Annual Report (Form 10-K), fiscal year 1993

ITEM 1. BUSINESS
(a) General Development of Business
Longview Fibre Company, was incorporated on November 17, 1989 in the State of Washington as a successor to a company of the same name incorporated in the State of Delaware on August 2, 1926. No general development of material importance has occurred during the past fiscal year.
(b) Financial Information about Industry Segments
This item is completed by reference to Note 12 of Item 8 of this Form 10-K.
(c) Narrative Description of Business
(1) Business Done and Intended to be Done
(i) Principal Products, Markets and Methods of Distribution
Logs - The company owns and operates tree farms in Oregon and Washington which produce logs for sale in the domestic and export market.
Paper and Paperboard - Its pulp and paper mill at Longview, Washington produces pulp which is manufactured into kraft paper and containerboard.
Wrapping paper and converting paper (paper in large rolls for use by manufacturers of bags and other items) are sold by the company's sales force working out of San Francisco, California; Longview, Washington; Milwaukee, Wisconsin; and Atlanta, Georgia or through paper merchants. Sales 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.
Converted Products - The company's fourteen converting plants in ten states produce shipping containers and merchandise and grocery bags. The tonnage of paper and containerboard used in the converting plants equals approximately 66% of the Longview mill production.
Bags are sold by the company's sales force working out of San Francisco and Los Angeles, California; Longview, Washington; and Waltham, Massachusetts. Sales are made directly or through paper merchants.
Corrugated and solid fibre boxes are sold by the company's offices located at Longview, Seattle and Yakima, Washington; Portland, Oregon; San Francisco and Oakland, California; Twin Falls, Idaho; Spanish Fork, Utah; Milwaukee, Wisconsin; Rockford, Illinois; Cedar Rapids, Iowa; Minneapolis, Minnesota; Amsterdam, New York; and Springfield, Massachusetts.
The following table sets forth the contribution to sales by each class of similar products which accounted for more than 10% of sales. 1993 1992 1991 Logs 24% 17% 14% Paper and Paperboard 28% 34% 35% Converted Products 48% 49% 51%
(ii) There has been no public announcement, or information which has become public, about a new product or line of business requiring the investment of a material amount of total assets of the company.
(iii) Wood Supply and Timberlands - 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 and augmented by log chipping operations owned by the Company and others. Wood chip costs were about one percent higher than in the prior year.
Lockup of federal and state timber for so-called threatened species (spotted owls and marbled murrelets) continues with no relief in sight. This keeps chip costs up, but enhances log revenues. Any adverse effect on our ability to log our private lands due to threatened species is presently estimated at under six percent.
The Leavenworth sawmill is improving. Dry kilns are being installed. When these are operative (estimated early 1994), operations should be in the black.
The company operates its 529,730 acres of tree farms on a sustained yield basis with rotations between 50 and 70 years; no large inventory of mature trees is maintained.
(iv) Patents, trademarks, licenses, franchises and concessions held do not play an important part in the business of the company.
(v) No material portion of the business of the company is seasonal.
(vi) The practice of the company and the industry does not require an abnormal amount of working capital.
(vii) The loss of a single customer, or a few customers, would not have a material effect on the business of the company.
(viii) The backlog of orders is not material to an understanding of the business of the company.
(ix) There is no material portion of the business subject to renegotiation or termination of contracts at the election of the Government.
(x) Practically all merchantable logs produced from the company's timberlands are sold to independent sawmills and plywood plants which purchase a substantial part of their log requirements, to U. S. exporters or direct to foreign importers. The company continues to emphasize quality, service, continuity and design of products to meet customers special needs. Accordingly, the company believes it is in an acceptable competitive posture as to its primary products in spite of high wood fiber costs in the region. As to converted products, the company believes it competes on even terms in highly competitive markets avoiding large accounts which have reached excessive loss levels.
(xi) The amount spent on research and development is completed by reference to Note 11 of Item 8 of this Form 10-K.
(xii) Estimated capital expenditures for environmental protection are $1,000,000 per year for 1994 and 1995.
(xiii) The company has approximately 3,500 employees.
(d) Financial Information about Foreign and Domestic Operations and Export Sales
Segment information (including amount of export sales) is completed by reference to Note 12 of Item 8 of this Form 10-K.
ITEM 2.



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:
Logs - As of October 31, 1993 the company owned in fee 529,730 acres of tree farms located in various counties of Washington and Oregon. The company as a matter of policy has consistently acquired and intends to continue to acquire more timberlands whenever purchasable at acceptable prices dependent on the location and quality of the site involved and the species and quality of the merchantable timber and growing stock thereon. The company operates its tree farms on a sustained yield basis with rotations between 50 and 70 years. No large inventory of mature trees is maintained.
Paper and Paperboard - At Longview, Washington on a site of approximately 350 acres owned by the company with deep water frontage on the Columbia River and featuring connections with two transcontinental railroads and adequate highway access, there is an integrated operation for producing pulp and delivering it to twelve paper and/or containerboard machines with full supporting facilities.
Mill utilization was at 76% during fiscal 1993.
Converted Products - On the same site at Longview there is a box factory for production of solid fibre and corrugated boxes.
At each of the following twelve locations there are factories for the production of converted products:
Oakland, California Corrugated Boxes Only Twin Falls, Idaho " " " Rockford, Illinois " " " Cedar Rapids, Iowa " " " Springfield, Massachusetts " " " Minneapolis, Minnesota " " " Amsterdam, New York " " " Seattle, Washington " " " Yakima, Washington " " " Spanish Fork, Utah Corrugated Boxes, Grocery Bags and Merchandise Bags Milwaukee, Wisconsin Corrugated and Solid Fibre Boxes Waltham, Massachusetts Merchandise Bags
The volume of converted products sold decreased during the past fiscal year. Capacity is available for increased sales.
Other - The company owns mineral rights on the majority of its tree farm acres. Revenues from minerals are immaterial. Natural gas from company lands in Columbia County, Oregon produce some royalty income. These revenues make land ownership more attractive, but to date have had an immaterial impact on overall corporate results.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
Nothing to report.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Nothing was submitted during the fourth quarter of the fiscal year to a vote of the Shareholders.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
(a)(1)(ii) Transaction prices per share as reported on the New York Stock Exchange are reported below.
Fiscal 1993 1992 Quarter High Low High Low 1st $18.75 $15.88 $16.00 $10.38 2nd 20.25 16.00 18.75 14.75 3rd 18.25 15.75 17.25 14.63 4th 18.25 15.88 17.38 12.88
(b)(1) The company estimates it now has approximately 11,650 shareholders.
(c)(1) Dividends per share paid in fiscal 1993, 1992 and 1991:
1993 1992 1991 January $0.10 $0.10 $0.13 April 0.10 0.10 0.13 July 0.10 0.10 0.13 October 0.22 0.22 0.13 $0.52 $0.52 $0.52
The Directors have declared a regular dividend of $0.13 per share to be paid on January 10, 1994, to shareholders of record on December 24, 1993.
Restrictions on the company's ability to pay cash dividends are completed by reference to Notes 5, 10 and 13 of Item 8 of this Form 10-K.
ITEM 6.

ITEM 6. SELECTED FINANCIAL AND OTHER DATA
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS 1993 vs. 1992
1993 was the fifth unsatisfactory year in a row. While earnings improved by 26%, they are 58% below 1988 when shareholders' equity was 11% lower.
Log profits increased from $61,006,000 to $101,471,000 in fiscal 1993. The 66% improvement was primarily due to a 49% increase in average price. Footage sold decreased by 2%. Demand and prices remain at good levels in both the export and domestic markets but are below peak 1993 levels.
The company operates its 529,730 acres of tree farms on a sustained yield basis with rotations between 50 and 70 years. Based on recent purchases and sales, we now estimate the value of the tree farms to be between six and nine times book value. Substantial new acquisitions completed after the end of the fiscal year are at market value; when they appear in subsequent balance sheets, the multiplier to estimate market value will, of course, be lower.
The lockup of federal and state timber for so-called threatened species (spotted owls and marbled murrelets) continues with no relief in sight. The resulting reduced log supply in the marketplace keeps log prices at very good levels. Any adverse effect on our ability to log our private lands is presently estimated at under 6%.
For the year, sales of paper and paperboard decreased 19% while operating results declined from $14,398,000 to $(2,181,000). Tonnage sold during the year decreased 25% while the average prices for paper held steady at year ago levels and the average price for paperboard declined 3%.
Slow recovery from the recession and intense competitive conditions have kept mill production at about 76%. Chip costs were high and depreciation costs increased. Aggressive recycling of old corrugated containers helped control fiber costs and facilitated product marketing. An additional pulper will shortly be installed which will permit utilization of purchased bleached pulp in lieu of bleaching on-site. This will reduce chip demand and defer a decision on how to replace our old bleach plants, which while they meet current environmental rules could not meet proposed EPA rules to be effective in 1997 or 1998.
Labor costs in the Pacific Northwest paper industry were bargained to very high levels when the region had low chip costs and could afford wages substantially above typical manufacturing rates. But with the reduction of government timber sales, chip costs in the region are now around two-thirds higher than those of the South. The premium wage rates are now a severe penalty.
Current high chip costs, which are about 1% higher than in the prior year, put the Pacific Northwest mills at a disadvantage in competing with mills in other regions. Over time, one can expect this disadvantage to become less. Supply- demand balance should be helped by reduced chip exports, increased imports, more recycling, pulp mill closures, pulp wood plantations and the reduction in diameter of logs sawn which increases the ratio of chips to lumber.
Chip costs in other regions are likely to rise because of increased exports, increased consumption and environmental constraints.
Converting results declined from $(4,830,000) in fiscal 1992 to $(14,717,000) in fiscal 1993. Sales declined 3% due to a 4% decrease in tonnage sold. Average price improved by 1%. Operating losses increased due to higher costs of containerboard used to manufacture boxes.
Paper, paperboard and corrugated box demand remained below industry capacity. Major competitors continue depressed price levels in the mistaken belief that market share and full operation in weak markets are more desirable than adequate margins.
The company continues to emphasize quality, service, continuity and the design of products to meet customers special needs, avoiding large accounts which have reached excessive loss levels.
Sale of power continues to make a substantial reduction in net cost of power used.
Selling, administrative and general expenses were 7% of sales in fiscal 1993 and fiscal 1992. Interest expensed decreased 7% in fiscal 1993 as compared with fiscal 1992 due to lower borrowing and lower interest rates.
A harsh governmental climate for business, especially for forest products and manufacturing industries, plus a weak world economy, make the prospects for recovery appear limited. If a sharp recovery should occur, the company's ability to take full advantage thereof may be limited by raw material availability. Should this happen, the company will move away from its lowest margined sales and will thus materially improve results. A dawdling recovery seem more likely, which would postpone any dramatic restoration of results to the previous peak level.
RESULTS OF OPERATIONS 1992 vs. 1991
1992 was the fourth unsatisfactory year in a row. While earnings improved by 93%, they were 67% below 1988 when shareholders' equity was 8% lower.
Log profits increased from $45,286,000 in fiscal 1991 to $61,006,000 in fiscal 1992. The 35% improvement was due to an 11% increase in footage sold and a 14% increase in average price. Demand and prices remain strong in both the export and domestic markets.
The company operates its 527,800 acres of tree farms on a sustained yield basis with rotations between 50 and 70 years. Based on recent purchases and sales, we now estimate the value of the tree farms to be between five and seven times book value.
Lockup of federal and state timber for so-called threatened species (spotted owls and marbled murrelets) continues with no relief in sight. The resulting reduced log supply in the marketplace keeps log prices at very good levels.
Any adverse effect on our ability to log our private lands is presently estimated at under 3%.
For the year, sales of paper and paperboard improved 5% while operating profits declined from $15,183,000 in fiscal 1991 to $14,398,000 in fiscal 1992. Tonnage sold during the year increased 16% while average prices for paper and paperboard decreased 3% and 6% respectively.
Slow recovery from the recession and intense competitive conditions kept mill production at about 85% of capacity. Depreciation and interest costs increased due to the completion of major capital projects such as Number 22 recovery furnace. Labor costs remain high as do chip costs which were about 1% higher than the prior fiscal year.
Converting results improved from $(19,535,000) in fiscal 1991 to $(4,830,000) in fiscal 1992. Sales improved 4% due to a 3% increase in average price and modest increase in tonnage sold. Operating losses were reduced due to lower costs of containerboard used to manufacture boxes and a better product mix.
Demand for paper, paperboard and corrugated boxes remained below industry capacity. Product markets remain chaotic. Announced price increases are often not implemented. Excessively leveraged competitors continue to dump products in markets they do not customarily serve. Competitive earnings clearly show the futility of such dumping. Any competitor who succeeds in remaining sold out during slow business will inevitably disappoint some customers in a strong market.
The company continues to try to earn sales by quality, service, continuity and the design of custom grades and products, not by price cutting. The twelve machines with varied but overlapping capabilities, and with considerable flexibility in switching from paper to board or from liner to corrugating medium, permit excellent response to customer needs.
Sale of power continues to make a substantial reduction in net cost of power used.
Selling, administrative and general expenses were 7% of sales in fiscal 1992 and fiscal 1991. Interest expensed increased modestly due to increased borrowing and proportionately less interest attributable to uncompleted capital projects.
Short-term prospects continue to appear to be mediocre. Industry expansion appears to be modest and if and when strong economic recovery occurs, earnings should improve materially.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations increased $22,161,000 in 1993 compared with 1992 due primarily to increased earnings and increases in noncash charges to earnings such as depreciation, depletion and deferred taxes.
Working capital was $34,308,000 at October 31, 1993 compared to $30,119,000 at October 31, 1992.
Long-term debt, current installments of long-term debt and short-term borrowings decreased by $35,596,000 in 1993 due to reduced capital expenditures and increased cash provided by operations.
At October 31, 1993, the company had bank lines of credit totaling $247,000,000. Of this amount, $170,000,000 was under a credit agreement with a group of banks expiring February 28, 1995, with renewal provisions beyond that date. The company had outstanding $150,000,000 of notes payable under this agreement at October 31, 1993. Also available was $77,000,000 of bank credit lines for additional borrowing needs. At October 31, 1993, the company had an outstanding balance of $30,000,000 under these credit lines. The unused portion of all bank lines of credit was $67,000,000 as of October 31, 1993, which is adequate for anticipated future needs.
Also outstanding at October 31, 1993 were senior notes of $157,500,000 and revenue bonds of $28,900,000.
Expenditures for fiscal 1993 for plant and equipment were $53,256,000 and for timberland $4,700,000. Expenditures for fiscal 1992 for plant and equipment were $66,744,000. The backlog of approved capital projects as of October 31, 1993 is $56,000,000. Timberland purchases of $26,000,000 closed after October 31, 1993.
Capital projects: Capacity of the old corrugated container (OCC) recycling plant will be increased by 33% in the first quarter of fiscal 1994.
The Leavenworth sawmill operation is improving. Dry kilns are being installed. When these are operative (estimated early 1994), operations should be in the black.
Engineering is proceeding on a 50,000 average kw cogeneration plant. When all necessary permits are received, the project can proceed. Cost of the plant is included in the capital backlog.
Capital investments in plant and equipment are expected to average $45,000,000 per year.
During fiscal 1993 the company purchased 17,973 shares of its stock for an average price of $16.62 per share. During fiscal 1992, the company purchased 8,323 shares for an average price of $15.29 per share. Purchases began in 1964; the total number of shares acquired through fiscal 1993 is 21,198,381 shares for $93,518,674 at an average cost of $4.41 per share. Stock purchases increase interest costs and thus reduce corporate earnings. In most years when earnings are good, they increase earnings per share. In a bad year, the interest cost can decrease earnings per share slightly.
Dividends of $.52 per share were paid in fiscal 1993 and 1992. Shareholders' equity increased $16,678,000 in fiscal 1993 as compared with an increase of $5,082,000 in fiscal 1992.
Due to timberland purchases of $26,000,000, total borrowing will increase during the first fiscal quarter of 1994. It is expected that near-term capital expenditures will be financed from internally generated funds.
OTHER The company has in place a process of reviewing any known environmental exposures which includes determining the costs of remediation. At the present time, the company is not aware of any environmental liabilities that would have a material impact on the consolidated financial statements.
The company'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 assete, although most of the inflationary effect of inventories is already portrayed in the consolidated income statement by the use of the LIFO method of inventory valuation.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PAGE Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . . 13 Consolidated Statements of Income for the three years ended October 31, 1993 . . . . . . . . . . . . . . 14 Consolidated Statements of Shareholders' Equity for the three years ended October 31, 1993. . . . . . . 14 Consolidated Balance Sheets at October 31, 1993, 1992 and 1991. . . . . . . . . . . . . . . . . . . . . . 15 Consolidated Statements of Cash Flows for the three years ended October 31, 1993 . . . . . . . . . . . . 16 Notes to Consolidated Financial Statements. . . . . . . . . . . 17
Financial Statement Schedules:
V - Property, Plant and Equipment. . . . . . . . . . . . . . . 26 VI - Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment . . . . . . . . . . . . . 28
Schedules not included with this additional financial data have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Longview Fibre Company
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Longview Fibre Company and its subsidiaries at October 31, 1993, 1992 and 1991, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 1993, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the financial statements, the Company changed its method of accounting for income taxes and for postretirement benefits other than pensions.
\s\ Price Waterhouse Price Waterhouse
Portland, Oregon December 8, 1993
CONSOLIDATED STATEMENT OF INCOME Years Ended October 31
(thousands except per share) 1993 1992 1991 Net sales. . . . . . . . . . . . . . . . . . . $689,551 $690,998 $644,000 Logs . . . . . . . . . . . . . . . . . . 166,822 114,944 90,785 Paper and paperboard . . . . . . . . . . 189,787 234,119 223,260 Converted products . . . . . . . . . . . 332,942 341,935 329,955 Cost of products sold, including outward freight . . . . . . . . . . . . . . . 554,984 571,453 556,329 Gross profit . . . . . . . . . . . . . . . . . 134,567 119,545 87,671 Selling, administrative and general expenses . 49,994 48,971 46,737 Operating profit . . . . . . . . . . . . . . . 84,573 70,574 40,934 Logs . . . . . . . . . . . . . . . . . . 101,471 61,006 45,286 Paper and paperboard . . . . . . . . . . (2,181) 14,398 15,183 Converted products . . . . . . . . . . . (14,717) (4,830) (19,535) Interest income. . . . . . . . . . . . . . . . 329 357 1,290 Interest expensed. . . . . . . . . . . . . . . (22,772) (24,356) (24,211) Miscellaneous. . . . . . . . . . . . . . . . . 958 812 4,490 Income before income taxes . . . . . . . . . . 63,088 47,387 22,503 Provision for taxes on income (see Note 9) Current. . . . . . . . . . . . . . . . . . . . 13,055 11,603 (633) Deferred . . . . . . . . . . . . . . . . . . . 9,745 3,697 6,493 22,800 15,300 5,860
Net income . . . . . . . . . . . . . . . . . . $ 40,288 $ 32,087 $ 16,643 Per share. . . . . . . . . . . . . . . . $ 0.78 $ 0.62 $ 0.32
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(thousands) 1993 1992 1991 Common stock: Balance at beginning of year . . . . . . $ 77,527 $ 77,540 $ 77,565 Issued . . . . . . . . . . . . . . . . . 323 - - Ascribed value of stock purchased. . . . (27) (13) (25) Balance at end of year . . . . . . . . . $ 77,823 $ 77,527 $ 77,540 Additional paid-in capital: Balance at beginning of year . . . . . . $ - $ - $ - On common stock issued . . . . . . . . . 3,306 - - Balance at end of year . . . . . . . . . $ 3,306 $ - $ - Retained earnings: Balance at beginning of year . . . . . . $304,590 $299,495 $309,913 Net income . . . . . . . . . . . . . . . 40,288 32,087 16,643 Less cash dividends on common stock ($0.52 per share). . . . . . . . . . . (26,940) (26,878) (26,883) Less purchases of common stock . . . . . (272) (114) (178) Balance at end of year . . . . . . . . . $317,666 $304,590 $299,495 Common shares: Balance at beginning of year . . . . . . 51,685 51,693 51,710 Issued . . . . . . . . . . . . . . . . . 215 - - Purchases. . . . . . . . . . . . . . . . (18) (8) (17) Balance at end of year . . . . . . . . . 51,882 51,685 51,693
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET
October 31
(dollars in thousands except per share) 1993 1992 1991 ASSETS Current assets: Accounts and notes receivable. . . . . . . . $ 82,563 $ 91,671 $ 84,121 Allowance for doubtful accounts. . . . . . (1,000) (750) (750) Taxes on income, refundable. . . . . . . . . - - 3,620 Inventories (see Note 3) . . . . . . . . . . 59,674 55,741 48,390 Other. . . . . . . . . . . . . . . . . . . . 7,081 1,883 2,074 Total current assets . . . . . . 148,318 148,545 137,455 Capital assets: Buildings, machinery and equipment at cost . 1,164,411 1,124,957 1,070,637 Accumulated depreciation . . . . . . . . . 548,538 499,228 452,619 Costs to be depreciated in future years (see Note 2). . . . . . . . . . . 615,873 625,729 618,018 Plant sites at cost. . . . . . . . . . . . . 2,423 2,423 2,318 618,296 628,152 620,336 Timber at cost less depletion. . . . . . . . 129,372 129,206 127,431 Roads at cost less amortization. . . . . . . 9,198 10,628 12,184 Timberland at cost . . . . . . . . . . . . . 10,264 9,669 8,455 148,834 149,503 148,070 Total capital assets . . . . . 767,130 777,655 768,406 Other assets . . . . . . . . . . . . . . . . 28,925 24,568 20,991 $ 944,373 $ 950,768 $ 926,852
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Payable to bank resulting from checks in transit . . . . . . . . . . . . . $ 8,363 $ 7,193 $ 9,022 Accounts payable . . . . . . . . . . . . . . 40,219 42,796 44,049 Short-term borrowings (see Note 4) . . . . . 20,000 35,000 9,000 Payrolls payable . . . . . . . . . . . . . . 8,973 8,431 7,054 Federal income taxes payable . . . . . . . . 1,502 4,057 - Other taxes payable. . . . . . . . . . . . . 15,010 15,324 14,714 Current installments of long-term debt . . . 19,943 5,625 25,825 Total current liabilities . . . 114,010 118,426 109,664 Long-term debt (see Note 5) . . . . . . . . 327,486 362,400 356,025 Deferred taxes - net (see Note 9). . . . . . 97,693 83,266 79,569 Other liabilities. . . . . . . . . . . . . . 6,389 4,559 4,559 Commitments (see Note 10). . . . . . . . . . - - - Shareholders' equity: Preferred stock; authorized 2,000,000 shares - - - Common stock, ascribed value $1.50 per share; authorized 150,000,000 shares; issued 51,881,819, 51,684,792 and 51,693,115 shares respectively (see Note 13) . . . . . 77,823 77,527 77,540 Additional paid-in capital . . . . . . . . . 3,306 - - Retained earnings. . . . . . . . . . . . . . 317,666 304,590 299,495 Total shareholders' equity. . . 398,795 382,117 377,035 $ 944,373 $ 950,768 $ 926,852
The accompanying notes are an integral part of these financial statements.
Page 15
CONSOLIDATED STATEMENT OF CASH FLOWS Years Ended October 31
(thousands) 1993 1992 1991 Cash provided by (used for) operations: Net income . . . . . . . . . . . . . . . . . $ 40,288 $ 32,087 $ 16,643 Charges to income not requiring cash - Depreciation . . . . . . . . . . . . . . 60,859 57,371 52,396 Depletion and amortization . . . . . . . 8,166 6,036 5,600 Deferred taxes - net . . . . . . . . . . 9,745 3,697 6,493 (Gain) loss on disposition of capital assets. . . . . . . . . . . . . 1,437 797 (1,285)
Change in: Inventories . . . . . . . . . . . . . . . (3,190) (7,351) (353) Taxes on income, refundable . . . . . . . - 3,620 (3,620) Other . . . . . . . . . . . . . . . . . . (516) 191 (299) Accounts and notes receivable . . . . . . 9,358 (7,550) (2,173) Accounts, payrolls and other taxes payable. . . . . . . . . . . . . . (3,049) 6,477 (271) Federal income taxes payable. . . . . . . (2,555) 4,057 (1,769) Other noncurrent assets . . . . . . . . . (4,357) (3,577) (3,321) Other noncurrent liabilities. . . . . . . 1,830 - - Cash provided by operations. . . . . . . . . 118,016 95,855 68,041
Cash provided by (used for) investing: Additions to: Plant and equipment . . . . . (53,256) (66,744) (101,950) Timber and timberlands. . . . (4,700) (7,579) (1,730) Proceeds from sale of capital assets . . . . 905 871 2,878 Cash used for investing. . . . . . . . . . . (57,051) (73,452) (100,802)
Cash provided by (used for) financing: Additions to long-term debt. . . . . . . . . 21,029 35,000 100,000 Reduction in long-term debt. . . . . . . . . (41,625) (48,825) (37,655) Short-term borrowings. . . . . . . . . . . . (15,000) 26,000 (14,877) Payable to bank resulting from checks intransit. . . . . . . . . . . . . . 1,170 (1,829) 9,022 Accounts payable for construction. . . . . . 700 (5,744) 2,451 Cash dividends . . . . . . . . . . . . . . . (26,940) (26,878) (26,883) Purchase of common stock . . . . . . . . . . (299) (127) (203) Cash provided by (used for) financing. . . . (60,965) (22,403) 31,855
Decrease in cash position. . . . . . . . . . - - (906) Cash position, beginning of year . . . . . . - - 906 Cash position, end of year . . . . . . . . . $ - $ - $ -
Supplemental disclosures of cash flow information: Cash paid during the year for: Interest (net of amount capitalized) . . . . $ 23,231 $ 24,037 $ 23,484 Capitalized interest . . . . . . . . . . . . 548 2,670 4,192 Income taxes . . . . . . . . . . . . . . . . 16,134 9,727 5,061
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES:
Principles of consolidation The financial statements include the accounts of the company and all subsidiaries after elimination of intercompany balances and transactions.
Inventories Inventories are stated at the lower of cost or market. Cost is determined on a last-in, first-out method except for supplies at current averages.
Property and depreciation Buildings, machinery and equipment are recorded at cost and include those additions and improvements that add to production capacity or extend useful life. Cost includes interest capitalized during the construction period on all significant asset acquisitions. When properties are sold or otherwise disposed, the cost and the related accumulated depreciation are removed from the respective accounts and the resulting profit or loss is recorded in income. The costs of maintenance and repairs are charged to income when incurred.
Depreciation for financial accounting purposes is computed on the straight-line basis over the estimated useful lives of the assets. The estimated useful lives of assets range from 20 to 60 years for buildings and principally from 12 to 16 years for machinery and equipment.
Timberlands, depletion and amortization Timber, timberlands and timber roads are stated at cost. Provision for depletion of timber and amortization of logging roads represents charges per unit of production (footage cut) based on the estimated recoverable timber. No gain or loss is recognized on timberland exchanges since the earnings process is not considered complete until timber is harvested and marketed.
Earnings per share Net income per common share is computed on the basis of weighted average shares outstanding of 51,785,201, 51,688,336 and 51,697,653 for 1993, 1992 and 1991, respectively.
Pension and other benefit plan costs The company's policy is to accrue as cost an amount computed by the actuary and to fund at least the minimum amount required by ERISA.
The Statement of Financial Accounting Standards No. 106 (FAS 106), "Employers' Accounting for Postretirement Benefits Other Than Pensions," was adopted during 1993. FAS 106 requires the company to accrue the estimated cost of retiree benefit payments, other than pensions, during the employees' active service period. The company elected to amortize the unrecognized transition obligation over 20 years. The transition obligation is $10 million as of November 1, 1992. The annual pretax costs for postretirement benefits other than pensions are $2 million greater in 1993 under the provisions of FAS 106 than under the company's prior "pay-as-you-go" method of accounting (see Note 7).
Income taxes The Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes," was adopted during 1993. FAS 109 requires a change from the deferred method to the asset and liability method of accounting for income taxes.
Under FAS 109, the effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Under the deferred method, deferred taxes were recognized using the tax rate applicable to the year of the calculation and were not adjusted for subsequent changes in tax rates. The cumulative effect of the change in the method of accounting for income taxes as of the beginning of fiscal 1993 was not material. Financial statements for prior years have not been restated (see Note 9).
Revenue recognition The company generally recognizes revenues when goods are shipped.
NOTE 2 - BUILDINGS, MACHINERY AND EQUIPMENT: At Cost - net of accumulated depreciation consist of the following:
October 31 (thousands) 1993 1992 1991 Buildings - net . . . . . . . . $ 39,644 $ 38,726 $ 39,749 Machinery and equipment - net . 576,229 587,003 578,269 $615,873 $625,729 $618,018
NOTE 3 - INVENTORIES: Inventories consist of the following:
October 31 (thousands) 1993 1992 1991 Finished goods. . . . . . . . . $14,977 $12,861 $10,261 Goods in process. . . . . . . . 11,231 11,024 9,043 Raw materials and supplies. . . 33,466 31,856 29,086 $59,674 $55,741 $48,390
The amounts included above for inventories valued by the LIFO method are less than replacement or current cost by approximately $39,306,000, $41,331,000 and $40,683,000 at October 31, 1993, 1992 and 1991, respectively.
NOTE 4 - SHORT-TERM BORROWINGS: At October 31, 1993, the company had bank lines of credit totaling $247 million. Of this amount, $170 million was under a credit agreement with a group of banks providing various methods of borrowing. The company can request a "Competitive Bid" specifying dollar amounts and loan duration. The various banks may then bid, specifying rates and amounts, which the company may accept or reject. The agreement also provides for borrowings other than competitive bids, at the Euro Dollar Rate plus 5/8% or the bank's prime rate, whichever the company selects. The credit agreement contains certain financial covenants and provides for a 1/4% facility fee and a 1/8% commitment fee on the unused portion of the commitments. This agreement has an expiration date of February 28, 1995 with renewal provisions beyond that date. At October 31, 1993, the company had loans of $150 million under the credit agreement.
The company also has an agreement whereby it can borrow money by issuing notes in the commercial paper market. The $170 million credit agreement above provides credit back-up for commercial paper issued, therefore the combined borrowing under the credit agreement and the commercial paper agreement cannot exceed $170 million. During the year no commercial paper was issued.
Also available was $77 million of bank credit lines for additional borrowing needs. Of this amount, two $20 million agreements are committed lines of
credit which are subject to a nominal commitment fee and expire March 31, 1995 and November 1, 1996, respectively. The other $37 million is uncommitted. At October 31, 1993, the company had an outstanding balance of $30 million under these credit lines.
Short-term borrowings of $160 million, $176 million and $199 million at October 31, 1993, 1992 and 1991, 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) 1993 1992 1991 Notes payable October 31 . . . . $180,000 $211,000 $208,000 Interest rate October 31 . . . . 4.0% 4.3% 6.1% Average daily amount of notes payable outstanding during year . . . . . . . . . . $179,601 $193,573 $186,476 Average* interest rate during year . . . . . . . . . . 4.2% 5.0% 7.2% Maximum amount of notes payable at any month end. . . . $195,000 $211,000 $210,000
*Computed by dividing interest incurred by average notes payable outstanding.
NOTE 5 - LONG-TERM DEBT: Long-term debt consists of the following:
October 31 (thousands) 1993 1992 1991 Senior notes due through 1999 (7.70%-10.13%) - Note (a). . . . $157,500 $163,125 $153,750 Revenue bonds payable through 2015 (floating rates, currently 2.55%-2.75%) - Note (b). . . . . 28,900 28,900 29,100 Other . . . . . . . . . . . . . . 1,029 - - Notes payable - banks - Note 4 above . . . . . . . . . . 160,000 176,000 199,000 347,429 368,025 381,850 Less current installments . . 19,943 5,625 25,825 Net long-term debt. . . . . . . . $327,486 $362,400 $356,025
Scheduled maturities 1995 $205,993 1996 34,119 1997 34,119 1998 14,119 1999-2015 39,136 $327,486
Note (a) Covenants of the senior notes include tests of minimum net worth, short-term borrowing, long-term borrowing, current ratio and restrictions on payments of dividends. Accordingly, at October 31, 1993, approximately $47 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, 1993 $23,900,000 was secured by liens on the equipment.
NOTE 6 - RETIREMENT AND SAVINGS PLANS: The company has two trusteed defined benefit pension programs which cover a majority of employees who have completed one year of continuous service. The plans provide benefits of a stated amount for each year of service with an option for some employees to receive benefits based on an average earnings formula.
The weighted-average discount rate and rate of increase in the future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7% and 5.25% for 1993, and 8% and 5.5% for 1992 and 1991, respectively. The expected long-term rate of return on assets was 9%.
The following table sets forth the plans' funded status and amounts recognized in the company's consolidated financial statements at October 31:
(thousands) 1993 1992 1991 Actuarial present value of benefit obligations: Vested . . . . . . . . . . . . . $132,030 $112,824 $106,879 Vested and nonvested . . . . . . $132,803 $113,429 $107,574 Projected for service rendered . . . . . . . . . . . $147,395 $127,745 $121,149 Plan assets at fair value, primarily listed stocks. . . . . . 235,763 197,524 187,911 Excess plan assets. . . . . . . . . 88,368 69,779 66,762 Items not recognized in earnings: Net (asset) at adoption of FAS No. 87 . . . . . . . . . . . . . (10,164) (11,534) (12,903) Unrecognized prior service cost. . 7,487 8,925 9,847 Net (gain) subsequent to adoption . . . . . . . . . . . . (63,095) (48,438) (47,740) Pension asset recognized in the consolidated balance sheet . . . . $ 22,596 $ 18,732 $ 15,966 Net pension (income) includes the following: Benefits earned during period. . . . . . . . . . . . . $ 3,203 $ 3,258 $ 3,138 Interest cost on projected benefit obligation. . . . . . . 9,770 9,451 8,951 Actual (return) on plan assets. . . . . . . . . . . . . (45,229) (16,098) (60,191) Net amortization and deferral of items not recognized in earnings. . . . . . . . . . . . 28,392 622 45,785
Net pension (income). . . . . . . . $ (3,864) $ (2,767) $ (2,317)
Voluntary savings plans are maintained for all employees who have completed one year of continuous service. The plans allow salary deferrals in accordance with IRC section 401(k) provisions. The company contribution as a matching incentive during 1993, 1992 and 1991 was $857,000, $826,000 and $563,000, respectively.
NOTE 7 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: The company provides postretirement health care insurance benefits for all salaried and certain non-salaried employees and their dependents. Individual benefits generally continue until age 65. The company does not pre-fund these benefits.
Postretirement benefit expense was $2,274,000, $390,000 and $382,000 in 1993, 1992 and 1991, respectively.
The components of expense in 1993 were as follows:
(thousands) 1993 Service cost . . . . . . . . . . . . . . . . . . . . . . . . $ 639 Interest cost. . . . . . . . . . . . . . . . . . . . . . . . 1,137 Amortization of unrecognized transition obligation . . . . . 498 Net periodic postretirement benefit cost . . . . . . . . . . $ 2,274
The accumulated postretirement benefit obligation, comprises the following components:
(thousands) 1993 Retirees . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,245) Fully eligible active plan participants. . . . . . . . . . . (3,025) Other active plan participants . . . . . . . . . . . . . . . (11,268) Total accumulated postretirement benefit obligation. . . . . (16,538) Unrecognized net loss. . . . . . . . . . . . . . . . . . . . 677 Unrecognized transition obligation . . . . . . . . . . . . . 9,472 Accrued postretirement benefit cost. . . . . . . . . . . . . $ (6,389)
Future benefit costs were calculated using a health care cost trend rate of 16% for the indemnity plan and 9% for the HMO plan. The trend rate declines each year until the ultimate health care cost trend rate, 5.5%, is reached in the year 2003 for the indemnity plan and the year 1999 for the HMO plan. A one percent change in the health care cost trend rate assumption has a $2,029,000 effect on the accumulated postretirement benefit obligation as of October 31, 1993 and a $251,000 effect on the net periodic postretirement benefit cost. The weighted-average discount rate used was 8% at November 1, 1992 and 7.5% at October 31, 1993.
NOTE 8 - 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 at October 31, 1993 is approximately $9 million more than the stated value.
NOTE 9 - INCOME TAXES: Provision (credit) for taxes on income is made up of the following components. The 1993 amounts reflect use of the liability method under FAS 109 while the 1992 and 1991 amounts reflect accounting using the deferred method which was required under previous rules.
(thousands) 1993 1992 1991 Current: Federal. . . . . . . . . . . . . . $12,601 $10,720 $ (401) State. . . . . . . . . . . . . . . 454 883 (232) 13,055 11,603 (633) Deferred: Federal. . . . . . . . . . . . . . 8,699 2,880 6,101 State. . . . . . . . . . . . . . . 1,046 817 392 9,745 3,697 6,493 $22,800 $15,300 $ 5,860
1992 and 1991 deferred income tax provision:
(thousands) 1992 1991 Depreciation . . . . . . . . . . . $13,642 $11,690 Alternative minimum tax. . . . . . (9,600) (5,652) Other. . . . . . . . . . . . . . . (345) 455 $ 3,697 $ 6,493
An analysis of the effective income tax rate as compared to the expected federal income tax rate is as follows:
1993 1992 1991 Expected federal income tax rate . . 35% 34% 34% Foreign Sales Corporation. . . . . . (5) (4) (7) State income taxes less federal income tax benefit . . . . 1 2 1 Enacted rate change impacting deferred taxes . . . . . . . . . . 5 - - Other. . . . . . . . . . . . . . . . - - (2) 36% 32% 26%
The deferred income tax liabilities (assets) recorded in the Consolidated Balance Sheet as of October 31, 1993, are as follows:
(thousands) Non-Current Current Depreciation . . . . . . . . . . . . $119,667 $ Employee Benefit Plans . . . . . . . 8,363 Alternative Minimum Tax. . . . . . . (24,235) Other. . . . . . . . . . . . . . . . (6,102) Non-deductible accruals. . . . . . . (4,682) Deferred tax liabilities (assets). . $ 97,693 $ (4,682)
Federal income tax returns through 1985 have been settled with the Internal Revenue Service.
NOTE 10 - COMMITMENTS AND CONTINGENCIES: Estimated costs to complete approved capital projects were approximately $56 million, $18 million and $47 million at October 31, 1993, 1992 and 1991, respectively.
NOTE 11 - SUPPLEMENTAL EXPENSE INFORMATION:
(thousands) 1993 1992 1991 Maintenance & repairs. . . . . . . . $63,556 $64,527 $70,297 Taxes, other than income taxes: Payroll. . . . . . . . . . . . 10,206 10,156 9,319 Property . . . . . . . . . . . 10,689 10,763 11,295 Sales and use. . . . . . . . . 3,548 3,797 4,246 Other. . . . . . . . . . . . . 7,823 7,561 7,240 Research and development . . . . . . 462 725 788
NOTE 12 - SEGMENT INFORMATION: The company owns and operates tree farms in Oregon and Washington which produce logs for sale. Its pulp and paper mill at Longview, Washington produces pulp which is manufactured into kraft paper and containerboard. The raw material fibers come primarily from purchased wood chips and sawdust with important contributions from fiber reclaimed from post-consumer and post-industrial waste, and augmented by log chipping operations owned by the company and others. The company's fourteen converting plants in ten states produce shipping containers, and merchandise and grocery bags. The tonnage of paper and containerboard used in the converting plants equals approximately 66% of the Longview mill tonnage.
Included in sales to customers are export sales, principally to Japan, Hong Kong, Taiwan and Southeast Asia in 1993, 1992 and 1991 of $124,195,000, $123,604,000 and $89,588,000, respectively. All sales are made in U. S. dollars.
There are no intersegment sales as all manufacturing operations to produce primary or converted products for sale are considered integrated from the purchased wood to the sale of the finished product.
Identifiable assets are segregated or allocated to segments as follows:
1. Assets used wholly within a segment are assigned to that segment.
2. Assets used jointly by two segments are allocated to each segment on a percentage determined by dividing total cost of product into cost of product produced for each segment. Paper and paperboard assets of $275,417,000, $262,105,000 and $266,305,000 have been allocated to converted products at October 31, 1993, 1992 and 1991, respectively.
Depreciation, depletion and amortization and additions to capital assets have been segregated and allocated similarly to the method used for identifiable assets.
(thousands) 1993 1992 1991 Sales to customers: Logs . . . . . . . . . . . . . . . . $166,822 $114,944 $ 90,785 Paper and paperboard . . . . . . . . 189,787 234,119 223,260 Converted products . . . . . . . . . 332,942 341,935 329,955 Total. . . . . . . . . . . . . . . 689,551 690,998 644,000
(thousands) 1993 1992 1991 Income (loss) on sales: Logs . . . . . . . . . . . . . . . . 101,471 61,006 45,286 Paper and paperboard . . . . . . . . (2,181) 14,398 15,183 Converted products . . . . . . . . . (14,717) (4,830) (19,535) Interest expensed and other. . . . . (21,485) (23,187) (18,431) Income before income taxes . . . . 63,088 47,387 22,503
Identifiable assets at October 31: Logs . . . . . . . . . . . . . . . . 188,450 190,041 180,337 Paper and paperboard . . . . . . . . 278,981 302,855 279,264 Converted products . . . . . . . . . 476,942 457,872 467,251 Total. . . . . . . . . . . . . . . 944,373 950,768 926,852
Depreciation, depletion and amortization: Logs . . . . . . . . . . . . . . . . 11,010 8,114 6,196 Paper and paperboard . . . . . . . . 19,907 20,225 17,533 Converted products . . . . . . . . . 38,108 35,068 34,267 Total. . . . . . . . . . . . . . . 69,025 63,407 57,996
Additions to capital assets: Logs . . . . . . . . . . . . . . . . 5,453 12,797 17,714 Paper and paperboard . . . . . . . . 15,162 27,898 35,922 Converted products . . . . . . . . . 37,341 33,628 50,044 Total. . . . . . . . . . . . . . . $ 57,956 $ 74,323 $103,680
NOTE 13 - SHAREHOLDER RIGHTS PLAN: A Shareholder Rights Plan provides one right for each share of common stock. With certain exceptions, the rights will become exercisable only in the event that an acquiring party accumulates 20% or more of the company's voting stock or a party announces an offer to acquire 30% or more of the voting stock. The rights expire on March 1, 1999, if not previously redeemed or exercised. Each right entitles the holder to purchase one-tenth of one common share at a price of $4.00 ($40 per whole share), subject to adjustment under certain circumstances. In addition, upon the occurrence of certain events, holders of the rights will be entitled to purchase a defined number of shares of an acquiring entity or the company's common shares at half their then current market value. The company will generally be entitled to redeem the rights at $0.01 per right at any time until the tenth day following the acquisition of 20% or more, or an offer to acquire 30% or more, of the company's voting stock.
QUARTERLY FINANCIAL DATA (UNAUDITED)
Fiscal Year Quarters Total Fiscal (thousands except per share) 1st 2nd 3rd 4th Year
Net sales. . . . . . . . . . $155,873 $179,045 $175,826 $178,807 $689,551 Gross profit . . . . . . . . 25,026 37,916 40,380 31,245 134,567 Net income . . . . . . . . . 5,089 13,363 14,625 7,211 40,288 Net income per share (1) . . 0.10 0.26 0.28 0.14 0.78
Net sales . . . . . . . . . $152,696 $172,868 $177,878 $187,556 $690,998 Gross profit . . . . . . . . 23,132 32,040 31,529 32,844 119,545 Net income . . . . . . . . . 3,904 9,679 8,689 9,815 32,087 Net income per share (1) . . 0.08 0.18 0.17 0.19 0.62
Net sales . . . . . . . . . $152,355 $158,106 $161,320 $172,219 $644,000 Gross profit . . . . . . . . 16,770 22,295 22,880 25,726 87,671 Net income . . . . . . . . . 1,458 3,279 4,523 7,383 16,643 Net income per share (1) . . 0.03 0.06 0.09 0.14 0.32
(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.
SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
(thousands) Balance at Other Balance beginning Additions changes- at end Description (7) of period at cost Retirements describe of period
For the Year Ended October 31, 1993
Buildings. . . $ 63,957 $ 2,504 $ 370 $ $ 66,091
Machinery and equipment. . . 1,061,000 50,752 13,432 1,098,320 1,124,957 53,256 13,802 1,164,411 Plant sites. . 2,423 - - 2,423 1,127,380 53,256 13,802 1,166,834
Timber . . . . 129,206 3,377 718 (5,864) (1) 129,372 3,371 (5) Timber Roads . 10,628 968 12 (2,303) (2) 9,198 (83) (3) Timberland . . 9,669 355 18 258 (5) 10,264 149,503 4,700 748 (4,621) 148,834 $1,276,883 $ 57,956 $14,550 $(4,621) $1,315,668
For the Year Ended October 31, 1992
Buildings. . . $ 63,672 $ 539 $ 254 $ $ 63,957
Machinery and equipment. . . 1,006,965 66,100 12,065 1,061,000 1,070,637 66,639 12,319 1,124,957 Plant sites. . 2,318 105 - 2,423 1,072,955 66,744 12,319 1,127,380
Timber . . . . 127,431 6,487 17 (3,769) (1) 129,206 (926) (4) Timber Roads . 12,184 804 2 (2,267) (2) 10,628 (91) (3) Timberland . . 8,455 288 - 926 (4) 9,669 148,070 7,579 19 (6,127) 149,503 $1,221,025 $ 74,323 $12,338 $(6,127) $1,276,883
SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
(thousands) Balance at Other Balance beginning Additions changes- at end Description (7) of period at cost Retirements describe of period
For the Year Ended October 31, 1991
Buildings. . . $ 63,568 $ 1,168 $ 1,055 $ (9) (6) $ 63,672
Machinery and equipment. . . 932,167 100,763 24,930 (1,035) 1,006,965 995,735 101,931 25,985 (1,044) 1,070,637 Plant sites. . 2,017 19 - 282 2,318 997,752 101,950 25,985 (762) 1,072,955
Timber . . . . 127,651 1,519 6 (3,346) (1) 127,431 890 (4) 723 (6) Timber Roads . 14,414 145 - (2,254) (2) 12,184 (94) (3) (27) (4) Timberland . . 9,215 66 2 (863) (4) 8,455 39 (6) 151,280 1,730 8 (4,932) 148,070 $1,149,032 $103,680 $25,993 $(5,694) $1,221,025
(1) Depletion of timber and amortization of aerial fertilization, charged to income. (2) Road amortization, charged to income. (3) Depreciation on bridges, culverts, and fire roads, charged to income. (4) Effect of timber trades. (5) Timber and timberland acquired through exchange of Longview Fibre Company common stock. (6) Effect of Los Angeles Box Plant exchange. (7) The methods used in computing the annual provisions are completed by reference to Item 8, Note 1 of this Form 10-K.
SCHEDULE VI
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
(thousands) Additions Other Balance at charged to changes - add Balance beginning costs and (deduct) - at end Description of period expenses Retirements describe of period
For the Year Ended October 31, 1993
Buildings. . . . $ 25,231 $ 1,524 $ 308 $ $ 26,447
Machinery and equipment. . . 473,997 59,252 11,158 522,091 $499,228 $60,776 $11,466 $ $548,538
For the Year Ended October 31, 1992
Buildings. . . . $ 23,923 $ 1,496 $ 188 $ $ 25,231
Machinery and equipment. . . 428,696 55,784 10,483 473,997 $452,619 $57,280 $10,671 $ $499,228
For the Year Ended October 31, 1991
Buildings. . . . $ 23,482 $ 1,492 $ 1,051 $ $ 23,923
Machinery and equipment. . . 401,235 50,810 23,349 428,696 $424,717 $52,302 $24,400 $ $452,619
ITEM 9.

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.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Item 10, with the exception of the following information regarding executive officers of the company, is contained in the Notice of Annual Meeting of Shareholders and Proxy Statement which is incorporated as part of this Form 10-K.
Executive Officers of the Company
Name Age Office and Year First Elected
R. P. Wollenberg 78 (1) Chairman of the Board, President and Chief Executive Officer (1953)
R. E. Wertheimer 65 (2) Executive Vice President (1960)
W. H. Smith 65 (3) Vice President-Production (1992)
R. J. Parker 45 (4) Senior Vice President-Production (1994)
D. L. Bowden 58 (5) Senior Vice President-Timber (1989)
L. J. Holbrook 38 (6) Senior Vice President-Finance, Secretary and Treasurer (1989)
D. C. Stibich 62 (7) Senior Vice President-Paper Sales (1981)
R. B. Arkell 62 (8) Vice President-Industrial Relations and General Council (1986)
(1) R. P. Wollenberg
From 1985 Chairman, President and Chief Executive Officer 1978-1985 President and Chief Executive Officer 1969-1978 President 1960-1969 Executive Vice President
(2) R. E. Wertheimer
From 1985 Executive Vice President 1975-1985 Vice President-Container Division 1974-1975 Vice President-Production 1963-1974 Vice President-Container Sales
(3) W. H. Smith
From 1992 Vice President-Production 1982-1992 Assistant Mill Manager
(4) R. J. Parker
From 1994 Senior Vice President-Production 1993-1994 Vice President and Assistant to the President 1992-1993 Pulp Mill Superintendant 1985-1992 Assistant Pulp Mill Superintendant
(5) D. L. Bowden
From 1992 Senior Vice President-Timber 1989-1992 Vice President-Timber 1980-1989 Assistant Timber Manager
(6) 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
(7) D. C. Stibich
From 1986 Senior Vice President Paper Sales 1981-1986 Vice President Paper Sales 1968-1981 Manager Paper Sales
(8) R. B. Arkell
From 1979 Vice President Industrial Relations and General Counsel
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
This item is completed by reference to Notice of Annual Meeting of Shareholders and Proxy Statement which is incorporated as part of this Form 10-K.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security ownership of certain beneficial owners. This item is completed by reference to Notice of Annual Meeting of Shareholders and Proxy Statement which is incorporated as part of this Form 10-K.
(b) Security ownership of management. This item is completed by reference to Notice of Annual Meeting of Shareholders and Proxy Statement which is incorporated as part of this Form 10-K.
(c) Changes in control. No known arrangements.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with management and others. There have been no known transactions in an amount in excess of $60,000 involving any of the specified persons.
(b) Certain business relationships. No director or nominee for director is known to be involved in any of the specified relationships with the company.
(c) Indebtedness of management. None of the specified persons is indebted to the company in an amount in excess of $60,000.
PART IV
ITEM 14.

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 1991, 1992 and 1993 consolidated financial statements are included in Item 8 of this Form 10-K.
The individual financial statements of the company have been omitted since the company is primarily an operating company and all subsidiaries included in the consolidated financial statements, in the aggregate, do not have minority equity interest and/or indebtedness to any person other than the company or its consolidated subsidiaries in amounts which together exceed 5% of total consolidated assets at October 31, 1993.
(3) Exhibits required to be filed by Item 601 of Regulation S-K:
3.1 Articles of Incorporation of Longview Fibre Company ***
3.2 Bylaws of Longview Fibre Company ***
4.1 Commercial Paper Facility *
4.2 Rights Agreement **
4.3 $170,000,000 Credit Agreement
4.4 First Amendment to Credit Agreement
4.5 Loan Agreement
4.6 Other long-term debts that do not exceed 10% of the total assets of the company, details of which will be supplied to the Commission upon request:
Senior Notes due through 1999 (7.70% - 10.13%) $157,500,000
Revenue Bonds payable through 2015 (floating rates, 2.55% through 2.75% at October 31, 1993) $ 28,900,000
Other $ 1,029,000
23. Consent of Independent Accountants
* Incorporated by reference to company's Annual Report on Form 10-K for the year ended October 31, 1988. ** Incorporated by reference to company's Annual Report on Form 10-K for the year ended October 31, 1989. *** Incorporated by reference to company's Annual Report on Form 10-K for the year ended October 31, 1990.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended October 31, 1993.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
LONGVIEW FIBRE COMPANY Registrant
\s\ L. J. Holbrook 1-25-94 L. J. Holbrook, Vice President-Finance, Date Secretary and Treasurer
Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the company and in the capacities and on the dates indicated.
\s\ R. P. Wollenberg 1-25-94 R. P. Wollenberg, Chief Executive Officer Date and Director
\s\ L. J. Holbrook 1-25-94 L. J. Holbrook, Chief Financial Officer Date and Director
\s\ C. D. Norman 1-25-94 C. D. Norman, Chief Accounting Officer Date
\s\ R. B. Arkell 1-25-94 R. B. Arkell, Director Date
\s\ D. L. Bowden 1-25-94 D. L. Bowden, Director Date
\s\ M. A. Dow 1-25-94 M. A. Dow, Director Date
\s\ C. H. Monroe 1-25-94 C. H. Monroe, Director Date
\s\ G. E. Schwartz 1-25-94 G. E. Schwartz, Director Date
\s\ J. E. Wertheimer 1-25-94 J. E. Wertheimer, Director Date
\s\ D. A. Wollenberg 1-25-94 D. A. Wollenberg, Director Date
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, 1993, which appears at Item 8 of Longview Fibre Company's Annual Report on Form 10-K.
\s\ Price Waterhouse Price Waterhouse
Portland, Oregon January 25, 1994