Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS
(a)	GENERAL DEVELOPMENT OF BUSINESS
	Longview Fibre Company was incorporated in the State of Washington in 1990 	as a successor to a company of the same name incorporated in the State of 	Delaware in 1926. No general development of material importance has 	occurred during the past fiscal year.
(b)	FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
	This item is completed by reference to Note 12 of Item 8 of this Form 10-K.
(c)	NARRATIVE DESCRIPTION OF BUSINESS
	(1) Principal Products, Markets and Methods of Distribution
TIMBER - Registrant owns and operates tree farms in Oregon and Washington which produce logs for sale in the domestic and export markets. The majority of domestic sales are to independent sawmills and plywood plants within a reasonable hauling distance from our tree farms. The company exports logs principally to Japan through sales to U.S. exporters or directly to foreign importers. The company does not believe that the loss of one customer or group of customers would have a material adverse effect on the company.
The lockup of federal and state timber for so-called threatened species (spotted owls, marbled murrelets and salmon) continues with no relief in sight. The resulting reduced supply in the marketplace keeps log prices at very good levels. Attempts are continuing to similarly restrict private lands which will increase operating costs and could reduce the value of our lands. We presently estimate this adverse effect to be not greater than 6%.
The company owned in fee on October 31, 1994 545,193 acres of tree farms which are managed on a sustained yield basis with rotations between 45 and 70 years. No large inventory of mature trees is maintained.
The company owns and operates a sawmill in Leavenworth, Washington. Having an efficient small log sawmill in this region has resulted in improved log realizations on the Chelan tree farm. Residual wood chips are used at the company's pulp and paper mill in Longview.
PAPER AND PAPERBOARD - The company's pulp and paper mill at Longview, Washington produces pulp which is manufactured into kraft paper and containerboard.
Sales of paper are made primarily in the domestic market with some grades of paper sold in the export market. Containerboard is sold in the export market and in the Pacific Coast states. The loss of a single customer, or a few customers, would not have a material
adverse effect on the company. Products 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.
The mill's raw material fibers come primarily from purchased wood chips and sawdust with important contributions from fiber reclaimed from post-consumer and post-industrial waste, purchased bleach pulp, and augmented by log chipping operations owned by the company and others.
Current high chip costs put the Pacific Northwest mills at a disadvantage in competing with mills in other regions. The lockup of federal and state timber for threatened species will tend to keep chip costs up in the near term due to reduced log supply in the region. The company expects that, over time, this disadvantage will lessen due to reduced chip exports from the region, 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). In an effort to reduce costs and take advantage of marketing opportunities, the company continues to maximize the use of reclaimed fibers, which is a lower cost fiber despite 1994 price increases.
To spread risk, the company has been engaged in a long campaign to increase value added. Through the years paper machines of various trim widths and capabilities have been added while the smaller and older machines have been kept in service to make small lots of colors and other specialties. During the course of this evolution, the commodity base (paperboard and bag paper) was not neglected as this makes the volume great enough to lower pulp and utility costs. Several machines are swing machines which can produce paper or paperboard. Due to current market conditions a greater proportion of paperboard is being produced.
The company continues to emphasize quality, service, continuity and design of products to meet customers needs. 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.
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 64% 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 loss of a single customer, or a few customers, would not have a material effect on the business of the company.
Due to the higher cost of containerboard used to manufacture boxes, caused primarily by high chip costs, the company has embarked on major programs of installing improved and specialized equipment in its box plants in order to make more specialized products as a means to improve margins.
The company believes it competes on even terms in highly competitive markets avoiding large accounts which have reached excessive loss levels.
The following table sets forth the contribution to sales by each class of similar products which accounted for more than 10% of sales.
1994 1993 1992 Paper and Paperboard 28% 28% 34% Timber 25% 24% 17% Converted Products 47% 48% 49%
No material portion of the business of the company is seasonal.
The practice of the company and the industry does not require an abnormal amount of working capital. 		 (xi) The amount spent on research and development is completed by 	 reference to Note 11 of Item 8 of this Form 10-K.
(xii) This item is completed by reference to Item 7 of this Form 10-K.
(xiii) The company has approximately 3,750 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:
TIMBER - As of October 31, 1994 the company owned in fee 545,193 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 45 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 87% during fiscal 1994. Markets improved starting late in the second quarter with full operation achieved in the fourth quarter of the year.
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, Merchandise Bags, Grocery Bags and Specialty Bags Milwaukee, Wisconsin Corrugated and Solid Fibre Boxes Waltham, Massachusetts Merchandise Bags and Specialty Bags
A plant to make short runs of boxes from corrugated sheets made at Spanish Fork, Utah will be constructed in 1995 at Cedar City, Utah.
The volume of converted products sold increased 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
The company is a party to various proceedings relating to the cleanup of hazardous waste under the Comprehensive Environmental Response Compensation and Liability Act, and similar state laws. The company is also a party to other legal proceedings generally incidental to its business. Although the final outcome of any legal proceeding cannot be predicted with any degree of certainty, the company presently believes that any ultimate liability resulting from any of the legal proceedings discussed herein, or all of them combined, would not have a material effect on the company's financial position.
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 1994 	 1993 Quarter High Low	 High Low 1st $23.63 $17.13 $18.75 $15.88 2nd 23.00 16.75 20.25 16.00 3rd 21.25 16.75 18.25 15.75 4th 21.25 16.63 18.25 15.88
(b)(1) The company estimates it now has approximately 13,000 shareholders.
(c)(1) Dividends per share paid in fiscal 1994, 1993 and 1992:
1994 1993 1992 January $0.13 $0.10 $0.10 April 0.13 0.10 0.10 July 0.13 0.10 0.10	 October 0.13 0.22 0.22	 $0.52 $0.52 $0.52
The Directors have declared a regular dividend of $0.13 per share to be paid on January 10, 1995, to shareholders of record on December 23, 1994.
Restrictions on the company's ability to pay cash dividends are completed by reference to Notes 5 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 1994 vs. 1993
1994 was the sixth consecutive unsatisfactory year. Earnings decreased by 17% and were 65% below 1988 when shareholders' equity was 13% lower.
Timber profits increased from $101,471,000 to $111,907,000 in fiscal 1994. The 10% improvement was primarily due to 21% increase in log and lumber footage sold. Prices for logs and lumber held steady with year ago levels, but operating results were adversely affected by fire losses. Demand and prices remain at good levels in both the export and domestic markets.
Summer of 1994 was a period of devastating forest fires east of the Cascades where we have about 80,000 acres. Parts of 9,000 acres were subject to fire. We have charged to earnings $2 million which is our best current estimate of the timber lost based on cost of that timber. Market value is, of course, greater; potential profit lost will be reflected in later years.
The company operates its 545,193 acres of tree farms on a sustained yield basis with rotations between 45 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. These multipliers are lower than the prior year because of large purchases in fiscal 1994 at market prices. While actual purchases reflect current market prices, we are confident that prices we paid have adequate allowance for profit and risk.
Lockup of federal and state timber for so-called threatened species continues to expand. The resulting reduced log supply in the marketplace keeps log prices at very good levels. Attempts are continuing to extend environmental overkill to private lands. This effort increases our operating costs and can reduce the value of our lands. We presently estimate this adverse effect to be not greater than 6%.
For the year, sales of paper and paperboard increased 18% while operating results declined from $(2,181,000) to $(15,703,000). Tonnage sold during the year increased 30% while the average prices for paper declined 3% and the average price for paperboard improved 8%. Increased costs which contributed to the reduced results are discussed below.
Markets improved starting late in the second quarter; full operation and improved prices were achieved in the fourth quarter of the year. Weak markets in the early part of the fiscal year resulted in operations for the year at about 87% of capacity.
Chip costs were about 1% lower than the prior year but continue to be high. Increased demand for OCC (old corrugated containers) caused its price to increase sharply; however, it is still cheaper than virgin pulp. Our expectation is still, as reported last year, that in time chip cost differences between the Pacific Northwest and other regions will diminish.
Market bleached pulp is now used for all bleached products and part of the bleach plant has been written off. Bleached pulp prices are increasing which necessitates higher prices for bleached products.
The company made a six-year labor settlement at the mill with moderate wage increases, but accompanied by substantial retirement improvements. The cost of the pension improvements reduced reported earnings by approximately $2,000,000. While the settlement is expensive, it is not out of line with regional competitors, but rates are high compared with other regions.
Converting results declined from $(14,717,000) in fiscal 1993 to $(19,408,000) in fiscal 1994. Sales increased 11% due to an 8% increase in tonnage sold and a 2% increase in average price. Operating losses increased due to higher costs of containerboard used to manufacture boxes.
Paperboard demand increased so that the industry is now running at capacity. The paper market improved slightly as swing machines shifted to paperboard. Corrugated box prices improved as containerboard became scarce.
During weak markets some large buyers tend to hold auctions. Longview Fibre will do its best to avoid such buyers and to have continuing long term relationships with customers who see the necessity for paying compensatory prices for quality, service, continuity, product design and specialized manufacturing capability. In the long term, no user of our products can expect to rely on producers who are forced to sell below cost.
Sale of power continues to make a substantial reduction in net cost of power used. The new cogeneration plant is expected to be on-line by next summer.
Selling, administrative and general expenses were 7% of sales in fiscal 1994 and fiscal 1993. Interest expensed increased 7% in fiscal 1994 as compared with fiscal 1993 due to higher borrowing for capital expenditures and higher interest rates.
The harsh government climate for manufacturing continues to make production expensive; no improvement is in sight. The current very strong market for our products will make manufacturing profitable; it will, nevertheless, take considerable time to recover the large amount lost in manufacturing in the last four years. The current recovery has gone on for long enough to start speculation as to when it may end. Modest expansion in the paper industry leads one to the hope that the next downmarket will not be as bad as the recent debacle.
It appears probable that the log market will stay fairly strong even in a downturn.
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.
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.
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.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations decreased $22,137,000 in 1994 compared with 1993 primarily due to decreased earnings and increases in accounts receivable resulting from increased sales.
Working capital was $35,761,000 at October 31, 1994 compared to $34,308,000 at October 31, 1993.
Long-term debt, current installments of long-term debt and short-term borrowings increased by $46,057,000 in 1994 due primarily to increased capital expenditures.
At October 31, 1994, the company had bank lines of credit totaling $292,000,000. Of this amount, $160,000,000 was under a credit agreement with a group of banks expiring February 28, 1996, with renewal provisions beyond that date. The company had outstanding $120,000,000 of notes payable under this agreement at October 31, 1994. Also available were $132,000,000 of bank credit lines for additional borrowing needs. At October 31, 1994, the company had an outstanding balance of $86,000,000 under these credit lines. The unused portion of all bank lines of credit was $86,000,000 as of October 31, 1994, which is adequate for anticipated future needs.
Also outstanding at October 31, 1994 were senior notes of $177,875,000 and revenue bonds of $28,900,000.
Expenditures for fiscal 1994 for plant and equipment were $81,544,000 and for timberland $43,494,000. Expenditures for fiscal 1993 for plant and equipment were $53,256,000 and for timberland $4,700,000. The backlog of approved capital projects as of October 31, 1994 is $65,000,000. Timberland purchases of $32,000,000 closed after October 31, 1994.
Capital projects: The company has embarked on major programs of installing improved and specialized equipment in its mill and box plants in order to make more customized products as a means to improve margins.
The company is acquiring property to build a corrugated sheet plant at Cedar City, Utah.
Capital expenditures for plant and equipment are expected to range between $60,000,000 and $100,000,000 per year. Purchase of timberlands will depend on offerings, price levels and competition.
During fiscal 1994, the company purchased 51,522 shares of its stock for an average price of $19.16 per share. During fiscal 1993, the company purchased 17,973 shares for an average price of $16.62 per share. Purchases began in 1964; the total number of shares acquired through fiscal 1994 is 21,249,903 shares for $94,505,865 at an average cost of $4.45 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 1994 and 1993. Shareholders' equity increased $5,458,000 in fiscal 1994 as compared with an increase of $16,678,000 in fiscal 1993.
Primarily due to timberland purchases of $32,000,000, total borrowing will increase during the first fiscal quarter of 1995. It is expected that near-term capital expenditures will be financed from internally generated funds and with external borrowings if needed.
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 believes it is in substantial compliance with Federal, State and local laws regarding environmental quality. The Environmental Protection Agency (EPA) has issued proposed rules regarding air and water quality referred to as the "Cluster Rules" which are currently undergoing public review. Depending upon the final form of these rules, the company estimates that over the next 4 to 5 years required pollution control capital expenditures could range from $10 million to $50 million. Although future pollution control expenditures cannot be predicted with any certainty because of continuing changes in laws, the company believes that compliance with these requirements will not have a material impact on its capital expenditures, earnings or competitive position.
The company's consolidated financial statements are prepared based on historical costs and do not portray the effects of inflation. The impact of inflation is most noticeable for inventories and capital assets, although most of the inflationary effect on inventories is already portrayed in the consolidated income statement by the use of the LIFO method of inventory valuation.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
											 PAGE Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . 14 Consolidated Statements of Income for the three years ended October 31, 1994 . . . . . . . . . . . . . 15 Consolidated Statements of Shareholders' Equity for the three years ended October 31, 1994 . . . . . . 15 Consolidated Balance Sheets at October 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . 16 Consolidated Statements of Cash Flows for the three years ended October 31, 1994 . . . . . . . . . . . 17 Notes to Consolidated Financial Statements . . . . . . . . . . 18
Financial Statement Schedules:
Schedules have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto of this Form 10-K.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Longview Fibre Company
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Longview Fibre Company and its subsidiaries at October 31, 1994, 1993 and 1992, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
\s\ Price Waterhouse LLP Price Waterhouse LLP
Portland, Oregon December 7, 1994
CONSOLIDATED STATEMENT OF INCOME 								 Years Ended October 31
(thousands except per share) 1994 1993 1992 NET SALES. . . . . . . . . . . . . . . . . . . $790,874 $689,551 $690,998 Timber . . . . . . . . . . . . . . . . . 197,978 166,822 114,944 Paper and paperboard . . . . . . . . . . 223,920 189,787 234,119 Converted products . . . . . . . . . . . 368,976 332,942 341,935 Cost of products sold, including outward freight . . . . . . . . . . . . . . . 659,309 554,984 571,453 GROSS PROFIT . . . . . . . . . . . . . . . . . 131,565 134,567 119,545 Selling, administrative and general expenses . 54,769 49,994 48,971 OPERATING PROFIT . . . . . . . . . . . . . . . 76,796 84,573 70,574 Timber . . . . . . . . . . . . . . . . . 111,907 101,471 61,006 Paper and paperboard . . . . . . . . . . (15,703) (2,181) 14,398 Converted products . . . . . . . . . . . (19,408) (14,717) (4,830) Interest income. . . . . . . . . . . . . . . . 539 329 357 Interest expensed. . . . . . . . . . . . . . . (24,384) (22,772) (24,356) Miscellaneous. . . . . . . . . . . . . . . . . 1,363 958 812 INCOME BEFORE INCOME TAXES . . . . . . . . . . 54,314 63,088 47,387 PROVISION FOR TAXES ON INCOME (see Note 9) Current. . . . . . . . . . . . . . . . . . . . 15,748 13,055 11,603 Deferred . . . . . . . . . . . . . . . . . . . 5,152 9,745 3,697 20,900 22,800 15,300
NET INCOME . . . . . . . . . . . . . . . . . . $ 33,414 $ 40,288 $ 32,087 Per share. . . . . . . . . . . . . . . . $ 0.64 $ 0.78 $ 0.62
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(thousands) 1994 1993 1992 COMMON STOCK: Balance at beginning of year . . . . . . $ 77,823 $ 77,527 $ 77,540 Issued . . . . . . . . . . . . . . . . . - 323 - Ascribed value of stock purchased. . . . (78) (27) (13) Balance at end of year . . . . . . . . . $ 77,745 $ 77,823 $ 77,527 ADDITIONAL PAID-IN CAPITAL: Balance at beginning of year . . . . . . $ 3,306 $ - $ - On common stock issued . . . . . . . . . - 3,306 - Balance at end of year . . . . . . . . . $ 3,306 $ 3,306 $ - RETAINED EARNINGS: Balance at beginning of year . . . . . . $317,666 $304,590 $299,495 Net income . . . . . . . . . . . . . . . 33,414 40,288 32,087 Less cash dividends on common stock ($0.52 per share). . . . . . . . . . . (26,968) (26,940) (26,878) Less purchases of common stock . . . . . (910) (272) (114) Balance at end of year . . . . . . . . . $323,202 $317,666 $304,590 COMMON SHARES: Balance at beginning of year . . . . . . 51,882 51,685 51,693 Issued . . . . . . . . . . . . . . . . . - 215 - Purchases. . . . . . . . . . . . . . . . (52) (18) (8) Balance at end of year . . . . . . . . . 51,830 51,882 51,685
The accompanying notes are an integral part of the financial statements.
CONSOLIDATED BALANCE SHEET
October 31
(dollars in thousands except per share) 1994 1993 1992 ASSETS Current assets: Accounts and notes receivable. . . . . . . . $ 101,190 $ 82,563 $ 91,671 Allowance for doubtful accounts. . . . . . (1,000) (1,000) (750) Inventories (see Note 2) . . . . . . . . . . 67,305 59,674 55,741 Other. . . . . . . . . . . . . . . . . . . . 7,597 7,081 1,883 Total current assets . . . . . . 175,092 148,318 148,545 Capital assets: Buildings, machinery and equipment at cost . 1,230,784 1,164,411 1,124,957 Accumulated depreciation . . . . . . . . . 599,342 548,538 499,228 Costs to be depreciated in future years (see Note 3). . . . . . . . . . . 631,442 615,873 625,729 Plant sites at cost. . . . . . . . . . . . . 2,423 2,423 2,423 633,865 618,296 628,152 Timber at cost less depletion. . . . . . . . 158,659 129,372 129,206 Roads at cost less amortization. . . . . . . 9,415 9,198 10,628 Timberland at cost . . . . . . . . . . . . . 13,570 10,264 9,669 181,644 148,834 149,503 Total capital assets . . . . . 815,509 767,130 777,655 Other assets . . . . . . . . . . . . . . . . 31,448 28,925 24,568 $1,022,049 $944,373 $950,768
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Payable to bank resulting from checks in transit . . . . . . . . . . . . . $ 12,505 $ 8,363 $ 7,193 Accounts payable . . . . . . . . . . . . . . 52,361 40,219 42,796 Short-term borrowings (see Note 4) . . . . . 1,000 20,000 35,000 Payrolls payable . . . . . . . . . . . . . . 9,862 8,973 8,431 Federal income taxes payable . . . . . . . . 2,929 1,502 4,057 Other taxes payable. . . . . . . . . . . . . 14,680 15,010 15,324 Current installments of long-term debt . . . 45,994 19,943 5,625 Total current liabilities . . . 139,331 114,010 118,426 Long-term debt (see Note 5). . . . . . . . . 366,492 327,486 362,400 Deferred taxes - net (see Note 9). . . . . . 103,234 97,693 83,266 Other liabilities. . . . . . . . . . . . . . 8,739 6,389 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 51,830,297, 51,881,819 and 51,684,792 shares, respectively (see Note 13). . . . . 77,745 77,823 77,527 Additional paid-in capital . . . . . . . . . 3,306 3,306 - Retained earnings. . . . . . . . . . . . . . 323,202 317,666 304,590 Total shareholders' equity. . . 404,253 398,795 382,117 $1,022,049 $ 944,373 $ 950,768
The accompanying notes are an integral part of the financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS Years Ended October 31
(thousands) 	 	 1994 1993 1992 CASH PROVIDED BY (USED FOR) OPERATIONS: Net income . . . . . . . . . . . . . . . . . $ 33,414 $ 40,288 $ 32,087 Charges to income not requiring cash - Depreciation . . . . . . . . . . . . . . 62,144 60,859 57,371 Depletion and amortization . . . . . . . 10,546 8,166 6,036 Deferred taxes - net . . . . . . . . . . 5,541 9,745 3,697 Loss on disposition of capital assets. . 2,679 1,437 797
Change in: Accounts and notes receivable . . . . . . (18,627) 9,358 (7,550) Taxes on income, refundable . . . . . . . - - 3,620 Inventories . . . . . . . . . . . . . . . (7,631) (3,190) (7,351) Other . . . . . . . . . . . . . . . . . . (516) (516) 191 Other noncurrent assets . . . . . . . . . (2,523) (4,357) (3,577) Accounts, payrolls and other taxes payable . . . . . . . . . . . . . 7,075 (3,049) 6,477 Federal income taxes payable. . . . . . . 1,427 (2,555) 4,057 Other noncurrent liabilities. . . . . . . 2,350 1,830 - Cash provided by operations. . . . . . . . . 95,879 118,016 95,855
CASH PROVIDED BY (USED FOR) INVESTING: Additions to: Plant and equipment . . . . . (81,544) (53,256) (66,744) Timber and timberlands. . . . (43,494) (4,700) (7,579) Proceeds from sale of capital assets . . . . 1,290 905 871 Cash used for investing. . . . . . . . . . . (123,748) (57,051) (73,452)
CASH PROVIDED BY (USED FOR) FINANCING: Additions to long-term debt. . . . . . . . . 85,000 21,029 35,000 Reduction in long-term debt. . . . . . . . . (19,943) (41,625) (48,825) Short-term borrowings. . . . . . . . . . . . (19,000) (15,000) 26,000 Payable to bank resulting from checks in transit . . . . . . . . . . . . . 4,142 1,170 (1,829) Accounts payable for construction. . . . . . 5,626 700 (5,744) Cash dividends . . . . . . . . . . . . . . . (26,968) (26,940) (26,878) Purchase of common stock . . . . . . . . . . (988) (299) (127) Cash provided by (used for) financing. . . . 27,869 (60,965) (22,403)
Change in cash position. . . . . . . . . . . - - - Cash position, beginning of year . . . . . . - - - Cash position, end of year . . . . . . . . . $ - $ - $ -
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest (net of amount capitalized) . . . . $ 23,912 $ 23,231 $ 24,037 Capitalized interest . . . . . . . . . . . . 1,486 548 2,670 Income taxes . . . . . . . . . . . . . . . . 14,500 16,134 9,727
The accompanying notes are an integral part of the 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 51,861,365, 51,785,201 and 51,688,336 for 1994, 1993 and 1992, 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 unrecognized transition obligation of $10 million as of November 1, 1992 is being amortized over 20 years (see Note 8).
INCOME TAXES The Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes," was adopted during 1993 and 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. 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 - INVENTORIES: Inventories consist of the following:
October 31 (thousands) 1994 1993 1992 Finished goods . . . . . . . . $ 15,106 $ 14,977 $ 12,861 Goods in process. . . . . . . . 11,390 11,231 11,024 Raw materials and supplies. . . 40,809 33,466	 31,856 $ 67,305 $ 59,674 $ 55,741
The amounts included above for inventories valued by the LIFO method are less than replacement or current cost by approximately $45,705,000, $39,306,000 and $41,331,000 at October 31, 1994, 1993 and 1992, respectively.
NOTE 3 - BUILDINGS, MACHINERY AND EQUIPMENT: At cost - net of accumulated depreciation consist of the following:
October 31 (thousands) 1994 1993 1992 Buildings - net . . . . . . . . $ 46,963 $ 39,644 $ 38,726 Machinery and equipment - net . 584,479 576,229 587,003 $631,442 $615,873 $625,729
NOTE 4 - SHORT-TERM BORROWINGS: At October 31, 1994, the company had bank lines of credit totaling $292 million. Of this amount, $160 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 3/8% 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 when the quarterly average daily usage is less than $90 million. This agreement has an expiration date of February 28, 1996 with renewal provisions beyond that date. At October 31, 1994, the company had loans of $120 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 $160 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 $160 million. During the year, no commercial paper was issued.
Also available was $132 million of bank credit lines for additional borrowing needs. Of this amount, a $45 million and a $20 million agreement are committed lines of credit which are each subject to a nominal commitment fee and expire November 1, 1996 and March 31, 1996, respectively. The other $67 million is uncommitted. At October 31, 1994, the company had an outstanding balance of $86 million under these credit lines.
Short-term borrowings of $205 million, $160 million and $176 million at October 31, 1994, 1993 and 1992, 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) 1994 1993 1992 Notes payable October 31 . . . . $206,000 $180,000 $211,000 Interest rate October 31 . . . . 5.6% 4.0% 4.3% Average daily amount of notes payable outstanding during year . . . . . . . . . . $196,547 $179,601 $193,573 Average* interest rate during year . . . . . . . . . . 4.6% 4.2% 5.0% Maximum amount of notes payable at any month end. . . . $213,000 $195,000 $211,000
*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) 1994 1993 1992 Senior notes due through 2001 (6.17%-9.80%) - Note (a) . . . . $177,875 $157,500 $163,125 Revenue bonds payable through 2015 (floating rates, currently 3.35%-3.45%) - Note (b). . . . . 28,900 28,900 28,900 Other . . . . . . . . . . . . . . 711 1,029 - Notes payable - banks - Note 4 above . . . . . . . . . . 205,000 160,000 176,000 412,486 347,429 368,025 Less current installments . . 45,994 19,943 5,625 Net long-term debt. . . . . . . . $366,492 $327,486 $362,400
Scheduled maturities 1996 $239,118 1997 34,119 1998 14,119 1999 30,118 2000-2015 49,018 $366,492
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, 1994, approximately $44 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, 1994, $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 was 8% and 5.25% for 1994, 7% and 5.25% for 1993, and 8% and 5.5% for 1992. 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) 1994 1993 1992 Actuarial present value of benefit obligations: Vested . . . . . . . . . . . . . $132,175 $132,030 $112,824 Vested and nonvested . . . . . . $133,190 $132,803 $113,429 Projected for service rendered . . . . . . . . . . . $157,549 $147,395 $127,745 Plan assets at fair value, primarily listed stocks. . . . . . 237,109 235,763 197,524 Excess plan assets. . . . . . . . . 79,560 88,368 69,779 Items not recognized in earnings: Net (asset) at adoption of FAS 87. (8,795) (10,164) (11,534) Unrecognized prior service cost. . 24,363 7,487 8,925 Unrecognized net (gain) . . . . . (71,034) (63,095) (48,438) Pension asset recognized in the consolidated balance sheet . . . . $ 24,094 $ 22,596 $ 18,732
Net pension (income) includes the following: Service cost . . . . . . . . . . $ 4,334 $ 3,203 $ 3,258 Interest cost. . . . . . . . . . 10,800 9,770 9,451 Actual (return) on plan assets . (8,920) (45,229) (16,098) Net amortization and deferral. . (7,711) 28,392 622
Net pension (income). . . . . . . . $ (1,497) $ (3,864) $ (2,767)
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 1994, 1993 and 1992 was $916,000, $857,000 and $826,000, respectively.
NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS: Accounts receivable, revenue bonds and notes payable to banks approximate fair value as reported in the balance sheet. The fair value of senior notes is estimated using discounted cash flow analyses, based on the company's incremental borrowing rates for similar types of borrowing arrangements. The difference between the fair value of the company's long-term debt and the stated value at October 31, 1994 is not material. The fair value of the company's long-term debt at October 31, 1993 was approximately $9 million more than the stated value.
NOTE 8 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: The company provides postretirement health care insurance benefits for all salaried and certain non-salaried employees and their dependents. Individual benefits generally continue until age 65. The company does not pre-fund these benefits.
Postretirement benefit expense was $2,679,000, $2,274,000 and $390,000 in 1994, 1993 and 1992, respectively.
The components of expense in 1994 and 1993 were as follows:
(thousands) 1994 1993	 Service cost . . . . . . . . . . . . . . . $ 850 $ 639	 Interest cost . . . . . . . . . . . . . . 1,331 1,137 Amortization of transition obligation . . 498 498 Net periodic postretirement benefit cost . $2,679 $2,274
The accumulated postretirement benefit obligation consists of the following:
(thousands) 1994 1993 Retirees . . . . . . . . . . . . . . . . . $(2,658) $ (2,245) 		 Fully eligible active plan participants . (3,898) (3,025)	 Other active plan participants . . . . . . (11,833) (11,268) Total accumulated postretirement benefit obligation	. . . . . . . . . . . (18,389) (16,538) Unrecognized net loss . . . . . . . . . . 676 677 Unrecognized transition obligation . . . . 8,974 9,472 Accrued postretirement benefit cost . . . $(8,739) $(6,389)
Future benefit costs were calculated using a health care cost trend rate of 15% for the indemnity plan and 8.5% 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 $2,945,000 effect on the accumulated postretirement benefit obligation as of October 31, 1994 and a $514,000 effect on the net periodic postretirement benefit cost. The weighted-average discount rate used was 8% and 7.5% at October 31, 1994 and 1993, respectively, and 8% at November 1, 1992.
NOTE 9 - INCOME TAXES: Provision for taxes on income is made up of the following components. The 1994 and 1993 amounts reflect use of the liability method under FAS 109 while the 1992 amount reflects accounting using the deferred method which was required under previous rules.
(thousands) 1994 1993 1992 Current: Federal. . . . . . . . . . . . . . $14,553 $12,601 $10,720 State. . . . . . . . . . . . . . . 1,195 454 883 15,748 13,055 11,603 Deferred: Federal. . . . . . . . . . . . . . 4,647 8,699 2,880 State. . . . . . . . . . . . . . . 505 1,046 817 5,152 9,745 3,697 $20,900 $22,800 $15,300
1992 deferred income tax provision:
(thousands) 1992 Depreciation . . . . . . . . . . . . $13,642 Alternative minimum tax. . . . . . . (9,600) Other. . . . . . . . . . . . . . . . (345) $ 3,697
An analysis of the effective income tax rate as compared to the expected federal income tax rate is as follows:
1994 1993 1992 Expected federal income tax rate . . 35% 35% 34% Foreign Sales Corporation. . . . . . - (5) (4) State income taxes less federal income tax benefit . . . . 2 1 2 Enacted rate change impacting deferred taxes . . . . . . . . . . - 5 - Other. . . . . . . . . . . . . . . . 1 - - 38% 36% 32%
The deferred income tax liabilities (assets) recorded in the Consolidated Balance Sheet as of October 31, are as follows:
(thousands) 1994 1993 Current: Non-deductible accruals. . . . . . $ (5,071) $ (4,682)
Non-current: Depreciation . . . . . . . . . . . $128,371 $ 119,667 Employee Benefit Plans . . . . . . 8,917 8,363 Alternative Minimum Tax. . . . . . (26,844) (24,235) Other. . . . . . . . . . . . . . . (7,210) (6,102) Non-current deferred tax . . . . . $103,234 $ 97,693
Federal income tax returns through 1988 have been settled with the Internal Revenue Service.
NOTE 10 - COMMITMENTS AND CONTINGENCIES: Estimated costs to complete approved capital projects were approximately $65 million, $56 million and $18 million at October 31, 1994, 1993 and 1992, respectively.
NOTE 11 - SUPPLEMENTAL EXPENSE INFORMATION:
(thousands) 1994 1993 1992 Maintenance & repairs. . . . . . . . $68,795 $63,556 $64,527 Taxes, other than income taxes: Payroll. . . . . . . . . . . . 10,949 10,206 10,156 Property . . . . . . . . . . . 10,114 10,689 10,763 Sales and use. . . . . . . . . 3,866 3,548 3,797 Other. . . . . . . . . . . . . 10,706 7,823 7,561 Research and development . . . . . . 471 462 725
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, purchased bleach pulp, 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 64% of the Longview mill tonnage.
Included in sales to customers are export sales, principally to Japan, Hong Kong and Southeast Asia in 1994, 1993 and 1992 of $161,622,000, $124,195,000 and $123,604,000, 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 $252,844,000, $275,417,000 and $262,105,000 have been allocated to converted products at October 31, 1994, 1993 and 1992, respectively.
Depreciation, depletion and amortization and additions to capital assets have been segregated and allocated similarly to the method used for identifiable assets.
(thousands) 	 1994 1993 1992 SALES TO CUSTOMERS: Timber . . . . . . . . . . . . . . . $ 197,978 $166,822 $114,944 Paper and paperboard . . . . . . . . 223,920 189,787 234,119 Converted products . . . . . . . . . 368,976 332,942 341,935 Total. . . . . . . . . . . . . . . 790,874 689,551 690,998
INCOME (LOSS) ON SALES: Timber . . . . . . . . . . . . . . . 111,907 101,471 61,006 Paper and paperboard . . . . . . . . (15,703) (2,181) 14,398 Converted products . . . . . . . . . (19,408) (14,717) (4,830) Interest expensed and other. . . . . (22,482) (21,485) (23,187) Income before income taxes . . . . 54,314 63,088 47,387
IDENTIFIABLE ASSETS AT OCTOBER 31: Timber . . . . . . . . . . . . . . . 225,656 188,450 190,041 Paper and paperboard . . . . . . . . 304,819 278,981 302,855 Converted products . . . . . . . . . 491,574 476,942 457,872 Total. . . . . . . . . . . . . . . 1,022,049 944,373 950,768
DEPRECIATION, DEPLETION AND AMORTIZATION: Timber . . . . . . . . . . . . . . . 13,350 11,010 8,114 Paper and paperboard . . . . . . . . 21,767 19,907 20,225 Converted products . . . . . . . . . 37,573 38,108 35,068 Total. . . . . . . . . . . . . . . 72,690 69,025 63,407
ADDITIONS TO CAPITAL ASSETS: Timber . . . . . . . . . . . . . . . 48,810 5,453 12,797 Paper and paperboard . . . . . . . . 19,890 15,162 27,898 Converted products . . . . . . . . . 56,338 37,341 33,628 Total. . . . . . . . . . . . . . . $ 125,038 $ 57,956 $ 74,323
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. . . . . . . . . . $166,085 $189,183 $207,341 $228,265 $790,874 Gross profit . . . . . . . . 21,360 40,101 32,184 37,920 131,565 Net income . . . . . . . . . 1,778 13,986 7,491 10,159 33,414 Net income per share (1) . . 0.03 0.27 0.14 0.20 0.64
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
(1) Per share statistics have been computed on the average of number of shares outstanding in the hands of the public. Per share statistics for the first three quarters may vary slightly from amounts reported on an interim basis due to changes in the number of shares outstanding.
ITEM 9.

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 79 (1) Chairman of the Board, President and Chief Executive Officer (1953)
R. E. Wertheimer 66 (2) Executive Vice President (1960)
R. J. Parker 46 (3) Senior Vice President-Production (1994)
D. L. Bowden 59 (4) Senior Vice President-Timber (1989)
L. J. Holbrook 39 (5) Senior Vice President-Finance, Secretary and Treasurer (1989)
D. C. Stibich 63 (6) Senior Vice President-Paper Sales (1981)
R. B. Arkell 63 (7) 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) 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
(4) D. L. Bowden
From 1992 Senior Vice President-Timber 1989-1992 Vice President-Timber 1980-1989 Assistant Timber Manager
(5) L. J. Holbrook
From 1992 Senior Vice President-Finance, Secretary and Treasurer 1991-1992 Vice President-Finance, Secretary and Treasurer 1989-1991 Assistant Secretary and Assistant Treasurer
(6) D. C. Stibich
From 1986 Senior Vice President Paper Sales 1981-1986 Vice President Paper Sales 1968-1981 Manager Paper Sales
(7) R. B. Arkell
From 1979 Vice President Industrial Relations and General Counsel
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 1994, 1993 and 1992 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, 1994.
(2) Financial Statement Schedules:
Schedules have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto in Item 8 of this Form 10-K.
(3) Exhibits required to be filed by Item 601 of Regulation S-K:
3.1 Articles of Incorporation of Longview Fibre Company ***
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 Second Amendment to Credit Agreement
4.6 Third Amendment to Credit Agreement
4.7 Loan Agreement ****
4.8 First Amendment to Loan Agreement
4.9 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 2001 (6.17% - 9.80%) $177,875,000
Revenue Bonds payable through 2015 (floating rates, 3.35% through 3.45% at October 31, 1994) $ 28,900,000
Other $ 711,000
10 Form of Term Protection
23 Consent of Independent Accountants
27 Financial Data Schedules
	* 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. **** 	Incorporated by reference to company's Annual Report on Form 			10-K for the year ended October 31, 1993.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended October 31, 1994.
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 	 1-24-95 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 	 1-24-95 R. P. Wollenberg, Chief Executive Officer Date and Director
\s\ L. J. Holbrook 	 1-24-95 L. J. Holbrook, Chief Financial Officer Date and Director
\s\ A. G. Higgens 	 1-24-95 A. G. Higgens, Chief Accounting Officer Date
\s\ R. B. Arkell 	 1-24-95 R. B. Arkell, Director Date
\s\ D. L. Bowden 	 1-24-95 D. L. Bowden, Director Date
\s\ M. A. Dow 	 1-24-95 M. A. Dow, Director Date
\s\ C. H. Monroe 	 1-24-95 C. H. Monroe, Director Date
\s\ G. E. Schwartz 	 1-24-95 G. E. Schwartz, Director Date
\s\ R. E. Wertheimer 	 1-24-95 R. E. Wertheimer, Director			 		 Date
\s\ D. A. Wollenberg 	 1-24-95 D. A. Wollenberg, Director Date