**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, 2005**
 
 Commission
File No. 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.)***300
      Fibre Way, Longview, Washington**
    **98632***(Address
      of principal executive offices)*
    *(Zip
      Code)***(360)
      425-1550***(Registrant's
      telephone number including area code)*Not
      Applicable*(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
____
 
 Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act).
 Yes X No
____
 
 51,076,567
Common Shares were outstanding as of May 31, 2005
 
 
 Page
1
 
 
 **PART
I - FINANCIAL INFORMATION**
 
 **ITEM
1. FINANCIAL STATEMENTS**
 
 **CONSOLIDATED
STATEMENT OF OPERATIONS (Unaudited)**
 
 Three
      Months Ended
    
    Six
      Months EndedApril
      30
    
    April
      30(thousands
      except per share)
    
    2005
    
    2004
    
    2005
    
    2004**Net
      sales**Timber
    
    $
    52,200
    
    $
    61,373
    
    $
    95,567
    
    $
    95,883Paper
      and paperboard
    
    
    64,210
    
    
    54,404
    
    
    135,514
    
    
    96,771Converted
      products
    
    
    107,999
    
    
    97,606
    
    
    217,408
    
    
    190,656224,409
    
    
    213,383
    
    
    448,489
    
    
    383,310Cost
      of products sold, including outward freight
    
    
    179,662
    
    
    173,934
    
    
    368,972
    
    
    329,787**Gross
      profit**
    
    
    44,747
    
    
    39,449
    
    
    79,517
    
    
    53,523Selling,
      administrative and general expenses
    
    
    21,773
    
    
    20,874
    
    
    43,520
    
    
    40,311**Operating
      profit (loss)**Timber
    
    
    26,026
    
    
    31,875
    
    
    45,481
    
    
    45,532Paper
      and paperboard
    
    
    (48
    )
    
    (8,962
    )
    
    (3,352
    )
    
    (17,639
    )Converted
      products
    
    
    (3,004
    )
    
    (4,338
    )
    
    (6,132
    )
    
    (14,681
    )22,974
    
    
    18,575
    
    
    35,997
    
    
    13,212Interest
      income
    
    
    56
    
    
    43
    
    
    100
    
    
    79Interest
      expense
    
    
    (9,345
    )
    
    (9,355
    )
    
    (18,674
    )
    
    (18,975
    )Miscellaneous
    
    
    218
    
    
    175
    
    
    641
    
    
    388**Income
      (loss) before taxes**
    
    
    13,903
    
    
    9,438
    
    
    18,064
    
    
    (5,296
    )**Provision
      (benefit) for taxes**Current
    
    
    375
    
    
    95
    
    
    488
    
    
    (53
    )Deferred
    
    
    4,769
    
    
    3,396
    
    
    6,196
    
    
    (1,907
    )5,144
    
    
    3,491
    
    
    6,684
    
    
    (1,960
    )**Net
      Income (loss)**
    
    $
    8,759
    
    $
    5,947
    
    $
    11,380
    
    $
    (3,336
    )**Earnings
      per share**Net
      income (loss)
    
    $
    0.17
    
    $
    0.12
    
    $
    0.22
    
    $
    (0.07
    )Dividends
    
    
    0.02
    
    
    -
    
    
    0.04
    
    
    -Average
      shares outstanding in the hands of the public
    
    
    51,077
    
    
    51,077
    
    
    51,077
    
    
    51,077
 
 The
accompanying notes are an integral part of these financial
statements.
 
   Page
2
  **CONSOLIDATED
BALANCE SHEET**
 
 Apr.
      30
    
    Oct.
      31
    
    Apr.
      302005
    
    2004
    
    2004(dollars
      in thousands except per share)
    
    (Unaudited)
    
    
    
    (Unaudited)**ASSETS**Current
      assets:Accounts
      and notes receivable
    
    $
    106,389
    
    $
    111,723
    
    $
    95,426Allowance
      for doubtful accounts
    
    
    1,350
    
    
    1,350
    
    
    1,350Inventories,
      at lower cost or market; costs are based on last-in,first-out
      method except for supplies at current averagesFinished
      goods
    
    
    17,149
    
    
    21,791
    
    
    17,069Goods
      in process
    
    
    12,519
    
    
    16,275
    
    
    8,529Raw
      materials and supplies
    
    
    47,675
    
    
    45,457
    
    
    40,999Other
    
    
    8,471
    
    
    7,800
    
    
    6,726Total
      current assets
    
    
    190,853
    
    
    201,696
    
    
    167,399Capital
      assets:Buildings,
      machinery and equipment at cost
    
    
    1,837,187
    
    
    1,828,195
    
    
    1,829,095Accumulated
      depreciation
    
    
    1,168,211
    
    
    1,139,390
    
    
    1,127,120Costs
      to be depreciated in future years
    
    
    668,976
    
    
    688,805
    
    
    701,975Plant
      sites at cost
    
    
    3,549
    
    
    3,549
    
    
    3,549672,525
    
    
    692,354
    
    
    705,524Timber
      at cost less depletion
    
    
    195,912
    
    
    196,440
    
    
    198,529Roads
      at cost less amortization
    
    
    8,364
    
    
    8,631
    
    
    8,533Timberlands
      at cost
    
    
    24,615
    
    
    24,598
    
    
    24,423228,891
    
    
    229,669
    
    
    231,485Total
      capital assets
    
    
    901,416
    
    
    922,023
    
    
    937,009Pension
      and other assets
    
    
    148,553
    
    
    147,211
    
    
    141,430$
    1,240,822
    
    $
    1,270,930
    
    $
    1,245,838
 
 **LIABILITIES
AND SHAREHOLDERS' EQUITY**
 Current
      liabilities:Payable
      to bank resulting from checks in transit
    
    $
    9,701
    
    $
    12,370
    
    $
    7,621Accounts
      payable
    
    
    61,949
    
    
    66,063
    
    
    58,461Short-term
      borrowings
    
    
    14,500
    
    
    10,000
    
    
    11,000Payrolls
      payable
    
    
    17,846
    
    
    15,897
    
    
    14,826Other
      taxes payable
    
    
    8,349
    
    
    9,100
    
    
    7,797Current
      installments of long-term debt
    
    
    13,000
    
    
    30,000
    
    
    30,000Total
      current liabilities
    
    
    125,345
    
    
    143,430
    
    
    129,705Long-term
      debt
    
    
    415,290
    
    
    442,148
    
    
    457,099Deferred
      taxes - net
    
    
    210,979
    
    
    204,783
    
    
    193,503Other
      liabilities
    
    
    36,217
    
    
    36,915
    
    
    36,560Shareholders'
      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
    
    
    76,615Additional
      paid-in capital
    
    
    3,306
    
    
    3,306
    
    
    3,306Retained
      earnings
    
    
    373,070
    
    
    363,733
    
    
    349,050Total
      shareholders' equity
    
    
    452,991
    
    
    443,654
    
    
    428,971$
    1,240,822
    
    $
    1,270,930
    
    $
    1,245,838
 
 The
accompanying notes are an integral part of the financial
statements.
 
 Page
3
  **CONSOLIDATED
STATEMENT OF CASH FLOWS (Unaudited)**
 
 (000
      Omitted)Three
      Months Ended
    
    Six
      Months EndedApril
      30
    
    April
      302005
    
    2004
    
    2005
    
    2004**Cash
      provided by (used for) operations:**Net
      income (loss)
    
    $
    8,759
    
    $
    5,947
    
    $
    11,380
    
    $
    (3,336
    )Charges
      to income (loss) not requiring cash:Depreciation
    
    
    17,637
    
    
    17,738
    
    
    35,256
    
    
    35,646Depletion
      and amortization
    
    
    2,558
    
    
    2,189
    
    
    5,348
    
    
    3,522Deferred
      taxes - net
    
    
    4,769
    
    
    3,396
    
    
    6,196
    
    
    (1,907
    )(Gain)
      loss on disposition of capital assets
    
    
    (28
    )
    
    80
    
    
    176
    
    
    45Change
      in:Accounts
      and notes receivable
    
    
    2,263
    
    
    (11,221
    )
    
    5,334
    
    
    4,328Inventories
    
    
    (1,447
    )
    
    (2,402
    )
    
    6,180
    
    
    (1,249
    )Other
    
    
    509
    
    
    2,138
    
    
    (671
    )
    
    383Pension
      and other noncurrent assets
    
    
    (1,065
    )
    
    6,823
    
    
    (1,342
    )
    
    4,006Accounts,
      payrolls and other taxes payable
    
    
    6,923
    
    
    11,235
    
    
    (1,996
    )
    
    4,290Other
      noncurrent liabilities
    
    
    (835
    )
    
    1,501
    
    
    (651
    )
    
    2,128Cash
      provided by operations
    
    
    40,043
    
    
    37,424
    
    
    65,210
    
    
    47,856**Cash
      provided by (used for) investing:**Additions
      to:Plant
      and equipment
    
    
    (8,269
    )
    
    (11,980
    )
    
    (17,709
    )
    
    (16,215
    )Timber
      and timberlands
    
    
    (2,014
    )
    
    (18,619
    )
    
    (4,607
    )
    
    (21,193
    )Proceeds
      from sale of capital assets
    
    
    1,203
    
    
    203
    
    
    2,143
    
    
    293Cash
      used for investing
    
    
    (9,080
    )
    
    (30,396
    )
    
    (20,173
    )
    
    (37,115
    )**Cash
      provided by (used for) financing:**Long-term
      debt
    
    
    (24,952
    )
    
    (5,952
    )
    
    (43,905
    )
    
    24,096Short-term
      borrowings
    
    
    (5,500
    )
    
    (4,000
    )
    
    4,500
    
    
    (33,000
    )Payable
      to bank resulting from checks in transit
    
    
    1,446
    
    
    1,220
    
    
    (2,669
    )
    
    (3,569
    )Accounts
      payable for construction
    
    
    (936
    )
    
    1,704
    
    
    (920
    )
    
    1,732Cash
      dividends
    
    
    (1,021
    )
    
    -
    
    
    (2,043
    )
    
    -Cash
      used for financing
    
    
    (30,963
    )
    
    (7,028
    )
    
    (45,037
    )
    
    (10,741
    )Change
      in cash position
    
    
    -
    
    
    -
    
    
    -
    
    
    -Cash
      position, beginning of period
    
    
    -
    
    
    -
    
    
    -
    
    
    -Cash
      position, end of period
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -**Supplemental
      disclosures of cash flow information:**Cash
      paid during the period for:Interest
      (net of amount capitalized)
    
    $
    3,357
    
    $
    2,284
    
    $
    19,356
    
    $
    17,617Income
      taxes
    
    
    348
    
    
    12
    
    
    416
    
    
    11
 
 The
accompanying notes are an integral part of these financial
statements.
 
 
   Page
4
  **CONSOLIDATED
STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)**
 
 (000
      Omitted)Three
      Months Ended
    
    Six
      Months EndedApril
      30
    
    April
      30(thousands
      except per share)
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004**COMMON
      STOCK:**Balance
      at beginning of period
    
    $
    76,615
    
    $
    76,615
    
    $
    76,615
    
    $
    76,615Balance
      at end of period
    
    $
    76,615
    
    $
    76,615
    
    $
    76,615
    
    $
    76,615**ADDITIONAL
      PAID-IN CAPITAL:**Balance
      at beginning of period
    
    $
    3,306
    
    $
    3,306
    
    $
    3,306
    
    $
    3,306Balance
      at end of period
    
    $
    3,306
    
    $
    3,306
    
    $
    3,306
    
    $
    3,306**RETAINED
      EARNINGS:**Balance
      at beginning of period
    
    $
    365,332
    
    $
    343,103
    
    $
    363,733
    
    $
    352,386Net
      income (loss)
    
    
    8,759
    
    
    5,947
    
    
    11,380
    
    
    (3,336
    )Less
      cash dividends on common stock
    
    
    (1,021
    )
    
    -
    
    
    (2,043
    )
    
    -Balance
      at end of period
    
    $
    373,070
    
    $
    349,050
    
    $
    373,070
    
    $
    349,050**DIVIDENDS
      PAID PER SHARE:**
    
    $
    0.02
    
    $
    -
    
    $
    0.04
    
    $
    -**COMMON
      SHARES:**Balance
      at beginning of period
    
    
    51,077
    
    
    51,077
    
    
    51,077
    
    
    51,077Balance
      at end of period
    
    
    51,077
    
    
    51,077
    
    
    51,077
    
    
    51,077
 
 The
accompanying notes are an integral part of these financial
statements.
 
 
 
   Page
5
  **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 that are, in the opinion of management,
necessary for fair presentation.
 
 
 **NOTE
2:**
 
 **Retirement
plans**
 
 We have
two trusteed defined benefit pension programs that cover a majority of our
employees who have completed one year of continuous service. The plans provide
benefits of a stated amount for each year of service with an option for some
employees to receive benefits based on an average earnings formula.
 
 The
components of net periodic pension income are summarized as
follows:
 
 Three
      Months
    
    Six
      MonthsEnded
      April 30
    
    Ended
      April 30thousands
    
    2005
    
    2004
    
    2005
    
    2004Service
      cost - benefits earnedduring
      the year
    
    $
    2,469
    
    $
    2,256
    
    $
    4,939
    
    $
    4,513Interest
      cost on benefit obligation
    
    
    6,098
    
    
    5,987
    
    
    12,195
    
    
    11,975Expected
      return on plan assets
    
    
    (10,957
    )
    
    (11,308
    )
    
    (21,915
    )
    
    (22,617
    )Amortization
      of prior service cost
    
    
    1,469
    
    
    1,486
    
    
    2,938
    
    
    2,972Net
      periodic (income)
    
    $
    (921
    )
    $
    (1,579
    )
    $
    (1,843
    )
    $
    (3,157
    )
 
 We do not
expect to make any contributions to our pension plans in 2005.
 
 **Savings
plans**
 
 Voluntary
savings plans are maintained for all employees who have completed one year of
continuous service. The plans allow salary deferrals in accordance with IRC
section 401(k) provisions. Our contribution as a matching incentive was
$1,260,000 during the six-month period ended April 30, 2005 and we expect to
contribute approximately $2.5 million for the full fiscal year.
 
 **Postretirement
benefits other than pensions**
 
 We
provide postretirement health care insurance benefits for all salaried and
certain non-salaried employees and their dependents. Individual benefits
generally continue until age 65. We do not pre-fund these benefits, and as such
have no plan assets. We paid $1,070,000 for these benefits during the six-month
period ended April 30, 2005 and we expect to pay approximately $2.0 million for
the full fiscal year.
 
 The
components of net periodic postretirement cost are summarized as
follows:
 
 Three
      Months
    
    Six
      MonthsEnded
      April 30
    
    Ended
      April 30Thousands
    
    2005
    
    2004
    
    2005
    
    2004Service
      cost - benefits earnedduring
      the year
    
    $
    362
    
    $
    317
    
    $
    723
    
    $
    633Interest
      cost on benefit obligation
    
    
    579
    
    
    574
    
    
    1,157
    
    
    1,148Amortization
      of transition obligation
    
    
    125
    
    
    125
    
    
    249
    
    
    249Amortization
      of net loss
    
    
    28
    
    
    11
    
    
    54
    
    
    22Net
      periodic benefit cost
    
    $
    1,094
    
    $
    1,027
    
    $
    2,183
    
    $
    2,052
  
 **NOTE
3:** We use
derivative financial instruments that are designated as hedges of the fair value
of long-term debt and meet the shortcut method requirements under Statement of
Financial Accounting Standards No. 133 “Accounting for Derivative Instruments
and Hedging Activities.” Interest rate swap agreements are used as part of our
program to manage the fixed and floating interest rate mix of our total debt
portfolio and related overall cost of borrowing by replacing fixed rate debt
with floating rate debt. The interest rate swap agreements involve the periodic
exchange of payments without the exchange of the notional amount upon which the
payments are based. The changes in fair values of the interest rate swap
agreements are exactly offset by changes in the fair value of the underlying
long-term debt, therefore the adjustments are recorded on the balance sheet and
do not impact income. Unrealized gains and losses are recorded as current or
non-current assets or liabilities on the balance sheet based on the
classification of the underlying debt. No ineffectiveness was recorded to net
income related to interest rate swaps designated as fair value hedges for the
fiscal quarter ended April 30, 2004.
 
 During
the quarter we terminated our two fixed-to-floating interest rate swap
agreements related to $70 million of our senior subordinated notes and paid cash
of $1.0 million resulting in a deferred loss of $1.1 million, which taken alone
would increase our interest expense. However, this deferred loss will be netted
with deferred gains on prior interest rate swap terminations. Total deferred net
gain on all terminated interest rate swap agreements relating to our senior
subordinated notes was $5.2 million and $7.9 million at April 30, 2005 and 2004,
respectively. The deferred gain is included in Other long-term liabilities in
the accompanying balance sheet and will reduce interest expense over the term of
the senior subordinated notes, which mature in 2009. The mark-to-market
adjustment for the outstanding interest rate swaps resulted in a derivative
liability of $1.3 million at April 30, 2004, with a corresponding adjustment to
long-term debt.
 
 Page
6
 
 
 **ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS**
 
 
 **CONSOLIDATED
STATEMENT OF OPERATIONS**
 
 **THREE
AND SIX MONTHS ENDED APRIL 30, 2005 COMPARED WITH**
 
 **THREE
AND SIX MONTHS ENDED APRIL 30, 2004**
 
 
 **Net
Sales** **-** Second fiscal quarter 2005 net sales were $224.4 million, compared
with $213.4 million for the second fiscal quarter of 2004. This 5.2% increase
was attributed to an increase in paper and paperboard net sales of $9.8 million,
or 18.0%, and an increase in converted products net sales of $10.4 million, or
10.6%, partially offset by a decrease in timber net sales of $9.2 million, or
14.9%.
 
 **Cost
of Products Sold** **-** Second fiscal quarter 2005 cost of products sold was $179.7 million,
or 80.1% of net sales, compared with $173.9 million, or 81.5% of net sales, for
second fiscal quarter 2004. This decrease as a percentage of net sales was
partially due to an increase in net sales resulting from increases in volume and
price in the paper and paperboard and converting segments. In addition, total
fiber costs decreased 4.7%, and labor cost per ton decreased 14.9% and 10.4% in
our paper and paperboard and converting segments, respectively. These
improvements were offset in part by lower allocated pension income.
 
 Our cost
of products sold also included depreciation, depletion and amortization costs.
Depreciation, depletion and amortization consist primarily of depreciation of
our plant and equipment, the depletion cost of timber harvested and, to a lesser
degree, amortization of logging roads. This expense was $20.2 million for second
fiscal quarter 2005 compared with $19.9 million for second fiscal quarter
2004.
 
 **Selling,
General and Administrative Expenses** **-** Second fiscal quarter 2005 selling, general and administrative
expenses were $21.8 million, or 9.7% of net sales, compared with $20.9 million,
or 9.8% of net sales for second fiscal quarter 2004. As a percent of sales, the
decrease was primarily caused by increased sales, partially offset by higher
salaries and wages, increased consulting and training costs associated with cost
reduction initiatives and lower allocated pension income.
 
 **Operating
Profit (Loss)** **-** Second fiscal quarter 2005 operating profit was $23.0 million
compared with operating profit of $18.6 million for the second fiscal quarter
2004. See “Selected Segment Results” below.
 
 **Provision
for Taxes on Income** **-** Second fiscal quarter 2005 provision for income taxes was $5.1
million, reflecting a tax rate of 37.0%. Second fiscal quarter 2004 provision
for income taxes was $3.5 million, reflecting a tax rate of 37.0%.
 
 **Net
Income (Loss)** **-** For the reasons noted above, the company earned net income of $8.8
million for the second fiscal quarter 2005 compared with net income of $5.9
million for second fiscal quarter 2004.
 
 **Selected
Segment Results**
 
 
 **Timber**
 
 Three
      Months
    
    
    
    Six
      MonthsEnded
      April 30
    
    Percentage
    
    Ended
      April 30
    
    Percentage2005
    
    2004
    
    Increase/(Decrease)
    
    2005
    
    2004
    
    Increase/(Decrease)Timber
      net sales, $ millions
    
    $
    52.2
    
    $
    61.4
    
    
    (14.9
    )
    $
    95.6
    
    $
    95.9
    
    
    (0.3
    )Timber
      operating profit, $ millions
    
    
    26.0
    
    
    31.9
    
    
    (18.3
    )
    
    45.5
    
    
    45.5
    
    
    (0.1
    )Logs,
      thousands of board feet
    
    
    76,752
    
    
    85,972
    
    
    (10.7
    )
    
    140,197
    
    
    134,724
    
    
    4.1Lumber,
      thousands of board feet
    
    
    16,774
    
    
    29,544
    
    
    (43.2
    )
    
    34,797
    
    
    55,629
    
    
    (37.4
    )Logs,
      $/thousand board feet
    
    $
    590
    
    $
    573
    
    
    3.0
    
    $
    589
    
    $
    555
    
    
    6.1Lumber,
      $/thousand board feet
    
    
    413
    
    
    410
    
    
    0.7
    
    
    375
    
    
    379
    
    
    (1.1
    )
 
 
 Second
fiscal quarter 2005 timber net sales were $52.2 million, compared with $61.4
million for second fiscal quarter 2004. This 14.9% decrease was due primarily to
decreases in log and lumber volumes of 10.7% and 43.2%, respectively, partially
offset by increases in log and lumber prices of 3.0% and 0.7%, respectively.
During the second fiscal quarter 2005, we harvested logs at levels more
consistent with our historical norms as compared with the increased harvest
levels in fiscal second quarter 2004 following the weather-related low harvest
levels of the first fiscal quarter 2004. The lumber volume decrease reflected
our decision to optimize our total returns and discontinue the processing of
logs into lumber at a third-party sawmill in Oregon.
 
 Second
fiscal quarter 2005 export log sales were $8.2 million, or 15.8% of timber net
sales, compared with $17.1 million, or 27.9% of timber net sales, for second
fiscal quarter 2004. This decrease was the result of decreased log export volume
of 54.1%, offset by increased log export prices of 4.6%. The volume decline in
export logs was a function of the characteristics of the timber we harvested in
the second fiscal quarter 2005, the timing of export shipments, and a strong
domestic market.
 
 Second
fiscal quarter 2005 operating profit was $26.0 million compared with $31.9
million for second fiscal quarter 2004. The primary reasons for this 18.3%
decrease were the lower export log sales, a 5% increase in logging and hauling
costs and increased depletion costs.
 
 Page
7
 Year-to-date
2005 sales were $95.6 million compared with $95.9 million for the first six
months of fiscal 2004. Year-to-date export sales were $14.4 million or 15.1% of
timber net sales, compared with $25.6 million or 26.7% of timber net sales for
the first six months of fiscal 2004. The reduction in year-to-date export sales
was due to characteristics of the timber we harvested discussed above and the
strong domestic log and lumber markets.
 
 Year-to-date
2005 operating profit was $45.5 million compared to $45.5 million for the first
six months of fiscal 2004. Log volume and price improved year-to-date 4.1% and
6.1%, respectively, offset by decreases in lumber volume and price of 37.4% and
1.1%, respectively, and a 6.1% increase in total logging costs.
 **Paper
and Paperboard**
 
 Three
      Months
    
    
    
    Six
      MonthsEnded
      April 30
    
    Percentage
    
    Ended
      April 30
    
    Percentage2005
    
    2004
    
    Increase/(Decrease)
    
    2005
    
    2004
    
    Increase/(Decrease)Paper
      and Paperboard net sales,$
      millions
    
    $
    64.2
    
    $
    54.4
    
    
    18.0
    
    $
    135.5
    
    $
    96.8
    
    
    40.0Paper
      and Paperboard operatingProfit
      (loss), $ millions
    
    
    -
    
    
    (9.0
    )
    
    -
    
    
    (3.4
    )
    
    (17.6
    )
    
    -Paper,
      tons
    
    
    75,023
    
    
    74,249
    
    
    1.0
    
    
    168,371
    
    
    134,881
    
    
    24.8Paperboard,
      tons
    
    
    48,742
    
    
    31,786
    
    
    53.3
    
    
    91,778
    
    
    51,677
    
    
    77.6Paper,
      $/ton FOB mill equivalent
    
    $
    583
    
    $
    548
    
    
    6.4
    
    $
    564
    
    $
    549
    
    
    2.7Paperboard,
      $/ton FOB mill equivalent
    
    
    343
    
    
    337
    
    
    1.8
    
    
    346
    
    
    338
    
    
    2.4
 
 
 Second
fiscal quarter 2005 paper and paperboard net sales were $64.2 million, compared
with $54.4 million for second fiscal quarter 2004. This 18.0% increase is
primarily due to a 16.7% increase in paper and paperboard volume, and to
increases in paper and paperboard prices of 6.4% and 1.8%, respectively. Demand
for domestic paper and paperboard increased due to the improved U.S. economy,
with volume of domestic paper and paperboard increasing 0.9% and 39.8%,
respectively.
 
 Second
fiscal quarter 2005 export sales in the paper and paperboard segment were $20.4
million, or 31.7% of paper and paperboard net sales, compared with $15.3
million, or 28.1% of paper and paperboard net sales for second fiscal quarter
2004. The export sales increase was primarily the result of a 60.0% increase in
the volume of export paperboard sales due to a 166.6% increase in roll pulp sold
into the export market compared with second fiscal quarter 2004. Although roll
pulp has a lower selling price than our kraft paper and paperboard, production
of roll pulp at meaningful volumes allows more stable, efficient and cost
effective operation of our Longview mill throughout the year.
 
 Second
fiscal quarter 2005 paper and paperboard operating loss was $48,000, compared
with an operating loss of $9.0 million for the second fiscal quarter 2004. Paper
and paperboard operating results compared with second fiscal quarter 2004 were
positively affected by the paper and paperboard price increases, an 18.0%
productivity improvement in labor hours per ton of paper and paperboard
produced, a 13.0% decrease in total energy cost per ton of production as a
result of our energy conservation efforts, and a 4.7% decrease in total fiber
costs. In addition, our Longview mill utilization improved to 87% compared with
73% for the second fiscal quarter 2004. We expect to operate at 85 to 90% of
capacity during the third fiscal quarter due to increased demand.
 
 Year-to-date
paper and paperboard sales were $135.5 million, compared with $96.8 million for
the first six months of fiscal 2004. Paper volume increased 24.8% and paperboard
volume improved 77.6% for the first six months of fiscal 2005 compared to 2004.
Average paper prices improved 2.7% and average paperboard prices improved 2.4%.
Demand was strong in both the domestic and export markets during year-to-date
2005 compared with the first six months of fiscal 2004.
 
 Year-to-date
export sales in the paper and paperboard segment were $39.6 million or 29.2% of
paper and paperboard net sales compared with $26.0 million or 26.9% of paper and
paperboard net sales for the first six months of fiscal 2004. Export paper
volume increased 12.2% and export paperboard volume increased 103.1%. Export
roll pulp volume accounted for 77.7% of the paperboard export volume increase,
with the remainder attributed to the improved markets. Average export paper and
paperboard prices were up 4.6% and 1.2%, respectively.
 
 Year-to-date
fiscal 2005 paper and paperboard operating loss was $3.4 million, compared with
an operating loss of $17.6 million for the year-ago period. The improvement was
primarily driven by the increases in paper and paperboard volume and price,
higher mill utilization rates resulting in lower fixed costs per unit, labor
productivity improvement of 17.9% based on hours per ton of production, a 16.9%
reduction in total energy cost per ton of production, and a 2.4% decrease in
total fiber costs.


**Converted
Products**
 
 Three
      Months
    
    
    
    Six
      MonthsEnded
      April 30
    
    Percentage
    
    Ended
      April 30
    
    Percentage2005
    
    2004
    
    Increase/(Decrease)
    
    2005
    
    2004
    
    Increase/(Decrease)Converted
      Products sales, $ millions
    
    $
    108.0
    
    $
    97.6
    
    
    10.6
    
    $
    217.4
    
    $
    190.7
    
    
    14.0Converted
      Products operatingprofit
      (loss), $ millions
    
    
    (3.0
    )
    
    (4.3
    )
    
    -
    
    
    (6.1
    )
    
    (14.7
    )
    
    -Converted
      Products, tons
    
    
    130,797
    
    
    122,708
    
    
    6.6
    
    
    262,908
    
    
    238,677
    
    
    10.2Converted
      Products, $/ton
    
    $
    826
    
    $
    795
    
    
    3.9
    
    $
    827
    
    $
    799
    
    
    3.5
 
 
 Second
fiscal quarter 2005 converted products net sales were $108.0 million, compared
with $97.6 million for second fiscal quarter 2004. This 10.6% increase was
primarily due to an increase in volume of 6.6% and a 3.9% increase in prices.
The improvement in the U.S. economy is the primary cause of the increase in
demand. Second fiscal quarter operating loss was $3.0 million, compared with an
operating loss of $4.3 million for second fiscal quarter 2004. Operating results
were favorably impacted by the increased volume and price, an improvement of
9.6% in labor productivity measured by hours per ton of production. Results were
negatively affected by the increased cost of paperboard provided by third
parties to our box plants.
 
 Page
8
 Year-to-date
fiscal 2005 converted product sales were $217.4 million, compared with $190.7
million for the first six months of fiscal 2004. This 14.0% increase was
primarily due to a 10.2% increase in volume coupled with a 3.5% increase in
average price compared with the first six months of fiscal 2004. The
year-to-date volume increase was a result of greater demand from the stronger
U.S. economy.
 
 The
year-to-date fiscal 2005 converted products operating loss was $6.1 million,
compared with a loss of $14.7 million for the first six months of fiscal 2004.
The primary reason for the reduction in operating loss year-to-date was the
improvement in total labor hours per ton of production of 9.9% compared
with the comparable 2004 period, and by the increased volume and price.


**LIQUIDITY
AND CAPITAL RESOURCES**
 At April
30, 2005, our total borrowed debt of $442.8 million included long-term debt of
$415.3 million, current installments of long-term debt of $13.0 million and
short-term borrowings of $14.5 million.
 At April
30, 2005, we had $84.5 million outstanding under our $250 million revolving
credit facility, excluding letters of credit of $9.9 million. Also outstanding
at April 30, 2005, were various senior notes totaling $124.5 million, revenue
bonds of $14.5 million and $214.3 million of senior subordinated notes, net of
original issuance discount. In addition, we had $5 million outstanding on a $15
million uncommitted line of credit. As of April 30, 2005, we had $165.6 million
available under our bank lines of credit. Our financing arrangements require us
to be in compliance with certain financial covenants, including minimum net
worth, short- and long-term borrowing ratio and fixed charge coverage ratio
requirements and restricting our payment of dividends. At April 30, 2005, we
were in compliance with such covenants.
 
 During
the quarter we terminated our two fixed-to-floating interest rate swap
agreements related to $70 million of our senior subordinated notes and paid cash
of $1.0 million resulting in a deferred loss of $1.1 million, which taken alone
would increase our interest expense. However, this deferred loss will be netted
with deferred gains on prior interest rate swap terminations. Total deferred net
gain on all terminated interest rate swap agreements relating to our senior
subordinated notes was $5.2 million and $7.9 million at April 30, 2005 and 2004,
respectively. The deferred gain is included in Other long-term liabilities in
the accompanying balance sheet and will reduce interest expense over the term of
the senior subordinated notes, which mature in 2009. The mark-to-market
adjustment for the outstanding interest rate swaps resulted in a derivative
liability of $1.3 million at April 30, 2004, with a corresponding adjustment to
long-term debt.
 
 Net cash
provided by operations was $40.0 million in the second fiscal quarter 2005 and
$37.4 million for the second fiscal quarter 2004. The primary reason for the
increase was an increase in net income.
 
 Net cash
used for investing was $9.1 million in the second fiscal quarter 2005 and $30.4
million in the second fiscal quarter 2004. Our capital expenditures, including
timberland acquisitions, were $10.3 million in the second fiscal quarter 2005
and $30.6 million in the second fiscal quarter 2004. Capital expenditures are
expected to be $40 to $50 million for fiscal year 2005 including expenditures
for timberland purchases, plant and equipment, and environmental
compliance.
 
 Net cash
used for financing in the second fiscal quarter 2005 was $31.0 million while net
cash used for financing was $7.0 million for the second fiscal quarter 2004.
Borrowed debt decreased by $30.5 million during the second fiscal quarter 2005
due to improved earnings and reduced capital expenditures.
 
 Each
quarter we determine the amount of our dividend based on, among other things,
operating results, current market conditions, debt levels and covenants in
financing agreements. Cash dividends of $0.02 per share were declared and paid
in the second fiscal quarter 2005 in the aggregate amount of $1.0 million. Cash
dividends were not paid in the second fiscal quarter 2004. The Board of
Directors declared a regular quarterly cash dividend of $0.02 per share payable
on July 8, 2005.
 
 We
believe that our cash flow generated from operations and available borrowings
under our revolving credit facility provide sufficient resources to fund
operations and to meet our debt payment obligations and foreseeable capital
expenditure requirements.
 
 **FORWARD-LOOKING
STATEMENTS**
 
 This Form
10-Q contains forward-looking statements, including statements concerning the
effect of selling roll pulp, the anticipated cost of and availability of cash
flow and financing to fund operations, meet debt payment obligations and for
planned capital expenditures; anticipated capacity utilization; expected capital
expenditures and anticipated operational benefits through improved mill
operations. 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. Actual events could differ materially from those anticipated by
the company due to a variety of factors, including, among others, developments
in the world, national, or regional economy or involving the company’s customers
or competitors affecting supply of or demand for the company’s products, energy
or raw materials; changes in product, energy or raw material prices; capital
project delay, cost overruns or unforeseen maintenance on capital assets or
advantageous capital acquisitions; changes in currency exchange rates between
the U.S. dollar and the currencies of important export markets; weather; labor
disputes; unforeseen adverse developments involving environmental matters or
other legal proceedings or the assertion of additional claims; adverse changes
in the capital markets or interest rates affecting the cost or availability of
financing; and unforeseen developments in the company's business, including
unforeseen capital requirements or reduced cash from operations. The company
does not undertake any obligation to update forward-looking statements should
circumstances or the company’s estimates or projections change.
 **ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK**
 
 Our
derivative activities are primarily limited to interest rate swaps. See Note 3
to our financial statements for a more detailed discussion of our interest rate
swaps. The swaps were terminated in February 2005. Our exposure to market risks
on our financial instruments is limited to interest rate changes on variable
rate debt, including debt under our revolving credit facilities. The interest
rates applied to our variable rate borrowings are adjusted often and therefore
react quickly to any movement in the general trend of market interest rates.
Interest expense incurred annually related to our variable rate debt is
dependent upon the amount outstanding during the year and the extent to which
interest rates rise and fall. The fair market value of long-term fixed interest
rate debt is subject to interest rate risk as well. Generally, the fair market
value of fixed rate debt will increase as interest rates fall and decrease as
interest rates rise. The interest rate changes affect the fair market value but
do not impact earnings or cash flows.


Page
9


**ITEM
4. CONTROLS AND PROCEDURES**
  **D****isclosure
Controls and Procedures.** We
maintain disclosure controls and procedures designed to provide reasonable
assurance that material information required to be disclosed by us in the
reports we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and that the information is accumulated and communicated
to our management, including our Chief Executive Officer and Senior Vice
President-Finance, as appropriate to allow timely decisions regarding required
disclosure. We performed an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and
Senior Vice President-Finance, of the effectiveness of the design and operation
of our disclosure controls and procedures as of the end of the period covered by
this report. Based on the material weakness in internal control over financial
reporting discussed below, our management, including our Chief Executive Officer
and Senior Vice President-Finance, concluded that the disclosure controls and
procedures were not effective as of the end of the period covered by this
report.
 
 We do not
expect that our disclosure controls or our internal controls will prevent all
errors and all instances of fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that we have detected all our control issues and
instances of fraud, if any. The design of any system of controls also is based
partly on certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions.
 
 ***Internal
Control Over Financial Reporting.*** **As of April 30, 2005, the company had a deficiency in internal controls
over the valuation of inventory. As a result of the deficiency, a data entry
error in the first quarter 2005 LIFO inventory calculation and related index
rates was not detected prior to the issuance of the first quarter 2005
consolidated financial statements. This control deficiency resulted in the
restatement of our first quarter 2005 consolidated financial statements. In
light of the deficiency, we performed additional analysis and other procedures
subsequent to the end of the second fiscal quarter but prior to the issuance of
our second quarter 2005 results to ensure our second fiscal quarter consolidated
financial statements were prepared without an error in the LIFO inventory
calculation. In addition, unless effectively remediated, this control deficiency
could result in a misstatement to inventory that could result in a material
misstatement to the annual or interim financial statements.
 
 Under the
Public Company Accounting Oversight Board’s Auditing Standard No. 2, the
restatement of previously issued financial statements to reflect the correction
of a misstatement should be regarded as at least a significant deficiency and as
a strong indicator that a material weakness in the design or operation of a
company’s internal control over financial reporting exists. A material weakness
is a control deficiency, or combination of control deficiencies, that results in
a more than remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. Accordingly,
management has concluded that the control deficiency constituted a material
weakness.
 
 ***Management
Remediation Plan.*** Subsequent to the end of the second quarter, we undertook remedial action to
address and correct the weakness in our internal controls and disclosure
controls. These actions included adopting an adequate independent review of the
LIFO calculation including performing a duplicate calculation.
 
 ***Changes
in Internal Control over Financial Reporting.*** We are
in the process of implementing a new company-wide Enterprise Resource Planning
System (ERP) with integrated point solution software. During the second fiscal
quarter we implemented the human resources and payroll modules for the ERP
system. As a result, we have updated our internal controls as necessary to
accommodate the modifications to our business processes and accounting
procedures. There have been no other changes in our internal controls over
financial reporting during the most recent quarter that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.
  
 **PART
II - OTHER INFORMATION**
 
 **ITEM
1. LEGAL PROCEEDINGS.**
 
 Nothing
to report.
 
 **ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.**
 
 Nothing
      to report.
 
 **ITEM
3. DEFAULTS UPON SENIOR SECURITIES.**
 
 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 March 15,
2005 at which time the following three Class III directors were
elected:
 
 CLASS
      III DIRECTORS(Terms
      to Expire in 2008)Votes CastFor
    WithheldLisa J. McLaughlin
    33,673,058
    12,088,422M.
      Alexis Dow
    40,039,343
    5,722,137Michael
      C. Henderson
    40,591,667
    5,169,813
 
  Page
10
 
 The
      remaining directors of Longview Fibre Company are as
    follows:CLASS
      I DIRECTORS(Terms
      to Expire in 2006)David
      A. WollenbergDavid
      L. BowdenRichard
      H. WollenbergCLASS
      II DIRECTORS(Terms
      to Expire in 2007)Robert
      E. WertheimerJohn
      R. KretchmerRobert
      A. Kirchner


**ITEM
5. OTHER INFORMATION.**
 
 Nothing
to report.
 
 **ITEM
6. EXHIBITS.**
 
 The
Exhibits to this report on Form 10-Q are listed on the accompanying Exhibit
Index.
 
 
 
 
 **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)
 
 **L.
J. McLAUGHLIN**  06/09/05
 L. J.
McLAUGHLIN
 Senior
Vice President-Finance,
 Secretary
and Treasurer
 
 
 **A.**  **G.**  **HIGGENS**  06/09/05
 A. G.
HIGGENS
 Assistant
Treasurer
  Page
11
  
 **EXHIBIT
INDEX**
 
 
 Exhibit
      No.
    
    Description31.1
    
    Section
      302 Certification by R. H. Wollenberg, President and Chief Executive
      Officer.31.2
    
    Section
      302 Certification by L. J. McLaughlin, Sr. Vice President-Finance,
      Secretary and Treasurer.32.1
    
    Section
      1350 Certification by R. H. Wollenberg, President and Chief Executive
      Officer.32.2
    
    Section
      1350 Certification by L. J. McLaughlin, Sr. Vice President-Finance,
      Secretary and Treasurer.
 
 
 
   Page
12