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 January 31, 1996 Commission file number 0-1370
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Longview Fibre Company
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(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
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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
----- -----
51,743,647 Common Shares were outstanding as of January 31, 1996
Page 1<PAGE>
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET
- -------------------------- (000 Omitted)
Jan. 31 Oct. 31 Jan. 31
1996 1995 1995
(Unaudited) (Unaudited)
A S S E T S ----------- ----------- -----------
CURRENT ASSETS:
Accounts and notes receivable $96,550 $118,164 $95,555
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 17,316 19,464 15,656
Goods in process 18,665 17,456 13,107
Raw materials and supplies 48,017 45,614 38,645
Other 10,197 9,372 8,660
----------- ----------- -----------
Total current assets 189,645 208,970 170,623
----------- ----------- -----------
CAPITAL ASSETS:
Buildings, machinery and equipment at cost 1,380,890 1,355,740 1,261,580
Accumulated depreciation 673,306 655,822 615,205
----------- ----------- -----------
Costs to be depreciated in future years 707,584 699,918 646,375
Plant sites at cost 2,834 2,834 2,674
----------- ----------- -----------
710,418 702,752 649,049
Timber at cost less depletion 178,429 178,494 186,704
Roads at cost less amortization 9,025 9,291 9,184
Timberland at cost 16,050 16,049 16,145
----------- ----------- -----------
203,504 203,834 212,033
----------- ----------- -----------
Total capital assets 913,922 906,586 861,082
----------- ----------- -----------
OTHER ASSETS 39,667 38,267 31,882
----------- ----------- -----------
$1,143,234 $1,153,823 $1,063,587
=========== =========== ===========
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 5,719 $10,272 5,990
Accounts payable 40,249 60,730 46,520
Short-term borrowings 16,000 36,000 22,000
Payrolls payable 13,604 10,703 13,587
Federal income taxes payable 5,060 2,475 6,054
Other taxes payable 13,696 12,112 15,942
Current installments of long-term debt 54,119 34,119 25,994
----------- ----------- -----------
Total current liabilities 148,447 166,411 136,087
----------- ----------- -----------
LONG-TERM DEBT 404,374 409,374 397,492
----------- ----------- -----------
DEFERRED TAXES - NET 123,319 119,205 107,025
----------- ----------- -----------
OTHER LIABILITIES 11,540 10,934 9,327
----------- ----------- -----------
SHAREHOLDERS' EQUITY
Common stock, ascribed value $1.50 per share;
authorized 150,000,000 shares; issued
51,743,647; 51,751,032 and 51,805,297
shares respectively 77,615 77,627 77,708
Additional paid-in capital 3,306 3,306 3,306
Retained earnings 374,633 366,966 332,642
----------- ----------- -----------
Total shareholders' equity 455,554 447,899 413,656
----------- ----------- -----------
$1,143,234 $1,153,823 $1,063,587
=========== =========== ===========
The accompanying note is an integral part of these financial statements.
Page 2<PAGE>
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
- --------------------------------------------
(000 Omitted)
Three Months Ended
January 31
-----------------------
1996 1995
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Net sales:
Timber $46,133 $46,211
Paper and paperboard 45,189 70,431
Converted products 117,891 110,877
----------- -----------
209,213 227,519
----------- -----------
Cost of products sold, including outward freight 162,446 179,468
----------- -----------
Gross profit 46,767 48,051
----------- -----------
Selling, administrative and general expenses 14,746 14,603
----------- -----------
Operating profit:
Timber 27,627 27,383
Paper and paperboard 737 588
Converted products 3,657 5,477
----------- -----------
32,021 33,448
----------- -----------
Other income (expense):
Interest income 153 139
Interest expensed (7,675) (7,183)
Miscellaneous 284 287
----------- -----------
24,783 26,691
Provision for taxes on income:
Current 5,130 6,352
Deferred 4,114 3,791
----------- -----------
9,244 10,143
----------- -----------
Net income $15,539 $16,548
=========== ===========
Dollars per share:
Net income $0.30 $0.32
Dividends $0.15 $0.13
Average shares outstanding in the hands
of the public (000 omitted) 51,747 51,810
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
January 31
-----------------------
1996 1995
----------- -----------
Cash provided by (used for) operations:
Net income $15,539 $16,548
Charges to income not requiring cash -
Depreciation 17,980 16,061
Depletion and amortization 909 1,948
Deferred taxes - net 4,114 3,791
(Gain) loss on disposition of capital assets (61) (8)
Change in:
Accounts and notes receivable 21,614 5,635
Inventories (1,464) (103)
Other (825) (1,063)
Other noncurrent assets (1,400) (434)
Accounts, payrolls and other taxes payable (10,087) 5,584
Federal income taxes payable 2,585 3,125
Other noncurrent liabilities 606 588
----------- -----------
Cash provided by operations 49,510 51,672
----------- -----------
Cash provided by (used for) investing:
Additions to: Plant and equipment (25,650) (31,322)
Timber and timberlands (594) (32,356)
Proceeds from sale of capital assets 80 104
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Cash used for investing (26,164) (63,574)
----------- -----------
Cash provided by (used for) financing:
Long-term debt 15,000 11,000
Short-term borrowings (20,000) 21,000
Payable to bank resulting from checks in transit (4,553) (6,515)
Accounts payable for construction (5,909) (6,438)
Cash dividends (7,762) (6,735)
Purchase of common stock (122) (410)
----------- -----------
Cash provided by (used for) financing (23,346) 11,902
----------- -----------
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) $9,146 $7,585
Income taxes 2,256 2,734
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
January 31
-----------------------
1996 1995
----------- -----------
Common stock:
Balance at beginning of period $77,627 $77,745
Ascribed value of stock purchased (12) (37)
----------- -----------
Balance at end of period $77,615 $77,708
=========== ===========
Additional paid-in capital:
Balance at beginning of period $3,306 $3,306
----------- -----------
Balance at end of period $3,306 $3,306
=========== ===========
Retained earnings:
Balance at beginning of period $366,966 $323,202
Net income 15,539 16,548
Less cash dividends on common stock (7,762) (6,735)
Less purchases of common stock (110) (373)
----------- -----------
Balance at end of period $374,633 $332,642
=========== ===========
Dividends paid per share $0.15 $0.13
=========== ===========
Common shares:
Balance at beginning of period 51,751 51,830
Purchases (7) (25)
----------- -----------
Balance at end of period 51,744 51,805
=========== ===========
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 Months Ended January 31, 1996 compared with
-------------------------------------------------
Three Months Ended January 31, 1995
-----------------------------------
First quarter earnings decreased 6% compared with the first quarter 1995 due
to lower operating results in the converted products segment of the business.
Net income for the first quarter 1996 decreased 14% compared with the fourth
quarter 1995.
Timber
- ------
First quarter operating profits improved 1% as compared with the first quarter
1995. Volume sold held steady with year-ago levels while log prices
increased 1% and lumber prices decreased 7%.
During the first quarter 1996, demand and prices were at good levels in both
the export and the domestic markets. Log markets are expected to remain
strong for the near term. Lumber markets were poor during the first quarter,
but are showing signs of modest improvement.
Paper and Paperboard
- --------------------
Operating profits for the first quarter improved 25% compared with an
unsatisfactory first quarter 1995. The modest improvement was due to average
price increases of 15% and 12% for paper and paperboard, which were
substantially offset by higher costs for raw material fibers. First quarter
wood chip costs increased 36% as compared with year-ago levels, but are
declining from peak fourth quarter 1995 levels. Further cost reductions are
expected. The volume of paper and paperboard sold during the first quarter
declined 52% as compared with the year-ago period. The mill operated at about
75% of capacity.
Demand for linerboard has been soft, particularly in the export market,
resulting in price attrition. Paper markets have been slow. The incoming
order pattern is still weak, but is currently improving.
Converted Products
- ------------------
Operating results decreased 33% due to increased costs for containerboard used
to manufacture boxes. First quarter 1996 sales improved 6% as a result of a
16% increase in average price and an 8% reduction in volume sold as compared
with the first quarter 1995. During the quarter, demand and prices were
lower than in the fourth quarter 1995 but are at adequate levels. Progress
continues to be made in marketing specialty products.
Other
- -----
Increased interest expensed for the first quarter 1996 compared with the first
quarter 1995 was due primarily to more borrowing.
Page 7<PAGE>
Income Taxes
- ------------
Taxes on income are approximately 37% and 38% of pretax income for fiscal 1996
and 1995, respectively.
Three Months
Ended January 31
%
Other Data 1996 1995 CHANGE
- ---------- -----------------------------------
Sales
Logs, thousands of board feet 59,000 59,000 --
Lumber, thousands of board feet 6,000 6,000 --
Paper, tons 44,000 59,000 - 25
Paperboard, tons 16,000 65,000 - 75
Converted products, tons 136,000 148,000 - 8
Logs, $/thousand board feet $ 756 $ 748 + 1
Lumber, $/thousand board feet 301 323 - 7
Paper, $/ton FOB mill equivalent 729 632 + 15
Paperboard, $/ton FOB mill equivalent 470 420 + 12
Converted products, $/ton 868 749 + 16
Liquidity and Capital Resources
-------------------------------
Capital expenditures for plant and equipment and timberland acquisitions were
below year-ago levels. Accordingly, total borrowing is declining. The
company continues with its major programs of installing improved or
specialized equipment in its mill and converting plants to make more value
added products as a means to improve margins. The backlog of approved
projects is $101 million, to be financed principally from internally generated
funds, supplemented if necessary by modest additional borrowing. During the
quarter, the company purchased 7,385 shares of its common stock. Cash
dividends of $0.15 per share were declared and paid in the first quarter in
the aggregate of $7,762,000.
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 NOTES.
Nothing to report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Shareholders of Longview Fibre Company was held
on January 23, 1996 at which time four Class III directors and one
Class I director were elected.
CLASS III DIRECTORS ELECTED
(Terms to Expire in 1999)
Votes Cast
For Withheld Abstentions
----------- ----------- -----------
Richard P. Wollenberg 44,167,924 848,034 359,827
Robert B. Arkell 44,208,145 807,813 359,827
M. Alexis Dow 44,110,688 905,270 359,827
Jeannie E. Wertheimer 4,289,025 2,056,975 428,605
CLASS I DIRECTOR ELECTED
(Term to Expire in 1997)
Richard H. Wollenberg 44,254,987 760,971 359,827
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 on 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 2-29-96 \s\s L. J. Holbrook
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L. J. Holbrook, Senior Vice President-Finance,
Secretary and Treasurer
Date 2-29-96 \s\ A. G. Higgens
---------------------- ----------------------------------------------
A. G. Higgens, Assistant Treasurer
Page 10<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 3-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JAN-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 96,550
<ALLOWANCES> 1,100
<INVENTORY> 83,998
<CURRENT-ASSETS> 189,645
<PP&E> 1,587,228
<DEPRECIATION> 673,306
<TOTAL-ASSETS> 1,143,234
<CURRENT-LIABILITIES> 148,447
<BONDS> 0
0
0
<COMMON> 77,615
<OTHER-SE> 377,939
<TOTAL-LIABILITY-AND-EQUITY> 1,143,234
<SALES> 209,213
<TOTAL-REVENUES> 209,213
<CGS> 162,446
<TOTAL-COSTS> 162,446
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,675
<INCOME-PRETAX> 24,783
<INCOME-TAX> 9,244
<INCOME-CONTINUING> 15,539
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,539
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.30
</TABLE>
