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, 1999 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 $14.25 as of December 31, 1999 Total $660,292,959
Indicate the number of shares outstanding of each of the issuer's class of
common stock as of December 31, 1999. 51,676,567 shares outstanding
DOCUMENTS INCORPORATED BY REFERENCE
PART III - NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
dated December 15, 1999.
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PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
Longview Fibre Company was incorporated in the State of Washington in
1990 as a successor to a company of the same name incorporated in the
State of Delaware in 1926. No general development of material importance
has occurred during the past fiscal year.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
This item is completed by reference to Note 7 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, 1999, the company owned in fee 570,993 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.
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 fifteen 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.
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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. 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.
Modernization of the press section of #10 paper machine, the dryer
section of #1 paper machine and replacement of #9 machine winder
are the largest projects being undertaken at this time. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations".
To spread risk, the company has been engaged in a long campaign to
increase value added products, such as extensible paper, recycled
kraft paper, specialty kraft, 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 fifteen converting plants in ten
states produce shipping containers and merchandise bags. The
tonnage of paper and containerboard used in the converting plants
equals approximately 53% of the Longview mill production.
Bags are sold by the company's sales force working out of San
Francisco, 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; Cedar Rapids, Iowa; Grand Forks, North Dakota;
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.
Planned capital expenditures include the construction of a new
sheet plant. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and
Capital Resources".
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In the timber segment, there is competition with various domestic
and international timber companies. We are one of the largest
U. S. exporters of logs to the Japanese market. 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 fiber 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 typically sought
out large national customer accounts that frequently involve
demands for discount pricing, although there are large account
customers with whom the company has established relationships.
The following table sets forth the contribution to sales by each
class of similar products which accounted for more than 10% of
sales.
1999 1998 1997
Timber 22% 22% 24%
Paper and Paperboard 29% 26% 25%
Converted Products 49% 52% 51%
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 3,650 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 7 of Item 8 of Part II of this Form 10-K.
(e) The company electronically files the following reports with the
Securities and Exchange Commission: Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K and Proxy
Statement on Form DEF 14-A. The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file
electronically with the SEC. The public may read and copy any materials
filed with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
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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, 1999, the company owned in fee 570,993 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
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.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations".
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 1999.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations".
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 " " "
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
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.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations".
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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.
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Office and Year First Elected
R. P. Wollenberg 84 (1) Chairman of the Board, President and
Chief Executive Officer (1953)
R. E. Wertheimer 71 (2) Executive Vice President (1960)
R. J. Parker 51 (3) Senior Vice President-Production (1994)
and Mill Manager
D. L. Bowden 64 (4) Senior Vice President-Timber (1989)
L. J. Holbrook 44 (5) Senior Vice President-Finance,
Secretary and Treasurer (1989)
D. C. Stibich 68 (6) Senior Vice President-Paper Sales (1981)
R. B. Arkell 68 (7) Vice President-Industrial Relations
and General Counsel (1986)
R. H. Wollenberg 46 (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
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(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
(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
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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 1999 1998
Quarter High Low High Low
1st $13.00 $ 9.44 $17.38 $14.31
2nd 14.38 10.31 17.13 15.00
3rd 17.44 12.88 17.44 11.75
4th 16.63 11.06 13.44 9.50
The company estimated it had approximately 13,000 shareholders on December 7,
1999.
Dividends per share paid in fiscal 1999, 1998 and 1997:
1999 1998 1997
January $0.02 $0.16 $0.16
April 0.02 0.16 0.16
July 0.08 0.14 0.16
October 0.16 0.08 0.16
$0.28 $0.54 $0.64
The Directors declared a regular dividend of $0.12 per share which was paid on
January 10, 2000, to shareholders of record on December 24, 1999.
Restrictions on the company's ability to pay cash dividends are completed by
reference to Note 3 of Item 8 of Part II of this Form 10-K.
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ITEM 6. SELECTED FINANCIAL AND OTHER DATA
<TABLE>
<S> <C> <C> <C> <C> <C>
(dollars in thousands except per share) 1999 1998 1997 1996 1995
STATEMENT OF INCOME
Net Sales . . . . . . . . . . . . . . . $ 774,349 $ 753,244 $ 772,845 $ 822,722 $ 985,515
Timber. . . . . . . . . . . . . . . . 170,992 166,037 186,814 186,405 207,735
Paper and paperboard. . . . . . . . . 226,330 193,154 196,192 199,827 308,356
Converted products. . . . . . . . . . 377,027 394,053 389,839 436,490 469,424
Cost of products sold, including
outward freight . . . . . . . . . . . 644,072 666,960 661,684 657,737 778,032
Gross profit. . . . . . . . . . . . . . 130,278 86,284 111,161 164,985 207,483
Selling, administrative and general
expenses. . . . . . . . . . . . . . . 62,670 64,693 63,760 60,199 59,709
Operating profit. . . . . . . . . . . . 67,608 21,591 47,401 104,786 147,774
Timber. . . . . . . . . . . . . . . . 83,207 74,470 101,740 104,449 121,738
Paper and paperboard. . . . . . . . . (4,114) (13,009) (5,143) 4,300 7,442
Converted products. . . . . . . . . . (11,485) (39,870) (49,196) (3,963) 18,594
Interest expensed . . . . . . . . . . . (38,703) (39,935) (31,613) (29,506) (29,447)
Other income. . . . . . . . . . . . . . 2,579 4,192 3,706 11,584 1,912
Income (loss) before income taxes . . . 31,484 (14,152) 19,494 86,864 120,239
Provision for income taxes. . . . . . . 11,500 (7,500) 6,800 30,500 44,200
Net income (loss) . . . . . . . . . . . 19,984 (6,652) 12,694 56,364 76,039
PER SHARE
Net income (loss) . . . . . . . . . . . $ 0.39 $ (0.13)$ 0.25 $ 1.09 $ 1.47
Dividends . . . . . . . . . . . . . . . 0.28 0.54 0.64 0.64 0.60
Earnings reinvested in the business . . 0.11 (0.67) (0.39) 0.45 0.87
Shareholders' equity at year-end. . . . 8.14 8.03 8.70 9.10 8.65
Average shares outstanding (thousands). 51,677 51,677 51,691 51,731 51,787
Shares outstanding at year-end (thousands) 51,677 51,677 51,677 51,706 51,751
BALANCE SHEET DATA
Total assets. . . . . . . . . . . . . . $1,212,753 $1,263,343 $1,260,903 $1,197,280 $1,153,823
Working capital . . . . . . . . . . . . 68,001 55,318 40,381 50,974 42,559
Capital assets. . . . . . . . . . . . . 947,359 1,004,837 1,013,361 951,137 906,586
Deferred taxes - net. . . . . . . . . . (153,945) (142,827) (141,623) (135,106) (119,205)
Long-term debt. . . . . . . . . . . . . 495,900 547,018 498,137 426,255 409,374
Shareholders' equity. . . . . . . . . . 420,463 414,949 449,506 470,412 447,899
OTHER DATA
Sales: Logs, thousands of board feet . 230,000 235,000 218,000 243,000 262,000
Lumber, thousands of board feet 85,000 76,000 65,000 33,000 32,000
Paper, tons . . . . . . . . . . 241,000 221,000 202,000 207,000 259,000
Paperboard, tons. . . . . . . . 240,000 140,000 177,000 129,000 212,000
Converted products, tons. . . . 500,000 524,000 548,000 542,000 572,000
Logs, $/thousand board feet . . $ 605 $ 598 $ 724 $ 719 $ 753
Lumber, $/thousand board feet . 378 336 443 367 313
Paper, $/ton FOB mill equivalent 565 610 638 664 698
Paperboard, $/ton FOB mill
equivalent. . . . . . . . . . 333 353 332 356 489
Converted products, $/ton . . . 754 752 711 805 821
Primary production, tons. . . . . . . . 1,016,000 903,000 958,000 905,000 1,058,000
Employees . . . . . . . . . . . . . . . 3,650 3,700 3,900 3,900 3,800
Funds: Used for plant and equipment. . $ 29,237 $ 73,054 $ 139,727 $ 127,558 $ 138,613
Used for timber and timberlands 3,541 15,622 15,716 3,822 35,046
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FISCAL 1999 VS. FISCAL 1998
Net income for fiscal 1999 was $19,984,000 as compared with a net loss of
$6,652,000 in fiscal 1998. The modest improvement was caused by improved
operating results in all segments of the business.
Operating profits for the timber segment improved 12% in fiscal 1999 to
$83,207,000 from $74,470,000 in fiscal 1998. The primary reasons for the
improved results were a 1% and 13% increase in average log and lumber prices
and a 12% increase in lumber footage sold. Export log prices were fairly
stable throughout the year and demand for douglas fir volume was stable. Log
prices in the domestic market improved during most of the year due to strong
lumber markets.
Demand in the domestic lumber market was good as housing starts remained
strong. Prices started increasing early in the year and peaked in July.
Fourth quarter domestic lumber prices were 13% higher than year-ago levels.
Export lumber prices improved substantially throughout the year and for the
fourth quarter were 37% above year-ago levels.
The company operates its 570,993 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 eight times book value. Environmental
regulations that require set asides, buffer zones and otherwise limit our
ability to harvest timber, reduce the value of our tree farms. The company
estimates that the reduction in value due to current regulations does not
exceed 15% of realizable value. See "Forward-Looking Statements".
Operating losses for paper and paperboard decreased from $13,009,000 in fiscal
1998 to $4,114,000 in fiscal 1999. The primary reasons for this improvement
were decreased costs for wood chips and old corrugated containers ("OCC"),
lower per unit operating costs due to improved efficiencies and a higher mill
operating rate and a 33% increase in tonnage sold.
Principal raw materials for paper and paperboard include wood chips, purchased
bleach pulp, sawdust and reclaimed fibers. Wood chip costs were about 8%
lower than the prior fiscal year. The price of OCC increased during the year
but the average OCC cost for fiscal 1999 was 6% lower than fiscal 1998.
Purchase of bleached pulp from a variety of sources has proved to be a
beneficial arrangement. Capital projects completed in prior years have
enabled the company to utilize more low cost raw materials, such as OCC, and
to adjust the raw material mix as markets change in an effort to control
costs.
The linerboard price deterioration which began the latter part of fiscal 1998
bottomed out in the first quarter 1999. During the year domestic linerboard
markets strengthened as the gap between supply and end user demand was
substantially reduced by the shutdown of some linerboard capacity by others in
the first half of the year. Export linerboard markets also improved due to
increased demand and reduced linerboard supply caused by certain suppliers
exiting that market. Average paperboard prices for the fourth quarter
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improved 13% from the first quarter low, but the average price for fiscal 1999
was 6% lower than fiscal 1998. The volume of paperboard sold in fiscal 1999
increased 71% from year-ago levels.
The volume of paper sold increased 9% but average price decreased 7% for
fiscal 1999 as compared to fiscal 1998.
The mill operated at 85% of capacity during fiscal 1999.
Operating losses from converted products decreased from $39,870,000 in fiscal
1998 to $11,485,000 in fiscal 1999. The primary reasons for the improvement
were lower costs of containerboard used to manufacture boxes and lower box
plant converting costs. Operating results were favorably impacted by the
closure of the Rockford box plant and the discontinuance of most of the
grocery bag product line in 1998.
The volume of product sold decreased 5% and average price held steady with
year-ago levels. Due to continued linerboard price deterioration in the first
quarter, box prices didn't bottom out until the second fiscal quarter. Since
then the company has implemented two price increases.
Selling, administrative and general expenses were 8% of sales in fiscal 1999
and 9% of sales in fiscal 1998. Interest expensed declined 3% from
$39,935,000 to $38,703,000 due primarily to a lower level of borrowing
partially offset by proportionately less interest capitalized for uncompleted
projects.
It appears that growth in consumption and retirement of capacity by others
brought supply and demand in containerboard and packaging to a more
satisfactory level and that price recoveries toward compensatory levels are
possible. Fourth quarter operating results were encouraging as both
manufacturing segments of the business reported operating profits. A better
utilization of mill capacity is expected which should help costs. The company
is making and will continue to make strenuous efforts to reach a satisfactory
level of earnings. See "Forward-Looking Statements".
RESULTS OF OPERATIONS FISCAL 1998 VS. FISCAL 1997
A net loss of $6,652,000 was incurred in fiscal 1998 as compared with net
income of $12,694,000 in fiscal 1997. The loss resulted from a significant
decrease in timber operating profit, continued operating losses in the
manufacturing segments of the business and increased interest expensed.
Operating profits for the timber segment declined 27% in fiscal 1998 to
$74,470,000 from $101,740,000 in fiscal 1997. The reduced operating profit
resulted from average log and lumber prices decreasing 17% and 24%,
respectively. Export log prices deteriorated during the latter half of 1997
due to the supply of logs in the marketplace exceeding end user demand in
Japan and the strong U.S. dollar. Export markets bottomed out early in 1998
as demand improved and prices stabilized. Fiscal year end export prices
remain below recent peak levels experienced in the first quarter 1997.
Despite a healthy housing market and strong end user demand, domestic lumber
prices declined. The decline in prices was caused by volume, displaced from
slow export markets (particularly Asia), entering the domestic market creating
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excess supply. Domestic log prices declined 10% as a consequence of the weak
lumber prices.
The company operates its 570,863 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 estimate the value of the tree
farms to be between six and eight times book value. Environmental
regulations that require set asides, buffer zones and 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
12% of realizable value.
Operating losses for paper and paperboard increased from $5,143,000 in fiscal
1997 to $13,009,000 in fiscal 1998. The primary reasons for this change were
increased wood chip costs, lower operating rates, a 4% reduction in average
paper prices, and a 5% decrease in volume sold. Average paperboard prices
increased 6%.
Principal raw materials for paper and paperboard include wood chips, purchased
bleached pulp, sawdust and reclaimed fibers. Wood chip costs were about 20%
higher than the prior fiscal year. Old corrugated container ("OCC") prices
have remained low but may increase. Fiber costs are being reduced by
increased use of OCC and by reducing the portion of chips manufactured from
whole logs, which cost more than chips saved from sawmill wastes. Prices of
sawmill residual chips declined at the end of the year. Purchase of bleached
pulp from a variety of sources proved to be a beneficial arrangement.
Export linerboard and paper markets, particularly in Asia, continue to be
slow. Average export linerboard prices improved during the first half of the
year, but deteriorated in the fourth quarter. Domestic markets were fair but
have been adversely affected by the soft Asian markets.
Due to market conditions mill operations were rescheduled by shutting down the
equivalent of at least two machines and leveling production at approximately
75% of total capacity. The number of paper machine crews were reduced to
support the scaled down schedule. In addition to reduced labor costs, this
schedule improved operating efficiencies and reduced energy and fiber costs.
During the year, the mill operated at approximately 75% of capacity.
Operating losses from converted products decreased from $49,196,000 in fiscal
1997 to $39,870,000 in fiscal 1998 due primarily to a 6% increase in average
price, offset in part by higher costs for containerboard used to manufacture
boxes. Due to continued poor performance, the long-term viability of certain
converting plants and product lines were studied. As a result, the Rockford
box plant was closed in October 1998. The building and some equipment were
sold and the balance of the equipment was or will be moved to other box plant
facilities. Most sizes of the grocery bag product line were discontinued with
the bulk of the equipment sold.
Demand for converted products was at satisfactory levels during the year but
some box price deterioration occurred due to recent containerboard price
decreases. The company continued to develop its specialty and niche products
to improve margins.
Selling, administrative and general expenses were 9% of sales in fiscal 1998
and 8% of sales in fiscal 1997. Higher total borrowing and proportionately
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less interest capitalized for uncompleted capital projects resulted in an
increase in interest expensed from $31,613,000 to $39,935,000.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations was $117,083,000 in fiscal 1999 compared with
$69,369,000 in fiscal 1998. The increase was primarily due to improved
earnings and the change in taxes on income refundable.
Working capital was $68,001,000 at October 31, 1999 compared to $55,318,000 at
October 31, 1998.
To reduce the high level of total debt incurred in fiscal 1998, the company
significantly reduced capital expenditures and its cash dividend. As a result
long-term debt, current installments of long-term debt and short-term
borrowings decreased by an aggregate of $73,619,000 in fiscal 1999.
At October 31, 1999 the company had bank lines of credit totaling
$347,000,000. Of this amount, $260,000,000 was under a credit agreement with
a group of banks expiring February 28, 2001, with renewal provisions beyond
that date. The agreement provides for borrowings at the Offshore Rate (LIBOR
based) plus a spread, currently 0.50%, or the bank's Reference rate, whichever
the company selects. The credit agreement contains certain financial
covenants and provides for a facility fee, currently 0.25% per year. The
company had outstanding $230,000,000 of notes payable under this agreement at
October 31, 1999. Also available was a bank loan agreement providing a
committed line of credit totaling $25,000,000 with an expiration date of
February 28, 2001. At October 31, 1999 the company had loans of $25,000,000
under this loan agreement. At October 31, 1999, the company had an
outstanding balance of $33,000,000 under the remaining $62,000,000 of lines of
credit. The unused portion of all lines of credit was $59,000,000.
Also outstanding at October 31, 1999 were senior notes of $227,000,000 and
revenue bonds of $28,900,000. For further details regarding borrowing, see
Notes 2 and 3 of Item 8 of Part II of this Form 10-K.
During the fiscal year the company obtained amendments from the holders of
certain senior notes with respect to compliance with covenants that require
the company to maintain a specified ratio of net income available for fixed
charges to fixed charges (fixed charge coverage ratio). The amendments
reducing the coverage requirements were effective for the quarter ending
January 31, 1999 through the quarter ending January 31, 2000. In connection
with the grant of the amendments, the company agreed to pay 0.75% per annum
over the original note coupon rates until certain conditions are met and has
paid an additional one time fee. As of October 31, 1999 the company is in
full compliance with all financial covenants of the original Note Agreements
without regard to the amendments, including the fixed charge coverage ratio.
The company will continue to pay the additional 0.75% per annum over the
original note coupon rates until it obtains an investment grade credit rating
for its long-term unsecured senior debt.
Capital expenditures for fiscal 1999 were $29,237,000 for plant and equipment
and $3,541,000 for timberlands. Capital expenditures for fiscal 1998 for
plant and equipment were $73,054,000 and for timberlands were $15,622,000.
The backlog of approved capital projects as of October 31, 1999 was
$33,000,000. The company plans to increase capital expenditures modestly such
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that expenditures for capital projects will remain somewhat below depreciation
charges until earnings improve materially, which should result in a reduction
of debt. See "Forward-Looking Statements".
Capital expenditures for plant and equipment are expected to be between
$45,000,000 and $55,000,000 in fiscal 2000. Purchase of timberlands will
depend on offerings, price levels and competition. We expect any offers we
make will be at prices we believe to be conservative. We plan to fund capital
expenditures principally from internally generated funds. See "Forward-
Looking Statements".
During fiscal 1999 and 1998, the company did not purchase shares of its stock.
Purchases began in 1964; the total number of shares acquired through fiscal
1999 is 21,403,633 shares for $97,090,164 at an average cost of $4.54 per
share.
Dividends of $0.28 per share were paid in fiscal 1999 and $0.54 in fiscal
1998. The Board of Directors declared a dividend of $0.12 per share which was
paid on January 10, 2000, to shareholders of record on December 24, 1999. A
high level of debt combined with a lack of earnings necessitated dividend
cuts. Restoration of dividends to the prior level is a high priority, but
there can be no assurance that the company's future results will support
increased dividends. See "Forward-Looking Statements".
YEAR 2000 ISSUES
To date there have been no material Y2K problems. Y2K compliance was not an
issue for our products. Longview Fibre Company committed in 1996 to reduce or
eliminate the effects of the Y2K issues on its information systems and
production processes and to maintain its reputation as a premier provider of
paper and containerboard products. A Y2K Readiness team was formed to look at
and monitor all aspects of our operations subject to Y2K issues. The program
was designed to assess current readiness, to implement corrective measures for
systems and equipment that were not ready, test systems where possible, and
establish contingency plans. Y2K readiness was also discussed with our
vendors, principal customers and business partners. The estimated cost was
approximately $2,300,000.
OTHER
During the year ended October 31, 1999, the company adjusted the estimated
useful lives of some capital assets. The estimated useful lives now range
from 20 to 40 years for buildings and principally from 12 to 18 years for
machinery and equipment. This change increased fiscal 1999 net income by
approximately $5,845,000 or $0.11 per share. As a result of an updated
comparison of the estimated useful lives for various asset categories of
certain companies in the industry and further study of its own asset base, the
company is planning to adjust the estimated useful lives of machinery and
equipment for fiscal 2000. The estimated useful lives will be principally
from 15 to 20 years. The company estimates that this change will increase
fiscal 2000 net income by approximately $10,000,000 or $0.20/share. See
"Forward-Looking Statements".
The company continually reviews any known environmental exposures including
the cost of remediation. At the present time, the company is not aware of any
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environmental liabilities that would have a material impact on the
consolidated financial statements. See "Forward-Looking 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 1 to 2 years
required pollution control capital expenditures could range from $10,000,000
to $12,000,000, with another $10,000,000 to $20,000,000 over the next 5 years.
See "Forward-Looking Statements".
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 regulations will not have a material
impact on its capital expenditures, earnings or competitive position. See
"Forward-Looking Statements".
As part of an industry-supported effort, new forestry regulations have been
developed in Washington to protect salmon. These regulations restrict the
harvest of timber near streams and other environmentally sensitive areas,
thereby reducing the timber that can be harvested and increasing costs. New
salmon regulations are also being considered in Oregon, but until the
regulations are adopted the magnitude of the impact on the company's Oregon
timberlands cannot be predicted with certainty.
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 use of the LIFO method of inventory
valuation.
FORWARD-LOOKING STATEMENTS
This Form 10-K contains forward-looking statements, including statements
concerning anticipated pricing and market conditions for the company's
products and certain raw materials, anticipated values of existing and costs
of additional timberlands, anticipated competitive conditions and the actions
of competitors, the expected results of planned paper mill improvement
projects and operating schedules, the anticipated cost of and availability of
financing for planned capital improvement projects, the anticipated cost of
compliance with certain environmental regulations and effects of environmental
contingencies and litigation on financial conditions and results of
operations, and the estimated cost and success of the company's Y2K compliance
program. Certain forward-looking statements are identified by a cross-
reference to this section. Forward-looking statements are based on the
company's estimates and projections on the date when they are made, and are
subject to a variety of risks and uncertainties. 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 or involving the company's customers or competitors affecting supply
of or demand for the company's products or raw materials, changes in product
or raw material prices, changes in currency exchange rates between the U. S.
dollar and the currencies of important export markets, capital project
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delay or cost overruns, weather, labor disputes, unforeseen adverse
developments involving environmental matters or other legal proceedings or the
assertion of additional claims, significant unforeseen developments in the
company's business, adverse changes in the capital markets or interest rates
affecting the cost or availability of financing or other unforeseen events.
The company does not undertake any obligation to update forward-looking
statements should circumstances or the company's estimates or projections
change.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company has not engaged in commodity, currency or interest rate hedging
arrangements or engaged in transactions involving derivatives.
Note 6 of Item 8 of Part II of this Report on Form 10-K is incorporated herein
by reference.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
PAGE
Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . . . . 17
Consolidated Statement of Income for the
three years ended October 31, 1999 . . . . . . . . . . . . . . . 18
Consolidated Statement of Shareholders'
Equity for the three years ended October 31, 1999. . . . . . . . 18
Consolidated Balance Sheet at October 31,
1999, 1998 and 1997. . . . . . . . . . . . . . . . . . . . . . . 19
Consolidated Statement of Cash Flows for
the three years ended October 31, 1999 . . . . . . . . . . . . . 20
Notes to Consolidated Financial Statements. . . . . . . . . . . . . 21
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 accompanying consolidated balance sheet and the related
consolidated statements of income, of shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Longview
Fibre Company and its subsidiaries at October 31, 1999, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years
in the period ended October 31, 1999, 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\ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Portland, Oregon
December 7, 1999
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CONSOLIDATED STATEMENT OF INCOME
Years Ended October 31
(thousands except per share) 1999 1998 1997
NET SALES. . . . . . . . . . . . . . . . . . . $774,349 $753,244 $772,845
Timber . . . . . . . . . . . . . . . . . 170,992 166,037 186,814
Paper and paperboard . . . . . . . . . . 226,330 193,154 196,192
Converted products . . . . . . . . . . . 377,027 394,053 389,839
Cost of products sold, including
outward freight . . . . . . . . . . . . . . . 644,071 666,960 661,684
GROSS PROFIT . . . . . . . . . . . . . . . . . 130,278 86,284 111,161
Selling, administrative and general expenses . 62,670 64,693 63,760
OPERATING PROFIT . . . . . . . . . . . . . . . 67,608 21,591 47,401
Timber . . . . . . . . . . . . . . . . . 83,207 74,470 101,740
Paper and paperboard . . . . . . . . . . (4,114) (13,009) (5,143)
Converted products . . . . . . . . . . . (11,485) (39,870) (49,196)
Interest income. . . . . . . . . . . . . . . . 481 1,256 784
Interest expensed. . . . . . . . . . . . . . . (38,703) (39,935) (31,613)
Miscellaneous. . . . . . . . . . . . . . . . . 2,098 2,936 2,922
INCOME (LOSS) BEFORE INCOME TAXES . . . . . . 31,484 (14,152) 19,494
PROVISION FOR TAXES ON INCOME (see Note 8)
Current. . . . . . . . . . . . . . . . . . . . 190 (8,503) (1,315)
Deferred . . . . . . . . . . . . . . . . . . . 11,310 1,003 8,115
11,500 (7,500) 6,800
NET INCOME (LOSS). . . . . . . . . . . . . . . $ 19,984 $ (6,652) $ 12,694
Per share. . . . . . . . . . . . . . . . $ 0.39 $ (0.13) $ 0.25
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(thousands) 1999 1998 1997
COMMON STOCK:
Balance at beginning of year . . . . . . $ 77,515 $ 77,515 $ 77,558
Ascribed value of stock purchased. . . . _- - (43)
Balance at end of year . . . . . . . . . $ 77,515 $ 77,515 $ 77,515
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 . . . . . . $334,128 $368,685 $389,548
Net income (loss). . . . . . . . . . . . 19,984 (6,652) 12,694
Less cash dividends on common stock
($0.28, $0.54, $0.64 per share,
respectively) . . . . . . . . . . . . (14,470) (27,905) (33,083)
Less purchases of common stock . . . . . - - (474)
Balance at end of year . . . . . . . . . $339,642 $334,128 $368,685
COMMON SHARES:
Balance at beginning of year . . . . . . 51,677 51,677 51,706
Purchases. . . . . . . . . . . . . . . . - - (29)
Balance at end of year . . . . . . . . . 51,677 51,677 51,677
The accompanying notes are an integral part of the financial statements.
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CONSOLIDATED BALANCE SHEET
October 31
(dollars in thousands except per share) 1999 1998 1997
ASSETS
Current assets:
Accounts and notes receivable. . . . . . . . $ 106,095 $ 99,823 $ 105,850
Allowance for doubtful accounts. . . . . . 1,100 1,100 1,100
Taxes on income, refundable. . . . . . . . . - 7,020 693
Inventories (see Note 4) . . . . . . . . . . 79,563 83,959 84,502
Other. . . . . . . . . . . . . . . . . . . . 8,162 8,136 7,739
Total current assets . . . . . . 192,720 197,838 197,684
Capital assets:
Buildings, machinery and equipment at cost . 1,635,298 1,629,580 1,572,089
Accumulated depreciation . . . . . . . . . 912,366 850,268 774,852
Costs to be depreciated in future
years (see Note 5). . . . . . . . . . . 722,932 779,312 797,237
Plant sites at cost. . . . . . . . . . . . . 3,116 3,041 3,041
726,048 782,353 800,278
Timber at cost less depletion. . . . . . . . 192,860 193,979 187,141
Roads at cost less amortization. . . . . . . 9,198 9,298 8,866
Timberland at cost . . . . . . . . . . . . . 19,253 19,207 17,076
221,311 222,484 213,083
Total capital assets . . . . . . 947,359 1,004,837 1,013,361
Pension and other assets (see Note 10) . . . 72,674 60,668 49,858
$1,212,753 $1,263,343 $1,260,903
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payable to bank resulting from
checks in transit . . . . . . . . . . . . . $ 8,892 $ 10,042 $ 9,834
Accounts payable . . . . . . . . . . . . . . 43,701 37,251 53,647
Short-term borrowings (see Note 2) . . . . . 18,000 50,500 56,000
Payrolls payable . . . . . . . . . . . . . . 14,321 14,309 13,206
Federal income taxes payable . . . . . . . . 926 - -
Other taxes payable. . . . . . . . . . . . . 8,761 10,299 10,498
Current installments of long-term debt . . . 30,118 20,119 14,118
Total current liabilities . . . 124,719 142,520 157,303
Long-term debt (see Note 3). . . . . . . . . 495,900 547,018 498,137
Deferred taxes - net (see Note 8). . . . . . 153,945 142,827 141,623
Other liabilities. . . . . . . . . . . . . . 17,726 16,029 14,334
Commitments (see Note 9) . . . . . . . . . . - - -
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 shares (see Note 11) . . . . . . 77,515 77,515 77,515
Additional paid-in capital . . . . . . . . . 3,306 3,306 3,306
Retained earnings. . . . . . . . . . . . . . 339,642 334,128 368,685
Total shareholders' equity . . . 420,463 414,949 449,506
$1,212,753 $1,263,343 $1,260,903
The accompanying notes are an integral part of the financial statements.
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CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended October 31
(thousands) 1999 1998 1997
CASH PROVIDED BY (USED FOR) OPERATIONS:
Net income (loss). . . . . . . . . . . . . . $ 19,984 $ (6,652) $ 12,694
Charges to income not requiring cash:
Depreciation . . . . . . . . . . . . . . 79,621 86,990 81,213
Depletion and amortization . . . . . . . 4,622 5,906 5,158
Deferred taxes - net . . . . . . . . . . 11,118 1,204 6,517
(Gain) loss on disposition of capital
assets . . . . . . . . . . . . . . . . . 841 (551) 3,961
Change in:
Accounts and notes receivable - net . . . (6,272) 6,027 (6,703)
Taxes on income, refundable . . . . . . . 7,020 (6,327) (693)
Inventories . . . . . . . . . . . . . . . 4,396 543 9,216
Other . . . . . . . . . . . . . . . . . . (26) (397) 4,184
Pension and other noncurrent assets . . . (12,006) (10,810) (7,403)
Accounts, payrolls and other
taxes payable . . . . . . . . . . . . . 5,162 (8,259) 6,950
Federal income taxes payable. . . . . . . 926 - -
Other noncurrent liabilities. . . . . . . 1,697 1,695 1,541
Cash provided by operations. . . . . . . . . 117,083 69,369 116,635
CASH PROVIDED BY (USED FOR) INVESTING:
Additions to: Plant and equipment.. . . . . (29,237) (73,054) (139,727)
Timber and timberlands. . . . (3,541) (15,622) (15,716)
Proceeds from sale of capital assets . . . . 5,172 4,855 2,887
Cash used for investing. . . . . . . . . . . (27,606) (83,821) (152,556)
CASH PROVIDED BY (USED FOR) FINANCING:
Additions to long-term debt. . . . . . . . . - 119,000 86,000
Reduction in long-term debt. . . . . . . . . (41,119) (64,118) (34,119)
Short-term borrowings. . . . . . . . . . . . (32,500) (5,500) 18,000
Payable to bank resulting from
checks in transit . . . . . . . . . . . . . (1,150) 208 (3,197)
Accounts payable for construction. . . . . . (238) (7,233) 2,837
Cash dividends . . . . . . . . . . . . . . . (14,470) (27,905) (33,083)
Purchase of common stock . . . . . . . . . . - - (517)
Cash provided by (used for) financing. . . . (89,477) 14,452 35,921
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) . . . $ 39,169 $ 40,248 $ 32,037
Capitalized interest . . . . . . . . . . . 386 1,344 3,290
Income taxes . . . . . . . . . . . . . . . (7,911) (1,985) (3,197)
The accompanying notes are an integral part of the financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The financial statements include the accounts of the company and all
subsidiaries after elimination of intercompany balances and transactions.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined on
a last-in, first-out method except for supplies at current averages.
PROPERTY AND DEPRECIATION
Buildings, machinery and equipment are recorded at cost and include those
additions and improvements that add to production capacity or extend useful
life. Cost includes interest capitalized during the construction period on
all significant asset acquisitions. When properties are sold or otherwise
disposed, the cost and the related accumulated depreciation are removed from
the respective accounts and the resulting profit or loss is recorded in
income. The costs of maintenance and repairs are charged to income when
incurred.
Depreciation for financial accounting purposes is computed on the straight-
line basis over the estimated useful lives of the assets. The estimated
useful lives of assets range from 20 to 40 years for buildings and principally
from 12 to 18 years for machinery and equipment. (See Note 5)
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 (loss) per common share is computed on the basis of weighted
average shares outstanding of 51,676,567, 51,676,567 and 51,691,411 for 1999,
1998 and 1997, respectively.
PENSION AND OTHER BENEFIT PLAN COSTS
The company's policy is to accrue as cost an amount computed by the actuary
and to fund at least the minimum amount required by ERISA.
The Statement of Financial Accounting Standards No. 132 (FAS 132), "Employers'
Disclosures about Pensions and Other Postretirement Benefits", was adopted
during 1999. This Statement revises the disclosures about pension and other
postretirement benefit plans but does not change the measurement or
recognition of those plans.
SEGMENT INFORMATION
The Statement of Financial Accounting Standards No. 131 (FAS 131),
"Disclosures about Segments of an Enterprise and Related Information", was
adopted during 1999. This Statement establishes standards for the way the
company reports information about operating segments in annual financial
statements issued to shareholders. The adoption of FAS 131 did not change the
disclosure of segments for the company.
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REVENUE RECOGNITION
The company recognizes revenues when goods are shipped.
NOTE 2 - SHORT-TERM BORROWINGS:
At October 31, 1999, the company had bank lines of credit totaling $347
million. Of this amount, $260 million was under a credit agreement with a
group of banks providing various methods of borrowing. The agreement provides
for borrowings at the Offshore Rate (LIBOR based) plus a spread, currently
0.50%, or the bank's Reference rate, whichever the company selects. The credit
agreement contains certain financial covenants and provides for a facility
fee, currently 0.25% per year. This agreement has an expiration date of
February 28, 2001 with renewal provisions beyond that date. At October 31,
1999, the company had loans of $230 million under the credit agreement.
Also available was a bank loan agreement providing a committed line of credit
totaling $25 million with an expiration date of February 28, 2001. At
October 31, 1999 the company had loans of $25 million under this loan
agreement.
Other lines of credit totaling $62 million were available for additional
borrowing needs. Included in this amount was a committed line of credit of
$20 million which expires March 31, 2001. The other $42 million is
uncommitted. At October 31, 1999, the company had an outstanding balance of
$33 million under these credit lines.
Short-term borrowings of $270 million, $291 million and $244 million at
October 31, 1999, 1998 and 1997, 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) 1999 1998 1997
Notes payable October 31 . . . . $288,000 $341,500 $300,000
Interest rate October 31 . . . . 6.2% 6.1% 6.2%
Average daily amount of
notes payable outstanding
during year . . . . . . . . . . $299,762 $319,133 $286,227
Average* interest rate
during year . . . . . . . . . . 6.1% 6.3% 6.1%
Maximum amount of notes
payable at any month end. . . . $333,000 $345,000 $303,000
*Computed by dividing interest incurred by average notes payable outstanding.
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NOTE 3 - LONG-TERM DEBT:
Long-term debt consists of the following:
October 31
(thousands) 1999 1998 1997
Senior notes due through 2010
(6.48%-8.84%) - Note (a) . . . . $227,000 $247,000 $239,000
Revenue bonds payable through
2018 (floating rates, currently
3.45%-4.70%) - Note (b). . . . . 28,900 28,900 28,900
Other . . . . . . . . . . . . . . 118 237 355
Notes payable - banks -
Note 2 above . . . . . . . . . . 270,000 291,000 244,000
526,018 567,137 512,255
Less current installments . . 30,118 20,119 14,118
Net long-term debt. . . . . . . . $495,900 $547,018 $498,137
Scheduled maturities
2001 $290,000
2002 45,000
2003 64,400
2004 -
2005-2018 96,500
$495,900
Note (a) Covenants of the senior notes include tests of minimum net worth,
short-term borrowing, long-term borrowing, current ratio, fixed charge
coverage ratios and restrictions on payment of dividends. During the year the
company obtained amendments from the holders of certain senior notes and in
connection with the grant of the amendments, the company agreed to pay 0.75%
per annum over the original note coupon rates until it obtains an investment
grade credit rating for its long-term unsecured senior debt. At October 31,
1999, approximately $19 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, 1999, $28,900,000 was secured by liens on the equipment.
NOTE 4 - INVENTORIES:
Inventories consist of the following:
October 31
(thousands) 1999 1998 1997
Finished goods . . . . . . . . $ 36,248 $ 35,645 $ 43,571
Goods in process. . . . . . . . 30,768 32,730 28,881
Raw materials . . . . . . . . . 13,200 20,676 11,879
Supplies (at average cost). . . 39,797 42,907 42,322
120,013 131,958 126,653
LIFO Reserve. . . . . . . . . . (40,450) (47,999) (42,151)
$ 79,563 $ 83,959 $ 84,502
During 1999, inventory quantities were reduced. This reduction resulted in a
liquidation of LIFO inventory, the effect of which increased net income by
approximately $806,000 or $0.02 per share.
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NOTE 5 - BUILDINGS, MACHINERY AND EQUIPMENT:
At cost - net of accumulated depreciation consist of the following:
October 31
(thousands) 1999 1998 1997
Buildings - net . . . . . . . . $ 69,667 $ 72,621 $ 66,494
Machinery and equipment - net . 653,265 706,691 730,743
$722,932 $779,312 $797,237
The estimated useful lives of some assets were changed for 1999, the effect of
which increased net income by approximately $5,845,000 or $0.11 per share.
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 approximated the stated value at
October 31, 1999, and exceeded the stated value by approximately $1 million at
October 31, 1998 and October 31, 1997.
NOTE 7 - SEGMENT INFORMATION:
The company owns and operates tree farms in Oregon and Washington which
produce logs for sale and operates a sawmill in Washington. 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 bags. The tonnage of paper and containerboard used in the
converting plants equals approximately 53% of the Longview mill production.
Included in sales to customers are export sales, principally to Japan, Hong
Kong and Southeast Asia, of $158,085,000, $135,350,000 and $169,055,000 during
1999, 1998 and 1997, respectively. All sales are made in U. S. dollars.
There are no intersegment sales as all manufacturing operations to produce
primary or converted products for sale are considered integrated from the
purchased wood to the sale of the finished product.
Identifiable assets are segregated or allocated to segments as follows:
1. Assets used wholly within a segment are assigned to that segment.
2. Assets used jointly by two segments are allocated to each segment on a
percentage determined by dividing total cost of product into cost of
product produced for each segment. Paper and paperboard assets of
$248,049,000, $308,338,000 and $309,562,000 have been allocated to
converted products at October 31, 1999, 1998 and 1997, respectively.
Page 24
<PAGE>
(thousands) 1999 1998 1997
SALES TO CUSTOMERS:
Timber . . . . . . . . . . . . . . . $ 170,992 $ 166,037 $186,814
Paper and paperboard . . . . . . . . 226,330 193,154 196,192
Converted products . . . . . . . . . 377,027 394,053 389,839
Total . . . . . . . . . . . . . . . 774,349 753,244 772,845
INCOME (LOSS) ON SALES:
Timber . . . . . . . . . . . . . . . 83,207 74,470 101,740
Paper and paperboard . . . . . . . . (4,114) (13,009) (5,143)
Converted products . . . . . . . . . (11,485) (39,870) (49,196)
Interest expensed and other. . . . . (36,124) (35,743) (27,907)
Income (loss) before income taxes . 31,484 (14,152) 19,494
IDENTIFIABLE ASSETS AT OCTOBER 31:
Timber . . . . . . . . . . . . . . . 272,080 275,379 260,832
Paper and paperboard . . . . . . . . 356,246 314,347 319,548
Converted products . . . . . . . . . 584,427 673,617 680,523
Total . . . . . . . . . . . . . . . 1,212,753 1,263,343 1,260,903
DEPRECIATION, DEPLETION AND
AMORTIZATION:
Timber . . . . . . . . . . . . . . . 8,111 9,330 8,669
Paper and paperboard . . . . . . . . 24,700 24,718 22,940
Converted products . . . . . . . . . 51,432 58,848 54,762
Total . . . . . . . . . . . . . . . 84,243 92,896 86,371
ADDITIONS TO CAPITAL ASSETS:
Timber . . . . . . . . . . . . . . . 6,290 20,254 17,608
Paper and paperboard . . . . . . . . 11,561 23,437 43,955
Converted products . . . . . . . . . 14,927 44,985 93,880
Total . . . . . . . . . . . . . . . $ 32,778 $ 88,676 $ 155,443
NOTE 8 - INCOME TAXES:
Provision for taxes on income is made up of the following components:
(thousands) 1999 1998 1997
Current:
Federal . . . . . . . . . . . . . . $ 121 $(7,925) $(1,293)
State . . . . . . . . . . . . . . . 69 (578) (22)
190 (8,503) (1,315)
Deferred:
Federal . . . . . . . . . . . . . . 10,618 1,625 7,453
State . . . . . . . . . . . . . . . 692 (622) 662
11,310 1,003 8,115
$11,500 $(7,500) $ 6,800
An analysis of the effective income tax rate as compared to the expected
federal income tax rate is as follows:
1999 1998 1997
Expected federal income tax rate . . 35% (35)% 35%
Foreign Sales Corporation. . . . . . (1) (1) (2)
State income taxes less
federal income tax benefit. . . . . 2 (5) 2
Research benefit . . . . . . . . . . - (12) -
Other. . . . . . . . . . . . . . . . 1 - -
37% (53)% 35%
Page 25
<PAGE>
The deferred income tax liabilities (assets) recorded in the Consolidated
Balance Sheet as of October 31, are as follows:
(thousands) 1999 1998 1997
Current:
Non-deductible accruals . . . . . . $ (4,564) $ (4,756) $ (4,555)
Non-current:
Depreciation. . . . . . . . . . . . $154,481 $151,177 $148,661
Employee benefit plans. . . . . . . 22,803 18,639 14,058
Alternative minimum tax . . . . . . (17,321) (20,458) (12,672)
Other . . . . . . . . . . . . . . . (6,018) (6,531) (8,424)
Non-current deferred tax. . . . . . $153,945 $142,827 $141,623
Federal income tax returns through 1993 have been settled with the Internal
Revenue Service.
NOTE 9 - COMMITMENTS AND CONTINGENCIES:
Estimated costs to complete approved capital projects were approximately $33
million, $16 million and $48 million at October 31, 1999, 1998 and 1997,
respectively.
NOTE 10 - RETIREMENT AND OTHER POSTRETIREMENT BENEFITS:
RETIREMENT 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 change in benefit obligation is as follows:
Year ended October 31
(thousands) 1999 1998 1997
Change in benefit obligation
Benefit obligation at beginning
of year . . . . . . . . . . . . $234,944 $196,510 $184,079
Service cost . . . . . . . . . . 6,498 5,218 5,189
Interest cost. . . . . . . . . . 16,130 14,141 13,689
Amendments . . . . . . . . . . . 173 755 12
Change in assumptions. . . . . . (14,691) 31,512 -
Actuarial (gain)/loss . . . . . 688 (2,730) 3,305
Expected benefits paid. . . . . (10,412) (10,462) (9,764)
Benefit obligation at end
of year . . . . . . . . . . . . $233,330 $234,944 $196,510
Page 26
<PAGE>
The change in fair value of assets is as follows:
Year ended October 31
(thousands) 1999 1998 1997
Change in plan assets
Fair value of plan assets at
beginning of year . . . . . . . $382,258 $386,372 $311,548
Actual return on plan assets . . 95,652 6,294 84,422
Employee contribution. . . . . . 4 4 4
Benefits paid. . . . . . . . . . (11,303) (10,412) (9,602)
Fair value of plan assets at
end of year . . . . . . . . . . $466,611 $382,258 $386,372
The funded status of the plan and pension asset recognized in the balance
sheet are summarized as follows:
Year ended October 31
(thousands) 1999 1998 1997
Funded status . . . . . . . . . . $233,281 $147,314 $189,862
Unrecognized net actuarial (gain) (173,892) (102,087) (159,545)
Unrecognized prior service cost . 5,053 9,236 12,592
Unrecognized net asset at
transition . . . . . . . . . . . (1,947) (3,317) (4,686)
Pension asset recognized in the
consolidated balance sheet . . . $ 62,495 $ 51,146 $ 38,223
Major assumptions used in the calculation are as follows:
Year ended October 31
(thousands) 1999 1998 1997
Weighted average discount rate. . 7.5% 7.0% 7.5%
Rate of compensation increase . . 4.75% 4.75% 5.25%
Expected long-term rate of return
on plan assets . . . . . . . . . 10.0% 10.0% 10.0%
The components of net periodic pension cost are
summarized as follows:
Year ended October 31
(thousands) 1999 1998 1997
Service cost - benefits earned
during the year. . . . . . . . . $ 6,498 $ 5,218 $ 5,189
Interest cost on benefit
obligation . . . . . . . . . . . 16,130 14,141 13,689
Expected (return) on plan assets. (34,609) (31,031) (26,755)
Recognized net actuarial (gain) . (2,354) (3,993) (2,525)
Amortization of prior service
cost . . . . . . . . . . . . . . 4,356 4,111 4,118
Amortization of net asset at
transition . . . . . . . . . . . (1,370) (1,369) (1,370)
Net periodic benefit (income) . . $(11,349) $(12,923) $ (7,654)
Page 27
<PAGE>
SAVINGS PLANS
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 $1,447,000, $1,386,000 and $1,295,000 during 1999, 1998
and 1997, respectively.
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, and as such has no plan assets.
The change in the benefit obligation is as follows:
Year ended October 31
(thousands) 1999 1998 1997
Change in benefit obligation
Benefit obligation at beginning
of year . . . . . . . . . . . . $18,239 $16,550 $17,265
Service cost . . . . . . . . . . 741 797 718
Interest cost. . . . . . . . . . 1,280 1,234 1,125
Actuarial (gain)/loss. . . . . . (1,014) 295 (2,068)
Benefits paid. . . . . . . . . . (613) (637) (490)
Benefit obligation at end of
year. . . . . . . . . . . . . . $18,633 $18,239 $16,550
The funded status of the plan and postretirement liabilities recognized in the
balance sheet are summarized as follows:
Year ended October 31
(thousands) 1999 1998 1997
Funded status . . . . . . . . . . $(18,633) $(18,239) $(16,550)
Unrecognized net (gain) . . . . . (5,573) (4,769) (5,262)
Unrecognized transition
obligation . . . . . . . . . . . 6,480 6,979 7,478
Accrued benefit cost. . . . . . . $(17,726) $(16,029) $(14,334)
The components of net periodic postretirement cost are summarized as follows:
Year ended October 31
(thousands) 1999 1998 1997
Service cost - benefits earned
during the year. . . . . . . . . . $ 741 $ 797 $ 718
Interest cost on benefit
obligation . . . . . . . . . . . . 1,280 1,234 1,125
Amortization of transition
obligation . . . . . . . . . . . . 499 499 498
Amortization of net (gain). . . . . (210) (198) (246)
Net periodic benefit cost . . . . . $2,310 $2,332 $2,095
Page 28
<PAGE>
The net periodic postretirement benefit cost was calculated using a health
care cost trend rate of 10% for the indemnity plan and 6.5% for the HMO
plan. The accrued postretirement benefit cost at October 31, 1999 was
calculated using a health care cost trend rate of 9% for the indemnity plan
and 6% 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 2001 for the HMO plan. A one percent
increase in the health care cost trend rate assumption has a $2,290,000
effect on the accumulated postretirement benefit obligation as of
October 31, 1999 and a $280,000 effect on the aggregate of the service and
interest cost components of the net periodic postretirement benefit cost.
A one percent decrease in the health care cost trend rate assumption has a
$(1,906,000) effect on the accumulated postretirement benefit obligation as
of October 31, 1999 and a $(235,000) effect on the aggregate of service and
interest cost components of the net periodic postretirement benefit cost.
The weighted-average discount rate used was 7.5% for 1999, 1998 and 1997.
NOTE 11 - SHAREHOLDER RIGHTS PLAN:
On January 26, 1999, the company's Board of Directors authorized a new
Shareholder Rights Plan ("Plan") which is generally similar to the Shareholder
Rights Plan that expired on March 1, 1999. The Plan provides for a dividend
distribution of one right for each share of common stock to shareholders of
record at the close of business on March 1, 1999. 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, 2009, if not previously redeemed or exercised. Each right entitles
the holder to purchase one-tenth of one common share at a price of $5.00 ($50
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 29
<PAGE>
QUARTERLY FINANCIAL DATA (UNAUDITED)
Fiscal Year Quarters Total
Fiscal
(thousands except per share) 1st 2nd 3rd 4th Year
1999
Net sales. . . . . . . . . . $163,324 $186,425 $197,593 $227,007 $774,349
Gross profit . . . . . . . . 22,331 32,301 31,120 44,526 130,278
Net income (loss). . . . . . (1,213) 5,230 3,958 12,009 19,984
Net income (loss) per
share (1) . . . . . . . . . (0.02) 0.10 0.08 0.23 0.39
1998
Net sales. . . . . . . . . . $176,217 $185,938 $194,203 $196,886 $753,244
Gross profit . . . . . . . . 14,034 18,373 30,313 23,564 86,284
Net income . . . . . . . . . (7,073) (4,589) 3,989 1,021 (6,652)
Net income (loss) per
share (1) . . . . . . . . . (0.14) (0.09) 0.08 0.02 (0.13)
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
(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 dated December 15, 1999 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.
ITEM 11. EXECUTIVE COMPENSATION
This item is completed by reference to Notice of Annual Meeting of
Shareholders and Proxy Statement dated December 15, 1999 which is hereby
incorporated by reference as part of this Form 10-K.
Page 30
<PAGE>
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 dated December 15, 1999 which is hereby
incorporated by reference as part of this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This item is completed by reference to Notice of Annual Meeting of
Shareholders and Proxy Statement dated December 15, 1999 which is hereby
incorporated by reference as part of this Form 10-K.
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 1999, 1998 and 1997 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,
1999.
(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 (a)
3.2 Bylaws of Longview Fibre Company (a)
4.1 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 2010 (6.48% - 8.84%) $227,000,000
Revenue Bonds payable through 2018 (floating rates,
3.45% through 4.70% at October 31, 1999) $28,900,000
Other $ 118,000
Page 31
<PAGE>
4.2 Rights Agreement Dated as of March 1, 1999 (e)
10.1 Form of Termination Protection Agreement (b)(*)
10.2 Credit Agreement (c)
23 Consent of Independent Accountants
27 Financial Data Schedule
99.1 Salary Savings Plan (d)(*)
99.2 Salary Savings Plan - Amendment No. 1 (d)(*)
99.3 Hourly Savings Plan (d)
99.4 Branch Hourly Savings Plan (d)
99.5 Branch Hourly Savings Plan - Amendment No. 1 (d)
99.6 Branch Hourly Savings Plan - Amendment No. 2 (d)
______________________
(a) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1990.
(b) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1994.
(c) Incorporated by reference to company's Quarterly Report on
Form 10-Q for the quarter ended April 30, 1998.
(d) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1998.
(e) Incorporated by reference to company's Current Report on
Form 8-K dated February 18, 1999.
(*) 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,
1998.
Page 32
<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 1-25-00
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 1-25-00
R. P. Wollenberg, Chief Executive Officer Date
and Director
\s\ L. J. Holbrook 1-25-00
L. J. Holbrook, Chief Financial Officer Date
and Director
\s\ A. G. Higgens 1-25-00
A. G. Higgens, Chief Accounting Officer Date
\s\ R. B. Arkell 1-25-00
R. B. Arkell, Director Date
\s\ D. L. Bowden 1-25-00
D. L. Bowden, Director Date
\s\ M. A. Dow 1-25-00
M. A. Dow, Director Date
\s\ J. R. Kretchmer 1-25-00
J. R. Kretchmer, Director Date
\s\ R. J. Parker 1-25-00
R. J. Parker, Director Date
\s\ D. C. Stibich 1-25-00
D. C. Stibich, Director Date
\s\ R. E. Wertheimer 1-25-00
R. E. Wertheimer, Director Date
\s\ D. A. Wollenberg 1-25-00
D. A. Wollenberg, Director Date
\s\ R. H. Wollenberg 1-25-00
R. H. Wollenberg, Director Date
Page 33
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, 1999, which
appears at Item 8 of Longview Fibre Company's Annual Report on Form 10-K.
\s\ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Portland, Oregon
January 25, 2000
<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-31-1999
<PERIOD-END> OCT-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 106,095
<ALLOWANCES> 1,100
<INVENTORY> 79,563
<CURRENT-ASSETS> 192,720
<PP&E> 1,859,725
<DEPRECIATION> 912,366
<TOTAL-ASSETS> 1,212,753
<CURRENT-LIABILITIES> 124,719
<BONDS> 495,900
0
0
<COMMON> 77,515
<OTHER-SE> 342,948
<TOTAL-LIABILITY-AND-EQUITY> 1,212,753
<SALES> 774,349
<TOTAL-REVENUES> 774,349
<CGS> 644,071
<TOTAL-COSTS> 644,071
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,703
<INCOME-PRETAX> 31,484
<INCOME-TAX> 11,500
<INCOME-CONTINUING> 19,984
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,984
<EPS-BASIC> 0.39
<EPS-DILUTED> 0.39
</TABLE>
