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 April 30, 1996 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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (360) 425-1550
-----------------------------
Not Applicable
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Former name, former address and former fiscal year, if changed since last repor
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
----- -----
51,735,567 Common Shares were outstanding as of April 30, 1996
Page 1<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET
- -------------------------- (000 Omitted)
Apr. 30 Oct. 31 Apr. 30
1996 1995 1995
(Unaudited) (Unaudited)
A S S E T S ----------- ----------- -----------
CURRENT ASSETS:
Accounts and notes receivable $92,861 $118,164 $104,694
Allowance for doubtful accounts 1,100 1,100 1,000
Inventories, at lower of cost or market; costs
are based on last-in, first-out method except
for supplies at current averages
Finished goods 18,603 19,464 18,885
Goods in process 19,270 17,456 15,751
Raw materials and supplies 46,033 45,614 39,383
Other 9,254 9,372 9,839
----------- ----------- -----------
Total current assets 184,921 208,970 187,552
----------- ----------- -----------
CAPITAL ASSETS:
Buildings, machinery and equipment at cost 1,411,600 1,355,740 1,281,185
Accumulated depreciation 689,124 655,822 626,997
----------- ----------- -----------
Costs to be depreciated in future years 722,476 699,918 654,188
Plant sites at cost 2,834 2,834 2,749
----------- ----------- -----------
725,310 702,752 656,937
Timber at cost less depletion 178,723 178,494 184,476
Roads at cost less amortization 8,719 9,291 8,965
Timberland at cost 16,068 16,049 16,161
----------- ----------- -----------
203,510 203,834 209,602
----------- ----------- -----------
Total capital assets 928,820 906,586 866,539
----------- ----------- -----------
OTHER ASSETS 41,497 38,267 32,301
----------- ----------- -----------
$1,155,238 $1,153,823 $1,086,392
=========== =========== ===========
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 $6,617 $10,272 $6,573
Accounts payable 40,846 60,730 47,572
Short-term borrowings 30,000 36,000 40,000
Payrolls payable 13,694 10,703 12,252
Federal income taxes payable 394 2,475 1,562
Other taxes payable 11,566 12,112 14,096
Current installments of long-term debt 44,119 34,119 15,994
----------- ----------- -----------
Total current liabilities 147,236 166,411 138,049
----------- ----------- -----------
LONG-TERM DEBT 412,374 409,374 397,492
----------- ----------- -----------
DEFERRED TAXES - NET 125,854 119,205 112,249
----------- ----------- -----------
OTHER LIABILITIES 12,081 10,934 9,914
----------- ----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, ascribed value $1.50 per share;
authorized 150,000,000 shares; issued
51,735,567; 51,751,032 and 51,790,167
shares respectively 77,603 77,627 77,685
Additional paid-in capital 3,306 3,306 3,306
Retained earnings 376,784 366,966 347,697
----------- ----------- -----------
Total shareholders' equity 457,693 447,899 428,688
----------- ----------- -----------
$1,155,238 $1,153,823 $1,086,392
=========== =========== ===========
The accompanying note is an integral part of these financial statements.
Page 2<PAGE>
CONSOLIDATED STATEMENT OF INCOME Unaudited)
- -------------------------------------------
(000 Omitted)
Three Months Ended Six Months Ended
April 30 April 30
--------------------- -----------------------
1996 1995 1996 1995
--------- ----------- ----------- -----------
Net sales:
Timber $45,492 $53,221 $91,625 $99,432
Paper and paperboard 45,516 73,862 90,705 144,293
Converted products 108,708 107,132 226,599 218,009
--------- ----------- ----------- -----------
199,716 234,215 408,929 461,734
--------- ----------- ----------- -----------
Cost of products sold, including
outward freight 161,639 176,518 324,085 355,986
--------- ----------- ----------- -----------
Gross profit 38,077 57,697 84,844 105,748
--------- ----------- ----------- -----------
Selling, administrative
and general expenses 15,281 14,691 30,027 29,294
--------- ----------- ----------- -----------
Operating profit:
Timber 26,181 31,744 53,808 59,127
Paper and paperboard 471 4,856 1,208 5,444
Converted products (3,856) 6,406 (199) 11,883
--------- ----------- ----------- -----------
22,796 43,006 54,817 76,454
--------- ----------- ----------- -----------
Other income (expense):
Interest income 150 120 303 259
Interest expensed (7,257) (7,087) (14,932) (14,270)
Miscellaneous 316 318 600 605
--------- ----------- ----------- -----------
16,005 36,357 40,788 63,048
Provision for taxes on income:
Current 3,435 8,591 8,565 14,943
Deferred 2,535 5,224 6,649 9,015
--------- ----------- ----------- -----------
5,970 13,815 15,214 23,958
--------- ----------- ----------- -----------
Net income $10,035 $22,542 $25,574 $39,090
========= =========== =========== ===========
Dollars per share:
Net income $0.19 $0.44 $0.49 $0.75
Dividends $0.15 $0.14 $0.30 $0.27
Average shares outstanding in the
hands of the public (000 omitted) 51,740 51,795 51,743 51,803
The accompanying note is an integral part of these financial statements.
Page 3<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
- ------------------------------------------------
(000 Omitted)
Three Months Ended Six Months Ended
April 30 April 30
--------------------- -----------------------
1996 1995 1996 1995
--------- ----------- ----------- -----------
Cash provided by (used for) operations:
Net income $10,035 $22,542 $25,574 $39,090
Charges to income not
requiring cash -
Depreciation 18,554 16,383 36,534 32,444
Depletion and amortization 1,152 3,590 2,061 5,538
Deferred taxes - net 2,535 5,224 6,649 9,015
(Gain) loss on disposition of
capital assets 1,725 1,025 1,664 1,017
Change in:
Accounts and notes receivable 3,689 (9,139) 25,303 (3,504)
Inventories 92 (6,611) (1,372) (6,714)
Other 943 (1,179) 118 (2,242)
Other noncurrent assets (1,830) (419) (3,230) (853)
Accounts, payrolls and other
taxes payable (4,644) (2,640) (14,731) 2,944
Federal income taxes payable (4,666) (4,492) (2,081) (1,367)
Other noncurrent liabilities 541 587 1,147 1,175
--------- ----------- ----------- -----------
Cash provided by operations 28,126 24,871 77,636 76,543
--------- ----------- ----------- -----------
Cash provided by (used for) investing:
Additions to: Plant and equipment (35,402) (25,768) (61,052) (57,090)
Timber and timberland (1,175) (1,178) (1,769) (33,534)
Proceeds from sale of
capital assets 248 491 328 595
--------- ----------- ----------- -----------
Cash used for investing (36,329) (26,455) (62,493) (90,029)
--------- ----------- ----------- -----------
Cash provided by (used for) financing:
Long-term debt (2,000) (10,000) 13,000 1,000
Short-term borrowings 14,000 18,000 (6,000) 39,000
Payable to bank resulting from
checks in transit 898 583 (3,655) (5,932)
Accounts payable for construction 3,201 511 (2,708) (5,927)
Cash dividends (7,761) (7,252) (15,523) (13,987)
Purchase of common stock (135) (258) (257) (668)
--------- ----------- ----------- -----------
Cash provided by (used for)
financing 8,203 1,584 (15,143) 13,486
--------- ----------- ----------- -----------
Change 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) $5,594 $5,977 $14,740 $13,562
Income taxes 8,389 13,681 10,645 16,415
The accompanying note is an integral part of these financial statements.
Page 4<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)
- ----------------------------------------------------------
(000 Omitted)
Three Months Ended Six Months Ended
April 30 April 30
--------------------- -----------------------
1996 1995 1996 1995
--------- ----------- ----------- -----------
Common stock:
Balance at beginning of period $77,615 $77,708 $77,627 $77,745
Ascribed value of stock purchased (12) (23) (24) (60)
--------- ----------- ----------- -----------
Balance at end of period $77,603 $77,685 $77,603 $77,685
========= =========== =========== ===========
Additional paid-in capital:
Balance at beginning of period $3,306 $3,306 $3,306 $3,306
--------- ----------- ----------- -----------
Balance at end of period $3,306 $3,306 $3,306 $3,306
========= =========== =========== ===========
Retained earnings:
Balance at beginning of period $374,633 $332,642 $366,966 $323,202
Net income 10,035 22,542 25,574 39,090
Cash dividends on common stock (7,761) (7,252) (15,523) (13,987)
Purchases of common stock (123) (235) (233) (608)
--------- ----------- ----------- -----------
Balance at end of period $376,784 $347,697 $376,784 $347,697
========= =========== =========== ===========
Dividends paid per share $0.15 $0.14 $0.30 $0.27
========= =========== =========== ===========
Common shares:
Balance at beginning of period 51,744 51,805 51,751 51,830
Purchases (8) (15) (15) (40)
--------- ----------- ----------- -----------
Balance at end of period 51,736 51,790 51,736 51,790
========= =========== =========== ===========
The accompanying note is an integral part of these financial statements.
Page 5<PAGE>
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 6<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Consolidated Statement of Income
--------------------------------
Three and Six Months Ended April 30, 1996 compared with
-------------------------------------------------------
Three and Six Months Ended April 30, 1995
-----------------------------------------
Net income decreased 56% and 35% for the second quarter and year-to-date 1996
as compared with like periods in 1995. Operating results in all segments of
the business, particularly the manufacturing segments, declined from year-ago
levels.
Timber
- ------
Operating profits decreased 18% and 9% for the second quarter 1996 and
year-to-date 1996 due to less volume sold and lower average price. Log
footage sold decreased 6% and 3% for the second quarter 1996 and year-to-date
1996, while average log prices declined 9% and 4%.
During the second quarter 1996, domestic log prices declined due to weak
lumber and wood chip markets, while demand held steady. Demand and prices in
the export market declined modestly, but remained at good levels.
Paper and Paperboard
- --------------------
Operating profits declined 90% for the second quarter 1996 because of a 37%
decrease in volume sold and a 3% and 21% decrease in average price for paper
and paperboard, respectively. Year-to-date operating results were adversely
affected by higher raw material costs and substantially less tonnage sold as
compared with the same period in 1995.
Wood chip costs have been declining from peak fourth quarter 1995 levels, but
second quarter and year-to-date costs were 2% and 18% higher than year-ago
levels. Further cost reductions are expected. The mill operated at 74% of
capacity during the second quarter, but the rate of incoming orders has
improved to 85% of capacity.
Demand for linerboard has been soft, particularly in the export market,
resulting in price attrition. Paper markets have been slow.
Converted Products
- ------------------
Operating results, compared to year-ago levels, have been adversely affected
by the increased cost of containerboard used to manufacture boxes. Currently
declining chip costs will result in lower containerboard costs. Volume sold
during the second quarter held steady with year-ago levels, but declined 5%
for the year-to-date period. Average selling price improved 2% and 9% for
the second quarter and year-to-date period as compared to like periods in
1995.
During the quarter demand was adequate and pricing deteriorated. Markets are
expected to remain competitive. Progress continues to be made in marketing
specialty products.
Page 7<PAGE>
Other
- -----
Increased interest expensed for the second quarter and year-to-date 1996 was
due to a higher level of borrowing, which was modestly offset by lower
interest rates.
Income Taxes
- ------------
Taxes on income are approximately 37% and 38% of pretax income for fiscal
1996 and 1995, respectively.
Three Months Six Months
Ended April 30 Ended April 30
% %
Other Data 1996 1995 Change 1996 1995 Change
- ---------- ---------------------- ---------------------
Sales
Logs, thousands of board feet 59,000 63,000 - 6 118,000 122,000 - 3
Lumber, thousands of board feet 7,000 8,000 - 13 13,000 14,000 - 7
Paper, tons 45,000 59,000 - 24 89,000 118,000 - 25
Paperboard, tons 28,000 56,000 - 50 44,000 121,000 - 64
Converted products, tons 130,000 131,000 - 1 266,000 279,000 - 5
Logs, $/thousand board feet $ 731 $ 802 - 9 $ 744 $ 776 - 4
Lumber, $/thousand board feet 302 321 - 6 301 322 - 7
Paper, $/ton FOB mill equivalent 660 678 - 3 694 655 + 6
Paperboard, $/ton FOB mill equiv. 385 490 - 21 417 453 - 8
Converted products, $/ton 835 815 + 2 852 780 + 9
Liquidity and Capital Resources
-------------------------------
Capital expenditures for the year were above available funds from cash flow
and, therefore, increased total borrowings. The company has embarked on
major programs of installing improved or specialized equipment in its mill
and box plants to make more specialized products as a means to improve
margins. The backlog of approved projects is $105 million. Adequate
financing is available as needed. During the quarter, the company purchased
8,080 shares of its common stock. Cash dividends of $0.15 per share were
declared and paid in the second quarter in the aggregate of $7,761,000.
Page 8<PAGE>
PART II - OTHER INFORMATION
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.
(a) Exhibits required to be filed by Item 601 of Regulation S-K:
27 Financial Data Schedule.
(b) Reports of Form 8-K - Nothing to report.
Page 9<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LONGVIEW FIBRE COMPANY
---------------------------------------------
(Registrant)
Date 6-3-96 \s\s L. J. Holbrook
----------------------- -----------------------------------------------
L. J. Holbrook, Senior Vice President-Finance,
Secretary and Treasurer
Date 6-3-96 \s\s A. G. Higgens
----------------------- -----------------------------------------------
A. G. Higgens, Assistant Treasurer
Page 10<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PART I OF THIS FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> APR-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 92,861
<ALLOWANCES> 1,100
<INVENTORY> 83,906
<CURRENT-ASSETS> 184,921
<PP&E> 1,617,944
<DEPRECIATION> 689,124
<TOTAL-ASSETS> 1,155,238
<CURRENT-LIABILITIES> 147,236
<BONDS> 0
0
0
<COMMON> 77,603
<OTHER-SE> 380,090
<TOTAL-LIABILITY-AND-EQUITY> 1,155,238
<SALES> 408,929
<TOTAL-REVENUES> 408,929
<CGS> 324,085
<TOTAL-COSTS> 324,085
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,932
<INCOME-PRETAX> 40,788
<INCOME-TAX> 15,214
<INCOME-CONTINUING> 25,574
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,574
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.49
</TABLE>
