segment:

Facility Type

  Number of
facilities

  Locations
Pulp and paper mills   4   Alabama, Minnesota, Oregon and Washington
Distribution centers   4   California, Illinois, New Jersey and Oregon
Converting facilities   2   Oregon and Washington

          The following table summarizes facilities in our Packaging & Newsprint segment:

Facility Type

  Number of
facilities

  Locations
Pulp and paper mill   1   Louisiana
Corrugated container plants   5   Idaho (2), Oregon, Utah and Washington

          The following table summarizes facilities in our Wood Products segment:

Facility Type

  Number of
facilities

  Locations
LVL/I-joist plants   3   Louisiana, Oregon and Canada
Plywood and veneer plants   11   Louisiana (2), Oregon (7), Washington and Brazil
Sawmills(1)   6   Alabama, Oregon (3) and Washington (2)
Particleboard plant   1   Oregon
Wood beam plant   1   Idaho

(1)
The Alabama sawmill is managed by our Paper segment.

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          The following table summarizes facilities in our Building Materials Distribution segment:

Location

  Owned or leased
  Approximate
Warehouse
square footage

Phoenix, Arizona   Owned/Leased   32,027
Riverside, California   Leased   131,263
Denver, Colorado   Owned   203,212
Grand Junction, Colorado   Owned   82,000
Orlando, Florida   Owned   105,000
Tucker, Georgia   Leased   79,620
Boise, Idaho   Owned   62,297
Idaho Falls, Idaho   Owned   51,752
Rochelle, Illinois   Owned   86,000
Annapolis Junction, Maryland   Owned/Leased   14,000
Westfield, Massachusetts   Leased   112,400
Wayne, Michigan   Leased   40,500
Lakeville, Minnesota   Owned   72,000
Billings, Montana   Owned   77,024
Portsmouth, New Hampshire   Owned/Leased   39,400
Delanco, New Jersey   Owned/Subleased   15,000
Albuquerque, New Mexico   Owned   30,000
Greensboro, North Carolina   Leased   88,140
Marion, Ohio   Leased   *
Tulsa, Oklahoma   Owned   128,552
Memphis, Tennessee   Owned   38,926
Dallas, Texas   Owned   137,840
Sugarland, Texas   Leased   104,949
Salt Lake City, Utah   Owned   114,610
Spokane, Washington   Owned/Leased   43,060
Vancouver, Washington   Leased   50,600
Woodinville, Washington   Owned/Leased   32,200
Yakima, Washington   Owned/Leased   33,779

*
We do not currently maintain indoor storage at our Marion, Ohio facility.

Environmental Matters

          Our businesses are subject to a wide range of general and industry-specific environmental laws and regulations. In particular, we are affected by laws and regulations covering air emissions, wastewater discharges, solid and hazardous waste management and site remediation. Compliance with these laws and regulations is a significant factor in the operation of our businesses. We believe that we have created a corporate culture of strong compliance by taking a conservative approach to environmental issues in order to assure that we are operating well within the bounds of regulatory requirements. However, we cannot assure you that we will at all times be in full compliance with environmental requirements, and we cannot assure you that we will not incur fines and penalties in the future.

          In 2002, OfficeMax entered into a Consent Decree with the EPA to settle alleged air permit violations at eight of the plywood and particleboard manufacturing facilities that we now own. The EPA alleged these plants failed to obtain New Source Review air permits. The final installation of control equipment required under the Consent Decree will be completed in May 2005. Once the

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contract equipment has been operated for 12 months, we will move to terminate the Consent Decree.

          We incur substantial capital and operating expenditures to comply with federal, state and local environmental laws and regulations. Failure to comply with these laws and regulations could result in civil or criminal fines or penalties or in enforcement actions. Our failure to comply could also result in governmental or judicial orders that stop or interrupt our operations or require us to take corrective measures, install additional pollution control equipment or take other remedial actions. During 2004, we made approximately $8.0 million in capital expenditures to comply with environmental requirements. We anticipate capital expenditures of approximately $18.0 million in 2005 to comply with environmental requirement, and we expect to spend similar or greater amounts on environmental capital expenditures in the years ahead.

          In 2004, the EPA promulgated rules to control air toxic emissions from wood and panel plants and industrial boilers. Compliance with these rules is required in 2007. The rules will require capital spending at our wood panel plants and paper mills. We are currently evaluating the rules and the amount of capital spending that will be required to comply with them. We expect capital spending to range from $13.0 million to $37.0 million for the period from 2005 to 2007. This range will be refined as mills develop their detailed compliance strategies.

          As an owner and operator of real estate, we may be liable under environmental laws for the cleanup of past and present spills and releases of hazardous or toxic substances on or from our properties and operations. We can be found liable under these laws if we knew of, or were responsible for, the presence of such substances. In some cases, this liability may exceed the value of the property itself.

          Some of our properties have been the subject of investigation or cleanup in connection with environmental contamination. In 2001, the EPA and the Oregon Department of Environmental Quality began an investigation at our paper mill in St. Helens, Oregon. The investigation is being conducted under Oregon's Voluntary Cleanup Program. The investigation has focused on polychlorinated biphenyls from leaking transformers, pentachlorophenol and arsenic near a demolition landfill and possible contamination in sediment in the adjacent Columbia River. Although we cannot assure you regarding the outcome of this investigation, based on current information, we do not expect it to result in material liabilities. Given that the investigation concerns hazardous substance releases that occurred prior to closing of the Acquisition, OfficeMax retained responsibility for this matter pursuant to the asset purchase agreement, as described below.

          OfficeMax retains responsibility for environmental liabilities incurred with respect to businesses, facilities and other assets not purchased by us in connection with the Acquisition, and indemnifies us for hazardous substance releases and other environmental regulatory violations related to our business that occurred prior to the closing of the Acquisition or arise out of pre-closing operations. However, OfficeMax may not have sufficient funds to satisfy in full its indemnification obligations when required, and, in some cases, we may not be entitled to indemnification under the asset purchase agreement.

Other Legal Proceedings

          Under the purchase agreement entered into in connection with the Acquisition, we have assumed responsibility for a small number of claims and litigation matters that arose prior to the Acquisition in the ordinary course of business. There are currently no material legal proceedings pending against us. Also, OfficeMax has agreed to retain responsibility for all claims and litigation not explicitly assumed by us pursuant to the Acquisition, including all litigation with respect to asbestos claims.

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MANAGEMENT

Directors and Executive Officers

          Set forth below is information concerning our directors and executive officers.

Name

  Age
  Position
W. Thomas Stephens   62   Chairman and Chief Executive Officer, Director
John W. Holleran   50   Executive Vice President, Administration and Chief Legal Officer
Stanley R. Bell   58   Senior Vice President, Building Materials Distribution
Thomas E. Carlile   53   Senior Vice President and Chief Financial Officer
Miles A. Hewitt   46   Senior Vice President, Paper
Thomas A. Lovlien   49   Senior Vice President, Wood Products
Samuel K. Cotterell   53   Vice President and Controller
Karen E. Gowland   46   Vice President, General Counsel and Corporate Secretary
Judith M. Lassa   46   Vice President, Packaging & Newsprint
Wayne M. Rancourt   42   Vice President and Treasurer
Robert E. Strenge   51   Vice President, Packaging & Newsprint
Zaid F. Alsikafi   29   Director
George J. Harad   60   Director
John W. Madigan   67   Director
Christopher J. McGowan   33   Director
Samuel M. Mencoff   48   Director
Thomas S. Souleles   36   Director

          W. Thomas Stephens became our Chief Executive Officer and Chairman and a director in October 2004 following a period of retirement. Mr. Stephens served as the President and Chief Executive Officer of MacMillan Bloedel from 1997 until his retirement in 1999. From 1986 to 1996, Mr. Stephens served as the President and Chief Executive Officer of Manville Corporation. From 1982 to 1985, Mr. Stephens served as the Chief Executive Officer of Riverwood Corporation. Mr. Stephens currently serves as a Trustee of Putnam Funds and as a director of TransCanada Pipelines.

          John W. Holleran became our Executive Vice President, Administration and Chief Legal Officer in connection with the Acquisition. From 1999 until 2004, he served as the Senior Vice President, Human Resources and General Counsel of Boise Cascade Corporation.

          Stanley R. Bell became our Senior Vice President, Building Materials Distribution in connection with the Acquisition. From 2000 until 2004, he served as the Senior Vice President and General Manager, Boise Building Solutions, Distribution of Boise Cascade Corporation.

          Thomas E. Carlile became our Senior Vice President and Chief Financial Officer in connection with the Acquisition. From 1994 to 2004, Mr. Carlile served as the Vice President and Controller of Boise Cascade Corporation.

          Miles A. Hewitt became our Senior Vice President, Paper in connection with the Acquisition. From 2001 to 2004, Mr. Hewitt served as the Vice President, General Manager, Boise Paper Solutions, Boise Cascade Corporation. From 1999 to 2001, Mr. Hewitt served as the Vice President, Boise Paper Solutions — Minnesota Operations, Boise Cascade Corporation.

          Thomas A. Lovlien became our Senior Vice President, Wood Products in connection with the Acquisition. From 2000 to 2004, Mr. Lovlien served as the Vice President of Operations, Boise Building Solutions Manufacturing of Boise Cascade Corporation. From 1999 to 2000, Mr. Lovlien

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served as the operations manager of Boise Cascade Corporation's Timber and Wood Products Division.

          Samuel K. Cotterell became our Vice President and Controller in connection with the Acquisition. From 1999 until 2004, he served as the Director of Financial Reporting of Boise Cascade Corporation.

          Karen E. Gowland became our Vice President, General Counsel and Corporate Secretary in connection with the Acquisition. From 1997 until 2004, Ms. Gowland served as the Vice President, Associate General Counsel and Corporate Secretary of Boise Cascade Corporation.

          Judith M. Lassa became our Vice President, Packaging & Newsprint in connection with the Acquisition. From 2000 until 2004, Ms. Lassa served as the Vice President and General Manager, Boise Paper Solutions, Packaging of Boise Cascade Corporation.

          Wayne M. Rancourt became our Vice President and Treasurer in connection with the Acquisition. Mr. Rancourt served as Vice President and Treasurer of Boise Cascade Corporation from June 2004 to October 2004. From 1999 until 2004, he served as the Retirement Funds and Risk Management Director of Boise Cascade Corporation.

          Robert E. Strenge became our Vice President, Packaging & Newsprint in connection with the Acquisition. During 2004, he served as the Vice President, Boise Paper Solutions — Louisiana Operations of Boise Cascade Corporation. From 1997 until 2003, Mr. Strenge served as the Mill Manager of Boise Cascade Corporation's paper mill in St. Helens, Oregon.

          Zaid F. Alsikafi became a director in October 2004. Mr. Alsikafi has been employed by Madison Dearborn since 2003 and currently serves as a Vice President. From 2001 to 2003, Mr. Alsikafi attended Harvard Business School. Mr. Alsikafi was employed by Madison Dearborn from 1999 to 2001 as an Associate.

          George J. Harad became a director in October 2004. Mr. Harad is the executive chairman of the board of OfficeMax Incorporated, having assumed that position in October 2004. Mr. Harad was elected Boise Cascade Corporation's chief executive officer in 1994 and became chairman of its board in 1995, serving in those positions until October 2004. In February 2005, Mr. Harad was appointed Chief Executive Officer of OfficeMax Incorporated and also continues in his role as Executive Chairman of OfficeMax's board of directors.

          John W. Madigan became a director in January 2005. Mr. Madigan retired in December 2003 from Tribune Company, where he served as Chairman and Chief Executive Officer since 1996. Mr. Madigan currently serves as a consultant with Madison Dearborn. Mr. Madigan is also a member of the Board of Directors of Morgan Stanley.

          Christopher J. McGowan became a director in October 2004. Mr. McGowan has been employed by Madison Dearborn since 1999 and currently serves as a Director. Mr. McGowan is a member of the boards of directors of Jefferson Smurfit Group Limited and Auto Trade Center, Inc.

          Samuel M. Mencoff became a director in October 2004. Mr. Mencoff has been employed by Madison Dearborn since 1993 and currently serves as Co-President. From 1987 to 1993, Mr. Mencoff served as Vice President of First Chicago Venture Capital. Mr. Mencoff is a member of the boards of directors of Buckeye Technologies, Inc., Great Lakes Dredge & Dock Corporation, Jefferson Smurfit Group Limited and Packaging Corporation of America.

          Thomas S. Souleles became a director in October 2004. Mr. Souleles has been employed by Madison Dearborn since 1995 and currently serves as a Managing Director. Mr. Souleles is a member of the boards of directors of Great Lakes Dredge & Dock Corporation, Jefferson Smurfit Group Limited, Magellan Midstream Partners, L.P. and Packaging Corporation of America.

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          Except as described in this prospectus, there are no arrangements or understandings between any member of the board of directors or executive officer, and any other person pursuant to which that person was elected or appointed to his or her position.

          Our board of directors has the power to appoint our officers. Each officer will hold office for the term determined by the board of directors and until such person's successor is chosen and qualified or until such person's death, resignation or removal.

          There are no family relationships among any of our directors or executive officers.

Composition of the Board of Directors after this Offering

          Our amended and restated certificate of incorporation, as in effect immediately prior to this offering, will provide for a classified board of directors consisting of three staggered classes of directors, as nearly equal in number as possible. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the directors of the same class whose terms are then expiring. The terms of the directors will expire upon election and qualification of successor directors at the annual meeting of stockholders to be held during the years 2006 for the Class I directors, 2007 for the Class II directors and 2008 for the Class III directors.

          Upon the closing of this offering:

          Our by-laws, as in effect immediately prior to this offering, will provide that the authorized number of directors, which will be seven, may be changed by a resolution adopted by at least two-thirds of our directors then in office. Any additional directorships resulting from an increase in the number of directors may only be filled by the directors and will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our board of directors could have the effect of delaying or preventing changes in control or changes in our management.

          Upon the completion of this offering, our board will consist of seven directors, one of whom will qualify as "independent" according to the rules and regulations of the SEC and the NYSE. We expect to add another independent director within 90 days after the effectiveness of the registration statement of which this prospectus is a part and a third independent director within one year after the effective date of the registration statement.

          Following the consummation of this offering, we will be deemed to be a "controlled company" under the rules of the NYSE, and we will qualify for, and intend to rely upon, the "controlled company" exception to the board of directors and committee composition requirements under the rules of the NYSE. Pursuant to this exception, we will be exempt from the rules that would otherwise require that our board of directors be comprised of a majority of "independent directors" and that our executive compensation and corporate governance and nominating committees be comprised solely of "independent directors," as defined under the rules of the NYSE. The "controlled company" exception does not modify the independence requirements for the audit committee, and we intend to comply with the requirements of the Sarbanes-Oxley Act of 2002 and the NYSE rules, which require that our audit committee be comprised of independent directors exclusively.

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Committees of the Board of Directors

          Our board of directors currently has an audit committee and an executive compensation committee. Prior to or promptly following the completion of this offering, our board of directors will establish a corporate governance and nominating committee. The composition, duties and responsibilities of these committees are set forth below. Committee members will hold office for a term of one year.

          Audit Committee.    The audit committee is responsible for (1) selecting the independent auditor, (2) approving the overall scope of the audit, (3) discussing the annual audited financial statements and quarterly financial statements, including matters required to be reviewed under applicable legal, regulatory or NYSE requirements, with management and the independent auditor, (4) discussing earnings press releases, guidance provided to analysts and other financial information provided to the public, with management and the independent auditor, as appropriate, (5) discussing with management and the independent auditor, as appropriate, any audit problems or difficulties and management's response, (6) discussing the company's risk assessment and risk management policies, (7) reviewing the company's financial reporting and accounting standards and principles, significant changes in such standards or principles and the key accounting decisions affecting the company's financial statements, (8) reviewing and approving the internal corporate audit staff functions, (9) reviewing the company's internal system of audit, financial and disclosure controls and the results of internal audits, (10) annually reviewing the independent auditor's written report describing the auditing firm's internal quality-control procedures and any material issues raised by the auditing firm's internal quality-control review or peer review of the auditing firm, (11) setting hiring policies for employees or former employees of the independent auditors, (12) reviewing and investigating matters pertaining to the integrity of management, (13) establishing procedures concerning the treatment of complaints and concerns regarding accounting, internal accounting controls or audit matters, (14) meeting separately with management, the corporate audit staff and the independent auditor, (15) handling such other matters that are specifically delegated to the audit committee by the board of directors from time to time and (16) reporting regularly to the full board of directors.

          Our audit committee currently consists of Messrs. Souleles, Mencoff, McGowan and Alsikafi. Prior to the completion of this offering, Mr. Madigan will become a member of the audit committee. Mr. Madigan will be determined to be an independent director according to the rules and regulations of the SEC and NYSE and an "audit committee financial expert," as such term is defined in Item 401(h) of Regulation S-K. We expect to add another independent director to our audit committee within 90 days of the effectiveness of the registration statement of which this prospectus is a part and a third independent director to our audit committee within one year after the effective date of such registration statement.

          Executive Compensation Committee.    The executive compensation committee is responsible for (1) reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer and annually evaluating the chief executive officer's performance in light of these goals, (2) reviewing and approving the compensation and incentive opportunities of our executive officers, (3) reviewing and approving employment contracts, severance arrangements, incentive arrangements, change-in-control arrangements and other similar arrangements between us and our executive officers, (4) receiving periodic reports on the company's compensation programs as they affect all employees, (5) reviewing executive succession plans for business and staff organizations and (6) such other matters that are specifically delegated to the compensation committee by the board of directors from time to time. Our compensation committee consists of Messrs. Mencoff, Madigan and Souleles.

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          Corporate Governance and Nominating Committee.    Prior to or promptly following the completion of this offering, our board of directors will establish a corporate governance and nominating committee. Our corporate governance and nominating committee's purpose will be to assist our board in identifying individuals qualified to become members of our board of directors, assess the effectiveness of the board and develop our corporate governance principles. This committee will be responsible for (1) identifying and recommending for election individuals who meet the criteria the board has established for board membership, (2) recommending nominees to be presented at the annual meeting of stockholders, (3) reviewing the board's committee structure and recommending to the board the composition of each committee, (4) annually reviewing director compensation and benefits, (5) establishing a policy for considering stockholder nominees for election to our board, (6) developing and recommending a set of corporate governance guidelines and reviewing them on an annual basis and (7) developing and recommending an annual self-evaluation process of the board and its committees and overseeing such self-evaluations.

          Other Committees.    Our board of directors may establish other committees as it deems necessary or appropriate from time to time.

Compensation of Executive Officers

          None of our executive officers received compensation from us prior to the closing of the Acquisition, and therefore all compensation figures cover the period between the closing of the Acquisition and December 31, 2004, the end of our last completed fiscal year. Prior to the closing of the Acquisition, each of our executive officers, other than Mr. Stephens, was employed by, and received compensation from, OfficeMax or its affiliates.

          The following table presents information regarding compensation paid by us relating to the fiscal year ended December 31, 2004 to our chief executive officer and our four next most highly compensated executive officers whose total annual salary and bonus exceeded $100,000 for the fiscal year ended December 31, 2004. These executives are referred to as the "named executive officers" elsewhere in this prospectus.

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Summary Compensation Table

 
   
   
  Long Term
Compensation

   
 
  Annual Compensation
   
Name and Principal Position

  Restricted Stock
Awards(3)

  All Other
Compensation ($)(4)

  Salary ($)(1)
  Bonus ($)(2)
W. Thomas Stephens
Chairman and Chief Executive Officer
  $ 166,667   $ 192,128   $ 0   $ 438,757
John W. Holleran
Executive Vice President, Administration and Chief Legal Officer
    83,453     118,179     0    
Thomas E. Carlile
Senior Vice President and Chief Financial Officer
    71,230     120,067     0    
Stanley R. Bell
Senior Vice President, Building Materials Distribution
    61,865     80,082     0    
Thomas A. Lovlien
Senior Vice President, Wood Products
    55,313     71,410     0    

(1)
Includes amounts deferred under our Savings and Plan. The Savings Plan is a profit-sharing plan intended to be qualified under Section 401(a) of the Internal Revenue Code that contains a cash or deferred arrangement meeting the requirements of Section 401(k) of the Code.

(2)
Represents payments under our variable incentive compensation plan and excellence awards. Of the amounts reported for Messrs. Holleran and Carlile, $22,115 and $38,413, respectively, represent special cash bonuses recognizing their individual contributions to the Acquisition.

(3)
The named executive officers were granted Series C common units of FPH. The Series C common units of FPH have no value to the holder until FPH's equity value appreciates above a specified level. One half of the Series C common units issued to such named executive officers were subject to vesting over a five-year period, and the other half of the Series C common units were subject to vesting only if the original investors achieved a specified rate of return on their total investment in FPH. As of December 31, 2004, the named executive officers held the following Series C common units of FPH:

 
  Series C
common units

W. Thomas Stephens   11,183,000
John W. Holleran   2,812,000
Thomas E. Carlile   2,396,000
Stanley R. Bell   1,917,000
Thomas A. Lovlien   851,000

        Upon completion of this offering, all of the Series C common units held by the named executive officers will be converted into the following number of shares of Class A common stock and will be subject to vesting on the same terms as the Series C common units, except

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that those shares of Class A common stock that would have vested within the two years following the offering date, will vest immediately upon completion of this offering.

 
  Class A
common stock

W. Thomas Stephens    
John W. Holleran    
Thomas E. Carlile    
Stanley R. Bell    
Thomas A. Lovlien    

See "— Management Equity Arrangements," "Certain Relationships and Related Transactions" and "Principal Stockholders."

(4)
Amounts disclosed in this column include the following:

Name

  Company matching
contributions to the
savings plan(1)

  Company paid
portion of
executive officer
life insurance

  Consulting
agreement(2)

W. Thomas Stephens   $ 1,750   $ 7,555   $ 429,452

Stock Option Grants in 2004

          We did not grant any stock options stock appreciation rights, or SARs, to our named executive officers during the fiscal year ended December 31, 2004. There were no outstanding options to purchase common stock or SARs held by our named executive officers as of December 31, 2004.

Compensation of Directors

          We do not currently compensate directors for their service on our board of directors. To the extent any future directors are neither our employees nor our equity investors, such directors may receive fees.

Compensation Committee Interlocks and Insider Participation

          None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our executive compensation committee. No interlocking relationship exists between the board or directors or the compensation committee of any other company.

Employment Agreement

          Mr. Stephens is party to an employment agreement with us pursuant to which he will serve as our Chairman and Chief Executive Officer. This agreement is scheduled to expire in October 2007, but will be automatically renewed each year thereafter for successive one-year terms unless either party gives the other party 60 days notice prior to the expiration of the then-current term.

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Mr. Stephens receives an initial annual base salary of $1,000,000, subject to adjustment at the discretion of the board of directors, and will be eligible to receive an annual performance bonus, up to a maximum of 146% of his annual salary, based upon the achievement of performance goals as determined by the compensation committee of our board of directors.

          In the event of termination for reasons other than for cause and other than as a result of expiration and non-renewal of the employment agreement term, or if Mr. Stephens resigns for good reason, as defined in the agreement, subject to his execution of a valid release of employment-related claims, Mr. Stephens will be entitled to receive a lump sum payment of two times the sum of his base salary and target bonus and will remain eligible to participate in our benefit plans for a period of two years. We would also be required in such an event to purchase real property in Boise, Idaho from Mr. Stephens at fair market value, which is currently estimated to be approximately $850,000. We also maintain a term life insurance policy on Mr. Stephens' life with a face amount of $2,000,000, which policy is payable to beneficiaries designated by Mr. Stephens.

          As part of the agreement, we would become obligated to purchase real property in Vancouver, British Columbia and a boat from Mr. Stephens at fair market value, which is currently estimated to total approximately $1.7 million, in the event that Mr. Stephens does not sell the property. Mr. Stephens is currently in negotiations with an unaffiliated party to sell the property. If we purchase the property, Mr. Stephens may also require us to lease this property to him at fair market value until it is sold. We intend to promptly dispose of any property purchased in connection with this agreement. Upon the closing of the Acquisition, we also made a one-time payment to Mr. Stephens in exchange for consulting services performed in connection with the Acquisition, totaling approximately $429,000.

          Mr. Stephens has the right under this agreement to be nominated for a position on our board of directors for so long as he is employed under the terms of this agreement. We have also agreed to use our reasonable efforts to have him elected as the chairman of our board during such period. The employment agreement also imposes on Mr. Stephens certain confidentiality, non-compete and non-solicitation obligations. The non-compete and non-solicitation obligations will continue to be in effect for two years after termination of his employment.

Severance Agreements

          Prior to the Acquisition, OfficeMax entered into agreements with most of our current executive officers to provide for severance benefits if we terminated the officer after the Acquisition. In connection with the Acquisition, we assumed these agreements and agreed to perform these agreements following the closing of the Acquisition. These agreements generally expire in October 2007. Pursuant to the terms of these severance agreements, each of our named executive officers (other than Mr. Stephens, who was not an officer of OfficeMax) is entitled to the following benefits subject to his execution of a valid release of employment-related claims: if the officer's employment is terminated "without cause" or if the officer terminates employment for "good reason," as such terms are defined in the agreements, the officer will be entitled to severance pay equal to the following: two times the officer's annual base salary plus the greater of (i) the officer's annual target incentive bonus for the year in which the termination occurs or (ii) the officer's incentive bonus for 2004; accrued and unpaid vacation; continuation for two years of all life, disability, accident and healthcare insurance plans and financial consulting services or a lump sum payment equal to 24 times 150% of the sum of the monthly premiums for such insurance plans plus two times the annual allowance for such financial consulting services; and the premium under our supplemental life plan for 24 months following the officer's date of termination. We will also be required to increase the officer's total payments under the agreement to cover any excise taxes imposed by the Internal Revenue Service as a result of such payments.

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          Such officer will also be entitled, in addition to the retirement benefits to which the officer would be entitled under our pension plan and excess benefit pension plan, to a monthly benefit to which the officer would have been entitled under OfficeMax's Supplemental Early Retirement Plan, or SERP, (i) commencing on the earliest date that the officer could have elected to begin receiving benefits under the SERP if the officer had satisfied the service, but not the age requirements under the SERP, or (ii) on the officer's date of termination if the officer had satisfied the age, but not the service, requirements under the SERP. For the purposes of calculating the amount of the benefit under the SERP, the officer shall be deemed to have accrued two years of additional service credit at a salary equal to the officer's base salary and target bonus at the time of termination under the pension plan and any supplemental retirement plan in which the officer participates following the officer's date of termination of employment. The officer is also entitled to legal fees incurred to enforce the agreement.

          The severance agreements also provide that the officers will not solicit our, or any of our subsidiaries' or affiliates', management-level employees to leave their employment for a period of one year following the officer's date of termination.

          The estimated amount of payments and other benefits (not including legal fees, if any) each named executive officer would receive under the agreement based on 2004 compensation figures (in excess of the benefits to which the officer is entitled without the agreement) is:

 
  Severance Payment
John W. Holleran   $ 3,254,627
Thomas E. Carlile     3,167,633
Stanley R. Bell     1,697,580
Thomas A. Lovlien     1,903,587

          Payments that would be made subsequent to an officer's termination date have been discounted as of December 31, 2004 at a rate of 4.24%, according to the requirements of Section 280G of the Internal Revenue Code. Actual payments made under the agreements at any future date would vary, depending in part upon what the executive has accrued under the variable compensation plans and benefit plans.

          Prior to the Acquisition, OfficeMax also entered into severance agreements with certain of our other executive officers, with terms similar to those described above, but which generally provide for one year of compensation and other benefits instead of two years and for one additional year of service credit under our pension and retirement plans rather than two years.

Management Equity Arrangements

          Pursuant to an equity incentive program established shortly after the closing of the Acquisition, approximately 170 of our management-level employees purchased Series B common units of FPH for approximately $18.6 million. Purchasers of FPH Series B common units in this program also received Series C common units of FPH representing the right to participate in our profits after the holders of the FPH Series B common units have received a return of all of their invested capital. The FPH Series C common units have no value to the holder until FPH's equity value appreciates above a specified level. To prevent dilution of Madison Dearborn's interest in Boise Cascade Holdings, L.L.C., FPH was issued Series C common units in Boise Cascade Holdings, L.L.C. to reflect management's equity interest in FPH.

          In connection with this program, the management investors received (1) an aggregate of approximately 4.2% (approximately       % on a fully-diluted basis) of the total FPH Series B common units as of the date of their investment, representing a 3.4% ownership interest in our total common equity (approximately       % on a fully-diluted basis) and (2) FPH Series C common units

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representing an aggregate of approximately       % of FPH's common equity on a fully-diluted basis, which in turn represents an additional       % of ownership interest in our total pre-offering common equity on a fully-diluted basis. Percentages of our common equity ownership exclude the Series A common units held by OfficeMax, which are non-voting and are only eligible to receive distributions up to their liquidation preference. See "Reorganization as a Corporation" for details of the proposed conversion of our Series A common units into preferred stock.

          Upon completion of this offering, all of the Series B common units of FPH, and those of the Series C common units of FPH that are scheduled to vest within two years of this offering, will vest immediately. The remainder of the FPH Series C common units will vest based on the increase in the value of our business over time. Vesting is dependent upon the internal rate of return earned on Madison Dearborn's investment in FPH. Management will receive a number of shares of our vested and unvested Class A common stock in exchange for their FPH Series C common units based upon an initial offering price of $              per share, representing the mid-point of the range set forth on the cover page to this prospectus, with vesting of such shares of Class A common stock reflecting the vesting terms of management's FPH Series C common units.

          Set forth below is the number of shares of FPH Series B common units and FPH Series C common units held by our executive officers as of December 31, 2004 and the number of shares of our Class A common stock and Class B common stock that we anticipate will be issued to such executive officers based upon an initial offering price of $              per share, representing the mid-point of the range set forth on the cover page to this prospectus.

Name

  FPH Series B common units
  FPH Series C common units
  Class A common stock
  Class B common stock
W. Thomas Stephens   4,000,000   11,183,000        
John W. Holleran   1,000,000   2,812,000        
Stanley R. Bell   740,000   1,917,000        
Thomas E. Carlile   850,000   2,396,000        
Miles A. Hewitt   660,000   1,598,000        
Thomas A. Lovlien   400,000   851,000        
Samuel K. Cotterell   150,000   311,000        
Karen E. Gowland   225,000   511,000        
Judith M. Lassa   225,000   431,000        
Wayne M. Rancourt   160,000   337,000        
Robert E. Strenge   250,000   431,000        

          We will enter into restricted stock agreements with the management investors that will provide for, among other things, repurchase of their unvested shares upon certain events.

Variable Incentive and Performance Plans

          Our board of directors adopted, and our stockholders approved, the Boise Incentive and Performance Plan, or the Boise Plan. The Boise Plan will permit grants of annual incentive awards, stock bonuses, restricted stock, restricted stock units, performance stock, performance units, SARs, and stock options (including performance based or indexed stock options) to certain of our executive officers, key employees and nonemployee directors, including each of the named executive officers. Plan participants will generally be selected by the executive compensation committee of our board of directors. The Boise Plan is designed to comply with Section 162(m) of the Internal Revenue Code, and it will be administered accordingly.

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          A total of                    shares of Class A common stock are reserved for issuance under the Boise Plan. Also, the following shares of Class A common stock will again be available for issuance under the Boise Plan: (1) shares subject to an incentive award that is cancelled, expired, terminated, forfeited, surrendered, or otherwise settled without the issuance of any stock; (2) shares of restricted stock that are forfeited; (3) shares tendered to satisfy the exercise price of an option; and (4) shares tendered or withheld to satisfy tax withholding requirements.

          Approximately 300 of our executive officers, key employees and nonemployee directors are eligible to receive awards under the Boise Plan at the discretion of the executive compensation committee. The Boise Plan restricts the number of stock options, SARs, restricted stock, restricted stock units and performance shares that can be granted during any fiscal year. In addition, the Boise Plan also limits the amount that may be paid to a participant for both annual incentive awards and performance units granted in a single fiscal year.

          Awards will become exercisable or otherwise vest at the times and upon the conditions that the executive compensation committee may determine at the time of grant, as reflected in the applicable award agreement. The committee may also make any or all awards performance-based, which means the award will be paid out based on the attainment of specified performance goals, in addition to any other conditions the committee may establish. Awards under the Boise Plan are discretionary. To date, no awards have been granted under this plan.

          Stock Options.    Stock options entitle the holder to purchase shares of our Class A common stock during a specified period at a purchase price set by the executive compensation committee (not less than 100% of the fair market value of the common stock on the grant date). Each option granted under the Boise Plan will be exercisable for a maximum period of 10 years from the date of grant (or for a lesser period if the committee so determines). Participants exercising an option may pay the exercise price by any lawful method permitted by the committee.

          Stock Appreciation Rights.    A SAR is the right, denominated in shares, to receive upon exercise, without payment to the company, an amount equal to the excess of the fair market value of the Class A common stock on the exercise date over the fair market value of the stock on the grant date. Payment will be made in stock. The executive compensation committee may grant SARs to participants as either freestanding awards or as awards related to stock options. For SARs related to an option, the terms and conditions of the grant will be substantially the same as the terms and conditions applicable to the related option, and exercise of either the SAR or the option will cause the cancellation of the other, unless otherwise determined by the committee. The committee will determine the terms and conditions applicable to awards of freestanding SARs.

          Restricted Stock.    Restricted stock is Class A common stock that is transferred or sold by the company to a participant and that is subject to a substantial risk of forfeiture and to restrictions on sale or transfer for a period of time. The executive compensation committee will determine the amounts, terms and conditions (including the attainment of performance goals) of any grant of restricted stock. Except for restrictions on transfer (and any other restrictions that the committee may impose), participants will have all the rights of a stockholder with respect to the restricted stock. Unless the committee determines otherwise, a participant's termination of employment during the restricted period will result in forfeiture of all shares subject to restrictions.

          Restricted Stock Units.    Restricted stock units are similar to restricted stock, except that the shares of stock are not issued to the participant until after the end of the restriction period and any other applicable conditions are satisfied. Restricted stock units may also be paid in cash rather than stock, or in a combination of cash and stock.

          Performance Units.    Performance units, which are the right to receive a payment upon the attainment of specified performance goals, may also be awarded by the executive compensation

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committee. The committee will establish the applicable performance goals at the time the units are awarded. Payment may be made in cash, stock, or a combination of cash and stock, at the committee's discretion.

          Performance Shares.    Performance shares represent the right to receive a payment at a future date based on the value of the Class A common stock in accordance with the terms of the grant and upon the attainment of specified performance goals. The executive compensation committee will establish the performance goals and all other terms applicable to the grant. Payment may be made in cash, stock, or a combination of cash and stock, at the committee's discretion.

          Annual Incentive Awards.    Annual incentive awards are payments based on the attainment of performance goals specified by the executive compensation committee. Awards are calculated as a percentage of salary, based on the extent to which the performance goals are met during the year, as determined by the committee. Awards are paid in cash, unless the committee determines otherwise.

          Stock Bonuses.    Stock bonus awards, consisting of Class A common stock, may be made at the discretion of the executive compensation committee upon the terms and conditions (if any) determined by the committee.

          Performance Goals.    Awards of restricted stock, performance units, performance shares, annual incentive awards and other awards under the Boise Plan may be subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) of the Internal Revenue Code. These goals may include or be based upon, without limitation, sales; gross revenue; gross margins; internal rate of return; cost; ratio of debt to debt plus equity; profit before tax; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; operating earnings; economic value added; ratio of operating earnings to capital spending; cash flow; free cash flow; net operating profit; net income; net earnings; net sales or net sales growth; price of our common stock; return on capital, net assets, equity or stockholders' equity; segment income; market share; productivity ratios; expense targets; working capital targets; or total return to stockholders. Performance goals may be used to measure the company's performance as a whole or any subsidiary, business unit or segment of the company, may be adjusted to include or exclude extraordinary items, and may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group, index or other external measure.

          Administration of the Plan.    The Boise Plan is administered by our board's executive compensation committee. The executive compensation committee has the sole discretion and responsibility to grant incentive awards, determine the participants to whom incentive awards shall be granted and establish and administer performance goals, among other things. The board of directors may amend the Boise Plan at any time and may make adjustments to the Boise Plan and outstanding options, without stockholder approval, to reflect a stock split, stock dividend, recapitalization, merger, consolidation or other corporate events. Stockholders must approve amendments that:

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          The board may terminate the plan at any time. The plan, however, will remain in effect as awards may extend beyond that time in accordance with their terms.

          For 2004, each of our executive officers received a cash bonus pursuant to the 2004 Boise Incentive Award Plan. These awards were based on the attainment of performance goals related to our net operating profits before taxes. Awards were calculated as a percentage of salary, based on the extent to which the performance goals were met during the year. For 2004, Messrs. Carlile, Holleran and Stephens were eligible to receive up to approximately 146% of the base salary they received from us. Messrs. Bell, Lovlien and Hewitt were eligible to receive up to approximately 124% of the base salary they received from us and Messrs. Strenge, Rancourt and Cotterell, Ms. Lassa and Ms. Gowland were eligible to receive up to approximately 101% of the base salary they received from us.

Defined Benefit Pension Plan for Executive Officers

          We maintain a defined benefit pension plan, which we refer to as the Salaried Pension Plan, for certain salaried employees, including our named executive officers.

          For employees hired before November 2003, our Salaried Pension Plan entitles each vested employee to receive a pension benefit at normal retirement equal to (1) 1.25% of the average of the highest five consecutive years of compensation out of the last 10 years of employment, multiplied by the participant's years of service through December 31, 2003, plus (2) 1% of the average of the highest five consecutive years of compensation out of the last 10 years of employment multiplied by the participant's years of service after December 31, 2003. Under the Salaried Pension Plan, "compensation" is defined as the employee's base salary plus any amounts earned under our variable incentive compensation programs.

          The following table reflects estimated annual benefits payable based on various compensation and years of service combinations.


Salaried Pension Plan Table

 
  Years of Service
Remuneration

  15
  20
  25
  30
  35
  40
$ 300,000   $ 56,250   $ 75,000   $ 93,750   $ 112,500   $ 131,250   $ 150,000
  400,000     75,000     100,000     125,000     150,000     175,000     200,000
  500,000     93,750     125,000     156,250     187,500     218,750     250,000
  600,000     112,500     150,000     187,500     225,000     262,500     300,000
  700,000     131,250     175,000     218,750     262,500     306,250     350,000
  800,000     150,000     200,000     250,000     300,000     350,000     400,000
  900,000     168,750     225,000     281,250     337,500     393,750     450,000
  1,000,000     187,500     250,000     312,500     375,000     437,500     500,000
  1,200,000     225,000     300,000     375,000     450,000     525,000     600,000
  1,400,000     262,500     350,000     437,500     525,000     612,500     700,000
  1,600,000     300,000     400,000     500,000     600,000     700,000     800,000

          As shown in the Salaried Pension Plan table above, benefits are computed on a straight-life annuity basis and are not offset by social security or other retirement-type benefits. An employee is 100% vested in his or her pension benefit after five years of service, except for breaks in service. If an employee is entitled to a greater benefit under the plan's formula than the Internal Revenue

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Code allows for tax-qualified plans, the excess benefits will be paid from our general assets under the unfunded supplemental pension plan. The supplemental pension plan will also provide payments to the extent that participation in the deferred compensation plans has the effect of reducing an individual's pension benefit under the qualified plan. Benefits payable under this supplemental plan are offset by benefits payable under a similar plan maintained by OfficeMax.

          As of December 31, 2004, the average of the highest five consecutive years of compensation and the years of service for each of the named executive officers are as follows:

Name

  Compensation(1)
  Years of
Service(1)

W. Thomas Stephens     N/A   N/A
John W. Holleran   $ 648,310   26
Thomas E. Carlile     413,930   32
Stanley R. Bell     447,184   34
Thomas A. Lovlien     337,127   26

(1)
Compensation and years of service include amounts attributable to employment with OfficeMax prior to the Acquisition.

Supplemental Early Retirement Plan for Executive Officers

          We maintain a Supplemental Early Retirement Plan for executive officers who: (1) are 55 years old or older (58 years old for executive officers appointed on or after June 1, 2004); (2) have 10 or more years of service); (3) have served as an executive officer for at least five full years; and (4) retire before the age of 65. Eligible executive officers receive an early retirement benefit prior to the age of 65 equal to the benefit calculated under the Salaried Pension Plan without reduction due to the officer's early retirement. Benefits payable under this plan are offset by benefits payable under a similar plan maintained by OfficeMax.

Deferred Compensation Plan

          Our 2004 Key Executive Deferred Compensation Plan is an unfunded plan. Under this plan, executive officers may irrevocably elect to defer receipt of a portion (6% to 25%) of their base salary and up to 100% of their bonus until termination of employment or beyond. A participant's account is credited with imputed interest at a rate equal to 130% of Moody's Composite Average of Yields on Corporate Bonds. In addition, participants may elect to receive their company matching contribution in Boise's deferred compensation plan in lieu of any matching contribution in our Savings Plan. The matching contribution is equal to $0.70 on the dollar up to the first 6% of eligible compensation, plus an additional discretionary match for eligible participants that may vary from year to year. In 2004, the discretionary match was equal to $0.30 on the dollar up to the first 6% of eligible compensation. None of our named executive officers participated in the deferred compensation plan during 2004.

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PRINCIPAL STOCKHOLDERS

          The following table sets forth information, as of the date of this prospectus and after giving effect to our conversion into a corporation, regarding the beneficial ownership of our common stock (1) immediately prior to the consummation of this offering and (2) as adjusted to reflect the sale of the shares of Class A common stock in this offering by:

          Unless otherwise noted, beneficial ownership of the common stock listed in the table has been determined in accordance with the applicable rules and regulations promulgated under the Exchange Act and generally includes voting or investment power over securities. Except in cases where community property laws apply or as indicated in the footnotes to the table, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by such stockholder. Percentage of beneficial ownership is based on                           shares of common stock outstanding as of the date of this prospectus, and              shares of common stock outstanding after the completion of this offering. The table below assumes the underwriters have not exercised their option to purchase additional shares. Unless indicated otherwise in the footnotes, the address of each individual listed in the table is c/o Boise Cascade Company, 1111 West Jefferson Street, Boise, Idaho 83702.

 
   
  Percentage of Class(1)
 
  Number of
Shares
Beneficially
Owned

Name of Beneficial Owner

  Prior to this
Offering

  After this
Offering

Principal stockholders:            
  Forest Products Holdings, L.L.C.(2)            
  OfficeMax Incorporated(3)            
Directors and named executive officers:            
  W. Thomas Stephens            
  John W. Holleran            
  Thomas E. Carlile            
  Stanley R. Bell            
  Thomas A. Lovlien            
  Zaid F. Alsikafi(4)      
  George J. Harad            
  John W. Madigan(5)            
  Christopher J. McGowan(4)      
  Samuel M. Mencoff(6)            
  Thomas S. Souleles(6)            
  All directors, director designees and executive officers as a group (11 persons)            

*
Less than 1%.

(1)
None of the holders listed on this table hold Class A Common Stock. Our shares of Class A common stock and Class B common stock are identical, except with respect to dividend and conversion rights. See "Description of Capital Stock" for more information regarding the terms of our Class A common stock and Class B common stock.

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(2)
Forest Products Holdings, L.L.C. ("FPH") is controlled by Madison Dearborn Partners IV, L.P. ("MDP IV"). Madison Dearborn Partners, LLC ("MDP LLC") is the ultimate sole general partner of MDP IV and, as a result, may be deemed to have voting and investment power over the shares held by FPH. The Board of Directors of FPH is comprised of Messrs. Stephens, Mencoff, Souleles, McGowan and Alsikafi. The address for FPH is c/o Boise Cascade Company, 1111 West Jefferson Street, Boise, Idaho 83702, and the address for MDP IV and MDP LLC is c/o Madison Dearborn Partners, LLC, Three First National Plaza, Suite 3800, 70 West Madison Street, Chicago, Illinois 60602

(3)
The address for OfficeMax Incorporated is 150 Pierce Road, Itasca, Illinois 60143.

(4)
Messrs. McGowan and Alsikafi are each employed by MDP LLC and each have a pecuniary interest in the shares held by FPH. Messrs. McGowan and Alsikafi expressly disclaim beneficial ownership except to the extent of their pecuniary interest therein.

(5)
Mr. Madigan is an investor in FPH and the shares listed in the table represent Mr. Madigan's proportionate ownership interest in the shares held by FPH. Mr. Madigan does not exercise voting or investment power over any of the shares held by FPH.

(6)
Mr. Mencoff is a Co-President, and Mr. Souleles is a Managing Director, of MDP LLC, which is the ultimate sole general partner of MDP IV, which controls FPH. As a result, Messrs. Mencoff and Souleles may be deemed to share beneficial ownership of the shares owned by FPH. Messrs. Mencoff and Souleles expressly disclaim beneficial ownership of the shares owned by FPH except to the extent of their pecuniary interest therein. The address of Messrs. Mencoff and Souleles is c/o Madison Dearborn Partners, LLC, Three First National Plaza, Suite 3800, 70 West Madison Street, Chicago, Illinois 60602.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          We have established procedures for the review of all transactions and other relationships between us and our directors, executive officers, and other affiliates. Our board of directors has charged the audit committee with the responsibility of reviewing and investigating any conflicts of interest involving management and our board of directors. Our amended and restated certificate of incorporation renounces any interest or expectancy of us in business opportunities that are offered to officers, directors or stockholders who are not our or our subsidiaries' employees to the fullest extent permitted by the Delaware General Corporation Law. See "Description of Capital Stock."

The Acquisition

          Pursuant to an asset purchase agreement entered into between FPH and OfficeMax, FPH acquired OfficeMax's paper, packaging and newsprint operations, wood products manufacturing, building materials distribution and timberlands operations for an aggregate purchase price of $3.9 billion in cash and installment notes, including fees and expenses. Of the purchase price, $1.7 billion was allocated to the timberlands operations and $2.2 billion was allocated to the remaining assets. FPH owns and operates the paper and forest products businesses through us. The timberlands operations were sold by Boise Land & Timber Corp., a sister corporation that is majority-owned by FPH, on February 4, 2005. See "— Timberlands Sale."

          For five years after the closing of the Acquisition, OfficeMax may not compete with us anywhere in the United States in the businesses purchased in the Acquisition, nor may OfficeMax induce or attempt to induce any customer to terminate or reduce its relationship with us.

          Until October 29, 2006, we must maintain health and welfare benefit plans, defined contribution retirement plans and severance benefits that will provide transferred employees with plans and benefits that are, in the aggregate, comparable to those offered by OfficeMax prior to the closing of the Acquisition.

          The asset purchase agreement contains customary representations, warranties and covenants, including an obligation by OfficeMax to indemnify us for breaches of representatives, warranties and covenants. OfficeMax's indemnification obligations with respect to such breaches generally survive until April 26, 2009, with indemnification obligations with respect to breaches relating to employee and environmental law matters surviving until October 29, 2009. OfficeMax's indemnification obligations for breaches of representations, warranties and covenants are, with certain exceptions subject to a deductible of $20.7 million and an aggregate cap of $248.9 million. OfficeMax also indemnifies us with respect to certain pre-closing liabilities, including environmental, asbestos, tax, benefits and other legacy liabilities.

          We currently indemnify and hold harmless each of our present or former officers, directors or employees against all claims, losses, liabilities, damages and other costs and expenses arising out of or pertaining to the fact that the indemnified party is or was an officer, director or employee of ours or our subsidiaries for matters existing or occurring prior to the completion of the Acquisition.

          In connection with the Acquisition, FPH and OfficeMax capitalized us with approximately $338.9 million in equity capital, $302.5 million of which consisted of Series B common units and $36.4 million of which consisted of Series A common units. Boise Land & Timber Holdings Corp. was capitalized in connection with the Acquisition with approximately $276.1 million in equity capital in the form of common stock, $246.5 million of which consisted of Series B common stock and $29.6 million of which consists of Series A common stock.

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          FPH was issued approximately 80.1% of each of our Series B common units and Boise Land & Timber Holdings Corp.'s Series B common stock in exchange for cash contributions of approximately $242.4 million and $197.6 million, respectively. OfficeMax was issued approximately 19.9% of our Series B common units and all of our Series A common units in exchange for cash contributions of $60.1 million and $36.4 million, respectively. An affiliate of OfficeMax was issued approximately 19.9% of Boise Land & Timber Holdings Corp.'s Series B common stock and all of its Series A common stock in exchange for cash contributions of $48.9 million and $29.6 million, respectively.

          In addition, on December 12, 2004, we and Boise Land & Timber Holdings Corp. each issued additional equity securities to FPH so that both FPH and OfficeMax would proportionately bear any dilution caused by the 35,600,120 FPH Class C units issued to 170 of our senior managers on such date.

          In connection with the Acquisition, we entered into a 12-year paper supply agreement with OfficeMax under which OfficeMax is required to purchase from us all of its North American requirements for cut-size office paper, to the extent we choose to supply such paper to them, through December 2012. OfficeMax's purchase obligations under the agreement will phase out over a four-year period beginning one year after the delivery of notice of termination, but not prior to December 31, 2012.

          In connection with the Acquisition, we entered into a six-year agreement with OfficeMax. Under the agreement, OfficeMax will pay us $710,000 for each dollar by which the average market price per ton of a specified benchmark grade of cut-size office paper during any twelve-month period ending on an anniversary of the closing of the Acquisition, or the annual paper price, is less than $800 per ton. In addition, we will pay $710,000 to OfficeMax for each dollar by which the annual paper price exceeds $920 per ton. Neither party will be obligated to make payments under the agreement (i) in excess of $45.0 million in any one year or (ii) in excess of $125.0 million in the aggregate during the first four years following the closing, $115.0 million in the aggregate if the determination is made during the fifth year following the closing, and $105.0 million in the aggregate if the determination is made during the sixth year following the closing, in each case net of payments received (the "Maximum Aggregate Consideration"). If a party has paid the Maximum Aggregate Consideration during the first four years following the closing, the party will not be entitled to recoup in years five or six the amount previously paid in excess of the Maximum Aggregate Consideration applicable in years five and six. This agreement is scheduled to expire as of the earliest of (i) six years after the closing, (ii) the sale of 50% or more of the outstanding common equity (as measured on October 29, 2004) of Boise Cascade, L.L.C., our subsidiary, in an underwritten public offering, (iii) the sale or transfer by Boise Cascade, L.L.C. of more than 50% of its common equity in Boise White Paper, L.L.C. (the subsidiary that operates our Paper business) and (iv) termination by either party upon a payment default by the other party not cured within 30 days. In connection with the asset purchase agreement, FPH represented to OfficeMax that no change of control or sale transaction involving the white paper business was contemplated as of that date and that FPH will not sell its white paper business during the first six months after closing. We do not anticipate that the completion of this offering will trigger the expiration of the additional consideration agreement.

          Any payments made or received pursuant to the additional consideration agreement will be treated as adjustments to the purchase price for the Acquisition.

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          Concurrently with the Acquisition, we and OfficeMax entered into a mutual administrative services agreement pursuant to which we and OfficeMax exchange certain accounting and financial management, legal, human resources and transportation services for terms ranging from two to fourteen months after the Acquisition. Substantially all of the services to be performed under this agreement are provided by us for OfficeMax. In addition, we also entered into an aviation services agreement under which we agreed to provide aviation services to OfficeMax for an initial term of eight months following the Acquisition, subject to extension at both parties' option. Fees for substantially all of the services provided under these agreements equal the provider's cost.

          In connection with the Acquisition, we entered into a registration rights agreement with FPH and OfficeMax with respect to the equity interests they own in us. Under the registration rights agreement, (a) FPH has the right to demand that we effect an unlimited number of registrations of its equity interests, whether pursuant to a long-form registration statement or a short-form registration, and pay all expenses, other than underwriting discounts and commissions, related to such registrations and (b) after the earlier of the fifth anniversary of the completion of the Acquisition or completion of an initial public offering by us, OfficeMax has the right to demand that we effect (1) seven registrations of its equity interests on a long-form registration statement and pay all expenses, other than underwriting discounts and commissions, related to any two of such registrations (with OfficeMax paying all expenses relating to the other five of such registrations) and (2) an unlimited number of registrations of its equity interests on a short-form registration statement and pay all expenses, other than underwriting discounts and commissions, related to such registrations. In addition, FPH and OfficeMax have the right to participate in registrations of our equity interests effected by us, whether such registrations relate to an offering by us or by our stockholders. FPH and OfficeMax have agreed not to effect any public sale or private placement of any of our equity interests during the period beginning seven days prior to, and ending 180 days after, the effective date of the registration statement for any underwritten public offering of our equity interests in which FPH or OfficeMax participate.

          At the closing of the Acquisition, Madison Dearborn received a fee of $40 million. Madison Dearborn may be paid additional fees from time to time in the future for providing management, consulting or advisory services and will be reimbursed for all future expenses incurred in connection with its investment in us.

          Messrs. Mencoff, Souleles, McGowan and Alsikafi, who are our directors, are employed by Madison Dearborn, which will indirectly own approximately    % of our common stock following this offering.

Relationship Between Us and Boise Land & Timber Holdings Corp.

          Prior to the Timberlands Sale, FPH operated our business and the timberlands operations through two direct, majority-owned subsidiaries. The timberlands operations supplied timber to us at prices that approximated market prices. During 2004, our fiber purchases from the timberlands operations were $120.0 million and were reflected as "fiber costs from related parties" in our statement of income. These sales, as well as the allocation of certain corporate, overhead and labor costs, were reflected through the adjustment of an intercompany note. See "—Loans between Us and Boise Land & Timber Corp." and Note 4 to the financial statements of Boise Forest Products Operations included in this prospectus.

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          In connection with the Acquisition, our subsidiary, Boise Cascade, L.L.C., loaned $164 million to Boise Land & Timber Corp., a subsidiary of Boise Land & Timber Holdings Corp., a sister corporation that is majority-owned by FPH. This loan bore interest at a rate of 6% per annum. The principal amount of the loan was adjusted from time to time to reflect the payments between these companies for allocated costs and expenses. This loan had a balance, including accrued interest, of $159.5 million on February 4, 2005 and was repaid from the proceeds of the Timberlands Sale.

          In connection with the Timberlands Sale, Boise Land & Timber Corp. loaned Boise Cascade, L.L.C. $264.8 million of the proceeds from such sale to make a mandatory repayment of indebtedness under our senior credit facilities. This note bears interest at 8% per annum, compounded semi-annually, is subject to adjustment based on transactions between the two entities and will be repaid with a portion of the proceeds of this offering. See "Use of Proceeds."

          On February 4, 2005, we and Boise Land & Timber Corp., a subsidiary of Boise Land & Timber Holdings Corp., completed the Timberlands Sale to entities controlled by Forest Capital Partners, LLC, an unaffiliated private equity investment firm, for an aggregate purchase price of $1,650 million, with net cash proceeds of $1,632 million after fees and expenses. The purchase and sale agreement entered into in connection with the Timberlands Sale contains customary representations, warranties and covenants, including an obligation by us and Boise Land & Timber Corp. to indemnify the purchasers for breaches of representations, warranties and covenants. Our indemnification obligations, with certain exceptions, survive until February 4, 2006 and are subject to a deductible of $16.5 million and an aggregate cap of $100.0 million. In addition, the purchasers have agreed that, if the events giving rise to an indemnification claim against us and Boise Land & Timber Corp. also give rise to an indemnification claim against OfficeMax under OfficeMax's indemnification obligations arising from its sale of the timberlands operations, the purchasers will pursue remedies directly and exclusively against OfficeMax. In connection with the foregoing, FPH assigned to the purchasers all of its rights to indemnification by OfficeMax with respect to the timberlands operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Effects of Recent Transactions — Effect of Timberlands Sale."

          We received an aggregate of $407.5 million in connection with the Timberlands Sale, including $159.5 million paid by Boise Land & Timber Corp. in satisfaction of a note issued to us concurrently with the Acquisition and $264.8 million in the form of a loan from Boise Land & Timber Corp. We used all of these amounts to reduce amounts outstanding under our Tranche B term loan. Boise Land & Timber Corp. used the remaining $1,225.0 million of the proceeds to repay in full its Tranche C term loan.

Proceeds of this Offering

          Our board of directors intends to declare and pay a dividend to holders of our Class B common stock in the amount of $176.8 million (assuming an initial public offering price of $         , the midpoint of the range set forth on the cover of this prospectus), of which $141.6 million will be payable to FPH and $35.2 million will be payable to OfficeMax. We expect that FPH will distribute all of the proceeds it receives from this dividend to its equityholders, consisting of Madison Dearborn and members of our management. We will also use approximately $36.9 million of the proceeds from this offering to redeem from OfficeMax all of our outstanding preferred stock, plus accrued and unpaid dividends. See "Reorganization as a Corporation" for details on the proposed conversion of our Series A units into preferred stock.

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          In addition, we will use a portion of the proceeds of this offering to repay the loan to Boise Land & Timber Corp., plus accrued interest. In connection with the Timberlands Sale, Boise Land & Timber Corp. loaned approximately $264.8 million of the proceeds to Boise Cascade, L.L.C., our subsidiary. The balance of this loan on a pro forma basis as of December 31, 2004 was $251.3 million. We expect that Boise Land & Timber Corp. will distribute the proceeds from the repayment of this loan to its parent, Boise Land & Timber Holdings Corp., which will use the proceeds to redeem its Series A stock from a subsidiary of OfficeMax, plus accrued and unpaid dividends. The Series A stock will have a liquidation preference as of May 1, 2005 of $30.8 million and accrues dividends at a rate of 8% per annum. Boise Land & Timber Holdings Corp. will use the remainder of the proceeds to pay a dividend on its Series B common stock, which is held by FPH and a subsidiary of OfficeMax. We expect that FPH will distribute all of the proceeds it receives from this dividend to its equityholders.

          The following chart sets forth the estimated amount of the net proceeds of this offering that would be received by FPH, OfficeMax and its subsidiary and by each of our named executive officers, assuming the offering was consummated on May 1, 2005 at an initial public offering price of $                    , the midpoint of the range set forth on the cover of this prospectus.

Holder

  Proceeds
 
  (dollars in thousands)

Madison Dearborn Capital Partners IV, L.P.   $  
OfficeMax Incorporated and its subsidiary      
W. Thomas Stephens      
John W. Holleran      
Thomas E. Carlile      
Stanley R. Bell      
Thomas A. Lovlien      

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DESCRIPTION OF CERTAIN DEBT

Senior Credit Facilities

          In connection with the Acquisition, we entered into term loan and revolving credit facilities, which we refer to as our senior credit facilities, with JPMorgan Chase Bank, N.A. as administrative agent, J.P. Morgan Securities Inc. and Lehman Brothers Inc. as joint-lead arrangers and joint book-runners and Lehman Commercial Paper Inc. as syndication agent. Under the term loan facilities, Boise Cascade, L.L.C., one of our direct subsidiaries, borrowed a seven-year tranche B term loan in a principal amount of $1,330.0 million and Boise Land & Timber Corp., a sister corporation, borrowed a six-year tranche C term loan in a total principal amount of $1,225.0 million. In February 2005, Boise Land & Timber Corp. repaid in full the tranche C term loan from the proceeds of the Timberlands Sale. Also in February 2005, Boise Cascade, L.L.C. prepaid $412.0 million of the tranche B term loan with the amounts it received from Boise Land & Timber Corp. as a loan and as a repayment of an existing loan, as well as a modest amount of cash on hand. Boise Cascade, L.L.C. is the borrower under the six-year revolving credit facility, which has a principal amount of up to $400.0 million, available for general corporate purposes, subject to certain conditions.

          The obligations under our senior credit facilities and any interest rate protection and other permitted hedging arrangements and overdrafts resulting from cash management arrangements, in each case entered into with one of the lenders under our senior credit facilities, are jointly and severally guaranteed by us and by each of our existing or subsequently organized domestic subsidiaries, which we refer to collectively as Guarantors.

          Our borrowings under our senior credit facilities and the guarantees described above are (subject to limited exclusions) secured by:

          Borrowings under our senior credit facilities bear interest, at our option, at either, in the case of the revolving credit facility, Adjusted LIBOR plus an interest rate spread based upon our leverage ratio, ranging from 1.50% to 2.25%, or the alternate base rate plus an interest rate spread based upon our leverage ratio, ranging from 0.50% to 1.25%, and, in the case of the tranche B term loan, Adjusted LIBOR plus 2.25% or the alternate base rate plus 1.25%. Adjusted LIBOR is the rate appearing on Page 3750 of the Dow Jones Market Service, plus statutory reserve requirements. Our credit agreement defines the alternate base rate as the higher of (1) the prime rate announced by JPMorgan Chase Bank, N.A. or (2) the federal funds effective rate plus 0.50%.

          Letters of credit are subject to a 0.25% fronting fee, payable to the issuing bank, and a fee payable to the lenders equal to the product of the margin applicable to Adjusted LIBOR borrowings

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under our revolving credit facility multiplied by the daily average amount available for drawing under the letters of credit. In addition, the senior credit facilities provide for an annual administration fee to be paid to the administrative agent, and a commitment fee of 0.50% per annum on the average daily unused amount under the revolving credit facility to be paid to the lenders.

          Subject to certain exceptions and limitations, including, under some circumstances, for reinvestment of proceeds, we are required to prepay outstanding term loans under our senior credit facilities with 50% of our excess cash flow (as defined in our credit agreement), 100% of the net cash proceeds of certain asset dispositions, 100% of casualty or condemnation proceeds, 100% of the net cash proceeds of issuances of debt (other than debt permitted to be outstanding under our credit agreement) and 50% of the net cash proceeds of certain issuances of equity, including this offering. We will seek a consent from lenders under our credit agreement, or an amendment and restatement of our senior credit facilities, to permit the use of the equity proceeds as described in this prospectus and to permit future dividend payments on our common stock. See "— Required Consent."

          We may voluntarily prepay loans or reduce commitments under our senior credit facilities at any time, in whole or in part, subject to minimum amounts. If we prepay Adjusted LIBOR loans at any time other than at the end of an applicable interest period, we will be required to reimburse lenders for their redeployment costs.

          Our senior credit facilities contain negative and affirmative covenants affecting us and each of our existing and future direct and indirect subsidiaries, with certain exceptions as set forth in the credit agreement. Our senior credit facilities contain, among others, the following negative covenants and restrictions: limitations on indebtedness, preferred stock, dividends and other restricted junior payments, redemptions and repurchases of capital stock, liens and sale-leaseback transactions, loans and investments, mergers, consolidations, liquidations, recapitalizations, acquisitions and asset sales, transactions with affiliates, changes in business conducted, amendments of debt and other material agreements, prohibitions on certain debt prepayments and redemptions and repurchases of interest rate swap agreements. Our senior credit facilities also require us and our existing and future direct and indirect wholly-owned subsidiaries, with certain exceptions set forth in our credit agreement, to meet certain financial covenants and ratios, in particular a leverage ratio, an interest coverage ratio and a limitation on capital expenditures.

          Our senior credit facilities contain, among others, the following affirmative covenants: delivery of financial and other information to the administrative agent, notice to the administrative agent of the occurrence of certain material events, maintenance of corporate existence and rights, payment of obligations, maintenance of properties and insurance, access to books and properties by the lenders, compliance with laws, further assurances, payment of taxes and maintenance of interest rate protection agreements.

          Our senior credit facilities specify certain events of default, including: failure to pay principal, interest or other amounts, violation of covenants, inaccuracy of representations and warranties, cross events of default and cross accelerations to other material indebtedness, certain bankruptcy and insolvency events, certain ERISA events, certain undischarged judgments, change of control, failure to maintain liens on the collateral and invalidity of guarantees or security or other loan documents.

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          Prior to this offering, we intend to amend and restate our senior credit facilities, which will consist of a $840.0 million Tranche D term loan and a $450.0 million revolving credit facility. The final terms of the amended and restated senior credit facilities are still being discussed with our lenders. However, based on discussions with our lenders, we believe the terms of the amended and restated senior credit facilities will be as described herein. Until such time as the senior credit facilities are rated BB or better by S&P and Ba2 or better by Moody's, borrowings under the Tranche D term loan will bear interest at the following rates:

After such time as the senior credit facilities are rated BB or better by S&P and Ba2 or better by Moody's, borrowings under the Tranche D term loan will be interest at the following rates:

We will be required to make scheduled principal payments on the Tranche D term loan in the amount of approximately $6.3 million in 2005 and $8.4 million in each of 2006 through 2010. The Tranche D term loan will mature on October 8, 2011. The maturity and interest rate on our revolving credit facility is not expected to change.

          The amendment and restatement will also permit this offering and our intended use of proceeds. The amended and restated credit facilities will permit the payment of dividends in an amount not to exceed the sum of:


          Notwithstanding such restrictions, the amended and restated senior credit facilities will permit us to declare and pay dividends in an aggregate amount of $35.0 million, whether or not the foregoing formula would permit the declaration and payment of dividends. The payment of dividends pursuant to this exception would, however, reduce the amount of dividends that could be paid pursuant to the formula described above.

Senior Floating Rate Notes and Senior Subordinated Notes

          Two of our subsidiaries, Boise Cascade, L.L.C. and Boise Cascade Finance Corporation, are co-issuers of $250.0 million in aggregate principal amount of Senior Floating Rate Notes due 2012 and $400.0 million in aggregate principal amount of 71/8% Senior Subordinated Notes due 2014 under an indenture dated October 29, 2004 among the co-issuers, the guarantors named therein and U.S. Bank National Association, as trustee. Interest on the senior floating rate notes accrues at a rate per annum, reset quarterly, equal to LIBOR plus 2.875%. The co-issuers may issue an unlimited principal amount of additional notes having identical terms and conditions as the original notes, provided that we are in compliance with the covenants contained in the indenture. Any additional notes of either series will be part of the same issue as the currently outstanding notes of that series and will vote on all matters with the holders of the original notes. The senior floating rate notes mature on October 15, 2012 and the senior subordinated notes mature on October 15, 2014.

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Interest on the senior floating rate notes is payable quarterly on January 15, April 15, July 15 and October 15 of each year. Interest on the senior subordinated notes is payable semi-annually on April 15 and October 15 of each year. The net proceeds of the sale of the senior floating rate notes and the senior subordinated notes were used, together with the other debt and equity financings, to fund the Acquisition.

          Senior Floating Rate Notes.    The senior floating rate notes are general unsecured obligations of the co-issuers and rank senior in right of payment to all of our existing and future indebtedness that is expressly subordinated in right of payment to the senior floating rate notes. The senior floating rate notes rank equally in right of payment with all of our existing and future indebtedness that is not so subordinated and are effectively subordinated to all of our secured indebtedness to the extent of the value of the assets that secure that indebtedness and to liabilities of our subsidiaries that do not guarantee the senior floating rate notes. In the event of bankruptcy, liquidation, reorganization or other winding up of the co-issuers or guarantors of the senior floating rate notes or upon a default in payment with respect to, or the acceleration of, any indebtedness under the senior credit facilities or other secured indebtedness, the assets that secure such indebtedness will be available to pay obligations on the senior floating rate notes and the related guarantees only after all indebtedness under the senior credit facilities and other secured indebtedness have been repaid in full from such assets.

          Senior Subordinated Notes.    The senior subordinated notes are general unsecured obligations of the co-issuers and rank junior in right of payment to all of our existing and future senior indebtedness, including any indebtedness under our senior credit facilities and the senior floating rate notes, and any guarantees thereof. The senior subordinated notes rank equally in right of payment with any of our existing and future senior subordinated indebtedness and senior in right of payment to any of our future indebtedness that is expressly subordinated. The senior subordinated notes are effectively subordinated to all of our secured indebtedness to the extent of the value of the assets that secure that indebtedness and to liabilities of our subsidiaries that do not guarantee the senior subordinated notes. In the event of bankruptcy, liquidation, reorganization or other winding up of the co-issuers or guarantors of the senior subordinated notes or upon a default in payment with respect to, or the acceleration of, any indebtedness under the senior credit facilities or other secured indebtedness, the assets that secure such indebtedness will be available to pay obligations on the senior subordinated notes and the related guarantees only after all indebtedness under the senior credit facilities and other secured indebtedness have been repaid in full from such assets.

          We and all of our domestic subsidiaries (other than the co-issuers) have, jointly and severally, unconditionally guaranteed on a senior unsecured basis the co-issuers' obligations under the senior floating rate notes and guaranteed on a senior subordinated unsecured basis the co-issuers' obligations under the senior subordinated notes.

          We may redeem all or a part of the senior floating rate notes at any time at the following redemption prices (expressed as a percentage of the principal amount) plus accrued interest to the

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redemption date if redeemed during the 12-month period commencing on October 15 of the years set forth below:

Period

  Redemption
Price

 
2004   103.000 %
2005   102.000 %
2006   101.000 %
2007 and thereafter   100.000 %

          Optional Redemption on and after October 15, 2009.    On and after October 15, 2009, we may redeem all or a part of the senior subordinated notes at any time at the following redemption prices (expressed as a percentage of the principal amount) plus accrued interest to the redemption date if redeemed during the 12-month period commencing on October 15 of the years set forth below:

Period

  Redemption
Price

 
2009   103.563 %
2010   102.375 %
2011   101.188 %
2012 and thereafter   100.000 %

          Optional Redemption from Proceeds of Equity Offerings.    Prior to October 15, 2007, we may at our option, on one or more occasions, redeem senior subordinated notes in an aggregate principal amount not to exceed 40% of the aggregate principal amount of the senior subordinated notes originally issued at a redemption price (expressed as a percentage of principal amount) of 107.125%, plus accrued and unpaid interest to the redemption date, with the net cash proceeds from one or more equity offerings; provided that (1) at least 60% of such aggregate principal amount of senior subordinated notes remains outstanding immediately after the occurrence of each such redemption (other than senior subordinated notes held, directly or indirectly, by the issuers or their affiliates) and (2) each such redemption occurs within 90 days after the date of the related equity offering.

          Make-Whole Redemption.    Prior to October 15, 2009, we may redeem the senior subordinated notes in whole or in part on one or more occasions upon not less than 30 nor more than 60 days' notice at a redemption price equal to the sum of:

          The term "Make-Whole Amount" means, in connection with any optional redemption of any senior subordinated note, the greater of (1) 1.0% of the principal amount of such senior subordinated note and (2) the excess, if any, of (A) the aggregate present value as of the date of such redemption of the redemption price of such senior subordinated note on October 15, 2009 (as set forth in the table above) and the amount of interest (exclusive of interest accrued to the redemption date) that would have been payable in respect of such senior subordinated note through October 15, 2009 if such redemption had not been made, determined by discounting, on a semiannual basis, such redemption price and interest at the Treasury Rate (determined on the business day preceding the date of such redemption) plus 0.5%, from the respective dates on

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which such redemption price and interest would have been payable if such redemption had not been made, over (B) the principal amount of the senior subordinated note being redeemed.

          "Treasury Rate" means, in connection with the calculation of any Make-Whole Amount with respect to any senior subordinated note, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity, as compiled by and published in the most recent Statistical Release that has become publicly available at least two business days prior to the redemption date, equal to the period from the redemption date to October 15, 2009. If no maturity exactly corresponds to such period, yields for the published maturities occurring prior to and after such maturity most closely corresponding to such maturity shall be calculated pursuant to the immediately preceding sentence and the Treasury Rate shall be interpolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month.

          "Statistical Release" means the statistical release "H.15(519)" or any successor publication which is published weekly by the Federal Reserve System and which establishes yields on actively traded U.S. government securities adjusted to constant maturities or, if such statistical release is not published at the time of any determination, then such other reasonably comparable index which shall be designated by the Trustee.

          If we experience certain kinds of changes of control, we will be required to offer to repurchase the notes at a price equal to 101% of their aggregate principal amount plus accrued and unpaid interest to the date of purchase. This offering will not result in a change in control for purposes of the notes.

          The indenture governing the notes contains customary events of default, including payment defaults, covenant defaults, certain cross-defaults to mortgages, indentures or other instruments, certain events of bankruptcy and insolvency, judgment defaults, and failure of any guaranty of the notes to be in full force and effect.

          The indenture governing the notes contains covenants for the benefit of the holders of the notes that, among other things, limit our ability to:

          These limitations are subject to qualifications and exceptions.

          The indenture governing the notes prohibits us from paying dividends or making other distributions unless certain conditions are satisfied. Specifically, we are only permitted to pay

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dividends and make other distributions if (1) no default has occurred and is continuing (or would result therefrom) under the indenture, (2) our consolidated coverage ratio, as defined in the indenture, is at least 2.0 to 1.0 after giving effect to such dividend or distribution and (3) the aggregate amount of such dividend or distribution and all other restricted payments, as defined in the indenture, declared or made since October 29, 2004 does not exceed the sum of:

          Notwithstanding such restrictions, the indenture permits us to make restricted payments in an aggregate amount of $35.0 million, whether or not the foregoing formula or the conditions to its use are satisfied, other than the requirement that no default has occurred and is continuing (or would result therefrom). The payment of dividends pursuant to this exception would, however, reduce the amount of dividends that would be payable pursuant to the formula described above.

          We have agreed with the holders of the notes to exchange all of the notes for exchange notes, which exchange notes will have terms that are substantially the same as those of the notes, but will be registered under the Securities Act. We will not receive any proceeds as a result of this exchange.

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DESCRIPTION OF CAPITAL STOCK

          The discussion set forth below describes our capital stock, amended and restated certificate of incorporation and by-laws as they will be in effect upon consummation of this offering. Our authorized capital stock consists of    shares of common stock, 0.01 par value per share,    shares of which are designated Class A common stock and    shares of which are designated Class B common stock, and    shares of preferred stock, par value $.01 per share. Upon completion of the offering,             shares of Class A common stock and    shares of Class B common stock will be issued and outstanding. We refer to the Class A common stock and the Class B common stock collectively as the "common stock." Our amended and restated certificate of incorporation and by-laws are included as exhibits to the registration statement of which this prospectus forms a part.

Common Stock

          All of our existing common stock is, and the shares of Class A common stock being offered by us in this offering will be, upon payment therefor, validly issued, fully paid and nonassessable. As of March 30, 2005, giving effect to our conversion to a corporation as described under "Reorganization as a Corporation," there were no record holders of our Class A common stock and two record holders of our Class B common stock.

          Dividend Rights.    Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available at the times and in the amounts as the board of directors may from time to time determine. For more information, see "Dividend Policy." Our amended and restated certificate of incorporation provides that in             , 2005, our board of directors will declare, and we will pay, out of any funds legally available therefor, a special, one-time dividend to the holders of our Class B common stock in the amount of $          million (assuming an initial public offering price of $         , the midpoint of the range set forth on the cover page of this prospectus). This special dividend will be payable to the holders of Class B common stock on the record date established by our board of directors.

          Voting Rights.    Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of stockholders. The holders of Class A common stock and Class B common stock will vote as a single class on all matters with respect to which the holders of common stock are entitled to vote, except as otherwise required by law and except that, in addition to any other vote of stockholders required by law, the approval of the holders of a majority of the outstanding shares of Class B common stock, voting as a separate class, is also required to approve any amendment to our amended and restated certificate of incorporation or by-laws, whether by merger, consolidation or otherwise by operation of law, which would adversely affect the rights of the holders of Class B common stock. The holders of common stock do not have cumulative voting rights in the election of directors.

          Preemptive or Similar Rights.    Our common stock is not entitled to preemptive or other similar subscription rights to purchase any of our securities.

          Conversion Rights.    The Class A common stock is not convertible. The Class B common stock may be converted at any time at the option of the holder into Class A common stock and will be automatically converted upon the conversion of a majority of the Class B common stock.

          Right to Receive Liquidation Distributions.    Upon our liquidation, dissolution or winding up, the holders of our common stock are entitled to receive pro rata our assets which are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding.

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          NYSE Listing.    We intend to apply to list the Class A common stock for trading on the NYSE under the symbol "BCC." The Class B common stock will not be listed on any exchange.

Preferred Stock

          Following this offering, our board of directors may, without further action by our stockholders, from time to time, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the rights, preferences and limitations of each series. Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of our liquidation, dissolution or winding-up before any payment is made to the holders of shares of common stock. Under specified circumstances, the issuance of shares of preferred stock may make it more difficult to complete, or tend to discourage, a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our securities or the removal of incumbent management. Upon the affirmative vote of a majority of the total number of directors then in office, the board of directors, without stockholder approval, may issue shares of preferred stock with voting and conversion rights which could adversely affect the holders of shares of common stock. Upon consummation of this offering, there will be no shares of preferred stock outstanding, and we have no present intention to issue any shares of preferred stock.

Anti-takeover Effects of our Amended and Restated Certificate of Incorporation and By-laws

          Our amended and restated certificate of incorporation and by-laws will contain certain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of the company unless such takeover or change in control is approved by our board of directors.

          These provisions include:

          Classified Board.    Our amended and restated certificate of incorporation will provide that our board of directors will be divided into three classes of directors, with the classes as nearly equal in number as possible. As a result, approximately one-third of our board will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board. Our amended and restated certificate of incorporation will provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed in the manner provided in the by-laws and the by-laws will provide that the number of directors will be fixed from time to time solely pursuant to a resolution adopted by two-thirds of the board of directors.

          Action by Written Consent; Special Meetings of Stockholders.    Our amended and restated certificate of incorporation provides that stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting, provided that the existing stockholders shall be permitted to take action by written consent for so long as the existing stockholders continue to hold 50% or more of our outstanding voting stock. Our amended and restated certificate of incorporation and the by-laws provide that, except as otherwise required by law, special meetings of the stockholders can only be called by the chairman of the board or our president, or pursuant to a resolution adopted by a majority of the board of directors. Stockholders are not permitted to call a special meeting or to require the board of directors to call a special meeting.

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          Advance Notice Procedures.    Our by-laws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. Stockholders at an annual meeting will only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our Secretary timely written notice, in proper form, of the stockholder's intention to bring that business before the meeting. Although the by-laws do not give our board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, the by-laws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or defer a potential acquiror from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of the company.

          Supermajority Approval Requirements.    The Delaware General Corporation Law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation's certificate of incorporation or by-laws, unless either a corporation's certificate of incorporation or by-laws require a greater percentage. Our amended and restated certificate of incorporation and by-laws provide that the affirmative vote of holders of at least 662/3% of the total votes eligible to be cast in the election of directors will be required to amend, alter, change or repeal the provisions related to the classified board, advance notice procedures and the taking of action by written consent. This requirement of a supermajority vote to approve amendments to our amended and restated certificate of incorporation and by-laws could enable a minority of our stockholders to exercise veto power over any such amendments.

          Authorized but Unissued Shares.    Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of a majority of our common stock by means of a proxy contest, tender offer, merger or otherwise.

Anti-takeover Effects of Delaware Law

          Section 203 of the Delaware General Corporation Law provides that, subject to exceptions specified therein, an "interested stockholder" of a Delaware corporation shall not engage in any "business combination," including mergers or consolidations or acquisitions of additional shares of the corporation, with the corporation for a three-year period following the time that such stockholder becomes an interested stockholder unless:

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Under Section 203, the restrictions described above also do not apply to specified business combinations proposed by an interested stockholder following the announcement or notification of one of specified transactions involving the corporation and a person who had not been an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority of the corporation's directors, if such transaction is approved or not opposed by a majority of the directors who were directors prior to any person becoming an interested stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors.

          Except as otherwise specified in Section 203, an "interested stockholder" is defined to include:


Under some circumstances, Section 203 makes it more difficult for a person who would be an interested stockholder to effect various business combinations with a corporation for a three-year period. We have not elected to be exempt from the restrictions imposed under Section 203.

Limitations on Liability and Indemnification of Officers and Directors

          Our amended and restated certificate of incorporation limits the liability of directors to the fullest extent permitted by the Delaware General Corporation Law. In addition, our amended and restated certificate of incorporation provides that we shall indemnify our directors and officers to the fullest extent permitted by such law. Prior to the completion of this offering, we expect to enter into indemnification agreements with our current directors.

Corporate Opportunities

          Our amended and restated certificate of incorporation renounces any interest or expectancy of us in business opportunities that are offered to officers, directors or stockholders who are not our or our subsidiaries' employees to the fullest extent permitted by the Delaware General Corporation Law.

Transfer Agent and Registrar

                                                                will be appointed as the transfer agent and registrar for our Class A common stock upon completion of this offering.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

General

          The following is a general discussion of the material United States federal income and estate tax consequences of the ownership and disposition of Class A common stock that may be relevant to you if you are a non-United States Holder. In general, a "non-United States Holder" is any person or entity that is, for United States federal income tax purposes, a foreign corporation, a nonresident alien individual, a foreign partnership or a foreign estate or trust. This discussion is based on current law, which is subject to change, possibly with retroactive effect, or different interpretations. This discussion is limited to non-United States Holders who hold shares of Class A common stock as capital assets. Moreover, this discussion is for general information only and does not address all the tax consequences that may be relevant to you in light of your personal circumstances, nor does it discuss special tax provisions, which may apply to you if you relinquished United States citizenship or residence.

          If you are an individual, you may, in many cases, be deemed to be a resident alien, as opposed to a nonresident alien, by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For these purposes, all the days present in the current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year are counted. Resident aliens are subject to United States federal income tax as if they were United States citizens.

          EACH PROSPECTIVE PURCHASER OF CLASS A COMMON STOCK IS ADVISED TO CONSULT A TAX ADVISOR WITH RESPECT TO CURRENT AND POSSIBLE FUTURE TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR CLASS A COMMON STOCK AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY STATE, MUNICIPALITY OR OTHER TAXING JURISDICTION.

Dividends

          If dividends are paid, as a non-United States Holder you will be subject to withholding of United States federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. To claim the benefit of a lower rate under an income tax treaty, you must properly file with the payor an Internal Revenue Service Form W-8BEN, or successor form, claiming an exemption from or reduction in withholding under the applicable tax treaty. In addition, where dividends are paid to a non-United States Holder that is a partnership or other pass through entity, persons holding an interest in the entity may need to provide certification claiming an exemption or reduction in withholding under the applicable treaty.

          If dividends are considered effectively connected with the conduct of a trade or business by you within the United States and, where a tax treaty applies, are attributable to a United States permanent establishment of yours, those dividends will be subject to United States federal income tax on a net basis at applicable graduated individual or corporate rates but will not be subject to withholding tax, provided an Internal Revenue Service Form W-8ECI, or successor form, is filed with the payor. If you are a foreign corporation, any effectively connected dividends may, under certain circumstances, be subject to an additional "branch profits tax" at a rate of 30% or a lower rate as may be specified by an applicable income tax treaty.

          You must comply with the certification procedures described above, or, in the case of payments made outside the United States with respect to an offshore account, certain documentary evidence procedures, directly or under certain circumstances through an intermediary, to obtain the benefits of a reduced rate under an income tax treaty with respect to dividends paid with respect to

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your common stock. In addition, if you are required to provide an Internal Revenue Service Form W-8ECI or successor form, as discussed above, you must also provide your tax identification number.

          If you are eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty, you may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service.

Gain on Disposition of Class A Common Stock

          As a non-United States Holder, you generally will not be subject to United States federal income tax on any gain recognized on the sale or other disposition of Class A common stock unless:

Federal Estate Tax

          If you are an individual, Class A common stock held at the time of your death will be included in your gross estate for United States federal estate tax purposes, and may be subject to United States federal estate tax, unless an applicable estate tax treaty provides otherwise.

Information Reporting and Backup Withholding Tax

          We must report annually to the Internal Revenue Service and to you the amount of dividends paid to you and the tax withheld with respect to those dividends, regardless of whether withholding was required. Copies of the information returns reporting those dividends and withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty or other applicable agreements.

          Backup withholding is generally imposed at a rate currently not to exceed 28% on certain payments to persons that fail to furnish the necessary identifying information to the payor. You generally will be subject to backup withholding tax with respect to dividends paid on your common stock at a rate currently not to exceed 28% unless you certify your non-United States status. Dividends subject to withholding of United States federal income tax as described above would not be subject to backup withholding.

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          The payment of proceeds of a sale of Class A common stock effected by or through a United States office of a broker is subject to both backup withholding and information reporting unless you provide the payor with your name and address and you certify your non-United States status or you otherwise establish an exemption. In general, backup withholding and information reporting will not apply to the payment of the proceeds of a sale of Class A common stock by or through a foreign office of a broker. If, however, such broker is, for United States federal income tax purposes, a United States person, a controlled foreign corporation, a foreign person that derives 50% or more of its gross income for certain periods from the conduct of a trade or business in the United States or a foreign partnership that at any time during its tax year either is engaged in the conduct of a trade or business in the United States or has as partners one or more United States persons that, in the aggregate, hold more than 50% of the income or capital interest in the partnership, backup withholding will not apply but such payments will be subject to information reporting, unless such broker has documentary evidence in its records that you are a non-United States Holder and certain other conditions are met or you otherwise establish an exemption.

          Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against your United States federal income tax liability provided the required information is furnished in a timely manner to the Internal Revenue Service.

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SHARES ELIGIBLE FOR FUTURE SALE

          Prior to this offering, there has been no public market for our Class A common stock. Future sales of substantial amounts of Class A common stock in the public market, or the perception that such sales may occur, could adversely affect the prevailing market price of the Class A common stock. Upon completion of this offering, there will be         outstanding shares of our Class A common stock and          shares of our Class B common stock. Each share of our Class B common stock is convertible into one share of our Class A common stock at the option of the holder. Of these shares,              shares of Class A common stock expected to be sold in this offering will be freely transferable without restriction or further registration under the Securities Act, except for any such shares which may be held or acquired by an "affiliate" of ours, as that term is defined in Rule 144 under the Securities Act, which shares will be subject to the volume limitations and other restrictions of Rule 144 described below. Of the remaining              shares of common stock outstanding,             shares of common stock held by our executive officers, directors and current stockholders will be subject to the lock-up arrangements described below and will be eligible for resale subject to the volume, manner of sale and other limitations of Rule 144, in each case immediately upon expiration of the lock-up period. The approximately                     shares that are not subject to the lock-up agreements described below will be freely transferrable.

Lock-Up Agreements

          In connection with this offering, we, our executive officers and directors, holders of substantially all of our common stock and Madison Dearborn will enter into 180-day lock-up agreements with the underwriters of this offering under which neither we nor they may, for a period of 180 days after the date of this prospectus, directly or indirectly sell, dispose of or hedge any shares of common stock or any securities convertible into or exchangeable or exercisable for shares of common stock without the prior written consent of Goldman, Sachs & Co. This 180-day period is subject to extension, as described under "Underwriting." We have been informed by Goldman, Sachs & Co. that any determination by it of whether to grant any such consent will not be tied to any particular criteria but will be based on facts and circumstances existing at the time. Among the factors that Goldman, Sachs & Co. may consider in deciding whether to grant such a consent may include the length of time before the lock-up expires, the number of shares involved, the reason for the requested release, market conditions, the trading price of our Class A common stock, historical trading volumes of our Class A common stock and whether the person seeking the release is our officer, director or affiliate.

Rule 144

          In general, under Rule 144 under the Securities Act, a person (or persons whose shares are required to be aggregated), including an affiliate, who has beneficially owned shares for at least one year is entitled to sell, within any three-month period commencing 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

          Sales under Rule 144 also are subject to manner-of-sale provisions and notice requirements and to the availability of current public information about us.

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Rule 144(k)

          Under Rule 144(k) under the Securities Act, persons who were not our affiliate at any time during the 90 days preceding a sale and who have beneficially owned the shares proposed to be sold for at least two years are entitled to sell such shares without complying with the manner-of-sale, public information, volume limitation or notice provisions of Rule 144. The two-year holding period includes the holding period of any prior owner who is not our affiliate. Therefore, unless otherwise restricted, shares covered by Rule 144(k) may be sold at any time.

Rule 701

          In general, under Rule 701 under the Securities Act, any of our employees, directors, officers, consultants or advisors who purchased shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering, or who purchased shares from us after that date upon the exercise of options granted before that date, are eligible to resell such shares in reliance upon Rule 144. If such person is not an affiliate, such sale may be made subject only to the manner-of-sale provisions of Rule 144. If such a person is an affiliate, such sale may be made under Rule 144 without compliance with its one-year minimum holding period, but subject to the other Rule 144 restrictions.

Equity Incentive Plan

          We intend to file a registration statement on Form S-8 under the Securities Act to register approximately             shares of Class A common stock reserved for issuance under our new equity incentive plan. This registration statement is expected to be filed after six months following the effective date of the registration statement of which this prospectus is a part and will be effective upon filing. Shares issued upon the exercise of equity incentives after the effective date of the Form S-8 registration statements will be eligible for resale in the public market without restriction, subject to Rule 144 limitations applicable to affiliates and the lock-up agreements described above.

Registration Rights

          Beginning 180 days after the date of this offering, holders of approximately             restricted shares of our common stock will be entitled to registration rights. For additional information regarding these registration rights, see "Certain Relationships and Related Transactions — Registration Rights Agreement." Registration of such shares under the Securities Act would result in such shares becoming freely tradeable without restriction under the Securities Act, except for shares held by our affiliates immediately upon the effectiveness of such registration.

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UNDERWRITING

          We and the underwriters named below have entered into an underwriting agreement with respect to the shares of Class A common stock being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co., J.P. Morgan Securities Inc., Lehman Brothers Inc. and Deutsche Bank Securities Inc. are joint book-running managers of this offering and the representatives of the underwriters.

Underwriters

  Number of
Shares of Class A Common Stock

Goldman, Sachs & Co.    
J.P. Morgan Securities Inc.    
Lehman Brothers Inc.    
Deutsche Bank Securities Inc.    
   
  Total    
   

          The underwriters are committed to take and pay for all of the shares of Class A common stock being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

          If the underwriters sell more shares of Class A common stock than the total number set forth in the table above, the underwriters have an option to buy up to an additional        shares of Class A common stock from us to cover such sales. They may exercise this option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

          The following table shows the per share and total underwriting discounts and commissions to be paid by us to the underwriters. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase                additional shares of Class A common stock.

Paid by Boise

 
  No Exercise
  Full Exercise
Per Share of Class A Common Stock   $   $
Total   $   $

          Shares of Class A common stock sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $         per share from the initial public offering price. Any such securities dealers may resell any shares purchased from the underwriters to certain other brokers or dealers at a discount of up to $         per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms.

          We, along with our executive officers, directors, holders of substantially all of our common stock, including members of management and the principal stockholders, and Madison Dearborn, have agreed with the underwriters not to dispose of (except as a gift or to a trust in connection with estate planning) or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of

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Goldman, Sachs & Co. This agreement does not apply to any existing employee benefit plans. See "Shares Eligible for Future Sale" for a discussion of certain transfer restrictions.

          The 180-day restricted period described in the preceding paragraph will be automatically extended if (1) during the last 17 days of the 180-day restricted period, we issue an earnings release or announces material news or a material event, or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period, in which case, the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release of the announcement of the material news or material event.

          Prior to this offering, there has been no public market for the shares of Class A common stock. The initial public offering price will be negotiated among us and the representatives of the underwriters. Among the factors considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

          We intend to apply to list the Class A common stock on the New York Stock Exchange under the symbol "BCC." In order to meet one of the requirements for listing the Class A common stock on the NYSE, the underwriters have undertaken to sell lots of 100 or more shares to a minimum of 2,000 beneficial holders.

          In connection with this offering, the underwriters may purchase and sell shares of Class A common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. "Covered" short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares from us in this offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. "Naked" short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Class A common stock in the open market after pricing that could adversely affect investors who purchase in this offering. Stabilizing transactions consist of various bids for or purchases of Class A common stock made by the underwriters in the open market prior to the completion of this offering.

          The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

          Purchases to cover a short position and stabilizing transactions may have the effect of preventing or retarding a decline in the market price of the shares, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the Class A common stock. As a result, the price of the Class A common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the NYSE, in the over-the-counter market or otherwise.

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          Each underwriter has represented, warranted and agreed that: (i) it has not offered or sold and, prior to the expiry of a period of six months from the closing date, will not offer or sell any shares of Class A common stock to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000, or FSMA, received by it in connection with the issue or sale of any shares of Class A common stock in circumstances in which section 21(1) of the FSMA does not apply to us; and (iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

          The shares of Class A common stock may not be offered or sold, transferred or delivered, as part of their initial distribution or at any time thereafter, directly or indirectly, to any individual or legal entity in the Netherlands other than to individuals or legal entities who or which trade or invest in securities in the conduct of their profession or trade, which includes banks, securities intermediaries, insurance companies, pension funds, other institutional investors and commercial enterprises which, as an ancillary activity, regularly trade or invest in securities.

          The shares of Class A common stock may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the shares may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong), other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.

          This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation or subscription or purchase, of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than under circumstances in which such offer, sale or invitation does not constitute an offer or sale, or invitation for subscription or purchase, of the securities to the public in Singapore.

          The securities have not been and will not be registered under the Securities and Exchange Law of Japan (the Securities and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

          A prospectus in electronic format may be made available on the website maintained by one or more of the joint book-running managers of this offering and may also be made available on websites maintained by other underwriters. The underwriters may agree to allocate a number of

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shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the joint book-running managers to underwriters that may make Internet distributions on the same basis as other allocations.

          The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.

          We estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $5.0 million.

          We have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.

          Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. In particular, affiliates of each of the underwriters act as lenders under our existing senior credit facilities. J.P. Morgan Securities Inc. and Lehman Brothers Inc. acted as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A. acts as administrative agent and collateral agent, Lehman Commercial Paper Inc. acted as syndication agent and Goldman Sachs Credit Partners L.P. acted as documentation agent for our existing senior credit facilities. J.P. Morgan Securities Inc. and Lehman Brothers Inc. performed financial advisory services for Madison Dearborn, and Goldman, Sachs & Co. performed financial advisory services for OfficeMax, in connection with the Acquisition. In October 2004, J.P. Morgan Securities Inc., Lehman Brothers Inc., Deutsche Bank Securities Inc. and Goldman, Sachs & Co. were the initial purchasers in the sale of Boise L.L.C.'s and Boise Cascade Finance Corporation's senior floating rate notes due 2012 and 71/8% senior subordinated notes due 2014. Goldman, Sachs & Co. was engaged by Madison Dearborn on behalf of Boise Cascade, L.L.C. and Boise Land & Timber Corp. to perform financial advisory services in connection with the Timberlands Sale. In addition, certain underwriters and/or affiliates of underwriters are creditors of, and own equity securities in, OfficeMax.

137



VALIDITY OF CLASS A COMMON STOCK

          The validity of the Class A common stock offered hereby will be passed upon for us by Kirkland & Ellis LLP (a partnership that includes professional corporations), Chicago, Illinois. The underwriters have been represented by Cravath, Swaine & Moore LLP, New York, New York. Kirkland & Ellis LLP has from time to time represented, and may continue to represent, Madison Dearborn Partners, LLC and some of its affiliates in connection with various legal matters. Some of the partners of Kirkland & Ellis LLP are partners in a partnership that is an investor in one or more of the investment funds affiliated with Madison Dearborn that have invested in FPH and partners in another partnership that directly owns less than 1% of FPH's common equity.


EXPERTS

          Our consolidated financial statements as of December 31, 2004 and for the period from October 29, 2004 (inception) through December 31, 2004, and the financial statements of Boise Forest Products Operations (formerly owned by OfficeMax Incorporated) as of December 31, 2003 and for the period from January 1, 2004 through October 28, 2004 and for each of the years in the two-year period ended December 31, 2003 have been included herein in reliance upon the reports of KPMG LLP, an independent registered public accounting firm, appearing elsewhere in this prospectus, and upon the authority of said firm as experts in accounting and auditing.

          Their report with respect to Boise Forest Products Operations (formerly owned by OfficeMax Incorporated) contains an explanatory paragraph that describes the adoption of the Financial Accounting Standards Board's Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement Obligations" and SFAS No. 148, "Accounting for Stock-Based Compensation — Transition and Disclosure."


WHERE YOU CAN FIND MORE INFORMATION

          We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares to be sold in this offering. This prospectus does not contain all of the information set forth in the registration statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information about us and the shares to be sold in this offering, please refer to the registration statement.

          You may read and copy all or any portion of the registration statement or any reports, statements or other information we file with the SEC at the public reference facility maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material are also available by mail from the Public Reference Branch of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.

          Please call the SEC at 1-800-SEC-0330 for more information on the public reference rooms. You can also find our SEC filings at the SEC's website at http://www.sec.gov.

          We will provide, without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon written or oral request of such person, a copy of any or all of the documents incorporated herein by reference other than exhibits, unless such exhibits specifically are incorporated by reference into such documents or this document. Requests for such documents should be addressed in writing to:

Boise Cascade Company
1111 West Jefferson Street
Boise, Idaho 83702
Attention: Investor Relations

138



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Boise Cascade Holdings, L.L.C. financial statements    

Reports of independent registered public accounting firm

 

F-2

Audited consolidated balance sheets as of December 31, 2004 and 2003 and unaudited pro forma consolidated balance sheet as of December 31, 2004

 

F-4

Audited consolidated statements of income (loss) for the period October 29, 2004 (inception) through December 31, 2004, the period January 1, 2004 through October 28, 2004 (Predecessor) and the years ended December 31, 2003 and 2002 (Predecessor)

 

F-6

Audited consolidated statements of cash flows for the period October 29, 2004 (inception) through December 31, 2004, the period January 1, 2004 through October 28, 2004 (Predecessor) and the years ended December 31, 2003 and 2002 (Predecessor)

 

F-7

Audited consolidated statements of capital for the period October 29, 2004 (inception) through December 31, 2004 and the years ended December 31, 2003 and 2002 (Predecessor)

 

F-8

Notes to consolidated financial statements

 

F-9

F-1



Report of Independent Registered Public Accounting Firm

To the Board of Directors and Unitholders of Boise Cascade Holdings, L.L.C.:

          We have audited the accompanying consolidated balance sheet of Boise Cascade Holdings, L.L.C. and subsidiaries as of December 31, 2004, and the related consolidated statements of income, capital, and cash flows for period from October 29, 2004 (inception) through December 31, 2004. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

          We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 audit provides a reasonable basis for our opinion.

          In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Boise Cascade Holdings, L.L.C. and subsidiaries as of December 31, 2004, and the results of their operations and their cash flows for the period from October 29, 2004 (inception) through December 31, 2004, in conformity with U.S. generally accepted accounting principles.

          /s/ KPMG LLP                                

Boise, Idaho
March 31, 2005

F-2



Report of Independent Registered Public Accounting Firm

To the Board of Directors of OfficeMax Incorporated:

          We have audited the accompanying balance sheet of Boise Forest Product Operations (formerly owned by OfficeMax Incorporated) as of December 31, 2003, and the related statements of income (loss), capital, and cash flows for the period from January 1, 2004 through October 28, 2004 and for each of the years in the two-year period ended December 31, 2003. These financial statements are the responsibility of the management of OfficeMax Incorporated. Our responsibility is to express an opinion on these financial statements based on our audits.

          We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 Boise Forest Product Operations (formerly owned by OfficeMax Incorporated) as of December 31, 2003, and the results of its operations and its cash flows for the period from January 1, 2004 through October 28, 2004 and for each of the years in the two-year period ended December 31, 2003, in conformity with U.S. generally accepted accounting principles.

          As discussed in Note 1 and Note 5 to the financial statements, in 2003, Boise Forest Product Operations (formerly owned by OfficeMax Incorporated) adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations, and the fair-value-based method of accounting for stock-based employee compensation using the prospective method of transition under the provisions of SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure.

          /s/ KPMG LLP                                

Boise, Idaho
March 29, 2005

F-3



BOISE CASCADE HOLDINGS, L.L.C.

CONSOLIDATED BALANCE SHEETS

 
  Boise Holdings
   
 
 
  December 31, 2004
  Predecessor
 
 
  Actual
  Pro Forma
Note 20
(unaudited)

  December 31,
2003

 
 
  (thousands)

 
ASSETS                    

Current

 

 

 

 

 

 

 

 

 

 
Cash and cash equivalents   $ 163,345   $ 163,345   $  
Receivables                    
  Trade, less allowances of $2,323 and $3,075     276,668     276,668     105,362  
  Related parties     42,055     42,055     28,703  
  Other     19,174     19,174     24,114  
Inventories     594,869     594,869     501,380  
Deferred income taxes         41,078     29,055  
Other     15,621     15,621     10,708  
   
 
 
 
      1,111,732     1,152,810     699,322  
   
 
 
 

Property

 

 

 

 

 

 

 

 

 

 
Property and equipment                    
  Land and land improvements     83,123     83,123     31,325  
  Buildings and improvements     204,704     204,704     577,083  
  Machinery and equipment     1,196,978     1,196,978     4,315,741  
   
 
 
 
      1,484,805     1,484,805     4,924,149  

Accumulated depreciation

 

 

(18,956

)

 

(18,956

)

 

(2,758,806

)
   
 
 
 
      1,465,849     1,465,849     2,165,343  
Fiber farms and timber deposits     44,646     44,646     86,547  
   
 
 
 
      1,510,495     1,510,495     2,251,890  
   
 
 
 

Note receivable from related party

 

 

157,509

 

 

157,509

 

 


 
Deferred financing costs     84,054     84,054     8,465  
Goodwill     18,390     18,390     11,639  
Intangible assets     34,357     34,357     192  
Investments in equity affiliates             44,232  
Other assets     15,532     15,532     108,095  
   
 
 
 
Total assets   $ 2,932,069   $ 2,973,147   $ 3,123,835  
   
 
 
 

See accompanying notes to consolidated financial statements.

F-4



BOISE CASCADE HOLDINGS, L.L.C.

CONSOLIDATED BALANCE SHEETS (Continued)

 
  Boise Holdings
   
 
  December 31, 2004
  Predecessor
 
  Actual
  Pro Forma
Note 20
(unaudited)

  December 31,
2003

 
  (thousands)

LIABILITIES AND CAPITAL                  

Current

 

 

 

 

 

 

 

 

 
Short-term borrowings   $   $   $ 2,894
Current portion of long-term debt     13,300     13,300     46,296
Income taxes payable            
Accounts payable                  
  Trade     310,148     310,148     274,584
  Related parties     150     150     6,089
Accrued liabilities                  
  Compensation and benefits     62,495     62,495     90,655
  Interest payable     8,584     8,584     19,034
  Other     43,631     43,631     55,184
Distributions payable to stockholders         176,832    
   
 
 
      438,308     615,140     494,736
   
 
 
Debt                  
Long-term debt, less current portion     1,966,700     1,966,700     1,222,127
   
 
 
Other                  
Deferred income taxes         16,561     486,088
Compensation and benefits     133,648     133,648     148,470
Other long-term liabilities     23,573     23,573     43,720
   
 
 
      157,221     173,782     678,278
   
 
 
Commitments and contingent liabilities                  

Capital

 

 

 

 

 

 

 

 

 
Series A equity units—no par value; 66,000,000 units authorized and outstanding     36,868     36,868    
Series B equity units—no par value; 549,000,000 units authorized and outstanding     332,972     176,831    
Series C equity units—no par value; 38,165,775 units authorized; 35,600,120 outstanding            
Retained losses              
Business unit equity             727,832
Accumulated other comprehensive income         3,826     862
   
 
 
Total capital     369,840     217,525     728,694
   
 
 
Total liabilities and capital   $ 2,932,069     2,973,147   $ 3,123,835
   
 
 

See accompanying notes to consolidated financial statements.

F-5



BOISE CASCADE HOLDINGS, L.L.C.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

 
  Boise Holdings
  Predecessor
 
 
  October 29
(inception)
through
December 31,
2004

   
  Year Ended
December 31

 
 
  January 1
through
October 28,
2004

 
 
  2003
  2002
 
 
  (thousands)

 
Sales                          
Trade   $ 779,953   $ 4,417,440   $ 4,217,305   $ 3,864,312  
Related parties     92,774     444,608     436,415     411,954  
   
 
 
 
 
      872,727     4,862,048     4,653,720     4,276,266  
   
 
 
 
 
Costs and expenses                          
Materials, labor and other operating expenses     733,509     4,122,045     3,982,229     3,653,510  
Fiber costs from related parties     24,451     95,537     113,818     110,775  
Depreciation, amortization and depletion     20,037     193,816     229,820     233,811  
Selling and distribution expenses     40,118     211,319     224,338     203,544  
General and administrative expenses     10,608     79,317     69,703     73,572  
Other (income) expense, net     (23 )   25,348     32,806     11,824  
   
 
 
 
 
      828,700     4,727,382     4,652,714     4,287,036  
   
 
 
 
 
Income (loss) from operations     44,027     134,666     1,006     (10,770 )
   
 
 
 
 
Equity in net income (loss) of affiliates         6,308     8,716     (1,454 )
Gain on sale of equity affiliate         46,498          
Foreign exchange gain (loss)     1,181     912     2,672     (133 )
Interest expense     (22,182 )   (72,124 )   (92,935 )   (94,803 )
Interest income     2,005     557     850     1,006  
   
 
 
 
 
      (18,996 )   (17,849 )   (80,697 )   (95,384 )
   
 
 
 
 
Income (loss) before income taxes and cumulative effect of accounting change     25,031     116,817     (79,691 )   (106,154 )
Income tax (provision) benefit     (329 )   (47,351 )   36,471     45,248