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, 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
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (360) 425-1550
---------------------------------
Not Applicable
- -------------------------------------------------------------------------------
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
----- -----
51,720,902 Common Shares were outstanding as of July 31, 1996
Page 1<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET
- -------------------------- (000 Omitted)
Jul. 31 Oct. 31 Jul. 31
1996 1995 1995
(Unaudited) (Unaudited)
A S S E T S ----------- ----------- -----------
CURRENT ASSETS:
Accounts and notes receivable $88,348 $118,164 $106,392
Allowance for doubtful accounts (1,100) (1,100) (1,100)
Inventories, at lower of cost or market; costs
are based on last-in, first-out method except
for supplies at current averages
Finished goods 18,890 19,464 19,080
Goods in process 17,939 17,456 19,666
Raw materials and supplies 46,380 45,614 38,011
Other 9,980 9,372 12,035
----------- ----------- -----------
Total current assets 180,437 208,970 194,084
----------- ----------- -----------
CAPITAL ASSETS:
Buildings, machinery and equipment at cost 1,422,919 1,355,740 1,316,694
Accumulated depreciation 698,488 655,822 641,100
----------- ----------- -----------
Costs to be depreciated in future years 724,431 699,918 675,594
Plant sites at cost 2,909 2,834 2,826
----------- ----------- -----------
727,340 702,752 678,420
Timber at cost less depletion 177,848 178,494 181,267
Roads at cost less amortization 8,578 9,291 8,900
Timberland at cost 16,068 16,049 16,167
----------- ----------- -----------
202,494 203,834 206,334
----------- ----------- -----------
Total capital assets 929,834 906,586 884,754
----------- ----------- -----------
OTHER ASSETS 41,881 38,267 37,240
----------- ----------- -----------
$1,152,152 $1,153,823 $1,116,078
=========== =========== ===========
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 $3,057 $10,272 $6,766
Accounts payable 37,947 60,730 50,333
Short-term borrowings 41,000 36,000 31,000
Payrolls payable 13,812 10,703 12,290
Federal income taxes payable 1,158 2,475 187
Other taxes payable 12,234 12,112 14,948
Current installments of long-term debt 34,119 34,119 35,994
----------- ----------- -----------
Total current liabilities 143,327 166,411 151,518
----------- ----------- -----------
LONG-TERM DEBT 404,255 409,374 397,374
----------- ----------- -----------
DEFERRED TAXES - NET 128,339 119,205 116,584
----------- ----------- -----------
OTHER LIABILITIES 12,623 10,934 10,501
----------- ----------- -----------
SHAREHOLDERS' EQUITY
Common stock, ascribed value $1.50 per share;
authorized 150,000,000 shares; issued
51,720,902; 51,751,032 and 51,775,067
shares respectively 77,581 77,627 77,663
Additional paid-in capital 3,306 3,306 3,306
Retained earnings 382,721 366,966 359,132
----------- ----------- -----------
Total shareholders' equity 463,608 447,899 440,101
----------- ----------- -----------
$1,152,152 $1,153,823 $1,116,078
=========== =========== ===========
The accompanying note is an integral part of these financial statements.
Page 2<PAGE>
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
- --------------------------------------------
(000 Omitted)
Three Months Ended Nine Months Ended
July 31 July 31
--------------------- -----------------------
1996 1995 1996 1995
--------- ----------- ----------- -----------
Net sales:
Timber $46,289 $49,649 $137,914 $149,081
Paper and paperboard 50,115 87,517 140,820 231,810
Converted products 101,189 116,197 327,788 334,206
--------- ----------- ----------- -----------
197,593 253,363 606,522 715,097
--------- ----------- ----------- -----------
Cost of products sold, including
outward freight 164,365 201,927 488,450 557,913
--------- ----------- ----------- -----------
Gross profit 33,228 51,436 118,072 157,184
--------- ----------- ----------- -----------
Selling, administrative
and general expenses 15,021 15,370 45,048 44,664
--------- ----------- ----------- -----------
Operating profit:
Timber 23,444 26,638 77,252 85,765
Paper and paperboard (584) 5,159 624 10,603
Converted products (4,653) 4,269 (4,852) 16,152
--------- ----------- ----------- -----------
18,207 36,066 73,024 112,520
--------- ----------- ----------- -----------
Other income (expense):
Interest income 155 163 458 422
Interest expensed (7,340) (7,611) (22,272) (21,881)
Miscellaneous 9,906 402 10,506 1,007
--------- ----------- ----------- -----------
20,928 29,020 61,716 92,068
Provision for taxes on income:
Current 4,519 5,773 13,084 20,716
Deferred 2,485 4,335 9,134 13,350
--------- ----------- ----------- -----------
7,004 10,108 22,218 34,066
--------- ----------- ----------- -----------
Net income $13,924 $18,912 $39,498 $58,002
========= =========== =========== ===========
Dollars per share:
Net income $0.27 $0.37 $0.76 $1.12
Dividends $0.15 $0.14 $0.45 $0.41
Average shares outstanding in the
hands of the public (000 omitted) 51,727 51,780 51,738 51,795
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 Nine Months Ended
July 31 July 31
--------------------- -----------------------
1996 1995 1996 1995
--------- ----------- ----------- -----------
Cash provided by (used for) operations:
Net income $13,924 $18,912 $39,498 $58,002
Charges to income not
requiring cash -
Depreciation 18,822 16,758 55,356 49,202
Depletion and amortization 1,428 3,818 3,489 9,356
Deferred taxes - net 2,485 4,335 9,134 13,350
(Gain) loss on disposition of
capital assets 4,390 (131) 6,054 886
Change in:
Accounts and notes receivable 4,513 (1,598) 29,816 (5,102)
Inventories 697 (2,738) (675) (9,452)
Other (726) (2,196) (608) (4,438)
Other noncurrent assets (384) (4,939) (3,614) (5,792)
Accounts, payrolls and other
taxes payable (1,397) 2,628 (16,128) 5,572
Federal income taxes payable 764 (1,375) (1,317) (2,742)
Other noncurrent liabilities 542 587 1,689 1,762
--------- ----------- ----------- -----------
Cash provided by operations 45,058 34,061 122,694 110,604
--------- ----------- ----------- -----------
Cash provided by (used for) investing:
Additions to: Plant and equipment (25,708) (38,403) (86,760) (95,493)
Timber and timberland (427) (568) (2,196) (34,102)
Proceeds from sale of
capital assets 481 311 809 906
--------- ----------- ----------- -----------
Cash used for investing (25,654) (38,660) (88,147) (128,689)
--------- ----------- ----------- -----------
Cash provided by (used for) financing:
Long-term debt (18,119) 19,882 (5,119) 20,882
Short-term borrowings 11,000 (9,000) 5,000 30,000
Payable to bank resulting from
checks in transit (3,560) 193 (7,215) (5,739)
Accounts payable for construction (716) 1,023 (3,424) (4,904)
Cash dividends (7,759) (7,249) (23,282) (21,236)
Purchase of common stock (250) (250) (507) (918)
--------- ----------- ----------- -----------
Cash provided by (used for)
financing (19,404) 4,599 (34,547) 18,085
--------- ----------- ----------- -----------
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) $9,648 $9,519 $24,388 $23,081
Income taxes 3,881 8,030 14,526 24,445
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 Nine Months Ended
July 31 July 31
--------------------- -----------------------
1996 1995 1996 1995
--------- ----------- ----------- -----------
Common stock:
Balance at beginning of period $77,603 $77,685 $77,627 $77,745
Ascribed value of stock purchased (22) (22) (46) (82)
--------- ----------- ----------- -----------
Balance at end of period $77,581 $77,663 $77,581 $77,663
========= =========== =========== ===========
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 $376,784 $347,697 $366,966 $323,202
Net income 13,924 18,912 39,498 58,002
Cash dividends on common stock (7,759) (7,249) (23,282) (21,236)
Purchases of common stock (228) (228) (461) (836)
--------- ----------- ----------- -----------
Balance at end of period $382,721 $359,132 $382,721 $359,132
========= =========== =========== ===========
Dividends paid per share $0.15 $0.14 $0.45 $0.41
========= =========== =========== ===========
Common shares:
Balance at beginning of period 51,736 51,790 51,751 51,830
Purchases (15) (15) (30) (55)
--------- ----------- ----------- -----------
Balance at end of period 51,721 51,775 51,721 51,775
========= =========== =========== ===========
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 Result
of Operations.
Consolidated Statement of Incone
--------------------------------
Three and Nine Months Ended July 31, 1996 compared with
-------------------------------------------------------
Three and Nine Months Ended July 31, 1995
-----------------------------------------
Net income decreased 26% and 32% for the third 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 12% in the third quarter 1996 as compared with
the third quarter 1995 due to a 12% reduction in average log prices. For the
year-to-date period, operating profits and average price decreased 10% and
7%, respectively. Volume sold increased 5% for the third quarter, but
decreased 1% for the year-to-date period as compared with year-ago levels.
Although domestic and export markets remain at good levels, modest price
deterioration occurred during the third quarter. Currently both markets are
showing signs of improvement.
Paper and Paperboard
- --------------------
The third quarter 1996 operating loss was the result of a 26% reduction in
tonnage sold and an 11% and 41% decrease in average price for paper and
paperboard, respectively. Year-to-date operating results declined 94% due to
a 38% reduction in tonnage sold and a 23% decrease in paperboard price.
Wood chip and OCC (old corrugated containers) costs decreased 16% and 54% in
the third quarter 1996 as compared with the third quarter 1995. During the
quarter a 10-day shutdown was taken to improve the balance between incoming
orders and paper machine production. Extensive planned maintenance and
repair work was completed during the shutdown. The mill ran at 82% of
capacity during the third quarter 1996.
During the quarter, No. 14 recovery furnace was retired from service and the
undepreciated cost of $3,475,000 was written off.
Demand for linerboard has been soft, particularly in the export market,
resulting in price attrition. Paper markets have been slow.
Converted Products
- ------------------
Sales declined 13% and 2% for the third quarter 1996 and year-to-date 1996 as
compared with like periods in 1995. The third quarter operating loss
resulted primarily from a 7% reduction in average price and volume sold.
Year-to-date operating results were adversely affected by the increased cost
of containerboard used to manufacture boxes.
Page 7<PAGE>
During the quarter demand was adequate and pricing deteriorated, particularly
for commodity products. Markets are expected to remain competitive.
Progress continues to be made in marketing specialty products.
Other
- -----
Interest expensed declined modestly during the quarter due to lower rates.
Year-to-date interest expensed increased due to a higher level of borrowing
during the 1996 period as compared with the 1995 period.
During the quarter an electrical power sales agreement was terminated. As
consideration for the termination of the contract, the company is receiving
$9,470,000, which has been recorded as miscellaneous income.
Income Taxes
- ------------
Taxes on income are approximately 36% and 37% of pretax income for fiscal
1996 and 1995, respectively.
Three Months Nine Months
Ended July 31 Ended July 31
% %
Other Data 1996 1995 Change 1996 1995 Change
- ---------- ---------------------- ---------------------
Sales
Logs, thousands of board feet 65,000 62,000 + 5 183,000 184,000 - 1
Lumber, thousands of board feet 9,000 10,000 -10 22,000 24,000 - 8
Paper, tons 53,000 71,000 -25 142,000 189,000 -25
Paperboard, tons 40,000 54,000 -26 84,000 175,000 -52
Converted products, tons 129,000 138,000 - 7 395,000 417,000 - 5
Logs, $/thousand board feet $ 662 $ 752 -12 $ 714 $ 768 - 7
Lumber, $/thousand board feet 357 305 +17 324 315 + 3
Paper, $/ton FOB mill equivalent 643 726 -11 675 682 - 1
Paperboard, $/ton FOB mill equiv. 325 549 -41 373 483 -23
Converted products, $/ton 785 845 - 7 830 801 + 4
Liquidity and Capital Resources
-------------------------------
Capital expenditures for the year were financed primarily from internally
generated funds. 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 $125 million. Adequate financing is available as needed. During
the quarter, the company purchased 14,665 shares of its common stock. Cash
dividends of $0.15 per share were declared and paid in the third quarter in
the aggregate of $7,759,000.
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. SUBMISSIION 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 8-27-96 \s\ L. J. Holbrook
----------------------- ------------------------------------------------
L. J. Holbrook, Senior Vice President-Finance,
Secretary and Treasurer
Date 8-27-96 \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> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 88,348
<ALLOWANCES> 1,100
<INVENTORY> 83,209
<CURRENT-ASSETS> 180,437
<PP&E> 1,628,322
<DEPRECIATION> 698,488
<TOTAL-ASSETS> 1,152,152
<CURRENT-LIABILITIES> 143,327
<BONDS> 0
0
0
<COMMON> 77,581
<OTHER-SE> 386,027
<TOTAL-LIABILITY-AND-EQUITY> 1,152,152
<SALES> 606,522
<TOTAL-REVENUES> 606,522
<CGS> 488,450
<TOTAL-COSTS> 488,450
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,272
<INCOME-PRETAX> 61,716
<INCOME-TAX> 22,218
<INCOME-CONTINUING> 39,498
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,498
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.76
</TABLE>
