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, 1996 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 $18.375 as of December 31, 1996 Total $853,684,584
Indicate the number of shares outstanding of each of the issuer's class of
common stock as of December 31, 1996. 51,698,912 shares outstanding
DOCUMENTS INCORPORATED BY REFERENCE
PART III - NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
dated December 16, 1996.
PART IV - Current Report on Form 8-K dated December 6, 1996.
Page 1<PAGE>
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 11 of Item 8 of this Form
10-K.
(c) NARRATIVE DESCRIPTION OF BUSINESS
(i-x) Principal Products, Markets and Methods of Distribution
TIMBER - The company 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 effect on the company.
Environmental overregulation continues to plague our tree farm
operations. The company estimates that the loss does not exceed
10% of realizable value.
At October 31, 1996, the company owned in fee 556,419 acres of tree
farms which are managed on a sustained yield basis with rotations
of 40 years for hardwood and 55 to 70 years for coniferous species.
The company owns and operates a sawmill in Leavenworth, Washington.
Having an efficient small log sawmill in this region results in
improved log realization on the Chelan tree farm. Residual wood
chips are used at the company's pulp and paper mill in Longview,
Washington.
PAPER AND PAPERBOARD - The company's pulp and paper mill in
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
effect on the company. Products are sold by the company's sales
force working out of San Francisco and Los Angeles, 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
Page 2<PAGE>
from post-consumer and post-industrial waste, purchased bleach
pulp, and augmented by log chipping operations owned by the company
and others.
Chip costs have declined to levels that are reasonably comparable
to those in the South which helps to restore this region's
competitive position. It is anticipated that the chip cost level
will remain competitive as both export and domestic demand have
moderated and supply has been enhanced by greater recovery of woods
wastes and going further for sawmill wastes. Increased use of
recycled containers lowers fiber costs and enhances supply.
An arrangement has been made to purchase pressed bleached pulp
(which has not been dried) from a nearby mill which has excess
capacity. The company believes that this will restore its
competitive position in bleached grades. The company can continue
if necessary to make some hydrogen peroxide bleached pulp which is
suitable for some colored grades.
To spread risk, the company has been engaged in a long campaign to
increase value added products. 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. The company believes
it is in an acceptable competitive posture as to its primary
products.
CONVERTED PRODUCTS - The company's fifteen 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 66% 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, Los Angeles and Oakland, California; Twin
Falls, Idaho; Spanish Fork and Cedar City, Utah; Milwaukee,
Wisconsin; Rockford, Illinois; Cedar Rapids, Iowa; Minneapolis,
Minnesota; Atlanta, Georgia; 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.
Page 3<PAGE>
The company is well along in major modernization of its box plants,
which are now some of the best equipped in the United States.
Modernization will continue at a slower pace.
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.
1996 1995 1994
Paper and Paperboard 24% 31% 28%
Timber 23% 21% 25%
Converted Products 53% 48% 47%
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 4 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 3,900 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 11 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, 1996, the company owned in fee 556,419 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 of 40 years for
hardwood and 55 to 70 years for coniferous species. No large inventory of
mature trees is maintained.
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.
Page 4<PAGE>
Mill utilization was at 82% during fiscal 1996.
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 thirteen 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 " " "
Cedar City, Utah Corrugated Boxes from Corrugated Sheets
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
The volume of converted products sold decreased during the past fiscal year.
Capacity is available for increased sales.
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, or all of them combined, would
not have a material effect on the company's financial position or results of
operation.
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.
Page 5<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Office and Year First Elected
R. P. Wollenberg 81 (1) Chairman of the Board, President and
Chief Executive Officer (1953)
R. E. Wertheimer 68 (2) Executive Vice President (1960)
R. J. Parker 48 (3) Senior Vice President-Production (1994)
D. L. Bowden 61 (4) Senior Vice President-Timber (1989)
L. J. Holbrook 41 (5) Senior Vice President-Finance,
Secretary and Treasurer (1989)
D. C. Stibich 65 (6) Senior Vice President-Paper Sales (1981)
R. B. Arkell 65 (7) Vice President-Industrial Relations
and General Counsel (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
(3) R. J. Parker
From 1994 Senior Vice President-Production
1993-1994 Vice President and Assistant to the President
1992-1993 Pulp Mill Superintendent
1985-1992 Assistant Pulp Mill Superintendent
(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
Page 6<PAGE>
(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
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Transaction prices per share as reported on the New York Stock Exchange are
reported below.
Fiscal 1996 1995
Quarter High Low High Low
1st $18.38 $14.63 $17.25 $14.88
2nd 18.13 15.75 18.00 15.50
3rd 18.25 14.13 19.63 15.63
4th 17.63 14.88 19.00 13.25
The company estimated it had approximately 13,000 shareholders on December 9,
1996.
Dividends per share paid in fiscal 1996, 1995 and 1994:
1996 1995 1994
January $0.15 $0.13 $0.13
April 0.15 0.14 0.13
July 0.15 0.14 0.13
October 0.19 0.19 0.13
$0.64 $0.60 $0.52
The Directors declared a regular dividend of $0.16 per share which was paid on
January 10, 1997, to shareholders of record on December 24, 1996.
Restrictions on the company's ability to pay cash dividends are completed by
reference to Note 6 of Item 8 of this Form 10-K.
Page 7<PAGE>
ITEM 6. SELECTED FINANCIAL AND OTHER DATA
<TABLE>
<S> <C> <C> <C> <C> <C>
(dollars in thousands except per share) 1996 1995 1994 1993 1992
STATEMENT OF INCOME
Net Sales . . . . . . . . . . . . . . . . . $ 822,722 $ 985,515 $ 790,874 $689,551 $690,998
Timber. . . . . . . . . . . . . . . . . . 186,405 207,735 197,978 166,822 114,944
Paper and paperboard. . . . . . . . . . . 199,827 308,356 223,920 189,787 234,119
Converted products. . . . . . . . . . . . 436,490 469,424 368,976 332,942 341,935
Cost of products sold, including
outward freight . . . . . . . . . . . . . 657,737 778,032 659,309 554,984 571,453
Gross profit. . . . . . . . . . . . . . . . 164,985 207,483 131,565 134,567 119,545
Selling, administrative and general
expenses. . . . . . . . . . . . . . . . . 60,199 59,709 54,769 49,994 48,971
Operating profit. . . . . . . . . . . . . . 104,786 147,774 76,796 84,573 70,574
Timber. . . . . . . . . . . . . . . . . . 104,449 121,738 111,907 101,471 61,006
Paper and paperboard. . . . . . . . . . . 4,300 7,442 (15,703) (2,181) 14,398
Converted products. . . . . . . . . . . . (3,963) 18,594 (19,408) (14,717) (4,830)
Interest expensed . . . . . . . . . . . . . (29,506) (29,447) (24,384) (22,772) (24,356)
Other income. . . . . . . . . . . . . . . . 11,584 1,912 1,902 1,287 1,169
Income before income taxes. . . . . . . . . 86,864 120,239 54,314 63,088 47,387
Provision for income taxes. . . . . . . . . 30,500 44,200 20,900 22,800 15,300
Net income. . . . . . . . . . . . . . . . . 56,364 76,039 33,414 40,288 32,087
PER SHARE
Net income. . . . . . . . . . . . . . . . . $ 1.09 $ 1.47 $ 0.64 $ 0.78 $ 0.62
Dividends . . . . . . . . . . . . . . . . . 0.64 0.60 0.52 0.52 0.52
Earnings reinvested in the business . . . . 0.45 0.87 0.12 0.26 0.10
Shareholders' equity at year-end. . . . . . 9.10 8.65 7.80 7.69 7.39
Average shares outstanding (thousands). . . 51,731 51,787 51,861 51,785 51,688
Shares outstanding at year-end (thousands). 51,706 51,751 51,830 51,882 51,685
BALANCE SHEET DATA
Total assets. . . . . . . . . . . . . . . . $1,197,280 $1,153,823 $1,022,049 $944,373 $950,768
Working capital . . . . . . . . . . . . . . 50,974 42,559 35,761 34,308 30,119
Capital assets. . . . . . . . . . . . . . . 951,137 906,586 815,509 767,130 777,655
Deferred taxes - net. . . . . . . . . . . . (135,106) (119,205) (103,234) (97,693) (83,266)
Long-term debt. . . . . . . . . . . . . . . 426,255 409,374 366,492 327,486 362,400
Shareholders' equity. . . . . . . . . . . . 470,412 447,899 404,253 398,795 382,117
OTHER DATA
Sales: Logs, thousands of board feet . . . 243,000 262,000 250,000 212,000 232,000
Lumber, thousands of board feet . . 33,000 32,000 36,000 25,000 11,000
Paper, tons . . . . . . . . . . . . 207,000 259,000 236,000 226,000 253,000
Paperboard, tons. . . . . . . . . . 129,000 212,000 181,000 96,000 174,000
Converted products, tons. . . . . . 542,000 572,000 549,000 506,000 525,000
Logs, $/thousand board feet . . . . $ 719 $ 753 $ 743 $ 745 $ 486
Lumber, $/thousand board feet . . . 367 313 352 347 208
Paper, $/ton FOB mill equivalent. . 664 698 592 608 607
Paperboard, $/ton FOB mill
equivalent. . . . . . . . . . . . 356 489 336 311 320
Converted products, $/ton . . . . . 805 821 672 658 651
Primary production, tons. . . . . . . . . . 905,000 1,058,000 968,000 822,000 894,000
Employees . . . . . . . . . . . . . . . . . 3,900 3,800 3,750 3,500 3,450
Funds: Used for plant and equipment. . . . $ 127,558 $ 138,613 $ 81,544 $ 53,256 $ 66,744
Used for timber and timberlands . . 3,822 35,046 43,494 4,700 7,579
</TABLE>
Page 8<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS 1996 vs. 1995
1996 was another difficult year as earnings decreased 26%.
Timber profits declined from $121,738,000 to $104,449,000 in fiscal 1996
primarily because prices for logs were 5% lower and volume was down 7%.
Domestic log prices were adversely affected by reduced residual chip prices in
early 1996, but there has been some recovery of domestic log prices with an
improving lumber market. Export log prices have remained fairly stable at a
high level throughout 1996 due to reduced overall supply of exportable quality
logs.
The company operates its 556,419 acres on a sustained yield basis with
rotations of 40 years for hardwood and 55 to 70 years for coniferous species.
Based on recent large purchases and sales, we now estimate the value of the
tree farm to be between five and eight times book value.
Environmental overregulation continues to reduce return on our tree farm
operations. We estimate that the loss does not exceed 10% of realizable
value.
Operating results for paper and paperboard declined from $7,442,000 to
$4,300,000. Reduced end usage coupled with expanded industry capacity
resulted in lower prices and capacity utilization, offset in part by lower raw
material costs. Volume sold decreased 29% and average price decreased 5% and
27% for paper and paperboard, respectively.
Wood chip costs were about 11% lower than the prior fiscal year. Current
costs have declined to levels that are reasonably comparable to those in the
South which helps restore this region's competitive position. It is
anticipated that the chip cost level will remain competitive as both export
and domestic demand have moderated and supply has been enhanced by greater
recovery of woods wastes and going further distances for sawmill wastes.
Increased use of recycled containers lowers fiber costs and enhances supply.
An arrangement has been made to purchase pressed bleached pulp (which has not
been dried) from a nearby mill which has excess capacity. We believe that
this will restore our competitive position in bleached grades. We can
continue if necessary to make some hydrogen peroxide bleached pulp which is
suitable for some colored grades.
Old corrugated container prices remain quite low. It is expected that as more
recycled mills come on-line, these prices will tend to increase.
Mill operation was at about 82% of capacity. Because of weak markets, the
paper mill operated for much of the year with reduced crews and shorter hours
on several machines, displacing a substantial number of machine hands. Rather
than lay these employees off, the company elected to utilize them primarily as
temporary helpers in the mechanical department. This permitted catch-up in
maintenance and installation work and was good for morale. Labor costs remain
high.
Page 9<PAGE>
Converting results declined from $18,594,000 to $(3,963,000) due to a 5%
reduction in tonnage sold and an average price decrease of 2% and increased
costs.
Price stability, which should be possible for our manufactured products, has
not been achieved. If demand improves somewhat, compensatory product prices
may again become achievable.
In the face of unwarranted (and often short term) price cutting by incautious
competitors, the company continues to stress quality, service, and specialized
capabilities and makes every effort to achieve compensatory prices. We
believe that, for the long term, money losing suppliers are not going to
render optimum performance for their customers, and we are determined to
provide optimum service.
The current popularity of "just in time" procurement programs has led some
customers to make unreasonable demands for instant shipments. These create
substantial increases in our manufacturing costs which in the long term must
be paid by our customers. It is in their best interests to do a good job of
anticipating needs in a timely manner and only request extraordinary service
for a small number of bona fide emergencies.
Due to deregulation, power sales markets for firm power have decreased. Our
customer has bought its way out of our contract and our cogeneration is
currently all being used internally. It still makes a modest contribution to
reduced cost, but this is less than the prior contribution when part was sold.
Selling, administrative and general expenses were 7% of sales in fiscal 1996
and 6% of sales in 1995. Higher total borrowing partially offset by lower
interest rates resulted in an increase in interest expensed from $29,447,000
to $29,506,000.
The current market for the company's manufactured products is weak but seems
to have bottomed out. It will take a while for the excess capacity in our
sector of the paper industry to be absorbed, but we believe this will occur.
The company will pursue a cautious policy as to pricing in an attempt to
maintain a reasonable load factor without selling at unreasonably low prices.
Log markets are expected to remain strong. Fiber costs should remain at
reasonable levels.
RESULTS OF OPERATIONS 1995 vs. 1994
Earnings in 1995 improved by 128% over the prior year. However, earnings
remained 21% below 1988, while shareholders' equity has increased by 27% since
1988. This shows a continuing need for improvement.
Timber profits increased from $111,907,000 to $121,738,000 in fiscal 1995 due
primarily to a 5% increase in log footage sold. Prices for logs in fiscal
1995 were flat as compared with fiscal 1994. Demand and prices remain at good
levels in both the export and domestic markets.
We have salvaged the bulk of the fire-killed trees from the 1994 Chelan County
fire. Because of checking in dry weather, any remaining fire-killed crop will
be primarily useful for chips.
Page 10<PAGE>
The company operates its 556,389 acres on a sustained-yield basis with
rotations of 40 years for hardwood and 60 to 70 years for coniferous species.
Based on recent purchases and sales, we now estimate the value of the tree
farms to be between five and seven times book value.
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 10%
of realizable value.
Operating results for paper and paperboard improved from $(15,703,000) to
$7,442,000 due to a 13% increase in volume sold and price increases that more
than covered cost increases. The average selling price for paper and
paperboard improved 18% and 46%, respectively. High labor and wood chip costs
continue to hold back earnings.
Chip costs increased 28% compared with the prior fiscal year, but it appears
that the peak has passed and further reductions can be expected. Vigorous
efforts to broaden the area tapped and to extend supply by more intensive
salvage have reduced the supply-demand imbalance. We continue to expect that
regional differences in chip costs will diminish.
The shutdown of our bleach plant in fiscal 1994 has turned out to be
unfortunate. Prices of bleached market pulp has more than doubled, which has
caused a reduction in the amount of bleached product we can sell profitably.
We have started making a semi-bleached pulp utilizing hydrogen peroxide. This
product can be substituted for full bleached in some grades. It appears that
it may become possible to equip to extend hydrogen peroxide bleaching to
brighter grades. If this can be accomplished, we might be freed from the
purchase of market pulp and would have a totally chlorine-free product.
Old corrugated container prices declined in the last part of the fiscal year.
Markets were strong for the first two quarters with slowing in the last half
of the year. Mill operation was at about 95% of capacity. Paperboard and
packaging paper demand is currently fairly close to industry capacity which
should augur well for price stability; however, competitors often fail to
realize that when volume declines industry downtime is inevitable.
Converting results improved from $(19,408,000) to $18,594,000 due to a 4%
increase in volume sold and price increases that more than covered cost
increases.
The company has invested very heavily in equipment to meet the needs of its
customers. These costs have necessitated moderate price increases. We are
confident that the improvements in quality, service, continuity and
specialized manufacturing ability achieved after equipment improvements have
met our customers' best interests.
The cogeneration plant came on line in June with a few minor difficulties and
delays. It is now operating well and is making a contribution to cost
reduction.
Sale of power continues to make a substantial contribution to results.
Page 11<PAGE>
Selling, administrative and general expenses were 6% of sales in fiscal 1995
and 7% of sales in fiscal 1994. Interest expensed increased 21% in fiscal
1995 as compared with fiscal 1994 due to higher borrowing for capital
expenditures and higher interest rates.
The current market for the company's manufactured products is somewhat weak.
While this may be due in part to user's inventory corrections, the question
remains how soon the market will recover. The company will seek to keep
prices above costs as this is in the best long-term interest of our customers.
Log markets are expected to remain strong. Chip costs should respond
favorably to lower industry demand.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations held steady in fiscal 1996 compared with fiscal
1995 despite lower earnings.
Working capital was $50,974,000 at October 31, 1996 compared to $42,559,000 at
October 31, 1995.
Long-term debt, current installments of long-term debt and short-term
borrowings increased by $18,881,000 in fiscal 1996 due to capital spending.
At October 31, 1996, the company had bank lines of credit totaling
$328,000,000. Of this amount, $186,000,000 was under a credit agreement with
a group of banks expiring February 28, 1998, with renewal provisions beyond
that date. The company had outstanding $160,000,000 of notes payable under
this agreement at October 31, 1996. Also available were $142,000,000 of bank
credit lines for additional borrowing needs. At October 31, 1996, the company
had an outstanding balance of $101,000,000 under these credit lines. The
unused portion of all bank lines of credit was $67,000,000 as of October 31,
1996, which is adequate for anticipated future needs.
Also outstanding at October 31, 1996 were senior notes of $208,000,000 and
revenue bonds of $28,900,000. For further details regarding borrowing, see
Notes 5 and 6 of Item 8 of this Form 10-K.
Expenditures for fiscal 1996 were $127,558,000 for plant and equipment and
$3,822,000 for timberlands. Expenditures for fiscal 1995 for plant and
equipment were $138,613,000 and for timberland $35,046,000. The backlog of
approved capital projects as of October 31, 1996 was $103,000,000.
The company is well along in major modernization of its box plants, which are
now some of the best equipped in the United States. Modernization will
continue at a slower pace.
Paper products that were satisfactory in the past are becoming increasingly
obsolete as converting machinery speeds up and printing gets more elaborate.
Hence, major paper mill projects are now being undertaken which will improve
quality and capability to make diverse grades, reduce costs and modestly
increase capacity. This is expected to be a heavy program for the next few
years. In January 1997, we will start a two-month rebuild of No. 11 Machine
to make extensible bag papers.
Page 12<PAGE>
Capital expenditures for plant and equipment are expected to average
$120,000,000 per year. Purchase of timberlands will depend on offerings,
price levels and competition. These expenditures will be financed principally
from internally generated funds supplemented, if necessary, by modest
additional borrowing (see Notes 5 and 6 of Item 8 of this Form 10-K).
During fiscal 1996, the company purchased 45,455 shares of its stock for an
average price of $16.37 per share. During fiscal 1995, the company purchased
79,265 shares for an average price of $16.68 per share. Purchases began in
1964; the total number of shares acquired through fiscal 1996 is 21,374,623
shares for $96,572,425 at an average cost of $4.52 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 $.64 and $.60 per share were paid in fiscal 1996 and 1995,
respectively. Shareholders' equity increased $22,513,000 in fiscal 1996, as
compared with an increase of $43,646,000 in fiscal 1995.
It is expected that near-term capital expenditures will be financed
principally from internally generated funds supplemented, if necessary, by
modest additional borrowing.
OTHER
The company continually reviews any known environmental exposures including
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.
Page 13<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
PAGE
Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . . . . 14
Consolidated Statement of Income for the
three years ended October 31, 1996 . . . . . . . . . . . . . . . 15
Consolidated Statement of Shareholders'
Equity for the three years ended October 31, 1996. . . . . . . . 15
Consolidated Balance Sheet at October 31,
1996, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . 16
Consolidated Statement of Cash Flows for
the three years ended October 31, 1996 . . . . . . . . . . . . . 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.
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, 1996,
1995 and 1994, and the results of their operations and their cash flows for
each of the three years in the period ended October 31, 1996, 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 9, 1996
Page 14<PAGE>
CONSOLIDATED STATEMENT OF INCOME
Years Ended October 31
(thousands except per share) 1996 1995 1994
NET SALES. . . . . . . . . . . . . . . . . . . $822,722 $985,515 $790,874
Timber . . . . . . . . . . . . . . . . . 186,405 207,735 197,978
Paper and paperboard . . . . . . . . . . 199,827 308,356 223,920
Converted products . . . . . . . . . . . 436,490 469,424 368,976
Cost of products sold, including
outward freight . . . . . . . . . . . . . . . 657,737 778,032 659,309
GROSS PROFIT . . . . . . . . . . . . . . . . . 164,985 207,483 131,565
Selling, administrative and general expenses . 60,199 59,709 54,769
OPERATING PROFIT . . . . . . . . . . . . . . . 104,786 147,774 76,796
Timber . . . . . . . . . . . . . . . . . 104,449 121,738 111,907
Paper and paperboard . . . . . . . . . . 4,300 7,442 (15,703)
Converted products . . . . . . . . . . . (3,963) 18,594 (19,408)
Interest income. . . . . . . . . . . . . . . . 611 594 539
Interest expensed. . . . . . . . . . . . . . . (29,506) (29,447) (24,384)
Miscellaneous. . . . . . . . . . . . . . . . . 10,973 1,318 1,363
INCOME BEFORE INCOME TAXES . . . . . . . . . . 86,864 120,239 54,314
PROVISION FOR TAXES ON INCOME (see Note 10)
Current. . . . . . . . . . . . . . . . . . . . 14,861 29,049 15,748
Deferred . . . . . . . . . . . . . . . . . . . 15,639 15,151 5,152
30,500 44,200 20,900
NET INCOME . . . . . . . . . . . . . . . . . . $ 56,364 $ 76,039 $ 33,414
Per share. . . . . . . . . . . . . . . . $ 1.09 $ 1.47 $ 0.64
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(thousands) 1996 1995 1994
COMMON STOCK:
Balance at beginning of year . . . . . . $ 77,627 $ 77,745 $ 77,823
Ascribed value of stock purchased. . . . (69) (118) (78)
Balance at end of year . . . . . . . . . $ 77,558 $ 77,627 $ 77,745
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year . . . . . . $ 3,306 $ 3,306 $ 3,306
Balance at end of year . . . . . . . . . $ 3,306 $ 3,306 $ 3,306
RETAINED EARNINGS:
Balance at beginning of year . . . . . . $366,966 $323,202 $317,666
Net income . . . . . . . . . . . . . . . 56,364 76,039 33,414
Less cash dividends on common stock
($0.64, $0.60, $0.52 per share,
respectively) . . . . . . . . . . . . (33,107) (31,070) (26,968)
Less purchases of common stock . . . . . (675) (1,205) (910)
Balance at end of year . . . . . . . . . $389,548 $366,966 $323,202
COMMON SHARES:
Balance at beginning of year . . . . . . 51,751 51,830 51,882
Purchases. . . . . . . . . . . . . . . . (45) (79) (52)
Balance at end of year . . . . . . . . . 51,706 51,751 51,830
The accompanying notes are an integral part of the financial statements.
Page 15<PAGE>
CONSOLIDATED BALANCE SHEET
October 31
(dollars in thousands except per share) 1996 1995 1994
ASSETS
Current assets:
Accounts and notes receivable. . . . . . . . $ 99,147 $ 118,164 $ 101,190
Allowance for doubtful accounts. . . . . . 1,100 1,100 1,000
Inventories (see Note 2) . . . . . . . . . . 93,718 82,534 67,305
Other. . . . . . . . . . . . . . . . . . . . 11,923 9,372 7,597
Total current assets . . . . . . 203,688 208,970 175,092
Capital assets:
Buildings, machinery and equipment at cost . 1,456,432 1,355,740 1,230,784
Accumulated depreciation . . . . . . . . . 710,946 655,822 599,342
Costs to be depreciated in future
years (see Note 3). . . . . . . . . . . 745,486 699,918 631,442
Plant sites at cost. . . . . . . . . . . . . 2,909 2,834 2,423
748,395 702,752 633,865
Timber at cost less depletion. . . . . . . . 177,683 178,494 158,659
Roads at cost less amortization. . . . . . . 8,956 9,291 9,415
Timberland at cost . . . . . . . . . . . . . 16,103 16,049 13,570
202,742 203,834 181,644
Total capital assets . . . . . . 951,137 906,586 815,509
Other assets . . . . . . . . . . . . . . . . 42,455 38,267 31,448
$1,197,280 $1,153,823 $1,022,049
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payable to bank resulting from
checks in transit . . . . . . . . . . . . . $ 13,031 $ 10,272 $ 12,505
Accounts payable . . . . . . . . . . . . . . 44,533 60,730 52,361
Short-term borrowings (see Note 5) . . . . . 38,000 36,000 1,000
Payrolls payable . . . . . . . . . . . . . . 11,125 10,703 9,862
Federal income taxes payable . . . . . . . . - 2,475 2,929
Other taxes payable. . . . . . . . . . . . . 11,906 12,112 14,680
Current installments of long-term debt . . . 34,119 34,119 45,994
Total current liabilities . . . 152,714 166,411 139,331
Long-term debt (see Note 6). . . . . . . . . 426,255 409,374 366,492
Deferred taxes - net (see Note 10) . . . . . 135,106 119,205 103,234
Other liabilities. . . . . . . . . . . . . . 12,793 10,934 8,739
Commitments (see Note 13). . . . . . . . . . - - -
Shareholders' equity:
Preferred stock; authorized 2,000,000 shares - - -
Common stock, ascribed value $1.50 per share;
authorized 150,000,000 shares; issued
51,705,577, 51,751,032 and 51,830,297
shares, respectively (see Note 12). . . . . 77,558 77,627 77,745
Additional paid-in capital . . . . . . . . . 3,306 3,306 3,306
Retained earnings. . . . . . . . . . . . . . 389,548 366,966 323,202
Total shareholders' equity . . . 470,412 447,899 404,253
$1,197,280 $1,153,823 $1,022,049
The accompanying notes are an integral part of the financial statements.
Page 16<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended October 31
(thousands) 1996 1995 1994
CASH PROVIDED BY (USED FOR) OPERATIONS:
Net income . . . . . . . . . . . . . . . . . $ 56,364 $ 76,039 $ 33,414
Charges to income not requiring cash:
Depreciation . . . . . . . . . . . . . . 74,709 66,719 62,144
Depletion and amortization . . . . . . . 4,745 12,684 10,546
Deferred taxes - net . . . . . . . . . . 15,901 15,971 5,541
Loss on disposition of capital assets . . 5,762 1,428 2,679
Change in:
Accounts and notes receivable - net . . . 19,017 (16,874) (18,627)
Inventories . . . . . . . . . . . . . . . (11,184) (15,229) (7,631)
Other . . . . . . . . . . . . . . . . . . (2,551) (1,775) (516)
Other noncurrent assets . . . . . . . . . (4,188) (6,819) (2,523)
Accounts, payrolls and other
taxes payable . . . . . . . . . . . . . (16,109) 7,886 7,075
Federal income taxes payable. . . . . . . (2,475) (454) 1,427
Other noncurrent liabilities. . . . . . . 1,859 2,195 2,350
Cash provided by operations. . . . . . . . . 141,850 141,771 95,879
CASH PROVIDED BY (USED FOR) INVESTING:
Additions to: Plant and equipment.. . . . . (127,558) (138,613) (81,544)
Timber and timberlands. . . . (3,822) (35,046) (43,494)
Proceeds from sale of capital assets . . . . 1,613 1,751 1,290
Cash used for investing. . . . . . . . . . . (129,767) (171,908) (123,748)
CASH PROVIDED BY (USED FOR) FINANCING:
Additions to long-term debt. . . . . . . . . 51,000 77,000 85,000
Reduction in long-term debt. . . . . . . . . (34,119) (45,993) (19,943)
Short-term borrowings. . . . . . . . . . . . 2,000 35,000 (19,000)
Payable to bank resulting from
checks in transit . . . . . . . . . . . . . 2,759 (2,233) 4,142
Accounts payable for construction. . . . . . 128 (1,244) 5,626
Cash dividends . . . . . . . . . . . . . . . (33,107) (31,070) (26,968)
Purchase of common stock . . . . . . . . . . (744) (1,323) (988)
Cash provided by (used for) financing. . . . (12,083) 30,137 27,869
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) . . . $ 30,023 $ 28,718 $ 23,912
Capitalized interest . . . . . . . . . . . 3,230 3,442 1,486
Income taxes . . . . . . . . . . . . . . . 19,625 30,109 14,500
The accompanying notes are an integral part of the financial statements.
Page 17<PAGE>
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 51,731,407, 51,786,698, and 51,861,365 for 1996, 1995
and 1994, 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.
REVENUE RECOGNITION
The company generally recognizes revenues when goods are shipped.
MISCELLANEOUS INCOME
In fiscal 1996, $9,470,000 was recorded as miscellaneous income as
consideration for the termination of an electrical power sales agreement.
Page 18<PAGE>
NOTE 2 - INVENTORIES:
Inventories consist of the following:
October 31
(thousands) 1996 1995 1994
Finished goods . . . . . . . . $ 39,962 $ 38,973 $ 33,254
Goods in process. . . . . . . . 33,632 39,905 25,332
Raw materials and supplies. . . 22,505 35,350 17,516
Supplies (at average cost). . . 45,236 38,707 36,908
141,335 152,935 113,010
LIFO Reserve. . . . . . . . . . (47,617) (70,401) (45,705)
$ 93,718 $ 82,534 $ 67,305
NOTE 3 - BUILDINGS, MACHINERY AND EQUIPMENT:
At cost - net of accumulated depreciation consist of the following:
October 31
(thousands) 1996 1995 1994
Buildings - net . . . . . . . . $ 61,914 $ 54,115 $ 46,963
Machinery and equipment - net . 683,572 645,803 584,479
$745,486 $699,918 $631,442
NOTE 4 - SUPPLEMENTAL EXPENSE INFORMATION:
(thousands) 1996 1995 1994
Maintenance & repairs. . . . . . . . $83,440 $78,557 $68,795
Taxes, other than income taxes:
Payroll. . . . . . . . . . . . 12,279 11,873 10,949
Property . . . . . . . . . . . 9,858 9,392 10,114
Sales and use. . . . . . . . . 3,423 4,227 3,866
Other. . . . . . . . . . . . . 8,050 10,650 10,706
Research and development . . . . . . 660 570 471
NOTE 5 - SHORT-TERM BORROWINGS:
At October 31, 1996, the company had bank lines of credit totaling $328
million. Of this amount, $186 million was under a credit agreement with a
group of banks providing various methods of borrowing. The agreement provides
for borrowings at the Euro Dollar Rate plus 0.325% or the bank's prime rate,
whichever the company selects. Also, 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 credit agreement contains certain financial covenants and provides for a
0.175% facility fee. This agreement has an expiration date of February 28,
1998 with renewal provisions beyond that date. At October 31, 1996, the
company had loans of $160 million under the credit agreement.
Also available was a bank credit agreement providing committed lines of credit
totaling $55 million. The agreement provides for a nominal commitment fee and
expires November 1, 1998 with renewal provisions beyond that date. At October
31, 1996 the company had loans of $45 million under this credit agreement.
Other bank credit lines totaling $87 million were available for additional
borrowing needs. Included in this amount were committed lines of credit of $20
million and $10 million both of which expire March 31, 1998. The other $57
million is uncommitted. At October 31, 1996, the company had an outstanding
balance of $56 million under these credit lines.
Page 19<PAGE>
Short-term borrowings of $223 million, $222 million and $205 million at
October 31, 1996, 1995 and 1994, 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) 1996 1995 1994
Notes payable October 31 . . . . $261,000 $258,000 $206,000
Interest rate October 31 . . . . 5.9% 6.4% 5.6%
Average daily amount of
notes payable outstanding
during year . . . . . . . . . . $253,893 $250,512 $196,547
Average* interest rate
during year . . . . . . . . . . 6.1% 6.5% 4.6%
Maximum amount of notes
payable at any month end. . . . $274,000 $272,000 $213,000
*Computed by dividing interest incurred by average notes payable outstanding.
NOTE 6 - LONG-TERM DEBT:
Long-term debt consists of the following:
October 31
(thousands) 1996 1995 1994
Senior notes due through 2004
(6.17%-9.80%) - Note (a) . . . . $208,000 $192,000 $177,875
Revenue bonds payable through
2015 (floating rates, currently
3.55%-3.85%) - Note (b) . . . . . 28,900 28,900 28,900
Other. . . . . . . . . . . . . . 474 593 711
Notes payable - banks -
Note 5 above . . . . . . . . . . 223,000 222,000 205,000
460,374 443,493 412,486
Less current installments . . 34,119 34,119 45,994
Net long-term debt. . . . . . . . $426,255 $409,374 $366,492
Scheduled maturities
1998 $237,119
1999 30,118
2000 30,118
2001 40,000
2002-2015 88,900
$426,255
Note (a) Covenants of the senior notes include tests of minimum net worth,
short-term borrowing, long-term borrowing, current ratio and restrictions on
payments of dividends. Accordingly, at October 31, 1996, approximately $77
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, 1996, $28,900,000 was secured by liens on the equipment.
Page 20<PAGE>
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
fair value of the company's long-term debt exceeded the stated value by
approximately $2 million and $7 million at October 31, 1996 and 1995,
respectively. The difference between the fair value of the company's long-
term debt and the stated value was not material at October 31, 1994.
NOTE 8 - 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 7.5% and 5.25% for 1996 and 8% and 5.25% for
1995 and 1994. 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) 1996 1995 1994
Actuarial present value of benefit
obligations:
Vested . . . . . . . . . . . . . $155,770 $139,308 $132,175
Vested and nonvested . . . . . . $156,317 $140,608 $133,190
Projected for service
rendered . . . . . . . . . . . $184,079 $165,042 $157,549
Plan assets at fair value,
primarily listed stocks. . . . . . 311,548 269,785 237,109
Excess plan assets. . . . . . . . . 127,469 104,743 79,560
Items not recognized in earnings:
Net (asset) at adoption of FAS 87. (6,056) (7,425) (8,795)
Unrecognized prior service cost. . 16,698 20,699 24,363
Unrecognized net (gain) . . . . . (107,542) (91,950) (71,034)
Pension asset recognized in the
consolidated balance sheet . . . . $ 30,569 $ 26,067 $ 24,094
Net pension (income) includes
the following:
Service cost . . . . . . . . . . $ 4,557 $ 4,220 $ 4,334
Interest cost. . . . . . . . . . 12,824 12,211 10,800
Actual (return) on plan assets . (51,069) (41,199) (8,920)
Net amortization and deferral. . 29,186 22,795 (7,711)
Net pension (income). . . . . . . . $ (4,502) $ (1,973) $ (1,497)
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 1996, 1995 and 1994 was $1,199,000, $1,151,000 and
$916,000, respectively.
Page 21<PAGE>
NOTE 9 - 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 $2,271,000, $2,589,000, and $2,679,000 in
1996, 1995 and 1994, respectively.
The components of expense were as follows:
(thousands) 1996 1995 1994
Service cost . . . . . . . . . . . . . . . $ 545 $ 717 $ 850
Interest cost. . . . . . . . . . . . . . . 1,227 1,373 1,331
Amortization of transition obligation. . . 499 499 498
Net periodic postretirement benefit cost . $2,271 $2,589 $2,679
The accumulated postretirement benefit obligation consists of the following:
(thousands) 1996 1995 1994
Retirees . . . . . . . . . . . . . . . . . $ (2,954) $ (3,448) $ (2,658)
Fully eligible active plan participants. . (3,817) (3,836) (3,898)
Other active plan participants . . . . . . (10,494) (11,519) (11,833)
Total accumulated postretirement
benefit obligation . . . . . . . . . . . (17,265) (18,803) (18,389)
Unrecognized net(gain)loss . . . . . . . . (3,440) (606) 676
Unrecognized transition obligation . . . . 7,976 8,475 8,974
Accrued postretirement benefit cost. . . . $(12,729) $(10,934) $ (8,739)
The net periodic postretirement benefit cost was calculated using a health
care cost trend rate of 13% for the indemnity plan and 7.5% for the HMO plan.
The accrued postretirement benefit cost at October 31, 1996 was calculated
using a health care cost trend rate of 10% for the indemnity plan and 7.5% for
the HMO plan. The trend rate declines each year until the ultimate health
care cost trend rate, 5.5% if 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 $1,053,000 effect on the accumulated
postretirement benefit obligation as of October 31, 1996 and a $149,000 effect
on the net periodic postretirement benefit cost. The weighted-average
discount rate used was 7.5% at October 31, 1996 and 8% at October 31, 1995 and
1994.
NOTE 10 - INCOME TAXES:
Provision for taxes on income is made up of the following components:
(thousands) 1996 1995 1994
Current:
Federal. . . . . . . . . . . . . . $13,452 $26,495 $14,553
State. . . . . . . . . . . . . . . 1,409 2,554 1,195
14,861 29,049 15,748
Deferred:
Federal. . . . . . . . . . . . . . 15,348 14,405 4,647
State. . . . . . . . . . . . . . . 291 746 505
15,639 15,151 5,152
$30,500 $44,200 $20,900
Page 22<PAGE>
An analysis of the effective income tax rate as compared to the expected
federal income tax rate is as follows:
1996 1995 1994
Expected federal income tax rate . . 35% 35% 35%
Foreign Sales Corporation. . . . . . - (1) -
State income taxes less
federal income tax benefit . . . . 1 2 2
Other. . . . . . . . . . . . . . . . (1) 1 1
35% 37% 38%
The deferred income tax liabilities (assets) recorded in the Consolidated
Balance Sheet as of October 31, are as follows:
(thousands) 1996 1995 1994
Current:
Non-deductible accruals. . . . . . $ (6,153) $ (5,891) $ (5,071)
Non-current:
Depreciation . . . . . . . . . . . $139,951 $135,146 $128,371
Employee Benefit Plans . . . . . . 11,219 9,648 8,917
Alternative Minimum Tax. . . . . . (10,042) (20,547) (26,844)
Other. . . . . . . . . . . . . . . (6,022) (5,042) (7,210)
Non-current deferred tax . . . . . $135,106 $119,205 $103,234
Federal income tax returns through 1991 have been settled with the Internal
Revenue Service.
NOTE 11 - 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 fifteen 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 66% of the Longview mill production.
Included in sales to customers are export sales, principally to Japan, Hong
Kong and Southeast Asia in 1996, 1995 and 1994 of $153,878,000, $229,984,000
and $161,622,000, 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.
Page 23<PAGE>
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
$306,101,000, $253,674,000 and $252,844,000 have been allocated to
converted products at October 31, 1996, 1995 and 1994, respectively.
Depreciation, depletion and amortization and additions to capital assets have
been segregated and allocated similarly to the method used for identifiable
assets.
(thousands) 1996 1995 1994
SALES TO CUSTOMERS:
Timber . . . . . . . . . . . . . . . $ 186,405 $ 207,735 $197,978
Paper and paperboard . . . . . . . . 199,827 308,356 223,920
Converted products . . . . . . . . . 436,490 469,424 368,976
Total. . . . . . . . . . . . . . . 822,722 985,515 790,874
INCOME (LOSS) ON SALES:
Timber . . . . . . . . . . . . . . . 104,449 121,738 111,907
Paper and paperboard . . . . . . . . 4,300 7,442 (15,703)
Converted products . . . . . . . . . (3,963) 18,594 (19,408)
Interest expensed and other. . . . . (17,922) (27,535) (22,482)
Income before income taxes . . . . 86,864 120,239 54,314
IDENTIFIABLE ASSETS AT OCTOBER 31:
Timber . . . . . . . . . . . . . . . 255,529 254,586 225,656
Paper and paperboard . . . . . . . . 279,383 313,778 304,819
Converted products . . . . . . . . . 662,368 585,459 491,574
Total. . . . . . . . . . . . . . . 1,197,280 1,153,823 1,022,049
DEPRECIATION, DEPLETION AND
AMORTIZATION:
Timber . . . . . . . . . . . . . . . 7,921 15,740 13,350
Paper and paperboard . . . . . . . . 20,201 22,964 21,767
Converted products . . . . . . . . . 51,332 40,699 37,573
Total. . . . . . . . . . . . . . . 79,454 79,403 72,690
ADDITIONS TO CAPITAL ASSETS:
Timber . . . . . . . . . . . . . . . 7,939 38,289 48,810
Paper and paperboard . . . . . . . . 29,552 26,721 19,890
Converted products . . . . . . . . . 93,889 108,649 56,338
Total. . . . . . . . . . . . . . . $ 131,380 $ 173,659 $ 125,038
NOTE 12 - SHAREHOLDER RIGHTS PLAN:
On December 6, 1996, the company's Board of Directors amended the Shareholder
Rights Plan by lowering the ownership and tender offer thresholds triggering a
distribution of the rights certificates under the rights agreement. With
certain exceptions, the rights will become exercisable only in the event that
an acquiring party accumulates 10% or more of the company's voting stock or a
party announces an offer to acquire 10% 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 business day following the
acquisition of 10% or more, or an offer to acquire 10% or more, of the
company's voting stock.
Page 24<PAGE>
NOTE 13 - COMMITMENTS AND CONTINGENCIES:
Estimated costs to complete approved capital projects were approximately $103
million, $93 million and $65 million at October 31, 1996, 1995 and 1994,
respectively.
QUARTERLY FINANCIAL DATA (UNAUDITED)
Fiscal Year Quarters Total
Fiscal
(thousands except per share) 1st 2nd 3rd 4th Year
1996
Net sales. . . . . . . . . . $209,213 $199,716 $197,593 $216,200 $822,722
Gross profit . . . . . . . . 46,767 38,077 33,228 46,913 164,985
Net income . . . . . . . . . 15,539 10,035 13,924 16,866 56,364
Net income per share (1) . . 0.30 0.19 0.27 0.33 1.09
1995
Net sales. . . . . . . . . . $227,519 $234,215 $253,363 $270,418 $985,515
Gross profit . . . . . . . . 48,051 57,697 51,436 50,299 207,483
Net income . . . . . . . . . 16,548 22,542 18,912 18,037 76,039
Net income per share (1) . . 0.32 0.43 0.37 0.35 1.47
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
(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.
Page 25<PAGE>
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 is contained in the Notice of Annual Meeting of Shareholders and Proxy
Statement which is incorporated as part of this Form 10-K. See Part I of this
Form 10-K for a listing of the executive officers of the company.
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
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 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.
(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 1996, 1995 and 1994 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
Page 26<PAGE>
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, 1996.
(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 (c)
3.2 Bylaws of Longview Fibre Company (c)
4.1 Commercial Paper Facility (a)
4.2 Rights Agreement (b)
4.3 First Amendment to Rights Agreement (g)
4.7 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 2004 (6.17% - 9.80%) $208,000,000
Revenue Bonds payable through 2015 (floating rates,
3.55% through 3.85% at October 31, 1996) $ 28,900,000
Other $ 474,000
10.1 Form of Termination Protection Agreement (e)(*)
10.2 $170,000,000 Credit Agreement (d)
10.3 First Amendment to Credit Agreement (d)
10.4 Second Amendment to Credit Agreement (e)
10.5 Third Amendment to Credit Agreement (e)
10.6 Fourth Amendment to Credit Agreement (f)
10.7 Fifth Amendment to Credit Agreement
23 Consent of Independent Accountants
27 Financial Data Schedule
99.1 Salary Savings Plan - Amendment No. 1 (e)
99.2 Salary Savings Plan - Amendment No. 2 (e)
Page 27<PAGE>
99.3 Salary Savings Plan - Amendment No. 3 (e)
99.4 Salary Savings Plan - Amendment No. 4 (f)
99.5 Salary Savings Plan - Amendment No. 5 (f)
99.6 Salary Savings Plan - Amendment No. 6 (f)
99.7 Salary Savings Plan - Amendment No. 7 (f)
99.8 Hourly Savings Plan - Amendment No. 1 (e)
99.9 Hourly Savings Plan - Amendment No. 2 (e)
99.10 Hourly Savings Plan - Amendment No. 3 (e)
99.11 Hourly Savings Plan - Amendment No. 4 (f)
99.12 Hourly Savings Plan - Amendment No. 5 (f)
99.13 Branch Hourly Savings Plan - Amendment No. 1 (e)
99.14 Branch Hourly Savings Plan - Amendment No. 2 (e)
99.15 Branch Hourly Savings Plan - Amendment No. 3 (f)
99.16 Branch Hourly Savings Plan - Amendment No. 4 (f)
(a) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1988.
(b) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1989.
(c) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1990.
(d) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1993.
(e) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1994.
(f) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1995
(g) Incorporated by reference to company's Current Report on Form
8-K dated December 6, 1996.
(*) Indicates management contract or compensatory plan or
arrangement.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended October 31,
1996.
Page 28<PAGE>
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 1-28-97
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 1-28-97
R. P. Wollenberg, Chief Executive Officer Date
and Director
\s\ L. J. Holbrook 1-28-97
L. J. Holbrook, Chief Financial Officer Date
and Director
\s\ A. G. Higgens 1-28-97
A. G. Higgens, Chief Accounting Officer Date
\s\ R. B. Arkell 1-28-97
R. B. Arkell, Director Date
\s\ D. L. Bowden 1-28-97
D. L. Bowden, Director Date
\s\ M. A. Dow 1-28-97
M. A. Dow, Director Date
\s\ R. J. Parker 1-28-97
R. J. Parker, Director Date
\s\ D. A. Wollenberg 1-28-97
D. A. Wollenberg, Director Date
\s\ R. H. Wollenberg 1-28-97
R. H. Wollenberg, Director Date
Page 29<PAGE>
FIFTH AMENDMENT TO CREDIT AGREEMENT
This Fifth Amendment to Credit Agreement ("Fifth Amendment") is entered
into this 28th day of February, 1996 by and between LONGVIEW FIBRE COMPANY as
"Borrower," SEATTLE-FIRST NATIONAL BANK, as agent for the Banks ("Agent"), and
the banks listed on the signature pages hereof as "Banks" and amends that
certain Credit Agreement dated as of February 26, 1993, as previously amended
by amendments dated August 31, 1993, January 28, 1994, September 30, 1994 and
February 28, 1995, respectively (as so amended, the "Agreement").
Recitals
A. The Borrower has requested a one year extension of the Termination
Date and the Banks are willing to grant such extension subject to the terms
and conditions of this Fifth Amendment.
B. The parties further wish to amend the Agreement to change certain
pricing terms as set forth below.
NOW, THEREFORE, the parties hereto agree as follows:
Agreement
1. Defined Terms. All terms defined in the Agreement shall have the
same meaning when used in this Fifth Amendment, except as may be otherwise
provided in this Fifth Amendment, including, specifically, the definition in
Section 1.1 of the Agreement for "Termination Date" which definition is hereby
deleted and replaced with the following:
"Termination Date" means February 28, 1998 (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. Euro-Bank Rate. Section 2.7(b) of the 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)
0.2%, if the Capitalization Ratio as of the end of the preceding fiscal
quarter was less than 0.30, (b) 0.25%, 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) 0.325%, 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) 0.5%, if the Capitalization Ratio as of
the end of the preceding fiscal quarter was greater than or equal to
0.55.
3. Facility Fee. Section 2.8(a) of the 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 ratable 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 0.10%
Greater than or equal to
.30 and less than .40 0.125%
Greater than or equal to
.40 and less than .55 0.175%
Greater than or equal to
.55 0.25%
4. Termination Date Extension. The first sentence of Section 2.17 is
amended to read as follows:
Section 2.17 Termination Date Extension. If the Borrower shall give to
the Agent written notice during December 1996 (or, if so extended
pursuant to this Section 2.17, the December of that subsequent year
occurring fourteen months prior to the then-current Termination Date) of
the Borrower's desire to extend the Termination Date for one additional
year then such Termination Date shall be so extended if each Bank by
February 28, 1997 (or February 28 of such subsequent year which is one
year prior to the then-current Termination Date) shall have provided its
written consent to such extension and the Borrower shall have paid such
appropriate fees and expenses as may be required by the Banks.
5. Effective Date. This Fifth Amendment shall be effective on February
28, 1996 (the "Effective Date") subject to the condition precedent that on or
prior to said date, each of the following events have occurred:
a. This Fifth Amendment shall have been fully executed in one or
more counterparts by the Borrower and Banks and delivered to the Agent;
b. All fees and other amounts due and payable on or before the
Effective Date shall have been paid in full;
c. No Event of Default or Default shall have occurred and be
continuing; and
d. Agent shall have received a copy of a Board resolution in form
and substance satisfactory to Agent authorizing the Borrower's
execution, delivery and performance of the Fifth Amendment.
6. Representations and Warranties. Borrower hereby represents and
warrants as follows:
a. This Fifth Amendment and the Agreement, as hereby amended, each
constitutes the valid and binding obligation of the Borrower enforceable
in accordance with its terms, having been duly authorized by all
necessary corporate action, having received all necessary governmental
approvals, and not being in contravention of any law, any provision of
the Articles of Incorporation or Bylaws of the Borrower or of any
contract binding upon the Borrower.
b. Each of the matters set forth in Article 4 of the Agreement is
true and correct in each case as if made on the Effective Date of this
Fifth Amendment and no Event of Default or Default shall have occurred
and be continuing or will have occurred as a result of the execution and
performance of this Fifth Amendment.
7. Other Terms. Except as specifically amended by this Fifth 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.
8. Counterparts. This Fifth 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. Dated and
effective as of the 28th day of February, 1996.
Borrower Agent
LONGVIEW FIBRE COMPANY SEATTLE-FIRST NATIONAL BANK
\s\ L. J. Holbrook \s\ Dora A. Brown
By: L. J. Holbrook By: Dora A. Brown
Title: Sr. Vice President-Finance Title: Asst. Vice President
Percentage of
BANKS: Commitment Commitment
SEATTLE-FIRST NATIONAL BANK $56.0 Million 30.10%
\s\ Robert M. Ingram, III
By: Robert M. Ingram, III
Title: Vice President
BANK OF AMERICA NATIONAL $26.0 Million 13.98%
TRUST & SAVINGS ASSOCIATION
\s\ Mike J. Balok
By: Mike J. Balok
Title: Managing Director
ABN AMRO BANK N.V., Seattle Branch $26.0 Million 13.98%
By: ABN AMRO North America, Inc.,
as agent
\s\ J. J. Rice
By: J. J. Rice
Title: Vice President
\s\ David McGinnis
By: David McGinnis
Title: Vice President
THE BANK OF NOVA SCOTIA $26.0 Million 13.98%
\s\ Michael Brown
By: Michael Brown
Title: Officer
UNITED STATES NATIONAL BANK $26.0 Million 13.98%
OF OREGON
\s\ Janice T. Thede
By: Janice T. Thede
Title: Vice President
UNION BANK OF SWITZERLAND $26.0 Million 13.98%
Los Angeles Branch
\s\ Curtis Flammini
By: Curtis Flammini
Title: Asst. Vice President
\s\ Philip A. Stephens
By: Philip A. Stephens
Title: Vice 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 9, 1996,
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 28, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM ITEM 8 OF THIS FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 99,147
<ALLOWANCES> 1,100
<INVENTORY> 93,718
<CURRENT-ASSETS> 203,688
<PP&E> 1,662,083
<DEPRECIATION> 710,946
<TOTAL-ASSETS> 1,197,280
<CURRENT-LIABILITIES> 152,714
<BONDS> 426,255
0
0
<COMMON> 77,558
<OTHER-SE> 392,854
<TOTAL-LIABILITY-AND-EQUITY> 1,197,280
<SALES> 822,722
<TOTAL-REVENUES> 822,722
<CGS> 657,737
<TOTAL-COSTS> 657,737
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,506
<INCOME-PRETAX> 86,864
<INCOME-TAX> 30,500
<INCOME-CONTINUING> 56,364
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,364
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.09
</TABLE>
