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, 1997 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.)
300 Fibre Way, 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 and non-voting common equity
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within 60 days prior to the date of filing.
Market value per share $15.1875 as of December 31, 1997 Total $706,146,033
Indicate the number of shares outstanding of each of the issuer's class of
common stock as of December 31, 1997. 51,676,567 shares outstanding
DOCUMENTS INCORPORATED BY REFERENCE
PART III - NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
dated December 15, 1997.
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 10 of Item 8 of Part II 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.
At October 31, 1997, the company owned in fee 560,377 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.
Based on recent large purchases and sales, we now estimate the
value of the tree farms to be between six and nine times book value.
Environmental regulations requiring set asides, buffer zones and
which otherwise limit our ability to harvest timber reduce the
value of our tree farms. The company estimates that the reduction
in value due to such regulations does not exceed ten percent of
realizable value.
The company owns and operates a sawmill in Leavenworth, Washington.
Having a sawmill in this region has improved the log realization of
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.
Page 2<PAGE>
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 bleached
pulp, and augmented by log chipping operations owned by the company
and others. Wood chips, our principal raw material, and sawdust
and shavings are purchased from more than 60 sawmills, plywood
plants and whole-log chipping facilities within a 1,300-mile radius
from the Longview Mill.
During fiscal 1997 and 1996, chip costs had declined to levels that
were reasonably comparable to those in the South which helped to
restore this region's competitive position. Chip costs in the
Pacific Northwest are rising somewhat from recent low levels.
Maximum efforts continue to broaden supply by greater recovery of
wastes. Increased use of recycled containers lowers fiber costs
and enhances supply.
The company purchases bleached pulp from various sources including
an arrangement to purchase pressed bleached pulp (which has not
been dried) from a nearby mill which has excess capacity. This has
proven to be a beneficial arrangement.
Extensive paper machine modernizations to improve quality,
efficiency and ability to make custom grades continue. The rebuild
on No. 11 paper machine to make extensible grades has been
completed.
To spread risk, the company has been engaged in a long campaign to
increase value added products, such as extensible paper, recycled
kraft paper, masking paper, and colored kraft paper. 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 basic commodity products
(paperboard and bag paper) were 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.
CONVERTED PRODUCTS - The company's sixteen converting plants in
eleven states produce shipping containers, merchandise bags and
grocery bags. The tonnage of paper and containerboard used in the
converting plants equals approximately 63% 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,
Page 3<PAGE>
Massachusetts. The loss of a single customer, or a few customers,
would not have a material effect on the business of the company.
The company is well along in major modernization of its box plants,
which included the installation of improved and specialized
equipment to produce premium products. A corrugated sheet plant
has been constructed in Grand Forks, N.D. Modernization will
continue at a slower pace.
In the paper and paperboard segment, there is intense competition
among a significant number of competitors, including conventional
paper mills, and recycling mills that rely on recycled post-
consumer and industrial material as the principal fibre source.
The converted products segment also involves intense competition
among many competitors. Competition in these manufacturing
segments is based principally on price, quality of product, service
and reliability. The company emphasizes quality, service and
reliability, and has not competed aggressively on the basis of
price or sought out large national customer accounts that
frequently involve demands for discount pricing.
The following table sets forth the contribution to sales by each
class of similar products which accounted for more than 10% of
sales.
1997 1996 1995
Paper and Paperboard 25% 24% 31%
Timber 24% 23% 21%
Converted Products 51% 53% 48%
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.
(xii) This item is completed by reference to Item 7 of Part II 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 10 of Item 8 of Part II 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, 1997, the company owned in fee 560,377 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 available 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
Page 4<PAGE>
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.
Mill utilization was at 85% during fiscal 1997.
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 fourteen 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 " " "
Grand Forks, North Dakota Corrugated Boxes from Corrugated Sheets
Cedar City, Utah " " "
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 increased slightly 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. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Forward Looking Statements" in Item 7 of Part II
of this Form 10-K.
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 82 (1) Chairman of the Board, President and
Chief Executive Officer (1953)
R. E. Wertheimer 69 (2) Executive Vice President (1960)
R. J. Parker 49 (3) Senior Vice President-Production (1994)
and Mill Manager
D. L. Bowden 62 (4) Senior Vice President-Timber (1989)
L. J. Holbrook 42 (5) Senior Vice President-Finance,
Secretary and Treasurer (1989)
D. C. Stibich 66 (6) Senior Vice President-Paper Sales (1981)
R. B. Arkell 66 (7) Vice President-Industrial Relations
and General Counsel (1986)
R. H. Wollenberg 44 (8) Senior Vice President-Production
Western Container Division (1996)
(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
Page 6<PAGE>
(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
(8) R. H. Wollenberg
From 1995 Senior Vice President-Production, Western Container
Division
1994-1995 Vice President-Production, Western Container Division
1993-1994 Manager-Production, Western Container Division
1988-1993 Assistant 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 1997 1996
Quarter High Low High Low
1st $19.25 $16.50 $18.38 $14.63
2nd 17.25 15.00 18.13 15.75
3rd 19.50 16.13 18.25 14.13
4th 22.38 15.88 17.63 14.88
The company estimated it had approximately 11,500 shareholders on December 8,
1997.
Dividends per share paid in fiscal 1997, 1996 and 1995:
1997 1996 1995
January $0.16 $0.15 $0.13
April 0.16 0.15 0.14
July 0.16 0.15 0.14
October 0.16 0.19 0.19
$0.64 $0.64 $0.60
The Directors declared a regular dividend of $0.16 per share which was paid on
January 9, 1998, to shareholders of record on December 24, 1997.
Restrictions on the company's ability to pay cash dividends are completed by
reference to Note 5 of Item 8 of Part II 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) 1997 1996 1995 1994 1993
STATEMENT OF INCOME
Net Sales . . . . . . . . . . . . . . . . $ 772,845 $ 822,722 $ 985,515 $ 790,874 $689,551
Timber. . . . . . . . . . . . . . . . . 186,814 186,405 207,735 197,978 166,822
Paper and paperboard. . . . . . . . . . 196,192 199,827 308,356 223,920 189,787
Converted products. . . . . . . . . . . 389,839 436,490 469,424 368,976 332,942
Cost of products sold, including
outward freight . . . . . . . . . . . . 661,684 657,737 778,032 659,309 554,984
Gross profit. . . . . . . . . . . . . . . 111,161 164,985 207,483 131,565 134,567
Selling, administrative and general
expenses. . . . . . . . . . . . . . . . 63,760 60,199 59,709 54,769 49,994
Operating profit. . . . . . . . . . . . . 47,401 104,786 147,774 76,796 84,573
Timber. . . . . . . . . . . . . . . . . 101,740 104,449 121,738 111,907 101,471
Paper and paperboard. . . . . . . . . . (5,143) 4,300 7,442 (15,703) (2,181)
Converted products. . . . . . . . . . . (49,196) (3,963) 18,594 (19,408) (14,717)
Interest expensed . . . . . . . . . . . . (31,613) (29,506) (29,447) (24,384) (22,772)
Other income. . . . . . . . . . . . . . . 3,706 11,584 1,912 1,902 1,287
Income before income taxes. . . . . . . . 19,494 86,864 120,239 54,314 63,088
Provision for income taxes. . . . . . . . 6,800 30,500 44,200 20,900 22,800
Net income. . . . . . . . . . . . . . . . 12,694 56,364 76,039 33,414 40,288
PER SHARE
Net income. . . . . . . . . . . . . . . . $ 0.25 $ 1.09 $ 1.47 $ 0.64 $ 0.78
Dividends . . . . . . . . . . . . . . . . 0.64 0.64 0.60 0.52 0.52
Earnings reinvested in the business . . . (0.39) 0.45 0.87 0.12 0.26
Shareholders' equity at year-end. . . . . 8.70 9.10 8.65 7.80 7.69
Average shares outstanding (thousands). . 51,691 51,731 51,787 51,861 51,785
Shares outstanding at year-end (thousands) 51,677 51,706 51,751 51,830 51,882
BALANCE SHEET DATA
Total assets. . . . . . . . . . . . . . . $1,260,903 $1,197,280 $1,153,823 $1,022,049 $944,373
Working capital . . . . . . . . . . . . . 40,381 50,974 42,559 35,761 34,308
Capital assets. . . . . . . . . . . . . . 1,013,361 951,137 906,586 815,509 767,130
Deferred taxes - net. . . . . . . . . . . (141,623) (135,106) (119,205) (103,234) (97,693)
Long-term debt. . . . . . . . . . . . . . 498,137 426,255 409,374 366,492 327,486
Shareholders' equity. . . . . . . . . . . 449,506 470,412 447,899 404,253 398,795
OTHER DATA
Sales: Logs, thousands of board feet . . 218,000 243,000 262,000 250,000 212,000
Lumber, thousands of board feet . 65,000 33,000 32,000 36,000 25,000
Paper, tons . . . . . . . . . . . 202,000 207,000 259,000 236,000 226,000
Paperboard, tons. . . . . . . . . 177,000 129,000 212,000 181,000 96,000
Converted products, tons. . . . . 548,000 542,000 572,000 549,000 506,000
Logs, $/thousand board feet . . . $ 724 $ 719 $ 753 $ 743 $ 745
Lumber, $/thousand board feet . . 443 367 313 352 347
Paper, $/ton FOB mill equivalent. 638 664 698 592 608
Paperboard, $/ton FOB mill
equivalent. . . . . . . . . . . 332 356 489 336 311
Converted products, $/ton . . . . 711 805 821 672 658
Primary production, tons. . . . . . . . . 958,000 905,000 1,058,000 968,000 822,000
Employees . . . . . . . . . . . . . . . . 3,900 3,900 3,800 3,750 3,500
Funds: Used for plant and equipment. . . $ 139,727 $ 127,558 $ 138,613 $ 81,544 $ 53,256
Used for timber and timberlands . 15,716 3,822 35,046 43,494 4,700
</TABLE>
Page 8<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS fiscal 1997 vs. fiscal 1996
Results in fiscal 1997 were increasingly unsatisfactory as earnings decreased
77% from fiscal 1996.
Timber profits declined from $104,449,000 to $101,740,000 in fiscal 1997
primarily because of a 10% reduction in log footage sold. Volume declined
because the company did not aggressively market its logs into a weakening
export market. Average log prices were 1% higher. Domestic log prices
remained firm. Export log prices were somewhat lower due to an increase in
supply of export quality logs, reduced end user demand and the strengthening
of the U.S. Dollar. Although export prices declined, they were at good
levels.
The company operates its 560,377 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 farms to be between six and nine times book value. Environmental
regulations requiring set asides, buffer zones and which otherwise limit our
ability to harvest timber reduce the value of our tree farms. The company
estimates that the reduction in value due to such regulations does not exceed
ten percent of realizable value.
Operating results for paper and paperboard declined from an operating profit
in fiscal 1996 of $4,300,000 to an operating loss of $5,143,000 in fiscal
1997. The addition of new recycling containerboard mills increased industry
capacity and resulted in lower prices for containerboard. Average paperboard
and paper prices decreased 7% and 4% respectively while volume sold increased
13%. Product prices started to improve modestly in the fourth quarter but not
to levels needed for profitable results.
Principal raw materials for paper and paperboard include wood chips, purchased
bleached pulp, sawdust and reclaimed fibers. Wood chip costs were about 26%
lower than the prior fiscal year. Chip costs are rising somewhat from recent
low levels. Maximum efforts continue to be made to broaden supply by greater
recovery of woods wastes and going further distances for sawmill wastes.
Purchase of bleached pulp from a variety of sources has proved to be a
beneficial arrangement. Old corrugated container (OCC) prices have remained
low but may increase.
Mill operation was at about 85% of capacity. Downtime was utilized for
vacations and displaced machine crews were reassigned as temporary mechanical
helpers so no lay-offs resulted. Reassigning machine crews reduced the
backlog of maintenance and installation work.
Operating losses from converted products increased from $3,963,000 in fiscal
1996 to $49,196,000 in fiscal 1997 due to a reduction in average price of 12%.
Corrugated box prices were driven down by lower containerboard prices
available in the marketplace due to increased industry capacity.
The company believes that increased demand for paper and paperboard is
reducing industry overcapacity. In addition, the increase in the number of
recycling containerboard mills may cause the price of old corrugated
Page 9<PAGE>
containers to increase which should help diminish the aggressive price
competition of those mills. Accordingly there may be prospects for higher
prices for paper, paperboard and converted products in fiscal 1998.
To serve customers who need "just in time" service, we are going to need to
charge higher prices if we are to cover the added capital, storage, handling
and shipping costs.
With an increasingly flexible national market for both electricity and natural
gas, some additional margin has been achieved by shutting cogeneration down
for periods when spot replacement electricity costs are less and our purchased
gas can be wheeled to others with some overall cost reduction. During fiscal
1996, miscellaneous income included $9,470,000 received as consideration for
the termination of an electrical power sales agreement.
Selling, administrative and general expenses were 8% of sales in fiscal 1997
and 7% of sales in fiscal 1996. Higher total borrowing resulted in an
increase in interest expensed from $29,506,000 to $31,613,000.
The company believes the current market for the company's manufactured
products has finally bottomed out. The company's sales of extensible papers
are growing slowly. Log markets remain good. Fibre costs may increase
modestly but they should be more than offset by better product prices.
OVERVIEW fiscal 1998:
November 1997 log sales were down substantially from year ago levels due to
high export log inventories resulting from increased export supply versus
reduced end user demand. Logging operations were redeployed until the
imbalance in the supply demand ratio was corrected in December. December
results were negatively affected by increased costs associated with the
equivalent of a 9-day mill shutdown, downtime for the rebuild of No.6 paper
machine and increased wood chip costs. Although January results are not yet
known, it is probable that the company will have a loss in the first quarter
of fiscal 1998. Currently, log export demand appears to be good and prices
have improved modestly. Domestic markets for our manufactured products appear
to have bottomed out, but the export market for paperboard is uncertain.
RESULTS OF OPERATIONS fiscal 1996 vs. fiscal 1995
Fiscal 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 fiscal 1996, but there was some recovery of domestic log prices as
lumber markets improved. Export log prices remained fairly stable at high
levels throughout fiscal 1996 due to reduced overall supply of export quality
logs.
Environmental overregulation continued to reduce return on our tree farm
operations.
Operating profits 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
Page 10<PAGE>
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. Costs
declined to levels that were reasonably comparable to those in the South.
Increased use of recycled containers lowered fiber costs and enhanced supply.
An arrangement has been made to purchase pressed bleached pulp (which has not
been dried) from a nearby mill which has excess capacity.
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
remained high.
Converting results declined from an operating profit of $18,594,000 to an
operating loss of $3,963,000 due to a 5% reduction in tonnage sold and an
average price decrease of 2% and increased costs.
Price stability for our manufactured products was not achieved.
In the face of aggressive (and often short term) price cutting by competitors,
the company continued to stress quality, service, and specialized capabilities
and made efforts to achieve compensatory prices.
Due to deregulation, power sales markets for firm power have decreased. Our
customer bought its way out of our contract for $9,470,000 in fiscal 1996.
Thereafter our cogeneration was used internally. It still made a modest
contribution to reducing costs, but this was 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.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations decreased by $25,215,000 in fiscal 1997 compared
with fiscal 1996 primarily due to reduced earnings.
Working capital was $40,381,000 at October 31, 1997 compared to $50,974,000 at
October 31, 1996.
Capital expenditures for the year were above available funds from cash flow
and were funded by borrowings. Therefore, long-term debt, current
installments of long-term debt and short-term borrowings increased by an
aggregate of $69,881,000 in fiscal 1997.
At October 31, 1997, the company had bank lines of credit totaling
$330,000,000. Of this amount, $200,000,000 was under a credit agreement with
a group of banks expiring February 28, 1999, with renewal provisions beyond
that date. The company had outstanding $200,000,000 of notes payable under
Page 11<PAGE>
this agreement at October 31, 1997. At October 31, 1997, the company
had an outstanding balance of $100,000,000 under the remaining $130,000,000 of
bank credit lines. The unused portion of all bank lines of credit was
$30,000,000 as of October 31, 1997.
Also outstanding at October 31, 1997 were senior notes of $239,000,000 and
revenue bonds of $28,900,000. For further details regarding borrowing, see
Notes 4 and 5 of Item 8 of Part II of this Form 10-K.
Capital expenditures for fiscal 1997 were $139,727,000 for plant and equipment
and $15,716,000 for timberlands. Capital expenditures for fiscal 1996 for
plant and equipment were $127,558,000 and for timberlands were $3,822,000.
The backlog of approved capital projects as of October 31, 1997 was
$48,000,000. With reduced cash flow, capital authorizations are being
reduced. While much remains to be done to optimize our manufacturing
capabilities, the most urgent projects have been completed or will
be completed in the near future.
Capital expenditures for plant and equipment are expected to be between
$50,000,000 and $70,000,000 in fiscal 1998. Purchase of timberlands will
depend on offerings, price levels and competition. Any offers we make will be
at prices we believe to be conservative. We plan to fund capital expenditures
principally from internally generated funds supplemented, if necessary, by
additional borrowing (see Notes 4 and 5 of Item 8 of Part II of this
Form 10-K).
During fiscal 1997, the company purchased 29,010 shares of its stock for an
average price of $17.85 per share. During fiscal 1996, the company purchased
45,455 shares for an average price of $16.37 per share. Purchases began in
1964; the total number of shares acquired through fiscal 1997 is 21,403,633
shares for $97,090,164 at an average cost of $4.54 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 per share were paid in fiscal 1997 and 1996. Shareholders'
equity decreased $20,906,000 in fiscal 1997, as compared with an increase of
$22,513,000 in fiscal 1996.
The company anticipates that cash flow from operations, supplemented as
necessary by short or long term borrowings will be adequate to fund capital
projects.
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 a final air and water quality rule referred to as the
"Cluster Rule". The company estimates that over the next 2 to 3 years
required pollution control capital expenditures could range from $10 million
to $20 million with another $20 million to $30 million possible 5 years later.
Page 12<PAGE>
Although future pollution control expenditures cannot be predicted with any
certainty because of continuing changes in laws and regulations and
uncertainty as to how they will be interpreted and applied, 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.
The company does not anticipate that expenditures to ensure that its
computerized systems are year 2000 compliant will have a material impact on
its financial position or its results of operations.
FORWARD-LOOKING STATEMENTS
This Form 10-K contains forward-looking statements concerning anticipated
pricing and market conditions for the company's products, anticipated future
raw material costs, anticipated competitive conditions and actions of
competitors, the expected results of planned paper mill improvement projects,
the anticipated cost of and availability of financing for planned capital
improvement projects, and anticipated cost of compliance with environmental
regulations and the effects of environmental contingencies and litigation on
financial condition and results of operations. Actual events could differ
materially from those anticipated by the company due to a variety of factors,
including, among others, developments in the world, national or regional
economy involving the company's products or raw materials, changes in product
or raw material prices, initiatives by competitiors, changes in currency
exchange rates between the U.S. dollars and the currencies of important export
markets, capital project delays or cost overruns, weather, labor disputes,
unanticipated adverse developments in environmental or other legal proceedings
or the assertion of additional claims, significant unforeseen developments in
the company's business or adverse changes in the capital markets or interest
rates affecting the availability of financing or other unforeseen events.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
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, 1997 . . . . . . . . . . . . . . . 15
Consolidated Statement of Shareholders'
Equity for the three years ended October 31, 1997. . . . . . . . 15
Consolidated Balance Sheet at October 31,
1997, 1996 and 1995. . . . . . . . . . . . . . . . . . . . . . . 16
Consolidated Statement of Cash Flows for
the three years ended October 31, 1997 . . . . . . . . . . . . . 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, 1997,
1996 and 1995, and the results of their operations and their cash flows for
each of the three years in the period ended October 31, 1997, 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 audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, 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 8, 1997
Page 14<PAGE>
CONSOLIDATED STATEMENT OF INCOME
Years Ended October 31
(thousands except per share) 1997 1996 1995
NET SALES. . . . . . . . . . . . . . . . . . . $772,845 $822,722 $985,515
Timber . . . . . . . . . . . . . . . . . 186,814 186,405 207,735
Paper and paperboard . . . . . . . . . . 196,192 199,827 308,356
Converted products . . . . . . . . . . . 389,839 436,490 469,424
Cost of products sold, including
outward freight . . . . . . . . . . . . . . . 661,684 657,737 778,032
GROSS PROFIT . . . . . . . . . . . . . . . . . 111,161 164,985 207,483
Selling, administrative and general expenses . 63,760 60,199 59,709
OPERATING PROFIT . . . . . . . . . . . . . . . 47,401 104,786 147,774
Timber . . . . . . . . . . . . . . . . . 101,740 104,449 121,738
Paper and paperboard . . . . . . . . . . (5,143) 4,300 7,442
Converted products . . . . . . . . . . . (49,196) (3,963) 18,594
Interest income. . . . . . . . . . . . . . . . 784 611 594
Interest expensed. . . . . . . . . . . . . . . (31,613) (29,506) (29,447)
Miscellaneous. . . . . . . . . . . . . . . . . 2,922 10,973 1,318
INCOME BEFORE INCOME TAXES . . . . . . . . . . 19,494 86,864 120,239
PROVISION FOR TAXES ON INCOME (see Note 9)
Current. . . . . . . . . . . . . . . . . . . . (1,315) 14,861 29,049
Deferred . . . . . . . . . . . . . . . . . . . 8,115 15,639 15,151
6,800 30,500 44,200
NET INCOME . . . . . . . . . . . . . . . . . . $ 12,694 $ 56,364 $ 76,039
Per share. . . . . . . . . . . . . . . . $ 0.25 $ 1.09 $ 1.47
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(thousands) 1997 1996 1995
COMMON STOCK:
Balance at beginning of year . . . . . . $ 77,558 $ 77,627 $ 77,745
Ascribed value of stock purchased. . . . (43) (69) (118)
Balance at end of year . . . . . . . . . $ 77,515 $ 77,558 $ 77,627
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 . . . . . . $389,548 $366,966 $323,202
Net income . . . . . . . . . . . . . . . 12,694 56,364 76,039
Less cash dividends on common stock
($0.64, $0.64, $0.60 per share,
respectively) . . . . . . . . . . . . (33,083) (33,107) (31,070)
Less purchases of common stock . . . . . (474) (675) (1,205)
Balance at end of year . . . . . . . . . $368,685 $389,548 $366,966
COMMON SHARES:
Balance at beginning of year . . . . . . 51,706 51,751 51,830
Purchases. . . . . . . . . . . . . . . . (29) (45) (79)
Balance at end of year . . . . . . . . . 51,677 51,706 51,751
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) 1997 1996 1995
ASSETS
Current assets:
Accounts and notes receivable. . . . . . . . $ 105,850 $ 99,147 $ 118,164
Allowance for doubtful accounts. . . . . . 1,100 1,100 1,100
Inventories (see Note 2) . . . . . . . . . . 84,502 93,718 82,534
Other. . . . . . . . . . . . . . . . . . . . 8,432 11,923 9,372
Total current assets . . . . . . 197,684 203,688 208,970
Capital assets:
Buildings, machinery and equipment at cost . 1,572,089 1,456,432 1,355,740
Accumulated depreciation . . . . . . . . . 774,852 710,946 655,822
Costs to be depreciated in future
years (see Note 3). . . . . . . . . . . 797,237 745,486 699,918
Plant sites at cost. . . . . . . . . . . . . 3,041 2,909 2,834
800,278 748,395 702,752
Timber at cost less depletion. . . . . . . . 187,141 177,683 178,494
Roads at cost less amortization. . . . . . . 8,866 8,956 9,291
Timberland at cost . . . . . . . . . . . . . 17,076 16,103 16,049
213,083 202,742 203,834
Total capital assets . . . . . . 1,013,361 951,137 906,586
Other assets . . . . . . . . . . . . . . . . 49,858 42,455 38,267
$1,260,903 $1,197,280 $1,153,823
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payable to bank resulting from
checks in transit . . . . . . . . . . . . . $ 9,834 $ 13,031 $ 10,272
Accounts payable . . . . . . . . . . . . . . 53,647 44,533 60,730
Short-term borrowings (see Note 4) . . . . . 56,000 38,000 36,000
Payrolls payable . . . . . . . . . . . . . . 13,206 11,125 10,703
Federal income taxes payable . . . . . . . . - - 2,475
Other taxes payable. . . . . . . . . . . . . 10,498 11,906 12,112
Current installments of long-term debt . . . 14,118 34,119 34,119
Total current liabilities . . . 157,303 152,714 166,411
Long-term debt (see Note 5). . . . . . . . . 498,137 426,255 409,374
Deferred taxes - net (see Note 9). . . . . . 141,623 135,106 119,205
Other liabilities. . . . . . . . . . . . . . 14,334 12,793 10,934
Commitments (see Note 12). . . . . . . . . . - - -
Shareholders' equity:
Preferred stock; authorized 2,000,000 shares - - -
Common stock, ascribed value $1.50 per share;
authorized 150,000,000 shares; issued
51,676,567, 51,705,577 and 51,751,032
shares, respectively (see Note 11). . . . . 77,515 77,558 77,627
Additional paid-in capital . . . . . . . . . 3,306 3,306 3,306
Retained earnings. . . . . . . . . . . . . . 368,685 389,548 366,966
Total shareholders' equity . . . 449,506 470,412 447,899
$1,260,903 $1,197,280 $1,153,823
The accompanying notes are an integral part of the financial statements.
Page 16<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended October 31
(thousands) 1997 1996 1995
CASH PROVIDED BY (USED FOR) OPERATIONS:
Net income . . . . . . . . . . . . . . . . . $ 12,694 $ 56,364 $ 76,039
Charges to income not requiring cash:
Depreciation . . . . . . . . . . . . . . 81,213 74,709 66,719
Depletion and amortization . . . . . . . 5,158 4,745 12,684
Deferred taxes - net . . . . . . . . . . 6,517 15,901 15,971
Loss on disposition of capital assets . . 3,961 5,762 1,428
Change in:
Accounts and notes receivable - net . . . (6,703) 19,017 (16,874)
Inventories . . . . . . . . . . . . . . . 9,216 (11,184) (15,229)
Other . . . . . . . . . . . . . . . . . . 3,491 (2,551) (1,775)
Other noncurrent assets . . . . . . . . . (7,403) (4,188) (6,819)
Accounts, payrolls and other
taxes payable . . . . . . . . . . . . . 6,950 (16,109) 7,886
Federal income taxes payable. . . . . . . - (2,475) (454)
Other noncurrent liabilities. . . . . . . 1,541 1,859 2,195
Cash provided by operations. . . . . . . . . 116,635 141,850 141,771
CASH PROVIDED BY (USED FOR) INVESTING:
Additions to: Plant and equipment.. . . . . (139,727) (127,558) (138,613)
Timber and timberlands. . . . (15,716) (3,822) (35,046)
Proceeds from sale of capital assets . . . . 2,887 1,613 1,751
Cash used for investing. . . . . . . . . . . (152,556) (129,767) (171,908)
CASH PROVIDED BY (USED FOR) FINANCING:
Additions to long-term debt. . . . . . . . . 86,000 51,000 77,000
Reduction in long-term debt. . . . . . . . . (34,119) (34,119) (45,993)
Short-term borrowings. . . . . . . . . . . . 18,000 2,000 35,000
Payable to bank resulting from
checks in transit . . . . . . . . . . . . . (3,197) 2,759 (2,233)
Accounts payable for construction. . . . . . 2,837 128 (1,244)
Cash dividends . . . . . . . . . . . . . . . (33,083) (33,107) (31,070)
Purchase of common stock . . . . . . . . . . (517) (744) (1,323)
Cash provided by (used for) financing. . . . 35,921 (12,083) 30,137
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) . . . $ 32,037 $ 30,023 $ 28,718
Capitalized interest . . . . . . . . . . . 3,290 3,230 3,442
Income taxes . . . . . . . . . . . . . . . (3,197) 19,625 30,109
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 51,691,411, 51,731,407, and 51,786,698 for 1997, 1996
and 1995, 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 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) 1997 1996 1995
Finished goods . . . . . . . . $ 43,571 $ 39,962 $ 38,973
Goods in process. . . . . . . . 28,881 33,632 39,905
Raw materials . . . . . . . . . 11,879 22,505 35,350
Supplies (at average cost). . . 42,322 45,236 38,707
126,653 141,335 152,935
LIFO Reserve. . . . . . . . . . (42,151) (47,617) (70,401)
$ 84,502 $ 93,718 $ 82,534
NOTE 3 - BUILDINGS, MACHINERY AND EQUIPMENT:
At cost - net of accumulated depreciation consist of the following:
October 31
(thousands) 1997 1996 1995
Buildings - net . . . . . . . . $ 66,494 $ 61,914 $ 54,115
Machinery and equipment - net . 730,743 683,572 645,803
$797,237 $745,486 $699,918
NOTE 4 - SHORT-TERM BORROWINGS:
At October 31, 1997, the company had bank lines of credit totaling $330
million. Of this amount, $200 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 0.5% 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
0.25% facility fee. This agreement has an expiration date of February 28,
1999 with renewal provisions beyond that date. At October 31, 1997, the
company had loans of $200 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, 1999 with renewal provisions beyond that date. At October
31, 1997 the company had loans of $45 million under this credit agreement.
Other bank credit lines totaling $75 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, 1999. The other $45
million is uncommitted. At October 31, 1997, the company had an outstanding
balance of $55 million under these credit lines.
Short-term borrowings of $244 million, $223 million and $222 million at
October 31, 1997, 1996 and 1995, 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.
Page 19<PAGE>
Short-term borrowing activity including the amount reclassified as long-term
is summarized as follows:
(thousands) 1997 1996 1995
Notes payable October 31 . . . . $300,000 $261,000 $258,000
Interest rate October 31 . . . . 6.2% 5.9% 6.4%
Average daily amount of
notes payable outstanding
during year . . . . . . . . . . $286,227 $253,893 $250,512
Average* interest rate
during year . . . . . . . . . . 6.1% 6.1% 6.5%
Maximum amount of notes
payable at any month end. . . . $303,000 $274,000 $272,000
*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) 1997 1996 1995
Senior notes due through 2004
(6.17%-9.49%) - Note (a) . . . . $239,000 $208,000 $192,000
Revenue bonds payable through
2018 (floating rates, currently
3.65%-3.95%) - Note (b). . . . . 28,900 28,900 28,900
Other . . . . . . . . . . . . . . 355 474 593
Notes payable - banks -
Note 4 above . . . . . . . . . . 244,000 223,000 222,000
512,255 460,374 443,493
Less current installments . . 14,118 34,119 34,119
Net long-term debt. . . . . . . . $498,137 $426,255 $409,374
Scheduled maturities
1999 $274,119
2000 30,118
2001 40,000
2002 45,000
2003-2018 108,900
$498,137
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, 1997, approximately $53
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, 1997, $28,900,000 was secured by liens on the equipment.
Page 20<PAGE>
NOTE 6 - 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 $1 million, $2 million and $7 million at October 31, 1997,
1996 and 1995, respectively.
NOTE 7 - 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 1997 and 1996 and 8% and
5.25% for 1995. The expected long-term rate of return on assets was 10% for
1997 and 9% for 1996 and 1995.
The following table sets forth the plans' funded status and amounts
recognized in the company's consolidated financial statements at October 31:
(thousands) 1997 1996 1995
Actuarial present value of benefit
obligations:
Vested . . . . . . . . . . . . . $165,335 $155,770 $139,308
Vested and nonvested . . . . . . $171,314 $156,317 $140,608
Projected for service
rendered . . . . . . . . . . . $196,510 $184,079 $165,042
Plan assets at fair value,
primarily listed stocks. . . . . . 386,372 311,548 269,785
Excess plan assets. . . . . . . . . 189,862 127,469 104,743
Items not recognized in earnings:
Net (asset) at adoption of FAS 87. (4,686) (6,056) (7,425)
Unrecognized prior service cost. . 12,592 16,698 20,699
Unrecognized net (gain) . . . . . (159,545) (107,542) (91,950)
Pension asset recognized in the
consolidated balance sheet . . . . $ 38,223 $ 30,569 $ 26,067
Net pension (income) includes
the following:
Service cost . . . . . . . . . . $ 5,189 $ 4,557 $ 4,220
Interest cost. . . . . . . . . . 13,689 12,824 12,211
Actual (return) on plan assets . (84,422) (51,069) (41,199)
Net amortization and deferral. . 57,890 29,186 22,795
Net pension (income). . . . . . . . $ (7,654) $ (4,502) $ (1,973)
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 was $1,295,000, $1,199,000 and $1,151,000 during 1997,
1996 and 1995, respectively.
Page 21<PAGE>
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 $2,095,000, $2,271,000 and $2,589,000 in
1997, 1996 and 1995, respectively.
The components of expense were as follows:
(thousands) 1997 1996 1995
Service cost . . . . . . . . . . . . . . . $ 718 $ 545 $ 717
Interest cost. . . . . . . . . . . . . . . 1,125 1,227 1,373
Net amortization and deferral. . . . . . . 252 499 499
Net periodic postretirement benefit cost . $2,095 $2,271 $2,589
The accumulated postretirement benefit obligation consists of the following:
(thousands) 1997 1996 1995
Retirees . . . . . . . . . . . . . . . . . $ (1,829) $ (2,954) $ (3,448)
Fully eligible active plan participants. . (3,844) (3,817) (3,836)
Other active plan participants . . . . . . (10,877) (10,494) (11,519)
Total accumulated postretirement
benefit obligation . . . . . . . . . . . (16,550) (17,265) (18,803)
Unrecognized net(gain)loss . . . . . . . . (5,262) (3,440) (606)
Unrecognized transition obligation . . . . 7,478 7,976 8,475
Accrued postretirement benefit cost. . . . $(14,334) $(12,729) $(10,934)
The net periodic postretirement benefit cost was calculated using a health
care cost trend rate of 12% for the indemnity plan and 7.5% for the HMO
plan. The accrued postretirement benefit cost at October 31, 1997 was
calculated using a health care cost trend rate of 11% for the indemnity plan
and 7% 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 $2,102,000 effect on the
accumulated postretirement benefit obligation as of October 31, 1997 and a
$143,000 effect on the aggregate of the service and interest cost components
of the net periodic postretirement benefit cost. The weighted-average
discount rate used was 7.5% at October 31, 1997 and 1996 and 8% at October
31, 1995.
NOTE 9 - INCOME TAXES:
Provision for taxes on income is made up of the following components:
(thousands) 1997 1996 1995
Current:
Federal. . . . . . . . . . . . . . $(1,293) $13,452 $26,495
State. . . . . . . . . . . . . . . (22) 1,409 2,554
(1,315) 14,861 29,049
Deferred:
Federal. . . . . . . . . . . . . . 7,453 15,348 14,405
State. . . . . . . . . . . . . . . 662 291 746
8,115 15,639 15,151
$ 6,800 $30,500 $44,200
Page 22<PAGE>
An analysis of the effective income tax rate as compared to the expected
federal income tax rate is as follows:
1997 1996 1995
Expected federal income tax rate . . 35% 35% 35%
Foreign Sales Corporation. . . . . . (2) - (1)
State income taxes less
federal income tax benefit . . . . 2 1 2
Other. . . . . . . . . . . . . . . . - (1) 1
35% 35% 37%
The deferred income tax liabilities (assets) recorded in the Consolidated
Balance Sheet as of October 31, are as follows:
(thousands) 1997 1996 1995
Current:
Non-deductible accruals. . . . . . $ (4,555) $ (6,153) $ (5,891)
Non-current:
Depreciation . . . . . . . . . . . $148,661 $139,951 $135,146
Employee Benefit Plans . . . . . . 14,058 11,219 9,648
Alternative Minimum Tax. . . . . . (12,672) (10,042) (20,547)
Other. . . . . . . . . . . . . . . (8,424) (6,022) (5,042)
Non-current deferred tax . . . . . $141,623 $135,106 $119,205
Federal income tax returns through 1991 have been settled with the Internal
Revenue Service.
NOTE 10 - 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 sixteen
converting plants in eleven states produce shipping containers, and
merchandise and grocery bags. The tonnage of paper and containerboard used
in the converting plants equals approximately 63% of the Longview mill
production.
Included in sales to customers are export sales, principally to Japan, Hong
Kong and Southeast Asia, of $169,055,000, $153,878,000 and $229,984,000
during 1997, 1996 and 1995, 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
$309,562,000, $306,101,000 and $253,674,000 have been allocated to
converted products at October 31, 1997, 1996 and 1995, respectively.
Depreciation, depletion and amortization and additions to capital assets
have been segregated and allocated similarly to the method used for
identifiable assets.
(thousands) 1997 1996 1995
SALES TO CUSTOMERS:
Timber . . . . . . . . . . . . . . . $ 186,814 $ 186,405 $207,735
Paper and paperboard . . . . . . . . 196,192 199,827 308,356
Converted products . . . . . . . . . 389,839 436,490 469,424
Total. . . . . . . . . . . . . . . 772,845 822,722 985,515
INCOME (LOSS) ON SALES:
Timber . . . . . . . . . . . . . . . 101,740 104,449 121,738
Paper and paperboard . . . . . . . . (5,143) 4,300 7,442
Converted products . . . . . . . . . (49,196) (3,963) 18,594
Interest expensed and other. . . . . (27,907) (17,922) (27,535)
Income before income taxes . . . . 19,494 86,864 120,239
IDENTIFIABLE ASSETS AT OCTOBER 31:
Timber . . . . . . . . . . . . . . . 260,832 255,529 254,586
Paper and paperboard . . . . . . . . 319,548 279,383 313,778
Converted products . . . . . . . . . 680,523 662,368 585,459
Total. . . . . . . . . . . . . . . 1,260,903 1,197,280 1,153,823
DEPRECIATION, DEPLETION AND
AMORTIZATION:
Timber . . . . . . . . . . . . . . . 8,669 7,921 15,740
Paper and paperboard . . . . . . . . 22,940 20,201 22,964
Converted products . . . . . . . . . 54,762 51,332 40,699
Total. . . . . . . . . . . . . . . 86,371 79,454 79,403
ADDITIONS TO CAPITAL ASSETS:
Timber . . . . . . . . . . . . . . . 17,608 7,939 38,289
Paper and paperboard . . . . . . . . 43,955 29,552 26,721
Converted products . . . . . . . . . 93,880 93,889 108,649
Total. . . . . . . . . . . . . . . $ 155,443 $ 131,380 $ 173,659
NOTE 11 - 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 12 - COMMITMENTS AND CONTINGENCIES:
Estimated costs to complete approved capital projects were approximately $48
million, $103 million and $93 million at October 31, 1997, 1996 and 1995,
respectively.
QUARTERLY FINANCIAL DATA (UNAUDITED)
Fiscal Year Quarters Total
Fiscal
(thousands except per share) 1st 2nd 3rd 4th Year
1997
Net sales. . . . . . . . . . $182,211 $185,860 $197,385 $207,389 $772,845
Gross profit . . . . . . . . 22,517 29,675 30,839 28,130 111,161
Net income . . . . . . . . . 28 4,626 4,142 3,898 12,694
Net income per share (1) . . - 0.09 0.08 0.08 0.25
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
(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.
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 hereby incorporated by reference 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.
Page 25<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
This item is completed by reference to Notice of Annual Meeting of
Shareholders and Proxy Statement which is hereby incorporated by reference
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 hereby incorporated by reference
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 1997, 1996 and 1995 consolidated financial statements are
included in Item 8 of Part II of this Form 10-K.
The individual financial statements of the company and its
subsidiaries 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,
1997.
(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 Part II 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 (b)
Page 26<PAGE>
3.2 Bylaws of Longview Fibre Company (b)
4.1 Rights Agreement (a)
4.2 First Amendment to Rights Agreement (i)
4.3 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% - 9.49%) $239,000,000
Revenue Bonds payable through 2018 (floating rates,
3.65% through 3.95% at October 31, 1997) $28,900,000
Other $ 355,000
10.1 Form of Termination Protection Agreement (g)(*)
10.2 $170,000,000 Credit Agreement (f)
10.3 First Amendment to Credit Agreement (f)
10.4 Second Amendment to Credit Agreement (g)
10.5 Third Amendment to Credit Agreement (g)
10.6 Fourth Amendment to Credit Agreement (h)
10.7 Fifth Amendment to Credit Agreement (j)
10.8 Sixth Amendment to Credit Agreement
23 Consent of Independent Accountants
27 Financial Data Schedule
99.1 Salary Savings Plan (c)(*)
99.2 Salary Savings Plan - Amendment No. 1 (g)(*)
99.3 Salary Savings Plan - Amendment No. 2 (g)(*)
99.4 Salary Savings Plan - Amendment No. 3 (g)(*)
99.5 Salary Savings Plan - Amendment No. 4 (h)(*)
99.6 Salary Savings Plan - Amendment No. 5 (h)(*)
99.7 Salary Savings Plan - Amendment No. 6 (h)(*)
99.8 Salary Savings Plan - Amendment No. 7 (h)(*)
99.9 Hourly Savings Plan (d)
99.10 Hourly Savings Plan - Amendment No. 1 (g)
Page 27<PAGE>
99.11 Hourly Savings Plan - Amendment No. 2 (g)
99.12 Hourly Savings Plan - Amendment No. 3 (g)
99.13 Hourly Savings Plan - Amendment No. 4 (h)
99.14 Hourly Savings Plan - Amendment No. 5 (h)
99.15 Branch Hourly Savings Plan (e)
99.16 Branch Hourly Savings Plan - Amendment No. 1 (g)
99.17 Branch Hourly Savings Plan - Amendment No. 2 (g)
99.18 Branch Hourly Savings Plan - Amendment No. 3 (h)
99.19 Branch Hourly Savings Plan - Amendment No. 4 (h)
(a) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1989.
(b) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1990.
(c) Incorporated by reference to the Registration Statement on
Form S-8 (No. 33-14358) filed November 4, 1990.
(d) Incorporated by reference to the company's Quarterly Report
on Form 10-Q for the quarter ended April 30, 1992.
(e) Incorporated by reference to the Registration Statement on
Form S-8 (No. 33-56620) filed December 31, 1992.
(f) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1993.
(g) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1994.
(h) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1995.
(i) Incorporated by reference to company's Current Report on
Form 8-K dated December 6, 1996.
(j) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 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,
1997.
Page 28<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
LONGVIEW FIBRE COMPANY
Registrant
\s\ L. J. Holbrook 1-27-98
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
registrant and in the capacities and on the dates indicated.
\s\ R. P. Wollenberg 1-27-98
R. P. Wollenberg, Chief Executive Officer Date
and Director
\s\ L. J. Holbrook 1-27-98
L. J. Holbrook, Chief Financial Officer Date
and Director
\s\ A. G. Higgens 1-27-98
A. G. Higgens, Chief Accounting Officer Date
\s\ R. B. Arkell 1-27-98
R. B. Arkell, Director Date
\s\ D. L. Bowden 1-27-98
D. L. Bowden, Director Date
\s\ M. A. Dow 1-27-98
M. A. Dow, Director Date
\s\ J. R. Kretchmer 1-27-98
J. R. Kretchmer, Director Date
\s\ R. J. Parker 1-27-98
R. J. Parker, Director Date
\s\ D. A. Wollenberg 1-27-98
D. A. Wollenberg, Director Date
\s\ R. H. Wollenberg 1-27-98
R. H. Wollenberg, Director Date
Page 29<PAGE>
SIXTH AMENDMENT TO CREDIT AGREEMENT
This Sixth Amendment to Credit Agreement ("Sixth Amendment") is entered
into this 28th day of February, 1997 by and between LONGVIEW FIBRE COMPANY as
"Borrower," BANK OF AMERICA NATIONAL TRUST AND SAVINGS BANK doing business as
SEAFIRST 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, February 28, 1995, and
February 28, 1996, respectively (as so amended, the "Agreement").
Recitals
A. The Borrower has requested a one year extension of the Termination
Date and an increase of its commitment to $200 Million. The Banks are willing
to grant such extension subject to the terms and conditions of this Sixth
Amendment.
B. On or about April 1, 1996 Seattle-First National Bank changed its
name to Bank of America NW, N.A. and on January 1, 1997 Bank of America NW,
N.A. was merged into Bank of America National Trust & Savings Association and
continues to do business as Seafirst Bank.
NOW, THEREFORE, the parties hereto agree as follows:
Agreement
1. Defined Terms. All capitalized terms used in this Sixth Amendment
shall have the same meaning as defined in the Agreement, except as may be
otherwise provided in this Sixth Amendment, including, specifically, the
following defined terms, "Commitment", "Prime Rate", and "Termination Date"
the definition for which as set forth in Section 1.1 of the Agreement are
hereby deleted and replaced with the following:
"Commitment" means, from and after the effective date of this Sixth
Amendment, with respect to each Bank, the amount set forth opposite the
name of such Bank on the signature pages of this Sixth Amendment.
"Prime Rate" shall mean the rate of interest publicly announced from time
to time by Agent in San Francisco, California, as its "Reference Rate."
The Reference Rate is set based on various factors, including Agent's
costs and desired return, general economic conditions, and other
factors, and is used as a reference point for pricing some loans. Agent
may price loans to its customers at, above, or below the Reference Rate.
Any change in the Reference Rate shall take effect at the opening of
business on the day specified in the public announcement of a change in
the Reference Rate.
"Termination Date" means February 28, 1999 (or February 28 of such
subsequent year to which the Termination Date may have been extended in
accordance with Section 2.17 of the Agreement) or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
2. 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 1997 (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) 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, 1998
(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.
3. Effective Date. This Sixth Amendment shall be effective on February
28, 1997 (the "Effective Date") subject to the condition precedent that on or
prior to said date, each of the following events have occurred:
a. This Sixth Amendment shall have been fully executed in one or
more counterparts by the Borrower, Agent 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 this Sixth Amendment.
4. Representations and Warranties. Borrower hereby represents and
warrants as follows:
a. This Sixth 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
Sixth 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 Sixth Amendment.
5. Other Terms. Except as specifically amended by this Sixth
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.
6. Counterparts. This Sixth 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, 1997.
Borrower Agent
LONGVIEW FIBRE COMPANY SEAFIRST 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
\s\ Ronald R. Parsons
By: Ronald R. Parsons
Title: Vice President
Percentage of
BANKS: Commitment Commitment
BANK OF AMERICA NATIONAL $80.0 Million 40.00%
TRUST & SAVINGS ASSOCIATION
\s\ Robert M. Ingram (Seafirst $55.0 Million) (27.5%)
By: Robert M. Ingram
Title: Vice President
\s\ Michael Balok (San Francisco $25.0 Million) (12.5%)
By: Michael Balok
Title: Managing Director
ABN AMRO BANK, N.V. $30.0 Million 15.00%
\s\ James J. Rice
By: James J. Rice
Title: Vice President
\s\ Leif H. Olsson
By: Leif H. Olsson
Title: Group Vice President
THE BANK OF NOVA SCOTIA $30.0 Million 15.00%
\s\ Sharon Bishop
By: Sharon Bishop
Title: Officer
UNITED STATES NATIONAL BANK $30.0 Million 15.00%
OF OREGON
\s\ Janice T. Thede
By: Janice T. Thede
Title: Vice President
UNION BANK OF SWITZERLAND $30.0 Million 15.00%
Los Angeles Branch
\s\ Dieter Hoeppli
By: Dieter Hoeppli
Title: Vice President
\s\ Samuel Azizo
By: Samuel Azizo
Title: Vice President
Total Commitment $200.0 Million 100%
PAGE 30<PAGE>
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 8, 1997, 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 27, 1998
Page 31<PAGE>
<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-31-1997
<PERIOD-END> OCT-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 105,850
<ALLOWANCES> 1,100
<INVENTORY> 84,502
<CURRENT-ASSETS> 197,684
<PP&E> 1,788,213
<DEPRECIATION> 774,852
<TOTAL-ASSETS> 1,260,903
<CURRENT-LIABILITIES> 157,303
<BONDS> 498,137
0
0
<COMMON> 77,515
<OTHER-SE> 371,991
<TOTAL-LIABILITY-AND-EQUITY> 1,260,903
<SALES> 772,845
<TOTAL-REVENUES> 772,845
<CGS> 661,684
<TOTAL-COSTS> 661,684
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,613
<INCOME-PRETAX> 19,494
<INCOME-TAX> 6,800
<INCOME-CONTINUING> 12,694
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,694
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
