**Exhibit 99**

 

**BoiseLand & Timber Holdings Corp.**

**Consolidated Statements of Income**

(unaudited, in thousands)

 
| ** **                                     | ** ** | **Timber  Holdings**                      | ** ** | **Predecessor** | ** ** |
|------------------------------------------------|------------|-------------------------------------------|------------|-----------------|------------|
| ** **                                     | ** ** | **Three Months Ended  September 30** | ** ** |
| ** **                                     | ** ** | **2005**                                  | ** ** | **2004**        | ** ** |
|                                           |       |                                      |       |            |       |
| **Sales**                                      |       |                                      |       |            |       |
| Fiber                                          |       |                                      |       |            |       |
| Trade                                          |       | $                                         | —     |            | $          | 111 |   |
| Related parties                                |       | —                                    |       | 30,342          |       |
| Timberlands                                    |       | —                                    |       | 13,978          |       |
|                                           |       | —                                    |       | 44,431          |       |
| **Costs and expenses**                         |       |                                      |       |            |       |
| Materials, labor, and other operating expenses |       | —                                    |       | 12,641          |       |
| Depreciation, amortization, and depletion      |       | —                                    |       | 2,285           |       |
| Cost of timberlands sold                       |       | —                                    |       | 815             |       |
| General and administrative expenses            |       | 4                                         |       | 1,864           |       |
| Other (income) expense, net                    |       | —                                    |       | (400            | )          |
|                                           |       | 4                                         |       | 17,205          |       |
|                                           |       |                                      |       |            |       |
| Loss on sale of timberland assets              |       | (153                                      | )          | —          |       |
|                                           |       |                                      |       |            |       |
| **Income (loss) from operations**              |       | (157                                      | )          | 27,226          |       |
|                                           |       |                                      |       |            |       |
| Interest expense                               |       | —                                    |       | (1,324          | )          |
| Related-party interest income                  |       | 5,375                                     |       | —          |       |
|                                           |       | 5,375                                     |       | (1,324          | )          |
|                                           |       |                                      |       |            |       |
| **Income before income taxes**                 |       | 5,218                                     |       | 25,902          |       |
| Income tax provision                           |       | —                                    |       | (10,085         | )          |
| **Net income**                                 |       | **$**                                     | **5,218**  | ** **      | **$**      | **15,817** |   |

 

See accompanying notes to unaudited quarterly consolidatedfinancial statements.

 

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**Boise Land & Timber Holdings Corp.**

**Consolidated Statements of Income**

(unaudited, in thousands)

 
| ** **                                     | ** ** | **Timber  Holdings**                     | ** ** | **Predecessor** | ** ** |
|------------------------------------------------|------------|------------------------------------------|------------|-----------------|------------|
| ** **                                     | ** ** | **Nine Months Ended  September 30** | ** ** |
| ** **                                     | ** ** | **2005**                                 | ** ** | **2004**        | ** ** |
|                                           |       |                                     |       |            |       |
| **Sales**                                      |       |                                     |       |            |       |
| Fiber                                          |       |                                     |       |            |       |
| Trade                                          |       | $                                        | 5          |            | $          | 140 |   |
| Related parties                                |       | 17,609                                   |       | 86,401          |       |
| Timberlands                                    |       | —                                   |       | 101,009         |       |
|                                           |       | 17,614                                   |       | 187,550         |       |
| **Costs and expenses**                         |       |                                     |       |            |       |
| Materials, labor, and other operating expenses |       | 2,302                                    |       | 32,614          |       |
| Depreciation, amortization, and depletion      |       | 10,854                                   |       | 6,490           |       |
| Cost of timberlands sold                       |       | —                                   |       | 25,035          |       |
| General and administrative expenses            |       | 2,351                                    |       | 5,321           |       |
| Other (income) expense, net                    |       | (174                                     | )          | (2,758          | )          |
|                                           |       | 15,333                                   |       | 66,702          |       |
|                                           |       |                                     |       |            |       |
| Gain on sale of timberland assets              |       | 6,400                                    |       | —          |       |
|                                           |       |                                     |       |            |       |
| **Income from operations**                     |       | 8,681                                    |       | 120,848         |       |
|                                           |       |                                     |       |            |       |
| Interest expense                               |       | (11,519                                  | )          | (4,153          | )          |
| Related-party interest income                  |       | 13,690                                   |       | —          |       |
|                                           |       | 2,171                                    |       | (4,153          | )          |
|                                           |       |                                     |       |            |       |
| **Income before income taxes**                 |       | 10,852                                   |       | 116,695         |       |
| Income tax (provision) benefit                 |       | 1,476                                    |       | (45,423         | )          |
| **Net income**                                 |       | **$**                                    | **12,328** | ** **      | **$**      | **71,272** |   |

 

See accompanying notes to unaudited quarterly consolidatedfinancial statements.

 

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**Boise Land & Timber Holdings Corp.**

**Consolidated Balance Sheets**

(unaudited, in thousands)

 
| ** **                             | ** ** | **September 30,  2005** | ** **  | **December 31,********2004** | ** ** |
|----------------------------------------|------------|------------------------------|-------------|-----------------------------------|------------|
|                                   |       |                         |        |                              |       |
| **ASSETS**                             |       |                         |        |                              |       |
|                                   |       |                         |        |                              |       |
| **Current**                            |       |                         |        |                              |       |
| Cash and cash equivalents              |       | $                            | —      |                              | $          | 1 |   |
| Receivables                            |       | —                       |        | 4                                 |       |
| Inventories                            |       | —                       |        | 828                               |       |
| Deferred income taxes                  |       | 1,476                        |        | —                            |       |
| Prepaid assets                         |       | —                       |        | 1,809                             |       |
|                                   |       | 1,476                        |        | 2,642                             |       |
|                                   |       |                         |        |                              |       |
| **Property**                           |       |                         |        |                              |       |
| Property and equipment                 |       |                         |        |                              |       |
| Land and land improvements             |       | —                       |        | 4,744                             |       |
| Buildings and improvements             |       | —                       |        | 715                               |       |
| Machinery and equipment                |       | —                       |        | 949                               |       |
|                                   |       | —                       |        | 6,408                             |       |
|                                   |       |                         |        |                              |       |
| Accumulated depreciation               |       | —                       |        | (138                              | )          |
|                                   |       | —                       |        | 6,270                             |       |
|                                   |       |                         |        |                              |       |
| Timber and timberlands                 |       | —                       |        | 1,628,426                         |       |
|                                   |       | —                       |        | 1,634,696                         |       |
|                                   |       |                         |        |                              |       |
| **Deferred financing costs**           |       | —                       |        | 4,833                             |       |
| **Investments in affiliates**          |       | 250                          |        | 250                               |       |
| **Note receivable from related party** |       | 266,405                      |        | —                            |       |
| **Other assets**                       |       | —                       |        | 300                               |       |
|                                   |       |                         |        |                              |       |
| **Total assets**                       |       | **$**                        | **268,131** | ** **                        | **$**      | **1,642,721** |   |

 

See accompanying notes tounaudited quarterly consolidated financial statements.

 

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**Boise Land & Timber HoldingsCorp.**

**Consolidated Balance Sheets(continued)**

(unaudited, in thousands except for share data)

 
| ** **                                                                                               | ** ** | **September 30,  2005** | ** **  | **December 31,  2004** | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|------------------------------|-------------|-----------------------------|------------|
|                                                                                                     |       |                         |        |                        |       |
| **LIABILITIES AND CAPITAL**                                                                              |       |                         |        |                        |       |
|                                                                                                     |       |                         |        |                        |       |
| **Current**                                                                                              |       |                         |        |                        |       |
| Current portion of long-term debt                                                                        |       | $                            | —      |                        | $          | 12,250 |   |
| Accounts payable                                                                                         |       | —                       |        | 2,500                       |       |
| Taxes payable                                                                                            |       | —                       |        | 1,840                       |       |
|                                                                                                     |       | —                       |        | 16,590                      |       |
|                                                                                                     |       |                         |        |                        |       |
| **Debt**                                                                                                 |       |                         |        |                        |       |
| Long-term debt, less current portion                                                                     |       | —                       |        | 1,212,750                   |       |
| Note payable to related party, net                                                                       |       | —                       |        | 157,509                     |       |
|                                                                                                     |       | —                       |        | 1,370,259                   |       |
|                                                                                                     |       |                         |        |                        |       |
| **Commitments and contingent liabilities**                                                               |       |                         |        |                        |       |
| ** **                                                                                               |       |                         |        |                        |       |
| **Capital**                                                                                              |       |                         |        |                        |       |
| Common stock – par value $.01; 65,317 shares  authorized; 65,035 and 65,060 shares outstanding |       | 1                            |        | 1                           |       |
| Additional paid-in capital                                                                               |       | 276,053                      |        | 276,122                     |       |
| Accumulated losses                                                                                       |       | (7,923                       | )           | (20,251                     | )          |
| **Total capital**                                                                                        |       | 268,131                      |        | 255,872                     |       |
|                                                                                                     |       |                         |        |                        |       |
| **Total liabilities and capital**                                                                        |       | **$**                        | **268,131** | ** **                  | **$**      | **1,642,721** |   |

 

Seeaccompanying notes to unaudited quarterly consolidated financial statements.

 

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**Boise Land & Timber Holdings Corp.**

**Consolidated Statements of Cash Flows**

(unaudited, in thousands)

 
| ** **                                                                             | ** ** | **Timber  Holdings**                     | ** ** | **Predecessor** | ** ** |
|----------------------------------------------------------------------------------------|------------|------------------------------------------|------------|-----------------|------------|
| ** **                                                                             | ** ** | **Nine Months Ended  September 30** | ** ** |
| ** **                                                                             | ** ** | **2005**                                 | ** ** | **2004**        | ** ** |
|                                                                                   |       |                                     |       |            |       |
| **Cash provided by (used for) operations**                                             |       |                                     |       |            |       |
| Net income                                                                             |       | $                                        | 12,328     |            | $          | 71,272 |   |
| Items in net income not using (providing) cash                                         |       |                                     |       |            |       |
| Depreciation, depletion, and amortization of  deferred financing costs and other costs |       | 15,852                                   |       | 6,490           |       |
| Related-party interest income                                                          |       | (13,690                                  | )          | —          |       |
| Deferred income tax provision (benefit)                                                |       | (1,476                                   | )          | 583             |       |
| Gain on sale of Louisiana timberlands                                                  |       | —                                   |       | (59,915         | )          |
| Gain on sale of timberland assets                                                      |       | (6,400                                   | )          | —          |       |
| Decrease (increase) in working capital                                                 |       |                                     |       |            |       |
| Receivables                                                                            |       | 4                                        |       | (894            | )          |
| Inventories                                                                            |       | (118                                     | )          | (1,471          | )          |
| Accounts payable and accrued liabilities                                               |       | (3,819                                   | )          | 2,630           |       |
| Current and deferred income taxes                                                      |       | —                                   |       | (583            | )          |
| Other                                                                                  |       | (170                                     | )          | (112            | )          |
| Cash provided by operations                                                            |       | 2,511                                    |       | 18,000          |       |
|                                                                                   |       |                                     |       |            |       |
| **Cash provided by (used for) investment**                                             |       |                                     |       |            |       |
| Expenditures for property and equipment                                                |       | (25                                      | )          | (1,481          | )          |
| Expenditures for timber and timberlands                                                |       | (540                                     | )          | (5,511          | )          |
| Proceeds from sale of Louisiana timberlands                                            |       | —                                   |       | 83,717          |       |
| Sale of timberland assets, net                                                         |       | 1,631,838                                |       | —          |       |
| Note receivable from related party, net                                                |       | (251,042                                 | )          | —          |       |
| Other                                                                                  |       | —                                   |       | 1,268           |       |
| Cash provided by investment                                                            |       | 1,380,231                                |       | 77,993          |       |
|                                                                                   |       |                                     |       |            |       |
| **Cash provided by (used for) financing**                                              |       |                                     |       |            |       |
| Payments of long-term debt                                                             |       | (1,225,000                               | )          | —          |       |
| Note payable to related party, net                                                     |       | (157,509                                 | )          | —          |       |
| Net equity transactions with OfficeMax                                                 |       | —                                   |       | (94,053         | )          |
| Net debt payments to OfficeMax                                                         |       | —                                   |       | (1,940          | )          |
| Other                                                                                  |       | (234                                     | )          | —          |       |
| Cash used for financing                                                                |       | (1,382,743                               | )          | (95,993         | )          |
|                                                                                   |       |                                     |       |            |       |
| **Decrease in cash and cash equivalents**                                              |       | (1                                       | )          | —          |       |
| ** **                                                                             |       |                                     |       |            |       |
| **Balance at beginning of the period**                                                 |       | 1                                        |       | —          |       |
| ** **                                                                             |       |                                     |       |            |       |
| **Balance at end of the period**                                                       |       | **$**                                    | **—** | ** **      | **$**      | **—** |   |

 

See accompanying notes to unaudited quarterly consolidatedfinancial statements.

 

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**Boise Land & Timber Holdings Corp.**

**Consolidated Statements of Capital**

(unaudited, in thousands)

 
| ** **                             | ** **   | ** **          | ** ** | **Additional Paid-In Capital**  | ** ** | ** **                      | ** ** | ** **                      | ** ** |
|----------------------------------------|--------------|---------------------|------------|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                             | ** **   | ** **          | ** ** | **Series A  Common Stock** | ** ** | **Series B  Common Stock** | ** ** | **Series C  Common Stock** | ** ** | ** ** | ** ** | ** ** | ** ** |
| *** ***                           | *** *** | **Common****Stock** | ** ** | **Shares**                      | ** ** | **Amount**                      | ** ** | **Shares**                      | ** ** | **Amount** | ** ** | **Shares** | ** ** | **Amount** | ** ** | **Accumulated  Losses** | ** ** | **Total  Capital** | ** ** |
|                                   |         |                |       |                            |       |                            |       |                            |       |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31,  2004     |         | $                   | 1          |                            | 7          |                            | $          | 30,040                          |       | 55 |   | $ | 246,082 |   | 4 |   | $ | — |   | $ | (20,251 | ) | $ | 255,872 |   |
|                                   |         |                |       |                            |       |                            |       |                            |       |   |   |   |   |   |   |   |   |   |   |
| Net income                             |         | —              |       | —                          |       | —                          |       | —                          |       | — |   | — |   | — |   | 12,328 |   | 12,328 |   |
| Repurchase of equity units             |         | —              |       | —                          |       | —                          |       | —                          |       | (69 | ) | — |   | — |   | — |   | (69 | ) |
| Paid-in-kind dividend                  |         | —              |       | —                          |       | 2,236                           |       | —                          |       | (2,236 | ) | — |   | — |   | — |   | — |   |
|                                   |         |                |       |                            |       |                            |       |                            |       |   |   |   |   |   |   |   |   |   |   |
| **Balance at September 30, 2005** | ** **   | **$**               | **1**      | ** **                      | **7**      | ** **                      | **$**      | **32,276**                      | ** ** | **55** | ** ** | **$** | **243,777** | ** ** | **4** | ** ** | **$** | **—** | ** ** | **$** | **(7,923** | **)** | **$** | **268,131** |   |

 

See accompanying notes tounaudited quarterly consolidated financial statements.

 

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***Notesto Unaudited Quarterly Consolidated Financial Statements***

 

##### ***DiscontinuedOperations***

 

At December 31,2004, our timberland assets were held for sale, and the operations of BoiseLand & Timber Holding Corp. (Timber Holdings) met the definition ofdiscontinued operations. In the accompanying financial statements, we have notshown our assets as “Assets held for sale” or our liabilities as “Liabilitiesrelated to assets held for sale” on our Consolidated Balance Sheet. Sincealmost all of the assets and liabilities were disposed of, we believe that weare providing more useful information by presenting the information as shown.

 

In February 2005,we sold all of our timberlands located across the Pacific Northwest, Louisiana,Alabama, and Minnesota to Forest Capital Partners, LLC, for $1.65 billionin cash (Timberlands Sale).  During the ninemonths ended September 30, 2005, we recorded a $6.4 million gain inour Consolidated Statement of Income. Proceeds from the sale were used toeliminate all of our debt, including a related-party loan from Boise Cascade,L.L.C. (Boise LLC), the wholly owned operating subsidiary of Boise CascadeHoldings, L.L.C. (Boise Holdings), and to make a related-party loan toBoise LLC. At September 30, 2005, our assets consisted of $1.5 millionof deferred income tax benefits, a $0.3 million investment inunconsolidated affiliates, and a related-party receivable of $266.4 millionfrom Boise Holdings. The amount of the receivable will fluctuate withrelated-party activity.

 

***1.******                                      Basisof Presentation***

 

Asused in these financial statements, the terms “Timber Holdings” and “we”include Boise Land & Timber Holdings Corp. and its consolidatedsubsidiaries. The term “predecessor” refers to the results of the timberlandassets of OfficeMax Incorporated (OfficeMax) or Boise Timberlands. OfficeMaxwas formerly Boise Cascade Corporation, the company that owned the timberlandsthrough October 28, 2004.  In thepredecessor periods, we refer to OfficeMax’s paper and forest productsbusinesses as Boise Forest Products Operations.

 

We have prepared thequarterly consolidated financial statements pursuant to the rules andregulations of the Securities and Exchange Commission (SEC). Some informationand footnote disclosures, which would normally be included in financialstatements prepared in accordance with accounting principles generally acceptedin the United States, have been condensed or omitted pursuant to those rules andregulations. These quarterly consolidated financial statements and notes shouldbe read together with the consolidated financial statements and notes filedwith the SEC in Boise Cascade Company’s registration statement on Form S-4(Registration No. 333-125768), as amended.

 

The quarterlyconsolidated financial statements have not been audited by an independentregistered public accounting firm, but in the opinion of management, we haveincluded all adjustments necessary to present fairly the results for theperiods. Net income for the three and nine months ended September 30, 2005and 2004, involved estimates and accruals. Actual results may vary from thoseestimates. Except as may be disclosed within these “Notes to Unaudited QuarterlyConsolidated Financial Statements,” the adjustments made were of a normal,recurring nature. Quarterly results are not necessarily indicative of resultsthat may be expected for the year.

 

The consolidatedfinancial statements present our operating results for the three and ninemonths ended September 30, 2005, and the results of OfficeMax’s timberlandoperations for the three and nine months ended September 30, 2004.OfficeMax historically managed its timberlands as part of its Boise PaperSolutions and Boise Building Solutions segments. These financial statementspresent the timberland operations as a separate entity.

 

The predecessor financialstatements include accounts specifically attributed to Boise Timberlands and aportion of OfficeMax’s shared corporate general and administrative expenses.The shared services included, but were not limited to, finance, accounting,legal, information technology and human resource functions. OfficeMax’scorporate general and administrative expenses were allocated to the predecessorperiod based on specifically identifiable services used by Boise Timberlands.

 

The predecessorfinancial statements also include an allocation of OfficeMax’s total debt andrelated interest expense based on average asset balances (see Note 6,Debt). The predecessor’s results

 

7

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havebeen or will be included in OfficeMax’s consolidated tax returns. Income taxesin the predecessor periods of these financial statements have been calculatedas if Boise Timberlands were a separate taxable entity (see Note 4, IncomeTaxes).

 

Information about theallocations and related-party transactions are included in Note 3,Transactions With Related Parties.

 

***2.******                                      Purchaseand Sale of Timberland Assets***

 

On October 29,2004, we acquired OfficeMax’s timberland assets for an aggregate considerationof $1,650.0 million, excluding fees and expenses (the Acquisition). Wepaid for the Acquisition with $15.0 million in cash and made contributionsof $1,635.0 million to affiliates, who in turn issued$1,635.0 million of timber installment notes to OfficeMax and an affiliateof OfficeMax. The $1,635.0 million in installment notes issued toOfficeMax were nonrecourse with respect to Forest Products Holdings, L.L.C.(Parent), a newly formed holding company controlled by Madison DearbornPartners, LLC, and its consolidated subsidiaries, and mature on January 29,2020. In addition, we incurred $14.8 million of deferred financing costsand assumed $3.3 million of liabilities, net of current assets acquired,for a net purchase price of $1,661.6 million.

 

On theAcquisition date, Parent and an affiliate of OfficeMax made an aggregate cashequity investment of $276.1 million in us. The equity investment consistedof $197.6 million invested by Parent in exchange for 44,000 shares of Series Bcommon stock and $78.5 million invested by an affiliate of OfficeMax inexchange for 7,000 and 11,000 shares of Series A and Series Bcommon stock, respectively.

 

In February 2005, we sold all of our timberland assetsfor $1,650.0 million in cash. We recorded a $6.4 million gain, net of$18.0 million of transaction costs related to the sale. Proceeds from thesale were used to eliminate all of our debt, including a related-party loanfrom Boise LLC, and to make a related-party loan to Boise LLC. At September 30,2005, our assets consisted of $1.5 million of deferred income tax benefits,a $0.3 million investment in unconsolidated affiliates, and arelated-party receivable of $266.4 million from Boise Holdings. The amountof the receivable will fluctuate with related-party activity.

 

**3.****                                      *Transactions With Related Parties***

 

For the three and nine months ended September 30,2005, we participated in Boise LLC’s centralized cash management system.During the predecessor periods presented, we participated in OfficeMax’scentralized cash management system. Cash receipts attributable to our operationswere collected by Boise LLC and OfficeMax, and cash disbursements were fundedby Boise LLC and OfficeMax. For the nine months ended September 30, 2005,the net effect of these transactions has been reflected in our ConsolidatedStatement of Cash Flows as “Note payable to related party, net” and “Notereceivable from related party.” For the nine months ended September 30,2004, the net effect of these transactions has been reflected in ourpredecessor financial statements as “Net equity transactions with OfficeMax” inthe Consolidated Statement of Cash Flows. The following table includes thecomponents of these related-party transactions (in thousands):

 

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| ** **                                      | ** ** | **Timber  Holdings**                     | ** **   | **Predecessor** | ** **  |
|-------------------------------------------------|------------|------------------------------------------|--------------|-----------------|-------------|
| ** **                                      | ** ** | **Nine Months Ended  September 30** | ** **   |
| ** **                                      | ** ** | **2005**                                 | ** **   | **2004**        | ** **  |
|                                            |       |                                     |         |            |        |
| Cash collections                                |       | $                                        | (17,792      | )               | $           | (189,562 | ) |
| Payment of accounts payable                     |       | 15,111                                   |         | 41,867          |        |
| Capital expenditures                            |       | 565                                      |         | 6,992           |        |
| Income taxes                                    |       | —                                   |         | 44,840          |        |
| Net debt payments to OfficeMax             |       | —                                   |         | 1,940           |        |
| Net cash from sale of timberlands               |       | (1,631,838                               | )            | —          |        |
| Payments of long-term debt                      |       | 1,225,000                                |         | —          |        |
| Other                                           |       | 403                                      |         | (130            | )           |
|                                            |       |                                     |         |            |        |
| Related-party notes payable and receivable, net |       | **$**                                    | **(408,551** | **)**           |        |   |
|                                            |       |                                     |         |            |        |
| Net equity transactions with OfficeMax     |       |                                     |         | **$**           | **(94,053** | **)** |

 

During the nine monthsended September 30, 2005, and the predecessor period presented, we usedservices and administrative staff of Boise LLC and OfficeMax, respectively.These included, but were not limited to, finance, accounting, legal,information technology, and human resource functions. The costs allocated toTimber Holdings and our predecessor were specifically identifiable as servicesused by us and our predecessor. These costs are included in “General andadministrative expenses” in the Consolidated Statements of Income. All cashadvances necessary to fund the lease and/or purchase of timberlands and otherexpenditures, to the extent not provided through internally generated funds,were provided by Boise LLC for the nine months ended September 30,2005, and by OfficeMax in the predecessor periods. These amounts have beenreflected in our Consolidated Statement of Cash Flows as “Note payable torelated party, net” and “Note receivable from related party” and in thepredecessor Consolidated Statement of Cash Flow as “Net equity transactionswith OfficeMax.”

 

Prior to the TimberlandsSale, we were a major supplier of fiber to Boise LLC and, in the predecessorperiod, were a major supplier of fiber to Boise Forest Products Operations.Sales of fiber to Boise LLC and Boise Forest Products Operations are reportedas fiber sales to related parties in the Consolidated Statements of Income andwere based on prices that approximated market prices.

 

Forthe nine months ended September 30, 2005, Boise Land & TimberCorp., a wholly owned direct subsidiary of Timber Holdings, leased employeesfrom Boise LLC.  During this period, mostof the leased employees participated in Boise LLC’s defined benefit plans,and most of the employees were eligible for participation in Boise LLC’sdefined contribution plans. During the predecessor periods, most of BoiseTimberlands’ employees participated in OfficeMax’s defined benefit pensionplans, and most of the employees were eligible for participation in OfficeMax’sdefined contribution plans. We have included the costs associated withemployees who participated in the plans in the Consolidated Statements ofIncome. These costs were not material in any of the periods presented.

 

***4.******                                      IncomeTaxes***

 

For federal income taxpurposes, the acquisition of Boise Timberlands was treated as an assetpurchase, and we had a tax basis in the acquired assets equal to the purchaseprice. As a result, we depleted assets with a higher tax basis after the dateof the Acquisition. As a result of the sale of our timberlands and the resulting interestincome expected on the note receivable from Boise Holdings during 2005, weexpect to release $7.9 million of valuation allowance, which existed atDecember 31, 2004. In second quarter, we released $1.5 million of thevaluation allowance as a discrete item and recorded the benefit in “DeferredIncome Taxes” on our Consolidated Balance Sheet and “Income tax (provision)benefit” in our Consolidated Statement of Income. The remaining valuationallowance is expected to reduce income tax expense on income earned during2005. As a result, during the three months ended September 30, 2005, werecognized no income tax expense.

 

In the predecessorperiods presented, Boise Timberlands’ results have been included in theconsolidated income tax returns of OfficeMax. However, in the predecessorfinancial statements, income

 

9

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taxes have been provided based on a calculation of theincome tax expense that would have been incurred if Boise Timberlands hadoperated as a separate taxpayer. Income taxes were provided for all itemsincluded in the Consolidated Statements of Income, regardless of when suchitems were reported for tax purposes or when the taxes were actually paid.Current tax liabilities were transferred to OfficeMax and are included in “Netequity transactions with OfficeMax.”

 

***5.******                                      Leases***

 

As a result of theTimberlands Sale, we are no longer a party to any lease obligations and have nocontingent liability for any leases that were sold to Forest Capital by oursubsidiaries.

 

***6.******                                      Debt***

 

In October 2004, weentered into a six-year, $1,225.0 million Tranche C term loan.Borrowings under the term loan bore interest at floating rates. We paidapproximately $14.8 million of fees and expenses associated with obtainingthe term loan. The fees were amortized over three months, the period the debtwas outstanding before being paid in full with the proceeds from theTimberlands Sale in February 2005. Accordingly, at September 30,2005, we had no “Deferred financing costs” recorded on our Consolidated BalanceSheet.

 

In October 2004, wealso obtained a $164 million, 6% related-party loan from Boise Holdingsthat was due to mature in October 2015. Proceeds from the Timberlands Salewere used to repay this related-party loan. Due to related-party activity (see Note 3, Transactions WithRelated Parties), the balance on this loan was $157.5 million at the timewe repaid it in February 2005.

 

In the predecessorperiods presented, we participated in OfficeMax’s centralized cash managementsystem. Cash advances necessary to fund the purchase of timberlands and majorimprovements to and replacements of property, to the extent not providedthrough internally generated funds, were provided by OfficeMax’s cash or fundedwith debt. In the predecessor periods presented, interest cost was allocated tous based on our average asset balances. The interest expense attributable tothe debt allocated from OfficeMax is included in our predecessor ConsolidatedStatements of Income.

 

***7.******                                      FinancialInstruments***

 

The estimated fair valuesof our financial instruments, such as receivables, payables, and debt, are thesame as their carrying values. For the nine months ended September 30,2005, essentially all of our sales were to Boise LLC, which represents aconcentration in the volume of business transacted and the revenue generatedfrom these transactions.

 

Concurrent with theTimberlands Sale, we made a related-party loan of $264.8 million toBoise LLC. The principal amount of this loan is subject to adjustmentbased on transactions between us and Boise LLC and had a balance at September 30,2005, of $266.4 million.  This notebears interest of 8% per annum, compounded semiannually, and matures on February 4,2015.

 

Prior to the TimberlandsSale, changes in interest rates exposed us to financial market risk. For thethree and nine months ended September 30, 2005, we did not use anyderivative financial instruments, such as interest rate swaps, rate hedgeagreements, or forward purchase contracts, to hedge underlying debt obligationsor anticipated transactions. In the predecessor periods, OfficeMax allocateddebt and interest costs to us based on our average asset balances. OfficeMaxoccasionally used derivative financial instruments, such as interest rateswaps, rate hedge agreements, and forward exchange contracts, to hedgeunderlying debt obligations or anticipated transactions. The effects of thesefinancial instruments are not included in our predecessor financial statementsother than through OfficeMax’s allocations to us.

 

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***8.******                                      Commitmentsand Guarantees***

 

***Commitments***

 

As a result of theTimberlands Sale, we have no commitments, including no commitments for leasesor debt.

 

***Guarantees***

 

Boise Cascade Companyand Timber Holdings (collectively The Companies) and their respective directand indirect domestic subsidiaries, excluding foreign subsidiaries, are partiesto an amended and restated Credit Agreement dated as of April 18, 2005,with JPMorgan Chase Bank, as Administrative Agent, and certain Lenders namedtherein and a related Guarantee and Collateral Agreement of the same date(collectively the Bank Credit Agreements). Boise LLC, a wholly owneddirect subsidiary of Boise Cascade Company, acts as borrower under the BankCredit Agreements for the $835.8 million Tranche D term loan and a$475.0 million revolving credit facility that had no outstanding balanceat September 30, 2005, other than reimbursement obligations in respect to$54.7 million of standby letters of credit issued under the revolvingfacility. In addition, Boise Land & Timber Corp., a wholly owneddirect subsidiary of Timber Holdings, acted as borrower under the original BankCredit Agreements for the Tranche C term loan in the amount of$1,225.0 million, which was paid in full in February 2005 with theproceeds of the Timberlands Sale. Boise LLC’s loans and reimbursementobligations are guaranteed by The Companies and each of their domesticsubsidiaries (other than Boise LLC). Prior to the repayment by Boise Land &Timber Corp. of the Tranche C term loan, The Companies and each of theirdomestic subsidiaries (other than Boise Land & Timber Corp.) alsoguaranteed such loan.

 

Boise LLC and its whollyowned subsidiary, Boise Cascade Finance Corporation, have jointly issued$250.0 million of senior floating-rate notes due in 2012 and$400.0 million of 7.125% senior subordinated notes due in 2014. The seniornotes are guaranteed on a senior basis and the subordinated notes on asubordinated basis by The Companies and each of the domestic subsidiaries,excluding foreign subsidiaries, of The Companies, other than Boise LLC andBoise Cascade Finance Corporation, which are the issuers of the notes.

 

In connection with the TimberlandsSale, we, along with Boise Holdings, have agreed to indemnify the purchasersfor any breach of representation, warranty, or covenant contained in thepurchase agreement. Our indemnification obligations, with certain exceptions,survive until February 4, 2006, and are subject to a deductible of $16.5 millionand an aggregate cap of $100.0 million. In addition, the purchasers have agreed that, if the events giving riseto an indemnification claim against us and Boise Holdings also give rise to anindemnification claim against OfficeMax under OfficeMax’s indemnificationobligations arising from its sale of the timberlands operations, the purchaserswill pursue remedies directly and exclusively against OfficeMax. In connectionwith the foregoing, Parent assigned to the purchasers all of its rights toindemnification by OfficeMax with respect to the timberlands operations.

 

***9.******                                      LegalProceedings and Contingencies***

 

We are not aware of anylitigation or administrative proceedings involving Timber Holdings.

 

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