UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 1999

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.        

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.

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 - 13,481,441 shares as of June 30, 1999

PART I.     FINANCIAL INFORMATION

ITEM 1.     Financial Statements:

Condensed Consolidated Balance Sheets - June 30, 1999 and
December 31, 1998

Consolidated Statements of Operations - Three and Six Months Ended
June 30, 1999 and 1998

Condensed Consolidated Statements of Cash Flows - Six Months Ended
June 30, 1999 and 1998

Notes to Condensed Consolidated Financial Statements

ITEM 2.      Management's Discussion and Analysis of Financial Condition and
                   Results of Operations

ITEM 3.      Quantitative and Qualitative Disclosure of Market Risk

PART II.     OTHER INFORMATION

ITEM 6.     Exhibits and Reports on Form 8-K

PART I.

POPE & TALBOT, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)

The accompanying notes to consolidated financial statements are an integral part of this statement.

POPE & TALBOT, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)

The accompanying notes to consolidated financial statements are an integral part of this statement.

POPE & TALBOT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)

The accompanying notes to consolidated financial statements are an integral part of this statement.

POPE & TALBOT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
(Unaudited)

1.     Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, and cash flow activity required under generally accepted accounting principles (GAAP). In the opinion of the Company, all adjustments (consisting of only normal accruals) necessary for a fair presentation of results have been made, and the Company believes such presentation is adequate to make the information presented not misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and footnotes in the Company's Annual Report on Form 10-K for the year ended December 31, 1998.

2.     Earnings Per Share

Certain Company stock options were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the average market prices. Such stock options totaled 768,252 shares and 936,084 shares for the three and six months ended June 30, 1999 and June 30, 1998, respectively.

Refer to Exhibit 11.1 of this filing for the computation of average common shares outstanding and earnings per average common share.

3.     Legal Matters and Contingencies

The Company is a party to legal proceedings, environmental matters and other contingencies generally incidental to its business. Although the final outcome of any legal proceeding or environmental matter is subject to many variables and cannot be predicted with any degree of certainty, the Company presently believes that the ultimate outcome resulting from these proceedings and matters would not have a material effect on the Company's current financial position or liquidity; however, in any given future reporting period such proceedings or matters could have a material effect on results of operations.

4.     Comprehensive income (loss) is as follows:

5.     Segment Information

The Company classifies its business into two operating segments: wood products and pulp products. A reconciliation of the totals reported for the operating segments to the applicable line items in the consolidated financial statements is as follows:

6.     Subsequent Event

On July 30, 1999, a binding agreement between the Company and Harmac was signed, which calls for the Company to acquire all of the outstanding shares of Harmac that it does not already own. Under the proposed transaction, shareholders of Harmac may elect to receive either 0.4732 of a share of the Company's common stock or $9.25 (Canadian) for each Harmac share. A Harmac shareholder may also elect to receive some other combination of cash or the Company's common stock, subject to the parameters that an aggregate maximum of $30 million (Canadian) will be paid and a maximum of 2 million shares of the Company's common stock will be issued. The transaction is expected to close in the fourth quarter and is subject to the normal regulatory approvals in the U.S. and Canada and court approval in Canada. The transaction also requires a favorable vote by two-thirds of Harmac minority shareholders. If the transaction is approved by Harmac shareholders and all of the conditions to closing have been satisfied or waived, Harmac intends to redeem, concurrent with the closing of the transaction, all of its currently outstanding 8 percent convertible unsecured subordinated debentures.

POPE & TALBOT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Pope & Talbot, Inc.'s (the "Company's") income from continuing operations in the second quarter of 1999 was $2.9 million, or $.22 per share, compared with a $7.1 million loss, or $.53 per share, in the second quarter of 1998. Strong lumber markets and cost reduction efforts were the primary reasons for the improved performance.

On a year-to-date basis, income from continuing operations in the first six months of 1999 was $645,000, or $.05 per share, compared with a loss from continuing operations of $13.7 million, or $1.02 per share, in the same period a year ago. The 1998 results also included $27.1 million of income from discontinued operations, or $2.01 per diluted share. Net income was $13.4 million, or $.99 per diluted share, for the first six months of 1998.

Total revenues were $120.3 million in the second quarter of 1999 compared with $106.5 million in the same period of 1998. Wood products revenues in the second quarter of 1999 increased to $65.1 million from $49.3 million in the same quarter of 1998. Lumber sales prices in the current quarter increased 7 percent over the first quarter of 1999 and 20 percent from the same period a year ago. Lumber sales volumes in the second quarter of 1999 were 8 percent higher than the first quarter of 1999 and 7 percent higher than the second quarter of 1998.

Pulp products revenues were $55.1 million in the second quarter of 1999 compared with $57.2 million in the same period of 1998. Pulp sales totaled 135,350 metric tons in the second quarter of 1999 compared with 127,100 metric tons in the second quarter of 1998 and 142,670 metric tons in the first quarter of 1999. The sales volume decrease in the second quarter of 1999 relative to the previous quarter was due primarily to an 11-day maintenance shut-down at the Company's Nanaimo, B.C. pulp mill. Average pulp sales prices were 9 percent higher in the second quarter of 1999 than the first quarter of 1999, but 8 percent lower than the second quarter of 1998.

On a year-to-date basis, wood products revenues in 1999 increased 14 percent over the 1998 period as a result of higher sales prices and volumes. Pulp products revenues in the first six months of 1999 were $4.4 million higher than the 1998 period primarily due to the inclusion of Harmac for only five months in the first half of 1998.

Cost of sales for wood products in the second quarter of 1999 decreased $1.1 million from the second quarter of 1998 level. Total lumber production costs and expenses per thousand board feet decreased 17 percent from last year's second quarter, primarily the result of lower log costs.

Cost of sales for pulp products was $56.8 million in the second quarter of 1999 compared with $56.9 million in the same period of 1998. Pulp production totaled 133,200 metric tons in the second quarter of 1999 compared with 126,200 metric tons in the second quarter of 1998. At Harmac, fiber costs decreased 4 percent in the second quarter of 1999 compared with the first quarter of 1999 and were slightly higher than costs in the second quarter of 1998. Fiber costs at the Halsey mill were down slightly in the second quarter of 1999 compared with the first quarter of 1999, but were down 15 percent from the second quarter of 1998.

Cost of sales for wood products in the first six months of 1999 were 8 percent less than the same period of 1998, primarily as the result of lower log costs. Year-to-date cost of sales for pulp products in 1999 were 7 percent higher than the same period of 1998, primarily due to Harmac's operations included in the 1998 period for only 5 months.

Selling, general and administrative expenses for the first six months of 1999 totaled $11.6 million compared with $12.0 million in the same period of 1998. The reduction was primarily the result of cost reduction and control initiatives implemented in 1998 after the divestiture of the tissue business and acquisition of Harmac. Selling, general and administrative expenses in the second quarter of 1999 were higher than second quarter of 1998 primarily due to employee benefit plan adjustments.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company's subsidiary Harmac enters into Canadian dollar forward exchange contracts with maturities of one to five months to fix the conversion of a portion of pulp sales receivables denominated in U.S. dollars. At June 30, 1999, the Company had contracts to purchase $31 million Canadian with the exchange rate to be used at settlement approximating the spot rate at the date the contract was acquired.

LIQUIDITY AND CAPITAL RESOURCES

During the first six months of 1999, operations generated cash of $16.5 million compared with $4.0 million for the first six months of 1998. Income in the second quarter of 1999 before interest, taxes, depreciation and amortization ("EBITDA") was $14.3 million, a significant improvement from the negative result of $723,000 in the second quarter of 1998 and EBITDA of $5.4 million in the first quarter of 1999. Cash generated from reductions in raw material inventories was partially offset by the increase in accounts receivable, primarily the result of strong lumber sales volumes in the first half of 1999.

The Company invested $9.7 million in capital projects in the first six months of 1999 and estimates that total 1999 capital spending, excluding environmental-related capital costs at the Halsey pulp mill, will approximate $18.5 million. These capital projects will relate primarily to maintenance of existing operations with a limited number of relatively small, high-return projects.

YEAR 2000 UPDATE

The Company, like all other companies using computers and microprocessors, is faced with the task of addressing the Year 2000 problem. The Year 2000 issue exists because many computer systems and applications currently use two-digit fields to designate a year. This can lead to incorrect results when computer software performs arithmetic operations, comparisons or data field sorting involving years later than 1999. The Company has embarked on a comprehensive approach to identify where this problem may occur in its information technology and manufacturing systems, and to evaluate the Year 2000 readiness of certain third parties, such as suppliers and customers. The direct costs of projects solely intended to correct the Company's Year 2000 problems are currently estimated at $3.3 million, of which $2.9 million has been spent as of June 30, 1999. Most of these expenditures relate to replacement of systems and applications and will be capitalized.

The Company completed an inventory of its core financial reporting processes and other information technology systems in 1997 and expects to have the necessary revisions to these systems and processes completed by the end of the third quarter of 1999. The Company has also completed an inventory of the process control systems and embedded microprocessors used in its manufacturing operations and determined that only a small percentage of such systems and microprocessors could be subject to Year 2000 problems. The Company expects, based on management's best estimate, to have these non-critical manufacturing systems replaced or corrected and complete testing and verification of such systems early in the fourth quarter of 1999 in conjunction with planned maintenance shutdowns at the pulp mills.

The Company presently believes that, with conversions to new computer and financial systems and modifications to existing software, the Year 2000 issues will not pose significant operational problems for the Company. Due to the general uncertainty inherent in the Year 2000 problem, however, there can be no assurance that all Year 2000 problems will be foreseen and corrected, or if foreseen, corrected on a timely basis, or that no material disruption to the Company's business or operations will occur. Further, the Company's expectations are based on the assumption that there will be no general failure of external local, national or international systems (such as power, communications or transportation systems) necessary for the ordinary conduct of business. There can be no assurance that successful contingency plans can, in fact, be developed or implemented to deal with such failures.

FACTORS THAT MAY AFFECT FUTURE RESULTS

Statements in this report or in other Company communications, such as press releases, may relate to future events or the Company's future performance. Such statements are forward-looking statements and are based on present information the Company has related to ts existing business circumstances. Investors are cautioned that such forward-looking statements are subject to an inherent risk that actual results may differ materially from such forward-looking statements. Factors that may result in such variances include, but are not limited to, changes in commodity prices, interest rates and other economic conditions, failure by the Company to realize expected cost savings from capital expenditures, actions by competitors, changing weather conditions and natural phenomena, actions by government authorities, uncertainties associated with legal proceedings, technological developments, assessment of the Company's Year 2000 compliance efforts and risks, future decisions by management in response to changing conditions and misjudgments in the course of preparing forward-looking statements. Such factors are discussed in this report on Form 10-Q as well as in the Company's Annual Report on Form 10-K.

ITEM 3.     Quantitative and Qualitative Disclosure of Market Risk

The information called for by this item is provided under the caption "Derivative Financial Instruments" under Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.

PART II.

ITEM 6.     Exhibits and Reports on Form 8-K

(a)     Exhibits

11.1     Statement showing 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.

(b)     Reports on Form 8-K

No reports on Form 8-K were filed during the three months ended June 30, 1999.

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.