<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995 Commission file number 0-3730
WILLAMETTE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Oregon 93-0312940
(State of incorporation) (I.R.S. Employer
Identification No.)
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 227-5581
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.50 par value
(Title of class)
Preferred Stock Purchase Rights
(Title of class)
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant.
$2,811,770,000 at January 31, 1996
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date.
Class Outstanding at January 31, 1996
Common Stock, $.50 par value 55,223,706 shares
DOCUMENTS INCORPORATED BY REFERENCE.
Portions of the registrant's definitive proxy statement for its 1996
annual meeting of shareholders are incorporated by reference into Part III
hereof.
<PAGE>
CROSS REFERENCE SHEET
Showing Location in Definitive Proxy Statement of Items Required
By Form 10-K
Item No Form 10-K Caption Definitive Proxy Statement
Caption
Item 10 Directors and Executive Election of Directors
Officers of the Registrant Holders of Common Stock
Item 11 Executive Compensation Executive Compensation
Compensation Committee
Interlocks and Insider
Participation
Compensation of Directors
Employment Agreements
Item 12 Security Ownership of Holders of Common Stock
Certain Beneficial
Owners and Management
Item 13 Certain Relationships and Compensation Committee
Related Transactions Interlocks and Insider
Participation
<PAGE>
INDEX
Page
Part I
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Business Segment Information. . . . . . . . . . . . . . . . . . . .1
Pulp and Paper. . . . . . . . . . . . . . . . . . . . . . . . . . .2
Converted Paper Products. . . . . . . . . . . . . . . . . . . . . .2
Building Materials. . . . . . . . . . . . . . . . . . . . . . . . .3
Timberlands . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Environmental Matters . . . . . . . . . . . . . . . . . . . . . . .4
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . .7
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . .8
Executive Officers of the Registrant. . . . . . . . . . . . . . . .8
Part II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters. . . . . . . . . . . . . . . .9
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 10
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . 11
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . 16
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 16
Part III
Item 10. Directors and Executive Officers of the Registrant. . . . . . . . 16
(See Part I for Executive Officers of the Registrant)
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . 17
Item 12. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . . . . 17
Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . . . . . . . 17
Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . 17
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Index to Consolidated Financial Statements. . . . . . . . . . . . 20
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . 38
<PAGE>
PART I
Item 1. Business
General
Willamette Industries ("Willamette" or the "Company") was founded in 1906
as the Willamette Valley Lumber Co. in Dallas, Oregon. In 1967, Willamette
Valley and several related firms merged to form Willamette Industries, Inc.
Its stock has been publicly traded since 1968.
Willamette is a diversified, integrated forest products company with 95
plants and mills manufacturing kraft liner, corrugating medium, bag paper,
fine paper, hardwood market pulp, specialty printing papers, corrugated
containers, business forms, cut sheet paper, paper bags, inks, lumber,
plywood, particleboard, medium density fiberboard, laminated beams, laminated
veneer lumber, wooden I-beams and other value-added wood products. We own or
control 1,253,000 acres of forests.
Willamette is a medium-sized firm in a very competitive industry consisting
of thousands of companies, some larger and more diversified, others much
smaller, producing only one or two products. Very competitive conditions
exist in every industry segment in which the Company operates. The Company
competes in its markets primarily through price, quality and service.
The Company believes its strengths are its vertical integration; its
geographically diverse, modern, fiber- and energy-efficient facilities; its
concentration on a focused, related product range; its balance among building
materials, fine paper and unbleached paper manufacturing and an
organizational structure that encourages teamwork as well as individual
initiative.
Willamette is listed in the FORTUNE 500. The Company's common stock trades
on The Nasdaq Stock Market under the symbol: WMTT.
Business Segment Information
The Company has two business segments. The paper group manufactures and
sells pulp and paper products. The building materials group manufactures and
sells wood products. Sales and operating data for the paper group and
building materials group for the past five years is set forth in the five
year comparison captioned "Supplementary Business Segment Information"
located on page 26. The Company has no foreign operations and is not
dependent on any one significant customer or group of customers.
Approximately 95% of the Company's total output is sold domestically.
<PAGE>
Pulp and Paper
Market pulp and fine paper
Hardwood market pulp is manufactured at Hawesville, Kentucky; fine paper at
Hawesville; Johnsonburg, Pennsylvania; Kingsport, Tennessee and Marlboro
County, South Carolina. We make 4.8% of the nation's hardwood market pulp,
which is sold to outside customers, and 7.7% of the nation's fine paper
production.
Chips from nearby sawmills and plywood plants serve as the primary fiber
source. Our timberlands in Tennessee and the Carolinas also serve as a
source of fiber.
Unbleached paper
Four paper mills manufacture 5.0% of the nation's production of linerboard,
corrugating medium and bag paper. Nearly all of the product is used or
traded for the needs of Willamette's box and bag manufacturing plants.
In Louisiana, our sawmills, plywood plants and timberlands can provide 100%
of the chips needed by our linerboard mill; in Oregon, almost 100% of the
chip requirements could be provided from those sources.
Recycled fiber, in the form of used corrugated containers, provides
58.7% of our fiber needs.
Converted paper products
Office papers
Seven business forms plants manufacture 8.8% of the nation's production of
forms. These forms, mostly long-run continuous computer forms, along with
Willcopy(R), Willamette's photocopy and cut sheet printer paper produced at
our four cut sheet facilities, are marketed by 73 sales and distribution
centers. Our cut sheets represent 9.5% of the nation's cut sheet production.
Corrugated containers and sheets
Corrugated containers and sheets are manufactured by 32 plants, accounting
for 5.6% of the nation's corrugated box production. Products range from
colorful store displays to eye-catching preprinted boxes; from sturdy wax
coated shipping containers to the plain brown box. Corrugated containers are
marketed by our own sales force to a variety of industrial and agricultural
customers.
Bags
Four bag plants make 14.4% of the nation's paper bags, marketed to grocery,
department, drug and hardware stores in the West and South by our sales
force.
<PAGE>
Building Materials
Structural panels and lumber
Plywood products, totalling 6.6% of the nation's structural panel
production, are manufactured at 10 plants in Arkansas, the Carolinas,
Louisiana and Oregon.
An oriented strand board (OSB) plant in Louisiana will begin production in
the first quarter of 1996. The output of this plant will represent 2.0% of
the nation's OSB Production.
Six sawmills manufacture 1.3% of the nation's lumber production.
Lumber and plywood products are marketed through independent wholesalers
and distributors throughout the U.S.
Composite board
Four particleboard plants in Louisiana and Oregon manufacture 12.8% of the
nation's particleboard. Three medium density fiberboard (MDF) plants in
Arkansas, Oregon and South Carolina made 19.7% of the nation's MDF in 1995.
These plants produce value-added products including color-coated, woodgrain-
printed, fire-rated and moisture-resistant boards.
Composite board products are sold nationwide through distributors, as well
as directly to cabinet and furniture manufacturers.
Engineered wood products
Three laminated beam plants in Oregon and Louisiana account for 28.4% of
the nation's production. Two laminated veneer lumber (LVL) plants and one
wooden I-beam plant, all located in Oregon, manufactured 5.3% and 5.2% of the
nation's total production for each respective product in 1995. Engineered
wood products, both stock and custom made, are sold nationwide and
internationally.
Timberlands
Willamette's 1,253,000 acres of timberland supply approximately 40% of our
long-term log needs. The remainder is purchased through government and
private timber sales and open market purchases. In Oregon, we are able to
provide approximately 70% of our log needs from our own timberlands. We own
or control cutting rights on 572,000 acres in Louisiana, Arkansas and Texas;
337,000 acres in Oregon; 188,000 acres in Tennessee and 156,000 acres in the
Carolinas. We continually look for opportunities to expand our fee timber
base and make purchases when it is profitable to do so.
Energy
Through cogeneration, the burning of waste materials and the recycling of
spent pulping liquors, Willamette's manufacturing facilities are able to
generate 60% of their total energy needs.
<PAGE>
Employees
Willamette employs approximately 13,180 people, of whom about 52% are
represented by labor unions with collective bargaining agreements.
Agreements covering approximately 2,060 employees were negotiated in 1995.
Agreements involving about 1,540 hourly employees are subject to renewal in
1996. In excess of 46% of all salaried employees have been with the Company
more than twelve years.
Environmental Matters
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Other Matters" for a discussion of the effect on the
Company of laws relating to environmental matters.
Item 2. Properties
Manufacturing Facilities
The following table sets forth information regarding the Company's
95 manufacturing facilities at December 31, 1995:
Facility Annual Production
-------- -----------------
M Square Ft.
(3/8" Basis)
Western Plywood (3 Plants)
Dallas, Oregon 151,000
Foster, Oregon 97,000
Springfield, Oregon 122,000
---------
Total Western Plants 370,000
---------
Southern Plywood (5 Plants)
Dodson, Louisiana 223,000
Emerson, Arkansas 235,000
Ruston, Louisiana 172,000
Taylor, Louisiana 208,000
Zwolle, Louisiana 214,000
---------
Total Southern Plants 1,052,000
---------
Atlantic Plywood (2 Plants)
Chester, South Carolina 250,000
Moncure, North Carolina 130,000
---------
Total Atlantic Plants 380,000
---------
(1995 Production-
1,786,000 M)
Total Plywood 1,802,000
---------
Oriented Strand Board
Arcadia, Louisiana (1) 249,000
---------
Total Structural Panels 2,051,000
=========
<PAGE>
Western Lumber (4 Mills) M Board Ft
Coburg, Oregon 107,000
Dallas, Oregon 88,000
Lebanon, Oregon-2 mills 118,000
---------
Total Western Mills 313,000
---------
Southern Lumber (2 Mills)
Dodson, Louisiana 62,000
Zwolle, Louisiana 50,000
---------
Total Southern Mills 112,000
---------
(1995 Production-
Total Lumber 425,000 430,000 M)
=========
M Square Ft
Particleboard (4 Plants) (3/4" Basis)
Albany, Oregon 206,000
Bend, Oregon 160,000
Lillie, Louisiana 111,000
Simsboro, Louisiana 94,000
---------
(1995 Production-
Total Particleboard 571,000 578,000 M)
=========
M Square Ft
Medium Density Fiberboard (3 Plants) (3/4" Basis)
Bennettsville, South Carolina 129,000
Eugene, Oregon (1) 43,000
Malvern, Arkansas 124,000
---------
(1995 Production-
Total MDF 296,000 221,000 M)
=========
Engineered Wood Products (6 Plants)
Laminated Beams M Board Ft
Saginaw, Oregon 26,000
Simsboro, Louisiana 8,000
Vaughn, Oregon 59,000
---------
(1995 Production-
Total Laminated Beams 93,000 80,000 M)
=========
<PAGE>
Laminated Veneer Lumber Cubic Ft.
Albany, Oregon (2) 614,000
Winston, Oregon 1,592,000(1995 Production-
---------
Total LVL 2,206,000 1,595,000 CF)
=========
Structural I-Beams M Lineal Ft.
Woodburn, Oregon 31,000(1995 Production-
=========
24,000 M)
Other Divisions (5 Facilities)
Coburg Veneer Coburg, Oregon
Custom Products Albany, Oregon
Custom Services Sweet Home, Oregon
Lebanon Machine Lebanon, Oregon
Remanufactured Lumber Lebanon, Oregon
<PAGE>
Pulp and Paper (9 Mills) Tons
Unbleached:
Albany, Oregon 501,000
Campti, Louisiana 797,000
Hawesville, Kentucky 178,000
Oxnard, California 194,000(1995 Production-
---------
1,670,000 1,608,000 Tons)
---------
Market Pulp and Fine Paper: Tons
Hawesville, Kentucky
Market Pulp 163,000
Fine Paper 202,000
Johnsonburg, Pennsylvania 337,000
Kingsport, Tennessee 212,000
Marlboro County, South Carolina 283,000(1995 Production-
---------
1,197,000 1,110,000 Tons)
---------
Total Pulp and Paper 2,867,000(1995 Production-
=========
2,718,000 Tons)
Corrugated Containers and Sheets(32 Plants)M Square Ft
Aurora, Illinois 939,000
Beaverton, Oregon 820,000
Bellevue, Washington 674,000
Bellmawr, New Jersey 739,000
Bowling Green, Kentucky 735,000
Cerritos, California 882,000
Compton, California 695,000
Dallas, Texas 900,000
Delaware, Ohio 626,000
Elk Grove, Illinois 442,000
Fort Smith, Arkansas 860,000
Fridley, Minnesota 948,000
Golden, Colorado 684,000
Griffin, Georgia 1,000,000
Huntsville, Alabama 860,000
Indianapolis, Indiana 700,000
Kansas City, Kansas 801,000
Lincoln, Illinois 431,000
Louisville, Kentucky 452,000
Lumberton, North Carolina 596,000
Maryland Heights, Missouri 742,000
Matthews, North Carolina 443,000
Memphis, Tennessee 54,000
Moses Lake, Washington 791,000
Newton, North Carolina 468,000
Sacramento, California 706,000
San Leandro, California 1,193,000
Sanger, California 857,000
Sealy, Texas 748,000
St. Paul, Minnesota 555,000
Warrensville Heights, Ohio 109,000
West Memphis, Arkansas 845,000(1995 Production-
---------
Total Corrugated Containers 22,295,000 20,810,000 M)
==========
Business Forms (7 Plants) Tons
Cerritos, California 57,000
Dallas, Texas 55,000
Dubois, Pennsylvania 18,000
Indianapolis, Indiana 72,000
Langhorne, Pennsylvania 58,000
Rock Hill, South Carolina 60,000
West Chicago, Illinois 62,000
---------
(1995 Production-
Total Business Forms 382,000 337,000 Tons)
=========
Cut Sheets and Other Converting (4 Plants) Tons
DuBois, Pennsylvania 105,000
Kingsport, Tennessee 109,000
Owensboro, Kentucky 87,000
Tatum, South Carolina 93,000
---------
(1995 Production-
Total Cut Sheets 394,000 333,000 Tons)
=========
Kraft Bags and Sacks (4 Plants) Tons
Beaverton, Oregon 51,000
Buena Park, California 40,000
Dallas, Texas 26,000
North Kansas City, Missouri 21,000
---------
(1995 Production-
Total Kraft Bags and Sacks 138,000 131,000 Tons)
=========
Preprinted Linerboard (2 Plants) M Square Ft
Richwood, Kentucky 411,000
Tigard, Oregon 490,000
---------
(1995 Production-
Total Preprinted Linerboard 901,000 667,000 M)
=========
Inks and Specialty Products(2 Plants) Tons
Beaverton, Oregon 3,000
Delaware, Ohio 3,000
---------
(1995 Production-
Total Inks 6,000 6,000 Tons)
=========
(1) Production to begin in first quarter of 1996. Annual production
capacity is estimated to be 350,000 MSF on a 3/8" basis.
(2) Production to begin in summer of 1996. Annual Production capacity is
estimated to be 1,600,000 cubic feet.
Timberlands
For information respecting the Company's timberlands, see "Business--
Timberlands."
Item 3. Legal proceedings
There are no material legal proceedings pending as of the date hereof.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1995.
Executive Officers of the Registrant
The executive officers of the Company are elected annually by the board of
directors. At February 8, 1996, the executive officers of the Company, their
ages at December 31, 1995, and their positions with the Company were as
follows:
Name Age Position
Steven R. Rogel 53 President and chief executive
officer
William P. Kinnune 56 Executive vice president-
corrugated containers and bags
Michael R. Onustock 56 Executive vice president-pulp
and fine paper marketing
J. A. Parsons 60 Executive vice president and
chief financial officer,
secretary and treasurer
Floyd Vike 60 Executive vice president-
building materials group
Each executive officer has been employed by the Company in his present or
in another managerial capacity for more than five years.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The Company's common stock trades on The Nasdaq Stock Market under the
symbol: WMTT. At December 31, 1995, there were approximately 6,200 holders
of record of the Company's common stock. The following table shows for the
periods indicated the high and low closing sales prices of, and the per share
dividends paid on, the Company's common stock in each case as adjusted for
stock splits.
1995 1994
------------------------ ------------------
Closing Closing
Dividends Price Dividends Price
Paid High-Low Paid High-Low
----------- -------- --------- --------
1st Quarter.... $0.27 55-46 3/4 $0.24 59-45 3/4
2nd Quarter.... 0.27 56 1/4-48 1/4 0.24 49 1/2-42 3/4
3rd Quarter.... 0.30 72 3/8-55 1/2 0.24 52-41 1/2
4th Quarter.... 0.30 66 1/2-54 1/4 0.24 50 3/4-41
A dividend of $.31 per share was declared on the common stock for the first
quarter of 1996 representing an indicated annual dividend rate of $1.24 per
share. The Company expects to continue paying regular cash dividends,
although there is no assurance as to future dividends as they are dependent
on earnings, capital requirements and financial condition.
<PAGE>
<TABLE>
<CAPTION>
Item 6. Selected Financial Data
The following table shows selected financial data for the Company for the periods indicated:
----------------------------------------------------------------------
Financial Results
(dollar amounts, except per share amounts, in thousands)
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
Net sales.....................................$ 3,873,575 3,007,949 2,622,237 2,372,396 2,004,501
===============================================================================================================
Cost and expenses:
Depreciation, amortization and cost
of fee timber harvested..................... 249,165 217,252 194,202 173,784 151,258
Materials, labor and other operating expenses.. 2,528,570 2,239,185 1,997,246 1,833,919 1,563,939
---------------------------------------------------------------
Gross profit............................... 1,095,840 551,512 430,789 364,693 289,304
Selling and administrative expenses............ 201,784 184,699 174,413 167,094 145,329
---------------------------------------------------------------
Operating earnings......................... 894,056 366,813 256,376 197,599 143,975
Interest expense............................... 71,050 71,513 63,290 66,422 63,263
Other income (expense)......................... 798 (6,377) (3,918) (1,725) (7,103)
----------------------------------------------------------------
Earnings before taxes...................... 823,804 288,923 189,168 129,452 73,609
Provision for income taxes..................... 309,000 111,300 78,500 47,900 27,800
----------------------------------------------------------------
Earnings before accounting changes......... 514,804 177,623 110,668 81,552 45,809
Accounting changes............................. - - 26,364 - -
----------------------------------------------------------------
Net earnings .............................. 514,804 177,623 137,032 81,552 45,809
Cash dividends paid............................ 62,874 52,807 48,213 45,200 40,715
Earnings retained in the business.............. 451,930 124,816 88,819 36,352 5,094
Capital expenditures........................... 453,523 393,161 386,864 367,173 244,373
===============================================================================================================
Financial Condition
Working capital...............................$ 359,258 138,528 157,576 157,822 147,194
Long-term debt (non-current portion)........... 790,210 915,797 941,710 843,618 746,622
Stockholders' equity........................... 1,846,890 1,387,865 1,257,870 1,164,828 994,460
Total assets................................... 3,413,555 3,033,398 2,804,553 2,527,416 2,219,067
===============================================================================================================
Common Stock
Number of stockholders (beneficial)............ 19,000 17,000 14,000 11,500 10,500
Shares outstanding (in thousands) (1).......... 55,224 55,036 54,897 54,770 50,962
===============================================================================================================
Per Share(1)
Earnings before accounting changes............$ 9.34 3.23 2.02 1.52 0.90
Accounting changes ............................ - - .48 - -
----------------------------------------------------------------
Net earnings ................................ 9.34 3.23 2.50 1.52 0.90
Cash dividends paid ........................... 1.14 .96 0.88 0.84 0.80
Stockholders' equity .......................... 33.44 25.22 22.91 21.27 19.51
===============================================================================================================
Financial Returns
Percent return on equity before accounting
changes (2).................................. 37.1% 14.1% 9.5% 8.2% 4.6%
Percent return on net sales before accounting
changes ..................................... 13.3% 5.9% 4.2% 3.4% 2.3%
===============================================================================================================
Employment
Number of employees............................ 13,180 12,260 12,040 12,000 11,350
Wages, salaries and cost of employee benefits $ 627,835 580,561 551,172 507,469 451,770
===============================================================================================================
(1) All share and per share amounts have been adjusted for stock splits.
(2) Calculated on stockholders' equity at the beginning of the year.
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Paper products markets tend to follow general economic conditions. The
sales and earnings of the building materials business are closely related to
new housing starts, remodeling activity and to the availability and terms of
financing for construction. The cost of wood fiber, the basic raw material
for both industry segments, is sensitive to various supply and demand
factors, including environmental issues affecting log supply.
Results of Operations 1995 vs. 1994
Net sales increased 28.8% in 1995 compared with 1994. Paper products sales
increased 49.0% as selling prices increased by 30.0% or more in all paper
products lines. Except for grocery bags and corrugated containers shipments,
unit sales volumes increased by 5.7% or more in all other paper products
lines. Grocery bag and corrugated container shipments were down 11.7% and
2.5% respectively from 1994 mainly due to exceptionally strong demand for
these products during 1994. During the fourth quarter of 1995, selling
prices for all paper products lines declined from the record levels achieved
in the third quarter of 1995 and this trend appears to be continuing as we
enter the first quarter of 1996.
Building materials sales decreased 5.2% in 1995 compared with 1994 mostly due
to lower unit shipments of at least 3.7% in all building materials product
lines. Unit shipments declined primarily due to weaker building materials
markets, downtime taken associated with the completion of capital expansion
projects and the closure of the Sweet Home, Oregon plywood plant in the
fourth quarter of 1994. Except for lumber, selling prices in all other
building materials product lines were higher in 1995 than 1994; however,
prices in the fourth quarter of 1995 were lower in all product lines than for
the first three quarters of 1995.
The gross profit margin was 28.3% for 1995 compared with 18.3% for 1994.
Paper products gross margins increased to 30.6% in 1995 compared with 13.8%
for 1994 reflecting improved selling prices for all paper products lines and
improved unit sales volumes in all fine paper products lines. Paper products
gross margins also improved because 1995 costs were not impacted by the
start-up costs incurred in 1994 for the installation of a new pulping
facility and paper machine at the Company's Johnsonburg, Pennsylvania mill.
Another significant improvement to gross margins in 1995 was the start-up of
the second linerboard machine at Campti, Louisiana which allowed the Company
to replace linerboard previously purchased outside with internally produced
product at a much lower cost. Partially offsetting the increase in gross
margins was the escalation of old corrugated container (OCC) prices. Prices
for OCC, a raw material used in the manufacture of paper, increased 47.3%
compared with 1994.
Building materials gross profit margins decreased to 22.9% compared with
25.9% in 1994. The drop in building materials margins is mainly due to
decreases in unit shipments coupled with higher log costs and increased glue
and resin costs. Log costs in 1995 increased 8.8% over costs from 1994. The
cost of glue and resin, raw materials used in the manufacture of plywood and
composite board products, increased 16.8% in 1995 over 1994.
Selling and administrative expenses declined to 5.2% of net sales in 1995
compared with 6.1% for 1994. The drop was due to higher net sales as selling
and administrative expenses increased 9.3% between 1995 and 1994 mainly due
to expansion of the Company's operations.
Other income(expense) was $.8 million in 1995 versus $(6.4) million for 1994.
The expense in 1994 was mostly due to the closure of the Sweet Home, Oregon
plywood plant with a related charge of $5.0 million.
Interest expense was $71.0 million in 1995 compared with $71.5 million in
1994. Because the Company's average outstanding debt decreased $105.2
million between 1995 and 1994, gross interest was $77.2 million in 1995
versus $80.8 million in 1994. Capitalized interest declined to $6.2 million
in 1995 versus $9.3 million in 1994. The weighted average interest rate of
all debt was 7.67% at December 31, 1995 compared with 7.75% at December 31,
1994.
Results of Operations 1994 vs. 1993
Net sales increased 14.7% in 1994 compared to 1993. Paper products sales
increased 18.4% as unit volume sales increased in all paper products lines.
Unbleached paper products selling prices improved significantly throughout
1994 as demand for these products was strong while available supplies grew at
a far slower pace. In addition, demand for linerboard grew in export markets
further tightening supply. In fine paper products, hardwood market pulp
prices trended upward throughout 1994. Average sales price realizations for
other fine paper products trended down through the second quarter of 1994.
In the second half of 1994, a favorable upward trend in fine paper products
sales prices boosted the average realization for fine paper prices in the
fourth quarter of 1994 to 13.6% above levels from the same period in 1993.
Building materials sales were up 8.9% compared with 1993 as average sales
price realizations increased for all building materials product lines. Both
particleboard and MDF average sales prices increased in excess of 15.0% in
1994 as compared with 1993. Sales volumes increased for both particleboard
and MDF, however plywood experienced slight volume declines due to the
continuing reduction in the availability of federal timber in the Pacific
Northwest.
As the federal government owns nearly 60% of the commercial timberland in
Oregon, preservationists' pressures that have stopped federal timber sales
have caused a significant reduction in available timber supply. State and
private timber supply is inadequate to fill the shortfall. This resulted in
many mill closures at a time when product demand was increasing, creating
supply-related pressures on lumber and plywood prices. In October 1994, the
Company closed its Sweet Home, Oregon plywood plant due to the reduced
availability of federal timber. No additional plant closures are anticipated
in the immediate future.
Gross profit margins increased to 18.3% in 1994 from 16.4% in 1993. Paper
products gross margins increased to 13.8% from 11.6% in 1993 reflecting
improved selling prices in the last half of 1994. This improvement was
tempered by start-up costs associated with a new pulping facility and paper
machine at the Johnsonburg, Pennsylvania mill. In addition, margins were
also pressured as the prices for old corrugated containers increased 68.5%
from 1993.
Building materials gross profit margins increased to 25.9% compared with
23.9% in 1993. The improvement in building materials margins was due mainly
to increases in average sales price realizations for all product lines.
However, the Company continued to experience increasing raw material costs
due to environmental and supply and demand factors. The cost of resin and
glue increased significantly from 1993.
Selling and administrative expenses declined to 6.1% of net sales compared
with 6.7% in 1993. The decline was due primarily to additional net sales as
selling and administrative expenses increased 5.9% between the two periods.
Other income(expense) was $(6.4) million in 1994 compared with $(3.9)
million in 1993. The increased expense was due primarily to a charge of $5.0
million ($.06 per share, after-tax) for the closure of the Sweet Home, Oregon
plywood plant recorded in the third quarter of 1994.
Interest expense increased to $71.5 million in 1994 compared with $63.3
million in 1993. Although the Company's average outstanding debt increased
$98.7 million between the two periods, gross interest was $80.8 million in
1994 versus $79.2 million in 1993 as the Company's effective interest rate on
average outstanding debt declined from 8.1% in 1993 to 7.5% in 1994.
Capitalized interest declined from $15.9 million in 1993 to $9.3 million in
1994. The weighted average interest rate of all debt was 7.75% at December
31, 1994 compared with 7.31% at December 31, 1993.
The overall effective income tax rate declined to 38.5% in 1994 from 41.5%
in 1993. The federal corporate income tax rate increased in 1993 which
required an increase in the deferred tax liability account and a
corresponding charge to earnings in the amount of $5.9 million or $.11 per
share.
Liquidity and Capital Resources
Willamette generates funds internally via net earnings adjusted for non-
cash charges against earnings such as depreciation, cost of fee timber
harvested and deferred income taxes. Funds generated externally have usually
been through debt financing.
In 1995, cash flows from operating activities were $717.2 million and
represented an increase of 80.7% over comparable cash flows in 1994. This
increase was primarily due to additional net earnings. In addition to
completely funding capital expenditures for 1995, increased operating cash
flows allowed the Company to reduce its debt outstanding by $195.9 million.
Significant debt transactions since December 31, 1994 include the retirement
of a $100.0 million note with a 9.55% interest rate due in April of 1995 and
the repayment of $75.0 million of the $100.0 million bank term loan. As a
result of strong cash flows in 1995, the total debt-to-capital ratio was
32.0% at December 31, 1995 compared with 43.5% at December 31, 1994.
Net working capital increased to $359.3 million at December 31, 1995 from
$138.5 million at December 31, 1994. The increase is primarily due to
increases in inventories and receivables coupled with a reduction in short-
term notes payable of $49.0 million. Inventories increased $135.3 million
mostly due to quantities being unusually low at December 31, 1994, the
acquisition of the Kingsport, Tennessee paper mill and higher prices for the
Company's non-manufactured inventories. Receivables increased $31.0 million
from December 31, 1994 due to higher sales and a slight increase in the
number of days sales outstanding.
The Company is continually making capital expenditures at its manufacturing
facilities to improve fiber utilization, labor efficiency and to expand
production. In 1995, the Company made such capital expenditures of $412.0
million.
During 1995 the following major capital projects were completed:
> Construction of a second linerboard machine at the paper mill in
Campti, Louisiana which began production in February, 1995.
> Construction of a gas turbine cogeneration facility at the Albany,
Oregon paper mill.
> Upgrade and rebuild to three specialty paper machines at the
Johnsonburg, Pennsylvania fine paper mill.
> Upgrade and expansion to the paper machine at Oxnard, California.
> Expansion of the cut sheet facility at Owensboro, Kentucky with a
12-pocket sheeter.
> Acquisition of the Kingsport, Tennessee fine paper mill in May,
1995.
Major capital projects underway at December 31, 1995 include the following:
> Conversion of the Eugene, Oregon particleboard plant to
manufacture medium density fiberboard.
> Construction of an oriented strand board facility in Arcadia,
Louisiana.
> Expansion of pulping capacity at the Marlboro County, South
Carolina fine paper mill.
> New fine paper machine and related pulping capacity at Hawesville,
Kentucky.
> Upgrades to the chemical and fiber recovery areas at the
Kingsport, Tennessee fine paper mill.
> Expansion of secondary fiber capacity at the paper mill in Campti,
Louisiana.
> Construction of a new laminated veneer lumber and custom products
plant in Albany, Oregon.
The cost of all major capital projects in progress at December 31, 1995 is
estimated to be approximately $922.9 million of which $179.3 million has
already been spent. These projects will be funded with internally generated
cash flows and with external borrowings if needed. The Company believes it
has the resources available to meet its liquidity requirements through
internally generated cash flows, short-term borrowings and revolving credit
agreements which could be arranged with a number of banks. In addition, in
April 1994, the Company registered, under the Securities Act of 1933, senior
debt securities totaling $200 million. As of December 31, 1995, none of
these debt securities had been issued.
In August 1995, the Board of Directors of the Company authorized the
repurchase of up to $100.0 million of the Company's common stock. During
1995, the Company purchased 50,000 share of its common stock for $2.7
million.
Other Matters
The Company believes it is in substantial compliance with federal, state
and local laws regarding environmental quality.
The Environmental Protection Agency (EPA) has issued proposed rules
regarding air and water quality referred to as the "cluster rules". These
rules are currently undergoing public review and if not modified would be
extremely onerous to the paper industry with a potential financial impact
estimated in excess of $11 billion in capital spending to comply with the
proposed rules. This level of regulation is not justified on either an
environmental impact or cost benefit basis and it is hoped compromise can be
reached lessening the severity of the rules.
In addition to the impact of the cluster rules on pulp and paper mills, the
Company's other operations are faced with increasingly stringent
environmental regulations. Based upon regulations either enacted or
proposed, the Company estimates that over the next five years additional
capital expenditures which are not yet in process to comply with
environmental regulations will not exceed $125 million. Although future
environmental capital expenditures cannot be predicted with any certainty
because of continuing changes in laws, we believe that compliance with such
environmental regulations will not have a material adverse effect upon the
Company's competitive position.
Much attention has been given to the controversy concerning
preservationists' efforts to stop the harvest of timber from Federal
timberlands in the Northwest. Concurrent with these efforts have come
increased regulations, limitations and restrictions on the harvest of timber
from privately-owned timberlands. Current rules and regulations do not
significantly impact the Company's ability to manage its Oregon timberland on
a sustained yield basis.
Over the years, inflation has resulted in replacement costs higher than
those originally needed to purchase existing plants and equipment. Advancing
technology and environmental concerns also contribute to higher costs.
Productivity gains, because of technological improvements, may partially
offset these increased costs. Our use of LIFO to value inventories allows us
to include these inflationary costs in the cost of sales.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data filed as part of this
report follow the signature pages of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding (i) directors of the Company is set forth in the
Company's definitive proxy statement (the "Proxy Statement") for its 1996
annual meeting of shareholders, under the heading "Election of Directors" and
(ii) the failure by a director of the Company to file, on a timely basis, one
report required by Section 16(a) of the Securities Exchange Act of 1934, is
set forth in the last paragraph under "Holders of Common Stock" in the Proxy
Statement, which information is incorporated herein by reference.
Information regarding the executive officers of the Company is set forth
under the heading "Executive Officers of the Registrant" in Part I of this
report.
Item 11. Executive Compensation
Information regarding compensation of directors and executive officers of
the Company is set forth in the Proxy Statement under the headings "Executive
Compensation," "Compensation Committee Interlocks and Insider Participation,"
"Compensation of Directors" and "Employment Agreements." Such information is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding security ownership of management and certain other
beneficial owners is in the Proxy Statement under the heading "Holders of
Common Stock" which information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related transactions is
set forth in the Proxy Statement under the heading "Compensation Committee
Interlocks and Insider Participation" which information is incorporated
herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) 1. and 2. For a list of the financial statements filed herewith, see the
index to consolidated financial statements following the
signature pages of this report.
(a) 3. For a list of the exhibits filed herewith, see the index to
exhibits following the financial statements filed with this
report. Each management contract or compensatory plan or
arrangement required to be filed as an exhibit to this report
is identified in the list.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed for the quarter ended
December 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant)
By/s/ J. A. PARSONS
Dated: February 8, 1996 (J. A. Parsons)
Executive Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on February 8, 1996, by the following persons on
behalf of the registrant in the capacities indicated.
Signature Title
--------- -----
Principal Executive Officer
and Director
/s/ STEVEN R. ROGEL President and Chief Executive Officer
(Steven R. Rogel) and Director
Principal Financial Officer
/s/ J. A. PARSONS Executive Vice President and
(J. A. Parsons) Chief Financial Officer, Secretary and
Treasurer
Principal Accounting Officer
/s/ DUANE C. MCDOUGALL Vice President-Controller
(Duane C. McDougall)
/s/ WILLIAM SWINDELLS Chairman of the Board
(William Swindells)
/s/ C. M. BISHOP Director
(C. M. Bishop)
/s/ GERARD K. DRUMMOND Director
(Gerard K. Drummond)
/s/ E. B. HART Director
(E. B. Hart)
/s/ C. W. KNODELL Director
(C.W. Knodell)
/s/ PAUL N. MCCRACKEN Director
(Paul N. McCracken)
/s/ STUART J. SHELK, JR. Director
(Stuart J. Shelk, Jr.)
/s/ ROBERT M. SMELICK Director
(Robert M. Smelick)
/s/ SAMUEL C. WHEELER Director
(Samuel C. Wheeler)
/s/ BENJAMIN R. WHITELEY Director
(Benjamin R. Whiteley)
<PAGE>
Index to Consolidated Financial Statements
Page No.
Independent Auditors' Report 21
Consolidated Balance Sheets as of December 31, 1995 and 1994 22
Consolidated Statements of Earnings for the Years ended
December 31, 1995, 1994 and 1993 23
Consolidated Statements of Stockholders' Equity for the Years ended
December 31, 1995, 1994 and 1993 24
Consolidated Statements of Cash Flows for the Years ended
December 31, 1995, 1994 and 1993 25
Supplementary Business Segment Information 26
Selected Quarterly Financial Data 27
Notes to Consolidated Financial Statements 28
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
Willamette Industries, Inc.:
We have audited the accompanying consolidated balance sheets of
Willamette Industries, Inc. and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of earnings, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Willamette Industries, Inc. and subsidiaries as of December 31, 1995 and
1994, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 1995 in conformity with
generally accepted accounting principles.
As discussed in the notes to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards #106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" and Statement of Financial
Accounting Standards #109, "Accounting for Income Taxes," in 1993.
KPMG PEAT MARWICK LLP
Portland, Oregon
February 8, 1996
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
(dollar amounts, except per share amounts, in thousands)
<S> <C> <C>
Assets 1995 1994
-------------- --------------
Current assets:
Cash $ 17,961 12,798
Accounts receivable, less allowance for doubtful
accounts of $5,446 (1994 - $5,278) 314,070 283,055
Inventories (note 3) 391,358 256,091
Prepaid expenses and deposits on timber cutting contracts 51,448 52,710
-------------- --------------
Total current assets 774,837 604,654
-------------- --------------
Timber, timberlands and related facilities, net 518,873 509,075
Property, plant and equipment, net (note 9) 2,054,868 1,863,505
Other assets 64,977 56,164
-------------- --------------
3,413,555 3,033,398
============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Current installments on long-term debt (note 5) $ 29,598 50,956
Notes payable (note 5) 51,000 100,000
Accounts payable, includes book 180,176 173,549
overdrafts of $58,158 (1994 - $48,589)
Accrued payroll and related expenses 65,335 58,945
Accrued interest 20,428 22,308
Other accrued expenses 44,506 37,414
Federal and state taxes on income (note 4) 24,536 22,954
-------------- --------------
Total current liabilities 415,579 466,126
-------------- --------------
Deferred income taxes (note 4) 330,142 231,717
Other liabilities 30,734 31,893
Long-term debt, net of current installments (note 5) 790,210 915,797
Stockholders' equity (note 7):
Preferred stock, cumulative, of $.50 par value.
Authorized 5,000,000 shares - -
Common stock of $.50 par value. Authorized
75,000,000 shares; issued 55,223,706
shares (1994 - 55,036,191 shares) 27,612 27,518
Capital surplus 300,757 293,756
Retained earnings 1,518,521 1,066,591
-------------- --------------
Total stockholders' equity 1,846,890 1,387,865
-------------- --------------
$ 3,413,555 3,033,398
============== ==============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended December 31, 1995, 1994 and 1993
(dollar amounts, except per share amounts, in thousands)
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net sales $ 3,873,575 3,007,949 2,622,237
Cost of sales 2,777,735 2,456,437 2,191,448
---------- ---------- ----------
Gross profit 1,095,840 551,512 430,789
Selling and administrative expenses 201,784 184,699 174,413
---------- ---------- ----------
Operating earnings 894,056 366,813 256,376
Other income (expense) 798 (6,377) (3,918)
---------- ---------- ----------
894,854 360,436 252,458
Interest expense 71,050 71,513 63,290
---------- ---------- ----------
Earnings before taxes and accounting changes 823,804 288,923 189,168
Provision for income taxes (note 4) 309,000 111,300 78,500
---------- ---------- ----------
Earnings before accounting changes 514,804 177,623 110,668
Accounting changes (notes 2 and 6) - - 26,364
---------- ---------- ----------
Net Earnings $ 514,804 177,623 137,032
======== ======== ========
Per share information:
Earnings before accounting changes $ 9.34 3.23 2.02
Accounting changes - - 0.48
---------- ---------- ----------
Net earnings $ 9.34 3.23 2.50
========== ========== ==========
Weighted average number of shares
outstanding (in thousands) 55,146 55,019 54,810
========== ========== ==========
Per share earnings are based upon the weighted average number of shares outstanding and have
been adjusted for all stock splits.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended December 31, 1995, 1994 and 1993
(dollar amounts, except per share amounts, in thousands)
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Common Stock:
Balance at beginning of year $ 27,518 27,449 27,385
Shares issued for options exercised 119 69 64
Stock repurchased and cancelled (25) - -
---------- ---------- ----------
Balance at end of year $ 27,612 27,518 27,449
========== ========== ==========
Capital Surplus:
Balance at beginning of year $ 293,756 288,646 284,487
Shares issued for options exercised 9,689 5,110 4,159
Stock repurchased and cancelled (2,688) - -
---------- ---------- ----------
Balance at end of year $ 300,757 293,756 288,646
========== ========== ==========
Retained Earnings:
Balance at beginning of year $ 1,066,591 941,775 852,956
Net earnings 514,804 177,623 137,032
Less cash dividends on common stock
($1.14, $.96, $.88 per share in
1995, 1994 and 1993 respectively) (62,874) (52,807) (48,213)
---------- ---------- ----------
Balance at end of year $ 1,518,521 1,066,591 941,775
========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994 and 1993
(dollar amounts in thousands)
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 514,804 177,623 137,032
Adjustments to reconcile net earnings
to net cash from operating activities:
Net change in accounting standards - - (26,364)
Depreciation 218,580 192,378 166,088
Cost of fee timber harvested 25,061 19,810 21,611
Other amortization 5,524 5,064 6,503
Increase in deferred income taxes 98,425 33,422 32,810
Changes in working capital items:
Accounts receivable (31,015) (75,894) (24,365)
Inventories (135,267) 12,972 (20,367)
Prepaid expenses and timber deposits 1,262 (5,265) (7,018)
Accounts payable and accrued expenses 18,229 26,648 8,444
Accrued income taxes 1,582 10,164 4,274
--------- --------- ---------
Net cash from operating activities 717,185 396,922 298,648
--------- --------- ---------
Cash flows from investing activities:
Proceeds from sale of equipment 2,000 2,415 6,988
Expenditures for property, plant and equipment (411,985) (340,278) (361,488)
Expenditures for timber and timberlands, net (33,776) (45,676) (18,295)
Expenditures for roads and reforestation (7,762) (7,207) (7,081)
Other (8,602) 17,110 (10,719)
--------- --------- ---------
Net cash from investing activities (460,125) (373,636) (390,595)
--------- --------- ---------
Cash flows from financing activities:
Debt borrowing 79,010 29,000 388,929
Proceeds from sale of common stock 9,635 5,011 4,073
Repurchased common stock (2,713) - -
Cash dividends paid (62,874) (52,807) (48,213)
Payment on debt (274,955) (1,235) (252,333)
--------- --------- ---------
Net cash from financing activities (251,897) (20,031) 92,456
--------- --------- ---------
Net change in cash 5,163 3,255 509
Cash at beginning of year 12,798 9,543 9,034
--------- --------- ---------
Cash at end of year $ 17,961 12,798 9,543
========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 72,930 70,791 65,183
========= ========= =========
Income taxes $ 208,993 67,714 41,416
========= ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUPPLEMENTARY BUSINESS SEGMENT INFORMATION
(dollar amounts in thousands)
1995 % 1994 % 1993 % 1992 % 1991 %
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Sales to outside customers:
Paper Group:
Fabricated paper products........... $ 2,128,428 55 1,475,593 49 1,232,311 47 1,098,777 46 958,615 48
Pulp and paper...................... 681,094 18 410,365 14 360,014 14 381,529 16 392,910 19
------------- ------------- ------------- ------------- -------------
Total Paper Group..................... 2,809,522 73 1,885,958 63 1,592,325 61 1,480,306 62 1,351,525 67
------------- ------------- ------------- ------------- -------------
Building Materials Group:
Lumber ............................. 169,753 4 188,445 6 184,287 7 147,886 6 112,423 6
Plywood ............................ 428,707 11 441,397 15 425,387 16 397,332 17 296,550 15
Particleboard and MDF .............. 272,336 7 292,153 10 234,123 9 186,973 8 148,749 7
Other wood products................. 193,257 5 199,996 6 186,115 7 159,899 7 95,254 5
------------- ------------- ------------- ------------- -------------
Total Building Materials Group........ 1,064,053 27 1,121,991 37 1,029,912 39 892,090 38 652,976 33
------------- ------------- ------------- ------------- -------------
Total net sales (1)..................... $ 3,873,575 100 3,007,949 100 2,622,237 100 2,372,396 100 2,004,501 100
============= ============= ============= ============= =============
Intersegment sales at market value
Building Materials Group.............. $ 61,082 36,121 39,113 38,128 34,253
============= ============= ============= ============= ==============
Contribution to earnings (2):
Paper Group........................... $ 707,234 79 124,856 34 53,655 21 95,970 49 119,719 83
Building Materials Group.............. 186,822 21 241,957 66 202,721 79 101,629 51 24,256 17
------------- ------------- ------------- ------------- -------------
Contribution to earnings ........... 894,056 100 366,813 100 256,376 100 197,599 100 143,975 100
=== === === === ===
Other income (expense).................. 798 (6,377) (3,918) (1,725) (7,103
Interest expense........................ 71,050 71,513 63,290 66,422 63,263
--------- --------- --------- --------- ---------
Earnings before taxes and
accounting changes.................... $ 823,804 288,923 189,168 129,452 73,609
========= ========= ========= ========= =========
Identifiable assets:
Paper Group........................... $ 2,359,462 2,090,399 1,884,017 1,663,990 1,361,437
Building Materials Group.............. 448,320 357,276 362,184 346,882 354,322
Timber, timberlands and related
facilities........................... 518,873 509,075 483,308 448,721 443,075
Corporate............................. 86,900 76,648 75,044 67,823 60,233
--------- --------- --------- --------- ---------
$ 3,413,555 3,033,398 2,804,553 2,527,416 2,219,067
========= ========= ========= ========= =========
(1) The Company has no foreign operations and is not dependent on any one significant customer or group
of customers. Approximately 95% of the Company's total output is sold domestically.
(2) "Contribution to earnings" is defined to be that amount of earnings generated before (a) unallocable
income, such as interest; (b) interest expense; and (c) income taxes.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited) (dollar amounts, except per share amounts, in thousands)
Net Earnings
Net Gross ----------------------
1995 Sales Profit Amount Per Share
- -------------------------------------------------------------------
1st Quarter........ $ 900,638 229,829 99,083 1.80
2nd Quarter........ 1,003,547 288,989 134,347 2.44
3rd Quarter........ 1,019,420 311,956 150,705 2.73
4th Quarter........ 949,970 265,066 130,669 2.37
- ------------------------------------------------------------------
Total.............. $ 3,873,575 1,095,840 514,804 9.34
==================================================================
Net Earnings
Net Gross ---------------------
1994 Sales Profit Amount Per Share
- -------------------------------------------------------------------
1st Quarter........ $ 679,701 114,964 32,885 0.60
2nd Quarter........ 728,701 111,554 29,730 0.54
3rd Quarter........ 780,827 132,925 37,720 0.68
4th Quarter........ 818,720 192,069 77,288 1.41
- -------------------------------------------------------------------
Total.............. $ 3,007,949 551,512 177,623 3.23
===================================================================
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993 (dollar amounts, except per share amounts, in
thousands)
1. Nature of Operations
Willamette Industries, Inc. is a diversified, integrated forest products
company with 95 plants and mills manufacturing containerboard, bag paper, fine
paper, hardwood market pulp, specialty printing papers, corrugated containers,
business forms, cut sheet paper, paper bags, inks, lumber, plywood,
particleboard, medium density fiberboard, laminated beams, laminated veneer
lumber, wooden I-beams and other value-added wood products. The Company's
principal lines of business are paper products and building materials. Based
on sales, paper products represent approximately two-thirds of the Company's
business with the balance consisting of building materials. The primary
market for all the Company's products is the United States domestic market.
Products are sold through wholesalers and distributors as well as directly to
end users.
2. Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements include the accounts of all
majority-owned subsidiaries. All material intercompany balances and
transactions have been eliminated upon consolidation.
(b) Inventories
Inventories are valued at the lower of cost or market. Cost is
determined on the last-in, first-out (LIFO) method for all major
classes of inventory. All other inventories are valued at average
cost.
(c) Property, Plant and Equipment
Property, plant and equipment is carried at cost and includes
expenditures for new facilities and those which substantially
increase the useful lives of existing plants and equipment.
Maintenance, repairs and minor renewals are expensed as incurred.
When properties are retired or otherwise disposed of, the related
cost and accumulated depreciation are removed from the respective
accounts and any profit or loss on disposition is credited or
charged to income. Depreciation is computed using the straight-line
method over the useful lives of the respective assets. Leasehold
improvements are amortized over the terms of the respective leases.
(d) Timber, Timberlands and Related Facilities
These accounts are stated at their cost less the cost of fee
timber harvested and the amortization of logging roads.
Amortization of logging roads is charged to expense as timber is
harvested. Both the cost of fee timber harvested and amortization
rates are determined with reference to costs and the related
existing volume of timber estimated to be recoverable.
The Company obtains a portion of its timber requirements from
various public and private sources under timber harvesting
contracts. The Company does not incur a direct liability for, or
ownership of, this timber until it has been harvested; therefore,
the timber is not recorded until cut.
(e) Income Taxes
Deferred income taxes are provided to reflect the tax effect of
temporary differences in reporting income and deductions for tax
purposes.
Effective January 1, 1993, the Company adopted the provisions of
SFAS #109 "Accounting for Income Taxes" which requires deferred
taxes payable in the future to be reflected at current statutory tax
rates. This change resulted in a credit to net earnings and a
reduction in the deferred tax liability by an amount of $40,000 or
$.73 per share.
(f) Capitalized Interest
Interest is capitalized on funds borrowed during the construction
period on certain assets. Capitalized interest in 1995, 1994 and
1993 was $6,187, $9,294 and $15,904 respectively and is netted
against interest expense in the consolidated statement of earnings.
Such capitalized interest will be amortized over the depreciable
life of the related assets.
(g) Repurchase of Company Common Stock
The Oregon Business Corporation Act requires the Company to cancel
common stock shares repurchased by the Company. The excess of cost
over par value is charged to capital surplus.
(h) Use of Estimates
Generally accepted accounting principles require management to
make estimates and assumptions that affect the reported amount of
assets, liabilities and contingencies at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
3. Inventories
The major components of inventories are as follows:
December 31,
-------------------------
1995 1994
-------- -------
Finished product....................... $ 98,055 72,229
Work in progress....................... 7,712 6,794
Raw material........................... 212,651 114,596
Supplies............................... 72,940 62,472
-------- -------
$391,358 $256,091
======== ========
Valued at:
LIFO cost............................ $289,341 $167,481
Average cost......................... 102,017 88,610
If current cost rather than LIFO cost had been used by the Company, inven-
tories would have been approximately $87,707 and $81,081 higher in 1995 and
1994 respectively.
4. Income Taxes
The provision for income taxes includes the following:
1995 1994 1993
------- ------- ------
Payable from taxable earnings..........$261,975 77,478 37,690
Payable (reduction) due to AMT......... (51,400) 400 8,000
------- ------- ------
Currently payable...................... 210,575 77,878 45,690
Deferred taxes due to temporary
differences for:
Accelerated depreciation......... 91,766 32,213 24,824
Increase in Federal corporate
tax rate by 1%................ - - 5,864
Other............................ 6,659 1,209 2,122
------- ------- ------
Total deferred................ 98,425 33,422 32,810
------- ------- ------
Total provision...............$309,000 111,300 78,500
======= ======= ======
Federal income taxes...................$265,500 95,000 67,000
State income taxes..................... 43,500 16,300 11,500
$309,000 111,300 78,500
The Company has no foreign pretax income. The Company's deferred income tax
liability is mainly due to depreciation. Differences between the effective
tax rate and the Federal statutory rate are shown in the following table as a
percentage of pretax income:
1995 1994 1993
---- ---- ----
Federal statutory rate....................... 35.0% 35.0% 35.0%
State income taxes, net of
Federal tax effect......................... 3.4 3.7 4.0
Adjustment to deferred taxes due to increase
in Federal corporate tax rate by 1%........ - - 3.1
Other........................................ (.9) (.2) (.6)
---- ---- ----
37.5% 38.5% 41.5%
==== ==== ====
The Company's consolidated Federal income tax returns for 1978 through 1991
have been examined by the Internal Revenue Service and while final settlement
has not been made, management believes that the Company has provided for all
deficiencies that ultimately might be assessed. The Tax Reform Act of 1986
expanded the corporate alternative minimum tax (AMT). Under this Act, the
Company's tax liability is the greater of its regular tax or the AMT. To the
extent the Company's AMT liability exceeds its regular tax liability, the AMT
liability may be applied against future regular tax liabilities. The Company
utilized AMT credits of $51,400 in 1995. At December 31, 1995, the Company
had no unused AMT credits.
In August 1993, the Federal corporate tax rate increased to 35% retroactive
to January 1, 1993, impacting both the current year's provision for income
taxes and the deferred tax liability. Accounting standards required that the
cumulative impact of the increase in rate ($5,864 or $.11 per share) be
charged to income in the third quarter of 1993 with a corresponding increase
in the deferred tax liability.
5. Long-term Debt
Long-term debt consists of the following:
December 31,
----------------------
1995 1994
------- -------
Notes payable to public:
9.55%, due in 1995....................... - 100,000
7.00%, due in 1998....................... 100,000 100,000
9.625%, due in 2000...................... 150,000 150,000
7.75%, due in 2002....................... 100,000 100,000
9.125%, due in 2003...................... 50,000 50,000
9.00%, due in 2021....................... 150,000 150,000
Medium-term notes, with interest
rates ranging from 5.66% to 7.30%,
due in varying amounts through 2013...... 150,000 150,000
Bank term loan, with interest rates
averaging 6.38% and 6.28%, due in 1996... 25,000 100,000
Revenue bonds, with interest
rates averaging 5.11% and 5.39%,
due in varying amounts
through 2023............................. 89,265 62,067
Other long-term debt, with
interest rates averaging
8.03% and 8.20%, due in
varying amounts through 2006.............. 5,543 4,686
------- -------
819,808 966,753
Less: Current installments.................. 29,598 50,956
------- -------
$790,210 915,797
======= =======
Principal payment requirements on the above debt for the four years subse-
quent to 1996 are: 1997, $768; 1998, $152,788; 1999, $753; 2000, $150,393.
The Company utilized short-term borrowings with a number of banks at various
times during 1995 and 1994 with $51,000 outstanding at December 31, 1995.
Such borrowings were backed by a line of credit which carried fees at market
rates. The weighted average interest rate on short-term borrowings at
December 31, 1995 and 1994 was 5.58% and 6.00% respectively. Other
uncommitted lines of credit are available. Interest is based upon prevailing
short-term rates in effect at the time of the transaction. Information on
short-term debt during 1995 and 1994 is as follows:
1995 1994
--------- ----------
Average daily short-term debt outstanding... $69,241 124,767
Weighted average interest rate.............. 6.13% 4.51%
The fair value of the Corporation's long-term debt is estimated to be
approximately $912,570 based on the quoted market prices for the same or
similar issues or on the current rates offered to the Company for debt with
the same remaining maturities.
The Company does not have any derivative financial instruments.
6. Pension and Retirement Plans
The Company contributes to multi-employer retirement plans at fixed payments
per hour for certain hourly employees.
DEFINED BENEFIT PLANS
Substantially all other employees of the Company are covered by
noncontributory defined benefit plans. Under the salaried plan, retirement
benefits are based on both years of service and the highest five consecutive
years of compensation prior to retirement. Plans covering hourly employees
provide benefits of stated amounts for each year of service. Total pension
expense in 1995, 1994 and 1993 for all such plans was $6,189, $9,580,and
$6,429 respectively.
The Company makes annual contributions to the plans that are between the
minimum amounts required by the Employee Retirement Income Security Act and
the maximum amounts deductible under current tax regulations. Such
contributions are intended to provide not only for benefits attributed to
service to date, but also for those expected to be earned in the future.
The net periodic pension cost for 1995, 1994 and 1993 included the following
components:
1995 1994 1993
---- ---- ----
Service cost of benefits earned
during the period ................... $10,278 11,061 9,158
Interest cost on projected
benefit contribution ................ 18,451 16,843 16,026
Actual return on assets ............... (70,087) (2,071) (31,748)
Net amortization and deferral ......... 43,114 (21,470) 9,066
------ ------ ------
Net periodic pension cost ............. $ 1,756 4,363 2,502
====== ====== ======
<PAGE>
The following table sets forth the plans' funded status and amount
recognized in the Company's consolidated financial statements at December 31,
1995 and 1994:
December 31
-------------------------------------------------------
1995 1994
-------------------------- -------------------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
Benefits Exceed Assets Benefits Exceed Assets
------------ ------------- ------------- -------------
Actuarial present
value of benefit
obligations:
Vested benefit
obligation $(211,992) ( 30,234) (169,342) ( 28,431)
======= ======= ======= =======
Accumulated
benefit
obligation $(215,243) ( 30,621) (171,538) ( 28,725)
======= ======= ======= =======
Projected
benefit
obligation $(255,903) ( 30,621) (203,695) (30,328)
Plan assets
at fair value 316,589 24,594 252,327 22,557
------- ------- ------- -------
Plan assets
greater (less)
than projected
benefit
obligation 60,686 (6,027) 48,632 (7,771)
Unrecognized
net (gain) loss (56,751) 96 (43,071) 129
Prior service
cost not yet
recognized in
net periodic
pension cost 5,900 3,535 6,050 3,321
Unrecognized
obligation,
net of
amortization (4,079) (181) (6,169) 71
------- ------- ------- -------
Prepaid pension
cost(pension
liability)
recognized $ 5,756 (2,577) 5,442 (4,250)
======= ======= ======= =======
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 7.0% and 5.0% in 1995 versus 8.0% and 5.5%
in 1994. The expected long-term rate of return on assets was 9.0%.
Substantially all plan assets are invested in stocks, bonds and cash
equivalents.
<PAGE>
CONTRIBUTORY PLANS
The Company covers all salaried employees and some hourly employees under
401(k) plans. The salaried plan allows employees to contribute up to 7% of
their salary (which the Company matches up to 6%). The amounts contributed by
the Company vary for the hourly plans. Total plan expenses were $8,857,
$8,925 and $8,417 in 1995, 1994 and 1993 respectively.
POSTRETIREMENT BENEFIT PLANS
Effective January 1, 1993, the Company adopted the provisions of SFAS #106
"Employers Accounting for Postretirement Benefits Other Than Pensions" which
resulted in a change in accounting for such benefits from the "pay-as-you-go"
basis to the accrual basis.
The Company has a contributory postretirement health plan primarily covering
its salaried employees. Employees become eligible for these benefits if they
meet minimum age and service requirements. The accumulated postretirement
benefit obligation (APBO) as of January 1, 1993 was $21,995 and was recorded
as a charge, net of tax, against income on a cumulative basis in the amount of
$13,600 or $.25 per share. The APBO as of December 31, 1995 and 1994 was:
1995 1994
------- -------
Retirees..................................... $13,001 $10,718
Other fully eligible participants............ 5,339 4,339
Other active participants.................... 12,421 9,896
------- -------
30,761 24,953
Unrecognized loss............................ (5,056) ( 688)
------- -------
APBO recognized in balance sheet............. $25,705 $24,265
======= =======
Weighted average discount rate............... 8.0% 7.0%
======= =======
The components of net periodic postretirement expenses are as follows:
1995 1994 1993
------- ------ ------
Service cost benefits earned in period....... $ 867 826 675
Interest cost on accumulated
benefit obligation......................... 2,043 1,811 1,725
Amortization of (gain) loss from
earlier periods............................ 71 60 -
------- ------ ------
Net expense.................................. $ 2,981 2,697 2,400
======= ====== ======
Weighted average discount rate............... 8.0% 7.0% 8.0%
=== === ===
For the year 1995, a 10.0% increase in the medical cost trend rate was
assumed. This rate decreases incrementally to an annual rate of 5.0% after 10
years. A 1.0% increase in the medical trend rate would increase the APBO by
$3,000 and increase the net periodic postretirement expense by $380.
<PAGE>
7. Stockholders' Equity
The Company's 1995 Long-Term Incentive Plan (the Plan) which replaced an
earlier plan, provides for grants of stock options to directors and key
employees and awards of stock appreciation rights (SARs) and restricted shares
of common stock to key employees. Options are granted at exercise prices not
less than the market value of the common stock on the date of grant. Options
generally become exercisable after one year in 33-1/3% increments per year and
expire ten years from the date of grant. The Company has reserved 2,750,000
shares for distribution under the Plan. A summary of stock option activity
related to the Plan is as follows:
Option Price
Shares Per Share
---------- ------------
Outstanding December 31, 1992 1,006,572 16.75-38.875
Granted 259,150 39.25
Exercised 137,459 16.75-38.875
Canceled or surrendered 1,460 38.875-39.25
---------- ------------
Outstanding December 31, 1993 1,126,803 16.75-39.25
Granted 259,420 45.375
Exercised 143,045 16.75-39.25
Canceled or surrendered 10,367 16.75-45.375
--------- ------------
Outstanding December 31, 1994 1,232,811 16.75-45.375
Granted 299,990 51.50
Exercised 244,344 16.75-45.375
Canceled or surrendered 6,653 16.75-51.50
--------- ------------
Outstanding December 31, 1995 1,281,804 $23.25-51.50
========= ============
Shares exercisable 792,403 $23.25-51.50
========= ============
In addition, SARs which have been awarded and are outstanding to officers of
the Company amount to 59,940 shares, of these 2,410 with a basis of $28.875;
7,340 with a basis of $24.25; 19,350 with a basis of $23.25 and 30,840 with a
basis of $26.25 were available for exercise at December 31, 1995. On exercise
of the SAR, the holder receives in cash an amount equal to the difference
between the market price of the common stock at the date the SAR is exercised
and the basis of the SAR.
Restricted shares vest based upon continued employment, the attainment of
performance goals or both, and are subject to transfer restrictions until
vested. The Company has awarded 39,202 restricted shares of common stock to
certain officers at no cost. These shares will vest in one-third annual
increments beginning after three years of continuous employment. At December
31, 1995, 7,630 restricted shares have not yet vested and 31,572 shares have
been either issued or cancelled. Unearned compensation, representing the fair
market value of the shares at the date of issuance, is charged to income over
the vesting period.
The Company has a shareholder rights plan providing for the distribution of
rights to shareholders ten days after a person or group (an "acquiring
person") becomes the owner of 20% or more of the Company's common stock or
makes a tender offer or exchange offer which would result in the ownership of
30% or more of the common stock. Once the rights are distributed, each right
becomes exercisable to purchase, for $175, 1/100th of a share of new series of
Company preferred stock, which 1/100th share is intended to equal one common
share in market value. Ten days after an acquiring person becomes the owner
of 20% or more of the Company's common stock, each right (other than rights
held by the acquiring person) becomes exercisable to purchase for $175, common
shares with a market value of $350. The rights will expire in 2000 and may be
redeemed at $.01 per right any time prior to the tenth day after an acquiring
person becomes the owner of 20% or more of the common stock.
In August 1995, the Board of Directors of the Company authorized the
repurchase of up to $100,000 of the Company's common stock. During 1995, the
Company purchased 50,000 shares of its common stock for $2,713.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards #123 on accounting for stock-based compensation that is
effective for years beginning after December 15, 1995. The Company
anticipates that the impact of this accounting standard will not be material
to its financial statements when implemented.
8. Business Segments
The Company operates in two principal business segments: paper products
and building materials. Timber, timberlands and related facilities have not
been allocated to the two segments because they are managed to supply raw
materials to both segments. Information with respect to the sales, operating
income and identifiable assets of these segments is included in the five-year
comparison on page 26. Information with respect to depreciation, cost of fee
timber harvested, amortization and capital expenditures for the years ended
December 31, 1995, 1994 and 1993 is shown below:
Depreciation,
Cost of Fee Timber Harvested
and Amortization
----------------------------
1995 1994 1993
---- ---- ----
Paper products............. $177,888 152,983 129,069
Building materials......... 46,216 44,459 43,522
Timber, timberlands and
related facilities...... 25,061 19,810 21,611
------- ------- -------
$249,165 217,252 194,202
======= ======= =======
Capital Expenditures
-------------------------
1995 1994 1993
---- ---- ----
Paper products............. $300,145 298,931 323,952
Building materials......... 111,840 41,347 37,536
Timber, timberlands and
related facilities...... 41,538 52,883 25,376
------- ------- -------
$453,523 393,161 386,864
======= ======= =======
9. Property, Plant and Equipment
Property, plant and equipment accounts are summarized as follows:
Principal
range of December 31
-------------------------
useful lives 1995 1994
------------ --------- --------
Land........................ - $ 32,680 28,933
Building materials
manufacturing facilities. 10 - 20 534,646 518,295
Paper products
manufacturing and
converting facilities.... 10 - 30 2,726,554 2,383,177
Furniture and fixtures...... 3 - 10 67,504 58,930
Leasehold improvements...... life of lease 6,286 6,195
Construction in progress.... - 181,581 169,857
--------- ---------
3,549,251 3,165,387
Accumulated depreciation.... 1,494,383 1,301,882
--------- ---------
$2,054,868 1,863,505
========= =========
10. Contingencies
There are various lawsuits, claims and environmental matters pending
against the Company. While any proceeding or litigation has an element of
uncertainty, management believes that the outcome of any lawsuit or claim that
is pending or threatened, or all of them combined will not have a material
adverse effect on the Company's financial condition or operations.
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
2. Not applicable.
3A. Third Restated Articles of Incorporation of the registrant.
Incorporated by reference from Exhibit 3A of the registrant's annual
report on Form 10-K for the year ended December 31, 1993 ("1993 Form
10-K"). [16]
3B. Bylaws of the registrant as amended through October 1, 1995. [27]
4A. Indenture dated as of March 15, 1983, between registrant and The Chase
Manhattan Bank. Incorporated by reference from Exhibit 4A of the
registration statement on Form S-3 effective December 13, 1985
(File No. 33-1876). [89]
4A1. Terms of the series of 9.625% Notes due 2000 and form of Note for such
series. Incorporated by reference from Exhibit 4A5 of the 1990 Form
10-K. [5]
4A2. Terms of the series of 9.125% Notes due 2003 and form of Note for such
series. Incorporated by reference from Exhibit 4A6 of the
registrant's annual report on Form 10-K for the year ended
December 31, 1991 ("1991 Form 10-K"). [5]
4A3. Terms of the series of 9.0% Notes due 2021 and form of Note for such
series. Incorporated by reference from Exhibit 4A7 of the 1991
Form 10-K. [5]
4A4. Terms of the series of 7.75% Notes due 2002 and form of Note for such
series. Incorporated by reference from Exhibit 4A8 of the
registrant's annual report on Form 10-K for the year ended
December 31, 1992. [5]
4A5. Form of Note for the series of 7.0% Notes due 1998 in the aggregate
principal amount of $100,000,000. Incorporated by reference from
Exhibit 4D of the registrant's current report on Form 8-K dated
December 29, 1992. [5]
4B. Indenture dated as of January 30, 1993 between the registrant and The
Chase Manhattan Bank. Incorporated by reference from Exhibit 1B of
the registration statement on Form S-3 effective March 1, 1993
(File No. 33-58044) ("1993 Form S-3). [82]
4B1. Form of Medium-Term Note (fixed rate) for the Medium-Term Notes,
Series A. Incorporated by reference from Exhibit 4D to the 1993
Form S-3. [2]
4B2. Terms of the Medium-Term Notes, Series A, due 1998-2013. Incorporated
by reference from Exhibit 4B2 to the 1993 Form 10-K. [1]
4C. Preferred Stock Purchase Rights of Willamette Industries, Inc.
Incorporated by reference from Exhibit 2 of the registrant's Form 8-A
filed February 26, 1990. [61]
9. Not applicable.
10A. Willamette Industries, Inc. Deferred Compensation Plan for Directors.
Incorporated by reference from Exhibit 10 of the registrant's annual
report on Form 10-K for the year ended December 31, 1983.* [5]
10B. Willamette Industries, Inc. 1986 Stock Option and Stock Appreciation
Rights Plan, as amended. Incorporated by reference from Exhibit 10B
of the 1990 Form 10-K.* [6]
10C. Willamette Industries, Inc. Retirement Plan for Non-Employee
Directors. Incorporated by reference from Exhibit 10 of the 1989 Form
10-K.* [2]
10D. Willamette Industries Inc. Severance Agreement with Key Management
Group. Incorporated by reference from Exhibit 10 of the 1991 Form 10-
K.* [13]
10E. Willamette Industries 1993 Deferred Compensation Plan. Incorporated
by reference from Exhibit 10E to the 1993 Form 10-K.* [16]
10F. Willamette Industries 1995 Long-Term Incentive Compensation Plan.
Incorporated by reference from Exhibit 10F of the registrant's annual
report on Form 10-K for the year ended December 31, 1994.* [12]
10G. Consulting agreement dated October 1, 1995 between the registrant and
William Swindells.* [4]
11. Computation of per share earnings is obtainable from the financial
statements filed with this annual report on Form 10-K.
12. Computation of Ratio of Earnings to Fixed Charges. [1]
13. Not applicable.
16. Not applicable.
18. Not applicable.
21. Omitted because the registrant's subsidiaries considered in the
aggregate as a single subsidiary do not constitute a significant
subsidiary.
22. Not applicable.
23. Consent of Independent Auditors to the incorporation by reference of
their report dated February 8, 1996, in the registrant's registration
statements on Forms S-3 and S-8. [1]
24. Not applicable.
27. Financial Data Schedule. [1]
28.-98. Not applicable.
99. Description of the registrant's common stock incorporated by reference
from exhibit 28 to the registrant's quarterly report on Form 10-Q for
the quarter ended March 31, 1992. [4]
The registrant will furnish a copy of any exhibit to this annual
report on Form 10-K to any security holder for a fee of $0.30 per page to
cover the registrant's expenses in furnishing the copy. The number of pages
of each exhibit is indicated in brackets at the end of each exhibit
description.
________________________
*Management contract or compensatory plan or arrangement.
Note: Certain instruments with respect to the long-term debt of the
registrant are not filed herewith where the total amount of securities
authorized thereunder does not exceed 10 percent of the total assets
of the registrant and its subsidiaries on a consolidated basis. The
registrant agrees to furnish copies of such instruments to the
Commission on request.
<PAGE>
<PAGE>
EXHIBIT 3.B
BYLAWS
OF
WILLAMETTE INDUSTRIES, INC.
AS AMENDED THROUGH
October 1, 1995
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Principal Office . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Registered Office. . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Special Meetings . . . . . . . . . . . . . . . . . . . . . . 2
Section 3. Place of Meeting . . . . . . . . . . . . . . . . . . . . . . 2
Section 4. Notice of Meeting. . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Quorum; Manner of Acting . . . . . . . . . . . . . . . . . . 3
Section 6. Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 7. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . 4
Section 8. Acceptance of Votes. . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III Board of Directors . . . . . . . . . . . . . . . . . . . . . . 5
Section 1. General Powers . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2. Number, Tenure and Classification. . . . . . . . . . . . . . 5
Section 3. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . 6
Section 4. Special Meetings . . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Notice; Waiver . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7. Manner of Acting . . . . . . . . . . . . . . . . . . . . . . 8
Section 8. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 9. Presumption of Assent. . . . . . . . . . . . . . . . . . . . 8
Section 10. Removal of Directors . . . . . . . . . . . . . . . . . . . . 9
Section 11. Compensation . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 12. Retirement . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 13. Emeritus Director. . . . . . . . . . . . . . . . . . . . . . 9
Section 14. Action Without a Meeting . . . . . . . . . . . . . . . . . . 10
Section 15. Telephonic Meetings. . . . . . . . . . . . . . . . . . . . . 10
Section 16. Notification of Nominations. . . . . . . . . . . . . . . . . 10
ARTICLE IV Executive Committee and Other Committees. . . . . . . . . . . . 12
Section 1. Appointment. . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2. Authority. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3. Tenure and Qualifications. . . . . . . . . . . . . . . . . . 13
Section 4. Meetings; Notice; Waiver . . . . . . . . . . . . . . . . . . 13
Section 5. Quorum; Manner of Acting . . . . . . . . . . . . . . . . . . 14
Section 6. Action Without a Meeting . . . . . . . . . . . . . . . . . . 14
Section 7. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8. Resignations and Removal . . . . . . . . . . . . . . . . . . 14
Section 9. Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 10. Appointment of Other Committees of the Board of Directors. . 15
Section 11. Appointment of Other Committees. . . . . . . . . . . . . . . 15
ARTICLE V Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 1. Number . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2. Appointment and Term of Office . . . . . . . . . . . . . . . 17
Section 3. Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5. Chairman of the Board. . . . . . . . . . . . . . . . . . . . 17
Section 6. President and Chief Executive Officer. . . . . . . . . . . . 18
Section 7. Executive Vice-Presidents. . . . . . . . . . . . . . . . . . 19
Section 8. Vice-Presidents. . . . . . . . . . . . . . . . . . . . . . . 19
Section 9. Chief Financial Officer. . . . . . . . . . . . . . . . . . . 19
Section 10. Secretary. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 11. Treasurer. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 12. Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI Contracts, Loans, Checks and Deposits . . . . . . . . . . . . . 21
Section 1. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2. Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3. Checks, Drafts, etc. . . . . . . . . . . . . . . . . . . . . 22
Section 4. Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII Certificates For Shares and Their Transfer . . . . . . . . . . 22
Section 1. Certificates for Shares. . . . . . . . . . . . . . . . . . . 22
Section 2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . 23
Section 3. Replacement of Certificates. . . . . . . . . . . . . . . . . 23
Section 4. Transfer Agents and Registrars . . . . . . . . . . . . . . . 24
ARTICLE VIII Seal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IX Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE X Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
<PAGE>
BYLAWS
OF
WILLAMETTE INDUSTRIES, INC.
AS AMENDED THROUGH
October 1, 1995
ARTICLE I
Offices
Section 1. Principal Office. The principal office of the
corporation in the State of Oregon shall be located in the City of Portland,
County of Multnomah. The corporation may have such other offices, either
within or without the State of Oregon, as the board of directors may designate
or as the business of the corporation may require from time to time.
Section 2. Registered Office. The registered office of the
corporation required by the Oregon Business Corporation Act ("Act") to be
maintained in the State of Oregon may be, but need not be, the same as any of
its places of business in the State of Oregon, and the location of the
registered office may be changed from time to time by the board of directors
or the registered agent of the corporation.
ARTICLE II
Shareholders
Section 1. Annual Meeting. The annual meeting of the
shareholders shall be held on the fourth Thursday in April at 10 a.m., for the
purpose of electing directors and for the transaction of such other business
as may come before the meeting.
Section 2. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, may be called by the chairman of
the board, by the president and chief executive officer or by the board of
directors, and shall be called by the chairman of the board if one or more
written demands for a meeting describing the purpose or purposes for which it
is to be held are signed, dated and delivered to the secretary of the
corporation by the holders of at least 10 percent of all votes entitled to be
cast on any issue proposed to be considered at the meeting.
Section 3. Place of Meeting. The board of directors shall
determine the place of meeting for all annual and special meetings of the
shareholders. In the absence of any such determination, all meetings of
shareholders shall be held at the principal office of the corporation in the
State of Oregon.
Section 4. Notice of Meeting. Written or printed notice stating
the place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given not
earlier than 60 nor less than ten days before the date of the meeting, either
personally or by mail, by or at the direction of the chairman of the board,
the president and chief executive officer or the secretary, or the persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be effective when deposited in the
United States mail, addressed to the shareholder at his address as shown in
the corporation's current record of shareholders, with postage thereon
prepaid. If a meeting is adjourned to a different date, time or place
announced at the meeting before adjournment, notice need not be given of the
new date, time or place unless a new record date is or must be fixed for the
adjourned meeting.
Section 5. Quorum; Manner of Acting. Shares entitled to vote as
a separate voting group may take action on a matter only if a quorum of those
shares exists with respect to the matter. A majority of the votes entitled to
be cast on the matter by voting group, represented in person or by proxy,
shall constitute a quorum of that voting group for action on that matter. If
a quorum exists, action on a matter, other than the election of directors,
shall be approved by a voting group if the votes cast within the voting group
favoring the action exceed the votes cast opposing the action unless the Act
requires a greater number of affirmative votes. Directors shall be elected by
a plurality of the votes cast by the shares entitled to vote in the election
at a meeting at which a quorum is present. Once a share is represented for
any purpose at a meeting, it shall be deemed present for quorum purposes for
the remainder of the meeting and for any adjournment of the meeting unless a
new record date is or must be set for the adjourned meeting.
Section 6. Proxies. At all meetings of shareholders, a
shareholder may vote by proxy executed in writing by the shareholder or by his
duly authorized attorney-in-fact. Such proxy shall be filed with the
secretary of the corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
Section 7. Voting of Shares. Each outstanding share of the
corporation's common stock shall be entitled to one vote upon each matter
submitted to a vote at a meeting of the shareholders except that shares owned,
directly or indirectly, by another corporation in which the corporation owns,
directly or indirectly, a majority of the shares entitled to vote for the
election of directors of such other corporation shall not be voted at any
meeting or counted in determining the total number of outstanding shares at
any given time.
Section 8. Acceptance of Votes. If the name signed on a vote,
consent, waiver or proxy appointment corresponds to the name of a shareholder,
the corporation shall be entitled to accept the vote, consent, waiver or proxy
appointment and give it effect as the act of the shareholder.
If the name signed on a vote, consent, waiver or proxy appointment
does not correspond to the name of its shareholder, the corporation shall
nevertheless be entitled to accept the vote, consent, waiver or proxy
appointment and give it effect as the act of the shareholder if:
a. The shareholder is an entity and the name signed purports to be
that of an officer or agent of the entity.
b. The name signed purports to be that of an administrator, executor,
guardian or conservator representing the shareholder.
c. The name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder.
d. The name signed purports to be that of a pledgee, beneficial owner
or attorney-in-fact of the shareholder.
e. Two or more persons are the shareholder as cotenants or
fiduciaries, the name signed purports to be the name of at least one of the
co-owners, and the person signing appears to be acting on behalf of all
co-owners.
The corporation shall be entitled to reject a vote, consent, waiver or
proxy if the secretary or other officer of agent authorized to tabulate votes,
acting in good faith, has reasonable basis for doubt about the validity of the
signature on it or about the signatory's authority to sign for the
shareholder.
ARTICLE III
Board of Directors
Section 1. General Powers. The business and affairs of the
corporation shall be managed by its board of directors.
Section 2. Number, Tenure and Classification. The number of directors
shall be eleven, divided into three classes, three directors to be designated
as Class A directors, four directors to be designated as Class B directors and
four directors to be designated as Class C directors. At each annual meeting,
directors to replace those whose terms expire at such annual meeting shall be
elected, each such director to hold office until the third annual meeting next
succeeding his election and until his successor is elected or until his death,
resignation, retirement or removal.
Section 3. Regular Meetings. A regular meeting of the board of
directors shall be held without other notice than this bylaw immediately
after, and at the same place as, the annual meeting of shareholders. The
board of directors may provide by resolution the time and place, either within
or without the State of Oregon, for the holding of additional regular meetings
without other notice than such resolution.
Section 4. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the chairman of the board or
any two directors. The person or persons authorized to call special meetings
of the board of directors may fix any place, either within or without the
State of Oregon, as the place for holding any special meeting of the board of
directors called by them.
Section 5. Notice; Waiver. Notice of the time, date and place of any
special meeting shall be given at least ten days previously thereto, orally or
by written notice delivered personally or given by telegraph, teletype or
other form of wire communication, or by mail or private carrier, to each
director at his business address. Oral notice shall be effective when
communicated if communicated in a comprehensible manner and written notice
shall be effective at the earliest of the following: (a) when received,
(b) five days after its deposit in the United States mail, as evidenced by the
postmark, if mailed postpaid and correctly addressed, and (c) on the date
shown on the return receipt, if sent by registered or certified mail, return
receipt requested, and the receipt is signed by or on behalf of the director.
A director's attendance at, or participation in, a meeting shall constitute a
waiver of notice of such meeting, except where a director at the beginning of
the meeting, or promptly upon the director's arrival, objects to holding of
the meeting or the transacting of business at the meeting and does not
thereafter vote for or assent to action taken at the meeting. A written
waiver of notice of a meeting signed by the director or directors entitled to
such notice, whether before or after the time stated therein, which specifies
the meeting for which notice is waived and which is filed with the minutes or
corporate records shall be equivalent to the giving of such notice. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in the notice or waiver of
notice of such meeting.
Section 6. Quorum. A majority of the number of directors fixed
by Section 2 of this Article III shall constitute a quorum for the transaction
of business at any meeting of the board of directors, but, if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
Section 7. Manner of Acting. The affirmative vote of a majority
of the directors present at a meeting at which a quorum is present shall be
the act of the board of directors.
Section 8. Vacancies. Any vacancy occurring in the board of
directors, including a vacancy resulting from an increase in the number of
directors, may be filled by the board of directors or, if the remaining
directors constitute fewer than a quorum, by the affirmative vote of a
majority of all the remaining directors. The term of a director elected to
fill a vacancy shall expire at the next shareholders' meeting at which
directors are elected.
Section 9. Presumption of Assent. A director who is present at a
meeting of the board of directors at which corporate action is taken shall be
deemed to have assented to the action taken, unless (a) the director objects
at the beginning of the meeting, or promptly upon the director's arrival, to
holding the meeting or transacting business at the meeting; (b) the director's
dissent or abstention from the action taken is entered in the minutes of the
meeting; or (c) the director delivers written notice of dissent or abstention
to the presiding officer of the meeting before its adjournment or to the
corporation immediately after adjournment of the meeting. Such right to
dissent or abstain shall not apply to a director who voted in favor of such
action.
Section 10. Removal of Directors. All or any number of the
directors of the corporation may be removed, with or without cause, at a
meeting called expressly for that purpose, by the affirmative vote of the
holders of not less than 80 percent of the outstanding shares of capital stock
of the corporation.
Section 11. Compensation. By resolution of the board of
directors, each director may be paid an annual fee as director and, in
addition thereto, a fixed sum for attendance at each meeting of the board of
directors and executive committee or other committees and his expenses, if
any, of attendance at any such meeting. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
Section 12. Retirement. Each director shall retire from the
board of directors on the date of the regular quarterly meeting of directors
next following the date on which he attains the age of 72 and shall not be
eligible thereafter for reelection.
Section 13. Emeritus Director. The board of directors may elect
one or more emeritus directors to serve at the pleasure of the board of
directors. Persons eligible to serve as emeritus directors shall be former
directors of this corporation or of a predecessor corporation; an emeritus
director shall be entitled to attend meetings of the board of directors but
shall not be entitled to vote on any matter submitted to the board of
directors. The board of directors shall fix the compensation to be paid each
emeritus director. Notice of any meeting of the board of directors need not
be given to an emeritus director, and he shall not be counted for a quorum of
the board of directors.
Section 14. Action Without a Meeting. Any action that may be
taken by the board of directors at a meeting may be taken without a meeting if
one or more consents in writing describing the action so taken shall be signed
by all the directors and included in the minutes or filed with the corporate
records reflecting the action taken.
Section 15. Telephonic Meetings. Meetings of the board of
directors, or of any committee designated by the board of directors, may be
held by means of conference telephone or any other means of communication by
which all directors participating in the meeting can hear each other
simultaneously during the meeting, and such participation shall constitute
presence in person at the meeting.
Section 16. Notification of Nominations. Nominations for the
election of directors may be made by the board of directors or a proxy
committee appointed by the board of directors or by any shareholder entitled
to vote in the election of directors generally. However, any shareholder
entitled to vote in the election of directors generally may nominate one or
more persons for election as directors at a meeting only if written notice of
such shareholder's intent to make such nomination or nominations has been
given, either by personal delivery or by United States mail, postage prepaid,
to the secretary of the corporation not later than (i) with respect to an
election to be held at an annual meeting of shareholders, 90 days in advance
of such meeting, and (ii) with respect to an election to be held at a special
meeting of shareholders for the election of directors, the close of business
on the seventh day following the date on which notice of such meeting is first
given to shareholders. Each such notice shall set forth: (a) the name and
address of the shareholder who intends to make the nomination and of the
person or persons to be nominated; (b) a representation that the shareholder
is a holder of record of stock of the corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the shareholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the shareholder; (d) such
other information regarding each nominee proposed by such shareholder as would
be required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission, had the nominee been
nominated, or intended to be nominated, by the board of directors; and (e) the
consent of each nominee to serve as a director of the corporation if so
elected. The chairman of the meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedure.
ARTICLE IV
Executive Committee
and Other Committees
Section 1. Appointment. The board of directors by resolution
adopted by a majority of the full board may appoint an executive committee to
consist of a chairman and two or more other directors. The chairman of the
committee shall be a director and shall be selected by the board of directors
from the members of the executive committee. The designation of such
committee and the delegation thereto of authority shall not operate to relieve
the board of directors, or any member thereof, of any responsibility imposed
by law.
Section 2. Authority. The executive committee, when the board of
directors is not in session, shall have and may exercise all the authority of
the board of directors except to the extent, if any, that such authority shall
be limited by the resolution appointing the executive committee and except
also that neither the executive committee nor any other committee of the board
of directors appointed pursuant to Section 10 of this Article IV shall have
the authority to (a) authorize distributions; (b) approve or propose to
shareholders actions required by the Act to be approved by shareholders;
(c) fill vacancies on the board of directors or any of its committees;
(d) amend articles of incorporation; (e) adopt, amend or repeal bylaws;
(f) approve a plan of merger not requiring shareholder approval; (g) authorize
or approve reacquisition of shares, except according to a formula or method
prescribed by the board of directors; or (h) authorize or approve the issuance
or sale or contract for sale of shares, or determine the designation and
relative rights, preferences and limitations of a class or series of shares,
except that the board of directors may authorize a committee or a senior
executive officer of the corporation to do so within limits specifically
prescribed by the board of directors.
Section 3. Tenure and Qualifications. Each member of the
executive committee shall hold office until the next regular annual meeting of
the board of directors following his appointment and until his successor is
appointed as a member of the executive committee.
Section 4. Meetings; Notice; Waiver. Regular meetings of the
executive committee or any other committee of the board of directors appointed
pursuant to Section 10 of this Article IV may be held without notice at such
times and places as the committee may fix from time to time by resolution.
Special meetings of the executive committee or any such other committee may be
called by any member thereof upon not less than two days' notice stating the
place, date and hour of the meeting. The provisions of Section 5 of
Article III shall apply to the method for giving of notice of special meetings
of the executive committee or any such other committee and to the waiver of
notice of any such meetings. The notice of a meeting of the executive
committee or any such other committee need not state the business proposed to
be transacted at the meeting.
Section 5. Quorum; Manner of Acting. A majority of the members of the
executive committee or any such other committee shall constitute a quorum for
the transaction of business at any meeting thereof, and the act of a majority
of the members present at a meeting at which a quorum is present shall be the
act of the committee.
Section 6. Action Without a Meeting. Any action that may be taken by
the executive committee or any such other committee at a meeting may be taken
without a meeting if one or more consents in writing describing the action so
taken shall be signed by all the members of the committee and included in the
minutes of the committee or filed with the corporate records reflecting the
action so taken.
Section 7. Vacancies. Any vacancy in the executive committee or
any such other committee may be filled by a resolution adopted by a majority
of the full board of directors.
Section 8. Resignations and Removal. Any member of the executive
committee or any such other committee may be removed at any time with or
without cause by resolution adopted by a majority of the full board of
directors. Any member of the executive committee or any such other committee
may resign as a member of the committee at any time by giving written notice
to the chairman of the board or secretary of the corporation, and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 9. Procedure. The chairman of the executive committee shall
be the presiding officer of the executive committee. The executive committee
and any such other committee shall fix its own rules of procedure which shall
not be inconsistent with these bylaws. The committee shall keep regular
minutes of its proceedings and report the same to the board of directors for
its information at the meeting thereof held next after the proceedings shall
have been taken.
Section 10. Appointment of Other Committees of the Board of
Directors. The board of directors may from time to time by resolution adopted
by a majority of the full board, create any other committee or committees of
the board of directors and appoint members of the board to serve thereon.
Each such committee shall have two or more members and, to the extent
specified by the board of directors, may exercise the powers of the board
subject to the limitations set forth in Section 2 of this Article IV.
Section 11. Appointment of Other Committees. The board of
directors or the executive committee or, pursuant to the authority of the
board of directors or the executive committee, the chairman of the board may
from time to time create and appoint any other committee or committees, or
subcommittee or subcommittees, whether composed of directors, officers or
employees, with such duties, responsibilities and authority as may be
prescribed by the board of directors or the executive committee, or by the
chairman of the board pursuant to the authority of the board of directors or
of the executive committee.
Each such committee or subcommittee shall fix its own rules of
procedure. The board of directors, the executive committee or the chairman of
the board with respect to any such committee or subcommittee created and
appointed by him shall have power to change the members of any such committee
or subcommittee at any time, to fill vacancies and to dissolve any such
committee or subcommittee at any time. Any committee may appoint one or more
subcommittees, of its own members, to advise with such committee, or to
apportion the work of such committee.
ARTICLE V
Officers
Section 1. Number. The officers of the corporation shall be a
chairman of the board, a president and chief executive officer, one or more
executive vice-presidents and vice-presidents (the number of executive vice-
presidents and vice-presidents to be determined by the board of directors), a
chief financial officer, a secretary and a treasurer, each of whom shall be
appointed by the board of directors. The board of directors may from time to
time appoint such assistant officers as may be deemed necessary or desirable
for the business of the corporation. Such assistant officers shall have such
duties as may be prescribed by the board of directors and shall serve at the
pleasure of the board of directors. Any two or more offices may be held by
the same person, except the offices of president and chief executive officer
and secretary.
Section 2. Appointment and Term of Office. The officers of the
corporation shall be appointed annually by the board of directors at the first
meeting of the board of directors held after each annual meeting of the
shareholders. If such appointments shall not be made at such meeting, such
appointments shall be made as soon thereafter as conveniently may be. Each
officer shall hold office until his successor shall have been duly appointed
or until his death or until he shall resign or shall have been removed in the
manner hereinafter provided.
Section 3. Removal. The board of directors may remove any
officer at any time with or without cause. The election or appointment of an
officer shall not of itself create contract rights; and the resignation or
removal of an officer shall not affect the contract rights, if any, of the
corporation or the officer.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term.
Section 5. Chairman of the Board. The chairman of the board
shall be a member of the board of directors and shall preside at meetings of
the board of directors and meetings of shareholders. He shall perform such
additional duties and exercise such authority as from time to time may be
assigned or delegated to him by the board of directors. He may sign, with the
secretary or any other proper officer of the corporation thereunto authorized
by the board of directors, certificates for shares of the corporation, and any
deeds, mortgages, bonds, contracts or other instruments which the board of
directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the board of directors or by
these bylaws to some other officer or agent of the corporation or shall be
required by law to be otherwise signed or executed.
Section 6. President and Chief Executive Officer. The president
and chief executive officer shall be a member of the board of directors, shall
be the chief executive officer of the corporation and, subject to the control
of the board of directors, shall in general supervise and control all the
business and affairs of the corporation. In the absence of the chairman of
the board he shall preside at meetings of the shareholders. He shall have
general power to execute deeds, mortgages, bonds, contracts and other
instruments for and on behalf of the corporation, except in cases where the
execution thereof shall be expressly delegated by the board of directors or by
these bylaws to some other officer or agent of the corporation or shall be
required by law to be otherwise executed. He may sign, with the secretary or
any other proper officer of the corporation thereunto authorized by the board
of directors, certificates for shares of the corporation.
Section 7. Executive Vice-Presidents. The executive
vice-presidents shall perform such duties and exercise such authority as from
time to time may be assigned or delegated to them by the president and chief
executive officer or the board of directors. An executive vice-president may
sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the board of directors, certificates for shares of the
corporation.
Section 8. Vice-Presidents. The vice-presidents shall perform
such duties and exercise such authority as from time to time may be assigned
or delegated to them by the president and chief executive officer, an
executive vice-president or the board of directors. One or more of the
vice-presidents may be designated senior vice-president. Any vice-president
may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the board of directors, certificates for shares of the
corporation.
Section 9. Chief Financial Officer. The chief financial officer
shall be the principal financial officer of the corporation. He shall in
general perform all duties incident to the office of the chief financial
officer and such other duties as from time to time may be assigned or
delegated to him by the president and chief executive officer or the board of
directors.
Section 10. Secretary. The secretary shall: (a) keep the minutes of
the shareholders' and of the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep
a register of the post office address of each shareholder which shall be
furnished to the secretary by such shareholder; (e) sign with the chairman of
the board, the president and chief executive officer, an executive
vice-president or a vice-president certificates for shares of the corporation
the issuance of which shall have been authorized by resolution of the board of
directors; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all the duties incident to the office
of secretary and such other duties as from time to time may be assigned to him
by the president and chief executive officer or the board of directors.
Section 11. Treasurer. The treasurer shall:
(a) have charge and custody of and be responsible for all funds and securities
of the corporation; receive and give receipts for moneys due and payable to
the corporation from any source whatsoever, and deposit all such moneys in the
name of the corporation in such banks, trust companies or other depositaries
as shall be selected in accordance with the provisions of Article VI of these
bylaws; and (b) in general perform all the duties incident to the office of
treasurer and such other duties as from time to time may be assigned to him by
the president and chief executive officer, the chief financial officer or the
board of directors. If required by the board of directors, the treasurer
shall give a bond for the faithful discharge of his duties in such sum and
with such surety or sureties as the board of directors shall determine.
Section 12. Salaries. The salaries of the officers shall be
fixed from time to time by the board of directors and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the corporation.
ARTICLE VI
Contracts, Loans, Checks and Deposits
Section 1. Contracts. The board of directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the corporation,
and such authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the board of directors. Such authority
may be general or confined to specific instances.
Section 3. Checks, Drafts, etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the corporation shall be signed in such manner as shall
from time to time be determined by resolution of the board of directors.
Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositaries as the president and
chief executive officer or the chief financial officer of the corporation may
select.
ARTICLE VII
Certificates For Shares and Their Transfer
Section 1. Certificates for Shares. Certificates representing shares
of the corporation shall be in such form as shall be determined by the board
of directors. Such certificates shall be signed by the chairman of the board,
the president and chief executive officer, an executive vice-president or a
vice-president and by the secretary or any other proper officer of the
corporation thereunto authorized by the board of directors and sealed with the
corporate seal or a facsimile thereof. The signatures of such officers upon a
certificate may be facsimiles if the certificate is countersigned by a
transfer agent, or registered by a registrar, other than the corporation
itself or one of its employees. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
corporation. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except as provided in Section 3 of this Article VII.
Section 2. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the
holder of record thereof or by his legal representative, who shall furnish
proper evidence of authority to transfer, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
Section 3. Replacement of Certificates. In the event of the
loss, theft, mutilation or destruction of any certificate for shares, a
duplicate thereof may be issued and delivered to the owner thereof, provided
he makes a sufficient affidavit setting forth the material facts surrounding
the loss, theft, mutilation or destruction of the original certificate and
gives a bond with corporate surety to the corporation, its officers and
agents, in an open penalty amount indemnifying the corporation, its officers
and agents, against any losses, costs and damages suffered or incurred by
reason of such loss, theft, mutilation or destruction of the original
certificate and replacement thereof.
Section 4. Transfer Agents and Registrars. The board of
directors or executive committee may provide for transfer and registration of
the stock of the corporation in Portland, Oregon, and in such other place or
places as may be deemed advisable, and for such purpose may appoint and change
from time to time the necessary transfer agents and registrars. In case there
shall be more than one transfer agent and more than one registrar, the board
of directors or executive committee may provide for the interchange of
certificates countersigned by the several transfer agents and registrars. A
transfer agent of the corporation may also be designated as the dividend
disbursing agent of the corporation. Resolutions of the board of directors or
executive committee appointing transfer agents and registrars shall provide
for such terms and conditions as may be deemed advisable, including without
limitation provisions for indemnification of the transfer agents and
registrars and instructions to them by designated officers of the corporation.
ARTICLE VIII
Seal
The board of directors shall provide a corporate seal which shall
be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal."
ARTICLE IX
Fiscal Year
The fiscal year of the corporation shall begin on the first day of
January and end on the thirty-first day of December in each year.
ARTICLE X
Amendments
These bylaws or any portion hereof may be amended by a vote of a
majority of the full board of directors at any meeting of the directors.
<PAGE>
CONSULTING AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of October, 1995,
by and between Willamette Industries, Inc., an Oregon corporation
("Corporation"), and William Swindells ("Swindells").
WHEREAS, Swindells has served as an executive officer of
Corporation for many years and is now its Chairman of the Board and Chief
Executive Officer and has knowledge and experience of significant value to
Corporation; and
WHEREAS, in order to provide for an orderly management succession
it is presently contemplated that Swindells will retire as Chairman and Chief
Executive Officer of Corporation, effective October 1, 1995; and
WHEREAS, Corporation wishes to avail itself of Swindells'
experience and knowledge following Swindells' retirement as an employee of
Corporation by retaining Swindells to provide consulting services to
Corporation with respect to the business of Corporation; and
WHEREAS, Swindells desires to perform such services;
NOW, THEREFORE, in consideration of the foregoing, and of the
mutual agreements herein contained, Swindells and Corporation agree as
follows:
1. Consulting Services.
(a) Term of Service. Corporation hereby agrees that it will
engage Swindells, and Swindells agrees that he will serve, as a consultant to
Corporation for a period (the "Term") commencing on October 1, 1995, and
ending on September 30, 1997, or earlier in the event of death or disability
of Swindells. Swindells will be deemed disabled only if, on the basis of
medical evidence acceptable to the Board of Directors of Corporation,
Swindells has a physical or mental condition resulting from unavoidable
impairment of mind or body which can be expected to result in death or to be
of long-continued and indefinite duration and which, in the discretion of the
Board of Directors of Corporation, prevents Swindells from engaging in any
employment or occupation for remuneration or profit. Following September 30,
1997, the Term will extend on a month-to-month basis until terminated by
Corporation or Swindells upon 30 days' notice or until the death or disability
of Swindells, but in any event, not beyond the retirement of Swindells from
the Board of Directors of Corporation.
(b) Nature of Consulting Services. To the extent reasonably
requested by Corporation, Swindells shall consult with and advise Corporation
with respect to acquisitions and strategic planning, capital expenditures,
product development and general corporate and organizational matters. The
Corporation shall not direct the manner or means by which Swindells performs
services under this Agreement. The consulting services shall be provided in
Portland, Oregon at times determined by Swindells except as the parties may
otherwise agree. Corporation shall provide Swindells with adequate
information and resources to allow Swindells to perform effectively the
services contemplated by this Agreement.
(c) Nature of Relationship. For all purposes, including that
of determining Swindells' eligibility for participation in Corporation's
employee benefit plans, Swindells' relationship to Corporation during the Term
shall be that of an independent contractor and not an employee.
2. Agreement Not to Compete. Swindells hereby agrees that,
during the Term, he will not, directly or indirectly, either as principal,
agent, stockholder, employee or in any other capacity, without the prior
approval of the Board of Directors of Corporation, engage in any activity or
be employed by, assist or have an equity interest in, any business or other
entity that competes in any material respect with Corporation; provided,
however, that such prohibited activity shall not include the ownership of
one percent (1%) or less of the voting securities of any publicly traded
corporation regardless of the business of such corporation. Swindells
acknowledges and agrees that a material breach by Swindells of the provisions
of this Section will constitute such damage as will be irreparable and the
exact amount of which will be impossible to ascertain and for that reason
agrees that Corporation will be entitled to an injunction to be issued by any
court of competent jurisdiction restraining and enjoining Swindells from
violating the provisions of this Section. The right of injunction shall be in
addition to and not in lieu of any other remedy available to Corporation for
such breach or threatened breach, including the recovery of damages from
Swindells.
3. Confidential Information. Swindells shall continue to hold
confidential for the benefit of Corporation all secret or confidential
information, knowledge or data relating to Corporation that shall have been
obtained by Swindells during his employment by Corporation or during the Term
and that shall not have become public knowledge.
4. Fees for Services. In consideration of the consulting
services to be performed by Swindells hereunder and for the covenants of
Swindells contained herein, Corporation shall pay Swindells consulting fees at
the rate of $10,000 per month during the Term. The obligation of Corporation
to make the foregoing payments to Swindells shall terminate upon the death or
disability of Swindells except with regard to accrued and unpaid amounts.
While receiving fees for services under this Agreement, Swindells shall not
receive annual retainer payments made to non-employee directors of the
Corporation, but shall receive fees for board and committee meetings attended
and all other amounts payable to non-employee directors of Corporation.
5. Other Matters. During the Term, Corporation shall provide
Swindells with the following:
(a) Expenses. Reimbursement for all reasonable travel and
other business expenses incurred by Swindells in the performance of his duties
hereunder;
(b) Office Space; Secretary. Office space, together with the
services of a secretary, appropriate to the status of Swindells hereunder; and
(c) Club Expenses. Dues, fees and expenses for the following
clubs: Arlington Club.
(d) Parking in the building in which Swindells' office is
located.
6. Scope of Agreement. Nothing in this Agreement shall limit
such rights as Swindells may have under any other agreements with Corporation.
Amounts which are vested benefits or which Swindells is otherwise entitled to
receive under any plan or program of Corporation shall be payable in
accordance with such plan or program.
7. Indemnification. Corporation shall indemnify Swindells and
his legal representatives to the fullest extent permitted by the laws of the
state of Oregon, the Articles of Incorporation, or the Bylaws of Corporation
as in effect as of the date of this Agreement and from time to time thereafter
against all claims, loss, damages, costs, charges and expenses whatsoever
incurred or sustained by him or his legal representatives in connection with
any action, suit or proceeding to which he or his legal representatives may be
made a party by reason of the services performed by Swindells pursuant to this
Agreement. Corporation will, upon request by Swindells, promptly advance or
pay any amounts for costs, charges or expenses (including, but not limited to,
reasonable legal fees and expenses incurred by counsel retained by Swindells)
in respect of his right to indemnification hereunder, subject to a later
determination as to Swindells' ultimate right to receive such payment.
Swindells' rights under this Agreement shall be in addition to, and not in
lieu of, any other rights Swindells may have to indemnification by
Corporation.
8. Successors. This Agreement is personal to Swindells and
without the prior written consent of Corporation shall not be assignable by
Swindells. This Agreement shall inure to the benefit of and be binding upon
Corporation and its successors.
Corporation will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business of Corporation to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Corporation would be
required to perform it if no such succession had taken place.
9. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the state of Oregon, without
reference to principles of conflict of laws.
(b) Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party or
by certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to Swindells:
Mr. William Swindells
1100 S.W. Myrtle Drive
Portland, Oregon 97201
If to Corporation:
Willamette Industries, Inc.
3800 First Interstate Tower
1300 S.W. Fifth Avenue
Portland, Oregon 97201
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee or three days following mailing, as
provided above, whichever shall first occur.
(c) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) Withholding. Corporation may withhold from any amounts
payable under this Agreement such amounts as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) Entire Agreement; Amendment. This Agreement contains the
entire understanding of Corporation and Swindells with respect to the subject
matter hereof, and may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
IN WITNESS WHEREOF, Swindells has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, Corporation has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ William Swindells
William Swindells
WILLAMETTE INDUSTRIES, INC.
By /s/Steven R. Rogel
Steven R. Rogel, President
<PAGE>
EXHIBIT 12
WILLAMETTE INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
Year Ended December 31,
----------------------------------------------
1991 1992 1993 1994 1995
------ ------ ------ ------ -------
Fixed Charges:
Interest Cost $ 63,986 $ 73,776 $ 79,194 $ 80,807 $ 77,237
1/3 rent expense 3,725 4,495 4,819 5,227 5,976
------- ------- ------- ------- -------
Total Fixed Charges 67,711 78,271 84,013 86,034 83,213
======= ======= ======= ======= =======
Add (Deduct):
Earnings before
Income Taxes 73,609 129,452 189,168 288,923 823,804
Interest Capitalized (723) (7,354) (15,904) (9,294) (6,187)
------- ------- ------- ------- -------
Earnings-Fixed Charges $140,597 $200,369 $257,277 $365,663 $900,830
======= ======= ======= ======= =======
Ratio of Earnings to
Fixed Charges 2.08 2.56 3.06 4.25 10.83
======= ======= ======= ======= =======
<PAGE>
EXHIBIT 23
Consent of Independent Auditors
The Board of Directors
Willamette Industries, Inc.:
We consent to incorporation by reference in the Registration Statements No.
33-5847, No. 33-59515 and No. 33-59517 on Form S-8 and No. 33-53263 on Form S-
3 of Willamette Industries, Inc. of our report dated February 8, 1996,
relating to the consolidated balance sheets of Willamette Industries, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of earnings, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1995, which report appears
in the December 31, 1995 annual report on Form 10-K of Willamette Industries,
Inc. As discussed in the notes to the consolidated financial statements, the
Company changed its method of accounting for income taxes and postretirement
benefits other than pensions in 1993.
KPMG PEAT MARWICK LLP
Portland, Oregon
February 29, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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 DECEMBER 31, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 17,961
<SECURITIES> 0
<RECEIVABLES> 319,516
<ALLOWANCES> 5,446
<INVENTORY> 391,358
<CURRENT-ASSETS> 774,837
<PP&E> 4,068,124
<DEPRECIATION> 1,494,383
<TOTAL-ASSETS> 3,413,555
<CURRENT-LIABILITIES> 415,579
<BONDS> 790,210
0
0
<COMMON> 27,612
<OTHER-SE> 1,819,278
<TOTAL-LIABILITY-AND-EQUITY> 3,413,555
<SALES> 3,873,575
<TOTAL-REVENUES> 3,873,575
<CGS> 2,777,735
<TOTAL-COSTS> 2,777,735
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,050
<INCOME-PRETAX> 823,804
<INCOME-TAX> 309,000
<INCOME-CONTINUING> 514,804
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 514,804
<EPS-PRIMARY> 9.34
<EPS-DILUTED> 9.34
</TABLE>
