UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended July 31, 1994 Commission file number 0-1370
------------------------ ----------
Longview Fibre Company
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Washington 91-0298760
- - ------------------------------------- ---------------------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
P. O. Box 639, Longview, Washington 98632
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (206) 425-1550
------------------------------
Not Applicable
- - --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
51,843,837 Common Shares were outstanding as of July 31, 1994
<PAGE> Page 1
LONGVIEW FIBRE COMPANY - CONSOLIDATED BALANCE SHEET
- - --------------------------------------------------- (000 Omitted)
Jul. 31 Oct. 31 Jul. 31
1994 1993 1993
(Unaudited) (Unaudited
A S S E T S ---------- ---------- ----------
CURRENT ASSETS:
Accounts and notes receivable $84,573 $82,563 $72,910
Allowance for doubtful accounts (1,000) (1,000) (750)
Inventories, at lower of cost or market; costs
are based on last-in, first-out method except
for supplies at current averages
Finished goods 15,645 14,977 12,257
Goods in process 10,288 11,231 11,435
Raw materials and supplies 35,793 33,466 28,603
Other 9,125 7,081 3,209
---------- ---------- ----------
Total current assets 154,424 148,318 127,664
---------- ---------- ----------
CAPITAL ASSETS:
Buildings, machinery and equipment at cost 1,201,853 1,164,411 1,152,378
Accumulated depreciation 587,320 548,538 535,488
---------- ---------- ----------
Costs to be depreciated in future years 614,533 615,873 616,890
Plant sites at cost 2,423 2,423 2,423
---------- ---------- ----------
616,956 618,296 619,313
Timber at cost less depletion 160,122 129,372 135,047
Roads at cost less amortization 8,959 9,198 9,139
Timberland at cost 13,562 10,264 9,898
---------- ---------- ----------
182,643 148,834 154,084
---------- ---------- ----------
Total capital assets 799,599 767,130 773,397
---------- ---------- ----------
OTHER ASSETS 33,482 28,925 27,666
---------- ---------- ----------
$987,505 $944,373 $928,727
========== ========== ==========
L I A B I L I T I E S A N D S H A R E H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES:
Payable to bank resulting from
checks in transit $6,511 $8,363 $3,339
Accounts payable 35,734 40,219 35,154
Short-term borrowings 5,500 20,000 12,000
Payrolls payable 12,682 8,973 11,782
Federal income taxes payable 851 1,502 4,177
Other taxes payable 16,229 15,010 16,631
Current installments of long-term debt 45,744 19,943 15,744
---------- ---------- ----------
Total current liabilities 123,251 114,010 98,827
---------- ---------- ----------
LONG-TERM DEBT 353,367 327,486 333,111
---------- ---------- ----------
DEFERRED TAXES - NET 101,897 97,693 89,053
---------- ---------- ----------
OTHER LIABILITIES 7,896 6,389 4,559
---------- ---------- ----------
SHAREHOLDERS' EQUITY
Common stock, ascribed value $1.50 per share;
authorized 150,000,000 shares; issued
51,843,837; 51,881,819 and 51,892,732
shares respectively 77,766 77,823 77,839
Additional paid-in capital 3,306 3,306 3,306
Retained earnings 320,022 317,666 322,032
---------- ---------- ----------
Total shareholders' equity 401,094 398,795 403,177
---------- ---------- ----------
$987,505 $944,373 $928,727
========== ========== ==========
The accompanying note is an integral part of these financial statements.
<PAGE> PART I. FINANCIAL INFORMATION Page 2
LONGVIEW FIBRE COMPANY - CONSOLIDATED STATEMENT OF INCOME (Unaudited)
- - -----------------------------------------------------------------------
(000 Omitted)
Three Months Ended Nine Months Ended
July 31 July 31
--------------------- ---------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
Net sales:
Timber $54,131 $50,661 $152,434 $127,996
Paper and paperboard 63,624 43,367 152,689 140,052
Converted products 89,586 81,798 257,486 242,696
---------- ---------- ---------- ----------
207,341 175,826 562,609 510,744
---------- ---------- ---------- ----------
Cost of products sold, including
outward freight 175,157 135,446 468,964 407,422
---------- ---------- ---------- ----------
Gross profit 32,184 40,380 93,645 103,322
---------- ---------- ---------- ----------
Selling, administrative
and general expenses 13,899 12,411 40,159 37,068
---------- ---------- ---------- ----------
Operating profit:
Timber 26,923 33,709 89,665 82,440
Paper and paperboard (4,547) (1,735) (15,270) (2,598)
Converted products (4,091) (4,005) (20,909) (13,588)
---------- ---------- ---------- ----------
18,285 27,969 53,486 66,254
---------- ---------- ---------- ----------
Other income (expense):
Interest income 140 43 401 276
Interest expensed (6,482) (5,623) (17,667) (17,356)
Miscellaneous 242 366 988 716
---------- ---------- ---------- ----------
12,185 22,755 37,208 49,890
Provision for taxes on income:
Current 3,668 5,138 9,749 11,026
Deferred 1,026 2,992 4,204 5,787
---------- ---------- ---------- ----------
4,694 8,130 13,953 16,813
---------- ---------- ---------- ----------
Net income $7,491 $14,625 $23,255 $33,077
========== ========== ========== ==========
Dollars per share:
Net income $0.14 $0.28 $0.45 $0.64
Dividends $0.13 $0.10 $0.39 $0.30
Average shares outstanding in the
hands of the public (000 omitted) 51,848 51,893 51,871 51,753
The accompanying note is an integral part of these financial statements.
<PAGE> PART I. FINANCIAL INFORMATION Page 3
LONGVIEW FIBRE COMPANY - CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
- - -------------------------------------------------------------------------
(000 Omitted)
Three Months Ended Nine Months Ended
July 31 July 31
--------------------- ---------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
Cash provided by (used for) operations:
Net income $7,491 $14,625 $23,255 $33,077
Charges to income not
requiring cash -
Depreciation 15,501 15,202 46,364 45,496
Depletion and amortization 4,993 2,023 8,421 5,122
Deferred taxes - net 1,026 2,992 4,204 5,787
(Gain) loss on disposition of
capital assets 1,019 (31) 2,152 380
Change in:
Inventories (1,368) 4,496 (2,052) 3,446
Accounts and notes receivable (1,696) 3,646 (2,010) 18,761
Accounts, payrolls and other
taxes payable 1,421 (2,077) 2,047 (1,779)
Federal income taxes payable (1,196) 545 (651) 120
Other (934) (1,477) (2,044) (1,326)
Other noncurrent assets (1,822) (1,115) (4,557) (3,098)
Other noncurrent liabilities 570 -- 1,507 --
---------- ---------- ---------- ----------
Cash provided by operations 25,005 38,829 76,636 105,986
---------- ---------- ---------- ----------
Cash provided by (used for) investing:
Additions to: Plant and equipment (17,322) (19,438) (47,748) (37,484)
Timber and timberlands (14,396) (3,968) (42,289) (6,139)
Proceeds from sale of capital assets 141 299 631 512
---------- ---------- ---------- ----------
Cash used for investing (31,577) (23,107) (89,406) (43,111)
---------- ---------- ---------- ----------
Cash provided by (used for) financing:
Long-term debt 20,881 830 51,682 (19,170)
Short-term borrowings 500 (7,000) (14,500) (23,000)
Payable to bank resulting from
checks intransit (7,185) (4,352) (1,852) (3,854)
Accounts payable for construction (243) 55 (1,604) (1,205)
Cash dividends (6,740) (5,189) (20,229) (15,526)
Purchase of common stock (641) (66) (727) (120)
---------- ---------- ---------- ----------
Cash provided by (used for)
financing 6,572 (15,722) 12,770 (62,875)
---------- ---------- ---------- ----------
Increase (decrease) in cash position -- -- -- --
Cash position, beginning of period -- -- -- --
---------- ---------- ---------- ----------
Cash position, end of period $ -- $ -- $ -- $ --
========== ========== ========== ==========
Supplemental disclosures of
cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $6,533 $5,981 $17,710 $18,108
Income taxes 5,352 4,783 10,535 10,988
The accompanying note is an integral part of these financial statements.
<PAGE> PART I. FINANCIAL INFORMATION Page 4
LONGVIEW FIBRE COMPANY -
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)
- - ----------------------------------------------------------
(000 Omitted)
Three Months Ended Nine Months Ended
July 31 July 31
--------------------- ---------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
Common stock:
Balance at beginning of period $77,816 $77,523 $77,823 $77,527
Issued during the period -- 323 -- 323
Ascribed value of stock purchased (50) (7) (57) (11)
---------- ---------- ---------- ----------
Balance at end of period $77,766 $77,839 $77,766 $77,839
========== ========== ========== ==========
Additional paid-in capital:
Balance at beginning of period $3,306 $ -- $3,306 $ --
On common stock issuance -- 3,306 -- 3,306
---------- ---------- ---------- ----------
Balance at end of period $3,306 $3,306 $3,306 $3,306
========== ========== ========== ==========
Retained earnings:
Balance at beginning of period $319,862 $312,655 $317,666 $304,590
Net income 7,491 14,625 23,255 33,077
Less cash dividends on common stock (6,740) (5,189) (20,229) (15,526)
Less purchases of common stock (591) (59) (670) (109)
---------- ---------- ---------- ----------
Balance at end of period $320,022 $322,032 $320,022 $322,032
========== ========== ========== ==========
Dividends paid per share $0.13 $0.10 $0.39 $0.30
========== ========== ========== ==========
Common shares:
Balance at beginning of period 51,877 51,682 51,882 51,685
Issued -- 215 -- 215
Purchases (33) (4) (38) (7)
---------- ---------- ---------- ----------
Balance at end of period 51,844 51,893 51,844 51,893
========== ========== ========== ==========
The accompanying note is an integral part of these financial statements.
<PAGE> PART I. FINANCIAL INFORMATION Page 5
NOTE 1: The consolidated interim financial statements have been prepared by
the company, without audit and subject to year-end adjustment, in accordance
with generally accepted accounting principles, except that certain
information and footnote disclosure made in the latest annual report have
been condensed or omitted for the interim statements. Accordingly, these
statements should be read in conjunction with the company's latest annual
report. Certain costs of a normal recurring nature are estimated for the
full year and allocated in interim periods based on estimates of operating
time expired, benefit received, or activity associated with the interim
period. The consolidated financial statements reflect all adjustments which
are, in the opinion of management, necessary for fair presentation.
<PAGE> PART I. FINANCIAL INFORMATION Page 6
LONGVIEW FIBRE COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
Consolidated Statement of Income
--------------------------------
Three and Nine Months Ended July 31, 1994 compared with
-------------------------------------------------------
Three and Nine Months Ended July 31, 1993
-----------------------------------------
Net income decreased 49% and 30% for the third quarter 1994 and the first nine
months of 1994 as compared with like periods in 1993. Operating results in
the manufacturing segments of the business are sharply lower in 1994 versus
1993. Operating profits for the timber segment are down for the quarter, but
improved for the year-to-date period.
Timber
- - ------
Third quarter 1994 operating profits decreased 20% due primarily to a 10%
decrease in average log selling price and a casualty loss due to fire at the
Chelan Tree Farm. Volume sold during the quarter increased 14%. Year-to-date
volume and profit improved 18% and 9% respectively.
During the quarter, demand and prices were down from peak levels in both the
domestic and export markets. At the present time, there is an adequate supply
of logs for domestic mills in the region; accordingly, domestic prices have
declined modestly. Fourth quarter harvest levels could be adversely affected
by forest closures due to fire conditions in the region. The company
estimates that 10,000 acres of the Chelan Tree Farm were involved in the
recent Eastern Washington wildfires. Preliminary estimate of the cost of the
timber lost is $2 million.
Paper and Paperboard
- - --------------------
Third quarter 1994 operating results decreased significantly compared with the
third quarter 1993 due primarily to increased costs and lower average selling
prices caused by proportionately more tonnage sold in the export market. As
compared with year-ago levels, the cost of OCC (old corrugated containers)
increased 82% while chip costs declined modestly. During the quarter, the
labor contract for the Longview Mill was renewed for six years. The agreement
included expensive improvements to the bargained pension plan. Unsatisfactory
year-to-date operating results were primarily caused by lower average prices
throughout the period and higher costs.
The Mill ran at 95% of capacity during the third quarter 1994; it is now at
full capacity. Due to improved export demand for linerboard, the rate of
incoming orders improved significantly compared with year-ago levels. Export
prices have improved, but are at inadequate levels. Additional improvement is
expected in the fourth quarter. Paper markets remain fair.
Converted Products
- - ------------------
Sales have increased 10% and 6% for the quarter and year-to-date periods.
However, operating results are down for both periods because of the higher
costs of containerboard used to manufacture boxes. Although markets remain
competitive, modest price increases have been implemented and more increases
are being pursued. Additional improvements continue to be made in product and
customer mix.
Other
- - -----
Increased interest expensed for the third quarter 1994 and year-to-date 1994
was due to a higher level of total borrowing and higher interest rates.
Income Taxes
- - ------------
Taxes on income are approximately 38% and 34% of pretax income for fiscal 1994
and 1993 respectively.
<PAGE> PART I. FINANCIAL INFORMATION Page 7
Three Months Nine Months
Ended July 31 Ended July 31
% %
Other Data 1994 1993 Change 1994 1993 Change
- - ---------- ---------------------- ----------------------
Sales
Logs, thousands of board feet 64,000 56,000 + 14 188,000 160,000 +18
Lumber, thousands of board feet 12,000 6,000 +100 25,000 17,000 +47
Paper, tons 64,000 50,000 + 28 166,000 167,000 - 1
Paperboard, tons 61,000 25,000 +144 120,000 71,000 +69
Converted products, tons 133,000 124,000 + 7 388,000 367,000 + 6
Logs, $/thousand board feet $ 777 $ 867 - 10 $ 763 $ 762 --
Lumber, $/thousand board feet 332 364 - 9 359 348 + 3
Paper, $/ton FOB mill equivalent 579 625 - 7 587 605 - 3
Paperboard, $/ton FOB mill equiv. 339 297 + 14 319 314 + 2
Converted products, $/ton 673 661 + 2 664 661 --
Liquidity and Capital Resources
-------------------------------
Capital expenditures and timberland purchases were above available funds from
cash flow and, therefore, increased total borrowing. Due to recent new
machinery and equipment programs, the capital backlog is $80 million and is
expected to be expended over the next twelve months. Due to timberland
availability, additional purchases are possible in the fourth quarter. During
the quarter, the company purchased 33,425 shares of its common stock.
<PAGE> PART I. FINANCIAL INFORMATION Page 8
LONGVIEW FIBRE COMPANY
ITEM 1 LEGAL PROCEEDINGS
Nothing to report.
ITEM 2 CHANGES IN SECURITIES
Nothing to report.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Nothing to report.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Nothing to report.
ITEM 5 OTHER INFORMATION
Nothing to report.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Nothing to report.
<PAGE> PART II. OTHER INFORMATION Page 9
LONGVIEW FIBRE COMPANY
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LONGVIEW FIBRE COMPANY
----------------------------------------------
(Registrant)
Date August 19, 1994 \s\ L. J. Holbrook
----------------------- ----------------------------------------------
L. J. Holbrook, Senior Vice President-Finance,
Secretary and Treasurer
Date August 19, 1994 \s\ C. D. Norman
----------------------- ----------------------------------------------
C. D. Norman, Assistant Treasurer
<PAGE> Page 10
