<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File No. 1-7852
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POPE & TALBOT, INC.
-------------------
<TABLE>
<S> <C>
Delaware 94-0777139
- - ---------------------------------------- ------------------------------
(State or other jurisdiction of incorp- I.R.S. Employer Identification
oration or organization) Number
1500 S.W. 1st Avenue, Portland, Oregon 97201
- - ---------------------------------------- ------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (503) 228-9161
--------------
NONE
- - ------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed
since last report.
Indicate by checkmark 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the latest practicable date.
Common stock, $1 par value - 13,362,729 shares as of May 6, 1994
<PAGE> 2
PART I. FINANCIAL INFORMATION
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Page No.
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ITEM 1. Financial Statements:
Consolidated Condensed Balance Sheets -
March 31, 1994 and December 31, 1993 2
Consolidated Statements of Income -
Three Months Ended March 31, 1994 and 1993 3
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1994 and 1993 4
Notes to Consolidated Condensed Financial Statements 5
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-8
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security
Holders 9
ITEM 6. Exhibits and Reports on Form 8-K 9-11
</TABLE>
<PAGE> 3
PART I. POPE & TALBOT, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1994 1993
------ ---------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,014 $ 3,768
Accounts receivable 60,480 56,040
Inventories:
Raw materials 59,206 62,474
Finished goods 41,301 32,782
--------- ---------
100,507 95,256
Deposits on timber purchase contracts 5,721 5,937
Prepaid expenses 8,955 8,896
--------- ---------
Total current assets 177,677 169,897
Properties:
Plant and equipment 521,681 503,416
Accumulated depreciation (252,283) (245,104)
--------- ---------
269,398 258,312
Land and timber cutting rights 10,955 10,888
--------- ---------
Total properties 280,353 269,200
Other assets:
Deferred charges 11,965 12,362
Goodwill, net of amortization 4,320 4,362
--------- ---------
Total other assets 16,285 16,724
--------- ---------
$ 474,315 $ 455,821
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $ 27,000 $ 11,000
Current portion of long-term debt 901 901
Accounts payable and accrued liabilities 66,480 71,439
Income taxes 9,684 17,822
--------- ---------
Total current liabilities 104,065 101,162
Noncurrent liabilities:
Reforestation 15,501 14,999
Postretirement benefits 13,049 12,804
Long-term debt, net of current portion 104,501 134,599
Deferred income taxes 7,952 7,936
--------- ---------
Total noncurrent liabilities 141,003 170,338
Stockholders' equity:
Common stock 13,972 12,429
Additional paid-in capital 40,858 3,370
Retained earnings 192,112 185,762
Cumulative translation adjustments (6,570) (4,578)
Less treasury shares at cost (11,125) (12,662)
--------- ---------
Total stockholders' equity 229,247 184,321
--------- ---------
$ 474,315 $ 455,821
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
balance sheets.
2
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POPE & TALBOT, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1994 1993
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<S> <C> <C>
Revenues:
Wood products $ 86,258 $ 84,269
Pulp and paper products 82,483 83,344
-------- --------
Total 168,741 167,613
Costs and expenses:
Cost of sales:
Wood products 60,740 60,580
Pulp and paper products 84,184 80,647
Selling, general and administrative 7,587 6,452
Interest 2,151 1,696
-------- --------
Total 154,662 149,375
Income before income taxes and
cumulative effect of accounting changes 14,079 18,238
Income tax provision 5,491 7,204
-------- --------
Net income before cumulative effect
of accounting changes 8,588 11,034
Cumulative effect of
accounting changes - net of tax - (562)
-------- --------
Net income $ 8,588 $ 10,472
======== ========
Net income per common share:
Primary:
Income before cumulative effect
of accounting changes $ .70 $ .95
Cumulative effect of accounting changes - (.05)
----- -----
Primary earnings per share $ .70 $ .90
===== =====
Fully diluted:
Income before cumulative effect
of account changes $ .65 $ .85
Cumulative effect of accounting changes - (.04)
----- -----
Fully diluted earnings per share $ .65 $ .81
===== =====
Cash dividends per common share $ .19 $ .19
===== =====
Weighted average number of
common shares outstanding:
Primary 12,336,311 11,629,661
========== ==========
Fully diluted 13,575,866 13,396,949
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
3
<PAGE> 5
POPE & TALBOT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1994 1993
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<S> <C> <C>
Cash flow from operating activities:
Net income $ 8,588 $ 10,472
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization 8,862 7,379
Cumulative effect of accounting changes - 562
Increase (decrease) in:
Accounts payable and accrued
liabilities (4,959) 46
Income taxes (8,138) 3,011
Reforestation 1,182 1,547
Postretirement benefits 245 267
Decrease (increase) in:
Accounts receivable (4,440) (11,289)
Inventories (5,251) (4,411)
Deposits on timber purchase contracts (52) (625)
Prepaid expenses (59) (14)
Deferred charges and other (1,541) (18)
-------- --------
Net cash provided by (used for)
operating activities (5,563) 6,927
Cash flow from investing activities:
Capital expenditures (21,781) (14,189)
Proceeds from sale of other properties - 1,300
-------- --------
Net cash used for
investing activities (21,781) (12,889)
Cash flow from financing activities:
Net increase in short-term borrowings 16,000 7,017
Proceeds from issuance of long-term debt 10,000 -
Reduction of long-term debt (98) -
Cash dividends (2,238) (2,209)
Net proceeds from issuance of treasury stock 1,926 271
-------- --------
Net cash provided by financing activities 25,590 5,079
-------- --------
Decrease in cash and cash equivalents (1,754) (883)
Cash and cash equivalents at
beginning of period 3,768 4,344
-------- --------
Cash and cash equivalents at
end of period $ 2,014 $ 3,461
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
4
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POPE & TALBOT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1994 and 1993
(Unaudited)
1. General
The consolidated condensed interim financial statements have been prepared by
the Company without audit and are subject to normal recurring year-end
adjustments. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles has been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. In the opinion of the Company, the
accompanying unaudited consolidated condensed financial statements contain all
adjustments (all of which are of a normal recurring nature) necessary to
present fairly the financial position of the Company as of March 31, 1994 and
December 31, 1993, and the results of operations and changes in cash flows for
the three months ended March 31, 1994 and 1993. It is suggested that these
interim statements be read in conjunction with the financial statements and
notes thereto contained in the Company's 1993 report on Form 10-K. The results
of operations for the three months ended March 31, 1994 and 1993 are not
necessarily indicative of the results to be expected for the full year.
2. Income Taxes
The income tax provision is estimated on an interim basis using the best
available information for projected results for the entire year.
3. Earnings per Share
Per share information is based on the weighted average number of common shares
outstanding during each year.
The computation for fully diluted earnings per share assumes conversion of the
$40 million of 6 percent convertible subordinated debentures issued in March
1987. (See Note 4.) The computation also includes the assumed issuance of
common shares under the Stock Option and Appreciation Plan, net of an assumed
buyback of treasury shares at the average market price.
Refer to Exhibit 11 of this filing for the computation of average common shares
outstanding and earnings per share.
4. Conversion of Debentures
On February 17, 1994, the Company initiated an underwritten call for the
redemption on March 4, 1994, of the $40 million outstanding aggregate principal
balance of its 6 percent convertible subordinated debentures due March 1, 2012.
As a result of this underwritten call, the Company issued 1.5 million shares of
previously unissued common stock to satisfy the $40 million debt obligation.
This issuance of common shares resulted in an increase in Stockholders' equity
of $38.6 million ($40 million less transaction fees and unamortized debt
issuance costs). This non-cash transaction has been excluded from the
accompanying Consolidated Condensed Statements of Cash Flows.
5
<PAGE> 7
POPE & TALBOT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1994 and 1993
(unaudited)
RESULTS OF OPERATIONS
First quarter 1994 net income was $8,588,000, or $.70 per share ($.65 on a
fully diluted basis). This earnings level was below the first quarter of 1993
earnings of $10,472,000, or $.90 per share ($.81 on a fully diluted basis);
however, it was an improvement over the fourth quarter 1993 earnings of
$4,556,000, or $.39 per share ($.36 on a fully diluted basis). Included in the
first quarter 1993 was a net charge of $562,000, or $(.05) per share reflecting
the cumulative effect of accounting changes adopted during the period. First
quarter 1994 revenues of $168,741,000 were essentially unchanged from the first
quarter 1993. Slightly higher lumber, pulp and tissue revenues were almost
fully offset by reduced diaper sales.
Wood products segment earnings of $24,130,000 in the first quarter 1994 were
slightly ahead of first quarter 1993 segment earnings of $22,473,000 and ahead
of the fourth quarter 1993 earnings of $16,164,000. Lumber sales prices in the
United States have varied substantially during the last one and one half years.
Prices for the Company's lumber products rose in line with the national trends
for lumber prices to levels an average of 40 percent higher in the first
quarter of 1993 over the fourth quarter of 1992; however, these prices had
declined back to year-end 1992 levels by the second quarter 1993, where they
remained for much of 1993's third quarter. Prices began to strengthen in the
fourth quarter of 1993, and average prices for lumber sold in the first quarter
1994 were approximately 7 percent higher than the first quarter of 1993.
Prices again declined in the late part of 1994's first quarter, but have again
recently moved upward. Timber supplies in the Pacific Northwest continue to be
restricted because of environmental concerns, and the decline in lumber prices
late in the first quarter appears to be a result of poor weather constricting
housing starts and not indicative of a long-term trend of declining lumber
prices. Higher wood costs in the first quarter 1994 compared to the first
quarter 1993 offset much of the first quarter price improvements. All wood
products mills operated essentially at capacity during the first quarter of
1994; however, the Port Gamble sawmill, which represents approximately 20
percent of the Company's lumber capacity, was shut down in April 1994 as a
result of high timber costs in relation to end-product prices. The mill will
remain shut down until the relationship between timber prices and end-product
prices allows the mill to re-open.
The Provincial Government of British Columbia informed the Company that
effective May 1, 1994, the price charged by the government to the Company for a
substantial portion of the wood used by the Company's three Canadian sawmills
would be adjusted upward. Although the final pricing structure has not been
determined, it appears that the new timber prices would be based to some extent
on sales prices of finished products. Based on preliminary estimates and
end-product prices in effect at the end of the first quarter, the new pricing
arrangement could increase Canadian timber costs by $12 million per year.
6
<PAGE> 8
During the first quarter 1994, the United States government appealed a
bi-national committee 1993 ruling that held there was no basis for a 1992 duty
imposed by the United States government on Canadian lumber sold in the United
States. A decision on the appeal is possible this year. During the first
quarter of 1994, the Company paid approximately $3.2 million under this tariff,
resulting in higher costs for the Canadian lumber sold in the United States.
At this time, it is unknown if any adjustment to the tariff will be made,
either upward or downward, and if any such adjustment would be made retroactive
to March 1992, when the tariff was first imposed.
The pulp and paper segment loss increased in the first quarter 1994 to
$5,409,000 from a $650,000 loss in the first quarter 1993 and a $3,805,000 loss
in the fourth quarter 1993. Earnings from the Company's disposable diaper
business did not offset losses in the Company's tissue and market pulp
businesses. First quarter 1994 segment sales were essentially unchanged from
both the first quarter 1993 and the fourth quarter 1993 as higher tissue and
pulp revenues offset declines in diaper sales.
Losses in the Company's pulp business in the first quarter 1994 was caused by a
combination of low production rates, continued low end-product prices and costs
associated with the start-up of a new pulp dryer. The Company's pulp mill
operated at approximately 70 percent of capacity during the first quarter of
1994 as the Company began shipping commercial quantities of pulp to a major new
customer, Grays Harbor Paper Company. After a mid-first quarter start-up, the
Grays Harbor paper mill has recently been purchasing pulp from the Company at
the anticipated annual rate of approximately 90,000 metric tons, or 50 percent
of the pulp mill's capacity. The Grays Harbor paper mill sells all of its
output to one customer and in the event that the paper mill's sales to its
customer are adversely impacted for any reason, sales of the Company's pulp may
also be adversely impacted. During the first quarter the paper mill reduced
its production by 50 percent for a brief period resulting in lower pulp sales
by the Company. By the end of the first quarter, the paper mill was operating
at full capacity. The Company's pulp mill has recently been operating at
approximately 90 percent of capacity and this arrangement will allow the
Company's pulp mill to operate essentially at capacity. During the first
quarter 1994, the Company completed and successfully started up a conventional
pulp dryer with the ability to dry the full output of the pulp mill. The costs
of this start-up were charged against earnings in the first quarter. Combined
with the improved quality of pulp produced at this mill, this pulp dryer
provides the Company with the flexibility to sell the full output of the mill
in the world pulp markets, which it did not have previously. The world pulp
market continues to be depressed with low product pricing throughout most of
the industry. Pulp prices have improved slightly from the fourth quarter of
1994, but for the Company's pulp, first quarter 1994 pulp prices were 5 percent
below the first quarter 1993.
Diaper earnings declined in the first quarter 1994 from both the first quarter
1993 and the fourth quarter 1993. Sales volumes declined early in the first
quarter before recovering later in the quarter. Overall, sales volumes in the
first quarter 1994 were 6 percent below the first quarter 1993. Based on the
existing mix of diaper sales, the Company's diaper business operated at
approximately 85 percent of capacity in the first quarter of 1994. Pricing for
the Company's diapers declined in the first quarter 1994 approximately 3
percent from first quarter 1993. During the first quarter 1994, the Company
introduced a diaper training pant to its line of diaper products which is
7
<PAGE> 9
intended to compete with the national branded diaper producers training pants.
The costs associated with starting up this product were expensed as incurred.
Tissue losses in the first quarter 1994 were smaller than any of the 1993
quarters as sales prices moved up slightly. Tissue pricing, however, remains
extremely competitive throughout the industry. Tissue sales volumes were
essentially even with last year's first quarter. Tissue operated at
approximately 85 percent of capacity, which was due primarily to seasonal
variations in selling patterns. In April 1994, the Company approved a project
to improve the quality of the pulp produced at the Company's Eau Claire,
Wisconsin tissue facility. The objectives of this project are to improve the
quality of the pulp produced at the facility to quality levels attained by
branded producers of tissue products, allowing the Company to compete more
effectively in the tissue business. The project is projected to cost
approximately $20 million and is scheduled for completion in mid 1995.
LIQUIDITY AND CAPITAL RESOURCES
For the first quarter 1994, net income before non-cash charges for depreciation
and amortization contributed cash of $17.5 million. Accounts receivables
increased $4.4 million primarily as a result of higher pulp sales to Grays
Harbor. Inventories increased $5.3 million, primarily as a result of higher
tissue inventories caused primarily by lower seasonal sales volume. Accounts
payable and accrued liabilities and income taxes payable decreased $5 million
and $8.1 million, respectively, due primarily to timing differences in the
recognition and payment of liabilities. Overall, cash of $5.6 million was used
for operating activities. Spending on capital projects was $21.8 million in
the first quarter of 1994 and it is estimated an additional $46 million will be
required for capital spending for the remainder of 1994. The $68 million
estimated to be spent in 1994 will be used for the completion of the pulp dryer
at the Halsey mill, for the pulp improvement in Eau Claire discussed
previously, for cost reducing and product improvement projects in the Company's
diaper business and for cost reducing projects at the Company's sawmills.
Early in the second quarter 1994, the Company successfully negotiated an
additional $25 million short-term line of credit with terms and conditions
similar to the Company's existing $20 million short-term line of credit. The
company now has $120 million in lines of credit available, of which $37 million
was outstanding at March 31, 1994.
During the first quarter, the Company called for redemption of all of the
Company's $40 million 6 percent convertible subordinated debentures due 2012.
The effect of this transaction was to reduce long-term debt by $40 million and
increase stockholders' equity by $38.6 million ($40 million less fees and
expenses) and to increase common shares outstanding by 1.5 million shares. The
Company's debt to total capitalization ratio decreased to 31 percent at the end
of the first quarter 1994 compared to 42 percent at year-end 1993.
8
<PAGE> 10
PART II.
ITEM 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on April 25, 1994. The
following members were elected to the Company's Board of Directors to hold
office for three-year terms expiring in 1997.
<TABLE>
<CAPTION>
Nominee In Favor Withheld
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<S> <C> <C>
Peter T. Pope 10,585,348 53,062
Brooks Walker, Jr. 10,582,948 55,462
Gordon P. Andrews 10,570,344 68,066
</TABLE>
Additionally, the following directors were elected in previous years to
three-year terms on the Company's Board of Directors and will continue their
terms of office: Hamilton W. Budge, Charles Crocker, Warren E. McCain, Robert
Stevens Miller, Jr., and Hugo G. L. Powell.
The results of the voting on the ratification of selection of Arthur Andersen &
Co. as independent public accountants was as follows:
<TABLE>
<CAPTION>
In Favor Opposed Abstained
---------- ------- ---------
<S> <C> <C>
10,587,564 17,986 32,860
</TABLE>
ITEM 6. Exhibits and Reports on Form 8-K
Exhibits
<TABLE>
<S> <C> <C>
(4) (a) Line of Credit Agreement with Wachovia Bank of
Georgia, National Association, dated April 29, 1994.
(b) Indenture dated June 2, 1993 between the Company
and Chemical Trust Company of California as
Trustee with respect to the Company's 8-3/8%
Debentures due 2013. (Incorporated herein by
reference to Exhibit 4.1 to the Company's
registration statement on Form S-3 filed April
6, 1993.)
(c) Revolving Credit Agreement with United States
National Bank of Oregon dated July 18, 1990.
(Incorporated herein by reference to Exhibit 4
to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990.)
(d) Revolving Credit Agreement dated May 6, 1992
with United States National Bank of Oregon;
CIBC, Inc.; ABN AMRO Bank N.V.; Continental Bank
N.A.; and Wachovia Bank of Georgia, National
Association. (Incorporated herein by reference
to Exhibit 4 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30,
1992.)
</TABLE>
9
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<TABLE>
<S> <C> <C>
(e) Rights Agreement between Pope & Talbot, Inc. and
The Bank of California, as rights agent, dated
as of April 13, 1988. (Incorporated herein by
reference to Exhibit 4(e) to the Company's Annual
Report on Form 10-K for the year ended December 31,
1992.)
(10) Executive Compensation Plans and Arrangements
(a) Stock Option and Appreciation Plan.
(Incorporated herein by reference to Exhibit
10(a) to the Company's Annual Report on Form
10-K for the year ended December 31, 1992.)
(b) Executive Incentive Plan. (Incorporated herein
by reference to Exhibit 10(b) to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1992.)
(c) Restricted Stock Bonus Plan. (Incorporated
herein by reference to Exhibit 10(c) to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1992.)
(d) Deferral Election Plan. (Incorporated herein by
reference to Exhibit 10(d) to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1992.)
(e) Supplemental Executive Retirement Income Plan.
(Incorporated herein by reference to Exhibit
10(e) to the Company's Annual Report on Form
10-K for the year ended December 31, 1990.)
(f) Form of Severance Pay Agreement between the
Corporation and certain of its executive
officers. (Incorporated herein by reference to
Exhibit 10(f) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1990.)
_________________________________________
(g) Lease agreement with Pope Resources dated
December 20, 1985 for Port Gamble, Washington
sawmill site. (Incorporated herein by reference
to Exhibit 10(g) to the Company's Annual Report
on Form 10-K for the year ended December 31,
1990.)
(h) Lease agreement with Shenandoah Development
Group, Ltd. dated March 14, 1988 for Atlanta
diaper mill site as amended September 1, 1988
and August 30, 1989. (Incorporated herein by
reference to Exhibit 10(h) to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1990.)
</TABLE>
10
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<TABLE>
<S> <C> <C>
(i) Lease agreement with Shenandoah Development
Group, Ltd. dated July 31, 1989 for additional
facilities at Atlanta diaper mill as amended
August 30, 1989 and February 1990.
(Incorporated herein by reference to Exhibit
10(i) to the Company's Annual Report on Form
10-K for the year ended December 31, 1990.)
(j) Grays Harbor Industrial, Inc. Pulp Sales Supply
Contract. (Incorporated herein by reference to
Exhibit 10(j) to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30,
1993.)
(11) Statement re computation of per share earnings.
(22) Listing of parents and subsidiaries. (Incorporated
herein by reference to Exhibit 22 to the Company's
Annual Report on Form 10-K for the year ended December
31, 1992.)
</TABLE>
Reports on Form 8-K
A Current Report on Form 8-K was filed on February 16, 1994,
reporting the financial statements of Pope & Talbot, Inc.,
including the related notes and the accountant's report
thereon, and Management's Discussion and Analysis of Results
of Operations and Financial Condition which were included in
the 1993 Annual Report to Shareholders.
11
<PAGE> 13
POPE & TALBOT, INC.
SIGNATURE
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.
POPE & TALBOT, INC.
------------------------------------
Registrant
Date: May 12, 1994 /s/ C. Lamadrid
------------------------------------
C. Lamadrid
Senior Vice President and
Chief Financial Officer
<PAGE> 1
WACHOVIA
- - ------------------------------------------------------------------------
MASTER NOTE
Date April 29, 1994 $ 25,000,000.00
---------------- -------------
For Value Received, the undersigned (hereinafter called the "Borrower"), hereby
promises to pay on demand but not later than the maturity date or dates
determined as herein set forth to the order of WACHOVIA BANK OF GEORGIA, N.A.
(hereinafter called the "Lender"), at its office where borrowed, the principal
sum of TWENTY-FIVE MILLION AND 00/100 Dollars or the aggregate unpaid principal
------------------------------
sum of all advances which the Lender actually makes hereunder to the Borrower,
whichever amount is less, together with interest in arrears payable on
each Interest Due Date (as hereinafter defined) at a rate computed on the basis
of a 360-day year for the actual number of days in each interest period,
determined as herein set forth.
Lender, at its sole discretion, is hereby authorized to make advances
under this Note upon telephonic or written communication of a borrowing request
from any person representing himself or herself to be the Borrower or, in the
event Borrower is a partnership or corporation, a duly authorized officer or
representative of Borrower. At the time of each advance hereunder, the
Borrower and the Lender shall agree on the maturity date for the payment of the
principal amount of such advance (in the absence of earlier demand), the
interest rate for such advance and the dates interest on such advance shall be
payable (the "Interest Due Dates"). The Lender or other holder shall be and is
hereby authorized by the Borrower to set forth on the reverse side of this Note,
or on an attachment hereto: (1) the amount and date of each advance made
hereunder; (2) the maturity date of each such advance (absent earlier demand);
(3) the interest rate for each such advance; (4) the Interest Due Dates for
each such advance; and (5) each payment of principal received thereon and the
date of such payment; provided, however, any such notation or the failure to
make any such notation shall not limit or otherwise affect the obligation of
the Borrower with respect to the repayment of all advances actually made
hereunder. In the event of a good faith dispute among the parties to this Note
as to rate, the rate shall be the Prime Rate.
After this Note or any advance of this Note shall become due, whether on demand
or otherwise, the unpaid principal of the Note shall bear interest at a rate
per annum equal to 150% of the Prime Rate, or if greater, 2% above the rate
applicable prior to the due date, not to exceed the maximum rate permitted by
applicable law. As used herein, "Prime Rate" refers to that interest rate so
denominated and set by the Lender from time to time as an interest rate basis
for borrowings. The Prime Rate is one of several interest rate bases used by
the Lender. The Lender lends at rates above and below the Prime Rate. Changes
in the Prime Rate shall be effective as of the day of each such change.
Advances made hereunder shall not be used to purchase or carry margin stock,
such terms having the same meanings used in Regulation U of the Federal Reserve
Board.
All payments of any advance hereunder shall be applied first to accrued
interest and then to principal.
The Borrower may prepay any advance hereunder prior to the maturity date
specified for such advance only with the consent or upon the demand of the
Lender.
No waiver by the Lender of any provision of the Note shall be effective unless
in writing. To the extent not prohibited by law the Borrower hereby grants to
the Lender and to such Lender's Affiliates (as the case may be) a security
interest in and security title to and does hereby assign, pledge, transfer and
convey to Lender and to such Lender's Affiliates (as the case may be) (i) all
property of the Borrower of every kind or description now or hereafter in the
possession or control of the Lender or of any of Lender's Affiliates, exclusive
of any such property in the possession or control of the Lender or Lender's
Affiliates as a fiduciary other than as agent, for any reason including,
without limitation, all cash, stock or other dividends and all proceeds thereof,
and all rights to subscribe for securities incident thereto and any
substitutions or replacements for, or other rights in connection with, any of
such collateral and (ii) any balance or deposit accounts of the Borrower,
whether such accounts be general or special, or individual or multiple party,
and upon all drafts, notes, or other items deposited for collection or
presented for payment by the Borrower with the Lender or the Lender's
Affiliates (as the case may be), exclusive of any such property in the
possession or control of the Lender or Lender's Affiliates as a fiduciary other
than as agent, and the Lender and the Lender's Affiliates (as the case may be)
may at any time, without demand or notice, appropriate and apply any of such
to the payment of any indebtedness, obligations and liabilities of the Borrower
to the Lender or to any of Lender's Affiliates (as the case may be), now
existing or hereafter incurred or arising, whether or not due, with the
exception of indebtedness, obligations and liabilities owing to any of Lender's
Affiliates that constitute open-end credit under, or are subject to, the
disclosure requirements of the Truth-In-Lending Act and Federal Reserve Board
Regulation Z, or any applicable state consumer protection laws. As used
herein, "Lender's Affiliates" means any entity or entities now or hereafter
directly or indirectly controlled by Wachovia Corporation or any successor
thereto. All parties to this Note, including makers, endorsers, sureties and
guarantors, whether bound by this or by separate instrument or agreement, shall
be jointly and severally liable for the indebtedness evidenced by this Note and
hereby (1) waive presentment for payment, demand, protest, notice of nonpayment
or dishonor and of protest and any and all other notices and demands
whatsovever; (2) consent that at any time, or from time to time, payment of any
sum payable under this Note may be extended without notice, whether for a
definite or indefinite time; and (3) agree to remain liable until the
indebtedness evidenced hereby is paid in full irrespective of any extension,
modification or renewal. No conduct of the holder shall be deemed a waiver or
release of such liability, unless the holder expressly releases such party in
writing. In the event the indebtedness evidenced hereby is collected by or
through an attorney, the holder shall be entitled to recover reasonable
attorneys' fees and all other costs and expenses of collection. Time is of the
essence. Notwithstanding the statement of any specific maturity date for any
specific advance and the requirement for the payment of interest from time to
time, thie Note is a demand instrument and is due and payable at any time
without cause or reason and is not subject to the terms of Sections 1-203 or
1-208 of the Uniform Commercial Code of Georgia, as the same may be amended
from time to time.
This Note shall evidence all advances and payments of principal made hereunder
until it is surrendered to the Borrower by the Lender, and it shall continue to
be used even though there may be periods prior to such surrender when no amount
of principal or interest is owing hereunder.
The Note, and the rights and obligations of the parties hereunder, shall be
governed by and construed in accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, the Borrower has executed this Note under seal the day and
year set forth above.
Witness:
/s/ SHEILA C. LAYTON XXXXXXXXXXXXXXXXXXXXXXXXXXX (Seal)
- - -------------------- ---------------------------
(Individual Borrower)
/s/ NORENE J. DELANCE XXXXXXXXXXXXXXXXXXXXXXXXXXX (Seal)
- - ------------------------- ---------------------------
(Individual Borrower)
Attest:
/s/ DENNIS BUNDAY
- - -----------------
Title: Financial Controller & Assistant Secretary
------------------------------------------
Borrower:
Pope & Talbot, Inc.
- - ------------------------------------
(Name of Corporation or Partnership)
By: /s/ C. LAMADRID (Seal)
--------------------
Title: Senior V.P. and C.F.O.
----------------------
[Corporate Seal] Wachovia Bank of Georgia, N.A.
<PAGE> 1
Exhibit 11
POPE & TALBOT, INC.
Statement Showing Calculation of Average
Common Shares Outstanding and Earnings
Per Average Common Share
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1994 1993
----------- -----------
<S> <C> <C>
Weighted average number
of common shares
outstanding 12,336,311 11,629,661
Weighted average of common
stock equivalent shares
attributable to
convertible debentures 1,010,880 1,542,020
Application of the "treasury
stock" method to the stock
option plan 228,675 225,268
----------- -----------
Total common and common
equivalent shares,
assuming full dilution 13,575,866 13,396,949
=========== ===========
Net income $ 8,588,000 $10,472,000
Add: interest on convertible
debentures, net of applicable
income taxes 244,000 363,000
----------- -----------
Net income, assuming
full dilution $ 8,832,000 $10,835,000
=========== ===========
Net income per common share,
assuming full dilution $.65 $.81
==== ====
</TABLE>
The computation of primary net income per common share is not included because
the computation can be clearly determined from the material contained in this
report.
