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, 1997 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
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(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
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51,697,912 Common Shares were outstanding as of January 31, 1997
Page 1<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET
- -------------------------- (000 Omitted)
Jan. 31 Oct. 31 Jan. 31
1997 1996 1996
(Unaudited) (Unaudited)
A S S E T S ----------- ----------- -----------
CURRENT ASSETS:
Accounts and notes receivable $87,762 $99,147 $96,550
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 17,792 24,321 17,316
Goods in process 14,043 17,328 18,665
Raw materials and supplies 53,587 52,069 48,017
Other 13,276 11,923 10,197
----------- ----------- -----------
Total current assets 185,360 203,688 189,645
----------- ----------- -----------
CAPITAL ASSETS:
Buildings, machinery and equipment at cost 1,489,100 1,456,432 1,380,890
Accumulated depreciation 729,766 710,946 673,306
----------- ----------- -----------
Costs to be depreciated in future years 759,334 745,486 707,584
Plant sites at cost 2,909 2,909 2,834
----------- ----------- -----------
762,243 748,395 710,418
Timber at cost less depletion 177,440 177,683 178,429
Roads at cost less amortization 8,785 8,956 9,025
Timberland at cost 16,206 16,103 16,050
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202,431 202,742 203,504
----------- ----------- -----------
Total capital assets 964,674 951,137 913,922
----------- ----------- -----------
OTHER ASSETS 44,805 42,455 39,667
----------- ----------- -----------
$1,194,839 $1,197,280 $1,143,234
=========== =========== ===========
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 $8,644 $13,031 $5,719
Accounts payable 41,822 44,533 40,249
Short-term borrowings 54,000 38,000 16,000
Payrolls payable 11,489 11,125 13,604
Federal income taxes payable -- -- 5,060
Other taxes payable 13,099 11,906 13,696
Current installments of long-term debt 14,119 34,119 54,119
----------- ----------- -----------
Total current liabilities 143,173 152,714 148,447
----------- ----------- -----------
LONG-TERM DEBT 441,255 426,255 404,374
----------- ----------- -----------
DEFERRED TAXES - NET 135,114 135,106 123,319
----------- ----------- -----------
OTHER LIABILITIES 13,264 12,793 11,540
----------- ----------- -----------
SHAREHOLDERS' EQUITY
Common stock, ascribed value $1.50 per share;
authorized 150,000,000 shares; issued
51,697,912; 51,705,577 and 51,743,647
shares respectively 77,547 77,558 77,615
Additional paid-in capital 3,306 3,306 3,306
Retained earnings 381,180 389,548 374,633
----------- ----------- -----------
Total shareholders' equity 462,033 470,412 455,554
----------- ----------- -----------
$1,194,839 $1,197,280 $1,143,234
=========== =========== ===========
The accompanying note is an integral part of these financial statements.
Page 2<PAGE>
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
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(000 Omitted)
Three Months Ended
January 31
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1997 1996
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Net sales:
Timber $48,161 $46,133
Paper and paperboard 37,115 45,189
Converted products 96,935 117,891
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182,211 209,213
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Cost of products sold, including outward freight 159,694 162,446
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Gross profit 22,517 46,767
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Selling, administrative and general expenses 15,446 14,746
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Operating profit:
Timber 28,690 27,627
Paper and paperboard (4,106) 737
Converted products (17,513) 3,657
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7,071 32,021
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Other income (expense):
Interest income 146 153
Interest expensed (7,442) (7,675)
Miscellaneous 269 284
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44 24,783
Provision for taxes on income:
Current 8 5,130
Deferred 8 4,114
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16 9,244
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Net income $28 $15,539
=========== ===========
Dollars per share:
Net income $ -- $0.30
Dividends $0.16 $0.15
Average shares outstanding in the hands
of the public (000 omitted) 51,699 51,747
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
-----------------------
1997 1996
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Cash provided by (used for) operations:
Net income $28 $15,539
Charges to income not requiring cash -
Depreciation 19,656 17,980
Depletion and amortization 1,314 909
Deferred taxes - net 8 4,114
(Gain) loss on disposition of capital assets 790 (61)
Change in:
Accounts and notes receivable 11,385 21,614
Inventories 8,296 (1,464)
Other (1,353) (825)
Other noncurrent assets (2,350) (1,400)
Accounts, payrolls and other taxes payable 2,314 (10,087)
Federal income taxes payable -- 2,585
Other noncurrent liabilities 471 606
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Cash provided by operations 40,559 49,510
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Cash provided by (used for) investing:
Additions to: Plant and equipment (34,360) (25,650)
Timber and timberlands (1,021) (594)
Proceeds from sale of capital assets 84 80
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Cash used for investing (35,297) (26,164)
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Cash provided by (used for) financing:
Long-term debt (5,000) 15,000
Short-term borrowings 16,000 (20,000)
Payable to bank resulting from checks in transit (4,387) (4,553)
Accounts payable for construction (3,468) (5,909)
Cash dividends (8,272) (7,762)
Purchase of common stock (135) (122)
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Cash used for financing (5,262) (23,346)
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Change in cash position -- --
Cash position, beginning of period -- --
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Cash position, end of period $ -- $ --
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $8,723 $9,146
Income taxes (227) 2,256
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
-----------------------
1997 1996
----------- -----------
Common stock:
Balance at beginning of period $77,558 $77,627
Ascribed value of stock purchased (11) (12)
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Balance at end of period $77,547 $77,615
=========== ===========
Additional paid-in capital:
Balance at beginning of period $3,306 $3,306
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Balance at end of period $3,306 $3,306
=========== ===========
Retained earnings:
Balance at beginning of period $389,548 $366,966
Net income 28 15,539
Less cash dividends on common stock (8,272) (7,762)
Less purchases of common stock (124) (110)
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Balance at end of period $381,180 $374,633
=========== ===========
Dividends paid per share $0.16 $0.15
=========== ===========
Common shares:
Balance at beginning of period 51,706 51,751
Purchases (8) (7)
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Balance at end of period 51,698 51,744
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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, 1997 compared with
-------------------------------------------------
Three Months Ended January 31, 1996
-----------------------------------
First quarter earnings decreased 100% compared with the first quarter 1996 and
as compared with the fourth quarter 1996 due to operating losses in the
manufacturing segments of the business.
Timber
- ------
First quarter operating profits improved 4% as compared with the first quarter
1996. Average prices for logs and lumber improved 7% and 83% respectively,
while the combined volume sold declined 2%.
During the first quarter 1997, demand and prices in the export market were at
very good levels. Export supply may exceed demand in the second quarter
because of an expected increase in the supply of export logs in the
marketplace. Domestic log markets continue to improve. The company continues
to make progress in developing its export lumber program which is now making a
modest contribution to segment results.
Paper and Paperboard
- --------------------
Operating results declined in the first quarter 1997 compared with the first
quarter 1996 due to lower prices and proportionately more tonnage sold in the
export market. Volume of paper and paperboard sold in the first quarter as
compared with year ago levels increased 15% while average paper and paperboard
prices declined 13% and 26% respectively. First quarter 1997 wood chip costs
decreased 40% as compared with the first quarter 1996. A 12-day shutdown was
taken during the quarter to improve the balance between incoming orders and
production. Extensive planned maintenance and repair work was completed
during the shutdown. The rebuild of No. 11 Paper Machine to produce
extensible bag papers started in late December.
Paper and paperboard markets remain weak, particularly the export market.
Converted Products
- ------------------
Sales declined 18% for the first quarter 1997 as compared with the first
quarter 1996. The first quarter operating loss resulted primarily from a 14%
reduction in average price and a 4% decrease in tonnage sold.
During the quarter demand was adequate but pricing deteriorated from year ago
levels, particularly for commodity products. Markets are expected to remain
competitive.
Other
- -----
Interest expensed decreased 3% for the first quarter 1997 compared with the
like period in 1996 due to lower interest rates.
Page 7<PAGE>
Income Taxes
- ------------
Taxes on income are approximately 36% and 37% of pretax income for fiscal 1997
and 1996, respectively.
Three Months
Ended January 31
%
Other Data 1997 1996 CHANGE
- ---------- -----------------------------------
Sales
Logs, thousands of board feet 50,000 59,000 - 15
Lumber, thousands of board feet 14,000 6,000 +133
Paper, tons 41,000 44,000 - 7
Paperboard, tons 28,000 16,000 + 75
Converted products, tons 130,000 136,000 - 4
Logs, $/thousand board feet $ 812 $ 756 + 7
Lumber, $/thousand board feet 550 301 + 83
Paper, $/ton FOB mill equivalent 635 729 - 13
Paperboard, $/ton FOB mill equivalent 347 470 - 26
Converted products, $/ton 745 868 - 14
Liquidity and Capital Resources
-------------------------------
Capital expenditures for the year were above available funds from cash flow
and, therefore, increased total borrowings. The company is well along in its
major modernization of its box plants which will continue at a slower pace.
Major paper mill projects are now being undertaken which will improve quality
and capability to make diverse grades, reduce costs and modestly increase
capacity. The backlog of approved projects is $104 million. Adequate
financing is available as needed. During the quarter, the company purchased
7,665 shares of its common stock. Cash dividends of $.16 per share were
declared and paid in the first quarter in the aggregate of $8,272,000.
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 28, 1997 at which time four Class I directors were
elected.
CLASS I DIRECTORS ELECTED
(Terms to Expire in 2000) Votes Cast
For Withheld Abstentions
----------- ----------- -----------
David A. Wollenberg 45,174,154 900,323 327,060
David L. Bowden 45,190,036 884,321 327,180
Richard H. Wollenberg 45,175,749 898,728 327,060
Richard J. Parker 45,139,034 935,023 327,480
DIRECTORS WHOSE TERM CONTINUES
CLASS II DIRECTORS
(Terms to Expire in 1998)
Robert E. Wertheimer
Donald C. Stibich
C. Harper Monroe
Lisa J. Holbrook
CLASS III DIRECTORS
(Terms to Expire in 1999)
Richard P. Wollenberg
Robert B. Arkell
M. Alexis Dow
Page 9<PAGE>
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) A Form 8-K was filed on December 6,1996 listing Item 5 and Item 7
Page 10<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 3-3-97 \s\ L. J. Holbrook
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L. J. Holbrook, Senior Vice President-Finance
Secretary and Treasurer
Date 3-3.97 \s\ A. G. Higgens
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A. G. Higgens, Assistant Treasurer
Page 11
<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-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 87,762
<ALLOWANCES> 1,100
<INVENTORY> 85,422
<CURRENT-ASSETS> 185,360
<PP&E> 1,694,440
<DEPRECIATION> 729,766
<TOTAL-ASSETS> 1,194,839
<CURRENT-LIABILITIES> 143,173
<BONDS> 0
0
0
<COMMON> 77,547
<OTHER-SE> 384,486
<TOTAL-LIABILITY-AND-EQUITY> 1,194,839
<SALES> 182,211
<TOTAL-REVENUES> 182,211
<CGS> 159,694
<TOTAL-COSTS> 159,694
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,442
<INCOME-PRETAX> 44
<INCOME-TAX> 16
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