(X)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001

(  )

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to __________________

Commission File Number: 1-5057

BOISE CASCADE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

82-0100960

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1111 West Jefferson Street
P.O. Box 50
Boise, Idaho

83728-0001

(Address of principal executive officers)

(208) 384-6161

(Registrant's telephone number, including area code)

(Zip Code)

Class
Common Stock, $2.50 par value

Shares Outstanding
as of April 30, 2001
57,433,386

ITEM 1.

FINANCIAL STATEMENTS

Three Months Ended
March 31

_______________________

2001

2000

_________

_________

(unaudited)

Revenues

   Sales

$

1,901,256

$

1,995,893

_________

_________

Costs and expenses

   Materials, labor, and other operating expenses  

1,539,598

1,581,369

   Depreciation, amortization, and cost of company
      timber harvested

73,368

73,716

   Selling and distribution expenses

206,203

200,686

   General and administrative expenses

29,678

29,036

   Other (income) expense, net

72,319

5,154

_________

_________

1,921,166

1,889,961

_________

_________

Equity in net income (loss) of affiliates

(1,964

)

2,321

_________

_________

Income (loss) from operations

(21,874

)

108,253

_________

_________

   Interest expense

(33,792

)

(36,685

)

   Interest income

420

504

   Foreign exchange loss

(2,619

)

(226

)

_________

_________

(35,991

)

(36,407

)

_________

_________

Income (loss) before income taxes and minority interest

(57,865

)

71,846

   Income tax (provision) benefit

22,259

(28,738

)

_________

_________

Income (loss) before minority interest

(35,606

)

43,108

   Minority interest, net of income tax

106

(3,544

)

_________

_________

Net income (loss)

$

(35,500

)

$

39,564

=========

=========

Net income (loss) per common share

   Basic

$

(0.68

)

$

0.63

=========

=========

   Diluted

$

(0.68

)

$

0.60

=========

=========

March 31

December 31

_________________________

___________

2001

2000

2000

_________

___________

___________

(unaudited)

Current

   Cash and cash equivalents

$

66,915

$

81,933

$

62,820

   Receivables, less allowances

      of $9,750, $11,196, and $7,607

561,334

698,454

671,793

   Inventories

672,087

687,997

747,829

   Deferred income tax benefits

67,080

57,276

50,924

   Other

45,719

43,981

43,955

__________

___________

___________

1,413,135

1,569,641

1,577,321

__________

___________

___________

Property

   Property and equipment

      Land and land improvements

70,054

73,049

70,551

      Buildings and improvements

645,222

621,111

648,256

     Machinery and equipment

4,466,272

4,331,169

4,447,628

__________

___________

___________

5,181,548

5,025,329

5,166,435

   Accumulated depreciation

(2,614,988

)

(2,475,109

)

(2,584,784

)

__________

___________

___________

2,566,560

2,550,220

2,581,651

   Timber, timberlands, and timber deposits

291,882

292,187

291,132

__________

___________

___________

2,858,442

2,842,407

2,872,783

__________

___________

___________

Goodwill, net of amortization

   of $52,194, $56,159, and $49,053

395,563

476,219

403,331

Investments in equity affiliates

129,007

39,732

134,757

Other assets

273,241

231,524

278,731

__________

___________

___________

Total assets

$

5,069,388

$

5,159,523

$

5,266,923

==========

===========

===========

March 31

December 31

_______________________

___________

2001

2000

2000

_________

_________

___________

(unaudited)

Current

   Short-term borrowings

$

6,400

$

77,752

$

52,000

   Current portion of long-term debt

36,230

22,825

41,314

   Income taxes payable

28,466

24,609

15,884

   Accounts payable

536,021

600,727

596,882

   Accrued liabilities

      Compensation and benefits

143,500

131,692

150,138

      Interest payable

28,340

28,154

27,802

      Other

169,202

170,453

130,374

_________

_________

___________

948,159

1,056,212

1,014,394

_________

_________

___________

Debt

   Long-term debt, less current portion

1,648,680

1,643,943

1,714,776

   Guarantee of ESOP debt

107,911

132,809

107,911

_________

_________

___________

1,756,591

1,776,752

1,822,687

_________

_________

___________

Other

   Deferred income taxes

362,559

317,498

383,646

   Other long-term liabilities

290,278

237,281

279,755

_________

_________

___________

652,837

554,779

663,401

_________

_________

___________

Minority interest

7,984

134,705

9,469

_________

_________

___________

Shareholders' equity

   Preferred stock -- no par value; 10,000,000       shares authorized;

      Series D ESOP: $.01 stated value; 4,611,843;
         4,880,791; and 4,688,030 shares outstanding

207,533

219,636

210,961

      Deferred ESOP benefit

(107,911

)

(132,809

)

(107,911

)

   Common stock -- $2.50 par value; 200,000,000
      shares authorized; 57,390,406; 57,219,461;
      and 57,337,158 shares outstanding

143,476

143,049

143,343

   Additional paid-in capital

456,393

451,079

454,849

   Retained earnings

1,030,706

971,705

1,074,228

   Accumulated other comprehensive income (loss)

(26,380

)

(15,585

)

(18,498

)

_________

_________

___________

      Total shareholders' equity

1,703,817

1,637,075

1,756,972

_________

_________

___________

Total liabilities and shareholders' equity

$

5,069,388

$

5,159,523

$

5,266,923

=========

=========

===========

Three Months Ended
March 31

__________________________

2001

2000

___________

___________

(unaudited)

Cash provided by (used for) operations

   Net income (loss)

$

(35,500

)

$

39,564

   Items in income (loss) not using (providing) cash

      Equity in net (income) loss of affiliates

1,964

(2,321

)

      Depreciation, amortization, and cost of
         company timber harvested

73,368

73,716

      Deferred income tax provision (benefit)

(33,469

)

5,696

      Minority interest, net of income tax

(106

)

3,544

      Restructuring activities

58,929

-

      Other

13,490

226

   Receivables

(59,553

)

(34,845

)

   Inventories

73,951

15,987

   Accounts payable and accrued liabilities

(54,456

)

11,802

   Current and deferred income taxes

13,558

4,635

   Other

(3,383

)

(2,284

)

___________

___________

      Cash provided by operations

48,793

115,720

___________

___________

Cash provided by (used for) investment

   Expenditures for property and equipment

(65,583

)

(64,934

)

   Expenditures for timber and timberlands

(2,943

)

(1,935

)

   Investments in equity affiliates, net

(435

)

-

   Sale of operating assets

159,554

-

   Other

(7,587

)

6,965

___________

___________

      Cash provided by (used for) investment

83,006

(59,904

)

___________

___________

Cash provided by (used for) financing

   Cash dividends paid

      Common stock

(8,601

)

(8,574

)

      Preferred stock

(44

)

(59

)

___________

___________

(8,645

)

(8,633

)

   Short-term borrowings

(45,600

)

5,952

   Additions to long-term debt

14,559

105,154

   Payments of long-term debt

(85,672

)

(140,894

)

   Other

(2,346

)

(2,397

)

___________

___________

      Cash used for financing

(127,704

)

(40,818

)

___________

___________

Increase in cash and cash equivalents

4,095

14,998

Balance at beginning of the year

62,820

66,935

___________

___________

Balance at March 31

$

66,915

$

81,933

===========

===========

(1)

BASIS OF PRESENTATION. We have prepared the quarterly financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Some information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations. These statements should be read together with the statements and the accompanying notes included in our 2000 Annual Report.

The quarterly financial statements have not been audited by independent public accountants, but in the opinion of management, all adjustments necessary to present fairly the results for the periods presented have been included. Net income (loss) for the three months ended March 31, 2001 and 2000, necessarily involved estimates and accruals. Actual results may vary from those estimates. Except as may be disclosed within these "Notes to Quarterly Financial Statements," the adjustments made were of a normal, recurring nature. Quarterly results are not necessarily indicative of results that may be expected for the year.

(2)

OTHER (INCOME) EXPENSE, NET. "Other (income) expense, net" includes gains and losses on the sale and disposition of property and other miscellaneous income and expense items. In first quarter 2001, our corporate and other segment recorded a $10.9 million pretax, noncash charge to accrue for a one-time liability related to postretirement benefits for our Northwest hourly paperworkers. These workers have been participating in a multiemployer trust which is converting to a single employer trust. The components of "Other (income) expense, net" in our Statements of Income (Loss) are as follows:

Three Months Ended
March 31

_____________________

2001

2000

_______

_______

(thousands)

Receivable securitization (Note 5)

$

2,486

$

1,576

Restructuring activities (Note 13)

58,929

-

Postretirement benefits

10,897

-

Other, net

7

3,578

_______

_______

$

72,319

$

5,154

=======

=======

(3)

NET INCOME (LOSS) PER COMMON SHARE. Net income (loss) per common share was determined by dividing net income (loss), as adjusted, by applicable shares outstanding. For the three months ended March 31, 2001, the computation of diluted net loss per share was antidilutive; therefore, the amounts reported for basic and diluted loss were the same.

Three Months Ended
March 31

_____________________

2001

2000

_______

_______

(thousands)

BASIC

Net income (loss) as reported

$

(35,500

)

$

39,564

   Preferred dividends (a)

(3,262

)

(3,376

)

_______

_______

Basic income (loss)

$

(38,762

)

$

36,188

=======

=======

Average shares used to determine basic

  income (loss) per common share

57,353

57,212

=======

=======

DILUTED

Basic income (loss)

$

(38,762

)

$

36,188

   Preferred dividends eliminated

-

3,376

   Supplemental ESOP contribution

-

(2,886

)

_______

_______

Diluted income (loss) (b)

$

(38,762

)

$

36,678

=======

=======

Average shares used to determine basic
   income (loss) per common share   

57,353

57,212

   Stock options and other

-

314

   Series D Convertible Preferred Stock

-

3,972

_______

_______

Average shares used to determine diluted
   income (loss) per common share (b)

57,353

61,498

=======

=======

(a)

The dividend attributable to our Series D Convertible Preferred Stock held by our ESOP (employee stock ownership plan) is net of a tax benefit.

(b)

Adjustments reducing the net loss to arrive at diluted loss totaling $556,000 in 2001 were excluded because the calculation of diluted loss per share was antidilutive. Also, in 2001, potentially dilutive common shares of 4,185,000 were excluded from average shares because they were antidilutive.

(4)

COMPREHENSIVE INCOME (LOSS). Comprehensive income (loss) for the periods include the following:

Three Months Ended
March 31

_____________________

2001

2000

_______

_______

(thousands)

Net income (loss)

$

(35,500

)

$

39,564

Other comprehensive income (loss)

   Cumulative foreign currency translation
      adjustment, net of income taxes

(6,993

)

(3,672

)

   Cash flow hedges, net of income taxes

(889

)

-

_______

_______

Comprehensive income (loss), net of
   income taxes

$

(43,382

)

$

35,892

=======

=======

For the three months ended March 31, 2001, reclassifications to earnings from the cash flow hedges were not material.

(5)

RECEIVABLES. We have sold fractional ownership interests in a defined pool of trade accounts receivable. At both March 31, 2001 and December 31, 2000, $200 million of sold accounts receivable were excluded from receivables, and at March 31, 2000, $100 million of sold accounts receivable were excluded from receivables in the accompanying Balance Sheets. The portion of fractional ownership interest retained by us is included in accounts receivable in the Balance Sheets. This program consists of a revolving sale of receivables committed to by the purchasers for 364 days and is subject to renewal. Costs related to the program are included in "Other (income) expense, net" in our Statements of Income (Loss). Under the accounts receivable sale agreement, the maximum amount available from time to time is subject to change based on the level of eligible receivables, restrictions on concentrations of receivables, and the historical performance of the receivables we sell.

(6)

DEFERRED SOFTWARE COSTS. We defer software costs that benefit future years. These costs are amortized on the straight-line method over the expected life of the software. "Other assets" in the Balance Sheets includes deferred software costs of $63.4 million, $50.3 million, and $59.7 million at March 31, 2001 and 2000, and December 31, 2000. Amortization of deferred software costs totaled $4.6 million and $3.4 million for the three months ended March 31, 2001 and 2000.

(7)

INVENTORIES. Inventories include the following:

March 31

December 31

_______________________

___________

2001

2000

2000

________

________

___________

(thousands)

Finished goods and work in process

$

535,960

$

553,227

$

583,030

Logs

58,633

52,316

87,176

Other raw materials and supplies

143,688

143,220

141,888

LIFO reserve

(66,194

)

(60,766

)

(64,265

)

________

________

___________

$

672,087

$

687,997

$

747,829

========

========

===========

(8)

INCOME TAXES. Our effective tax benefit rate for the three months ended March 31, 2001, was 38.5%, compared with an effective tax provision rate of 40.0% for the three months ended March 31, 2000. Before nonroutine items, our estimated annual tax provision rate in 2001 is 41.0%. In 2000, our actual tax provision rate was 39.0%. The changes in our tax rates were due primarily to the sensitivity of the rate to changing income levels and the mix of domestic and foreign sources of income.

For the three months ended March 31, 2001 and 2000, we paid income taxes, net of refunds received, of $8.1 million and $12.1 million.

(9)

DEBT. We have a revolving credit agreement with 23 major banks that permits us to borrow as much as $600 million at variable interest rates based on the London Interbank Offered Rate (LIBOR). At March 31, 2001, the rate was 5.4%. When the agreement expires in June 2002, any amount outstanding will be due and payable. The revolving credit agreement contains financial covenants relating to minimum net worth, minimum interest coverage ratios, and ceiling ratios of debt to capitalization. Under this agreement, the payment of dividends depends on the existence of and the amount of net worth in excess of the defined minimum. Our net worth at March 31, 2001, exceeded the defined minimum by $95.5 million. At March 31, 2001, there were $470.0 million of borrowings outstanding under this agreement.

In February 2001, we entered into two interest rate swaps with notional amounts of $50 million each and effective fixed interest rates of 5.4% and 5.6% with respect to $100 million of our revolving credit agreement borrowings. The swaps expire in February 2003 and February 2004.

Also at March 31, 2001, we had $6.4 million of short-term borrowings outstanding. At March 31, 2000, we had $77.8 million of short-term borrowings outstanding. The maximum amount of short-term borrowings outstanding during the three months ended March 31, 2001 and 2000, was $125.0 million and $156.2 million. The average amount of short-term borrowings outstanding during the three months ended March 31, 2001 and 2000, was $61.0 million and $80.7 million. The average interest rate for these borrowings was 6.3% for 2001 and 6.2% for 2000.

At March 31, 2001, we had $430 million of unused borrowing capacity registered with the SEC for additional debt securities.

In April 1998, Boise Cascade Office Products (BCOP) registered $300 million of shelf capacity with the SEC. In May 1998, BCOP issued $150 million of 7.05% notes under this registration statement. The notes are due in May 2005. BCOP does not intend to use the remaining shelf capacity.

In July 2000, a registration statement filed with the SEC covering $300 million in universal shelf capacity became effective. Under this filing, we may offer and sell in one or more offerings common stock, preferred stock, debt securities, warrants, and/or purchase contracts.

In March 2000, we retired $100 million of 9.9% notes.

Cash payments for interest, net of interest capitalized, were $33.3 million and $38.1 million for the three months ended March 31, 2001 and 2000.

(10)

BOISE CASCADE OFFICE PRODUCTS CORPORATION. In April 2000, we completed a tender offer for the outstanding common stock of BCOP owned by shareholders other than Boise Cascade Corporation. BCOP once again became a wholly owned subsidiary of Boise Cascade Corporation. The purchase price, including transaction costs and payments to shareholders and stock option holders, totaled $216.1 million. It was funded by short-term borrowings and by borrowings under our revolving credit agreement.

On September 28, 2000, BCOP sold its European operations to Guilbert S.A. of France for $335.3 million. After debt repayments of $17.2 million, we received $158.5 million in 2000 and a final payment, net of forward exchange contracts, of $159.6 million in early January 2001. Sales for the operations sold for the three months ended March 31, 2000, totaled $91.2 million.

BCOP also formed a joint venture with Guilbert to provide service for both companies' multinational customers. Through the joint venture, BCOP serves Guilbert customers in North America, Australia, and New Zealand, and Guilbert serves BCOP customers in Europe and the Middle East.

On October 6, 2000, BCOP acquired Blue Star Business Supplies Group of US Office Products (Blue Star), a distributor of office and educational supplies in Australia and New Zealand, for $114.7 million in cash and the recording of $13.2  million in estimated acquisition liabilities. The acquisition liabilities include $4.7 million for termination benefits to be paid to about 380 employees at acquired facilities and $3.9 million for closure costs at six acquired locations, primarily in Australia. Through March 31, 2001, there have been no significant charges against these reserves. Blue Star had sales of approximately $300 million for its fiscal year ended April 29, 2000.

On October 19, 2000, BCOP merged its majority-owned promotional products subsidiary, Boise Marketing Services, Inc. (BMSI), with American Identity, a division of IdentityNow. We also contributed $6 million in cash to this joint venture. As a result of the merger, BCOP has approximately a 22% equity position in IdentityNow and accounts for the investment under the equity method of accounting. Sales for BMSI for the three months ended March 31, 2000, totaled $20.8 million.

The 2000 acquisitions were accounted for under the purchase method of accounting. Accordingly, the purchase prices were allocated to the assets acquired and liabilities assumed based upon their estimated fair values. The initial purchase price allocations may be adjusted within one year of the date of purchase for changes in estimates of the fair values of assets and liabilities. Such adjustments were not, and are not expected to be, significant to our results of operations or financial position. The excesses of the purchase price over the estimated fair values of the tangible and intangible net assets acquired were recorded as goodwill and are being amortized over 40 years. The results of operations of the acquired businesses are included in our operations following the dates of acquisitions.

On a pro forma basis, if our 2000 acquisitions and divestitures had occurred on January 1, 2000, sales for the first three months of 2000 would have decreased by $35.0 million, while net income and diluted earnings per share would not have materially changed.

This unaudited pro forma financial information does not necessarily represent what would have occurred if the transactions had taken place on the dates assumed.

(11)

BUILDING PRODUCTS ACQUISITION. On June 30, 2000, we acquired Alliance Forest Products-Joists, Inc. (AllJoist). Formerly a subsidiary of Alliance Forest Products, Inc., AllJoist operates a wood I-joist manufacturing plant in St. Jacques, New Brunswick, Canada. The purchase price was $14.6 million in cash.

This acquisition was accounted for under the purchase method of accounting.  Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values. The initial purchase price allocations may be adjusted within one year of the date of purchase for changes in estimates of the fair values of assets and liabilities. Such adjustments were not, and are not expected to be, significant to our results of operations or financial position. The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill and is being amortized over 40 years. The results of operations of the acquired business is included in our operations following the date of acquisition.

On a pro forma basis, if the AllJoist acquisition had occurred on January 1, 2000, sales for the first three months of 2000 would have increased by $4.8 million, while net income and diluted earnings per share would not have materially changed. This unaudited pro forma financial information does not necessarily represent what would have occurred if the acquisition had taken place on the dates assumed.

(12)

FINANCIAL INSTRUMENTS. On January 1, 2001, we adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. Adoption of this statement did not have a material impact on our results of operations or financial position.

At March 31, 2001, we had foreign exchange contracts that were purchased to mitigate exchange risk related to 185.9 million New Zealand dollar-denominated receivables. Exchange gains and losses on the forward exchange contracts partially offset exchange gains or losses on the receivables. These contracts mature in May 2001, had a notional amount in New Zealand dollars of 160.0 million, a weighted average contractual exchange rate of 0.414215, and a fair value of a negative $2.0  million at March 31, 2001, based on the spot rate on that date. Gains and losses on these contracts are recognized in income as they occur.

In February 2001, we entered into two interest rate swaps with notional amounts of $50 million each, maturing in February 2003 and February 2004. The swaps hedge the variable cash flow risk from the variable interest payments on $100 million of our current and anticipated future revolving credit agreements. The effective fixed interest rates resulting from the swaps are 5.4% and 5.6%. The fair value of these swaps, net of taxes, is recorded in "Accumulated other comprehensive income (loss)" and then reclassified to interest expense as interest expense is recognized on the revolving credit agreement. There is no ineffectiveness related to these hedges.

We are exposed to modest credit-related risks in the event of nonperformance by counterparties to our forward exchange contracts and interest rate swaps; however, we do not expect the counterparties, who are all major financial institutions, to fail to meet their obligations.

(13)

RESTRUCTURING ACTIVITIES. In February 2001, we announced that we will permanently close in mid-2001 our plywood and lumber operations in Emmett, Idaho, and our sawmill in Cascade, Idaho. The closures are due to the steady decline in federal timber offered for sale. About 375 positions will be eliminated as a result of the closures. In first quarter 2001, we recorded a pretax charge of $54.0 million related to these closures. Sales for our Idaho operations for the three months ended March 31, 2001 and 2000, were $25.9 million and $31.0 million. Sales for the years ended December 31, 2000 and 1999, were $115.8 million and $138.6 million. Our operating loss for the three months ended March 31, 2001, was $1.1 million, while our operating income for the three months ended March 31, 2000, was $2.4 million. Operating income for the years ended December 31, 2000 and 1999, was $2.2 million and $15.4 million .

In addition, as a result of a decision to stop development of operations in Chile, we wrote off our investment in assets in that country with a pretax charge of $4.9 million. We recorded both of these charges in our building products segment and in "Other (income) expense, net" in the Statement of Income (Loss). Asset write-downs were for plant and equipment at the Idaho facilities and the write-off of our equity investment in and related receivables from a joint venture in Chile. Employee-related costs include pension curtailment costs arising from the shutdowns of the Idaho facilities and severance cost. Other exit costs include tear-down and environmental cleanup cost related to the Idaho facilities and reserves for contractual obligations with no future benefit. These restructuring reserve liabilities are included in "Accrued liabilities, other" in the accompanying Balance Sheet.

Restructuring reserve liability account activity related to these 2001 charges is as follows:

Asset
Write-
Downs

Employee-
Related
Costs

Other
Exit
Costs

Total

______

_________

______

_______

(thousands)

2001 expense recorded

$

21,300

$

15,000

$

22,600

$

58,900

Assets written down

(21,300

)

-

-

(21,300

)

Pension liability recorded

-

(9,600

)

-

(9,600

)

______

_________

______

_______

Restructuring reserve at March 31, 2001

$

-

$

5,400

$

22,600

$

28,000

======

=========

======

=======

In 1998, we recorded restructuring charges totaling $118.9 million related to the closure of two wood products facilities and companywide cost-reduction and restructuring initiatives. With the exception of a few ongoing severance payments and cleanup costs, this restructuring is completed. Remaining reserves included in "Accrued liabilities, other" at March 31, 2001, totaled $3.4 million, compared with $8.2 million at March 31, 2000, and $3.9  million at December 31, 2000.

(14)

RECLASSIFICATIONS. In September 2000, the Emerging Issues Task Force of the Financial Accounting Standards Board issued a consensus on Issue 00-10, Accounting for Shipping and Handling Fees and Costs. This consensus, which became effective and was adopted by us in fourth quarter 2000, requires that amounts billed to customers for shipping be included as a revenue and that amounts paid by us for shipping be included as a cost. To comply with this consensus, r eclassifications were made to increase both "Sales" and "Materials, labor, and other operating expenses" by $49.6 million for the three months ended March 31, 2000.

(15)

SEGMENT INFORMATION. There are no differences from our last annual report in our basis of segmentation or in our basis of measurement of segment profit or loss. An analysis of our operations by segment is as follows:

Income

(Loss)

Before

Sales (a)

Taxes and

_____________________________________

Minority

Trade

Intersegment

Total

Interest (b)

____________

__________

____________

____________

(thousands)

Three Months Ended March 31, 2001

   Office products

$

966,206

$

630

$

966,836

$

41,219

   Building products

525,860

7,393

533,253

(66,425

) (c)

   Paper and paper products

403,253

112,991

516,244

24,676

   Corporate and other

5,937

12,717

18,654

(23,543

) (d)

____________

___________

____________

____________

      Total

1,901,256

133,731

2,034,987

(24,073

)

   Intersegment eliminations

-

(133,731

)

(133,731

)

-

   Interest expense

-

-

-

(33,792

)

____________

___________

____________

____________

      Consolidated totals

$

1,901,256

$

-

$

1,901,256

$

(57,865

)

============

===========

============

============

Three Months Ended March 31, 2000

   Office products

$

940,947

$

673

$

941,620

$

39,470

   Building products

631,698

8,377

640,075

29,185

   Paper and paper products

416,015

104,588

520,603

48,683

   Corporate and other

7,233

10,696

17,929

(8,807

)

____________

___________

____________

____________

      Total

1,995,893

124,334

2,120,227

108,531

   Intersegment eliminations

-

(124,334

)

(124,334

)

-

   Interest expense

-

-

-

(36,685

)

____________

___________

____________

____________

      Consolidated totals

$

1,995,893

$

-

$

1,995,893

$

71,846

============

===========

============

============

(a)

Reclassifications were made to the 2000 sales to comply with the Emerging Issues Task Force consensus on Issue 00-10 (see Note 14).

(b)

Interest income has been allocated to our segments in the amounts of $420,000 and $504,000 for the three months ended March 31, 2001 and 2000.

(c)

Includes a $58.9 million pretax charge related to the closure of two mills in Idaho and a write-off of our investment in assets in Chile (see Note 13).

(d)

Includes $10.9 million pretax, noncash charge to accrue for a one-time liability related to postretirement benefits (see Note 2).

ITEM 2.

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

Three Months Ended
March 31

______________________________

2001

2000

___________

___________

Sales

$

1.9 billion

$

2.0 billion

Net income (loss)

$

(35.5) million

$

39.6 million

Net income (loss) per basic share

$

(0.68

)

$

0.63

Net income (loss) per diluted share

$

(0.68

)

$

0.60

Net income before nonroutine items

$

7.1 million

$

39.6 million

Net income per basic share before nonroutine

  items

$

0.07

$

0.63

Net income per diluted share before nonroutine

  items

$

0.07

$

0.60

(percentage of sales)

Materials, labor, and other operating expenses

81.0%

79.2%

Selling and distribution

10.8%

10.1%

General and administrative expenses

1.6%

1.5%

Three Months Ended
March 31

_______________________________

2001

2000

___________

___________

Sales

$

966.8 million

$

941.6 million

Segment income

$

41.2 million

$

39.5 million

(percentage of sales)

Gross profit

23.7%

24.5%

Operating expenses

19.5%

20.3%

Operating profit

4.3%

4.2%

Three Months Ended
March 31

_________________________________

2001

2000

_____________

_____________

Sales

$

533.3

  million

$

640.1

million

Segment income (loss)

$

(66.4

) million

$

29.2

 million

Segment income (loss) before nonroutine items

$

(7.5

) million

$

29.2

 million

Sales Volumes

Plywood (1,000 sq. ft. 3/8" basis)

462,791

460,651

OSB (1,000 sq. ft. 3/8" basis) (a)

99,733

101,439

Lumber (1,000 board ft.)

93,242

124,564

LVL (100 cubic ft.)

15,400

15,811

I-joists (1,000 equivalent lineal ft.)

33,487

28,842

Particleboard (1,000 sq. ft. 3/4" basis)

47,953

47,214

Building materials distribution (millions of sales dollars)

$

341

$

401

Average Net Selling Prices (b)

Plywood (1,000 sq. ft. 3/8" basis)

$

214

$

244

OSB (1,000 sq. ft. 3/8" basis)

108

214

Lumber (1,000 board ft.)

425

530

LVL (100 cubic ft.)

1,526

1,550

I-joists (1,000 equivalent lineal ft.)

907

983

Particleboard (1,000 sq. ft. 3/4" basis)

253

299

(a)  Includes 100% of the sales of Voyageur Panel, of which we own 47%.

(b)  Gross invoice price less trade discounts and freight costs.

Nonroutine Items. In February 2001, we announced that we will permanently close in mid-2001 our plywood and lumber operations in Emmett, Idaho, and our sawmill in Cascade, Idaho. The closures are due to the steady decline in federal timber offered for sale. About 375 positions will be eliminated as a result of the closures. In first quarter 2001, we recorded a pretax charge of $54.0 million related to these closures. Sales for our Idaho operations for the three months ended March 31, 2001 and 2000, were $25.9 million and $31.0 million. Sales for the years ended December 31, 2000 and 1999, were $115.8 million and $138.6 million. Our operating loss for the three months ended March 31, 2001, was $1.1 million, while our operating income for the three months ended March 31, 2000, was $2.4 million. Operating income for the years ended December 31, 2000 and 1999, was $2.2 million and $15.4 million.

In addition, as a result of a decision to stop development of operations in Chile, we wrote off our investment in assets in that country with a pretax charge of $4.9 million. We recorded both of these charges in our building products segment and in "Other (income) expense, net" in the Statement of Income (Loss). Asset write-downs were for plant and equipment at the Idaho facilities and the write-off of our equity investment in and related receivables from a joint venture in Chile. Employee-related costs include pension curtailment costs arising from the shutdowns of the Idaho facilities and severance cost. Other exit costs include tear-down and environmental cleanup cost related to the Idaho facilities and reserves for contractual obligations with no future benefit. We estimate that about $14.5 million of these charges will require cash outlays in 2001. Cash requirements in 2002 and beyond are expected to total $23.1 million, with most of that occurring in 2002. These restructuring reserve liabilities are included in "Accrued liabilities, other" in the accompanying Balance Sheet.

Restructuring reserve liability account activity related to these 2001 charges is as follows:

Asset
Write-
Downs

Employee-
Related
Costs

Other
Exit
Costs

Total

______

_________

______

_______

(thousands)

2001 expense recorded

$

21,300

$

15,000

$

22,600

$

58,900

Assets written down

(21,300

)

-

-

(21,300

)

Pension liability recorded

-

(9,600

)

-

(9,600

)

______

_________

______

_______

Restructuring reserve at March 31, 2001

$

-

$

5,400

$

22,600

$

28,000

=======

=========

======

=======

Three Months Ended
March 31

____________________________

2001

2000

___________

___________

Sales

$

516.2 million

$

520.6 million

Segment income

$

24.7 million

$

48.7 million

Sales Volumes

(thousands of short tons)

Uncoated free sheet

368

363

Containerboard

158

165

Newsprint

103

108

Other

35

39

_____

_____

Total

664

675

=====

=====

Average Net Selling Prices (a)

(per short ton)

Uncoated free sheet

$

759

$

770