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, 1997 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 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
----- -----
51,694,912 Common Shares were outstanding as of April 30, 1997
Page 1<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET
- -------------------------- (000 Omitted)
Apr. 30 Oct. 31 Apr. 30
1997 1996 1996
(Unaudited) (Unaudited)
A S S E T S ----------- ----------- -----------
CURRENT ASSETS:
Accounts and notes receivable $84,118 $99,147 $92,861
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 25,757 24,321 18,603
Goods in process 19,689 17,328 19,270
Raw materials and supplies 40,461 52,069 46,033
Other 10,929 11,923 9,254
----------- ----------- -----------
Total current assets 179,854 203,688 184,921
----------- ----------- -----------
CAPITAL ASSETS:
Buildings, machinery and equipment at cost 1,519,949 1,456,432 1,411,600
Accumulated depreciation 747,837 710,946 689,124
----------- ----------- -----------
Costs to be depreciated in future years 772,112 745,486 722,476
Plant sites at cost 2,932 2,909 2,834
----------- ----------- -----------
775,044 748,395 725,310
Timber at cost less depletion 178,466 177,683 178,723
Roads at cost less amortization 8,593 8,956 8,719
Timberland at cost 16,248 16,103 16,068
----------- ----------- -----------
203,307 202,742 203,510
----------- ----------- -----------
Total capital assets 978,351 951,137 928,820
----------- ----------- -----------
OTHER ASSETS 45,641 42,455 41,497
----------- ----------- -----------
$1,203,846 $1,197,280 $1,155,238
=========== =========== ===========
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 $8,768 $13,031 $6,617
Accounts payable 38,162 44,533 40,846
Short-term borrowings 57,000 38,000 30,000
Payrolls payable 14,338 11,125 13,694
Federal income taxes payable -- -- 394
Other taxes payable 11,306 11,906 11,566
Current installments of long-term debt 14,119 34,119 44,119
----------- ----------- -----------
Total current liabilities 143,693 152,714 147,236
----------- ----------- -----------
LONG-TERM DEBT 451,255 426,255 412,374
----------- ----------- -----------
DEFERRED TAXES - NET 136,822 135,106 125,854
----------- ----------- -----------
OTHER LIABILITIES 13,734 12,793 12,081
----------- ----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, ascribed value $1.50 per share;
authorized 150,000,000 shares; issued
51,694,912; 51,705,577 and 51,735,567
shares respectively 77,542 77,558 77,603
Additional paid-in capital 3,306 3,306 3,306
Retained earnings 377,494 389,548 376,784
----------- ----------- -----------
Total shareholders' equity 458,342 470,412 457,693
----------- ----------- -----------
$1,203,846 $1,197,280 $1,155,238
=========== =========== ===========
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
--------------------- -----------------------
1997 1996 1997 1996
--------- ----------- ----------- -----------
Net sales:
Timber $49,313 $45,492 $97,474 $91,625
Paper and paperboard 46,668 45,516 83,783 90,705
Converted products 89,879 108,708 186,814 226,599
--------- ----------- ----------- -----------
185,860 199,716 368,071 408,929
--------- ----------- ----------- -----------
Cost of products sold, including
outward freight 156,185 161,639 315,879 324,085
--------- ----------- ----------- -----------
Gross profit 29,675 38,077 52,192 84,844
--------- ----------- ----------- -----------
Selling, administrative
and general expenses 15,530 15,281 30,976 30,027
--------- ----------- ----------- -----------
Operating profit:
Timber 28,743 26,181 57,433 53,808
Paper and paperboard (912) 471 (5,018) 1,208
Converted products (13,686) (3,856) (31,199) (199)
--------- ----------- ----------- -----------
14,145 22,796 21,216 54,817
--------- ----------- ----------- -----------
Other income (expense):
Interest income 128 150 274 303
Interest expensed (7,247) (7,257) (14,689) (14,932)
Miscellaneous 202 316 471 600
--------- ----------- ----------- -----------
7,228 16,005 7,272 40,788
Provision for taxes on income:
Current 894 3,435 902 8,565
Deferred 1,708 2,535 1,716 6,649
--------- ----------- ----------- -----------
2,602 5,970 2,618 15,214
--------- ----------- ----------- -----------
Net income $4,626 $10,035 $4,654 $25,574
========= =========== =========== ===========
Dollars per share:
Net income $0.09 $0.19 $0.09 $0.49
Dividends $0.16 $0.15 $0.32 $0.30
Average shares outstanding in the
hands of the public (000 omitted) 51,698 51,740 51,699 51,743
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
--------------------- -----------------------
1997 1996 1997 1996
--------- ----------- ----------- -----------
Cash provided by (used for) operations:
Net income $4,626 $10,035 $4,654 $25,574
Charges to income not
requiring cash -
Depreciation 19,860 18,554 39,516 36,534
Depletion and amortization 930 1,152 2,244 2,061
Deferred taxes - net 1,708 2,535 1,716 6,649
(Gain) loss on disposition of
capital assets 452 1,725 1,242 1,664
Change in:
Accounts and notes receivable 3,644 3,689 15,029 25,303
Inventories (485) 92 7,811 (1,372)
Other 2,347 943 994 118
Other noncurrent assets (836) (1,830) (3,186) (3,230)
Accounts, payrolls and other
taxes payable (682) (4,644) 1,632 (14,731)
Federal income taxes payable -- (4,666) -- (2,081)
Other noncurrent liabilities 470 541 941 1,147
--------- ----------- ----------- -----------
Cash provided by operations 32,034 28,126 72,593 77,636
--------- ----------- ----------- -----------
Cash provided by (used for) investing:
Additions to: Plant and equipment (33,192) (35,402) (67,552) (61,052)
Timber and timberlands (1,826) (1,175) (2,847) (1,769)
Proceeds from sale of
capital assets 99 248 183 328
--------- ----------- ----------- -----------
Cash used for investing (34,919) (36,329) (70,216) (62,493)
--------- ----------- ----------- -----------
Cash provided by (used for) financing:
Long-term debt 10,000 (2,000) 5,000 13,000
Short-term borrowings 3,000 14,000 19,000 (6,000)
Payable to bank resulting from
checks in transit 124 898 (4,263) (3,655)
Accounts payable for construction (1,922) 3,201 (5,390) (2,708)
Cash dividends (8,272) (7,761) (16,544) (15,523)
Purchase of common stock (45) (135) (180) (257)
--------- ----------- ----------- -----------
Cash provided by (used for)
financing 2,885 8,203 (2,377) (15,143)
--------- ----------- ----------- -----------
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) $6,392 $5,594 $15,115 $14,740
Income taxes 68 8,389 (159) 10,645
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
--------------------- -----------------------
1997 1996 1997 1996
--------- ----------- ----------- -----------
Common stock:
Balance at beginning of period $77,547 $77,615 $77,558 $77,627
Ascribed value of stock purchased (5) (12) (16) (24)
--------- ----------- ----------- -----------
Balance at end of period $77,542 $77,603 $77,542 $77,603
========= =========== =========== ===========
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 $381,180 $374,633 $389,548 $366,966
Net income 4,626 10,035 4,654 25,574
Cash dividends on common stock (8,272) (7,761) (16,544) (15,523)
Purchases of common stock (40) (123) (164) (233)
--------- ----------- ----------- -----------
Balance at end of period $377,494 $376,784 $377,494 $376,784
========= =========== =========== ===========
Dividends paid per share $0.16 $0.15 $0.32 $0.30
========= =========== =========== ===========
Common shares:
Balance at beginning of period 51,698 51,744 51,706 51,751
Purchases (3) (8) (11) (15)
--------- ----------- ----------- -----------
Balance at end of period 51,695 51,736 51,695 51,736
========= =========== =========== ===========
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, 1997 compared with
-------------------------------------------------------
Three and Six Months Ended April 30, 1996
-----------------------------------------
Net income decreased 54% and 82% for the second quarter and year-to-date 1997
as compared with like periods in 1996 due to operating losses incurred in the
manufacturing segments of the business.
Timber
- ------
Operating profits improved 10% for the second quarter 1997 due to a 2% and 51%
increase in the average price for logs and lumber, respectively, and a 9%
increase in combined volume sold. For the year-to-date period, operating
profits improved 7%. Average log and lumber prices increased 5% and 67% for
the year-to-date period.
During the second quarter 1997, demand and prices in the export log market were
at good levels, but were down from peak levels. Domestic log markets continued
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, compared with year ago levels, have been adversely affected
by price decreases for paper and paperboard which have exceeded savings from
lower wood chip costs. Volume of paper and paperboard sold in the second
quarter 1997 and year-to-date 1997 increased 27% and 22%. Average paper prices
decreased 2% and average paperboard prices decreased 18% for the second quarter
1997 compared with the second quarter 1996. Wood chip costs decreased 37% for
the second quarter as compared with year-ago levels. The mill operated at 83%
of capacity. The rebuild of No. 11 paper machine to produce extensible bag
papers was completed during the quarter.
Pricing for linerboard is extremely weak in both the domestic and export
markets. Customer demand continues to be less than industry capacity. Paper
markets are weak.
Converted Products
- ------------------
A 14% decrease in average selling price and a 4% reduction in tonnage sold were
the primary reasons for the operating losses incurred by the converted products
segment for the quarter and year-to-date period.
During the quarter demand was adequate, but often at inadequate price levels,
particularly for commodity products. Markets are expected to remain
competitive.
Other
- -----
Despite a higher level of borrowing, interest expensed in the second quarter
held steady to year-ago levels due to lower interest rates and proportionately
more interest charged to uncompleted capital projects.
Page 7<PAGE>
Income Taxes
- ------------
Taxes on income are approximately 36% and 37% of pretax income for fiscal 1997
and 1996, respectively.
Three Months Six Months
Ended April 30 Ended April 30
% %
Other Data 1997 1996 Change 1997 1996 Change
- ---------- ---------------------- ---------------------
Sales
Logs, thousands of board feet 56,000 59,000 - 5 106,000 118,000 - 10
Lumber, thousands of board feet 16,000 7,000 +129 30,000 13,000 +131
Paper, tons 46,000 45,000 + 2 87,000 89,000 - 2
Paperboard, tons 47,000 28,000 + 68 75,000 44,000 + 70
Converted products, tons 125,000 130,000 - 4 255,000 266,000 - 4
Logs, $/thousand board feet $ 749 $ 731 + 2 $ 779 $ 744 + 5
Lumber, $/thousand board feet 457 302 + 51 502 301 + 67
Paper, $/ton FOB mill equivalent 648 660 - 2 642 694 - 7
Paperboard, $/ton FOB mill equiv. 317 385 - 18 328 417 - 21
Converted products, $/ton 720 835 - 14 733 852 - 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 $80 million. Adequate financing
is available as needed. During the quarter, the company purchased 3,000 shares
of its common stock. Cash dividends of $.16 per share were declared and paid
in the second 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 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
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 5-30-97 \s\ L. J. Holbrook
----------------------- ---------------------------------------------
L. J. Holbrook, Senior Vice President-Finance
Secretary and Treasurer
Date 5-30-97 \s\ A. G. Higgens
----------------------- ---------------------------------------------
A. G. Higgens, Assistant Treasurer
Page 10
<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-31-1997
<PERIOD-END> APR-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 84,118
<ALLOWANCES> 1,100
<INVENTORY> 85,907
<CURRENT-ASSETS> 179,854
<PP&E> 1,726,188
<DEPRECIATION> 747,837
<TOTAL-ASSETS> 1,203,846
<CURRENT-LIABILITIES> 143,693
<BONDS> 0
0
0
<COMMON> 77,542
<OTHER-SE> 380,800
<TOTAL-LIABILITY-AND-EQUITY> 1,203,846
<SALES> 368,071
<TOTAL-REVENUES> 368,071
<CGS> 315,879
<TOTAL-COSTS> 315,879
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,689
<INCOME-PRETAX> 7,272
<INCOME-TAX> 2,618
<INCOME-CONTINUING> 4,654
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,654
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
