<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
March 31, 1995
Commission File Number 0-3730
Willamette Industries, Inc.
(Exact name of registrant as specified in its charter)
State of Oregon 93-0312940
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3800 First Interstate Tower, Portland, Oregon 97201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (503) 227-5581
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, 50 cent par value: 55,060,773, May 1, 1995.
<PAGE>
<TABLE>
WILLAMETTE INDUSTRIES, INC. AND SUBSIDIARIES FORM 10-Q
CONSOLIDATED BALANCE SHEETS PART I
(dollar amounts, except per share amounts, in thousands) ITEM 1
<CAPTION>
March 31, December 31,
ASSETS 1995 1994
------ -------------- ------------
<S> <C> <C>
Current assets:
Cash $ 11,932 12,798
Receivables, net of allowance
for doubtful accounts of $5,309 and $5,278 331,122 283,055
Inventories (Note 2) 274,356 256,091
Prepaid expenses and deposits on timber cutting contracts 55,244 52,710
------------ ------------
Total current assets 672,654 604,654
Timber, timberlands and related facilities, net 510,906 509,075
Property, plant and equipment, at cost less
accumulated depreciation of $1,350,626 and $1,301,882 1,896,463 1,863,505
Other assets 56,468 56,164
------------ ------------
Total assets $ 3,136,491 3,033,398
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long-term debt $ 101,848 50,956
Notes payable 39,000 100,000
Accounts payable, including book overdrafts
of $53,901 and $48,589 176,960 173,549
Accrued expenses 136,981 118,667
Accrued income taxes 53,759 22,954
------------ ------------
Total current liabilities 508,548 466,126
Deferred income taxes 255,908 231,717
Other liabilities 33,405 31,893
Long-term debt 865,858 915,797
Stockholders' equity:
Common stock, $.50 par value (55,052,827 and
55,036,191 shares outstanding) 27,526 27,518
Capital surplus 294,429 293,756
Retained earnings 1,150,817 1,066,591
------------ ------------
Total stockholders' equity 1,472,772 1,387,865
------------ ------------
Total liabilities & stockholders' equity $ 3,136,491 3,033,398
============ ============
</TABLE>
<PAGE>
<TABLE>
WILLAMETTE INDUSTRIES, INC. AND SUBSIDIARIES FORM 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS PART I
(dollar amounts in thousands) ITEM 1
<CAPTION>
Three Months Ended
March 31,
---------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 99,083 32,885
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 51,653 44,534
Cost of fee timber harvested 5,528 5,404
Other amortization 1,239 873
Increase in deferred income taxes 24,191 5,147
Changes in working capital items:
Accounts receivable (48,067) (30,379)
Inventories (18,265) (15,730)
Prepaid expenses and deposits on timber cutting contracts (2,534) 1,142
Accounts payable and accrued expenses 21,725 6,315
Accrued income taxes 30,805 12,736
--------- ---------
Net cash provided by operating activities 165,358 62,927
--------- ---------
Cash flows from investing activities:
Proceeds from sale of equipment 296 919
Expenditures for property, plant and equipment (84,918) (68,316)
Expenditures for timber and timberlands, net (6,487) (9,123)
Expenditures for roads and reforestation (1,833) (1,850)
Other 984 4,206
--------- ---------
Net cash used in investing activities (91,958) (74,164)
--------- ---------
Cash flows from financing activities:
Debt borrowings 1,165 12,000
Proceeds from sale of capital stock 638 4,709
Cash dividends (14,857) (13,199)
Payment on debt (61,212) (248)
--------- ---------
Net cash provided by financing activities (74,266) 3,262
--------- ---------
Net change in cash (866) (7,975)
Cash at beginning of period 12,798 9,543
--------- ---------
Cash at end of period $ 11,932 1,568
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 19,293 15,404
========= =========
Income taxes $ 7,032 1,106
========= =========
4
</TABLE>
<PAGE>
<TABLE>
WILLAMETTE INDUSTRIES, INC. AND SUBSIDIARIES FORM 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS PART I
(dollar amounts in thousands) ITEM 1
<CAPTION>
Three Months Ended
March 31,
---------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 99,083 32,885
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 51,653 44,534
Cost of fee timber harvested 5,528 5,404
Other amortization 1,239 873
Increase in deferred income taxes 24,191 5,147
Changes in working capital items:
Accounts receivable (48,067) (30,379)
Inventories (18,265) (15,730)
Prepaid expenses and deposits on timber cutting contracts (2,534) 1,142
Accounts payable and accrued expenses 21,725 6,315
Accrued income taxes 30,805 12,736
--------- ---------
Net cash provided by operating activities 165,358 62,927
--------- ---------
Cash flows from investing activities:
Proceeds from sale of equipment 296 919
Expenditures for property, plant and equipment (84,918) (68,316)
Expenditures for timber and timberlands, net (6,487) (9,123)
Expenditures for roads and reforestation (1,833) (1,850)
Other 984 4,206
--------- ---------
Net cash used in investing activities (91,958) (74,164)
--------- ---------
Cash flows from financing activities:
Debt borrowings 1,165 12,000
Proceeds from sale of capital stock 638 4,709
Cash dividends (14,857) (13,199)
Payment on debt (61,212) (248)
--------- ---------
Net cash provided by financing activities (74,266) 3,262
--------- ---------
Net change in cash (866) (7,975)
Cash at beginning of period 12,798 9,543
--------- ---------
Cash at end of period $ 11,932 1,568
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 19,293 15,404
========= =========
Income taxes $ 7,032 1,106
========= =========
</TABLE>
<PAGE>
FORM 10-Q
PART I
WILLAMETTE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
Note 1 The information furnished in this report reflects all adjustments
which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented.
Note 2 The components of inventories are as follows (thousands of
dollars):
March 31, December 31,
1995 1994
--------- ------------
Finished product $ 85,184 72,229
Work in process 6,907 6,794
Raw material 118,164 114,596
Supplies 64,101 62,472
$274,356 256,091
Other notes have been omitted pursuant to Rule 10-01(a)(5) of
Regulation S-X.
<PAGE>
FORM 10-Q
PART I
ITEM 2
WILLAMETTE INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
March 31, 1995
The Company's two basic businesses, paper products and building materials, are
affected by changes in general economic conditions. Paper product sales and
earnings tend to follow the general economy. Building materials activity is
closely related to new housing starts and to the availability and terms of
financing for construction. Both industry segments use timber as the basic
raw material. The cost of timber is sensitive to various supply and demand
factors, including environmental issues affecting log supply.
RESULTS OF OPERATIONS
1st Quarter 1995 vs. 1st Quarter 1994
Net sales increased 32.5% in the first quarter of 1995 compared with the first
quarter of 1994. Paper product sales increased 51.9%. Sales price realizations
increased significantly as white and brown paper are in extremely tight supply
with limited amounts of capacity expected to come on line in the near future.
In the Company's unbleached paper product lines, selling prices were
considerably higher than those from the first quarter of 1994. Selling prices
for grocery sacks and corrugated containers, the Company's major unbleached
converted paper products, increased 75.9% and 35.2% respectively over levels
from the first quarter of 1994. Selling prices were also significantly higher
for bleached papers in the first quarter of 1995 compared with the first
quarter of 1994. Prices for bleached hardwood market pulp increased 116.4%
while prices for continuous stock computer forms and cut sheet copy paper, the
Company's two major converted bleached paper products, were up 38.7% and 28.4%
respectively from levels for the first quarter of 1994. Except for grocery
sacks, sales volumes were above levels from the same period a year ago as
several of the Company's capital expansion projects came on line since the
first quarter of 1994. Building materials sales increased 3.0% compared with
the first quarter of 1994 as average sales price realizations increased
substantially in all building materials product lines except lumber. Lumber
prices decreased 10.2% primarily due to curtailed building activity and
increased availability of both Canadian lumber and substitute engineered wood
products. Building activity was down mainly due to the rapid increases in
interest rates late in 1994 that began to take their toll during the first
quarter of 1995. Demand continued to be strong, relative to the first quarter
of 1994, for particleboard and medium density fiberboard (MDF); although, it
too is beginning to be affected by the downturn in building activity. As a
result, average price realizations for particleboard and MDF have increased
16.1% and 14.5% respectively compared with the first quarter of 1994. Unit
sales volumes exceeded the previous year levels for lumber and MDF products.
However, plywood and particleboard unit sales volumes were below previous year
levels mainly due to the closure of the Sweet Home, Oregon plywood plant in
October of 1994 and to downtime taken at the Bend, Oregon particleboard plant
to complete a capital expansion project.
Gross profit margins increased significantly to 25.5% in the first quarter of
1995 from 16.9% in the first quarter of 1994. Paper product gross margins
increased to 26.6% from 10.8% in the first quarter of 1994 as both average
sales prices and sales volumes continued to improve. The results of this
group were also favorably affected by the successful start-up of the Company's
#2 unbleached linerboard machine at the Campti, Louisiana mill. Offsetting
some of the favorable sales related gross margin improvement was the
continuing escalation of old corrugated container (OCC) prices. OCC prices in
the first quarter of 1995 increased nearly 275% compared with the same period
in 1994. Building materials gross profit margins declined to 23.2% compared
with 26.2% in the first quarter of 1994. The decrease in building materials
margins is mainly due to decreases in average sales price realizations for
lumber coupled with increasing log, glue and resin costs. Log costs in the
Southern and Atlantic regions of the U.S. increased primarily due to supply,
demand and weather factors. Glue and resin costs, raw materials used in the
manufacture of plywood and composite board products, have increased
significantly in the first quarter of 1995 compared with the first quarter of
1994.
Selling and administrative expenses declined to 5.5% of net sales in the first
quarter of 1995 compared with 6.7% for the same period in 1994. The decline
was primarily due to additional sales volumes as selling and administrative
expenses increased 8.7% between the two periods.
Interest expense was $19.2 million in the first quarter of 1995 compared with
$15.9 million in the first quarter of 1994. Interest expense increased
primarily due to rising interest rates and lower capitalized interest. The
Company's effective interest rate on average outstanding debt increased from
7.28% for the first quarter of 1994 to 7.99% for the same period in 1995.
Capitalized interest declined to $1.5 million in the first quarter of 1995
compared with $3.3 million in the same period of 1994.
FINANCIAL CONDITION AS OF MARCH 31, 1995
During the first quarter of 1995, the Company had capital expenditures of
$93.2 million that were funded by internally generated cash flows. Cash flows
from operating activities have increased $102.4 million or 162.8% in the first
quarter of 1995 from the comparable period in 1994 mainly due to increased
operating earnings and higher non-cash charges against earnings. In addition
to completely funding capital expenditures for the first quarter of 1995,
higher operating cash flows have allowed the Company to reduce its net debt
outstanding by $60.0 million.
The total debt-to-capital ratio has decreased to 40.6% at March 31, 1995 from
43.5% at December 31, 1994. Net working capital increased to $164.1 million
at March 31, 1995 from $138.5 million at December 31, 1994.
The Company believes it has the resources available to meet its liquidity
requirements. Resources include internally generated funds, short-term
borrowing agreements, revolving credit lines and term loans which could be
arranged with several banks as the Company has done in the past. In early May
of 1995, the Company received $50 million under an agreement arranged with a
bank at market interest rates. The proceeds were used for the Kingsport,
Tennessee mill acquisition from The Mead Corporation and for the reduction of
short-term borrowing. In addition, in April 1994, the Company registered,
under the Securities Act of 1933, senior debt securities totaling $200
million. As of the date of this filing, none of the debt securities have been
issued.
On April 27, 1995, the Board of Directors of the Company voted to pay a
quarterly cash dividend of $.27 per share in the second quarter of 1995;
however, there is no assurance to future dividends as they are dependent upon
earnings, capital requirements and financial condition.
<PAGE>
FORM 10-Q
PART II
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of the Company's shareholders was held April 27, 1995.
The following directors were elected at the annual meeting for terms of office
expiring in 1998 by the vote indicated below:
Abstentions and
For Withheld Broker Non-votes
---------- -------- ----------------
C. M. Bishop, Jr. 48,710,823 125,332 0
Robert M. Smelick 48,725,676 110,479 0
Benjamin R. Whiteley 48,725,943 110,212 0
The following individuals continue to serve as directors:
Expiration
Of Term
----------
E. B. Hart 1996
C. W. Knodell 1996
William Swindells 1996
Gerard K. Drummond 1997
Paul N. McCracken 1997
Stuart J. Shelk, Jr. 1997
Samuel C. Wheeler 1997
The amendment to the Company's 1986 stock option and stock appreciation rights
plan was approved at the annual meeting by the following vote: 44,203,634
for; 4,124,999 against and 507,522 abstentions and broker non-votes.
The Company's 1995 long-term incentive compensation plan was approved at the
annual meeting by the following vote: 44,261,231 for; 4,095,472 against and
479,452 abstentions and broker non-votes.
The appointment of KPMG Peat Marwick LLP, independent certified public
accountants, to audit the financial statements of the Company for the year
1995 was approved at the annual meeting by the following vote: 48,704,144
for; 44,284 against and 87,727 abstentions and broker non-votes.
Item 5. Other Information
On March 15, 1995, the Company entered into an agreement to acquire a fine
paper mill located in Kingsport, Tennessee from The Mead Corporation. This
acquisition was completed May 2, 1995.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Exhibit
---------- -------
10B Willamette Industries, Inc.
1986 Stock Option and Stock
Appreciation Rights Plan, as
amended.*
12 Computation of
Ratio of Earnings
to Fixed Charges.
27 Financial Data Schedule.
(b) Reports on Form 8-K
None
* Management contract or compensatory plan or arrangement.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WILLAMETTE INDUSTRIES, INC.
By /s/J. A. Parsons
J. A. Parsons
Executive Vice President
Principal Financial Officer)
Date: May 8, 1995
<PAGE>
<PAGE>
EXHIBIT 10B
WILLAMETTE INDUSTRIES, INC.
1986 STOCK OPTION AND STOCK
APPRECIATION RIGHTS PLAN
1. General. Pursuant to the terms and conditions of the
WILLAMETTE INDUSTRIES, INC., 1986 STOCK OPTION AND STOCK APPRECIATION RIGHTS
PLAN (the "Plan"), hereinafter set forth, the Committee specified in Article 2
may from time to time grant or award to eligible employees of Willamette
Industries, Inc. ("Company"), and of those corporations ("Subsidiaries") in
which Company owns at least 50 percent of the total combined voting power of
all classes of stock, options to purchase shares of the $.50 par value common
stock ("Stock") of Company, stock appreciation rights, and restricted Stock
(shares of Stock which are awarded subject to restrictions during the vesting
period). Such options, stock appreciation rights, and restricted Stock are
sometimes referred to herein collectively as "grants and awards." The purpose
of the Plan is to motivate special achievement by officers and other key
employees of Company and its Subsidiaries by assisting them in acquiring or
increasing an equity interest in Company. The options shall be nonqualified
stock options subject to Section 83 of the Internal Revenue Code, and not
incentive stock options subject to Section 422A of the Internal Revenue Code.
2. Administration. The Board of Directors of Company ("the
Board") shall designate a Committee of not less than three members of the
Board ("the Committee") who shall administer the Plan and serve at the
pleasure of the Board. The Committee may also have other duties, as would be
the case if the Board should designate the Company's Compensation and
Nomination Committee (or a successor thereto) to act as the Committee under
the Plan. All members of the Committee shall be disinterested persons. For
the purposes of the Plan, a member of the Committee shall be a "disinterested
person" only if such member is not, at the time any action is taken with
regard to the Plan, eligible to receive grants and awards under the Plan, and
has not at any time within one year prior thereto been so eligible. Subject
to the express provisions of the Plan, the Committee shall have full and final
authority, acting in its sole discretion, to interpret the Plan, to establish
rules and regulations relating to the Plan and to take such action and make
such determinations as the Committee may deem necessary or advisable in the
administration of the Plan. No member of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
grant or award made thereunder, nor be liable for any good faith reliance upon
any report or other information furnished to the Committee by Company's
officers, its independent public accounts or by any other person or entity.
3. Eligibility. Employees eligible to receive grants and awards
under the Plan shall be such key employees (including officers, regardless
whether they are directors) of Company and its Subsidiaries as may be selected
from time to time by the Committee. Any such key employee shall be eligible
to receive grants of options to purchase Stock and awards of restricted Stock,
but only officers shall be eligible to receive awards of stock appreciation
rights. No provisions of the Plan shall be construed to prohibit the
Committee from making additional grants or awards under the Plan to employees
who have previously received grants or awards. No provision of the Plan shall
be construed as automatically entitling an employee to a grant or award,
regardless whether the employee has received a grant or award in a prior year
or has attained a particular executive position or salary level.
4. Shares Subject to the Plan. Subject to Article 13 hereof,
the total number of shares of Stock issuable under the Plan shall not exceed
1,500,000, of which no more than 250,000 may be issued as restricted Stock.
For purposes of these limitations, (a) shares previously issued (or that may
be issued in the future) on the exercise of options granted prior to this
amendment and restatement shall reduce the 1,500,000 maximum limitation,
(b) any option which terminates or expires without exercise and without
exercise of stock appreciation rights (and without the making of a cash
exercise under Article 8) related to that option shall thereafter be deemed
not to have been granted, and (c) shares of restricted Stock which are
forfeited shall thereafter be deemed not to have been issued. Shares of Stock
available for issue under the Plan shall be authorized and unissued shares or
shares acquired by Company and held in treasury.
5. Stock Options. The Committee may from time to time grant
options under the Plan to eligible employees. The price at which a share of
Stock may be purchased on exercise of an option shall be fixed by the
Committee at the date of grant of such option and shall not be less than the
fair market value of a share of Stock at that date. Fair market value, as
used in this Article 5 and elsewhere in the Plan, shall, unless the Committee
shall determine otherwise, be the closing price of Stock on the date the
option is granted as reported on the NASDAQ national market system for such
date or, if such closing price is not available for a date (because the date
is not a trading date or otherwise), for the next preceding date for which
such closing price is available.
At the time an option is granted, the Committee shall specify the
period during which it is not exercisable, and whether the option is to be
thereafter exercisable in full or in installments. The Committee may at any
time after the grant accelerate the exercisability of the option.
Notwithstanding the foregoing, no portion of an option covered by related
stock appreciation rights may be exercised within six months of the date of
grant. Options granted under the Plan shall expire not more than ten years
and two days from the date of the grant of the option as specified by the
Committee at date of grant.
No employee to whom an option is granted shall be entitled to any
of the rights of a shareholder of company with respect to any shares covered
by the option until certificates representing such shares have been issued to
the employee.
No option may be transferred except by will or the laws of descent
and distribution and, during the lifetime of an employee to whom an option is
granted, such option may be exercised only by the employee, the employee's
guardian or legal representative.
Upon termination of employment for any reason other than death,
disability, or retirement ("disability" and "retirement" are defined in
Article 8A) of an employee to whom an option has been granted, the employee
may, at any time prior to the earlier of (a) 30 days after termination of
employment or (b) the expiration of the stated period of the option, exercise
the option to the same extent, if any, that the option was exercisable by the
employee on the date of termination of employment under the terms of the
option. Notwithstanding the foregoing, the Committee may in its discretion,
after giving consideration to the circumstances of the termination of
employment of an employee to whom an option has been granted, extend said 30-
day period to a period of three years after termination of employment. The
option shall expire on the date of termination of employment to the extent it
was not then exercisable and otherwise shall expire upon the earlier of
30 days (three years, if the Committee has extended the period) after
termination of employment or the expiration of the stated period of the
option.
Upon the termination of employment by reason of death, disability,
or retirement of an employee to whom an option has been granted, the employee
(or, in case of death, any person or persons, including the legal
representative of the employee's estate, to whom the option passes by will or
by the laws of descent and distribution) may, at any time prior to the
expiration of the stated period of the option, exercise the option to the same
extent, if any, that the option was exercisable by the employee on the date of
termination of employment under the terms of the option. The option shall
expire on the date of termination of employment to the extent it was not then
exercisable and otherwise shall expire upon the expiration of the stated
period of the option.
Payment upon exercise of an option shall be made in cash, by
certified check or bank draft payable to the order of Company or, at the
Committee's discretion, in whole or in part in any other form, including by
personal check or by the delivery to Company of shares of Stock previously
acquired by the employee or by any combination of the foregoing.
6. Stock Appreciation Rights. The Committee may, at the time of
grant of an option, or at such later date during the term of the option as the
Committee may determine, make an award of stock appreciation rights in
conjunction with the option. A "stock appreciation right" is a right to
receive cash as provided in this Article 6. The maximum number of stock
appreciation rights that may be awarded to an optionee is 50 percent of the
number of shares of Stock covered by the related option. Any exercise of the
related option shall reduce the number of stock appreciation rights available
for exercise. For each one share of Stock covered by the exercise of the
related option, the number of stock appreciation right (except that, if the
number of stock appreciation rights that had been awarded to the optionee is a
lesser percentage than the maximum allowable 50 percent of the number of
shares covered by the related option, then the reduction shall be limited to
such lesser percentage of one stock appreciation right).
A stock appreciation right may be exercised only at the same time
as an exercise of the related option. The maximum number of stock
appreciation rights that can be then exercised is 50 percent of the number of
shares of Stock to be purchased at that time under the option (except that, if
the number of stock appreciation rights that had been awarded to the optionee
is a lesser percentage than the maximum allowable 50 percent of the number of
shares covered by the related option, then the maximum number of stock
appreciation rights that can be then exercised shall be such lesser percentage
of the number of shares to Stock to be purchased). Any exercise of stock
appreciation rights shall reduce the number of shares of Stock covered by the
related option. For each one stock appreciation right exercised, the number
of shares shall be reduced by two (unless the number of stock appreciation
rights that had been awarded to the optionee is a lesser percentage than the
maximum allowable 50 percent, in which case the reduction shall be a
correspondingly higher number of shares).
Upon the exercise of a stock appreciation right, the optionee shall
be entitled to the excess of the fair market value of one share of Stock on
the date of such exercise over the purchase price per share specified in the
related option, multiplied by the number of stock appreciation rights so
exercised.
Except as otherwise provided in this Article 6, stock appreciation
rights shall be exercisable and expire on the same terms and conditions as the
options to which they relate and shall be subject to the same restraints on
transferability, except that stock appreciation rights shall be exercisable
only during such periods as may be permissible without causing the employee to
incur liability under Section 16(b) of the Securities Exchange Act of 1934,
and if a termination of employment occurs by reason of discharge for cause or
voluntary resignation the employee's stock appreciation rights shall expire on
the date of termination of employment.
6A. Awards of Restricted Stock. The Committee may from time to
time make awards of restricted Stock under the Plan to eligible employees.
At the time an award is made, the Committee shall specify the
waiting period or periods during which the shares are not vested. The vesting
of shares may be dependent on a period of subsequent employment, on the
attainment of performance goals, or both. The Committee may at any time after
the award accelerate the vesting as to part or all the shares awarded.
During the waiting period, the employee shall have all the rights
of a shareholder of Company as to the nonvested shares, except that the shares
may not be sold, assigned, transferred, pledged or otherwise encumbered.
Certificates representing awarded shares shall be registered in the name of
the employee but held (with a stock power endorsed in blank) by Company during
the vesting period.
The shares shall vest and be delivered to the employee or legal
representative free of restrictions at the end of the original or accelerated
vesting period, upon the attainment of specified performance goals or, if
earlier, upon death, disability, or retirement ("disability" and "retirement"
are defined in Article 8A).
Upon termination of employment for any reason other than death,
disability, or retirement of an employee to whom an award has been made, any
nonvested shares shall be forfeited. If any performance criteria are not met
within the time specified for such criteria, the nonvested shares subject to
such criteria shall be forfeited.
The Committee may, in its discretion, provide that a portion of the
award of restricted Stock shall be made in cash rather than shares. Any such
cash shall be payable at the same time or times as the shares to which the
cash relates become vested. If shares are forfeited, the related amount of
unpaid cash shall also be forfeited.
7. Change in Control. For purposes of the Plan, "change in
control" means the occurrence of any of the following events without approval
by the affirmative vote of at least two thirds of those members of the Board
who (i) are members of the Board immediately prior to the event, and (ii) are
not employees of Company or a Subsidiary:
(a) The merger or consolidation of Company with, or the sale
of all or substantially all the assets of the Company to, any person
or entity or group of associated persons or entities.
(b) The attainment of direct or indirect beneficial
ownership of securities of Company which in the aggregate represent
20 percent or more of the total combined voting power of Company's
then issued and outstanding securities by any person or entity or
group of associated persons or entities acting in concert who is
not affiliated (within the meaning of the Securities Act of 1933)
with Company as of February 13, 1986; provided, however the Board
may at any time in its discretion increase the 20 percent
requirement but not beyond 40 percent.
(c) The approval by the shareholders of Company of any plan
or proposal for the liquidation or dissolution of Company.
A change in control shall also be deemed to occur upon a change in
the membership of the Board at any time during any consecutive 24-month period
such that the "continuity" directors cease for any reason to constitute at
lest 70 percent of the Board. The continuity directors are those members of
the Board who were either (i) members of the Board at the beginning of such
consecutive 24-month period, or (ii) elected by, or on the nomination or
recommendation of, at least two thirds of the members of the Board.
If a change in control occurs, all options and stock appreciation
rights previously granted or awarded which are not fully exercisable shall
become exercisable in full upon the date of such occurrence and shall remain
so exercisable until the earlier of (a) three years after the date of such
occurrence, or (b) the expiration of the stated period of the option. After
the end of the three-year period, the options and rights shall revert to being
exercisable in accordance with their terms, although no option or rights which
have previously been exercised or otherwise terminated shall become
exercisable. Notwithstanding the foregoing, neither stock appreciation rights
nor the portion of the related option covered by the stock appreciation rights
may be exercised within six months of the date of award or grant of the rights
or option.
Notwithstanding the provisions of Articles 5 and 6 relating to the
expiration of options and stock appreciation rights in connection with
termination of employment, upon termination of employment for any reason
(other than by reason of conduct which constitutes a felony under federal law
or the law of the state in which the employee resides) within the two-year
period following the occurrence of a change in control, the option and rights
may be exercised at any time prior to the earlier of (a) three years after
termination of employment or (b) the expiration of the stated period of the
option.
if a change in control occurs, all shares of restricted Stock
previously awarded which are not vested shall become vested upon the date of
such occurrence.
8. Right to Receive Cash on Change in Control. If a change in
control, as defined in Article 7, occurs, each employee (including those who
are not officers) holding an exercisable option, and regardless whether the
option is then otherwise fully exercisable, may make a cash exercise of all or
any portion of the option in lieu of the purchase of Stock under the option.
A cash exercise may be made, without any payment to Company, by surrendering
unexercised the option (and any related stock appreciation rights) or any
portion thereof. Upon such exercise and surrender, the optionee shall be
entitled to receive cash (less applicable withholding taxes) in an amount
equal to the excess of the aggregate fair market value of the shares of Stock
covered by the option, or the relevant portion thereof, on the date of such
exercise and surrender over the aggregate exercise price of such Stock under
the option. The cash exercise may be made only during the period beginning on
the first day following the date on which Company has actual knowledge of the
actual occurrence of the change in control and ending on the 45th day
following such date. Notwithstanding the foregoing, no cash exercise may be
made by an officer of Company or its Subsidiaries within six months of the
date of the grant of the option and no cash exercise may be made by any
optionee after the expiration of the stated period of the option.
8A. Disability; Retirement. "Disability" for purposes of this
Plan shall have the same meaning as "total and permanent disability" under the
Willamette Industries, Inc., and Associated Companies Salaried Employees'
Retirement Plan (regardless whether the employee is covered by such Retirement
Plan). With respect to grants and awards made on or after August 9, 1990,
"retirement" shall mean:
(a) Termination of employment at or after attainment of age
62, provided the employee has (or would have, if covered by such
Retirement Plan) at least ten vesting credits as defined under such
Retirement Plan, or
(b) Termination of employment at or after attainment of age
65, regardless of the number of such vesting credits, if any.
9. Employee Agreement. Each employee to whom a grant or award
is made under the Plan shall execute an appropriate agreement with respect to
such grant or award referring to the terms and conditions thereof and of the
Plan. The form of agreements may be changed from time to time and need not be
identical among those receiving the grants or awards.
10. Withholding Taxes. Company shall have the right to deduct
from all cash payments made under the Plan any federal, state or local taxes
required by law to be withheld with respect to such cash payments, and, in the
event such cash payments are insufficient to cover the required withholding,
the employee or other person receiving such payment may be required to pay to
Company the additional amount necessary for this purpose. In the case of an
exercise of an option or an award of restricted Stock, the employee or other
person exercising such option or taxable in connection with such award may be
required to pay to Company the amount of any such taxes that Company is
required to withhold with respect to such exercise or award. Company shall
also have the right to deduct any such taxes from the shares that would
otherwise be issued to or vest in the employee or other person.
The Committee may, in its discretion, allow the employee or other
person to make the required payment to Company by delivery of shares of
previously acquired Stock.
11. Employment. Nothing contained in the Plan or in any grant or
award under the Plan shall confer upon any employee any right with respect to
the continuation of employment with Company or its Subsidiaries or interfere
in any way with the right of Company or its Subsidiaries to terminate the
employee's employment at any time. Nothing contained in the Plan shall confer
upon any employee or other person any claim or right to any grant or award
under the Plan.
12. Governmental Compliance. Each grant and award under the Plan
shall be subject to the requirement that, if at any time the Committee shall
determine that the listing, registration or qualification of any shares
issuable thereunder upon any securities exchange or under any federal or state
law, or the consent or approval of any governmental or self-regulatory body is
necessary or desirable as a condition thereof, or in connection therewith, no
such grant or award may be exercised or shares issued unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
13. Adjustments. The right and power of Company to provide for
reclassifications, reorganizations, recapitalizations, stock splits, stock
dividends, combination of shares, merger, consolidation or any other change in
the capital structure or shares of Company shall not be affected by the Plan.
In the event of any such action, the Committee or the Board may make such
adjustments, if any, as it may deem appropriate in the number of shares
available for grants and awards under the Plan and to grants and awards made
under the Plan.
14. Expenses. The expenses of administering the Plan shall be
borne by the Company.
15. Termination. No grants or awards under the Plan shall be
made after April 14, 1996, or such earlier date as the Board may determine.
16. Successors and Assigns. The provisions of the Plan(and
interpretations and determinations made by the Committee pursuant thereto)
shall be conclusive and binding upon Company and its Subsidiaries, their
successors and assigns and upon each employee receiving grants or awards under
the Plan and the employee's heirs, successors and assigns.
17. Amendment. The Plan may be amended by the Board as it deems
advisable, provided that no such amendments shall adversely affect the rights
of employees to whom grants and awards under the Plan shall have been made
without the consent of the employees affected thereby, nor shall the Board,
without approval of Company's shareholders:
(a) Except as provided in Article 13, increase the number of
shares of Stock that are subject to the Plan;
(b) Extend the period during which grants and awards under the
Plan may be made or exercised;
(c) Otherwise materially increase the benefits accruing to
participants under the Plan;
(d) Amend the requirements of the Plan in respect of
eligibility to receive or to exercise grants and awards under the
Plan; or
(e) Establish the price at which shares may be purchased on
the exercise of an option at less than the fair market value of the
Stock at the time the option is granted.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12
WILLAMETTE INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
Three Months Ended
Year Ended December 31, March 31,
-------------------------------------------------- -----------------
1990 1991 1992 1993 1994 1994 1995
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest Cost $52,028 $63,986 $73,776 $79,194 $80,807 $19,179 $20,677
One-third rent expense 2,948 3,725 4,495 4,819 5,227 1,387 1,374
------- ------- ------- ------- ------- ------- -------
Total Fixed Charges 54,976 67,711 78,271 84,013 86,034 20,566 22,051
======= ======= ======= ======= ======= ======= =======
Add (Deduct):
Earnings before Income Taxes 208,671 73,609 129,452 189,168 288,923 53,471 161,111
Interest Capitalized (22,129) (723) (7,354) (15,904) (9,294) (3,267) (1,476)
------- ------- ------- ------- ------- ------- -------
Earnings for Fixed Charges $241,518 $140,597 $200,369 $257,277 $365,663 $70,770 $181,686
======= ======= ======= ======= ======= ======= =======
Ratio of Earnings to
Fixed Charges 4.39 2.08 2.56 3.06 4.25 3.44 8.24
======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S CONSOLIDATED BALANCE
SHEETS AND RELATED CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 11,932
<SECURITIES> 0
<RECEIVABLES> 336,431
<ALLOWANCES> 5,309
<INVENTORY> 274,356
<CURRENT-ASSETS> 672,654
<PP&E> 3,757,995
<DEPRECIATION> 1,350,626
<TOTAL-ASSETS> 3,136,491
<CURRENT-LIABILITIES> 508,548
<BONDS> 865,858
0
0
<COMMON> 27,526
<OTHER-SE> 1,445,246
<TOTAL-LIABILITY-AND-EQUITY> 3,136,491
<SALES> 900,638
<TOTAL-REVENUES> 900,638
<CGS> 670,809
<TOTAL-COSTS> 670,809
<OTHER-EXPENSES> 49,517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,201
<INCOME-PRETAX> 161,111
<INCOME-TAX> 62,028
<INCOME-CONTINUING> 99,083
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 99,083
<EPS-PRIMARY> 1.80
<EPS-DILUTED> 1.80
</TABLE>
