SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1999 Commission file number 1-5313
POTLATCH CORPORATION
(Exact name of registrant as specified in its charter)
A Delaware Corporation 82-0156045
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 West Riverside Ave., Suite 1100
Spokane, Washington 99201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (509) 835-1500
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[ ]
The number of shares of common stock outstanding as of September 30, 1999:
28,952,232 shares of Common Stock, par value $1 per share.
<PAGE>
POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES
Index to Form 10-Q
PART I. FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Statements of Earnings for the quarter and nine
months ended September 30, 1999 and 1998 2
Condensed Balance Sheets at September 30, 1999
and December 31, 1998 3
Condensed Statements of Cash Flows for the nine
months ended September 30, 1999 and 1998 4
Notes to Financial Statements 5 - 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6 - 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBIT INDEX 14
1
<PAGE>
PART I
Item 1. Financial Statements
<TABLE>
Potlatch Corporation and Consolidated Subsidiaries
Statements of Earnings
Unaudited (Dollars in thousands - except per-share amounts)
- -----------------------------------------------------------------------------
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
1999 1998 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $446,591 $404,625 $1,276,052 $1,207,641
Costs and expenses:
Depreciation, amortization and
cost of fee timber harvested 38,270 39,203 110,843 112,411
Materials, labor and other
operating expenses 329,972 301,987 976,345 916,857
Selling, general and
administrative expenses 31,239 31,450 92,374 91,525
- -----------------------------------------------------------------------------
399,481 372,640 1,179,562 1,120,793
- -----------------------------------------------------------------------------
Earnings from operations 47,110 31,985 96,490 86,848
Interest expense (10,507) (12,801) (34,846) (37,148)
Other income (expense), net (169) 732 (9,096)* 3,208
- -----------------------------------------------------------------------------
Earnings before taxes
on income 36,434 19,916 52,548 52,908
Provision for taxes on
income (Note 2) 13,845 7,369 19,968 19,576
- -----------------------------------------------------------------------------
Net earnings $ 22,589 $ 12,547 $ 32,580 $ 33,332
=============================================================================
Net earnings per
common share (Note 3):
Basic $ .78 $ .43 $1.13 $1.15
Diluted .77 .43 1.12 1.15
Dividends per common share
(annual rate) 1.74 1.74 1.74 1.74
Average shares outstanding
(in thousands):
Basic 28,950 29,009 28,940 29,006
Diluted 28,991 29,026 28,966 29,032
- -----------------------------------------------------------------------------
<FN>
*Includes a first quarter nonrecurring charge of $7.5 million ($4.6 million
after tax) for expenses related to the termination of efforts to form a
timber real estate investment trust with Anderson-Tully Company.
The accompanying notes are an integral part of these financial statements.
</TABLE>
2
<PAGE>
<TABLE>
Potlatch Corporation and Consolidated Subsidiaries
Condensed Balance Sheets
1999 amounts unaudited (Dollars in thousands -
except per-share amounts)
- ----------------------------------------------------------------------------
<CAPTION>
September 30, December 31,
1999 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 11,190 $ 11,650
Short-term investments 352 6,422
Receivables, net 190,838 162,268
Inventories (Note 4) 170,291 200,257
Prepaid expenses 19,785 27,258
- ----------------------------------------------------------------------------
Total current assets 392,456 407,855
Land, other than timberlands 9,073 9,073
Plant and equipment, at cost less
accumulated depreciation 1,605,530 1,504,522
Timber, timberlands and related
logging facilities 337,917 338,617
Other assets 66,587 117,239
- ----------------------------------------------------------------------------
$2,411,563 $2,377,306
============================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 69,777 $ 74,939
Current installments on long-term debt 10,323 10,021
Accounts payable and accrued liabilities 257,592 225,339
- ----------------------------------------------------------------------------
Total current liabilities 337,692 310,299
Long-term debt 701,779 712,113
Other long-term obligations 168,018 163,453
Deferred taxes 269,665 253,691
Put options 9,417 6,844
Stockholders' equity 924,992 930,906
- ----------------------------------------------------------------------------
$2,411,563 $2,377,306
============================================================================
Stockholders' equity per common share $31.95 $32.19
Working capital $54,764 $97,556
Current ratio 1.2:1 1.3:1
- ----------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
<TABLE>
Potlatch Corporation and Consolidated Subsidiaries
Condensed Statements of Cash Flows
Unaudited (Dollars in thousands)
- ----------------------------------------------------------------------------
<CAPTION>
Nine Months Ended
September 30
1999 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operations
Net earnings $ 32,580 $ 33,332
Adjustments to reconcile net earnings
to cash provided by operations:
Depreciation, amortization and cost of
fee timber harvested 110,843 112,411
Deferred taxes 15,974 7,831
Working capital changes 42,801 49,177
Other, net (244) (1,315)
- ----------------------------------------------------------------------------
Net cash provided by operations 201,954 201,436
- ----------------------------------------------------------------------------
Cash Flows From Financing
Change in bank overdrafts (1,679) (8,968)
Decrease in notes payable (5,162) (51,851)
Proceeds from long-term debt 99,935 -
Repayment of long-term debt (109,967) 19
Issuance of treasury stock 785 323
Dividends (37,763) (37,852)
- ----------------------------------------------------------------------------
Net cash used for financing (53,851) (98,329)
- ----------------------------------------------------------------------------
Cash Flows From Investing
Additions to investments (50,827) (11,261)
Reductions in investments 56,835 9,452
Receipt of payment on note receivable 50,000 -
Additions to plant and properties (205,116) (99,579)
Other, net 545 2,440
- ----------------------------------------------------------------------------
Net cash used for investing (148,563) (98,948)
- ----------------------------------------------------------------------------
Increase (decrease) in cash (460) 4,159
Balance at beginning of period 11,650 9,026
- ----------------------------------------------------------------------------
Balance at end of period $ 11,190 $ 13,185
============================================================================
<FN>
Net interest payments (net of amounts capitalized) for the nine months ended
September 30, 1999 and 1998 were $25.6 million and $27.8 million, respectively.
Net income tax payments (refunds) for the nine months ended September 30, 1999
and 1998 were $(.7) million and $2.4 million, respectively.
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
Potlatch Corporation and Consolidated Subsidiaries
Notes to Financial Statements
(Dollars in thousands)
- -----------------------------------------------------------------------------
NOTE 1. GENERAL - The accompanying condensed balance sheets at September 30,
1999 and December 31, 1998, and the statements of earnings for the quarter
and nine months ended September 30, 1999 and 1998, and the condensed
statements of cash flows for the nine months ended September 30, 1999 and
1998, have been prepared in conformity with generally accepted accounting
principles. The management of Potlatch Corporation (the "company") believes
that all adjustments necessary for a fair statement of the results of such
interim periods have been included. All adjustments were of a normal
recurring nature; there were no material nonrecurring adjustments.
NOTE 2. INCOME TAXES - The provision for taxes on income has been computed
by applying an estimated annual effective tax rate. This rate was 38 percent
for the quarter and nine months ended September 30, 1999. The rate was 37
percent for the quarter and nine months ended September 30, 1998.
NOTE 3. EARNINGS PER COMMON SHARE - Earnings per common share are computed
by dividing net earnings by the weighted average number of common shares
outstanding in accordance with FASB Statement No. 128, "Earnings Per Share."
The following table reconciles the number of common shares used in the
basic and diluted earnings per share calculations:
Quarter Ended Nine Months Ended
September 30 September 30
(In thousands) 1999 1998 1999 1998
Basic average common shares
outstanding 28,950 29,009 28,940 29,006
Incremental shares due to:
Common stock options 41 7 22 26
Put options - 10 4 -
------ ------ ------ ------
Diluted average common shares
outstanding 28,991 29,026 28,966 29,032
====== ====== ====== ======
Stock options to purchase 1,236,475 shares of common stock for the
quarter and nine months ended September 30, 1999, and 1,236,975 and 943,250
for the quarter and nine months ended September 30, 1998, respectively, were
not included in the above computations because the exercise prices of the
stock options were greater than the average market price of common shares.
5
<PAGE>
Note 4. INVENTORIES - Inventories at the balance sheet dates consist of:
September 30, 1999 December 31, 1998
Raw materials $ 84,917 $ 88,591
Work in process 7,144 9,385
Finished goods 78,230 102,281
-------- --------
$170,291 $200,257
======== ========
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Funding
Net cash provided by operations for the first nine months of 1999, as
presented in the Condensed Statements of Cash Flows on page 4, totaled
$201.9 million, compared with $201.4 million for the same period in 1998.
The company's ratio of long-term debt to stockholders' equity was .76 to
1 at September 30, 1999, unchanged from December 31, 1998. During the first
quarter of 1999, the company issued $100.0 million of long-term debt, the
proceeds of which were used to repay a like amount of commercial paper which
had been classified as long-term debt. Also during the first quarter, $10.0
million of medium-term notes were reclassified from long-term to current due
to their maturity within a year. Stockholders' equity decreased $5.9 million
during the first nine months of 1999 largely due to the payment of dividends
in excess of earnings.
Working capital of $54.8 million at September 30, 1999, decreased $42.8
million from December 31, 1998. The reduction was the result of a decrease
in current assets of $15.4 million and an increase in current liabilities of
$27.4 million. The change in current assets was a combination of decreases
in short-term investments of $6.1 million, inventories of $30.0 million and
prepaid expenses of $7.5 million, partially offset by an increase of $28.6
million in receivables. Current liabilities increased largely due to a $32.3
million increase in accounts payable and accrued liabilities, which was
partially offset by a $5.2 million decrease in notes payable. Accounts
payable and accrued liabilities are normally higher at the end of the third
quarter of any given year due to the timing of payments on accruals for items
such as interest and taxes.
Capital expenditures totaled $205.1 million for the first nine months of
1999. Of this amount, the company spent $17.0 million in the wood products
segment, which included expenditures for the modernization and expansion of
the Cook, Minnesota, oriented strand board plant. Spending in the resource
segment totaled $15.0 million, of which a significant portion was utilized
for the continued development of the hybrid poplar tree farm in Boardman,
Oregon. The company spent $154.8 million in the printing papers segment.
The majority of these expenditures were for the continued modernization and
expansion of the company's pulp mill in Cloquet, Minnesota, which will
ultimately increase annual pulp-making capacity by approximately 250,000
tons. Spending in the pulp and paper segment totaled $17.8 million, largely
on various small projects designed to improve product quality and
manufacturing efficiency.
6
<PAGE>
With the completion of the modernization and expansion of the pulp mill
in Cloquet (startup of the last phase is scheduled to occur late in the
fourth quarter of 1999) and the oriented strand board plant in Cook
(scheduled for startup in December, 2000), the company's 15-year program to
update its facilities will have been substantially completed. As a result,
the company believes capital expenditure requirements to maintain and update
its facilities will be significantly less than in the last 15 years. The
projected reduction in required capital expenditures plus the added revenues
from the modernized and expanded pulp mill in Cloquet should provide a
significant amount of additional cash starting in 2000. The company expects
to utilize any such cash for high return projects at its existing facilities,
reduction of debt and for other projects which may include new facilities and
repurchase of the company's stock.
Results of Operations
A summary of period-to-period changes in items included in the statements
of earnings is presented on page 11 of this Form 10-Q.
During the quarter, the company made certain changes in its management
structure designed to separate the operations of the company's timberlands
from its wood products manufacturing facilities. The results for the newly
created Resource Management Group are reported as a separate segment
beginning this quarter. Prior period segment information has been restated
to reflect this change.
<TABLE>
Segment Information (Dollars in thousands)
- ------------------------------------------------------------------------------
<CAPTION>
Third Quarter Nine Months
1999 1998 1999 1998
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales
Wood products
Oriented strand board $ 68,202 $ 55,955 $ 174,425 $ 129,888
Lumber 69,309 57,569 199,968 175,955
Plywood 18,524 13,462 52,207 39,435
Particleboard 4,510 3,664 12,510 10,841
Other 5,882 8,472 20,856 28,657
- ------------------------------------------------------------------------------
166,427 139,122 459,966 384,776
- ------------------------------------------------------------------------------
Resource 88,762 83,048 247,204 243,077
- ------------------------------------------------------------------------------
Printing papers 111,869 97,985 324,176 313,458
- ------------------------------------------------------------------------------
Pulp and paper
Pulp 6,941 2,749 19,263 8,496
Paperboard 93,953 98,326 276,093 313,204
Tissue 57,899 58,703 180,980 177,428
- ------------------------------------------------------------------------------
158,793 159,778 476,336 499,128
- ------------------------------------------------------------------------------
525,851 479,933 1,507,682 1,440,439
Elimination of intersegment sales (79,260) (75,308) (231,630) (232,798)
- ------------------------------------------------------------------------------
Total consolidated net sales $446,591 $404,625 $1,276,052 $1,207,641
==============================================================================
Intersegment sales or transfers
Wood products $ 3,958 $ 5,786 $ 12,589 $ 20,901
Resource 75,294 69,513 218,998 211,802
Pulp and paper 8 9 43 95
- ------------------------------------------------------------------------------
Total $ 79,260 $ 75,308 $ 231,630 $ 232,798
==============================================================================
</TABLE>
7
<PAGE>
<TABLE>
Segment Information (continued) (Dollars in thousands)
- ------------------------------------------------------------------------------
<CAPTION>
Third Quarter Nine Months
1999 1998 1999 1998
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Income
Wood products $ 35,403 $ 15,187 $ 71,289 $ 5,272
Resource 19,058 17,533 48,121 54,971
Printing papers (5,125) (1,702) (7,378) 7,771
Pulp and paper 7,058 11,483 9,935 48,283
- ------------------------------------------------------------------------------
56,394 42,501 121,967 116,297
Corporate (19,960) (22,585) (69,419) (63,389)
- ------------------------------------------------------------------------------
Consolidated earnings before
taxes on income $ 36,434 $ 19,916 $ 52,548 $ 52,908
==============================================================================
</TABLE>
The company reported significantly higher earnings for the third quarter
of 1999, compared to 1998's third quarter. The favorable comparison was
largely due to the positive market conditions for the company's wood products
during the quarter. Net earnings for the third quarter of 1999 were $22.6
million or $.77 per diluted common share. For 1998's third quarter, net
earnings were $12.5 million or $.43 per diluted common share. Net sales were
$446.6 million, compared with $404.6 million in the third quarter of 1998.
Net earnings for the first nine months of 1999 were $37.2 million or
$1.28 per diluted common share, before a nonrecurring after tax charge of
$4.6 million taken in the first quarter. Including the charge, net earnings
for the first nine months of 1999 were $32.6 million or $1.12 per diluted
common share. Net earnings for the first nine months of 1998 were $33.3
million or $1.15 per diluted common share. Net sales for the first nine
months of 1999 were $1.28 billion, versus $1.21 billion in 1998.
Operating income for the Wood Products segment was $35.4 million for the
third quarter of 1999, substantially higher than the $15.2 million earned in
1998's third quarter. Higher net sales realizations for all of the company's
wood products were primarily responsible for the favorable results. Prices
for oriented strand board, plywood and particleboard reached record highs
during the quarter, before declining by the end of the period. Prior year
results for the segment have been restated to remove the operations of the
new Resource Management Group.
The Resource segment had operating income of $19.1 million for 1999's
third quarter, compared to $17.5 million in the previous year's third
quarter. The segment derives its income mainly from the sale of logs at
market prices to company manufacturing facilities and to third parties. The
increase in income for the quarter compared to 1998 was principally due to
higher market prices for logs.
The Printing Papers segment recorded a third quarter operating loss of
$5.1 million, compared to a loss of $1.7 million reported a year ago. Higher
operating costs, largely associated with the phased startup of the pulp mill
in Cloquet, Minnesota, adversely affected earnings for the segment. The last
phase of the pulp mill startup will occur late in the fourth quarter, which
will lead to substantial increases in pulp production. Net sales
realizations declined compared to the third quarter of 1998, as markets for
printing papers remain soft.
The Pulp and Paper segment reported third quarter operating income of
$7.1 million, versus $11.5 million for 1998's third quarter. A decline in
8
<PAGE>
net sales realizations for paperboard and tissue products was the primary
reason for the unfavorable comparison with last year's quarter. However, the
segment's third quarter results represented a substantial improvement from
this year's second quarter, caused by improved markets and realizations for
pulp and paperboard.
Year 2000
The company has nearly completed its comprehensive project to identify
and resolve potential Year 2000 problems. A Year 2000 steering team has been
in place since June 1998 to coordinate the review of programs and systems,
evaluate the findings and implement the changes necessary to become Year 2000
compliant. The company has been using outside consultants to assist in this
effort and believes it has allocated adequate resources to the issue. It
expects to complete the review and any necessary changes on a timely basis.
The review has been divided into two categories: business systems and
manufacturing systems. The business systems have been undergoing
modifications to address the Year 2000 issue over the last few years.
Routine changes, modifications and new software purchases have all been made
with Year 2000 compliance in mind. As a result, the company believes that
its business systems have been substantially Year 2000 compliant since
December 31, 1998. Testing to confirm that all critical business systems are
compliant has been completed.
The company has completed a comprehensive inventory of its manufacturing
systems (including both embedded technology and information technology),
which it used to identify systems that were not Year 2000 compliant.
Assessment of all devices and systems is complete. Testing and remediation
are nearly complete, and no obstacles to achieving satisfactory compliance
have been identified.
The costs incurred to date to conduct the manufacturing systems inventory
and other Year 2000 conversion work have not been material to the company's
results of operations for any reporting period in which expenditures have
been made. These costs, including hardware, software, internal personnel and
external consultants, are expensed as incurred, except for expenditures
relating to system replacements or upgrades occurring in the normal course of
business that are capitalized under company guidelines. Prior to 1998, the
company did not separately identify internal costs related to Year 2000
conversion work. The total costs incurred from January 1998 through the
conclusion of the Year 2000 project are expected to be in the range of $4
million to $5 million, exclusive of normal replacements and upgrades.
The company has made inquiries of its major customers and significant
suppliers, including its energy and other utility service providers and
transportation vendors, to evaluate their Year 2000 readiness. The survey is
nearing completion and to date no problems have been identified. While the
company has no control over the readiness of its suppliers, failure by them
or the company to be substantially Year 2000 compliant could have a material
adverse effect on the company's operations and financial results. Although
management believes it is unlikely to occur, a plausible worst case scenario
would involve the failure of a critical system of the company or a supplier,
causing a temporary halt or slowdown at one or more of the company's
manufacturing operations.
9
<PAGE>
The company has developed contingency plans for each of its facilities.
These plans address both internal and external potential failures, as well as
any unresolved issues. Activation of the contingency plans began in October.
Other
This report contains, in addition to historical information, certain
forward-looking statements, including without limitation, statements
regarding future revenues, capital requirements and Year 2000 issues. These
forward-looking statements are based on management's best estimates and
assumptions regarding future events, and are therefore subject to known and
unknown risks and uncertainties and are not guarantees of future performance.
The company's actual results of operations could differ materially from those
expressed or implied by forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to, changes in
the United States and international economies; changes in worldwide demand
for the company's products; changes in worldwide production and production
capacity in the forest products industry; competitive pricing pressures for
the company's products; impact of Year 2000 issues; and changes in raw
material, energy and other costs.
10
<PAGE>
<TABLE>
POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES
Changes in Statements of Earnings
(Dollars in thousands)
<CAPTION>
Quarter Ended September 30 Nine Months Ended September 30
Increase Increase
1999 1998 (Decrease) 1999 1998 (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Net sales $446,591 $404,625 10% $1,276,052 $1,207,641 6%
Costs and expenses:
Depreciation, amortization and
cost of fee timber harvested 38,270 39,203 (2%) 110,843 112,411 (1%)
Materials, labor and other
operating expenses 329,972 301,987 9% 976,345 916,857 6%
Selling, general and
administrative expenses 31,239 31,450 (1%) 92,374 91,525 1%
Earnings from operations 47,110 31,985 47% 96,490 86,848 11%
Interest expense (10,507) (12,801) (18%) (34,846) (37,148) (6%)
Other income (expense), net (169) 732 * (9,096) 3,208 *
Provision for taxes on income 13,845 7,369 88% 19,968 19,576 2%
Net earnings 22,589 12,547 80% 32,580 33,332 (2%)
<FN>
* Not a meaningful figure.
</TABLE>
11
<PAGE>
PART II
ITEM 6. Exhibits and Reports on Form 8-K
Exhibits
The exhibit index is located on page 14 of this Form 10-Q.
Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended
September 30, 1999.
12
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
POTLATCH CORPORATION
(Registrant)
By /S/ S. T. Powell
------------------------------
S. T. Powell
Senior Vice President, Finance
and Chief Financial Officer
(Duly Authorized; Principal
Financial Officer)
By /S/ T. L. Carter
------------------------------
T. L. Carter
Controller
(Duly Authorized; Principal
Accounting Officer)
Date: October 29, 1999
13
<PAGE>
POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES
Exhibit Index
Exhibit
PART II
(4) Registrant undertakes to file with the Securities and
Exchange Commission, upon request, any instrument with
respect to long-term debt
(10)(k)(ii)1 Amendment No. 2 to Schedule A to form of Indemnification
Agreement with certain officers of Potlatch Corporation.
(10)(n)(vii)1 Amendment, dated September 17, 1999, to the Potlatch
Corporation 1989 Stock Incentive Plan and the Potlatch
Corporation 1995 Stock Incentive Plan.
1 Management compensatory plan or arrangement.
14
Amendment No. 2
to
Schedule A to Exhibit (10)(k)
October 29, 1999
The following table sets forth the name of each
current officer of Potlatch Corporation who has executed
the Indemnification Agreement filed as Exhibit (10)(k):
Date Agreement
Name of Officer Position Executed
L. Pendleton Siegel Chairman and December 11, 1986
Chief Executive
Officer
Richard L. Paulson President and January 1, 1993
Chief Operating
Officer
Michael W. DeGenring Executive Vice September 7, 1999
President, Finance
And Administration
Richard K. Kelly Group Vice July 15, 1999
President
Charles R. Pottenger Group Vice March 14, 1991
President
Sandra T. Powell Senior Vice December 11, 1986
President and
Chief Financial
Officer
John W. Bacon Vice President June 14, 1995
Phillip M. Baker Vice President May 20, 1999
Kenneth L. Clark Vice President April 10, 1995
Exhibit (10)(k)(ii)
<PAGE>
Date Agreement
Name of Officer Position Executed
Ralph M. Davisson Vice President April 1, 1990
John E. Hanby Vice President October 15, 1997
Craig H. Nelson Vice President May 29, 1996
John R. Olson Vice President July 30, 1999
Gerald L. Zuehlke Treasurer April 10, 1995
Betty R. Fleshman Secretary June 14, 1995
RESOLUTION
1989 STOCK INCENTIVE PLAN
1995 STOCK INCENTIVE PLAN
September 17, 1999
RESOLVED, that Section 17 of the 1989 Stock Incentive
Plan and Section 19 of the 1995 Stock Incentive Plan shall
be amended to read as follows:
PAYMENT OF EXCISE TAXES If any payments or transfers
to or for the benefit of the Participant is deemed an
"excess parachute payment" as defined in Section 280G of
the Internal Revenue Code of 1986 (the "Code") subject to
the excise tax imposed by Section 4999 of the Code, the
Corporation shall pay to the Participant an additional
amount such that the total amount of all such payments and
benefits (including payments made pursuant to this Section)
to the Participant shall equal the total amount of all such
payments and benefits to which the Participant would have
been entitled (but for this Section) net of all applicable
federal, state and local taxes except the excise tax. For
purposes of this Section, the Participant shall be deemed
to pay federal, state and local taxes at the highest
marginal rate of taxation for the applicable calendar year.
The amount of the payment to the Participant shall be
estimated by the firm of independent certified public
accountants serving as the outside auditor of the
Corporation, as of the date of the applicable event as
described in section 7(d)(i)-(iv).
Exhibit (10)(n)(vii)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 11,190
<SECURITIES> 150
<RECEIVABLES> 164,602
<ALLOWANCES> 2,150
<INVENTORY> 170,291
<CURRENT-ASSETS> 392,456
<PP&E> 3,437,766
<DEPRECIATION> 1,485,246
<TOTAL-ASSETS> 2,411,563
<CURRENT-LIABILITIES> 337,692
<BONDS> 701,779
<COMMON> 32,722
0
0
<OTHER-SE> 892,270
<TOTAL-LIABILITY-AND-EQUITY> 2,411,563
<SALES> 1,276,052
<TOTAL-REVENUES> 1,276,052
<CGS> 1,087,188
<TOTAL-COSTS> 1,087,188
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,846
<INCOME-PRETAX> 52,548
<INCOME-TAX> 19,968
<INCOME-CONTINUING> 32,580
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,580
<EPS-BASIC> 1.13
<EPS-DILUTED> 1.12
</TABLE>
