UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1994 Commission File No. 0-1370
LONGVIEW FIBRE COMPANY
(Exact name of registrant as specified in its charter)
Washington 91-0298760
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Longview, Washington 98632
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (360) 425-1550
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $1.50 Ascribed Value New York Stock Exchange
Rights to purchase Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
(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. X
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
Market value per share $15.75 as of December 31, 1994 Total $715,591,044
Indicate the number of shares outstanding of each of the issuer's class of
common stock as of December 31, 1994. 51,810,297 shares outstanding
DOCUMENTS INCORPORATED BY REFERENCE
PART III - NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
dated December 14, 1994.
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PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
Longview Fibre Company was incorporated in the State of Washington in 1990
as a successor to a company of the same name incorporated in the State of
Delaware in 1926. No general development of material importance has
occurred during the past fiscal year.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
This item is completed by reference to Note 12 of Item 8 of this Form
10-K.
(c) NARRATIVE DESCRIPTION OF BUSINESS
(1) Principal Products, Markets and Methods of Distribution
TIMBER - Registrant owns and operates tree farms in Oregon and
Washington which produce logs for sale in the domestic and export
markets. The majority of domestic sales are to independent sawmills
and plywood plants within a reasonable hauling distance from our
tree farms. The company exports logs principally to Japan through
sales to U.S. exporters or directly to foreign importers. The
company does not believe that the loss of one customer or group of
customers would have a material adverse effect on the company.
The lockup of federal and state timber for so-called threatened
species (spotted owls, marbled murrelets and salmon) continues with
no relief in sight. The resulting reduced supply in the marketplace
keeps log prices at very good levels. Attempts are continuing to
similarly restrict private lands which will increase operating costs
and could reduce the value of our lands. We presently estimate this
adverse effect to be not greater than 6%.
The company owned in fee on October 31, 1994 545,193 acres of tree
farms which are managed on a sustained yield basis with rotations
between 45 and 70 years. No large inventory of mature trees is
maintained.
The company owns and operates a sawmill in Leavenworth, Washington.
Having an efficient small log sawmill in this region has resulted in
improved log realizations on the Chelan tree farm. Residual wood
chips are used at the company's pulp and paper mill in Longview.
PAPER AND PAPERBOARD - The company's pulp and paper mill at
Longview, Washington produces pulp which is manufactured into kraft
paper and containerboard.
Sales of paper are made primarily in the domestic market with some
grades of paper sold in the export market. Containerboard is sold
in the export market and in the Pacific Coast states. The loss of a
single customer, or a few customers, would not have a material
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adverse effect on the company. Products are sold by the company's
sales force working out of San Francisco, California; Longview,
Washington; Milwaukee, Wisconsin; and Atlanta, Georgia or through
paper merchants.
The mill's raw material fibers come primarily from purchased wood
chips and sawdust with important contributions from fiber reclaimed
from post-consumer and post-industrial waste, purchased bleach pulp,
and augmented by log chipping operations owned by the company and
others.
Current high chip costs put the Pacific Northwest mills at a
disadvantage in competing with mills in other regions. The lockup
of federal and state timber for threatened species will tend to keep
chip costs up in the near term due to reduced log supply in the
region. The company expects that, over time, this disadvantage will
lessen due to reduced chip exports from the region, increased
imports, more recycling, pulp mill closures, pulp wood plantations,
and the reduction in diameter of logs sawn (which increases the
ratio of chips to lumber). In an effort to reduce costs and take
advantage of marketing opportunities, the company continues to
maximize the use of reclaimed fibers, which is a lower cost fiber
despite 1994 price increases.
To spread risk, the company has been engaged in a long campaign to
increase value added. Through the years paper machines of various
trim widths and capabilities have been added while the smaller and
older machines have been kept in service to make small lots of
colors and other specialties. During the course of this evolution,
the commodity base (paperboard and bag paper) was not neglected as
this makes the volume great enough to lower pulp and utility costs.
Several machines are swing machines which can produce paper or
paperboard. Due to current market conditions a greater proportion
of paperboard is being produced.
The company continues to emphasize quality, service, continuity and
design of products to meet customers needs. Accordingly the company
believes it is in an acceptable competitive posture as to its
primary products in spite of high wood fiber costs in the region.
CONVERTED PRODUCTS - The company's fourteen converting plants in ten
states produce shipping containers and merchandise and grocery bags.
The tonnage of paper and containerboard used in the converting
plants equals approximately 64% of the Longview mill production.
Bags are sold by the company's sales force working out of San
Francisco and Los Angeles, California; Longview, Washington; and
Waltham, Massachusetts. Sales are made directly or through paper
merchants.
Corrugated and solid fibre boxes are sold by the company's offices
located at Longview, Seattle and Yakima, Washington; Portland,
Oregon; San Francisco and Oakland, California; Twin Falls, Idaho;
Spanish Fork, Utah; Milwaukee, Wisconsin; Rockford, Illinois;
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Cedar Rapids, Iowa; Minneapolis, Minnesota; Amsterdam, New York; and
Springfield, Massachusetts. The loss of a single customer, or a few
customers, would not have a material effect on the business of the
company.
Due to the higher cost of containerboard used to manufacture boxes,
caused primarily by high chip costs, the company has embarked on
major programs of installing improved and specialized equipment in
its box plants in order to make more specialized products as a means
to improve margins.
The company believes it competes on even terms in highly competitive
markets avoiding large accounts which have reached excessive loss
levels.
The following table sets forth the contribution to sales by each
class of similar products which accounted for more than 10% of
sales.
1994 1993 1992
Paper and Paperboard 28% 28% 34%
Timber 25% 24% 17%
Converted Products 47% 48% 49%
No material portion of the business of the company is seasonal.
The practice of the company and the industry does not require an
abnormal amount of working capital.
(xi) The amount spent on research and development is completed by
reference to Note 11 of Item 8 of this Form 10-K.
(xii) This item is completed by reference to Item 7 of this Form 10-K.
(xiii) The company has approximately 3,750 employees.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
Segment information (including amount of export sales) is completed by
reference to Note 12 of Item 8 of this Form 10-K.
ITEM 2. PROPERTIES
The principal plants and important physical properties of the company are held
without any major encumbrances and their respective locations by industry
segment are as follows:
TIMBER - As of October 31, 1994 the company owned in fee 545,193 acres of tree
farms located in various counties of Washington and Oregon. The company as a
matter of policy has consistently acquired and intends to continue to acquire
more timberlands whenever purchasable at acceptable prices dependent on the
location and quality of the site involved and the species and quality of the
merchantable timber and growing stock thereon. The company operates its tree
farms on a sustained yield basis with rotations between 45 and 70 years. No
large inventory of mature trees is maintained.
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PAPER AND PAPERBOARD - At Longview, Washington on a site of approximately 350
acres owned by the company with deep water frontage on the Columbia River and
featuring connections with two transcontinental railroads and adequate highway
access, there is an integrated operation for producing pulp and delivering it
to twelve paper and/or containerboard machines with full supporting facilities.
Mill utilization was at 87% during fiscal 1994. Markets improved starting late
in the second quarter with full operation achieved in the fourth quarter of the
year.
CONVERTED PRODUCTS - On the same site at Longview there is a box factory for
production of solid fibre and corrugated boxes.
At each of the following twelve locations there are factories for the
production of converted products:
Oakland, California Corrugated Boxes Only
Twin Falls, Idaho " " "
Rockford, Illinois " " "
Cedar Rapids, Iowa " " "
Springfield, Massachusetts " " "
Minneapolis, Minnesota " " "
Amsterdam, New York " " "
Seattle, Washington " " "
Yakima, Washington " " "
Spanish Fork, Utah Corrugated Boxes, Merchandise Bags,
Grocery Bags and Specialty Bags
Milwaukee, Wisconsin Corrugated and Solid Fibre Boxes
Waltham, Massachusetts Merchandise Bags and Specialty Bags
A plant to make short runs of boxes from corrugated sheets made at Spanish
Fork, Utah will be constructed in 1995 at Cedar City, Utah.
The volume of converted products sold increased during the past fiscal year.
Capacity is available for increased sales.
OTHER - The company owns mineral rights on the majority of its tree farm acres.
Revenues from minerals are immaterial. Natural gas from company lands in
Columbia County, Oregon produce some royalty income. These revenues make land
ownership more attractive, but to date have had an immaterial impact on overall
corporate results.
ITEM 3. LEGAL PROCEEDINGS
The company is a party to various proceedings relating to the cleanup of
hazardous waste under the Comprehensive Environmental Response Compensation and
Liability Act, and similar state laws. The company is also a party to other
legal proceedings generally incidental to its business. Although the final
outcome of any legal proceeding cannot be predicted with any degree of
certainty, the company presently believes that any ultimate liability resulting
from any of the legal proceedings discussed herein, or all of them combined,
would not have a material effect on the company's financial position.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Nothing was submitted during the fourth quarter of the fiscal year to a vote of
the Shareholders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
(a)(1)(ii) Transaction prices per share as reported on the New York Stock
Exchange are reported below.
Fiscal 1994 1993
Quarter High Low High Low
1st $23.63 $17.13 $18.75 $15.88
2nd 23.00 16.75 20.25 16.00
3rd 21.25 16.75 18.25 15.75
4th 21.25 16.63 18.25 15.88
(b)(1) The company estimates it now has approximately 13,000 shareholders.
(c)(1) Dividends per share paid in fiscal 1994, 1993 and 1992:
1994 1993 1992
January $0.13 $0.10 $0.10
April 0.13 0.10 0.10
July 0.13 0.10 0.10
October 0.13 0.22 0.22
$0.52 $0.52 $0.52
The Directors have declared a regular dividend of $0.13 per share to be
paid on January 10, 1995, to shareholders of record on December 23,
1994.
Restrictions on the company's ability to pay cash dividends are
completed by reference to Notes 5 and 13 of Item 8 of this Form 10-K.
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ITEM 6. SELECTED FINANCIAL AND OTHER DATA
<TABLE>
(dollars in thousands except per share)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME 1994 1993 1992 1991 1990
Net sales . . . . . . . . . . . . . . . . $ 790,874 $689,551 $690,998 $644,000 $685,473
Timber . . . . . . . . . . . . . . . . . 197,978 166,822 114,944 90,785 94,615
Paper and paperboard . . . . . . . . . . 223,920 189,787 234,119 223,260 241,974
Converted products . . . . . . . . . . . 368,976 332,942 341,935 329,955 348,884
Cost of products sold, including
outward freight . . . . . . . . . . . . 659,309 554,984 571,453 556,329 530,246
Gross profit . . . . . . . . . . . . . . . 131,565 134,567 119,545 87,671 155,227
Selling, administrative and general
expenses . . . . . . . . . . . . . . . . 54,769 49,994 48,971 46,737 46,752
Operating profit . . . . . . . . . . . . . 76,796 84,573 70,574 40,934 108,475
Timber . . . . . . . . . . . . . . . . . 111,907 101,471 61,006 45,286 51,781
Paper and paperboard . . . . . . . . . . (15,703) (2,181) 14,398 15,183 42,483
Converted products . . . . . . . . . . . (19,408) (14,717) (4,830) (19,535) 14,211
Interest expensed . . . . . . . . . . . . (24,384) (22,772) (24,356) (24,211) (17,056)
Other income . . . . . . . . . . . . . . . 1,902 1,287 1,169 5,780 1,422
Income before income taxes . . . . . . . . 54,314 63,088 47,387 22,503 92,841
Provision for income taxes . . . . . . . . 20,900 22,800 15,300 5,860 31,700
Net income . . . . . . . . . . . . . . . . 33,414 40,288 32,087 16,643 61,141
PER SHARE
Net income . . . . . . . . . . . . . . . . $ 0.64 $ 0.78 $ 0.62 $ 0.32 $ 1.13
Dividends . . . . . . . . . . . . . . . . 0.52 0.52 0.52 0.52 0.52
Earnings reinvested in the business . . . 0.12 0.26 0.10 (0.20) 0.61
Shareholders' equity at year-end . . . . . 7.80 7.69 7.39 7.29 7.49
Average shares outstanding (thousands) . . 51,861 51,785 51,688 51,698 54,309
Shares outstanding at year-end (thousands) 51,830 51,882 51,685 51,693 51,710
BALANCE SHEET DATA
Total assets . . . . . . . . . . . . . . . $1,022,049 $944,373 $950,768 $926,852 $873,901
Working capital . . . . . . . . . . . . . 35,761 34,308 30,119 27,791 26,578
Capital assets . . . . . . . . . . . . . . 815,509 767,130 777,655 768,406 724,315
Deferred taxes . . . . . . . . . . . . . . (103,234) (97,693) (83,266) (79,569) (73,076)
Long-term debt . . . . . . . . . . . . . . 366,492 327,486 362,400 356,025 303,450
Shareholders' equity . . . . . . . . . . . 404,253 398,795 382,117 377,035 387,478
OTHER DATA
Sales: Logs, thousands of board feet . . 250,000 212,000 232,000 218,000 224,000
Lumber, thousands of board feet . 36,000 25,000 11,000 - -
Paper, tons . . . . . . . . . . . 236,000 226,000 253,000 249,000 273,000
Paperboard, tons . . . . . . . . . 181,000 96,000 174,000 119,000 126,000
Converted products, tons . . . . . 549,000 506,000 525,000 520,000 539,000
Logs, $/thousand board feet . . . $ 743 $ 745 $ 486 $ 417 $ 423
Lumber, $/thousand board feet . . 352 347 208 - -
Paper, $/ton FOB mill equivalent . 592 608 607 625 617
Paperboard, $/ton FOB mill
equivalent . . . . . . . . . . . 336 311 320 340 352
Converted products, $/ton . . . . 672 658 651 635 647
Primary production, tons . . . . . . . . . 968,000 822,000 894,000 831,000 873,000
Employees . . . . . . . . . . . . . . . . 3,750 3,500 3,450 3,400 3,450
Funds: Used for plant and equipment . . . $ 81,544 $ 53,256 $ 66,744 $101,950 $133,088
Used for timber and timberlands . 43,494 4,700 7,579 1,730 40,627
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS 1994 vs. 1993
1994 was the sixth consecutive unsatisfactory year. Earnings decreased by 17%
and were 65% below 1988 when shareholders' equity was 13% lower.
Timber profits increased from $101,471,000 to $111,907,000 in fiscal 1994. The
10% improvement was primarily due to 21% increase in log and lumber footage
sold. Prices for logs and lumber held steady with year ago levels, but
operating results were adversely affected by fire losses. Demand and prices
remain at good levels in both the export and domestic markets.
Summer of 1994 was a period of devastating forest fires east of the Cascades
where we have about 80,000 acres. Parts of 9,000 acres were subject to fire.
We have charged to earnings $2 million which is our best current estimate of
the timber lost based on cost of that timber. Market value is, of course,
greater; potential profit lost will be reflected in later years.
The company operates its 545,193 acres of tree farms on a sustained yield basis
with rotations between 45 and 70 years. Based on recent purchases and sales,
we now estimate the value of the tree farms to be between five and seven times
book value. These multipliers are lower than the prior year because of large
purchases in fiscal 1994 at market prices. While actual purchases reflect
current market prices, we are confident that prices we paid have adequate
allowance for profit and risk.
Lockup of federal and state timber for so-called threatened species continues
to expand. The resulting reduced log supply in the marketplace keeps log
prices at very good levels. Attempts are continuing to extend environmental
overkill to private lands. This effort increases our operating costs and can
reduce the value of our lands. We presently estimate this adverse effect to be
not greater than 6%.
For the year, sales of paper and paperboard increased 18% while operating
results declined from $(2,181,000) to $(15,703,000). Tonnage sold during the
year increased 30% while the average prices for paper declined 3% and the
average price for paperboard improved 8%. Increased costs which contributed to
the reduced results are discussed below.
Markets improved starting late in the second quarter; full operation and
improved prices were achieved in the fourth quarter of the year. Weak markets
in the early part of the fiscal year resulted in operations for the year at
about 87% of capacity.
Chip costs were about 1% lower than the prior year but continue to be high.
Increased demand for OCC (old corrugated containers) caused its price to
increase sharply; however, it is still cheaper than virgin pulp. Our
expectation is still, as reported last year, that in time chip cost differences
between the Pacific Northwest and other regions will diminish.
Market bleached pulp is now used for all bleached products and part of the
bleach plant has been written off. Bleached pulp prices are increasing which
necessitates higher prices for bleached products.
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The company made a six-year labor settlement at the mill with moderate wage
increases, but accompanied by substantial retirement improvements. The cost of
the pension improvements reduced reported earnings by approximately $2,000,000.
While the settlement is expensive, it is not out of line with regional
competitors, but rates are high compared with other regions.
Converting results declined from $(14,717,000) in fiscal 1993 to $(19,408,000)
in fiscal 1994. Sales increased 11% due to an 8% increase in tonnage sold and
a 2% increase in average price. Operating losses increased due to higher costs
of containerboard used to manufacture boxes.
Paperboard demand increased so that the industry is now running at capacity.
The paper market improved slightly as swing machines shifted to paperboard.
Corrugated box prices improved as containerboard became scarce.
During weak markets some large buyers tend to hold auctions. Longview Fibre
will do its best to avoid such buyers and to have continuing long term
relationships with customers who see the necessity for paying compensatory
prices for quality, service, continuity, product design and specialized
manufacturing capability. In the long term, no user of our products can expect
to rely on producers who are forced to sell below cost.
Sale of power continues to make a substantial reduction in net cost of power
used. The new cogeneration plant is expected to be on-line by next summer.
Selling, administrative and general expenses were 7% of sales in fiscal 1994
and fiscal 1993. Interest expensed increased 7% in fiscal 1994 as compared
with fiscal 1993 due to higher borrowing for capital expenditures and higher
interest rates.
The harsh government climate for manufacturing continues to make production
expensive; no improvement is in sight. The current very strong market for our
products will make manufacturing profitable; it will, nevertheless, take
considerable time to recover the large amount lost in manufacturing in the last
four years. The current recovery has gone on for long enough to start
speculation as to when it may end. Modest expansion in the paper industry
leads one to the hope that the next downmarket will not be as bad as the recent
debacle.
It appears probable that the log market will stay fairly strong even in a
downturn.
RESULTS OF OPERATIONS 1993 vs. 1992
1993 was the fifth unsatisfactory year in a row. While earnings improved by
26%, they are 58% below 1988 when shareholders' equity was 11% lower.
Log profits increased from $61,006,000 to $101,471,000 in fiscal 1993. The 66%
improvement was primarily due to a 49% increase in average price. Footage sold
decreased by 2%. Demand and prices remain at good levels in both the export
and domestic markets but are below peak 1993 levels.
The company operates its 529,730 acres of tree farms on a sustained yield basis
with rotations between 50 and 70 years. Based on recent purchases and sales,
we now estimate the value of the tree farms to be between six and nine times
book value. Substantial new acquisitions completed after the end of the fiscal
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year are at market value; when they appear in subsequent balance sheets, the
multiplier to estimate market value will, of course, be lower.
For the year, sales of paper and paperboard decreased 19% while operating
results declined from $14,398,000 to $(2,181,000). Tonnage sold during the
year decreased 25% while the average prices for paper held steady at year ago
levels and the average price for paperboard declined 3%.
Slow recovery from the recession and intense competitive conditions have kept
mill production at about 76%. Chip costs were high and depreciation costs
increased. Aggressive recycling of old corrugated containers helped control
fiber costs and facilitated product marketing. An additional pulper will
shortly be installed which will permit utilization of purchased bleached pulp
in lieu of bleaching on-site. This will reduce chip demand and defer a
decision on how to replace our old bleach plants, which while they meet current
environmental rules could not meet proposed EPA rules to be effective in 1997
or 1998.
Labor costs in the Pacific Northwest paper industry were bargained to very high
levels when the region had low chip costs and could afford wages substantially
above typical manufacturing rates. But with the reduction of government timber
sales, chip costs in the region are now around two-thirds higher than those of
the South. The premium wage rates are now a severe penalty.
Current high chip costs, which are about 1% higher than in the prior year, put
the Pacific Northwest mills at a disadvantage in competing with mills in other
regions. Over time, one can expect this disadvantage to become less. Supply-
demand balance should be helped by reduced chip exports, increased imports,
more recycling, pulp mill closures, pulp wood plantations and the reduction in
diameter of logs sawn which increases the ratio of chips to lumber.
Chip costs in other regions are likely to rise because of increased exports,
increased consumption and environmental constraints.
Converting results declined from $(4,830,000) in fiscal 1992 to $(14,717,000)
in fiscal 1993. Sales declined 3% due to a 4% decrease in tonnage sold.
Average price improved by 1%. Operating losses increased due to higher costs
of containerboard used to manufacture boxes.
Paper, paperboard and corrugated box demand remained below industry capacity.
Major competitors continue depressed price levels in the mistaken belief that
market share and full operation in weak markets are more desirable than
adequate margins.
Sale of power continues to make a substantial reduction in net cost of power
used.
Selling, administrative and general expenses were 7% of sales in fiscal 1993
and fiscal 1992. Interest expensed decreased 7% in fiscal 1993 as compared
with fiscal 1992 due to lower borrowing and lower interest rates.
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LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations decreased $22,137,000 in 1994 compared with 1993
primarily due to decreased earnings and increases in accounts receivable
resulting from increased sales.
Working capital was $35,761,000 at October 31, 1994 compared to $34,308,000 at
October 31, 1993.
Long-term debt, current installments of long-term debt and short-term
borrowings increased by $46,057,000 in 1994 due primarily to increased capital
expenditures.
At October 31, 1994, the company had bank lines of credit totaling
$292,000,000. Of this amount, $160,000,000 was under a credit agreement with a
group of banks expiring February 28, 1996, with renewal provisions beyond that
date. The company had outstanding $120,000,000 of notes payable under this
agreement at October 31, 1994. Also available were $132,000,000 of bank credit
lines for additional borrowing needs. At October 31, 1994, the company had an
outstanding balance of $86,000,000 under these credit lines. The unused
portion of all bank lines of credit was $86,000,000 as of October 31, 1994,
which is adequate for anticipated future needs.
Also outstanding at October 31, 1994 were senior notes of $177,875,000 and
revenue bonds of $28,900,000.
Expenditures for fiscal 1994 for plant and equipment were $81,544,000 and for
timberland $43,494,000. Expenditures for fiscal 1993 for plant and equipment
were $53,256,000 and for timberland $4,700,000. The backlog of approved
capital projects as of October 31, 1994 is $65,000,000. Timberland purchases
of $32,000,000 closed after October 31, 1994.
Capital projects:
The company has embarked on major programs of installing improved and
specialized equipment in its mill and box plants in order to make more
customized products as a means to improve margins.
The company is acquiring property to build a corrugated sheet plant at Cedar
City, Utah.
Capital expenditures for plant and equipment are expected to range between
$60,000,000 and $100,000,000 per year. Purchase of timberlands will depend on
offerings, price levels and competition.
During fiscal 1994, the company purchased 51,522 shares of its stock for an
average price of $19.16 per share. During fiscal 1993, the company purchased
17,973 shares for an average price of $16.62 per share. Purchases began in
1964; the total number of shares acquired through fiscal 1994 is 21,249,903
shares for $94,505,865 at an average cost of $4.45 per share. Stock purchases
increase interest costs and thus reduce corporate earnings. In most years when
earnings are good, they increase earnings per share. In a bad year, the
interest cost can decrease earnings per share slightly.
Dividends of $.52 per share were paid in fiscal 1994 and 1993. Shareholders'
equity increased $5,458,000 in fiscal 1994 as compared with an increase of
$16,678,000 in fiscal 1993.
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Primarily due to timberland purchases of $32,000,000, total borrowing will
increase during the first fiscal quarter of 1995. It is expected that
near-term capital expenditures will be financed from internally generated funds
and with external borrowings if needed.
OTHER
The company has in place a process of reviewing any known environmental
exposures which includes determining the costs of remediation. At the present
time, the company is not aware of any environmental liabilities that would have
a material impact on the consolidated financial statements.
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" which are currently undergoing public review.
Depending upon the final form of these rules, the company estimates that over
the next 4 to 5 years required pollution control capital expenditures could
range from $10 million to $50 million. Although future pollution control
expenditures cannot be predicted with any certainty because of continuing
changes in laws, the company believes that compliance with these requirements
will not have a material impact on its capital expenditures, earnings or
competitive position.
The company's consolidated financial statements are prepared based on
historical costs and do not portray the effects of inflation. The impact of
inflation is most noticeable for inventories and capital assets, although most
of the inflationary effect on inventories is already portrayed in the
consolidated income statement by the use of the LIFO method of inventory
valuation.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
PAGE
Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . 14
Consolidated Statements of Income for the
three years ended October 31, 1994 . . . . . . . . . . . . . 15
Consolidated Statements of Shareholders'
Equity for the three years ended October 31, 1994 . . . . . . 15
Consolidated Balance Sheets at October 31,
1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . 16
Consolidated Statements of Cash Flows for
the three years ended October 31, 1994 . . . . . . . . . . . 17
Notes to Consolidated Financial Statements . . . . . . . . . . 18
Financial Statement Schedules:
Schedules have been omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes
thereto of this Form 10-K.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Longview Fibre Company
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Longview Fibre Company and its subsidiaries at October 31, 1994,
1993 and 1992, and the results of their operations and their cash flows for
each of the three years in the period ended October 31, 1994, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audits 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
\s\ Price Waterhouse LLP
Price Waterhouse LLP
Portland, Oregon
December 7, 1994
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CONSOLIDATED STATEMENT OF INCOME
Years Ended October 31
(thousands except per share) 1994 1993 1992
NET SALES. . . . . . . . . . . . . . . . . . . $790,874 $689,551 $690,998
Timber . . . . . . . . . . . . . . . . . 197,978 166,822 114,944
Paper and paperboard . . . . . . . . . . 223,920 189,787 234,119
Converted products . . . . . . . . . . . 368,976 332,942 341,935
Cost of products sold, including
outward freight . . . . . . . . . . . . . . . 659,309 554,984 571,453
GROSS PROFIT . . . . . . . . . . . . . . . . . 131,565 134,567 119,545
Selling, administrative and general expenses . 54,769 49,994 48,971
OPERATING PROFIT . . . . . . . . . . . . . . . 76,796 84,573 70,574
Timber . . . . . . . . . . . . . . . . . 111,907 101,471 61,006
Paper and paperboard . . . . . . . . . . (15,703) (2,181) 14,398
Converted products . . . . . . . . . . . (19,408) (14,717) (4,830)
Interest income. . . . . . . . . . . . . . . . 539 329 357
Interest expensed. . . . . . . . . . . . . . . (24,384) (22,772) (24,356)
Miscellaneous. . . . . . . . . . . . . . . . . 1,363 958 812
INCOME BEFORE INCOME TAXES . . . . . . . . . . 54,314 63,088 47,387
PROVISION FOR TAXES ON INCOME (see Note 9)
Current. . . . . . . . . . . . . . . . . . . . 15,748 13,055 11,603
Deferred . . . . . . . . . . . . . . . . . . . 5,152 9,745 3,697
20,900 22,800 15,300
NET INCOME . . . . . . . . . . . . . . . . . . $ 33,414 $ 40,288 $ 32,087
Per share. . . . . . . . . . . . . . . . $ 0.64 $ 0.78 $ 0.62
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(thousands) 1994 1993 1992
COMMON STOCK:
Balance at beginning of year . . . . . . $ 77,823 $ 77,527 $ 77,540
Issued . . . . . . . . . . . . . . . . . - 323 -
Ascribed value of stock purchased. . . . (78) (27) (13)
Balance at end of year . . . . . . . . . $ 77,745 $ 77,823 $ 77,527
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year . . . . . . $ 3,306 $ - $ -
On common stock issued . . . . . . . . . - 3,306 -
Balance at end of year . . . . . . . . . $ 3,306 $ 3,306 $ -
RETAINED EARNINGS:
Balance at beginning of year . . . . . . $317,666 $304,590 $299,495
Net income . . . . . . . . . . . . . . . 33,414 40,288 32,087
Less cash dividends on common stock
($0.52 per share). . . . . . . . . . . (26,968) (26,940) (26,878)
Less purchases of common stock . . . . . (910) (272) (114)
Balance at end of year . . . . . . . . . $323,202 $317,666 $304,590
COMMON SHARES:
Balance at beginning of year . . . . . . 51,882 51,685 51,693
Issued . . . . . . . . . . . . . . . . . - 215 -
Purchases. . . . . . . . . . . . . . . . (52) (18) (8)
Balance at end of year . . . . . . . . . 51,830 51,882 51,685
The accompanying notes are an integral part of the financial statements.
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CONSOLIDATED BALANCE SHEET
October 31
(dollars in thousands except per share) 1994 1993 1992
ASSETS
Current assets:
Accounts and notes receivable. . . . . . . . $ 101,190 $ 82,563 $ 91,671
Allowance for doubtful accounts. . . . . . (1,000) (1,000) (750)
Inventories (see Note 2) . . . . . . . . . . 67,305 59,674 55,741
Other. . . . . . . . . . . . . . . . . . . . 7,597 7,081 1,883
Total current assets . . . . . . 175,092 148,318 148,545
Capital assets:
Buildings, machinery and equipment at cost . 1,230,784 1,164,411 1,124,957
Accumulated depreciation . . . . . . . . . 599,342 548,538 499,228
Costs to be depreciated in future
years (see Note 3). . . . . . . . . . . 631,442 615,873 625,729
Plant sites at cost. . . . . . . . . . . . . 2,423 2,423 2,423
633,865 618,296 628,152
Timber at cost less depletion. . . . . . . . 158,659 129,372 129,206
Roads at cost less amortization. . . . . . . 9,415 9,198 10,628
Timberland at cost . . . . . . . . . . . . . 13,570 10,264 9,669
181,644 148,834 149,503
Total capital assets . . . . . 815,509 767,130 777,655
Other assets . . . . . . . . . . . . . . . . 31,448 28,925 24,568
$1,022,049 $944,373 $950,768
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payable to bank resulting from
checks in transit . . . . . . . . . . . . . $ 12,505 $ 8,363 $ 7,193
Accounts payable . . . . . . . . . . . . . . 52,361 40,219 42,796
Short-term borrowings (see Note 4) . . . . . 1,000 20,000 35,000
Payrolls payable . . . . . . . . . . . . . . 9,862 8,973 8,431
Federal income taxes payable . . . . . . . . 2,929 1,502 4,057
Other taxes payable. . . . . . . . . . . . . 14,680 15,010 15,324
Current installments of long-term debt . . . 45,994 19,943 5,625
Total current liabilities . . . 139,331 114,010 118,426
Long-term debt (see Note 5). . . . . . . . . 366,492 327,486 362,400
Deferred taxes - net (see Note 9). . . . . . 103,234 97,693 83,266
Other liabilities. . . . . . . . . . . . . . 8,739 6,389 4,559
Commitments (see Note 10). . . . . . . . . . - - -
Shareholders' equity:
Preferred stock; authorized 2,000,000 shares - - -
Common stock, ascribed value $1.50 per share;
authorized 150,000,000 shares; issued
51,830,297, 51,881,819 and 51,684,792
shares, respectively (see Note 13). . . . . 77,745 77,823 77,527
Additional paid-in capital . . . . . . . . . 3,306 3,306 -
Retained earnings. . . . . . . . . . . . . . 323,202 317,666 304,590
Total shareholders' equity. . . 404,253 398,795 382,117
$1,022,049 $ 944,373 $ 950,768
The accompanying notes are an integral part of the financial statements.
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CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended October 31
(thousands) 1994 1993 1992
CASH PROVIDED BY (USED FOR) OPERATIONS:
Net income . . . . . . . . . . . . . . . . . $ 33,414 $ 40,288 $ 32,087
Charges to income not requiring cash -
Depreciation . . . . . . . . . . . . . . 62,144 60,859 57,371
Depletion and amortization . . . . . . . 10,546 8,166 6,036
Deferred taxes - net . . . . . . . . . . 5,541 9,745 3,697
Loss on disposition of capital assets. . 2,679 1,437 797
Change in:
Accounts and notes receivable . . . . . . (18,627) 9,358 (7,550)
Taxes on income, refundable . . . . . . . - - 3,620
Inventories . . . . . . . . . . . . . . . (7,631) (3,190) (7,351)
Other . . . . . . . . . . . . . . . . . . (516) (516) 191
Other noncurrent assets . . . . . . . . . (2,523) (4,357) (3,577)
Accounts, payrolls and other
taxes payable . . . . . . . . . . . . . 7,075 (3,049) 6,477
Federal income taxes payable. . . . . . . 1,427 (2,555) 4,057
Other noncurrent liabilities. . . . . . . 2,350 1,830 -
Cash provided by operations. . . . . . . . . 95,879 118,016 95,855
CASH PROVIDED BY (USED FOR) INVESTING:
Additions to: Plant and equipment . . . . . (81,544) (53,256) (66,744)
Timber and timberlands. . . . (43,494) (4,700) (7,579)
Proceeds from sale of capital assets . . . . 1,290 905 871
Cash used for investing. . . . . . . . . . . (123,748) (57,051) (73,452)
CASH PROVIDED BY (USED FOR) FINANCING:
Additions to long-term debt. . . . . . . . . 85,000 21,029 35,000
Reduction in long-term debt. . . . . . . . . (19,943) (41,625) (48,825)
Short-term borrowings. . . . . . . . . . . . (19,000) (15,000) 26,000
Payable to bank resulting from
checks in transit . . . . . . . . . . . . . 4,142 1,170 (1,829)
Accounts payable for construction. . . . . . 5,626 700 (5,744)
Cash dividends . . . . . . . . . . . . . . . (26,968) (26,940) (26,878)
Purchase of common stock . . . . . . . . . . (988) (299) (127)
Cash provided by (used for) financing. . . . 27,869 (60,965) (22,403)
Change in cash position. . . . . . . . . . . - - -
Cash position, beginning of year . . . . . . - - -
Cash position, end of year . . . . . . . . . $ - $ - $ -
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (net of amount capitalized) . . . . $ 23,912 $ 23,231 $ 24,037
Capitalized interest . . . . . . . . . . . . 1,486 548 2,670
Income taxes . . . . . . . . . . . . . . . . 14,500 16,134 9,727
The accompanying notes are an integral part of the financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The financial statements include the accounts of the company and all
subsidiaries after elimination of intercompany balances and transactions.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
on a last-in, first-out method except for supplies at current averages.
PROPERTY AND DEPRECIATION
Buildings, machinery and equipment are recorded at cost and include those
additions and improvements that add to production capacity or extend useful
life. Cost includes interest capitalized during the construction period on
all significant asset acquisitions. When properties are sold or otherwise
disposed, the cost and the related accumulated depreciation are removed from
the respective accounts and the resulting profit or loss is recorded in
income. The costs of maintenance and repairs are charged to income when
incurred.
Depreciation for financial accounting purposes is computed on the straight-
line basis over the estimated useful lives of the assets. The estimated
useful lives of assets range from 20 to 60 years for buildings and
principally from 12 to 16 years for machinery and equipment.
TIMBERLANDS, DEPLETION AND AMORTIZATION
Timber, timberlands and timber roads are stated at cost. Provision for
depletion of timber and amortization of logging roads represents charges per
unit of production (footage cut) based on the estimated recoverable timber.
No gain or loss is recognized on timberland exchanges since the earnings
process is not considered complete until timber is harvested and marketed.
EARNINGS PER SHARE
Net income per common share is computed on the basis of weighted average
shares outstanding of 51,861,365, 51,785,201 and 51,688,336 for 1994, 1993
and 1992, respectively.
PENSION AND OTHER BENEFIT PLAN COSTS
The company's policy is to accrue as cost an amount computed by the actuary
and to fund at least the minimum amount required by ERISA.
The Statement of Financial Accounting Standards No. 106 (FAS 106),
"Employers' Accounting for Postretirement Benefits Other Than Pensions," was
adopted during 1993. FAS 106 requires the company to accrue the estimated
cost of retiree benefit payments, other than pensions, during the employees'
active service period. The unrecognized transition obligation of $10
million as of November 1, 1992 is being amortized over 20 years (see Note
8).
INCOME TAXES
The Statement of Financial Accounting Standards No. 109 (FAS 109),
"Accounting for Income Taxes," was adopted during 1993 and requires a change
from the deferred method to the asset and liability method of accounting for
income taxes. Under FAS 109, the effect on deferred taxes of a change in
tax rates is recognized in income in the period that includes the enactment
date.
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The cumulative effect of the change in the method of accounting for income
taxes as of the beginning of fiscal 1993 was not material. Financial
statements for prior years have not been restated (see Note 9).
REVENUE RECOGNITION
The company generally recognizes revenues when goods are shipped.
NOTE 2 - INVENTORIES:
Inventories consist of the following:
October 31
(thousands) 1994 1993 1992
Finished goods . . . . . . . . $ 15,106 $ 14,977 $ 12,861
Goods in process. . . . . . . . 11,390 11,231 11,024
Raw materials and supplies. . . 40,809 33,466 31,856
$ 67,305 $ 59,674 $ 55,741
The amounts included above for inventories valued by the LIFO method are
less than replacement or current cost by approximately $45,705,000,
$39,306,000 and $41,331,000 at October 31, 1994, 1993 and 1992,
respectively.
NOTE 3 - BUILDINGS, MACHINERY AND EQUIPMENT:
At cost - net of accumulated depreciation consist of the following:
October 31
(thousands) 1994 1993 1992
Buildings - net . . . . . . . . $ 46,963 $ 39,644 $ 38,726
Machinery and equipment - net . 584,479 576,229 587,003
$631,442 $615,873 $625,729
NOTE 4 - SHORT-TERM BORROWINGS:
At October 31, 1994, the company had bank lines of credit totaling $292
million. Of this amount, $160 million was under a credit agreement with a
group of banks providing various methods of borrowing. The company can
request a "Competitive Bid" specifying dollar amounts and loan duration.
The various banks may then bid, specifying rates and amounts, which the
company may accept or reject. The agreement also provides for borrowings
other than competitive bids, at the Euro Dollar Rate plus 3/8% or the bank's
prime rate, whichever the company selects. The credit agreement contains
certain financial covenants and provides for a 1/4% facility fee and a 1/8%
commitment fee on the unused portion of the commitments when the quarterly
average daily usage is less than $90 million. This agreement has an
expiration date of February 28, 1996 with renewal provisions beyond that
date. At October 31, 1994, the company had loans of $120 million under the
credit agreement.
The company also has an agreement whereby it can borrow money by issuing
notes in the commercial paper market. The $160 million credit agreement
above provides credit back-up for commercial paper issued, therefore the
combined borrowing under the credit agreement and the commercial paper
agreement cannot exceed $160 million. During the year, no commercial paper
was issued.
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Also available was $132 million of bank credit lines for additional
borrowing needs. Of this amount, a $45 million and a $20 million agreement
are committed lines of credit which are each subject to a nominal commitment
fee and expire November 1, 1996 and March 31, 1996, respectively. The other
$67 million is uncommitted. At October 31, 1994, the company had an
outstanding balance of $86 million under these credit lines.
Short-term borrowings of $205 million, $160 million and $176 million at
October 31, 1994, 1993 and 1992, respectively, under the above agreements,
have been reclassified as long-term debt because they are to be renewed and
replaced with borrowings due beyond one year and into future periods.
Short-term borrowing activity including the amount reclassified as long-term
is summarized as follows:
(thousands) 1994 1993 1992
Notes payable October 31 . . . . $206,000 $180,000 $211,000
Interest rate October 31 . . . . 5.6% 4.0% 4.3%
Average daily amount of
notes payable outstanding
during year . . . . . . . . . . $196,547 $179,601 $193,573
Average* interest rate
during year . . . . . . . . . . 4.6% 4.2% 5.0%
Maximum amount of notes
payable at any month end. . . . $213,000 $195,000 $211,000
*Computed by dividing interest incurred by average notes payable
outstanding.
NOTE 5 - LONG-TERM DEBT:
Long-term debt consists of the following:
October 31
(thousands) 1994 1993 1992
Senior notes due through 2001
(6.17%-9.80%) - Note (a) . . . . $177,875 $157,500 $163,125
Revenue bonds payable through
2015 (floating rates, currently
3.35%-3.45%) - Note (b). . . . . 28,900 28,900 28,900
Other . . . . . . . . . . . . . . 711 1,029 -
Notes payable - banks -
Note 4 above . . . . . . . . . . 205,000 160,000 176,000
412,486 347,429 368,025
Less current installments . . 45,994 19,943 5,625
Net long-term debt. . . . . . . . $366,492 $327,486 $362,400
Scheduled maturities
1996 $239,118
1997 34,119
1998 14,119
1999 30,118
2000-2015 49,018
$366,492
Note (a) Covenants of the senior notes include tests of minimum net worth,
short-term borrowing, long-term borrowing, current ratio and restrictions on
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payments of dividends. Accordingly, at October 31, 1994, approximately $44
million of consolidated retained earnings was unrestricted as to the payment
of dividends.
Note (b) Primarily incurred upon the purchase of manufacturing equipment.
At October 31, 1994, $23,900,000 was secured by liens on the equipment.
NOTE 6 - RETIREMENT AND SAVINGS PLANS:
The company has two trusteed defined benefit pension programs which cover a
majority of employees who have completed one year of continuous service.
The plans provide benefits of a stated amount for each year of service with
an option for some employees to receive benefits based on an average
earnings formula.
The weighted-average discount rate and rate of increase in the future
compensation levels used in determining the actuarial present value of the
projected benefit obligation was 8% and 5.25% for 1994, 7% and 5.25% for
1993, and 8% and 5.5% for 1992. The expected long-term rate of return on
assets was 9%.
The following table sets forth the plans' funded status and amounts
recognized in the company's consolidated financial statements at October 31:
thousands) 1994 1993 1992
Actuarial present value of benefit
obligations:
Vested . . . . . . . . . . . . . $132,175 $132,030 $112,824
Vested and nonvested . . . . . . $133,190 $132,803 $113,429
Projected for service
rendered . . . . . . . . . . . $157,549 $147,395 $127,745
Plan assets at fair value,
primarily listed stocks. . . . . . 237,109 235,763 197,524
Excess plan assets. . . . . . . . . 79,560 88,368 69,779
Items not recognized in earnings:
Net (asset) at adoption of FAS 87. (8,795) (10,164) (11,534)
Unrecognized prior service cost. . 24,363 7,487 8,925
Unrecognized net (gain) . . . . . (71,034) (63,095) (48,438)
Pension asset recognized in the
consolidated balance sheet . . . . $ 24,094 $ 22,596 $ 18,732
Net pension (income) includes
the following:
Service cost . . . . . . . . . . $ 4,334 $ 3,203 $ 3,258
Interest cost. . . . . . . . . . 10,800 9,770 9,451
Actual (return) on plan assets . (8,920) (45,229) (16,098)
Net amortization and deferral. . (7,711) 28,392 622
Net pension (income). . . . . . . . $ (1,497) $ (3,864) $ (2,767)
Voluntary savings plans are maintained for all employees who have completed
one year of continuous service. The plans allow salary deferrals in
accordance with IRC section 401(k) provisions. The company contribution as
a matching incentive during 1994, 1993 and 1992 was $916,000, $857,000 and
$826,000, respectively.
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NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS:
Accounts receivable, revenue bonds and notes payable to banks approximate
fair value as reported in the balance sheet. The fair value of senior notes
is estimated using discounted cash flow analyses, based on the company's
incremental borrowing rates for similar types of borrowing arrangements.
The difference between the fair value of the company's long-term debt and
the stated value at October 31, 1994 is not material. The fair value of the
company's long-term debt at October 31, 1993 was approximately $9 million
more than the stated value.
NOTE 8 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
The company provides postretirement health care insurance benefits for all
salaried and certain non-salaried employees and their dependents.
Individual benefits generally continue until age 65. The company does not
pre-fund these benefits.
Postretirement benefit expense was $2,679,000, $2,274,000 and $390,000 in
1994, 1993 and 1992, respectively.
The components of expense in 1994 and 1993 were as follows:
(thousands) 1994 1993
Service cost . . . . . . . . . . . . . . . $ 850 $ 639
Interest cost . . . . . . . . . . . . . . 1,331 1,137
Amortization of transition obligation . . 498 498
Net periodic postretirement benefit cost . $2,679 $2,274
The accumulated postretirement benefit obligation consists of the following:
(thousands) 1994 1993
Retirees . . . . . . . . . . . . . . . . . $(2,658) $ (2,245)
Fully eligible active plan participants . (3,898) (3,025)
Other active plan participants . . . . . . (11,833) (11,268)
Total accumulated postretirement
benefit obligation . . . . . . . . . . . (18,389) (16,538)
Unrecognized net loss . . . . . . . . . . 676 677
Unrecognized transition obligation . . . . 8,974 9,472
Accrued postretirement benefit cost . . . $(8,739) $(6,389)
Future benefit costs were calculated using a health care cost trend rate of
15% for the indemnity plan and 8.5% for the HMO plan. The trend rate
declines each year until the ultimate health care cost trend rate, 5.5% is
reached in the year 2003 for the indemnity plan and the year 1999 for the
HMO plan. A one percent change in the health care cost trend rate
assumption has a $2,945,000 effect on the accumulated postretirement benefit
obligation as of October 31, 1994 and a $514,000 effect on the net periodic
postretirement benefit cost. The weighted-average discount rate used was 8%
and 7.5% at October 31, 1994 and 1993, respectively, and 8% at November 1,
1992.
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NOTE 9 - INCOME TAXES:
Provision for taxes on income is made up of the following components. The
1994 and 1993 amounts reflect use of the liability method under FAS 109
while the 1992 amount reflects accounting using the deferred method which
was required under previous rules.
(thousands) 1994 1993 1992
Current:
Federal. . . . . . . . . . . . . . $14,553 $12,601 $10,720
State. . . . . . . . . . . . . . . 1,195 454 883
15,748 13,055 11,603
Deferred:
Federal. . . . . . . . . . . . . . 4,647 8,699 2,880
State. . . . . . . . . . . . . . . 505 1,046 817
5,152 9,745 3,697
$20,900 $22,800 $15,300
1992 deferred income tax provision:
(thousands) 1992
Depreciation . . . . . . . . . . . . $13,642
Alternative minimum tax. . . . . . . (9,600)
Other. . . . . . . . . . . . . . . . (345)
$ 3,697
An analysis of the effective income tax rate as compared to the expected
federal income tax rate is as follows:
1994 1993 1992
Expected federal income tax rate . . 35% 35% 34%
Foreign Sales Corporation. . . . . . - (5) (4)
State income taxes less
federal income tax benefit . . . . 2 1 2
Enacted rate change impacting
deferred taxes . . . . . . . . . . - 5 -
Other. . . . . . . . . . . . . . . . 1 - -
38% 36% 32%
The deferred income tax liabilities (assets) recorded in the Consolidated
Balance Sheet as of October 31, are as follows:
(thousands) 1994 1993
Current:
Non-deductible accruals. . . . . . $ (5,071) $ (4,682)
Non-current:
Depreciation . . . . . . . . . . . $128,371 $ 119,667
Employee Benefit Plans . . . . . . 8,917 8,363
Alternative Minimum Tax. . . . . . (26,844) (24,235)
Other. . . . . . . . . . . . . . . (7,210) (6,102)
Non-current deferred tax . . . . . $103,234 $ 97,693
Federal income tax returns through 1988 have been settled with the Internal
Revenue Service.
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NOTE 10 - COMMITMENTS AND CONTINGENCIES:
Estimated costs to complete approved capital projects were approximately $65
million, $56 million and $18 million at October 31, 1994, 1993 and 1992,
respectively.
NOTE 11 - SUPPLEMENTAL EXPENSE INFORMATION:
(thousands) 1994 1993 1992
Maintenance & repairs. . . . . . . . $68,795 $63,556 $64,527
Taxes, other than income taxes:
Payroll. . . . . . . . . . . . 10,949 10,206 10,156
Property . . . . . . . . . . . 10,114 10,689 10,763
Sales and use. . . . . . . . . 3,866 3,548 3,797
Other. . . . . . . . . . . . . 10,706 7,823 7,561
Research and development . . . . . . 471 462 725
NOTE 12 - SEGMENT INFORMATION:
The company owns and operates tree farms in Oregon and Washington which
produce logs for sale. Its pulp and paper mill at Longview, Washington
produces pulp which is manufactured into kraft paper and containerboard.
The raw material fibers come primarily from purchased wood chips and sawdust
with important contributions from fiber reclaimed from post-consumer and
post-industrial waste, purchased bleach pulp, and augmented by log chipping
operations owned by the company and others. The company's fourteen
converting plants in ten states produce shipping containers, and merchandise
and grocery bags. The tonnage of paper and containerboard used in the
converting plants equals approximately 64% of the Longview mill tonnage.
Included in sales to customers are export sales, principally to Japan, Hong
Kong and Southeast Asia in 1994, 1993 and 1992 of $161,622,000, $124,195,000
and $123,604,000, respectively. All sales are made in U. S. dollars.
There are no intersegment sales as all manufacturing operations to produce
primary or converted products for sale are considered integrated from the
purchased wood to the sale of the finished product.
Identifiable assets are segregated or allocated to segments as follows:
1. Assets used wholly within a segment are assigned to that segment.
2. Assets used jointly by two segments are allocated to each segment on a
percentage determined by dividing total cost of product into cost of
product produced for each segment. Paper and paperboard assets of
$252,844,000, $275,417,000 and $262,105,000 have been allocated to
converted products at October 31, 1994, 1993 and 1992, respectively.
Depreciation, depletion and amortization and additions to capital assets
have been segregated and allocated similarly to the method used for
identifiable assets.
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(thousands) 1994 1993 1992
SALES TO CUSTOMERS:
Timber . . . . . . . . . . . . . . . $ 197,978 $166,822 $114,944
Paper and paperboard . . . . . . . . 223,920 189,787 234,119
Converted products . . . . . . . . . 368,976 332,942 341,935
Total. . . . . . . . . . . . . . . 790,874 689,551 690,998
INCOME (LOSS) ON SALES:
Timber . . . . . . . . . . . . . . . 111,907 101,471 61,006
Paper and paperboard . . . . . . . . (15,703) (2,181) 14,398
Converted products . . . . . . . . . (19,408) (14,717) (4,830)
Interest expensed and other. . . . . (22,482) (21,485) (23,187)
Income before income taxes . . . . 54,314 63,088 47,387
IDENTIFIABLE ASSETS AT OCTOBER 31:
Timber . . . . . . . . . . . . . . . 225,656 188,450 190,041
Paper and paperboard . . . . . . . . 304,819 278,981 302,855
Converted products . . . . . . . . . 491,574 476,942 457,872
Total. . . . . . . . . . . . . . . 1,022,049 944,373 950,768
DEPRECIATION, DEPLETION AND
AMORTIZATION:
Timber . . . . . . . . . . . . . . . 13,350 11,010 8,114
Paper and paperboard . . . . . . . . 21,767 19,907 20,225
Converted products . . . . . . . . . 37,573 38,108 35,068
Total. . . . . . . . . . . . . . . 72,690 69,025 63,407
ADDITIONS TO CAPITAL ASSETS:
Timber . . . . . . . . . . . . . . . 48,810 5,453 12,797
Paper and paperboard . . . . . . . . 19,890 15,162 27,898
Converted products . . . . . . . . . 56,338 37,341 33,628
Total. . . . . . . . . . . . . . . $ 125,038 $ 57,956 $ 74,323
NOTE 13 - SHAREHOLDER RIGHTS PLAN:
A Shareholder Rights Plan provides one right for each share of common stock.
With certain exceptions, the rights will become exercisable only in the event
that an acquiring party accumulates 20% or more of the company's voting stock
or a party announces an offer to acquire 30% or more of the voting stock. The
rights expire on March 1, 1999, if not previously redeemed or exercised. Each
right entitles the holder to purchase one-tenth of one common share at a price
of $4.00 ($40 per whole share), subject to adjustment under certain
circumstances. In addition, upon the occurrence of certain events, holders of
the rights will be entitled to purchase a defined number of shares of an
acquiring entity or the company's common shares at half their then current
market value. The company will generally be entitled to redeem the rights at
$0.01 per right at any time until the tenth day following the acquisition of
20% or more, or an offer to acquire 30% or more, of the company's voting stock.
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QUARTERLY FINANCIAL DATA (UNAUDITED)
Fiscal Year Quarters Total
Fiscal
(thousands except per share) 1st 2nd 3rd 4th Year
1994
Net sales. . . . . . . . . . $166,085 $189,183 $207,341 $228,265 $790,874
Gross profit . . . . . . . . 21,360 40,101 32,184 37,920 131,565
Net income . . . . . . . . . 1,778 13,986 7,491 10,159 33,414
Net income per share (1) . . 0.03 0.27 0.14 0.20 0.64
1993
Net sales. . . . . . . . . . $155,873 $179,045 $175,826 $178,807 $689,551
Gross profit . . . . . . . . 25,026 37,916 40,380 31,245 134,567
Net income . . . . . . . . . 5,089 13,363 14,625 7,211 40,288
Net income per share (1) . . 0.10 0.26 0.28 0.14 0.78
1992
Net sales . . . . . . . . . $152,696 $172,868 $177,878 $187,556 $690,998
Gross profit . . . . . . . . 23,132 32,040 31,529 32,844 119,545
Net income . . . . . . . . . 3,904 9,679 8,689 9,815 32,087
Net income per share (1) . . 0.08 0.18 0.17 0.19 0.62
(1) Per share statistics have been computed on the average of number of shares
outstanding in the hands of the public. Per share statistics for the first
three quarters may vary slightly from amounts reported on an interim basis due
to changes in the number of shares outstanding.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change of accountants or disagreements on any matter of
accounting principles, practices or financial statement disclosures required
to be reported under this item.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Item 10, with the exception of the following information regarding executive
officers of the company, is contained in the Notice of Annual Meeting of
Shareholders and Proxy Statement which is incorporated as part of this Form
10-K.
Executive Officers of the Company
Name Age Office and Year First Elected
R. P. Wollenberg 79 (1) Chairman of the Board, President and
Chief Executive Officer (1953)
R. E. Wertheimer 66 (2) Executive Vice President (1960)
R. J. Parker 46 (3) Senior Vice President-Production (1994)
D. L. Bowden 59 (4) Senior Vice President-Timber (1989)
L. J. Holbrook 39 (5) Senior Vice President-Finance,
Secretary and Treasurer (1989)
D. C. Stibich 63 (6) Senior Vice President-Paper Sales (1981)
R. B. Arkell 63 (7) Vice President-Industrial Relations
and General Council (1986)
(1) R. P. Wollenberg
From 1985 Chairman, President and Chief Executive Officer
1978-1985 President and Chief Executive Officer
1969-1978 President
1960-1969 Executive Vice President
(2) R. E. Wertheimer
From 1985 Executive Vice President
1975-1985 Vice President-Container Division
1974-1975 Vice President-Production
1963-1974 Vice President-Container Sales
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(3) R. J. Parker
From 1994 Senior Vice President-Production
1993-1994 Vice President and Assistant to the President
1992-1993 Pulp Mill Superintendant
1985-1992 Assistant Pulp Mill Superintendant
(4) D. L. Bowden
From 1992 Senior Vice President-Timber
1989-1992 Vice President-Timber
1980-1989 Assistant Timber Manager
(5) L. J. Holbrook
From 1992 Senior Vice President-Finance, Secretary and Treasurer
1991-1992 Vice President-Finance, Secretary and Treasurer
1989-1991 Assistant Secretary and Assistant Treasurer
(6) D. C. Stibich
From 1986 Senior Vice President Paper Sales
1981-1986 Vice President Paper Sales
1968-1981 Manager Paper Sales
(7) R. B. Arkell
From 1979 Vice President Industrial Relations and General Counsel
ITEM 11. EXECUTIVE COMPENSATION
This item is completed by reference to Notice of Annual Meeting of
Shareholders and Proxy Statement which is incorporated as part of this Form
10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security ownership of certain beneficial owners. This item is
completed by reference to Notice of Annual Meeting of Shareholders and
Proxy Statement which is incorporated as part of this Form 10-K.
(b) Security ownership of management. This item is completed by reference
to Notice of Annual Meeting of Shareholders and Proxy Statement which
is incorporated as part of this Form 10-K.
(c) Changes in control. No known arrangements.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with management and others. There have been no known
transactions in an amount in excess of $60,000 involving any of the
specified persons.
(b) Certain business relationships. No director or nominee for director is
known to be involved in any of the specified relationships with the
company.
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<PAGE>
(c) Indebtedness of management. None of the specified persons is indebted to
the company in an amount in excess of $60,000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following financial statements, schedules and exhibits are filed as
part of this Form 10-K.
(1) Financial Statements:
The 1994, 1993 and 1992 consolidated financial statements are
included in Item 8 of this Form 10-K.
The individual financial statements of the company have been omitted
since the company is primarily an operating company and all
subsidiaries included in the consolidated financial statements, in
the aggregate, do not have minority equity interest and/or
indebtedness to any person other than the company or its
consolidated subsidiaries in amounts which together exceed 5% of
total consolidated assets at October 31, 1994.
(2) Financial Statement Schedules:
Schedules have been omitted because they are not applicable or the
required information is shown in the consolidated financial
statements or notes thereto in Item 8 of this Form 10-K.
(3) Exhibits required to be filed by Item 601 of Regulation S-K:
3.1 Articles of Incorporation of Longview Fibre Company ***
3.2 Bylaws of Longview Fibre Company ***
4.1 Commercial Paper Facility *
4.2 Rights Agreement **
4.3 $170,000,000 Credit Agreement ****
4.4 First Amendment to Credit Agreement ****
4.5 Second Amendment to Credit Agreement
4.6 Third Amendment to Credit Agreement
4.7 Loan Agreement ****
4.8 First Amendment to Loan Agreement
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4.9 Other long-term debts that do not exceed 10% of the total assets
of the company, details of which will be supplied to the
Commission upon request:
Senior Notes due through 2001 (6.17% - 9.80%) $177,875,000
Revenue Bonds payable through 2015 (floating rates,
3.35% through 3.45% at October 31, 1994) $ 28,900,000
Other $ 711,000
10 Form of Term Protection
23 Consent of Independent Accountants
27 Financial Data Schedules
* Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1988.
** Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1989.
*** Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1990.
**** Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1993.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended October 31,
1994.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the company has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
LONGVIEW FIBRE COMPANY
Registrant
\s\ L. J. Holbrook 1-24-95
L. J. Holbrook, Vice President-Finance, Date
Secretary and Treasurer
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the company and in
the capacities and on the dates indicated.
\s\ R. P. Wollenberg 1-24-95
R. P. Wollenberg, Chief Executive Officer Date
and Director
\s\ L. J. Holbrook 1-24-95
L. J. Holbrook, Chief Financial Officer Date
and Director
\s\ A. G. Higgens 1-24-95
A. G. Higgens, Chief Accounting Officer Date
\s\ R. B. Arkell 1-24-95
R. B. Arkell, Director Date
\s\ D. L. Bowden 1-24-95
D. L. Bowden, Director Date
\s\ M. A. Dow 1-24-95
M. A. Dow, Director Date
\s\ C. H. Monroe 1-24-95
C. H. Monroe, Director Date
\s\ G. E. Schwartz 1-24-95
G. E. Schwartz, Director Date
\s\ R. E. Wertheimer 1-24-95
R. E. Wertheimer, Director Date
\s\ D. A. Wollenberg 1-24-95
D. A. Wollenberg, Director Date
Page 31
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EXHIBIT 4.5
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT ("Second Amendment") is entered
into as of the 28th day of January, 1994, by and between LONGVIEW FIBRE COMPANY
("Borrower"), SEATTLE-FIRST NATIONAL BANK ("Seafirst"), BANK OF AMERICA
NATIONAL TRUST & SAVINGS ASSOCIATION ("BofA"), ABN AMRO BANK N.V. ("ABN"),
CONTINENTAL BANK N.A. ("CB"), NATIONAL WESTMINSTER BANK PLC ("NWB"),
NATIONSBANK OF NORTH CAROLINA, N.A. ("NBNC"), and THE BANK OF NOVA SCOTIA
("BNS") ("Banks"), and SEATTLE-FIRST NATIONAL BANK as agent for the Banks
("Agent").
RECITALS
A. Borrower, Banks and Agent are parties to that certain Credit
Agreement dated as of February 26, 1993 (as amended by that certain First
amendment to Credit Agreement dated as of August 31, 1993, the "Credit
Agreement"), pursuant to which Banks made certain loans to Borrower subject to
the terms and conditions contained therein. Capitalized terms used herein and
not otherwise defined shall have the meanings set forth in the Credit
Agreement.
B. Borrower has requested a one-year extension of the Termination Date
and the Banks are willing to make such extension subject to the terms and
conditions contained herein.
C. The parties hereto further desire to amend the Credit Agreement to
adjust the interest rates, to modify the financial covenants, to provide for
the withdrawal of NWB and NBNC, and otherwise in the manner set out herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain Defined Terms. The definitions of the terms "Bank,"
"Commitment," and "Termination Date" in Section 1.1 of the Credit Agreement are
hereby deleted and replaced with the following:
"Bank" means each bank listed on the signature pages of the
Second Amendment to this Agreement as having a Commitment, and its successors
and assigns.
"Commitment" means, from and after the Effective Date of this
Second Amendment, with respect to each Bank, the amount set forth opposite the
name of such Bank on the signature pages of this Second Amendment to this
Agreement as its Commitment.
"Termination Date" means February 28, 1996 (or February 28 of
such subsequent year to which the Termination Date may have been extended in
accordance with Section 2.17 of this Agreement) or, if such day is not a Euro-
Dollar Business Day, the next preceding Euro-Dollar Business Day.
2. Additional Defined Terms. Section 1.1 of the Credit Agreement is
hereby amended to add the following definitions:
"Funded Debt" means all interest-bearing Indebtedness, including
all capital leases.
"Capitalization Ratio" means, as of the end of each of Borrower's
fiscal quarters, the ratio of (i) Funded Debt to (ii) the sum of Funded Debt
and Tangible Net Worth.
3. Euro-Bank Rate. Section 2.7(b) of the Credit Agreement is hereby
amended to delete the definition of the term "Euro-Dollar Margin" and to
replace it with the following:
"Euro-Dollar Margin," during any fiscal quarter of Borrower, means:
(a) 0.25% if the Capitalization Ratio as of the end of the preceding fiscal
quarter was less than 0.30, (b) 0.3%, if the Capitalization Ratio as of the end
of the preceding fiscal quarter was greater than or equal to 0.30 and less than
0.40, (c) 0.375% if the Capitalization Ratio as of the end of the preceding
fiscal quarter was greater than or equal to 0.40 and less than 0.55, and (d)
0.55% if the Capitalization Ratio as of the end of the preceding fiscal quarter
was greater than or equal to 0.55.
4. Facility Fee. Section 2.8(a) of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:
(a) Facility Fee. Borrower shall pay to the Agent quarterly in
arrears, for the account of the Banks ratably in portion to their Commitments,
a facility fee equal to a percentage per annum of the aggregate Commitments,
according to the following schedule:
Capitalization Ratio
as of the end of the
preceding fiscal quarter Facility Fee Percentage
Less than .30 0.125%
Greater than or equal to
.30 and less than .40 0.2%
Greater than or equal to
.40 and less than .55 0.25%
Greater than or
equal to .55 0.325%
5. Commitment Fee. Section 2.8(b) of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:
(b) Commitment Fee. Borrower shall pay to the Agent quarterly in
arrears, for the account of the Banks ratably in proportion to their
commitments, a commitment fee equal to 1/8 of 1% per annum on the daily
difference between (i) the aggregate of all commitments, and (ii) the aggregate
daily outstanding principal balance of all Notes (the "Usage"); provided,
however, that the commitment fee shall be waived for any quarter in which the
average daily Usage is equal to or greater than Ninety Million Dollars
($90,000,000).
6. Tangible Net Worth. Section 5.4 of the Credit Agreement is hereby
amended to read as follows:
Section 5.4. Tangible Net Worth. The Borrower shall at all times
maintain a minimum Tangible Net Worth of not less than Three Hundred Twenty-
Five Million and No/100 Dollars ($325,000,000.00) as determined at the end of
each of Borrower's fiscal quarters.
7. Debt Service Coverage Ratio. Section 5.6 of the Credit Agreement is
hereby deleted in its entirety.
8. Effective Date. This Second Amendment shall be effective on January
28, 1994 (the "Effective Date"), subject to the condition precedent that on or
prior to that date, the following events have occurred:
a. This Second Amendment shall have been fully executed by Borrower and
Banks and shall have been delivered to Agent;
b. Agent and each Bank shall have received a copy of a resolution in
form and substance satisfactory to Agent authorizing the Borrower's execution,
delivery and performance of this Second Amendment; and
c. Each of the outstanding Pro Rata Loans, interest, fees and all other
amounts accrued as of the Effective Date to the Banks shall be paid in full.
9. Withdrawal of Certain Banks. As provided in Section 8.c on the
Effective Date, which is the last day of an Interest Period, all outstanding
Pro Rata Loans, interest, fees and all amounts accrued under the Credit
Agreement as of the Effective Date shall be repaid and NWB and NBNC will
withdraw as Banks under the Credit Agreement and their Commitments shall
terminate. The withdrawal of NWB and NBNC shall be effective upon receipt of
such payment, and promptly upon receipt of such payment, each of NWB and NBNC
shall deliver to Agent (for delivery to Borrower) all of the Notes payable to
it. If on the Effective Date Borrower shall reborrow all or any portion
thereof (the "Renewal Loan"), the Borrowing shall be advanced by each Bank
pursuant to Section 2.4 of the Credit agreement, pro rata in accordance with
its Commitment as defined in this Second Amendment. The Renewal Loan shall be
a Prime Rate Loan unless on or before the fourth Euro-Dollar business Day prior
to the Effective Date Borrower has delivered to Agent a Notice of Pro Rata
Borrowing in accordance with Section 2.2 of the Credit Agreement.
10. Representations and Warranties: Borrower hereby represents and
warrants as follows:
a. The making and performance of this Second Amendment is within the
Borrower's corporate powers, has been duly authorized by all necessary
corporate action, has received all necessary governmental approvals, and does
not contravene any law, any provision of the Articles of Incorporation or
Bylaws of the Borrower, or any contractual restriction binding on the Borrower.
b. This Second Amendment constitutes the valid and binding obligation of
the Borrower enforceable in accordance with its terms.
c. Each of the matters set forth in Article 4 of the Credit Agreement is
true and correct in each case as if made on and as of the Effective Date of
this Second Amendment, and Borrower expressly agrees that it shall be an
additional event constituting an Event of Default under the Credit Agreement if
any representation or warranty made hereunder shall prove to have been
incorrect in any material respect when made.
d. No Event of Default and no event which, with the giving of notice or
the lapse of time or both would constitute an Event of Default, shall have
occurred and be continuing or will have occurred as a result of the execution
of this Second Amendment.
11. No Further Amendment. Except as expressly stated herein, the Credit
Agreement shall remain unmodified and in full force and effect and the parties
hereto hereby reaffirm and ratify their respective obligations thereunder.
12. Counterparts. This Second Amendment may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
original document.
13. CONCERNING ORAL AGREEMENTS. ORAL AGREEMENTS OR ORAL COMMITMENTS TO
LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF DEBT ARE
NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of
the date first above written.
BORROWER: LONGVIEW FIBRE COMPANY
By \s\ L. J. Holbrook
Its SR VP Finance
LENDERS:
Percent of
Aggregate
Commit-
ments Commitment
35% $56 Million SEATTLE FIRST NATIONAL BANK, a
national banking association
By \s\ Robert M. Ingram, III
Its Vice President
16.25% $26 Million BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By \s\ Michael J. Balok
Its Vice President
16.25% $26 Million ABN AMRO BANK N.V.
By \s\ Walter Euyang
Its Vice President
16.25% $26 Million CONTINENTAL BANK N.A.
By \s\ R. Guy Stapleton
Its Vice President
0% $0.00 NATIONSBANK OF NORTH CAROLINA, N.A.
By \s\ Michael O. Lincoln
Its Vice President
16.25% $26 Million THE BANK OF NOVA SCOTIA
By \s\ Errett S. Hummel
Its Account Representative
0% $0.00 NATIONAL WESTMINSTER BANK, PLC
By \s\ Michael E. Keeting
Its Vice President
TOTAL
COMMITMENT $160 Million
AGENT: SEATTLE FIRST NATIONAL BANK, a
national banking association
By \s\ Dora A. Brown
Its Assistant Vice President
EXHIBIT 4.6
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment amends that certain Credit Agreement dated as
of February 26, 1993, among Longview Fibre Company as "Borrower,"
Seattle-First National Bank as "Agent," and the undersigned banks as
"Banks" (as previously amended, the "Agreement"), and all terms defined
in the Agreement shall have the same meaning when used in this Third
Amendment, except as may be otherwise provided in this Third Amendment.
For mutual consideration, receipt of which is hereby acknowledged,
Borrower, Agent, and Banks agree as follows:
1. Ratio of Indebtedness to Tangible Net Worth. Section 5.5
of the Agreement is amended to change the ratio set forth therein from
"1.5 to 1.0" to "1.65 to 1.0," but with all other provisions of Section
5.5 to remain unchanged.
2. Other Terms. Except as specifically amended by this Third
Amendment, all other terms, conditions, and definitions of the Agreement
and the other Loan Documents shall remain in full force and effect, and
are ratified by each of the undersigned.
3. Counterparts. This Third Amendment may be signed in any
number of counterparts, each of which shall be an original, with the
same effect as if the signatures to such counterparts were upon the same
instrument. This Third Amendment shall become effective when the Agent
shall have received counterparts of this Third Amendment signed by
Borrower, Agent, and all Banks.
Dated and effective as of the 30th day of September, 1994.
Borrower Agent
LONGVIEW FIBRE COMPANY SEATTLE-FIRST NATIONAL BANK
By \s\ L. J. Holbrook By \s\ Dora A. Brown
Title SR VP Finance Title Assistant VP
Banks
SEATTLE-FIRST NATIONAL BANK BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
By \s\ Robert M. Ingram III By \s\ Michael J. Balok
Title Vice President Title Vice President
ABN AMRO BANK N.V. THE BANK OF NOVA SCOTIA
By \s\ Leif H. Olsson By \s\ Errett S. Hummel
Title Vice President Title Account Representative
BANK OF AMERICA ILLINOIS
(f/k/a Continental Bank N.A.)
By \s\ Michael J. Balok
Title Vice President
EXHIBIT 4.8
First Amendment
To Loan Agreement
Between Longview Fibre Company and
First Interstate Bank of Washington, N.A.
Dated as of October 25, 1993
This First Amendment ("First Amendment") to the Loan Agreement
between Longview Fibre Company ("Borrower") and First Interstate Bank of
Washington, N.A. ("Bank") dated as of October 25, 1993 ("Loan
Agreement") is entered into as of December ___, 1993.
Recitals
A. On or about October 25, 1993, Borrower and Bank entered into
the Loan Agreement under which Borrower could borrow amounts not to
exceed in the aggregate at any one time outstanding twenty million
Dollars ($20,000,000) under the Line.
B. Borrower and Bank now desire to increase the maximum amount
of the Line and to amend certain covenants of the Loan Agreement.
Agreements
In consideration of the mutual agreements of the parties, Borrower and
Bank agree that the Loan Agreement is hereafter amended as follows:
1. Paragraph 2.1 of the Loan Agreement is amended to state:
2.1 Agreement to Lend. Subject to the terms and conditions of
this Agreement, Bank agrees to lend to Borrower and Borrower may borrow
amounts not to exceed in the aggregate at any one time outstanding
forty-five million Dollars ($45,000,000) to be used for general
corporate purposes, including commercial paper back-up. The Line shall
be a revolving line of credit under which Borrower may borrow, repay and
reborrow from time to time pursuant to the terms and conditions hereof.
The making of Borrowings to Borrower may be suspended or
terminated at any time in the discretion of Bank upon the occurrence of
a Default.
2. Paragraph 2.7.2 of the Loan Agreement is amended to state:
2.7.2 Facility Fee. Borrower shall pay to Bank a facility
fee at the rate of the applicable Margin per annum on the maximum amount
of the Line as in effect for the period for which the fee is calculated.
Such facility fee shall accrue from and including the date of this
Agreement through the Maturity of the Note, and shall be payable in
arrears on the last Business Day of each calendar quarter for the
immediately preceding quarter or portion thereof beginning December 31,
1993. Such fee shall be based on the actual number of days elapsed
divided by three hundred sixty (360).
3. There is added a new paragraph 3.3 of the Loan Agreement which
states:
3.3 Conditions Precedent to First Amendment. The obligation of
Bank to provide the increase to the maximum amount of the Line and
otherwise to enter into the First Amendment is subject to satisfaction
of the following conditions before the first Borrowing under the
increased Line amount:
3.3.1 Agreement. Borrower shall have executed and delivered to
Bank the First Amendment to the Loan Agreement (which is also an
amendment to the Note), and the Loan Agreement and the Note, as amended,
shall be in full force and effect.
3.3.2 Opinion of Counsel. Borrower shall have delivered to Bank,
dated on or before December 31, 1993, an opinion of Borrower's counsel
stating that:
(i) Borrower is a corporation duly organized, validly
existing and authorized to transact business in the corporate form under
the laws of the state of Washington, and Borrower and each of its
Subsidiaries has all corporate power required to carry on its business
as now conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so qualified
would have a material adverse effect on Borrower;
(ii) The execution, delivery and performance by Borrower of
this Agreement as amended is within the corporate powers of Borrower,
has been duly authorized by all necessary corporate action, requires no
action by or in respect of, or filing with, any governmental body,
agency or official and does not contravene, or constitute a default
under, any provision of its articles of incorporation or by-laws or, to
the best of such counsel's knowledge, after reasonable inquiry, of any
applicable law or regulation or of any agreement, bond, debenture, note,
contract, indenture, judgment, injunction, order, decree or other
instrument binding upon Borrower or result in the creation or imposition
of any lien on any asset of Borrower;
(iii) The Loan Agreement and Note, as amended and given in
accordance with the First Amendment to the Loan Agreement, each
constitutes a valid and binding agreement of Borrower, each enforceable
in accordance with its terms subject to bankruptcy and insolvency laws
and enforceability of creditors' rights generally; and
(iv) To the best of counsel's knowledge after due inquiry
made to one or more officers of Borrower, there is no action, suit or
proceeding pending against, or to the best of counsel's knowledge
threatened against or affecting, Borrower before any court or arbitrator
or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could materially
adversely affect the business, financial position or results of
operations of Borrower or which in any manner questions the validity of
the Loan Agreement or the Note.
3.3.3 Resolution; Certificate of Incumbency. Bank shall have
received:
(i) certified copies of resolutions adopted by the Board
of Directors of Borrower authorizing execution, delivery and performance
of this Agreement, the Note and all other instruments or agreements
required hereunder, as each may be amended pursuant to the First
Amendment;
(ii) a certificate signed by the Secretary of Borrower,
dated the date of the First Amendment as to the incumbency of the person
or persons authorized to execute and deliver this Agreement and the
Note; and
(iii) such other certifications and or certified resolutions
of Borrower authorizing the request of Borrowings under the Line as Bank
may deem reasonably necessary.
3.3.4 Representations and Warranties. All representations and
warranties set forth in Section 4 of the Loan Agreement shall be true as
of the date of the First Amendment.
3.3.5 Default. No Default hereunder shall have occurred and be
continuing except as may have been waived by Bank in writing.
3.3.6 Other Evidence. Bank shall have received all documents and
other evidence it may reasonably request relating to the existence of
Borrower, the authority for and the validity of any amendments to this
Agreement or the Note and any other matters relevant hereto, all in form
and substance satisfactory to Bank.
4. The Note shall also be deemed to have been amended by this First
Amendment as though fully restated herein.
5. Except as specifically modified by this First Amendment, the Loan
Agreement as amended by this First Amendment remains in full force and
effect, and all agreements and documents given in connection therewith,
including but not limited to the Note, also remain in full force and
effect and are hereby ratified as to all indebtedness of Borrower.
6. Capitalized terms not otherwise defined herein have the meanings
set forth in the Loan Agreement.
7. From and after the date of this First Amendment, the terms
"Agreement" or "Loan Agreement" shall mean the Loan Agreement as amended
by this First Amendment.
8. This Amendment shall become effective when Bank shall have
received counterparts hereof signed by all of the parties hereto and all
conditions precedent have been met.
9. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT,
OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed by their respective authorized officers as of the
day and year first above written.
BANK: BORROWER:
FIRST INTERSTATE BANK OF LONGVIEW FIBRE COMPANY
WASHINGTON, N.A.
By \s\ Adrienne Stone By \s\ L. J. Holbrook
Its Vice President Its SR VP Finance
First Interstate Bank of Longview Fibre Company
Washington, N.A. P.O. Box 639
P.O. Box 160 Longview, WA 98632
Seattle, WA 98111 Attention: Chief Financial
Attention: Washington Corporate Officer
Exhibit 10
This Termination Protection Agreement was signed by the following named
executive officers of the registrant, as defined by Item 402(a)(3) of the
Securities and Exchange Commission Regulations:
R. B. Arkell dated April 9, 1990
D. L. Bowden dated April 9, 1990
D. C. Stibich dated April 9, 1990
Form of
TERMINATION PROTECTION AGREEMENT
This Agreement ("this Agreement") is made as of the _____ day of
____________________, 1994, between LONGVIEW FIBRE COMPANY, a Washington
corporation, with its principal offices at Longview, Washington (hereinafter
called the "Company"), and ______________ (hereinafter called "Employee").
It is made with reference to the following facts:
A. The Board of Directors of the Company (the "Board") believes it
imperative that the Company and the Board be able to rely upon Employee to
continue in his position, and that they be able to receive and rely upon his
advice as to the best interests of the Company and its shareholders, without
concern that he might be distracted or his advice affected by the circumstances
described in Section 1.3 below;
B. Employee is willing to enter into this Agreement for the purposes and
on the terms and conditions described herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions.
1.1 "Approved Group" shall mean (a) any employee benefit plan of the
Company or of any subsidiary of the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the terms of any
such plan or (b) any group which includes any member of the Founding Families
if a majority of the shares of common stock of the Company beneficially owned
by the members of such group (such beneficial ownership including the right to
vote such shares) are beneficially owned by a member or members of the Founding
Families.
1.2 "Founding Families" shall mean any descendant of H. L. Wollenberg, M.
A. Wertheimer, G. B. Downing, or C. J. Schoo or the spouse of any such
descendant, any trust or other arrangement for the benefit of any such
descendant or the spouse of any such descendant or any charitable organization
established by any such descendant or the spouse of such descendant.
1.3 "Effective Date" shall mean the day preceding the first to occur of
the following events (the "Change of Control Events"):
(a) Any Person (as defined in Section 13(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other than the Approved Group or
a broker, bank, or trust company holding common stock of the Company for the
account of customers who are not members of a "group" (within the meaning of
Section 13(d) of the Exchange Act), becoming the record or beneficial owner of
30% or more of any class of the Company's voting equity securities or the
Approved Group sells substantially all of its stock in the Company to any
Person other than the Company, as disclosed by the Company's stock records or
in any other way, including, without limitation, any filing with the Securities
and Exchange Commission or otherwise; or
(b) Upon the purchase of 30% or more of any class of the Company's voting
equity securities pursuant to any tender offer or exchange offer for shares of
the Company's stock, other than one made by the Company or the Approved Group;
or
(c) Upon approval by the shareholders of the Company (or, if later,
approval by the shareholders of a third party) of any merger, consolidation,
reorganization or other transaction providing for the conversion or exchange of
more than fifty percent (50%) of the outstanding shares of the Company's stock
into securities of a third party, or cash, or property, or a combination of any
of the foregoing.
1.4 "Fiscal Year" shall mean the 12-month period ending on December 31.
1.5 "Good Reason," when used with reference to a voluntary termination by
Employee of his employment with the Company, shall mean:
(a) The assignment to Employee of any duties inconsistent with, or the
reduction of powers or functions associated with, his positions, duties,
responsibilities and status with the Company immediately prior to the Effective
Date, or any removal of Employee from or any failure to re-elect Employee to
any positions or offices Employee held immediately prior to the Effective Date,
except in connection with the termination of Employee's employment by the
Company for Cause or for Disability, or the failure to maintain a working
environment conducive to the performance of Employee's duties or the effective
exercise of the powers or functions associated with Employee's position,
responsibilities and status with the Company immediately prior to the Effective
Date;
(b) the failure by the Company to pay a monthly base salary at least
equal to the then applicable Minimum Base Salary;
(c) the Company's mandatory transfer of Employee to another geographic
location, except for required travel on the Company's business to an extent
substantially consistent with Employee's business travel obligations
immediately prior to the Effective Date hereof;
(d) the failure by the Company to continue in effect any employee benefit
plan, program or arrangement (including, without limitation, employee benefit
plans within the meaning of ERISA, but excluding any deferred compensation plan
or incentive compensation plan) in which Employee was participating immediately
prior to the Effective Date, provided that the Company may modify or terminate
any of the above plans, programs or arrangements if it substitutes plans,
programs or arrangements or modifies provisions thereof providing Employee with
substantially comparable benefits; the taking of any action by the Company
which would adversely affect Employee's participation in, or materially reduce
Employee's benefits under any of such plans, programs or arrangements (or
substitutes therefor) or deprive Employee of any material fringe benefit
enjoyed by Employee immediately prior to the Effective Date, or the failure by
the Company to provide Employee with thirty (30) paid vacation days per year in
accordance with the Company's normal vacation policy in effect on the Effective
Date;
(e) the failure by the Company to obtain an assumption of the obligations
of the Company to perform this Agreement by any successor to the Company; or
(f) any attempted termination of Employee's employment by the Company
during the Contract Period which is not effected pursuant to the requirements
of this Agreement.
1.6 "Contract Period" shall mean the period commencing on the Effective
Date and ending on the third anniversary of the Effective Date.
1.7 "Disability" shall mean a physical or mental incapacity of Employee
which entitles Employee to commence the receipt of benefits under the long-term
disability plan maintained by the Company.
1.8 "Cause," when used in connection with the termination of Employee's
employment by the Company, shall mean (a) the willful and continued failure by
Employee substantially to perform his duties and obligations to the Company
(other than any such failure resulting from any illness, sickness or physical
or mental incapacity) which failure continues after the Company has given
written notice thereof to Employee or (b) the willful engaging by Employee in
misconduct which is significantly injurious to the Company, monetarily or
otherwise. For purposes of this definition, no act, or failure to act, on
Employee's part shall be considered "willful" unless done, or omitted to be
done, by Employee in bad faith and without reasonable belief that his action or
omission was in the best interests of the Company.
1.9 "Without Cause," when used in connection with the termination of
Employee's employment by the company, shall mean any termination of employment
of Employee by the Company which is not a termination of employment for Cause
or for Disability.
1.10 "Termination Date" shall mean the effective date as provided in this
Agreement for the termination of Employee's employment.
1.11 "Minimum Base Salary" shall mean, at any given time during the
Contract Period, salary at an annual rate equal to Employee's annual rate of
salary on the Effective Date, payable monthly, increased by 10% per annum
compounded annually on each anniversary of the Effective Date.
2. Scope of Agreement. This Agreement shall apply with respect to any
termination of employment of Employee which occurs during the Contract Period.
It shall not apply to any termination of employment of Employee which occurs
other than during the Contract Period. Except as otherwise provided herein in
respect of payments to beneficiaries, this Agreement shall terminate
automatically upon the death of Employee.
3. Termination of Employment of Employee By the Company During the
Contract Period.
3.1 General. During the Contract Period, the Company shall have the
right to terminate Employee's employment hereunder for Cause, for Disability or
Without Cause upon following the procedures hereinafter specified.
3.2 For Disability. Termination of Employee's employment for
Disability shall become effective on the date that disability benefits, payable
to Employee in an amount equal to at least sixty-five (65%) percent of
Employee's then Minimum Base Salary commence under any long-term disability
plan maintained by the Company or on such later date as the Company may specify
in a written notice to the Employee.
3.3 For Cause. Termination of Employee's employment for Cause shall
become effective five (5) days after a written notice of intent to terminate
Employee's employment, specifying the particulars of the conduct of Employee
forming the basis for such termination, is given to Employee by the Board.
3.4 Without Cause. The Company shall have the absolute right to
terminate Employee's employment Without Cause at any time. Termination of
Employee's employment Without Cause shall be effective five (5) business days
after the date of the giving to Employee by the Board of a written notice of
termination, specifying that such termination is Without Cause.
3.5 Effect of Termination. Upon a termination of Employee's
employment for Cause, Employee shall have no right to receive any compensation
or benefits hereunder. Upon a termination of Employee's employment Without
Cause, Employee shall be entitled to receive the compensation and benefits
provided in Section 5 hereof. Upon a termination of Employee's employment for
Disability as provided in 3.2, Employee shall have no right to receive any
compensation or benefits hereunder.
4. Termination of Employment by Employee During Contract Period. During
the Contract Period, the Employee shall be entitled to terminate his employment
with the Company. The Employee shall give the Company written notice of
voluntary termination of employment, which notice need specify only Employee's
desire to terminate his employment and, if such termination is for Good Reason,
set forth in reasonable detail the facts and circumstances claimed by Employee
to constitute Good Reason. Any notice by Employee pursuant to this Section
shall be effective thirty (30) days after the date it is given by Employee or
on such earlier date after the Company's receipt of the notice as the Company
may specify. If such termination is for Good Reason, Employee shall be
entitled to receive the compensation and benefits in Section 5 hereof. If such
termination is for other than Good Reason, Employee shall have no right
to receive any compensation and benefits hereunder other than Employee's
Minimum Base Salary and accrued vacation through his termination date.
5. Benefits Upon Termination by the Company Without Cause or by Employee
for Good Reason. Upon the termination of the employment of Employee by the
Company pursuant to Section 3.4 or by Employee for Good Reason pursuant to
Section 4 hereof, Employee shall be entitled to receive the following
compensation and benefits:
5.1 The Company shall continue to pay monthly to Employee for the
remainder of the Contract Period an amount equal to the Minimum Base Salary
payable; provided, however, that the Company's obligation hereunder shall be
reduced to the extent of any compensation the Employee receives from another
source for services rendered during the remainder of the Contract Period.
5.2 The Company shall also pay to Employee all legal fees and
expenses as incurred by Employee as a result of such termination of employment
(including all such fees and expenses, if any, as incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided to Employee by this Agreement).
5.3 The Company shall maintain in full force and effect for
Employee's continued benefit until the earliest to occur of (a) the end of the
Contract Period, (b) Employee's commencement of full-time employment with a new
employer, all life insurance, medical, health, dental and accident, and
disability plans, programs or arrangements in which Employee was entitled to
participate immediately prior to the Termination Date, provided that Employee's
continued participation is practicable under the general terms and provisions
of such plans, programs or arrangements. If Employee's participation in any
such plan, program or arrangement is not practicable, the Company shall arrange
to provide Employee with benefits substantially similar to those which Employee
is entitled to receive under such plans, programs or arrangements or
compensation on an after-tax basis sufficient for the Employee to purchase such
benefits.
5.4 The Company shall pay to Employee (or his beneficiary upon his
death) the excess, if any, of:
(a) the benefit Employee (or his beneficiary, as the case may be)
would have been entitled to receive under the Employee's Pension Plan of
Longview Fibre Company as in effect on the Effective Date, determined as though
he were vested and on the assumptions that he remained an employee of the
Company until the earlier of the end of the Contract Period or his death, at an
annual rate of compensation equal to the Compensation (as defined in said plan
and trust) earned by Employee for the calendar year preceding the Termination
Date; over
(b) the benefit actually payable to Employee (or such beneficiary, as
the case may be) under such Plan.
Such excess benefit shall be payable and determined in accordance with the
provisions, rules and assumptions of such Pension Plan, but shall be actually
paid from the general assets of the Company.
5.5 In no event shall all payments or the value of all benefits under
this Section 5 exceed three times Employee's average annual income for services
rendered to Company for the five calendar years preceding the commencement of
the Contract Period (if Employee was employed for fewer than five years by
Company, then the average will be for such fewer years).
5.6 Except as specifically provided herein, the amount of any
compensation or benefits provided for in this Section 5 shall not be subject to
mitigation by Employee being required to seek other employment or otherwise.
6. Successors; Binding Agreement.
6.1 The Company will require any successor or successors (whether
direct or indirect, by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, upon or prior to such succession, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
A copy of such assumption and agreement shall be delivered to Employee
promptly after its execution by the successor. Failure of the Company to
obtain such agreement upon or prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle Employee to benefits from
the Company in the same amounts and on the same terms as Employee would be
entitled hereunder if Employee terminated his employment for Good Reason. For
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 6.1 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
6.2 This Agreement is personal to Employee and Employee may not
assign or transfer any part of his rights or duties hereunder, or any
compensation due to Employee hereunder, to any other person, except that this
Agreement shall inure to the benefit of and be enforceable by Employee's
personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees or beneficiaries.
7. Modification; Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and by the Chief Executive Officer of
the Company or such other director or officer as may be specifically designated
by the Board. Waiver by any party of any breach of or failure to comply with
any provision of this Agreement by the other party shall not be construed as,
or constitute, a continuing waiver of such provision, or a waiver of any other
breach of, or failure to comply with, any other provision of this Agreement.
8. Arbitration of Disputes.
8.1 Any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the interpretation or validity hereof shall be
settled exclusively and finally by arbitration. It is specifically understood
and agreed that any disagreement, dispute or controversy which cannot be
resolved between the parties, including, without limitation, any matter
relating to the interpretation of this Agreement, may be submitted to
arbitration irrespective of the magnitude thereof, the amount in controversy or
whether such disagreement, dispute or controversy would otherwise be considered
justiciable or ripe for resolution by a court or arbitral tribunal.
8.2 The arbitration shall be conducted in accordance with the
Commercial Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA").
8.3 The arbitral tribunal shall consist of one arbitrator. The
parties to the arbitration jointly shall directly appoint such arbitrator
within thirty (30) days of initiation of the arbitration. If the parties shall
fail to appoint such arbitrator as provided above, such arbitrator shall be
appointed by the AAA as provided in the Arbitration Rules and shall be a person
who (a) maintains his principal place of business in the State of Washington;
and (b) has had substantial experience in business transactions. The Company
shall pay all of the fees, if any, and expenses of such arbitrator.
8.4 The arbitration shall be conducted in Longview, Washington, or in
such other city in the United States of America as the parties to the dispute
may designate by mutual written consent.
8.5 At any oral hearing of evidence in connection with the
arbitration, each party thereto or its legal counsel shall have the right to
examine its witnesses and to cross-examine the witnesses of any opposing party.
No evidence of any witness shall be presented in written form unless the
opposing party or parties shall have the opportunity to cross-examine such
witness, except as the parties to the dispute otherwise agree in writing or
except under extraordinary circumstances where the interests of justice require
a different procedure.
8.6 Any decision or award of the arbitral tribunal shall be final and
binding upon the parties to the arbitration proceeding. The parties hereto
hereby waive to the extent permitted by law any rights to appeal or to seek
review of such award by any court or tribunal. The parties hereto agree that
the arbitral award may be enforced against the parties to the arbitration
proceeding or their assets wherever they may be found and that a judgment upon
the arbitral award may be entered in any court having jurisdiction.
8.7 Nothing herein contained shall be deemed to give the arbitral
tribunal any authority, power, or right to alter, change, amend, modify, add
to, or subtract from any of the provisions of this Agreement.
9. Payment Obligations Absolute. The Company's obligation to pay
Employee the amounts provided for hereunder and to make the arrangements
provided for hereunder shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against Employee or anyone else. All amounts payable by the Company hereunder
shall be paid without notice or demand. Except as expressly provided herein,
the Company waives all rights which it may now have or may hereafter have
conferred upon it, by statute or otherwise, to terminate, cancel or rescind
this Agreement in whole or in part. Subject to the right of the Company to
seek arbitration under Section 8 and recover any payment made hereunder, each
and every payment made hereunder by the Company shall be final and the Company
will not seek to recover all or any part of such payment from Employee or from
whomsoever may be entitled thereto, for any reason whatsoever.
10. Notice. All notices, requests, demands and other communications
required or permitted to be given by either party to the other party by this
Agreement (including, without limitation, any notice of termination of
employment and any notice under the Arbitration Rules of an intention to
arbitrate) shall be in writing and shall be deemed to have been duly given when
delivered personally or received by certified or registered mail, return
receipt requested, postage prepaid, at the address of the other party as
follows:
If to the Company, to:
Longview Fibre Company
Corporate Secretary
P. O. Box 639
Longview, WA 98632
If to the Employee, to:
Either party hereto may change its address, for purposes of this Section 10, by
giving fifteen (15) days prior notice to the other party hereto.
11. Severability. If any term or provision of this Agreement or the
application hereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12. Headings. The headings in this Agreement are inserted for
convenience of reference only and shall not be a part of or control or affect
the meaning of this Agreement.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original.
14. Governing Law. This Agreement shall in all respects be governed by,
and construed and enforced in accordance with, the laws of the State of
Washington.
15. Payroll and Withholding Taxes. All payments to be made or benefits
to be provided hereunder by the Company shall be subject to reduction for any
applicable payroll related or withholding taxes.
16. Entire Agreement. This Agreement supersedes any and all other oral
or written agreements heretofore made relating to the subject matter hereof and
constitutes the entire agreement of the parties relating to the subject matter
hereof; provided, that this Agreement shall not supersede or limit or in any
way affect any rights Employee may have under any other Company employee
benefit plan, program or arrangement (including, without limitation, any
pension, life insurance, medical, dental, health, vacation, accident and
disability plans, programs and arrangements).
17. Effectiveness. This Agreement shall become effective on the
Effective Date.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EMPLOYEE
LONGVIEW FIBRE COMPANY
By \s\ R. P. Wollenberg
R. P. Wollenberg
President
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
LONGVIEW FIBRE COMPANY
LONGVIEW, WASHINGTON
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-14358) and the Registration Statement on Form
S-8 (No. 33-37836) and the Registration Statement on Form S-8 (No. 33-
56620) of Longview Fibre Company of our report dated December 7, 1994,
which appears at Item 8 of Longview Fibre Company's Annual Report on Form
10-K.
\s\ Price Waterhouse LLP
Price Waterhouse LLP
Portland, Oregon
January 24, 1995
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0
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