EX-99.1 2 pressrelease.htm MAY 25, 2005 PRESS RELEASE May 25, 2005 Press Release

May 25, 2005

FOR IMMEDIATE RELEASE
Major Markets Circuit

Dateline: Longview, Washington
Contact: R. H. Wollenberg
President and Chief Executive Officer
Phone: (360) 425-1550

LONGVIEW FIBRE ANNOUNCES RESTATEMENT OF
FIRST FISCAL QUARTER 2005 RESULTS


LONGVIEW, Wash., May 25, 2005 - Longview Fibre Company (NYSE:LFB) today announced that it is correcting its previously reported financial results for its first fiscal quarter ended January 31, 2005 to correct an error in its LIFO inventory valuation.
 
The restatement reduces gross profit to $34.8 million, a reduction of $1.1 million from the previously reported amount of $35.9 million for the quarter. As restated, operating profit was $13.0 million, compared to the previously reported amount of $14.1 million, and net income was $2.6 million, compared to the previously reported amount of $3.3 million.
 
Longview Fibre uses the last-in, first-out, or LIFO, method of valuing inventories. Each quarter the Company calculates LIFO inventory in connection with the determination of cost of products sold on a discrete quarterly basis.
 
The cumulative LIFO index rate for valuing inventory decrements for the first fiscal quarter 2005 was improperly set at a prior year's rate instead of the proper current rate.  The error was caused when the Company updated its model used for the LIFO calculation for its manufacturing segments - paper and paperboard and converted products.
 
As a result of the error, a LIFO adjustment of $0.7 million was recorded in the first fiscal quarter of 2005.  Had the Company calculated the first quarter 2005 interim calculation correctly, a LIFO adjustment of $1.8 million would have been recorded.  The difference for the first fiscal quarter 2005 is an adjustment of $1.1 million, resulting in lower operating profit and pretax income for the first fiscal quarter 2005 by $1.1 million, or 7.8% and 20.8%, respectively.  The impact on net income is a reduction of $0.7 million, or $0.01 per share.  The attached financial information shows Longview Fibre's results reported in the first fiscal quarter 2005, the restated results for the first fiscal quarter 2005 and, as a comparison, results reported in the first fiscal quarter 2004.
 
R. H. Wollenberg, Chairman, President and Chief Executive Officer, said "Longview Fibre, its management and personnel are committed to maintaining a high standard of internal controls and procedures and the accuracy of reported financial results.  The Company is instituting further policies and procedures to help prevent this situation occurring in the future."
 
Longview Fibre intends to file with the Securities and Exchange Commission an amendment to its quarterly report on Form 10-Q for the quarter ended January 31, 2005 as soon as practicable.
 
The amended Form 10-Q will also include management’s revised conclusions regarding the Company’s financial reporting controls related to the material weakness resulting from the LIFO calculation error.

About Longview Fibre
Longview Fibre Company is a diversified timberlands manager and a specialty paper and container manufacturer.  Using sustainable forestry methods, the Company manages approximately 585,000 acres of softwood timberlands predominantly located in western Washington and Oregon, primarily for the sale of logs to the U.S. and Japanese markets. Longview Fibre’s manufacturing facilities include one of the largest pulp-paper mills in North America at Longview, Washington; a network of 15 converting plants in 12 states; and a sawmill in central Washington.  The Company’s products include: logs; corrugated and solid-fiber containers; commodity and specialty Kraft paper; paperboard; and dimension and specialty lumber.  Longview Fibre press releases, SEC filings and Annual Reports are available at no charge through the Company’s Web site at www.longviewfibre.com.

Forward-Looking Statements
This press release contains forward-looking statements, including statements concerning the Company’s policies and procedures related to internal controls and accuracy of reported financial results; and the timing of the amended 10-Q. Forward-looking statements are based on the Company’s estimates and projections on the date they are made, and are subject to a variety of risks and uncertainties.

(Financial Tables Follow)
CONSOLIDATED STATEMENT OF INCOME (Unaudited)

   
Three Months
      
   
Ended January 31
      
   
2005
  
2005
  
2004
  
(thousands except per share)
  
As Reported
  
As Restated
      
Net sales
  
$
224,080
  
$
224,080
  
$
169,927
  
Cost of products sold, including outward freight
    
188,214
    
189,310
    
155,853
  
Gross profit
    
35,866
    
34,770
    
14,074
  
Selling, administrative and general expenses
    
21,747
    
21,747
    
19,437
  
Operating profit (loss)
    
14,119
    
13,023
    
(5,363
)
Interest income
    
44
    
44
    
36
  
Interest expense
    
(9,329
)
  
(9,329
)
  
(9,620
)
Miscellaneous
    
423
    
423
    
213
  
Income (loss) before income taxes
    
5,257
    
4,161
    
(14,734
)
Provision (benefit) for taxes on income
    
1,945
    
1,540
    
(5,451
)
                     
Net income (loss)
  
$
3,312
  
$
2,621
  
$
(9,283
)
Per share
  
$
0.06
  
$
0.05
  
$
(0.18
)
                     
Average shares outstanding
    
51,077
    
51,077
    
51,077
  


SEGMENT AND OTHER INFORMATION (Unaudited)

   
Three Months
  
   
Ended January 31
  
   
2005
  
2005
  
2004
  
% Change
  
% Change
  
(thousands)
  
As Reported
  
As Restated
      
As Reported
  
As Restated
  
Net sales:
                                
Timber
  
$
43,367
  
$
43,367
  
$
34,510
    
25.7
    
25.7
  
Paper and paperboard
    
71,304
    
71,304
    
42,367
    
68.3
    
68.3
  
Converted products
    
109,409
    
109,409
    
93,050
    
17.6
    
17.6
  
   
$
224,080
  
$
224,080
  
$
169,927
    
31.9
    
31.9
  
Operating profit (loss):
                                
Timber
  
$
19,455
  
$
19,455
  
$
13,657
    
42.5
    
42.5
  
Paper and paperboard
    
(2,873
)
  
(3,304
)
  
(8,677
)
  
-
    
-
  
Converted products
    
(2,463
)
  
(3,128
)
  
(10,343
)
  
-
    
-
  
   
$
14,119
  
$
13,023
  
$
(5,363
)
  
-
    
-
  
Sales:
                                
    Logs, thousands of board feet
    
63,445
    
63,445
    
48,752
    
30.1
    
30.1
  
    Lumber, thousands of board feet
    
18,023
    
18,023
    
26,085
    
(30.9
)
  
(30.9
)
    Paper, tons
    
93,348
    
93,348
    
60,632
    
54.0
    
54.0
  
    Paperboard, tons
    
43,036
    
43,036
    
19,891
    
116.4
    
116.4
  
    Converted products, tons
    
132,111
    
132,111
    
115,969
    
13.9
    
13.9
  
    Logs, $/thousand board feet
  
$
587
  
$
587
  
$
524
    
12.0
    
12.0
  
    Lumber, $/thousand board feet
    
339
    
339
    
343
    
(1.2
)
  
(1.2
)
    Paper, $/ton FOB mill equivalent
    
549
    
549
    
550
    
(0.2
)
  
(0.2
)
    Paperboard, $/ton FOB mill equivalent
    
350
    
350
    
340
    
2.9
    
2.9
  
    Converted products, $/ton
    
828
    
828
    
802
    
3.2
    
3.2
  


 

CONSOLIDATED BALANCE SHEET

               
 
     Jan. 31     
Jan. 31
    
Oct. 31
    
Jan. 31
  
     
2005
    
2005
    
2004
    
2004
  
 
     (Unaudited)     
(Unaudited
)
        
(Unaudited
)
(dollars in thousands except per share)
    
As Reported
    
As Restated
              
ASSETS
                          
Current assets:
                          
Accounts and notes receivable
  
$
108,652
  
$
108,652
  
$
111,723
  
$
84,205
  
Allowance for doubtful accounts
    
1,350
    
1,350
    
1,350
    
1,350
  
Inventories, at lower cost or market; costs are
based on last-in, first-out method except for
supplies at current averages
                          
Finished goods
    
18,186
    
17,680
    
21,791
    
15,820
  
Goods in process
    
11,886
    
11,420
    
16,275
    
9,160
  
Raw materials and supplies
    
46,920
    
46,796
    
45,457
    
39,215
  
Other
    
8,980
    
8,980
    
7,800
    
8,864
  
Total current assets
    
193,274
    
192,178
    
201,696
    
155,914
  
Capital assets:
                          
Buildings, machinery and equipment at cost
    
1,832,588
    
1,832,588
    
1,828,195
    
1,819,667
  
Accumulated depreciation
    
1,153,093
    
1,153,093
    
1,139,390
    
1,111,677
  
Costs to be depreciated in future years
    
679,495
    
679,495
    
688,805
    
707,990
  
Plant sites at cost
    
3,549
    
3,549
    
3,549
    
3,549
  
     
683,044
    
683,044
    
692,354
    
711,539
  
Timber at cost less depletion
    
196,304
    
196,304
    
196,440
    
186,032
  
Roads at cost less amortization
    
8,557
    
8,557
    
8,631
    
8,378
  
Timberlands at cost
    
24,598
    
24,598
    
24,598
    
20,671
  
     
229,459
    
229,459
    
229,669
    
215,081
  
Total capital assets
    
912,503
    
912,503
    
922,023
    
926,620
  
Pension and other assets
    
147,488
    
147,488
    
147,211
    
148,728
  
   
$
1,253,265
  
$
1,252,169
  
$
1,270,930
  
$
1,231,262
  

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
                          
Payable to bank resulting from checks in transit
  
$
8,255
  
$
8,255
  
$
12,370
  
$
6,401
  
Accounts payable
    
56,067
    
56,067
    
66,063
    
44,574
  
Short-term borrowings
    
20,000
    
20,000
    
10,000
    
15,000
  
Payrolls payable
    
16,946
    
16,946
    
15,897
    
14,869
  
Other taxes payable
    
9,173
    
9,144
    
9,100
    
8,702
  
Current installments of long-term debt
    
-
    
-
    
30,000
    
30,000
  
Total current liabilities
    
110,441
    
110,412
    
143,430
    
119,546
  
Long-term debt
    
452,179
    
452,179
    
442,148
    
463,526
  
Deferred taxes - net
    
206,586
    
206,210
    
204,783
    
190,107
  
Other liabilities
    
38,115
    
38,115
    
36,915
    
35,059
  
Shareholders' equity:
                          
Preferred stock; authorized 2,000,000 shares
    
-
    
-
    
-
    
-
  
Common stock, ascribed value $1.50 per share; authorized 150,000,000 shares; issued 51,076,567 shares
    
76,615
    
76,615
    
76,615
    
76,615
  
Additional paid-in capital
    
3,306
    
3,306
    
3,306
    
3,306
  
Retained earnings
    
366,023
    
365,332
    
363,733
    
343,103
  
Total shareholders' equity
    
445,944
    
445,253
    
443,654
    
423,024
  
   
$
1,253,265
  
$
1,252,169
  
$
1,270,930
  
$
1,231,262
  



 

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

       
 
  
Three Months Ended
 
  
January 31
     
2005
    
2005
    
2004
  
(thousands)
    
As Reported
    
As Restated
        
Cash provided by (used for) operations:
                    
Net income (loss)
  
$
3,312
  
$
2,621
  
$
(9,283
)
Charges to income (loss) not requiring cash:
                    
Depreciation
    
17,619
    
17,619
    
17,908
  
Depletion and amortization
    
2,790
    
2,790
    
1,333
  
Deferred taxes - net
    
1,803
    
1,427
    
(5,303
)
(Gain) loss on disposition of capital assets
    
204
    
204
    
(35
)
                     
Change in:
                    
Accounts and notes receivable
    
3,071
    
3,071
    
15,549
  
Inventories
    
6,531
    
7,627
    
1,153
  
Other
    
(1,180
)
  
(1,180
)
  
(1,755
)
Pension and other noncurrent assets
    
(277
)
  
(277
)
  
(2,817
)
Accounts, payrolls and other taxes payable
    
(8,890
)
  
(8,919
)
  
(6,945
)
Other noncurrent liabilities
    
184
    
184
    
627
  
Cash provided by operations
    
25,167
    
25,167
    
10,432
  
                     
Cash provided by (used for) investing:
                    
Additions to: Plant and equipment
    
(9,440
)
  
(9,440
)
  
(4,235
)
Timber and timberlands
    
(2,593
)
  
(2,593
)
  
(2,574
)
Proceeds from sale of capital assets
    
940
    
940
    
90
  
Cash used for investing
    
(11,093
)
  
(11,093
)
  
(6,719
)
                     
Cash provided by (used for) financing:
                    
Long-term debt
    
(18,953
)
  
(18,953
)
  
30,048
  
Short-term borrowings
    
10,000
    
10,000
    
(29,000
)
Payable to bank resulting from checks in transit
    
(4,115
)
  
(4,115
)
  
(4,789
)
Accounts payable for construction
    
16
    
16
    
28
  
Cash dividends
    
(1,022
)
  
(1,022
)
  
-
  
Cash used for financing
    
(14,074
)
  
(14,074
)
  
(3,713
)
                     
Change in cash position
    
-
    
-
    
-
  
Cash position, beginning of period
    
-
    
-
    
-
  
Cash position, end of period
  
$
-
  
$
-
  
$
-
  
                     
Supplemental disclosures of cash flow information:
                    
Cash paid (received) during the period for:
                    
Interest (net of amount capitalized)
  
$
15,998
  
$
15,998
  
$
15,333
  
Income taxes
    
68
    
68
    
(1
)