<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 June 30, 1995
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
POPE & TALBOT, INC.
DELAWARE 94-0777139
(State or other jurisdiction of I.R.S. Employer Identification Number
incorporation or organization)
1500 S.W. 1ST AVE., PORTLAND, OREGON 97201
(Address of principal executive offices) (Zip Code)
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 - 13,363,779 shares as of August 4, 1995
<PAGE> 2
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
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<S> <C> <C>
ITEM 1. Financial Statements:
Consolidated Condensed Balance Sheets -
June 30, 1995 and December 31, 1994 2
Consolidated Statements of Income -
Three and Six Months Ended June 30, 1995 and 1994 3
Consolidated Condensed Statements of Cash Flows -
Three and Six Months Ended June 30, 1995 and 1994 4
Notes to Consolidated Condensed Financial Statements 5
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-9
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 10-11
</TABLE>
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PART I.
POPE & TALBOT, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
--------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 317 $ 6,847
Accounts receivable 69,990 71,477
Inventories:
Raw materials 60,057 81,156
Finished goods 40,400 46,236
--------- ---------
100,457 127,392
Deposits on timber purchase contracts 7,005 5,997
Prepaid expenses 13,280 11,337
--------- ---------
Total current assets 191,049 223,050
Properties:
Plant and equipment 564,112 548,430
Accumulated depreciation (294,476) (276,465)
--------- ---------
269,636 271,965
Land and timber cutting rights 11,000 10,862
--------- ---------
Total properties 280,636 282,827
Other assets:
Restricted bond funds 5,838 15,458
Deferred charges 19,766 13,853
Goodwill, net of amortization 4,113 4,196
Deferred income tax assets, net 6,009 -
--------- ---------
Total other assets 35,726 33,507
--------- ---------
$ 507,411 $ 539,384
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 26,200 $ 20,000
Current portion of long-term debt 928 928
Accounts payable and accrued liabilities 55,704 74,048
Income taxes 2,740 8,600
--------- ---------
Total current liabilities 85,572 103,576
Noncurrent liabilities:
Reforestation 16,062 15,136
Postretirement benefits 14,076 13,641
Long-term debt, net of current portion 177,260 177,471
Deferred income tax liabilities, net - 1,365
--------- ---------
Total noncurrent liabilities 207,398 207,613
Stockholders' equity:
Common stock 13,972 13,972
Additional paid-in capital 40,860 40,858
Retained earnings 176,481 191,804
Cumulative translation adjustments (5,761) (7,315)
Less treasury shares at cost (11,111) (11,124)
--------- ---------
Total stockholders' equity 214,441 228,195
--------- ---------
$ 507,411 $ 539,384
========= =========
</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 Six months ended
June 30, June 30,
-------------------------- -------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Wood products $ 62,343 $ 69,480 $ 131,430 $ 155,738
Pulp and paper products 96,680 88,440 200,656 170,923
----------- ----------- ----------- ----------
Total 159,023 157,920 332,086 326,661
Costs and expenses:
Cost of sales:
Wood products 63,666 55,366 128,408 116,106
Pulp and paper products 98,437 88,345 197,821 172,529
Selling, general and administrative 8,269 6,960 15,840 14,547
Interest, net 3,671 2,657 7,128 4,808
----------- ----------- ---------- ----------
Total 174,043 153,328 349,197 307,990
Income (loss) before income taxes (15,020) 4,592 (17,111) 18,671
Income tax provision (benefit) (6,009) 1,791 (6,866) 7,282
----------- ----------- ---------- ----------
Net income (loss) $ (9,011) $ 2,801 $ (10,245) $ 11,389
=========== =========== ========== ==========
Net income (loss) per common share:
Primary $ (.68) $ .21 $ (.77) $ .89
====== ====== ====== =====
Fully diluted $ (.68) $ .21 $ (.77) $ .86
====== ====== ====== =====
Cash dividends per common share $ .19 $ .19 $ .38 $ .38
====== ====== ====== =====
Weighted average number of
common shares outstanding:
Primary 13,363,779 13,362,729 13,363,257 12,852,355
========== ========== ========== ==========
Fully diluted 13,363,779 13,362,729 13,363,257 13,538,208
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
3
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POPE & TALBOT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net income (loss) $ (9,011) $ 2,801 $(10,245) $ 11,389
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization 10,873 9,560 21,512 18,422
Increase (decrease) in:
Accounts payable and accrued liabilities (18,285) (8,597) (18,344) (13,556)
Income taxes 423 (6,821) (5,860) (14,959)
Reforestation (571) (457) 590 725
Postretirement benefits 199 266 435 511
Deferred income taxes, net (7,365) - (7,365) -
Decrease (increase) in:
Accounts receivable 8,741 (1,335) 1,487 (5,775)
Inventories 29,297 (228) 26,935 (5,479)
Deposits on timber purchase contracts (498) (584) (2,400) (636)
Prepaid expenses (2,358) (1,048) (1,943) (1,107)
Deferred charges and other (2,462) (970) (3,637) (2,511)
-------- -------- -------- --------
Net cash provided by (used for)
operating activities 8,983 (7,413) 1,165 (12,976)
Cash flow from investing activities:
Capital expenditures (8,277) (13,833) (18,542) (35,614)
Proceeds from sale of other properties 60 6 301 6
-------- -------- -------- --------
Net cash used for investing activities (8,217) (13,827) (18,241) (35,608)
Cash flow from financing activities:
Net increase (decrease) in short-term borrowings (10,300) (6,000) 6,200 10,000
Proceeds from issuance of long-term debt - 30,000 - 40,000
Reduction of long-term debt (106) (99) (211) (197)
Decrease in restricted bond funds 7,399 - 9,620 -
Cash dividends (2,539) (2,539) (5,078) (4,777)
Net proceeds from issuance of treasury stock 15 1 15 1,927
-------- -------- -------- --------
Net cash provided by (used for)
financing activities (5,531) 21,363 10,546 46,953
-------- -------- -------- --------
Increase (decrease) in cash and
cash equivalents (4,765) 123 (6,530) (1,631)
Cash and cash equivalents at
beginning of period 5,082 2,014 6,847 3,768
-------- -------- -------- --------
Cash and cash equivalents at
end of period $ 317 $ 2,137 $ 317 $ 2,137
======== ======== ======== ========
</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
June 30, 1995 and 1994
(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 June 30, 1995 and December 31, 1994, and the results of
operations and changes in cash flows for the three and six months
ended June 30, 1995 and 1994. It is suggested that these interim
statements be read in conjunction with the financial statements and
notes thereto contained in the Company's 1994 report on Form 10-K.
The results of operations for the three and six months ended June 30,
1995 and 1994 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 period. The computation
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 11.1 of this filing for the computation of average
common shares outstanding and earnings per share.
4. Debt
During the second quarter of 1995, the Company modified its unsecured
revolving-credit agreement. The primary results of this modification
were to increase the revolving credit from $75 million to $100 million
and to extend the agreement one year through June of 1998. As of June
30, 1995 and December 31, 1994, the Company had $65 million
outstanding under this agreement.
5
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POPE & TALBOT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1995 AND 1994
(unaudited)
RESULTS OF OPERATIONS
Losses in both the wood products and pulp and paper products segments
combined to produce a second quarter 1995 loss for Pope & Talbot (the
"Company") of $9.0 million, or $.68 per share. The second quarter 1995 loss
was worse than both the first quarter 1995 loss of $1.2 million, or $.09 per
share, and the second quarter 1994 income of $2.8 million, or $.21 per share.
Second quarter 1995 revenues were essentially unchanged from the second quarter
of 1994, although in the second quarter of 1995, as in the first quarter of
1995, the mix of sales between the Company's two segments changed from year to
year. In the wood products segment, lumber sales declined as a result of lower
volumes caused by less timber availability in Canada and lower prices. In the
pulp and paper segment, tissue and diaper revenues declined although pulp
revenues climbed on substantially higher pulp pricing resulting in increased
revenues for this segment.
The wood products segment, which comprised approximately 39 percent of
second quarter sales, produced a loss of $2.5 million, the first quarterly loss
since the fourth quarter of 1991. Following a very strong 1994 first quarter,
decreasing sales prices and rising log costs have resulted in steadily eroding
profits. The second quarter 1995 loss compares to earnings of $12.8 million in
the second quarter of 1994 and $2.9 million in the first quarter of 1995.
Lumber prices peaked in the first quarter of 1994 and then declined steadily
throughout the remainder of 1994 and continued to decline into 1995. Lumber
prices for a majority of the Company's production reached their lowest point
since 1992 in June of 1995. Overall, sales prices for the Company's lumber in
the second quarter of 1995 averaged 17 percent below the second quarter 1994
prices and 10 percent below the first quarter 1995 prices. In mid 1994, the
Provincial Government of British Columbia revised the prices charged for
Canadian timber, where the Company has approximately 60 percent of its lumber
capacity. Primarily as a result of this change, log costs in Canada were
approximately $7 million higher in the second quarter of 1995 than the second
quarter of 1994.
Lumber sales volume decreased slightly to 162 million board feet in
the second quarter of 1995, or approximately 90 percent of 1995 capacity, from
168 million board feet in the second quarter of 1994, or approximately 85
percent of 1994 capacity. Effective January 1, 1995, the Company reduced its
Grand Forks, British Columbia sawmill to a one-shift basis as a result of
reduced timber harvest levels allowed by the British Columbia government. The
effect of this lower timber supply will be to reduce the Company's annual
lumber production capacity from 1994 levels by approximately 8 percent, or 60
million board feet. During the second quarter of 1995, the Port Gamble sawmill
operated on a curtailed basis while the Company's other sawmills operated
essentially at capacity. The Port Gamble sawmill operates in the high-cost
timber area of the Olympic Peninsula of Washington, and has operated on a
curtailed basis or has been shut down for much of the last year as a result of
a lack of acceptably priced
6
<PAGE> 8
timber in relation to end-product prices. The Port Gamble sawmill was shut
down for much of the second quarter, and when opened, operated on a curtailed,
one-shift basis to process existing log supplies. This mill competes with
other sawmills located in its area and the export log market for timber and
will only be able to operate if acceptably priced timber is available. During
the second quarter of 1994, operating inefficiencies in the Canadian sawmills
caused by poor log quality and curtailed production at the Port Gamble sawmill
resulted in production rates that were only at 85 percent of capacity.
The pulp and paper segment lost $6.8 million in the second quarter of
1995, which was greater than the $3.5 million loss in the second
quarter of 1994. During the first quarter of 1995, this segment produced a
$900,000 profit. A strong pulp market reversed losses in the Company's pulp
business during 1994 and allowed the pulp business to return to profitability
in 1995. However, the strength of the pulp business was offset by competitive
market conditions, higher fluff pulp and wastepaper prices for tissue and
diapers and strike related costs at the Company's Ransom tissue mill which
resulted in the second quarter 1995 losses.
World pulp prices continued the increase started in early 1994 into
the second quarter of 1995 resulting in further strengthening in the Company's
pulp business. Pulp losses declined steadily throughout 1994 and the Company's
pulp business, which comprised 23 percent of second quarter sales, returned to
profitability in the fourth quarter of 1994. The world pulp market has seen a
substantial improvement since the beginning of 1994, with pricing for a
standard grade of bleached softwood pulp selling at the end of the second
quarter of 1995 for more than double its December 1993 price. However, prices
for wood chips, a primary raw material for pulp production, have increased
approximately 40 percent in the second quarter of 1995 over the second quarter
of 1994 as some Pacific Northwest sawmills have curtailed production as a
result of the poor lumber markets. To expand the source of fiber for the
Halsey pulp mill, the Company in 1994 began using sawdust as an additional
fiber source. Sawdust is currently in adequate supply and has not increased in
price as wood chips have. During the second quarter of 1995 approximately 33
percent of the Halsey pulp mill's production was from sawdust. During the
second quarter and first half of 1995, the Halsey pulp mill operated at
capacity. The losses in the second quarter of 1994 were due primarily to
volume shipped under pricing arrangements which were below then-current
industry pricing. Those contracts expired later in 1994.
The Company's tissue business, which comprised approximately 16
percent of second quarter sales, again incurred a significant loss in the
second quarter of 1995. The Company's tissue business has incurred increasing
losses since 1992. Company tissue pricing improved approximately 11 percent
during the 1995 second quarter from essentially flat pricing in 1994. The 1995
price increases reflect the first general price increase since 1990. Although
tissue pricing has improved, higher costs for wastepaper, the primary raw
material component, have outpaced the sales price improvements. Wastepaper
pricing, which generally follows the pricing trends of world pulp markets, has
been pushed to record levels by a combination of strong pulp markets and a
shortage of certain wastepaper grades caused primarily by the start-up in 1994
of new recycled fiber mills in the United States. As a result of these
pressures, the Company's wastepaper prices have nearly tripled since the second
quarter of 1994. During the second quarter of 1995, wastepaper prices began
to stabilize and slightly decline for certain grades. It is not clear at this
time if this price stability is temporary or will continue longer term.
7
<PAGE> 9
The tissue market has been, and continues to be, extremely
competitive. Two of the Company's smaller competitors in the private label
tissue industry have gone out of business in 1995. The Company's Ransom tissue
mill has been incurring losses and to reduce these losses the Company
implemented a labor contract having a revised, lower compensation structure for
the Ransom tissue mill employees early in the second quarter of this year. The
union employees went on strike over this wage structure implementation and
except for a minor amount of production being performed by salaried and
temporary workers, the mill is shut down. The long-term viability of this mill
is uncertain unless a combination of lower wage rates, lower other
manufacturing costs, including raw materials, and higher sales prices make it
advantageous to re-open the mill. Ransom represents approximately 50 percent
of the Company's tissue volume, and although sales volumes have been reduced as
a result of the strike, because of relatively low tissue pricing and high
wastepaper costs, this loss of volume has not significantly increased tissue
losses. Tissue results were negatively affected in the second quarter of 1995,
however, as higher costs for repackaging and shipping were incurred to supply
some of the Company's East Coast customers. The Company anticipates it will
implement further tissue price increases during the third quarter of 1995,
although no assurances can be given that such tissue price increases will
become effective. Additionally, the increases in wastepaper prices appear to
be moderating somewhat. However, even with more stable wastepaper prices and
higher tissue prices, without a substantial change in industry pricing for
tissue, or a lowering of wastepaper costs, it is anticipated the Company's
tissue business will continue to reflect losses.
The Company's diaper business, which comprised approximately 21
percent of second quarter sales, incurred a loss in the second quarter 1995
compared to the second quarter of 1994, when diapers produced a small profit.
Procter & Gamble, a significant producer of disposable diapers, continued to
attempt to gain market share through aggressive pricing. Although diaper
prices for the Company were unchanged from the first quarter of 1995, sales
volumes were down approximately 12 percent from the same period. Prices in the
second quarter of 1995 were, however, 4 percent lower than the second quarter
of 1994. During the first quarter, branded producers of diapers instituted
package count reductions and revised pricing, however, the Company did not
complete this conversion until the second quarter of 1995, lowering sales
volume and increasing costs to revise packaging. Although no assurances can be
given, it is anticipated that with the package count reduction complete, diaper
volumes will improve in the third quarter. Diaper sales volumes were
approximately 70 percent of capacity in the second quarter. In addition to
price and volume pressures, another significant factor in the diaper losses has
been increasing fluff pulp costs. Costs for fluff pulp have not risen as fast
as the world pulp market, but are still 60 percent higher than the second
quarter of 1994. The Company anticipates that pulp markets will continue to
strengthen during the remainder of 1995 and anticipates that fluff pulp costs
also will continue to increase.
LIQUIDITY AND CAPITAL RESOURCES
During the first half of 1995, operations generated cash of $1.2
million and for the second quarter of 1995 generated cash of $9.0 million.
Income before non-cash charges for depreciation and amortization generated
$11.3 million of cash during the first six months. Seasonal reductions in log
inventories and an effort to reduce inventories generated cash in 1995 of $26.9
million, all of which occurred in the second quarter. Cash was used as
accounts payable and accrued liabilities declined $18.3 million in 1995, again
all in the second quarter, due to the timing of payments.
8
<PAGE> 10
Capital spending for the first half of 1995 was $18.5 million, of
which $11.9 was related to continuing progress on a project to modernize the
recycled pulping operations at the Eau Claire tissue facility. In 1994, the
Company obtained restricted funding to finance this pulp modernization project.
The remaining expenditures were various smaller projects to sustain existing
operations. It is estimated that approximately $7.0 million will be required
to complete previously approved projects, the most significant of which is the
completion of the Eau Claire pulping modernization. The Company anticipates
that additional projects will be undertaken in 1995, primarily to sustain
existing operations. It is anticipated that capital spending in the remainder
of the year will be financed from the remaining $5.8 million of restricted bond
funds, internally generated cash and, if necessary, from the Company's lines of
credit.
During the second quarter, the Company renegotiated its long-term
revolving-credit agreement resulting in an increase in the commitment from $75
million up to $100 million and a one-year extension through June 1998. The
Company now has available $126 million in short- and long-term lines of credit,
of which $91 million was outstanding at June 30, 1995.
9
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PART II.
ITEM 6. Exhibits and Reports on Form 8-K
Exhibits
--------
3.1 Certificate of Incorporation, as amended. (Incorporated
herein by reference to Exhibit 3(a) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992.)
3.2 Bylaws. (Incorporated herein by reference to Exhibit 3(b)
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992.)
4.1 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.)
4.2 Revolving Credit Agreement, dated May 6, 1992, among the
Company and 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.)
4.3 Rights Agreement, dated as of April 13, 1988, between the
Company and The Bank of California, as rights agent.
(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.)
4.4 Extension Agreement, dated as of June 30, 1994, to the
Revolving Credit Agreement, dated May 6, 1992, among the
Company and 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 4.6 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994.)
4.5 Modification Agreement, dated as of October 31, 1994, to
the Revolving Credit Agreement, dated May 6, 1992, among
the Company and 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 4.7 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994.)
4.6 Modification Agreement, dated as of December 31, 1994, to
the Revolving Credit Agreement, dated May 6, 1992, among
the Company and 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 4.8 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994.)
4.7 Extension/Modification Agreement, dated as of June 30,
1995, to the Revolving Credit Agreement, dated May 6, 1992,
among the Company and United States National Bank of
Oregon; CIBC, Inc.; ABN AMRO Bank N.V.; Bank of America
Illinois, fka Continental Bank; and Wachovia Bank of
Georgia, National Association.
10
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10.1 Executive Compensation Plans and Arrangements
---------------------------------------------
10.1.1 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.)
10.1.2 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.)
10.1.3 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.)
10.1.4 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.)
10.1.5 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.)
10.1.6 Form of Severance Pay Agreement among the Company 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.)
10.2 Lease agreement between the Company and 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.)
10.3 Lease agreement between the Company and 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.)
10.4 Lease agreement between the Company and 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.)
10.5 Grays Harbor Paper L.P. Amended and Restated Pulp Sales
Supply Contract, dated September 28, 1994 (with certain
confidential information deleted). (Incorporated herein by
reference to Exhibit 10(j) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1994.)
11.1 Statement regarding computation of per share earnings.
27.1 Financial Data Schedule.
The undersigned registrant hereby undertakes to file with the
Commission a copy of any agreement not filed under exhibit item (4)
above on the basis of the exemption set forth in the Commission's
rules and regulations.
Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the three months ended June
30, 1995.
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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: August 11, 1995 By: /s/ C. Lamadrid
----------------------------------
C. Lamadrid
Senior Vice President and
Chief Financial Officer
<PAGE> 1
EXHIBIT 4.7
EXTENSION/MODIFICATION AGREEMENT
This extension/modification agreement is dated as of June 30,
1995, and is among POPE & TALBOT, INC., a Delaware corporation ("Borrower"),
UNITED STATES NATIONAL BANK OF OREGON ("U.S. Bank"), CIBC INC. ("CIBC"), ABN
AMRO BANK N.V. ("ABN"), BANK OF AMERICA ILLINOIS, fka CONTINENTAL BANK ("BAI"),
and WACHOVIA BANK OF GEORGIA, NATIONAL ASSOCIATION ("Wachovia").
Recitals
A. U.S. Bank, CIBC, ABN, BAI, and Wachovia ("Banks") and
Borrower are parties to a credit agreement dated as of May 6, 1992, as modified
in October, 1992, in June, 1993, June, 1994, October, 1994, and December, 1994
(the "Credit Agreement"). The capitalized words and phrases that are not
defined in this modification agreement have the same meanings as are given to
those words and phrases in the Credit Agreement.
B. Borrower and Banks desire to modify the terms of the
Credit Agreement to extend the Expiry Date, increase the Aggregate Commitment
by $25,000,000, change the Leverage Ratio on a temporary basis, and modify the
pricing grid established in the modification agreement dated as of December 31,
1994. Because of the increase in the Aggregate Commitment, Borrower will issue
new Notes to Banks.
NOW, THEREFORE, for value, it is agreed that effective as of
the date of this agreement:
1. Extension of Expiry Date. The Expiry Date is extended pursuant to
Section 2.15 of the Credit Agreement to June 30, 1998.
2. Increase in Aggregate Commitment and Individual Commitments. The
maximum Aggregate Commitment is hereby increased to $100,000,000. The
Individual Commitment of each Bank is $32,000,000 for U.S. Bank,
$20,000,000 for CIBC, $20,000,000 for ABN, $16,000,000 for Wachovia,
and $12,000,000 for BAI unless and until ratably reduced under Section
2.16 of the Credit Agreement. Borrower promises and agrees to
promptly issue new Notes to Banks and each Bank promises and agrees to
surrender its existing Note to Borrower when it receives its new Note.
3. Leverage Ratio. Section 5.01(h) of the Credit Agreement is modified
to require Borrower to maintain on a consolidated basis a Leverage
Ratio of not more than 1.2 to 1.0 at all times from the date of this
extension/modification agreement through March 31, 1996, and of not
more than 1.0 to 1.0 at all times thereafter.
4. Additional Pricing Row. The pricing matrix for the Interbank Rate
margin, Commitment Fee, and Unused Fee payable by Borrower introduced
in the modification agreement dated as of December 31, 1994, is
modified by adding the row for a leverage ratio of more than 1.0 to
1.0 shown in the following table:
-1-
<PAGE> 2
<TABLE>
<CAPTION>
Leverage Ratio Interbank Margin Commitment Fee Unused Fee
-------------- ---------------- -------------- ----------
<S> <C> <C> <C>
less than .50 to 1.0 43.75 bps(1) 15.00 bps 5.00 bps
---------------------------------------------------------------------------------------------------------------------
greater than or equal to .50
but less than .80 to 1.0 50.00 bps 18.75 bps 6.25 bps
---------------------------------------------------------------------------------------------------------------------
greater than or equal to .80
but less than or equal to 1.0 to 1.0 62.50 bps 20.00 bps 8.50 bps
---------------------------------------------------------------------------------------------------------------------
greater than 1.0 but less than or equal to 1.2 to 1.0 75.00 bps 25.00 bps 10.00 bps
</TABLE>
The Interbank margin, the Commitment Fee, and the Unused Fee payable
by Borrower will be determined quarterly and put into effect as of the
date upon which Borrower delivers its quarterly compliance certificate
to Agent. The margin and fees will be based on the Leverage Ratio
disclosed in such compliance certificate and the foregoing margin.
The applicable margin and fees will remain as determined until the
next quarterly compliance certificate is delivered.
5. Miscellaneous. The parties agree to issue any additional documents
and instruments reasonably necessary to effectuate the objectives of
this extension/modification agreement. The Loan Documents will
continue in full force and effect as modified by this
extension/modification agreement. This extension/modification
agreement may be signed in one or more counterparts but all such
counterparts will constitute but one agreement. The Loan Documents,
as modified by this extension/modification agreement, are intended to
be the complete, final, and exclusive statement of the terms upon
which Banks made their Individual Commitments to Borrower and Borrower
promised to repay Loans.
POPE & TALBOT, INC. UNITED STATES NATIONAL BANK
OF OREGON
By By
--------------------------- ---------------------------
Carlos M. Lamadrid Janice T. Thede
Senior Vice President Vice President
- -----------------------------
(1) The abbreviation "bps" means basis points. 100 bps = 1%.
-2-
<PAGE> 3
CIBC INC.
By
--------------------------------
Ray Mendoza
Vice President
ABN AMRO BANK N.V.
By
--------------------------------
By
--------------------------------
David McGinnis
Vice President
BANK OF AMERICA ILLINOIS
By
--------------------------------
Michael J. Balok
Vice President
WACHOVIA BANK OF GEORGIA,
NATIONAL ASSOCIATION
By
--------------------------------
William F. Hamlet
Senior Vice President
-3-
<PAGE> 1
EXHIBIT 11.1
POPE & TALBOT, INC.
STATEMENT SHOWING CALCULATION OF AVERAGE
COMMON SHARES OUTSTANDING AND EARNINGS
PER AVERAGE COMMON SHARE
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
--------------------------- ---------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average number
of common shares
outstanding 13,363,779 13,362,729 13,363,257 12,852,355
Weighted average of common
stock equivalent shares
attributable to
convertible debentures - - - 502,647
Application of the "treasury
stock" method to the stock
option plan 15,980 122,465 15,980 183,206
----------- ----------- ------------ -----------
Total common and common
equivalent shares,
assuming full dilution 13,379,759 13,485,194 13,379,237 13,538,208
=========== =========== ============ ===========
Net income (loss) $(9,011,000) $ 2,801,000 $(10,245,000) $11,389,000
Add: interest on convertible
debentures, net of applicable
income taxes - - - 244,000
----------- ----------- ------------ -----------
Net income (loss), assuming
full dilution $(9,011,000) $ 2,801,000 $(10,245,000) $11,633,000
=========== =========== ============ ===========
Net income (loss) per common
share, assuming full dilution $(.68) $.21 $(.77) $.86
===== ==== ===== ====
</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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE POPE &
TALBOT, INC. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE QUARTERLY
PERIOD ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 317
<SECURITIES> 0
<RECEIVABLES> 57,426
<ALLOWANCES> 0
<INVENTORY> 100,457
<CURRENT-ASSETS> 191,049
<PP&E> 575,112
<DEPRECIATION> 294,476
<TOTAL-ASSETS> 507,411
<CURRENT-LIABILITIES> 85,572
<BONDS> 177,260
<COMMON> 13,972
0
0
<OTHER-SE> 200,469
<TOTAL-LIABILITY-AND-EQUITY> 507,411
<SALES> 332,086
<TOTAL-REVENUES> 332,086
<CGS> 326,229
<TOTAL-COSTS> 326,229
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,128
<INCOME-PRETAX> (17,111)
<INCOME-TAX> (6,866)
<INCOME-CONTINUING> (10,245)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,245)
<EPS-PRIMARY> (.77)
<EPS-DILUTED> (.77)
</TABLE>
