Longview Fibre Swings to Loss

Revenue falls short of targets.
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Longview Fibre


, the Washington-based timber and paper producer, swung to a loss in the first quarter, hit by expenses related to conversion to a real estate investment trust and advisory fees.

The company lost $11 million, or 22 cent a share, in the quarter, compared with profit of $6.4 million, or 12 cents a share, a year ago. Adjusted for advisory fees, REIT related expenses and debt and equity issuance cost, loss were 5 cents a share in the most recent quarter. On that basis, analysts surveyed by Thomson First Call were expecting earnings of 7 cents a share in the most recent quarter.

First-quarter revenue fell 4.6% to $220.1 million. Analysts were expecting revenue of $222.4 million in the most recent quarter.

The company expects 2006 consolidated cash provided by operations of $130 million to $145 million, excluding the impact of $25 million to $30 million of non-recurring costs associated with early debt retirement, advisory fees and REIT conversion expenses.

Longview's converted products segment revenue increased 3.8% to $111.58 million. Paper and paperboard segment revenue declined 4.2% to $66.6 million and the timber division revenue dropped 22.1% to $41.9 million, hurt by wet weather conditions.

The company expects to complete REIT conversion process by Sept. 30, 2006, with the payment of a special taxable distribution to shareholders totaling approximately $385 million, of which up to $77 million, or about $1.50 per share, is expected to be distributed in cash, with the remainder to be distributed in shares of the company's common stock.

Longview Fibre also increased annual dividend rate by 20% to $1.20 a share.

"We are confident that our improved operating plan, in combination with our REIT conversion, will further accelerate our ability to deliver additional value to our shareholders," the company said.

In a separate development, private equity firm Obsidian Finance that has made an unsolicited bid for Longview Fibre along with the Campbell Group said that the poor first-quarter results will have an effect on the valuation of its offer.

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