|
|

UNITED STATES
  SECURITIES AND EXCHANGE COMMISSIONWashington,
  D.C. 20549

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FORM 10-Q_______________________________

x 
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly periodended June 30, 2004 
  OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

|Commission
      File No.: | 1-13573-01
|-------------------------- | ----------
|                           | 1-13573   

INLAND
  FIBER GROUP, LLCFIBER
  FINANCE CORP.(Exact name of registrant
  as specified in its charter)

|DELAWARE                                                                    | 91-1217136                                
|--------------------------------------------------------------------------- | ------------------------------------------
|DELAWARE                                                                    | 91-1851612                                
|(State or other jurisdiction
      
      of incorporation or organization) | (I.R.S. Employer
      Identification No.)
|                                                                            |                                           
|6400 Highway 66
			Klamath Falls, OR 97601                                  | 97601                                     
|(Address of principal
      executive offices)                              | (Zip code)                                

Registrants telephone number, including area code:   
	541-884-2240

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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 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 xNo o

Indicate by check mark whether the registrant
  is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YesoNo x



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|FORM 10-QTABLE OF CONTENTS
|--------------------------



PART I.FINANCIAL INFORMATION (Unaudited)

|     |    |   | Form 10-Q                                                                                        |     
|---- | -- | - | ------------------------------------------------------------------------------------------------ | ----
|     |    |   |                                                                                                  |     
|     |    |   | Table of Contents                                                                                |     
|     |    |   |                                                                                                  |     
|Part | I  | . | Financial Information                                                                            | Page
|     |    |   |                                                                                                  |     
|Item | 1  | . | Condensed Consolidated Statements of Operationsfor the three months ended June 30, 2004 and 2003 | 1   
|     |    |   |                                                                                                  |     
|Item | 1  | . | Condensed ConsolidatedStatements of Operationsfor the six months ended June 30, 2004 and 2003    | 2   
|     |    |   |                                                                                                  |     
|Item | 1  | . | Condensed Consolidated Balance Sheetsat June 30, 2004 and December 31, 2003                      | 3   
|     |    |   |                                                                                                  |     
|Item | 1  | . | Condensed Consolidated Statements of Cash Flowsfor the six months ended June 30, 2004 and 2003   | 4   
|     |    |   |                                                                                                  |     
|Item | 1  | . | Notes to Condensed Consolidated Financial Statements                                             | 5   
|     |    |   |                                                                                                  |     
|Item | 2  | . | Management's Discussion and Analysis of Financial
				Condition and Results of Operations        | 10  
|     |    |   |                                                                                                  |     
|Item | 4  | . | Controls and Procedures                                                                          | 16  
|     |    |   |                                                                                                  |     
|Part | II | . | OTHER INFORMATION                                                                                |     
|     |    |   |                                                                                                  |     
|Item | 1  |   | Legal Proceedings                                                                                | 16  
|     |    |   |                                                                                                  |     
|Item | 2  | . | Changes in Securities and Use of Proceeds                                                        | 17  
|     |    |   |                                                                                                  |     
|Item | 3  | . | Defaults Upon Senior Securities                                                                  | 17  
|     |    |   |                                                                                                  |     
|Item | 4  | . | Submission of Matters to a Vote of Security Holders                                              | 17  
|     |    |   |                                                                                                  |     
|Item | 5  | . | Other Information                                                                                | 17  
|     |    |   |                                                                                                  |     
|Item | 6  | . | Exhibits and Reports on Form 8-K                                                                 | 18  



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INLAND FIBER GROUP, LLC AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  (IN THOUSANDS) 
  (UNAUDITED)



|                                                                 |  |  |   |                            |   |  |  |   |         |  
|---------------------------------------------------------------- |  |  | - | -------------------------- | - |  |  | - | ------- | -
|                                                                 |  |  |   | Three MonthsEnded June 30, |  
|                                                                 |  |  |   | 2004                       |   |  |  |   | 2003    |  
|                                                                 |  |  |   |                            |   |  |  |   |        
|                                                                
|Revenues (including $345 (2004) and $8,300 (2003) to affiliates) |  |  | $ | 16,494                     |   |  |  | $ | 14,727  |  
|Cost of timber harvested                                         |  |  |   | (2,918                     | ) |  |  |   | (3,104  | )
|Depletion, depreciation and road amortization                    |  |  |   | (4,856                     | ) |  |  |   | (3,438  | )
|Cost of timber and property sales                                |  |  |   | (9,915                     | ) |  |  |   | (8,640  | )
|                                                                 |  |  |   |                            |   |  |  |   |         |  
|Gross loss                                                       |  |  |   | (1,195                     | ) |  |  |   | (455    | )
|                                                                
|Selling, general and administrative expenses                     |  |  |   | (2,046                     | ) |  |  |   | (1,382  | )
|Equity in net loss of affiliate                                  |  |  |   | (4,356                     | ) |  |  |   | (4,906  | )
|                                                                 |  |  |   |                            |   |  |  |   |         |  
|Operating loss                                                   |  |  |   | (7,597                     | ) |  |  |   | (6,743  | )
|                                                                
|Interest expense                                                 |  |  |   | (5,385                     | ) |  |  |   | (5,399  | )
|Amortization of deferred financing fees                          |  |  |   | (168                       | ) |  |  |   | (169    | )
|Other income, net                                                |  |  |   | 30                         |   |  |  |   | 37      |  
|                                                                 |  |  |   |                            |   |  |  |   |         |  
|                                                                
|Net loss                                                         |  |  | $ | (13,120                    | ) |  |  | $ | (12,274 | )
|                                                                 |  |  |   |                            |   |  |  |   |         |  
|                                                                
|                                                                
|See notes to the condensed consolidated financial statements    

1



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PART 1. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

INLAND FIBER GROUP, LLC AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(IN THOUSANDS)
	(UNAUDITED)



|                                                                 |  |  |   | Six Months Ended June 30, |  
|---------------------------------------------------------------- |  |  | - | ------------------------- | -
|                                                                 |  |  |   | 2004                      |  
|                                                                 |  |  |   |                           |  
|Revenues (including $345 (2004) and $8,300 (2003) to affiliates) |  |  | $ | 19,079                    |  
|Cost of timber harvested                                         |  |  |   | (4,520                    | )
|Depletion, depreciation and road amortization                    |  |  |   | (6,002                    | )
|Cost of timber and property sales                                |  |  |   | (9,944                    | )
|                                                                 |  |  |   |                           |  
|Gross loss                                                       |  |  |   | (1,387                    | )
|                                                                
|Selling, general and administrative expenses                     |  |  |   | (4,220                    | )
|Equity in net loss of affiliate                                  |  |  |   | (9,274                    | )
|                                                                 |  |  |   |                           |  
|Operating loss                                                   |  |  |   | (14,881                   | )
|                                                                
|Interest expense                                                 |  |  |   | (10,800                   | )
|Amortization of deferred financing fees                          |  |  |   | (337                      | )
|Other income, net                                                |  |  |   | 68                        |  
|                                                                 |  |  |   |                           |  
|                                                                
|Net loss                                                         |  |  | $ | (25,950                   | )
|                                                                 |  |  |   |                           |  
|                                                                
|                                                                
|See notes to the condensed consolidated financial statements    

2

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PART 1. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS



|                                                                                |  |   |  |         |   |             |   |  |         |   |              | 
|------------------------------------------------------------------------------- |  | - |  | ------- | - | ----------- | - |  | ------- | - | ------------ | 
|INLAND FIBER GROUP, LLC AND SUBSIDIARY
			CONDENSED CONSOLIDATED BALANCE SHEETS
|(IN THOUSANDS)                                                                 
|                                                                                |  |   |  |         |   | June 30,    |   |  |         |   | December 31, | 
|                                                                                |  |   |  |         |   | 2004        |   |  |         |   | 2003         | 
|                                                                                |  |   |  |         |   |             |   |  |         |   |              | 
|                                                                                |  |   |  |         |   | (Unaudited) |   |  |         |   | *            | 
|ASSETS                                                                          |  |   |  |         |   |             |   |  |         |  
|Current assets:                                                                 |  |   |  |         |   |             |   |  |         |  
|Cash and cash equivalents                                                       |  | $ |  | 597     |   |             | $ |  | 1,447   |  
|Accounts receivable                                                             |  |   |  | 616     |   |             |   |  | 530     |  
|Other receivables                                                               |  |   |  | 658     |   |             |   |  | 332     |  
|Notes receivable                                                                |  |   |  | 788     |   |             |   |  | 103     |  
|Prepaid expenses and other current assets                                       |  |   |  | 104     |   |             |   |  | 220     |  
|                                                                                |  |   |  |         |   |             |   |  |         |  
|Total current
			assets                                                         |  |   |  | 2,763   |   |             |   |  | 2,632   |  
|                                                                               
|Timber and timberlands, net                                                     |  |   |  | 113,375 |   |             |   |  | 129,002 |  
|Investment in affiliates                                                        |  |   |  | 24,139  |   |             |   |  | 33,414  |  
|Property, plant and equipment, net                                              |  |   |  | 802     |   |             |   |  | 833     |  
|Notes receivable, less current portion                                          |  |   |  | 10      |   |             |   |  | 10      |  
|Restricted cash                                                                 |  |   |  | 155     |   |             |   |  | 154     |  
|Deferred financing fees, net                                                    |  |   |  | 2,286   |   |             |   |  | 2,623   |  
|                                                                                |  |   |  |         |   |             |   |  |         |  
|                                                                               
|Total assets                                                                    |  | $ |  | 143,530 |   |             | $ |  | 168,668 |  
|                                                                                |  |   |  |         |   |             |   |  |         |  
|                                                                               
|LIABILITIES AND MEMBERS' EQUITY/(DEFICIENCY)                                    |  |   |  |         |   |             |   |  |         |  
|Current liabilities:                                                            |  |   |  |         |   |             |   |  |         |  
|Accounts payable                                                                |  |   |  | 1,509   |   |             |   |  | 525     |  
|Accrued liabilities                                                             |  |   |  | 1,593   |   |             |   |  | 511     |  
|Accrued bond interest                                                           |  |   |  | 2,722   |   |             |   |  | 2,830   |  
|Customer deposit                                                                |  |   |  | 3,991   |   |             |   |  | 5,000   |  
|Payable to managing member and affiliates                                       |  |   |  | 147     |   |             |   |  | 284     |  
|                                                                                |  |   |  |         |   |             |   |  |         |  
|Total current
			liabilities                                                    |  |   |  | 9,962   |   |             |   |  | 9,150   |  
|                                                                                |  |   |  |         |   |             |   |  |         |  
|                                                                               
|Long-term debt                                                                  |  |   |  | 225,000 |   |             |   |  | 225,000 |  
|                                                                                |  |   |  |         |   |             |   |  |         |  
|                                                                               
|Members' deficiency                                                             |  |   |  |         |   |             |   |  |         |  
|Managing member's interest                                                      |  |   |  | (936    | ) |             |   |  | (674    | )
|Nonmanaging members' interest                                                   |  |   |  | (90,496 | ) |             |   |  | (64,808 | )
|                                                                                |  |   |  |         |   |             |   |  |         |  
|Total members'
			deficiency                                                    |  |   |  | (91,432 | ) |             |   |  | (65,482 | )
|                                                                                |  |   |  |         |   |             |   |  | `       |  
|                                                                               
|Total liabilities
			and members' deficiency                                    |  | $ |  | 143,530 |   |             | $ |  | 168,668 |  
|                                                                                |  |   |  |         |   |             |   |  |         |  
|                                                                                |  |   |  |         |   |             |   |  |         |  

|* | Derived from audited Consolidated Balance Sheet as of December 31, 2003 See notes
			to unaudited condensed consolidated financial statements
|- | ---------------------------------------------------------------------------------------------------------------------------------------------
| 

3





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INLAND FIBER GROUP, LLC AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(IN THOUSANDS) 
	(UNAUDITED)





|                                                                   |  |  |                           |        |   |  |  |   |        |  
|------------------------------------------------------------------ |  |  | ------------------------- | ------ | - |  |  | - | ------ | -
|                                                                   |  |  | Six Months Ended June 30, |       
|                                                                   |  |  |                           | 2004   |   |  |  |   | 2003   |  
|                                                                   |  |  |                           |        |   |  |  |   |        |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                              |  |  |                           |        |   |  |  |   |        |  
|Net cash (used in) provided by operating activities                |  |  | $                         | (185   | ) |  |  | $ | 647    |  
|                                                                   |  |  |                           |        |   |  |  |   |        |  
|                                                                  
|CASH FLOWS FROM INVESTING ACTIVITIES:                              |  |  |                           |        |   |  |  |   |        |  
|Timber, timberlands and road
			additions                          |  |  |                           | (663   | ) |  |  |   | (1,619 | )
|Sale (purchase) of property,
			plant and equipment - net          |  |  |                           | (2     | ) |  |  |   | 8      |  
|                                                                   |  |  |                           |        |   |  |  |   |        |  
|Net cash used in investing activities                              |  |  |                           | (665   | ) |  |  |   | (1,611 | )
|                                                                   |  |  |                           |        |   |  |  |   |        |  
|                                                                  
|CASH FLOWS FROM FINANCING ACTIVITIES:                              |  |  |                           |        |   |  |  |   |        |  
|Capital contribution                                               |  |  |                           |        |   |  |  |   | 1,238  |  
|                                                                   |  |  |                           |        |   |  |  |   |        |  
|Net cash used in financing activities                              |  |  |                           |        |   |  |  |   | 1,238  |  
|                                                                   |  |  |                           |        |   |  |  |   |        |  
|                                                                  
|Increase (decrease) in cash and cash equivalents                   |  |  |                           | (850   | ) |  |  |   | 274    |  
|Cash and cash equivalents - beginning of period                    |  |  |                           | 1,447  |   |  |  |   | 965    |  
|                                                                   |  |  |                           |        |   |  |  |   |        |  
|                                                                  
|Cash and cash equivalents - end of period                          |  |  | $                         | 597    |   |  |  | $ | 1,239  |  
|                                                                   |  |  |                           |        |   |  |  |   |        |  
|                                                                  
|Noncash activities:                                                |  |  |                           |        |   |  |  |   |        |  
|Contribution of timberlands for
			investment in affiliate         |  |  | $                         | —      |   |  |  | $ | 11,572 |  
|                                                                  
|Supplemental cash flow information:                                |  |  |                           |        |   |  |  |   |        |  
|Cash paid for interest expense                                     |  |  | $                         | 10,908 |   |  |  | $ | 10,829 |  
|                                                                  
|                                                                  
|See notes to unaudited condensed consolidated financial statements

4





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INLAND FIBER GROUP, LLC AND SUBSIDIARY 
	Notes to Condensed Consolidated Financial Statements 
	(In thousands, except as otherwise indicated)

|1. Business and Basis of Presentation
|-------------------------------------



|Business
|--------

The unaudited condensed consolidated financial statements include the accounts of Inland Fiber Group, LLC (“IFG”),
	a Delaware limited liability company, and its wholly owned subsidiary, Fiber Finance Corp. (“Finance Corp.”), collectively
	referred to hereafter as the Company. Fiber Finance Corp. serves as the co-obligor for IFG’s 9-5/8% Senior Notes due 2007
	(the “Notes”). Finance Corp has nominal assets and does not conduct operations. All intercompany transactions have been
	eliminated in consolidation.
	The primary activities of the Company are the growing of trees and the sale of logs and standing timber to third party wood processors
	and the sale of excess land. The Company’s timber is located principally in Oregon, east of the Cascade Range. Logs harvested
	from the timberlands are sold to unaffiliated domestic conversion facilities. These logs are processed for sale as lumber, plywood
	and other wood products, primarily for use in new residential home construction, home remodeling and repair and general industrial
	applications.
	Prior to July 2003, Pacific Fiber Company, LP, a master limited partnership (the “MLP”) (formerly U.S. Timberlands Company,
	L.P.), owned a 99% non-managing member interest in the Company. The MLP was formed on June 27, 1997 to acquire and own substantially
	all of the equity interests in the Company. Timber Resource Services, LLC (formerly known as U.S. Timberlands Services Company,
	LLC, the “Manager”) manages the business of the Company and owns a 1% non-voting membership interest in the Company.

On October 17, 2002, the MLP announced that it had signed a definitive agreement to be acquired by an acquisition company formed by
	a group led by senior management (the “Privatization Transaction”). The group beneficially owned 36.4% of the combined
	outstanding limited partnership units of the MLP consisting of 16% of the common units and 98% of the subordinated units. The definitive
	agreement contemplated a cash tender offer for 100% of the outstanding common limited partnership units not already owned by the
	acquiring entity or its affiliates for $3.00 per unit in cash, followed by a merger of the acquisition company with and into the
	MLP, pursuant to which each common limited partnership unit not already owned by the acquiring entity or its affiliates would be
	converted into the right to receive $3.00 per unit in cash. The tender offer commenced on November 19, 2002 and was completed on
	March 6, 2003. In connection with the tender offer, approximately 71% of the MLP’s common units were tendered. The remaining
	common units held by non-affiliates not purchased in the tender offer were converted into the right to receive $3.00 per common
	unit in the merger which was completed on June 26, 2003. 
	Subsequent to the Privatization Transaction, the 99% interest in the Company held by the MLP was transferred in a series of transactions
	to a newly-formed limited liability company, IFG Holdings, LLC. IFG Holdings, LLC is wholly owned by American Forest Resources,
	LLC (“AFR”) (formerly known as US Timberlands Yakima, LLC), in which the Company holds a preferred equity interest.
	As part of this reorganization of the ownership structure of the



5

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INLAND FIBER GROUP, LLC AND SUBSIDIARYNotes to Condensed Consolidated Financial Statements (continued)(In thousands, except as otherwise indicated)

Company, a Board of Directors was elected for the Company to supervise its operations and a new management arrangement was established
	under which the Manager, whose interest was converted into a 1% non-voting interest in the Company, provides comprehensive timber
	management services to the Company pursuant to a fee-based management agreement.
	As a result of the Privatization Transaction described above, the Company is an indirect 99% owned subsidiary of AFR.

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations
	of the United States Securities and Exchange Commission for reporting on Form 10-Q. Accordingly, certain information and footnotes
	required in financial statements prepared in accordance with accounting principles generally accepted in the United States of America
	have been condensed or omitted from these statements. These unaudited condensed consolidated financial statements were prepared
	on a consistent basis with and should be read in conjunction with the consolidated financial statements included in the Company’s
	2003 Annual Report on Form 10-K. Operating results for the quarter and six month period ended June 30, 2004 are not necessarily
	indicative of the results that may be expected for the full year or any other period. In the opinion of management, the accompanying
	unaudited consolidated financial statements include all normal recurring adjustments necessary to present fairly the information
	for such periods.
	The accompanying condensed consolidated statements have been prepared assuming that the Company will continue as a going concern.
	In December 2003, the trustee under the indenture (the “Indenture”) governing the Company’s $225,000 of 9-5/8%
	Senior Notes, which mature in 2007 commenced litigation against the Company and others alleging, among other matters, that the Company
	has violated certain covenants contained in the Indenture. The Company has denied all of the allegations and made a motion to dismiss
	the complaint. In May 2004, the Company received a Notice of Default from the Trustee covering certain of the allegations in the
	complaint. On July 29, 2004, the Court of Chancery dismissed the action without prejudice, based on its determination that the trustee
	under the Indenture lacked standing under the terms of the Indenture to bring an action against the Defendants since the requisite
	notice of default and opportunity to cure had not been provided to the Company prior to the time the action was commenced. The trustee
	was granted 30 days to file an amended complaint. The Company and its legal counsel believe the litigation and the Notice of Default
	to be without merit and intend to vigorously defend the litigation that would arise if the trustee files an amended complaint.
	In the event the trustee prevails in the litigation the Trustee will have the right to demand repayment and accelerate the maturity
	of the notes. If such event occurs, and the Company is unable to effect an amendment or a restructuring of the notes, the Company’s
	ability to continue as a going concern would be in substantial doubt. The consolidated financial statements do not include any adjustments
	that might result from the outcome of this uncertainty. (See Note 5 for a further discussion of the Litigation).

6





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2. Timber and Timberlands
	Timber and Timberlands consisted of the following:

| |  |  |                                                     |  |  |   |          |  |  |   |             
| |  |  | --------------------------------------------------- |  |  | - | -------- |  |  | - | ------------
| |  |  |                                                     |  |  |   | June 30, |  |  |   | December 31,
| |  |  |                                                     |  |  |   | 2004     |  |  |   | 2003        
| |  |  |                                                     |  |  |   |          |  |  |   |             
| |  |  | Timber and logging
			roads                         |  |  | $ | 274,097  |  |  | $ | 281,367     
| |  |  | Timberlands                                         |  |  |   | 17,099   |  |  |   | 19,269      
| |  |  | Seed orchard and
			nursery stock                   |  |  |   | 1,267    |  |  |   | 1,451       
| |  |  |                                                     |  |  |   |          |  |  |   |             
| |  |  |                                                     |  |  |   | 292,463  |  |  |   | 302,087     
| |  |  | Less accumulated
			depletion and road amortization |  |  |   | 179,088  |  |  |   | 173,085     
| |  |  |                                                     |  |  |   |          |  |  |   |             
| |  |  |                                                     |  |  | $ | 113,375  |  |  | $ | 129,002     
| |  |  |                                                     |  |  |   |          |  |  |   |             

3. Investment in Affiliate



Since October 1999, the Company has owned a redeemable preferred membership interest ("Preferred LLC Interest")
	in AFR, an affiliate accounted for under the equity method. As described in Note 1 to the Financial Statements, in 2003 the Company
	became an indirect subsidiary of AFR as a result of a series of transactions culminating in the contribution to a subsidiary of
	AFR of the 99% non-managing member's interest in the Company previously owned by the MLP.

The following summarized unaudited financial information for AFR is presented on an AFR standalone basis without
	consolidation of the Company's results of operations to avoid duplication, which would otherwise occur. The results of AFR presented
	below reflect purchase accounting relating to the Privatization Transaction for periods subsequent to March 6, 2003.

|                         |  |  |   |                    |   |  |  |   |                    |   |  |  |   |                  |   |  |  |   |                  |  
|------------------------ |  |  | - | ------------------ | - |  |  | - | ------------------ | - |  |  | - | ---------------- | - |  |  | - | ---------------- | -
|                         |  |  |   | Three Months Ended |   |  |  |   | Three Months Ended |   |  |  |   | Six Months Ended |   |  |  |   | Six Months Ended |  
|                         |  |  |   | June 30            |   |  |  |   | June 30            |   |  |  |   | June 30          |   |  |  |   | June 30          |  
|                         |  |  |   | 2004               |   |  |  |   | 2003               |   |  |  |   | 2004             |   |  |  |   | 2003             |  
|                         |  |  |   |                    |   |  |  |   |                    |   |  |  |   |                  |   |  |  |   |                  |  
|                        
|Net sales                |  |  | $ | 2,742              |   |  |  | $ | 1,540              |   |  |  | $ | 4,722            |   |  |  | $ | 4,116            |  
|Gross profit             |  |  |   | 371                |   |  |  |   | (266               | ) |  |  |   | 560              |   |  |  |   | (230             | )
|Loss before equity       |  |  |   |                    |   |  |  |   |                    |   |  |  |   |                  |   |  |  |   |                  |  
|in the Company's Loss    |  |  |   | (2,437             | ) |  |  |   | (2,760             | ) |  |  |   | (5,131           | ) |  |  |   | (4,988           | )
|Equity in Company's Loss |  |  |   | (10,684            | ) |  |  |   | (9,513             | ) |  |  |   | (20,816          | ) |  |  |   | (13,412          | )
|Net loss                 |  |  |   | (13,120            | ) |  |  |   | (12,274            | ) |  |  |   | (25,950          | ) |  |  |   | (18,401          | )

|(1) | Reflects (a) charges of $1,920, $2,145, $4,140 and $2,860, respectively related to
			the amortization of $43,287 excess of cost over deficiency in net assets attributable to 63.6% acquired interest and
			(b) benefit of $3,984 representing share of the Company's net loss for 2003 attributable to 63.6% acquired interest,
			prior to acquisition.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   



7



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INLAND FIBER GROUP, LLC AND SUBSIDIARYNotes to Condensed Consolidated Financial Statements (continued)(In thousands, except as otherwise indicated)

4. Unit-based Compensation Plans

Prior to the Privatization Transaction the MLP had a Unit Option Plan, which permitted the grant of unit options to employees and
	directors of the Company who perform services for the Company covering 857,749 Common Units. As permitted under SFAS No. 148, Accounting
	for Stock-Based Compensation-Transition and Disclosure, which was issued in December 2002 and amended SFAS No. 123, Accounting for
	Stock-Based Compensation, the Company has elected to follow the intrinsic value method in accounting for its stock-based employee
	compensation arrangements as defined by Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock
	Issued to Employees”, and related interpretations. There would have been no effect on net loss for the three and six month
	periods ended June 30, 2004 and 2003 if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based
	employee compensation.

In connection with the Privatization Transaction described in Note 1, each outstanding unit option granted under the Unit Option Plan
	was converted into an option to receive, upon exercise, including payment of the exercise price, the $3.00 per unit merger consideration.
	Because the exercise price for each option was greater than the merger consideration, the Company does not expect any options to
	be exercised in the future.

5. Litigation
	On December 19, 2003, an action was brought in the Court of Chancery of the State of Delaware in and for New Castle County by the
	trustee under the Indenture against the Company, Finance Corp., the Manager, American Forest Resources, LLC, Cascade Resource Holdings
	Group, LLC, and all of the directors of the Manager as of January 1, 2003 (collectively, the “Defendants”). The complaint
	alleges that the Company violated the provisions of the Indenture by transferring certain assets to its affiliates, the directors
	of the Company violated their fiduciary duty to the Company and that the transfers of the assets were fraudulent conveyances and
	subject to rescission. The trustee seeks a declaration that the Company has violated the terms of the Indenture, an injunction against
	the transfer of additional assets out of the ordinary course of business, damages and the imposition of a constructive trust on
	the assets transferred by the Company to its affiliates. In January 2004, the plaintiff’s motion to schedule a preliminary



8

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INLAND FIBER GROUP, LLC AND SUBSIDIARYNotes to Condensed Consolidated Financial Statements (concluded)(In thousands, except as otherwise indicated)



injunction hearing with respect to further transfers to affiliates and for expedited discovery was denied. In connection with the denial
	of the plaintiff’s motion, the Company agreed that, through the earlier of December 31, 2004 and the resolution of the lawsuit,
	it would provide at least thirty days’ notice before entering into any transfer of assets to affiliates, other than payment
	of management fees. Discovery began in January 2004 and is ongoing. On February 6, 2004, the Defendants filed a motion to dismiss.
	On March 26, 2004 a motion to stay discovery pending the outcome of the Defendant’s motion to dismiss was denied. In May 2004,
	a hearing was held with respect to defendants’ motion to dismiss. The defendants expect a decision regarding their motion
	to dismiss within a few months. On May 17, 2004, the Company received a Notice of Default from the Trustee covering certain of the
	allegations in the complaint. On July 29, 2004, the Court of Chancery dismissed the action without prejudice, based on its determination
	that the trustee under the Indenture lacked standing under the terms of the Indenture to bring an action against the Defendants
	because the requisite notice of default and opportunity to cure had not been provided to the Company prior to the time the action
	was commenced. The trustee was granted 30 days to file an amended complaint. The Company and its legal counsel believe the litigation
	and the Notice of Default to be without merit and intend to vigorously defend the litigation that would arise if the trustee files
	an amended complaint.6. Long Term Debt
	The Company’s long term debt consists of $225,000 of 9-5/8 % Senior Notes (the “Notes”) due 2007, which were issued
	jointly and severally by the Company and Fiber Finance Corp., a wholly owned subsidiary of the Company (collectively, the “Issuers”).
	The Issuers serve as co-obligors of the Notes. The Notes represent unsecured general obligations of the Issuers and bear interest
	at 9-5/8% payable semiannually in arrears on May 15 and November 15, and mature on November 15, 2007 unless previously redeemed.
	The Notes are redeemable at the option of the Issuers in whole or in part at predetermined redemption prices plus accrued interest
	to the redemption date.
	The Notes contain certain restrictive covenants, including limiting the ability of the Company and its subsidiaries to make cash
	distributions, incur additional indebtedness, sell assets or harvest timber in excess of certain limitations. Under certain restrictive
	covenants, during 2003 and 2002, the Company was and presently is prohibited from making distributions to its members. Although
	the Company believes it was and is in compliance with the covenants contained in the Notes, the trustee under the indenture has
	alleged that the company has violated certain covenants and has commenced litigation and also issued a notice of default, alleging
	issues already covered in its complaint as described in Note 5. On July 29, 2004, the Court of Chancery dismissed the action without
	prejudice, based on its determination that the trustee under the Indenture lacked standing under the terms of the Indenture to bring
	an action against the Defendants because the requisite notice of default and opportunity to cure had not been provided to the Company
	prior to the time the action was commenced. The trustee was granted 30 days to file an amended complaint. The Company and its legal
	counsel believe the litigation and the Notice of Default to be without merit and intend to vigorously defend the litigation that
	would arise if the trustee files an amended complaint.

7. Management Agreement
	Effective September 1, 2003, the Company entered into a new management agreement with the Manager. The management agreement replaced
	the prior arrangement under which the Company reimbursed the Manager for expenses incurred on the Company’s behalf. The management
	agreement provides for an annual fee of 2% of the agreed upon valuation of total timber and timberland assets under management,
	payable monthly. In addition, the Company established its own Board of Directors to supervise the management of the Company

9





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INLAND FIBER GROUP, LLC AND SUBSIDIARY

Forward-Looking Statements
	Certain information contained in this report may constitute forward-looking statements within the meaning of the federal securities
	laws. Although the Company believes that expectations reflected in such forward-looking statements are based upon reasonable assumptions,
	it can give no assurance that its expectations will be achieved. Forward-looking information is subject to certain risks, trends
	and uncertainties that could cause actual results to differ materially from those projected. Such risks, trends and uncertainties
	include the highly cyclical nature of the forest products industry, general economic conditions, competition, price conditions or
	trends for the Company’s products, the possibility that timber supply could increase if governmental, environmental or endangered
	species policies change, and limitations on the Company’s ability to harvest its timber due to adverse natural conditions
	or increased governmental restrictions. These and other risks are described in the Company’s other reports and registration
	statements, which are available from the United States Securities and Exchange Commission.

In June 2003, a major customer and competitor of the Company, Crown Pacific, filed for relief under Chapter 11 of the Bankruptcy Code.
	There was no direct financial impact to the Company. It is not known at this time how this bankruptcy will impact the forest products
	industry in which the Company operates although it may lead to increased timber supply in the market.

Application of Critical Accounting Policies

Certain accounting policies have a significant impact on amounts reported in the financial statements. A summary of those significant
	accounting policies can be found in Note 1 to the Company’s financial statements included in the Company’s 2003 Annual
	Report on Form 10-K.  The Company has not adopted any significant new accounting policies during the six months ended June
	30, 2004.

Among the significant judgments made by management in the preparation of the Company’s financial statements are the determination
	of the allowance for doubtful accounts and the rates of depletion applicable to the Company’s merchantable timber. These determinations
	are made periodically in the ordinary course of accounting.

Overview

The Company’s principal operations consist of growing and harvesting timber and selling logs, standing timber and related by-products
	to third party wood processors and related party purchasers as well as the sale of excess timberland. These logs and by-products
	are processed for sale as lumber, molding products, doors, mill work, commodity, specialty and overlaid plywood products, laminated
	veneer lumber, engineered wood I-beams, particleboard, hardboard, paper and other wood products. These products are used in residential,
	commercial and industrial construction, home remodeling and repair, general industrial applications and a



10

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INLAND FIBER GROUP, LLC AND SUBSIDIARY



variety of paper products. The results of the Company’s operations and its ability
	to pay distributions to its members depend upon a number of factors, many of which are beyond its control. These factors include
	general economic and industry conditions, domestic and export prices, supply and demand for timber logs, seasonality, government
	regulations affecting the manner in which timber may be harvested, and competition from other supplying regions and substitute products.
	The Company is currently not permitted to make any distributions to members (see Financial Condition and Liquidity).

Seasonality

The Company’s log and standing timber sales volumes are generally at their lowest levels in the first and second quarters of
	each year. In the first quarter, heavy snowfalls in higher elevations prevent access to many areas of the Company’s timberlands.
	This limited access, along with spring break-up conditions (when warming weather thaws and softens roadbeds) in March or April,
	restricts logging operations to lower elevations and areas with rockier soil types. As a result of these constraints, the Company’s
	sales volumes are typically at their lowest in the first quarter, improving in the second quarter and at their highest during the
	third and fourth quarters. Most customers in the region react to this seasonality by carrying sufficiently high log inventories
	at the end of the calendar year to carry them to the second quarter of the following year.

Current Market Conditions
	Second quarter 2004 prices for finished wood products (e.g. lumber, plywood and engineered wood products) were higher than the first
	quarter 2004. Plywood prices leveled off during the quarter but remained high. Lumber prices continued to rise slightly with industrial
	pine prices out-pacing other lumber products.
	Delivered log prices for Douglas Fir remained flat in the second quarter due to a long term delivered log agreement. Prices for
	veneer logs improved, as did Ponderosa Pine saw log prices. Incense Cedar prices are off from first quarter prices.



11



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INLAND FIBER GROUP, LLC AND SUBSIDIARY

Results of Operations

Selected operating statistics for the Company:

|                            |  |                   |  |          |  |                       |  |   |  |      |  |          |  |   |  |       |  |       
|--------------------------- |  | ----------------- |  | -------- |  | --------------------- |  | - |  | ---- |  | -------- |  | - |  | ----- |  | ------
|                            |  | SalesVolume (MBF) |  |          |  | PriceRealization(MBF)
|                           
|                            |  |                   |  |          |  | Timber                |  |   |  |      |  |          |  |   |  |       |  | Timber
|Period                      |  | Logs              |  | Stumpage |  | Deeds                 |  |   |  | Logs |  | Stumpage |  |   |  | Deeds
|                           
|2004                        |  |                   |  |          |  |                       |  |   |  |      |  |          |  |   |  |       |  |       
|Three Months Ended June 30  |  | 8,775             |  | —        |  | 26,915                |  | $ |  | 318  |  | $        |  | — |  | $     |  | 102   
|Three Months Ended March 31 |  | 6,932             |  | —        |  | 1,249                 |  | $ |  | 317  |  | $        |  | — |  | $     |  | 158   
|                           
|                           
|2003                        |  |                   |  |          |  |                       |  |   |  |      |  |          |  |   |  |       |  |       
|Three Months Ended June 30  |  | 14,314            |  | —        |  | 10,869                |  | $ |  | 320  |  | $        |  | — |  | $     |  | 136   
|Three Months Ended March 31 |  | 17,098            |  | —        |  | 2,886                 |  | $ |  | 313  |  | $        |  | — |  | $     |  | 236   



Quarter Ended June 30, 2004 Compared to Quarter Ended June 30, 2003

Revenues

Revenues for the quarter ended June 30, 2004 were $16.5 million, an increase of $1.8 million or 12% from revenues of $14.7 million
	for the same period in 2003. The increase in revenues during the second quarter of 2004 was caused by higher sales of timber deeds,
	timberlands, and by-product, offset by lower log sales.

Timber deed sales for the second quarter of 2004 were $2.8 million on volume of 26.9 million board feet (“MMBF”), an increase
	of $1.3 million as compared to the same period in 2003, when timber deed sales were $1.5 million on 10.9 MMBF. The average timber
	deed price was $102 per thousand board feet (“MBF”) during the second quarter of 2004, as compared to $136 per MBF for
	the same period in 2003.

Log sales for the quarter ended June 30, 2004 were $2.8 million on volume of 8.8 MMBF, a decrease of $1.8 million as compared to the
	same period in 2003 when log sales were $4.6 million on 14.3 MMBF. The average sales price was $318 per MBF for the second quarter
	of 2004, as compared to an average $320 per MBF for the same period in 2003.

In addition, property sales for the 2004 second quarter were $9.8 million, as compared to $8.3 million for the same period in 2003.

Gross Profit

The Company had a gross loss of $1.2 million in the second quarter of 2004 as compared to a gross loss of $0.5 million for the same
	period in 2003. As a percentage of sales, the gross loss was 7% as compared to a gross loss percentage of 3% in the second quarter
	of 2003. The gross loss percentage in 2004 was adversely impacted compared to 2003 by higher timberland sales costs and higher timber
	deed depletion costs.



|12
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INLAND FIBER GROUP, LLC AND SUBSIDIARY

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $0.6 million from $1.4 million in the second quarter of 2003 to $2.0 million
	in the second quarter of 2004. The increase was attributable to increased management company fees of $1.0 million and increased
	legal fees of $0.7 million offset by overall lower costs.

Equity in Net Loss of Affiliate

Equity in net loss of affiliate was $4.4 million for the second quarter of 2004. This amount reflects the Company’s share of
	the net loss of an affiliate (AFR) accounted for under the equity method. This compares to equity in net loss of affiliate of $4.9
	million in the second quarter of 2003.

Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003

Revenues

Revenues for the six months ended June 30, 2004 were $19.1 million, a decrease of $2.5 million or 12% from revenues of $21.6 million
	for the same period in 2003. The decrease in revenues during the first half of 2004 was caused by lower log sales offset by increased
	sales of timber deeds, timberlands, and by-product.

Timber deed sales for the first half of 2004 were $3.0 million on volume of 28.2 MMBF, a decrease of $0.8 million as compared to the
	same period in 2003, when timber deed sales were $2.2 million on 13.8 MMBF. The average timber deed price was $105 per MBF during
	the first half of 2004, as compared to $157 per MBF for the same period in 2003.

Log sales for the six months ended June 30, 2004 were $5.0 million on volume of 15.7 MMBF, a decrease of $4.9 million as compared
	to the same period in 2003 when log sales were $9.9 million on 31.4 MMBF. The average sales price was $317 per MBF for the first
	half of 2004, as compared to an average $316 per MBF for the same period in 2003. The increase in log prices reflects a general
	increase in the market.

In addition, property sales for the 2004 first half were $9.9 million, as compared to $8.9 million for the same period in 2003.

Gross Profit

The Company had a gross loss of $1.4 million in the first half of 2004 as compared to a gross loss of $0.5 million for the same period
	in 2003. As a percentage of sales, the gross loss was 7% as compared to a gross loss percentage of 2% in the first half of 2003.
	The gross loss percentage in 2004 was adversely impacted compared to 2003 by higher timber deed, timberland sales, and by-product
	costs, offset by lower logging and logging depletion costs.



13

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INLAND FIBER GROUP, LLC AND SUBSIDIARY

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $1.2 million from $3.0 million in the first half of 2003 to $4.2 million
	in the first half of 2004. The increase was attributable to increased management company fees of $2.0 million and increased legal
	fees of $1.0 million offset by overall lower costs.

Equity in Net Loss of Affiliate

Equity in net loss of affiliate was $9.3 million for the first half of 2004. This amount reflects the Company’s share of the
	net loss of an affiliate (AFR) accounted for under the equity method. This compares to equity in net loss of affiliate of $7.8 million
	in the first half of 2003.

Financial Condition and Liquidity

Operating Activities

Cash flows used in operating activities during the six months ended June 30, 2004 were $0.2 million, as compared to cash provided
	by operating activities of $0.6 million during the same period in 2003. The $0.8 million decrease is primarily due to the Company’s
	decrease in sales revenue in comparison to the same period in 2003.

Investing Activities

Cash flows used in investing activities were $0.7 million during the first six months of 2004 and $1.6 million during the first six
	months of 2003.

Financing Activities

The agreement governing the Company’s 9-5/8% Senior Notes due 2007 (the “Notes”) contains restrictive covenants,
	including limitations on harvest levels, land sales, cash distributions and the amount of future indebtedness. Under the Notes,
	the Company’s average annual adjusted harvest volume over any period of four consecutive years cannot exceed a volume of approximately
	147 MMBF as adjusted for timberland sales and purchases. The Notes also limit one-year harvest levels and average annual harvest
	levels for consecutive two-and-three year periods. As of June 30, 2004, the Company was in compliance with the covenants contained
	in the Notes. As of June 30, 2004, the Company was not permitted to make any distributions, as it had not exceeded the requisite
	Consolidated Fixed Charge Coverage Ratio within the Restricted Payments provisions of the Notes.

Through the first six months of 2004, the Company funded its investing activities and met its cash requirements for debt service from
	operations and cash on hand.

Cash required to meet the Company’s debt service will be significant. To meet its working capital requirements, the Company
	for the past several years has been selling logs and making timber sales at a rate in excess of the Manager’s estimate of
	the current annual board footage growth on the Company’s timberlands. The debt service and, prior to April 2001, quarterly
	cash

14



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distributions have been funded from operations and borrowings. Given projected volumes for sales
	of logs and timber, estimated current board footage growth on the timberlands and the harvest restrictions in the Notes, unless
	prices improve, costs are reduced, new markets are developed or the Company makes accretive acquisitions, the Company’s ability
	in the future to make distributions will be adversely affected. On May 10, 2001 the Company announced an indefinite suspension of
	distributions. The Company continues to evaluate means to improve cash flows, including the factors mentioned above. There can be
	no assurance that prices will improve or that the Company will be able to take any of these actions and it is unlikely prices will
	improve or any of these actions will take effect within a short-term horizon. The Company will continue to look to log and timber
	deed sales as well as the sale of excess timberlands, and short-term advances from an affiliated lender, to meet its short-term
	cash needs and meet debt service. 
	On December 19, 2003, an action was brought in the Court of Chancery of the State of Delaware in and for New Castle County by the
	trustee under the Indenture against the Company, Finance Corp., the Manager, American Forest Resources, LLC, Cascade Resource Holdings
	Group, LLC, and all of the directors of the Manager as of January 1, 2003 (collectively, the “Defendants”). The complaint
	alleges that the Company violated the provisions of the Indenture by transferring certain assets to its affiliates, the directors
	of the Company violated their fiduciary duty to the Company and that the transfers of the assets were fraudulent conveyances and
	subject to rescission. The trustee seeks a declaration that the Company has violated the terms of the Indenture, an injunction against
	the transfer of additional assets out of the ordinary course of business, damages and the imposition of a constructive trust on
	the assets transferred by the Company to its affiliates. In January 2004, the plaintiff’s motion to schedule a preliminary
	injunction hearing with respect to further transfers to affiliates and for expedited discovery was denied. In connection with the
	denial of the plaintiff’s motion, the Company agreed that, through the earlier of December 31, 2004 and the resolution of
	the lawsuit, it would provide at least thirty days’ notice before entering into any transfer of assets to affiliates, other
	than payment of management fees. Discovery began in January 2004 and is ongoing. On February 6, 2004, the Defendants filed a motion
	to dismiss. On March 26, 2004 a motion to stay discovery pending the outcome of the Defendant’s motion to dismiss was denied.
	In May 2004, a hearing was held with respect to defendants’ motion to dismiss.  On May 17, 2004, the Company received
	a Notice of Default from the Trustee covering certain of the allegations in the complaint. On July 29, 2004, the Court of Chancery
	dismissed the action without prejudice, based on its determination that the trustee under the Indenture lacked standing under the
	terms of the Indenture to bring an action against the Defendants because the requisite notice of default and opportunity to cure
	had not been provided to the Company at the time the action was commenced. The trustee was granted 30 days to file an amended complaint.
	The Company and its legal counsel believe the litigation and the Notice of Default to be without merit and intend to vigorously
	defend the litigation that would arise if the trustee files an amended complaint which properly alleges standing.

15



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ITEM 4. CONTROLS AND PROCEDURES

The Company’s management maintains an adequate system of disclosure controls and procedures to promote the timely identification
	and reporting of material, relevant information. The Company’s President and Chief Executive Officer and its Vice President
	and Chief Financial Officer meet regularly with members of senior management of the Manager to discuss significant transactions
	and events affecting the Company’s operations and consider whether topics discussed represent information that should be disclosed
	under the rules of the SEC. The Company established a Board of Directors in July 2003 and it includes an Audit Committee. The Audit
	Committee reviews all reports on Form 10-Q and 10-K prior to their filing. The Audit Committee is responsible for hiring the Company’s
	external auditors and meets with those auditors.

The Company’s President and Chief Executive Officer and its Vice President and Chief Financial Officer are responsible for establishing
	and maintaining disclosure controls and procedures. They have designed such controls to ensure that others make all material information
	known to them within the organization.
	As of the end of the period covered by this quarterly report, the Company’s principal executive officer and principal financial
	officer completed an evaluation of the disclosure controls and procedures and has determined them to be functioning properly and
	effectively. They did not discover any significant deficiencies or material weaknesses within the controls and procedures that required
	modifications. Since the completion of that evaluation, there have been no significant changes in internal control over financial
	reporting or in other factors that could significantly affect internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
	On June 21, 2002, the Company was notified that it was named in a lawsuit filed in State Court in Oregon as a codefendant seeking
	medical expenses and up to $12.0 million in damages for injuries sustained by the minor child of an employee of the Manager while
	riding on equipment owned by the Manager. At the time, liability insurance was in place, however, the insurance underwriter has
	since gone bankrupt and coverage is limited and is being administered by the Oregon Guarantee Insurance Association. Effective April
	5, 2004 this case was dismissed with prejudice.
	On December 19, 2003, an action was brought in the Court of Chancery of the State of Delaware in and for New Castle County by the
	trustee under the Indenture against the Company, Finance Corp., the Manager, American Forest Resources, LLC, Cascade Resource Holdings
	Group, LLC, and all of the directors of the Manager as of January 1, 2003 (collectively, the “Defendants”). The complaint
	alleges that the Company violated the provisions of the Indenture by transferring certain assets to its affiliates, the directors
	of the Company violated their fiduciary duty to the Company and that the transfers of the assets were fraudulent conveyances and
	subject to rescission. The trustee seeks a declaration that the Company has violated the terms

16



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of the Indenture, an injunction against the transfer of additional assets out of the ordinary course
	of business, damages and the imposition of a constructive trust on the assets transferred by the Company to its affiliates. In January
	2004, the plaintiff’s motion to schedule a preliminary injunction hearing with respect to further transfers to affiliates
	and for expedited discovery was denied. In connection with the denial of the plaintiff’s motion, the Company agreed that,
	through the earlier of December 31, 2004 and the resolution of the lawsuit, it would provide at least thirty days’ notice
	before entering into any transfer of assets to affiliates, other than payment of management fees. Discovery began in January 2004
	and is ongoing. On February 6, 2004, the Defendants filed a motion to dismiss. In May 2004, a hearing was held with respect to defendants’
	motion to dismiss. On March 26, 2004 a motion to stay discovery pending the outcome of the Defendant’s motion to dismiss was
	denied. On May 17, 2004, the Company received a Notice of Default from the Trustee covering certain of the allegations in the complaint.
	On July 29, 2004, the Court of Chancery dismissed the action without prejudice, based on its determination that the trustee under
	the Indenture lacked standing under the terms of the Indenture to bring an action against the Defendants because the requisite notice
	of default and opportunity to cure had not been provided to the Company at the time the action was commenced. The trustee was granted
	30 days to file an amended complaint. The Company and its legal counsel believe the litigation and the Notice of Default to be without
	merit and intend to vigorously defend the litigation that would arise if the trustee files an amended complaint.ITEM 3. DEFAULTS UPON SENIOR SECURITIES

As noted above in Part II, Item 1, the trustee under the Indenture has alleged that the Company is in default under the Indenture
	as a result of its violation of certain provisions of the Notes.

ITEMS 2, 4, AND 5 OF PART II

Are not applicable and have been omitted.







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INLAND FIBER GROUP, LLC AND SUBSIDIARY

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

|(a) | Exhibits           
|--- | -------------------
|   
|    | 31.1               
|   
|    | 31.2               
|   
|    | 32.1               
|   
|    | 32.2               
|   
|(b) | Reports on Form 8-K
|   

| | None.
| | -----

18



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|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.

|      |  |                |  |                        |  |                              
|----- |  | -------------- |  | ---------------------- |  | -----------------------------
|Date: |  | August 6, 2004 |  | INLANDFIBER GROUP, LLC
|      |  |                |  | By:                    |  | /s/ Thomas C. Ludlow         
|      |  |                |  |                        |  |                              
|      |  |                |  |                        |  | Thomas C. Ludlow             
|      |  |                |  |                        |  | Vice President and Treasurer 
|      |  |                |  |                        |  | (Principal Financial Officer)

19



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