<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
10-K
X Annual Report Pursuant to Section 13 or 15(d) of the Securities
- ---- Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1995, or
- ---- Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to
---------------- -------------------
Commission File No. 1-9035
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 91-1313292
- ----------------------- -----------------------
(State of Organization) (IRS Employer I.D. No.)
P.O. Box 1780, Poulsbo, WA 98370
---------------------------------------------------
(Address of principal executive offices Zip Code)
Registrant's telephone number, including area code: (360) 697-6626
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
--------------------------- -----------------------------------------
Depositary Receipts (Units) Pacific Stock Exchange
Depositary Receipts (Units) NASDAQ National Market System
Securities registered pursuant to Section 12(g) of the Act:
None
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K. [ X ]
Approximate aggregate market value of the voting stock held by
nonaffiliates of the registrant as of February 12, 1996 was $ 77,837,025.
DOCUMENTS INCORPORATED BY REFERENCE:
SEE ITEM 14
Exhibit Index at page
-------
1
<PAGE> 2
PART I
------
Item 1. BUSINESS.
---------
Pope Resources, A Delaware Limited Partnership (the "Partnership"),
including its subsidiaries Ludlow Water Company and Gamble Village Water & Sewer
Company were organized in December, 1985 as a result of a spin-off by Pope &
Talbot, Inc. (P&T) of certain of its assets. The Partnership is a successor to
Pope & Talbot Development, Inc. and other P&T affiliates. P&T acquired its first
timberlands in the Puget Sound area in 1853. The Partnership also formed another
subsidary, Ludlow Bay Realty in 1993.
FINANCIAL INFORMATION ABOUT SEGMENTS.
-------------------------------------
The Partnership's operations are classified into two segments: (I)
timberland resources, and (II) property development.
Segment financial information is presented in Note 9 to the Partnership's
Financial Statements included witht this report.
NARRATIVE DESCRIPTION OF BUSINESS.
----------------------------------
The Partnership's largest segment, timberland resources, encompasses the
growing and harvesting of timber and leasing of the timberlands for mineral and
tower leases. The Partnership's other segment, property development, consists of
residential development and income properties. Residential development consists
of the sale of single-family homes, finished lots and undeveloped acreage.
Income properties consists of various commercial operations. All of the
Partnership's operations are conducted within a 50-mile radius of Seattle,
Washington. The following is a detailed description of each industry segment.
Timberland Resources. The Partnership's key asset is its tree farm of
approximately 76,000 acres. Its principal operations consist of the sale of logs
in export and domestic markets and sales of standing timber to buyers who log it
under the terms of purchase contracts. This segment produced 73%, 63% and 76% of
the Partnership's consolidated gross revenues in 1995, 1994 and 1993,
respectively.
The dominant species on the tree farm is douglas fir. Douglas fir is a
softwood, which due to its long fiber strength, flexibility and other
characteristics is generally preferred over "hardwood" for construction lumber
and plywood. At December 31, 1995 the Partnership estimates the tree farm's
merchantable softwood timber inventory volume at approximately 486 million board
feet. This compares to inventory volumes of 474 and 486 at December 31, 1994 and
1993, respectively. Due to Washington State forest practice regulations that
provide for reduced clear-cut size, mandatory buffers, wildlife "leave tree"
rules, wetland requirements and other harvest restrictions, the Partnership
estimates that between 7 and 10% of the aforementioned volume is
non-harvestable. The merchantable timber volume is derived through the
Partnership's inventory system, which involves periodic statistical sampling of
the timber (cruising) with adjustments made for growth estimates and harvesting
information. In 1993, management retained a consulting firm to undertake a
detailed study of the Partnership's inventory and growth rates. Their report
confirmed the Partnership's inventory volume but concluded that the annual
2
<PAGE> 3
sustained merchantable softwood cutting volume could be increased from
approximately 15 to 21 million feet a year.
The Partnership views the tree farm as a core holding and is managing it
accordingly. As such, the policy of the Partnership is to harvest annually the
aforementioned 21 million board feet and thereby operate on a sustained yield
basis. From year to year, there will be some variation from the sustained cut
target. For instance, if log markets are weak, the Partnership may decrease its
cut or, when log markets are strong, the cut may be higher. Additionally, over
the longer term management anticipates that population and economic pressures
will contribute to increasing portions of the tree farm being developed. To
offset a possible reduction in the size of the tree farm management is actively
pursuing acquisitions and trades that enhance tree farm ownership. In 1995 the
Partnership purchased approximately 1,300 acres with no merchantable timber for
$1,992,000, compared to 1994's purchases of approximately 1,100 acres with no
merchantable timber for $1,908,000.
The Partnership's harvesting schedules are based on data concerning
species, site index, classification of soils, estimates of timber inventory, and
the type, size and age classification of the timber. From this information, the
Partnership develops its annual and long-term harvesting plans predicated on
existing and anticipated economic conditions with a view toward maximizing the
long-term value of its timberland assets.
The Partnership sells timber in five ways: 1)log sales to Japanese buyers;
2)log sales to export brokers in Port Angeles, Tacoma and Everett (who, in turn
sell to Japanese and Korean buyers); 3)log sales to domestic sawmills;
4)stumpage sales of standing timber; and 5)sales of pulp logs and softwood chips
to a wood fiber market. Direct export sales to Japanese buyers in 1995 totaled
$8,935,000. This compares to 1994 and 1993 direct export sales to Japanese
buyers totaling $8,080,000 and $101,000, respectively.
There are many competitors of the Partnership, most of whom are comparable
in size or larger. The principal areas of competition in the timber business are
pricing and the ability to satisfy volume demands for various types and grades
of timber to the competing market. Management believes that its location, type
and grade of timber will enable it to effectively compete in its markets.
However, the Partnership's products are subject to increasing competition from a
variety of non-wood and engineered wood products as well as competition from
foreign sources.
The Partnership's timber operations require forest management which
primarily consists of reforestation, fertilization of timber, and the thinning
of timber stands. During 1995, the Partnership planted approximately 518,000
seedlings on 1,350 acres. This compares to 1994 and 1993 in which the
Partnership planted approximately 540,000 and 482,000 seedlings on 1,200 and
1,125 acres, respectively. Management's current policy is to remain current on
its reforestation whenever possible. Management is also reviewing its
fertilization program and is thinning timber stands as it considers appropriate.
3
<PAGE> 4
A risk of forest fire exists with any timberland. Historically, the
Partnership has relied principally on state fire prevention programs for
firefighting services. Fire insurance for standing timber is rarely purchased
for North American timberland and would be prohibitively expensive. Consistent
with historical practice, the Partnership does not purchase such insurance
coverage.
In the operation and management of the tree farm, the Partnership is
subject to federal, state and local laws and regulations which govern land use.
Management believes it is in substantial compliance with such laws and
regulations. Management anticipates that increasingly strict laws and
regulations relating to the environment, natural resources, forestry operations,
health and safety matters, as well as increased social concern over
environmental issues, may result in additional restrictions on the operations of
the Partnership. This will in turn result in increased costs, additional capital
expenditures and reduced operating flexibility. Although the Partnership does
not consider current laws and regulations to be materially burdensome, there can
be no assurance that future legislative, governmental or judicial decisions will
not adversely affect the Partnership operations.
At December 31, 1995 timberland resources had no backlog of sales. This
compares to one unsold stumpage contract (backlog of sales) totaling $420,000 in
1994 and no unsold stumpage contracts at December 31, 1993.
The tree farming segment is a year-round activity of the Partnership and
presently employs seven full-time salaried employees. No employee is a member of
a labor union.
Property Development. Property development consists of residential
development and income properties. Residential development consists of the sale
of single-family homes, finished lots and undeveloped acreage. Income properties
consists of providing water and sewer services to properties in the Port Ludlow,
Washington area; a marina, golf course, commercial shopping center and RV park
operated by the Partnership; certain parcels leased to Pope & Talbot, Inc.; a
restaurant/lounge and related facilities leased to and operated by Village
Resorts, Inc. The golf, marina, resort and RV park business is seasonal, with
the peak season beginning in May and running through September of each year.
This segment produced 27%, 37% and 24% of the Partnership's consolidated
gross revenues in 1995, 1994 and 1993, respectively.
The principal activity of residential development consists of building
residential dwellings and developing lots in Port Ludlow. This division's key
asset is approximately 2,000 acres of land located in Western Washington, of
which the focus for development is Port Ludlow. Port Ludlow is an active adult
community on approximately 1,000 acres.
Outside of Port Ludlow the Partnership has developed a 100 lot project in
Port Orchard (Grandridge). The Partnership is also in the planning and
entitlements stages for developments in Kingston, Gig Harbor and Bremerton, all
of which are located in the western Puget Sound region of Washington State.
Kingston is a residential development comprising 750 acres and consisting of 765
units. Kingston awaits entitlements and expansion of the local sewage treatment
facility. The Gig Harbor parcel is part of a larger land area with multiple
owners and is about to be annexed into the city of Gig Harbor, Washington.
Bremerton will likely be developed primarily as a residential/light-industrial
site.
The Partnership completed construction of a 36-room inn in 1994. The inn is
a joint venture with another developer with the Partnership owning a 50%
interest.
4
<PAGE> 5
The Partnership's land sales activities are closely associated with the
management of its timber properties. After logging its timberlands, the
Partnership has the option of reforesting the land, developing it for sale as
improved property, or selling it in developed or undeveloped acreage tracts.
Management continually evaluates timber properties in terms of their best
economic use (i.e., whether to continue growing timber or reclassifying the
properties for sale or development). As the Partnership reclassifies timber
properties for sale or development, the Partnership may replace such timber
properties with land purchases in more remote areas. Although the Partnership
believes it has adequate land inventory for future development, additional
properties will be purchased as they become available.
The Partnership competes for property sales with other timber companies
which are as large or larger than the Partnership and have substantial acreage
for sale and development. Management believes location, price and terms of sale
enable the Partnership to compete effectively in these markets.
The property development segment's backlog of sales was approximately
$2,184,000 as of December 31, 1995, all of which are expected to be closed in
1996 and 1997. This compares to sales backlogs of $1,623,000 and $1,360,000 as
of December 31, 1994 and 1993, respectively.
Property development presently employs 22 full-time salaried employees and
has in the past employed up to an additional 45 seasonal employees. No employee
is a member of a labor union.
Nonclassified assets and operations are composed of the Partnership's
administrative office.
The total number of employees not otherwise classified under a segment is
10, all of which are full-time salaried employees. No employee is a member of a
labor union.
Item 2. PROPERTIES.
-----------
See the discussion of each segment under "Item 1. Business."
Item 3. LEGAL PROCEEDINGS.
------------------
None.
Item 4. SUBMISSION OF MATTER TO A
VOTE OF SECURITY HOLDERS.
-------------------------
No matters were submitted to a vote of the Partnership's unitholders during
the quarter ended December 31, 1995.
5
<PAGE> 6
PART II
Item 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER
MATTERS.
----------------------------------------------------------
The units are traded on both the Pacific Stock Exchange, Inc. and NASDAQ
National Market System. The Partnership's units trade under the ticker symbols
"PRP" (Pacific Stock Exchange) and "POPEZ" (NASDAQ). The following table sets
forth the 1994-1995 quarterly range of high and low prices for the Partnership's
units:
<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
High Low High Low
-------------------- --------------------
<S> <C> <C> <C> <C>
First Quarter $87 $76 1/4 $93 $76
Second Quarter 93 80 90 81
Third Quarter 98 84 1/2 86 73 1/2
Fourth Quarter 104 91 1/2 85 75 1/2
</TABLE>
The number of registered holders of record of the Partnership's units as of
January 31, 1996 was 543.
An annual cash distribution of $5.30 per unit was paid on December 29, 1995
to unitholders of record on December 8, 1995. The aggregate distribution totaled
$4,790,000. In 1994 an annual cash distribution of $3.60 per unit was paid
December 30, 1994 totaling $3,260,000. All cash distributions are at the
discretion of the Partnership's managing general partner, Pope MGP, Inc. The
practice of the Partnership has been to make cash distributions only for the
purpose of defraying the federal and state tax liability of unitholders on their
flow-through share of Partnership net income and as approved from time to time
by the managing general partner.
6
<PAGE> 7
Item 6. SELECTED FINANCIAL DATA.
------------------------
The financial information set forth below for each of the years ending
December 31, 1991 through 1995 is derived from the Partnership's audited
financial statements. This information should be read in conjunction with the
financial statements and related notes included with this report and previously
filed with the Securities and Exchange Commission
<TABLE>
<CAPTION>
-------------------------------------------------------
(Thousands, except per unit data)
-------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
TOTAL REVENUES $36,195 $30,508 $33,891 $25,087 $26,256
======= ======= ======= ======= =======
INCOME FROM
OPERATIONS $14,416 $10,332 $16,576 $ 5,960 $ 4,371
======= ======= ======= ======= =======
NET INCOME $13,090 $ 8,893 $14,825 $ 5,058 $ 3,263
======= ======= ======= ======= =======
NET INCOME PER
PARTNERSHIP UNIT $ 14.48 $ 9.65 $ 15.01 $ 4.30 $ 2.77
======= ======= ======= ======= =======
TOTAL ASSETS $54,147 $52,759 $48,101 $51,236 $48,941
======= ======= ======= ======= =======
LONG-TERM DEBT $17,717 $25,451 $24,348 $21,720 $20,204
======= ======= ======= ======= =======
PARTNERS' CAPITAL $32,988 $24,824 $20,875 $27,548 $23,301
======= ======= ======= ======= =======
CASH DISTRIBUTION
PER UNIT $ 5.30 $ 3.60 $ 6.00 $ .69 $ .76
======= ======= ======= ======= =======
</TABLE>
7
<PAGE> 8
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
---------------------------------------------------------------
This discussion should be read in conjunction with the Partnership's
consolidated financial statements included with this report.
Results of Operations
---------------------
Timberland Resources
- --------------------
During 1995 the Partnership logged and sold approximately 26.2 million
board feet of softwood timber at an average price of $848 per thousand board
feet (MBF). In addition, during 1995, the Partnership sold stumpage totaling 837
thousand board feet of softwood timber at an average price of $551 per MBF. For
the corresponding period in 1994, the Partnership logged and sold stumpage
totaling approximately 20.6 and .6 million board feet of softwood timber at
average prices of $783 and $565 per MBF, respectively. For the corresponding
period in 1993, Pope logged and sold stumpage totaling approximately 16.8 and
16.1 million board feet at average prices of $592 and $841 per MBF,
respectively. The increase in the average price logged per MBF is primarily
attributable to a higher percentage of export volume sold and higher export and
pulp prices in 1995 as compared to 1994 and 1993. The increase in timber sold in
1993 as compared to 1995 and 1994 is due to management increasing the 1993
harvest in order to repurchase units and repay acquisition debt with the aid of
record timber prices. The aforementioned average price of timber sold reflects
various mixes of timber grades and different types of timber sales and is,
therefore, not necessarily indicative of the price of timber to be sold in the
future.
The Partnership sells its timber into two major markets, namely the export
and domestic markets. Direct and indirect log sales to the export market totaled
13.1, 9.5 and 4.1 million board feet of softwood timber for 1995, 1994 and 1993,
respectively.
The export demand for logs is directly affected by the demand from Asian
countries. As nearly all of the Partnership's export logs are sold to Japan, the
strength of the Japanese economy and the relative strength of the United States
dollar directly affect the demand for export logs. The export market is
currently strong with prices still at high historical levels. Management
anticipates export prices to remain strong into the second quarter of 1996 then
to decline due to increased supply coupled with price resistance from log
buyers. A modest upturn at the end of 1996 is anticipated.
The Partnership's domestic demand for logs is directly affected by the
level of construction activity on the west coast of the United States. Changes
in general economic and demographic factors have historically caused
fluctuations in housing starts. This in turn affects demand for lumber and
commodity wood prices which drives the demand for logs. For 1996 management
anticipates the domestic market to be similar to 1995. Management is concerned
about the declining number of sawmills in its region. As the number of sawmills
declines management must find additional outlets for its domestic timber.
Management does not believe the decline in domestic sawmills will materially
impact its 1996 operations but is nonetheless exploring additional outlets for
its domestic timber.
8
<PAGE> 9
Property Development
- --------------------
Property development consists of residential development and income
properties. Residential development consists of the sale of single-family homes,
finished lots and undeveloped acreage. Income properties consists of providing
water and sewer services to properties in the Port Ludlow area; a marina, golf
course, commercial center and RV park operated by the Partnership; certain Port
Gamble parcels leased to Pope & Talbot, Inc.; and a restaurant/lounge and
related facilities leased to and operated by Village Resorts, Inc. Revenues from
property development totaled $9,796,000, $11,425,000 and $8,175,000 for 1995,
1994 and 1993, respectively.
Revenue from residential development totaled $5,726,000, $7,126,000 and
$4,178,000 for 1995, 1994 and 1993, respectively. The Partnership's largest
development is in Port Ludlow, Washington. During 1995 the Partnership's
development at Port Ludlow generated revenues of $4,163,000 on 26 finished lot
sales, 14 home sales and one bulk sale of 27 lots with preliminary lot approval.
This compares to 1994 sales at Port Ludlow of $4,850,000 on 30 lot sales and 14
home sales. In 1993, Port Ludlow generated revenues of $3,692,000 on 11 lot
sales and 22 home sales. Excluding the one bulk sale, 1995 lot and home sales
were similar to 1994. This was attributable to similar mixes of inventory
combined with similar real estate markets. The slower 1993 sales as compared to
1994 and 1995 was mostly attributable to the weakened economies of California
and the Pacific Northwest.
At December 31, 1995 the Partnership had in total 234 developed lots and 23
homes under various stages of completion. This compares to the prior year's 281
developed lots and 24 homes under various stages of completion. This inventory
consists of a wide variety of subdivisions, encompassing a broad spectrum of
prices.
Revenues from income properties totaled $4,070,000, $4,299,000 and
$3,997,000 for 1995, 1994 and 1993, respectively. Operations were generally
consistent for each of the three years and management expects future revenues to
be stable.
General
- -------
Cost of sales for the Partnership can fluctuate widely due to the various
methods for selling timber and the basis of the land the Partnership sells.
General and administrative costs increased in 1995 as compared to 1994 and
1993. This was primarily attributable to three factors: increased property taxes
on the Partnership's land; increased road maintenance and silviculture expenses
related to timberland acquisitions; and increased costs related to the
Partnership's development in Port Ludlow.
Deferred profit on current year's contract sales as well as recognition of
prior years' deferred profit is affected by the timing and amount of cash
received on contract sales.
Interest expense has continued to decline from 1993 through 1995 due to
reductions in debt levels plus lower interest rates.
9
<PAGE> 10
In 1995 interest income declined from amounts earned in 1994 and 1993. This
was attributable to a two-year decline in the contracts receivable balance
outstanding.
Liquidity and Capital Resources
-------------------------------
Management has budgeted spending $2.2 million on its real estate
development in 1996. In addition, management has budgeted spending an additional
$800,000 in capital expenditures for other operations in 1996. Funds generated
internally through operations and externally through financing will provide the
required resources for the Partnership's real estate development and capital
expenditures. Management considers its capital resources to be adequate for its
real estate development plans, both in the near future and on a long-term basis.
At December 31, 1995, the Partnership had available an unused $17 million loan
commitment from a bank.
Management has considerable discretion to increase or decrease the level of
timber cut and thus drive net income and cash flow up or down assuming, of
course, timber prices are stable. Management's current plan is to harvest 21
million board feet of softwood timber in 1996, which is in balance with its
sustainable yield capacity. Since harvest plans are based on demand, price and
cash needs, actual harvesting may vary subject to management's on-going review.
Cash provided by operating activities generated $16,900,000 in 1995, and
was primarily used for debt repayments of $7,663,000, a unitholder distribution
of $4,790,000 and capital and land expenditures of $3,890,000 in 1995. Land and
timber acquisitions totaled $2,911,000 in 1995 and are expected to continue to
be the most significant capital expenditures in 1996.
A cash distribution of $5.30 per unit was paid on December 29, 1995 to
unitholders of record on December 8, 1995. The aggregate distribution totaled
$4,790,000. In 1994 a cash distribution of $3.60 per unit was paid December 30,
1994 totaling $3,260,000. The practice of the Partnership has been to make
annual cash distributions only for the purpose of defraying the federal and
state tax liability of unitholders on their flow-through share of Partnership
net income and as approved from time to time by the managing general partner.
10
<PAGE> 11
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
-----------------------------------------------
11
<PAGE> 12
POPE RESOURCES
A DELAWARE LIMITED PARTNERSHIP
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
12
<PAGE> 13
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
CONTENTS
Page
Independent auditors' report 14
Consolidated financial statements:
Balance sheets 15
Statements of income 16
Statements of cash flows 17
Notes to financial statements 18 - 25
13
<PAGE> 14
Independent Auditors' Report
----------------------------
To the Board of Directors and Unitholders
Pope Resources, A Delaware Limited Partnership
Poulsbo, Washington
We have audited the accompanying consolidated balance sheets of Pope
Resources, A Delaware Limited Partnership and subsidiaries as of December 31,
1995 and 1994, and the related consolidated statements of income and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Pope Resources, A Delaware
Limited Partnership and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Seattle, Washington
January 26, 1996
14
<PAGE> 15
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1995 AND 1994
(Thousands)
<TABLE>
<CAPTION>
ASSETS
Current assets: 1995 1994
-------- --------
<S> <C> <C>
Cash and cash equivalents $ 987 $ 100
Accounts receivable 1,047 1,172
Work in progress 11,375 11,774
Current portion of contracts receivable 739 1,558
Prepaid expenses and other 164 136
-------- --------
Total current assets 14,312 14,740
-------- --------
Properties and equipment, at cost:
Land and land improvements 15,146 14,483
Roads and timber, net of accumulated
depletion of $7,031 and $6,446 11,922 9,960
Buildings and equipment, net of
accumulated depreciation of
$10,051 and $9,406 9,040 9,484
-------- --------
36,108 33,927
-------- --------
Other assets:
Contracts receivable, net of current portion 2,640 2,888
Unallocated amenities and project costs 996 1,172
Other 91 152
-------- --------
3,727 4,212
------- -------
$54,147 $52,879
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $ 1,029 $ 893
Accrued liabilities 521 397
Current portion of long-term debt 300 228
Deposits 165 111
Other liabilities 363 120
------- -------
Total current liabilities 2,378 1,749
Other long-term liabilities 275 94
Long-term debt, net of current portion 17,717 25,451
Deferred profit on contracts receivable 789 761
Partners' capital 32,988 24,824
======= =======
$54,147 $52,879
======= =======
</TABLE>
See notes to consolidated financial statements.
15
<PAGE> 16
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Thousands, except per unit data)
<TABLE>
<CAPTION>
Revenues: 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Timberland resources including sales to
related parties of 1%, 23% and 18% $ 26,399 $ 19,083 $ 25,716
Property development 9,796 11,425 8,175
-------- -------- --------
36,195 30,508 33,891
-------- -------- --------
Cost of sales (13,820) (13,187) (10,787)
Selling, general and administrative expenses (7,926) (6,566) (6,968)
Deferred profit on current year's contract sales (457) (511) (73)
Recognition of prior years' deferred profit 424 88 513
-------- -------- --------
Income from operations 14,416 10,332 16,576
-------- -------- --------
Other income (expense):
Interest expense (1,712) (1,870) (2,366)
Interest income 386 431 615
-------- -------- --------
(1,326) (1,439) (1,751)
-------- -------- --------
Net income $ 13,090 $ 8,893 $ 14,825
======== ======== ========
Net income:
Allocable to general partners $ 131 $ 89 $ 148
Allocable to limited partners 12,959 8,804 14,677
-------- -------- --------
Net income per partnership unit $ 13,090 $ 8,893 $ 14,825
======== ======== ========
Net income per partnership unit $ 14.48 $ 9.65 15.01
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 17
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Thousands)
<TABLE>
<CAPTION>
Cash flows from operating activities: 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Cash received from customers $ 37,422 $ 30,012 $ 36,880
Cash paid to suppliers and employees (19,201) (21,241) (15,043)
Interest received 399 494 597
Interest paid, net of amounts capitalized (1,720) (1,849) (2,363)
-------- -------- --------
Net cash provided by operating activities 16,900 7,416 20,071
-------- -------- --------
Cash flows from investing activities:
Capital expenditures (3,429) (4,022) (1,220)
Proceeds from the sale of equipment 5 5 14
-------- -------- --------
Net cash used in investing activities (3,424) (4,017) (1,206)
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 1,879 16,000
Purchase of partnership units (136) (1,684) (15,938)
Cash distributions to unitholders (4,790) (3,260) (5,560)
Repayments of long-term debt (7,663) (678) (13,428)
-------- -------- --------
Net cash used in financing activities (12,589) (3,743) (18,926)
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents 887 (344) (61)
Cash and cash equivalents:
Beginning of year 100 444 505
-------- -------- --------
End of year $ 987 $ 100 $ 444
======== ======== ========
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 13,090 $ 8,893 $ 14,825
Adjustments to reconcile net income to
net cash provided by operating activities:
Cost of land and timber sold 133 1,182 163
Land resale expenditures (461) (1,238) (293)
Depreciation and depletion 1,559 1,334 1,679
Deferred profit 27 410 (457)
Increase (decrease) in cash from changes in
operating accounts:
Accounts receivable 125 (357) (22)
Work in progress 575 (3,046) 716
Contracts receivable 1,067 944 1,967
Accounts payable and accrued liabilities 261 (15) 379
Other liabilities 363 120
Deposits 54 (1,009) 1,043
Other, net 107 198 71
-------- -------- --------
Net cash provided by operating activities $ 16,900 $ 7,416 $ 20,071
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 18
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. Summary of significant accounting policies:
General:
Pope Resources, A Delaware Limited Partnership (the "Partnership"), is a
publicly-traded limited partnership engaged principally in tree farming
operations and property development in Western Washington. Tree farming
operations include the sale of logs, and the selling of standing timber
under cutting contracts or other arrangements. Property development
includes the sale of single-family homes, finished lots and undeveloped
acreage, and various commercial operations.
Principles of consolidation:
The consolidated financial statements include the accounts of the
Partnership and its wholly-owned subsidiaries, Ludlow Water Company,
Ludlow Bay Realty and Gamble Village Water and Sewer Company.
Significant intercompany balances and transactions have been eliminated
in consolidation.
Use of estimates in financial statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Work in progress:
Work in progress consists of direct development costs, including
capitalized interest, of residential lots and dwellings which are
completed or are expected to be substantially completed and available
for sale in the upcoming year and are recorded at the lower of cost or
net realizable value.
Contracts receivable:
The Partnership sells land parcels under contracts requiring a minimum
cash down payment of twenty percent and having financing terms of up to
eight years at interest rates of ten percent. The Partnership reduces
credit risk on contracts through collateral and down payment
requirements.
Principal payments on contracts receivable for the next five years are
due as follows:
<TABLE>
<CAPTION>
(Thousands)
-----------
<S> <C>
1996 $739
1997 356
1998 588
1999 270
2000 182
</TABLE>
Unallocated amenities and project costs:
Unallocated amenities and project costs represent indirect development
costs for long-term real estate development projects. These costs are
expensed based on anticipated project sales of residential dwellings and
lots over the life of the project.
18
<PAGE> 19
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. Summary of significant accounting policies (continued):
Properties and equipment:
Depreciation is provided using straight-line methods over the estimated
useful lives of the assets which range from five to 39 years. Depletion
of logging roads and costs of fee timber harvested are provided at rates
based on unrecovered costs and estimated recoverable volume of softwood
timber.
The carrying value of properties is reviewed periodically for
impairment. If the asset carrying amount is not recoverable, the asset
is considered to be impaired and the value is adjusted to estimated fair
value.
Revenue recognition:
Revenue on real estate sales is recorded on the date the sale closes.
The Partnership uses the installment method of accounting for real
estate sales transactions until 25% of the contract sales value has been
collected, at which point the full accrual method of accounting is used.
Income per partnership unit:
Income per partnership unit is computed using the weighted average
number of units outstanding during each year (903,913 units in 1995,
921,097 units in 1994, 987,653 in 1993). There were 903,894 and 905,594
units outstanding at December 31, 1995 and 1994, respectively.
Statement of cash flows:
For purposes of the statement of cash flows, the Partnership considers
all highly-liquid debt instruments with a maturity of three months or
less when purchased to be cash equivalents. During 1995 noncash
investing activities include a transfer of $287,000 of land to work in
progress. During 1994 noncash investing activities include a transfer of
$123,000 of work in progress to land and land improvements.
Reclassifications:
Certain reclassifications have been made to the 1994 financial
statements to conform with the current year's presentation.
19
<PAGE> 20
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. Income taxes:
The Partnership is not subject to income taxes. Instead, each partner is
taxed on his share of the Partnership's taxable income, whether or not
distributed.
The following schedule reconciles net income reported for financial
statement purposes to consolidated taxable income:
<TABLE>
<CAPTION>
(Thousands)
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Net income per financial statements $13,090 $ 8,893 $14,825
Difference in reporting depreciation (104) (308) (336)
Cost basis of land, timber and homes sold 269 161 86
Difference in reporting depletion (130) (182) (196)
Deferred profit from differences in the
use of the installment method 315 381 263
Other, net 292 115 26
------- ------- -------
Consolidated taxable income $13,732 $ 9,060 $14,668
======= ======= =======
</TABLE>
3. Long-term debt:
Long-term debt at December 31 consisted of:
<TABLE>
<CAPTION>
(Thousands)
1995 1994
------- -------
<S> <C> <C>
Note payable to a bank with interest at Prime
(8.5% at December 31, 1995) $ 3,000 $ 9,875
Mortgage note payable to an insurance company
with interest at 9.65%, collateralized by timberlands,
with a minimum monthly payment of $136,000, due
May 2022 14,463 15,188
Local improvement district assessments, with interest
ranging from 6.5% to 10%, due through 2009 554 616
------- -------
18,017 25,679
Less current portion 300 228
------- -------
$17,717 $25,451
======= =======
</TABLE>
20
<PAGE> 21
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. Long-term debt: (Continued)
The note payable to bank represents borrowings on a $20 million revolving
term agreement. The maximum available borrowings are reduced by $10 million
on September 30, 1997 and the agreement expires on January 31, 1999.
The Partnership debt agreements contain certain financial statement ratio
covenants and have tangible net worth requirements for which the
Partnership is in compliance. As of December 31, 1995 the minimum net worth
requirements for the bank and the insurance company notes were $27,427,000
each. The net worth requirements increase each year by a percentage of the
current year's net income. The mortgage note payable also includes debt
repayment provisions in the event of timber harvests in excess of specified
amounts.
Principal payments on long-term debt for the next five years are due as
follows:
<TABLE>
<CAPTION>
(Thousands)
-----------
<S> <C>
1996 $ 300
1997 325
1998 353
1999 3,384
2000 413
</TABLE>
4. Fair value of financial instruments:
The Partnership's financial instruments include cash and cash equivalents,
accounts receivable, contracts receivable, and variable rate debt, for
which the carrying amount of each approximates fair value. The fair value
of fixed rate debt having a carrying value of $15,017,000 has been
estimated based on current interest rates for similar financial instruments
and totals $16,848,000 as of December 31, 1995.
5. Partners' capital:
The general partners of the Partnership are Pope MGP, Inc. and Pope EGP,
Inc. Allocations of partner distributions and net income are based on units
held.
21
<PAGE> 22
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. Partners' capital: (Continued)
The following presents the partners' capital account activity for the
three years ended December 31, 1995:
<TABLE>
<CAPTION>
(Thousands)
General Limited
Partners Partners Total
-------- ---------- --------
<S> <C> <C> <C>
January 1, 1993 $270 $27,278 $27,548
Repurchase of 250,000 units (15,938) (15,938)
Cash distributions (72) (5,488) (5,560)
Net income 148 14,677 14,825
---- ------- -------
December 31, 1993 $346 $20,529 $20,875
Repurchase of 21,100 units (1,684) (1,684)
Cash distributions (43) (3,217) (3,260)
Net income 89 8,804 8,893
---- ------- -------
December 31, 1994 $392 $24,432 $24,824
Repurchase of 1,700 units (136) (136)
Cash distributions (63) (4,727) (4,790)
Net income 131 12,959 13,090
---- ------- -------
December 31, 1995 $460 $32,528 $32,988
==== ======= =======
</TABLE>
6. Employee benefits:
Full-time salaried employees with one year of service are eligible to
receive benefits under a defined contribution plan. The Partnership is
required to contribute 3% of eligible employee compensation into the
plan, which amounted to $48,000, $56,000, $50,000 for each of the three
years in the period ended December 31, 1995. The Partnership also
accrued $181,000 in 1995 and $94,000 in 1994 related to a supplemental
retirement plan for a key employee.
7. Commitments:
In the ordinary course of business, and as part of the entitlement and
development process, the Partnership is required to provide performance
bonds and letters of credit to assure completion of certain public
facilities. At December 31, 1995, the Partnership had performance bonds
and letters of credit outstanding totaling $634,000.
The Partnership has guaranteed the repayment of a note from a 50%-owned
joint venture to a bank in the amount of $6,000,000.
22
<PAGE> 23
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. Related party and major customer transactions:
Pope MGP, Inc. is the managing general partner of the Partnership and
receives $150,000 per year for this service. Furthermore, one individual
serves as a director of both Pope MGP, Inc. and Pope & Talbot, Inc.
(P&T). During the years ended December 31, 1994 and 1993, revenues of
$3,915,000 and $4,557,000, respectively, were realized from timber sales
to P&T. P&T managed the townsite of Port Gamble, for which the
Partnership paid $125,000 annually for 1995, 1994 and 1993 under an
agreement between P&T and the Partnership which expired on December 31,
1995. The Partnership leased to P&T a log dump at Port Ludlow together
with a millsite and log dump in Port Gamble and received, in return,
annual payments of $50,000 and $75,000, respectively. The Port Gamble
millsite and log dump lease expires in 2005. The Port Ludlow log dump
lease expired at December 31, 1995.
A former director of Pope MGP, Inc. is a managing director of MRGC and
is the President and Chief Executive Officer and a director of Merrill &
Ring, Inc. MRGC is 50%-owned by Merrill & Ring, Inc. Such individual
served as a director of Pope MGP, Inc. from January 1994 to September
1995. During the years ended December 31, 1995 and 1994 the Partnership
paid $268,000, and $313,000, respectively for fees and commissions
related to export timber sales through MRGC totaling $4,389,000 and
$5,148,000, respectively.
23
<PAGE> 24
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
9. Segment information:
The Partnership's operations are classified into two segments:
timberland resources and property development. Identifiable assets are
those used exclusively in the operations of each industry segment or
those allocated when used jointly. Non-allocable assets of the
Partnership include cash, accounts receivable, certain prepaid expenses
and the Partnership's administrative office. Details of the
Partnership's operations by business segment for the years ended
December 31 were as follows:
<TABLE>
<CAPTION>
(Thousands)
Timberland Property
Resources Development Administrative Consolidated
---------- ----------- -------------- ------------
<S> <C> <C> <C> <C>
1995
Revenues $26,399 $ 9,796 $36,195
Income (loss)
from operations 18,087 (1,287) $(2,384) 14,416
Depreciation and
depletion 592 842 125 1,559
Identifiable assets 17,414 32,648 4,085 54,147
Capital and land
expenditures 2,555 1,265 70 3,890
1994
Revenues $19,083 $11,425 $30,508
Income (loss)
from operations 12,525 (258) $(1,935) 10,332
Depreciation and
depletion 390 818 126 1,334
Identifiable assets 14,327 35,019 3,413 52,759
Capital and land
expenditures 1,869 3,363 28 5,260
1993
Revenues $25,716 $ 8,175 $33,891
Income (loss) from
operations 20,880 (2,037) $(2,267) 16,576
Depreciation and
depletion 674 877 128 1,679
Identifiable assets 12,062 31,548 4,491 48,101
Capital and land
expenditures 713 792 8 1,513
</TABLE>
24
<PAGE> 25
POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
9. Segment Information (Continued)
Direct export sales to Japan for 1995 and 1994 totaled $8,935,000 and
$8,080,000, respectively.
10. Quarterly financial information (unaudited):
<TABLE>
<CAPTION>
Income Net Income
(Thousands, except from Net per
per unit data) Revenues Operations Income Partnership Unit
------------------ -------- ---------- ------ ----------------
<S> <C> <C> <C> <C>
1995
First quarter $ 7,350 $2,818 $2,395 $2.65
Second quarter 11,437 5,609 5,289 5.85
Third quarter 8,053 3,029 2,722 3.01
Fourth quarter 9,355 2,960 2,684 2.97
1994
First quarter $ 5,193 $1,530 $1,190 $1.28
Second quarter 6,126 2,138 1,813 1.96
Third quarter 9,401 3,333 2,926 3.16
Fourth quarter 9,788 3,331 2,964 3.27
1993
First quarter $ 4,034 $ 964 $ 569 $ .49
Second quarter 8,018 3,969 3,485 3.76
Third quarter 9,540 5,624 5,047 5.45
Fourth quarter 12,299 6,019 5,724 6.18
</TABLE>
25
<PAGE> 26
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
---------------------------------------------------------------
None.
26
<PAGE> 27
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The Managing General Partner of the Partnership is Pope MGP, Inc. Its
address is the same as the address of the principal offices of the Partnership.
Pope MGP, Inc. receives $150,000 per year for acting as managing general partner
of the Partnership.
The following table identifies the directors of Pope MGP, Inc. as of
December 31, 1995. The Partnership has no directors. Officers of Pope MGP, Inc.
hold identical offices with the Partnership. All directors, except Mr. Tucker,
have served since the formation of Pope MGP, Inc. in 1985. George H. Folquet
served as a director until his term expired on December 13, 1995. Richard E.
Stroble served as a director until he resigned on September 28, 1995.
Name Age Position and Background
- ---- --- ------------------------------------
Adolphus Andrews, Jr. (1), (2) 73 Director; President of Andrews
Associates, Inc., 1981 to present
Peter T. Pope (1), (2) 61 Director; President, CEO and
Chairman of the Board of Pope &
Talbot, Inc., 1971 to present.
Gary F. Tucker (3)(4) 59 Director; President and CEO of Pope
MGP, Inc. and the Partnership since
December 1995; President of Trees
Inc., June 1989 to December 1995;
Vice President Resources of Plum
Creek Timber Company, Inc.,
December 1984 to May 1989
Marco F. Vitulli (4) 61 Director; President, Vitulli
Ventures Ltd., 1980 to present
David Cunningham (3) 49 Vice President Land Use, since
December 1985 of Pope MGP, Inc. and
the Partnership; Planning Director,
Pope & Talbot Development, Inc.,
July 1978 to December 1985
Thomas A. Griffin (3) 38 Treasurer and Controller since
November 1991 and Controller from
March 1989 to October 1991 and
Assistant Controller May 1988 to
February 1989 of Pope MGP, Inc. and
the Partnership; Property Manager
of Wood Associates, January 1986 to
April 1988; Controller of Vestar,
January 1984 to January 1986
27
<PAGE> 28
Gregory M. McCarry (3) 46 Vice President Development of Pope
MGP, Inc. and the partnership, since
November 1987; owner of Pace , 1986
to November 1987; Treasurer of
Security Resources, Inc., from
1983 to 1986
Thomas M. Ringo (3) 42 Vice President Finance since
November 1991 and Treasurer from
March 1989 through October 1991 of
Pope MGP, Inc. and the Partnership;
Tax Manager of Westin Hotel Company,
1985 to March 1989; Tax Consultant
for Price Waterhouse, 1981 to 1985
John S. Walter (3) 53 Vice President Timberlands since
September 1989 of Pope MGP, Inc. and
the Partnership; Timber Sales
Manager for Scott Paper Timberlands,
1984 to 1989
(1) Mr. Pope is the first cousin of Emily T. Andrews, Mr. Andrews' wife.
(2) Terms expire December 11, 1996.
(3) Term as an officer expires December 12, 1997
(4) Term as a director expires December 12, 1997.
28
<PAGE> 29
Item 11. EXECUTIVE COMPENSATION.
-----------------------
The following table sets forth certain information concerning the cash
compensation paid to each of the five most highly compensated executive
officers of the Partnership whose individual aggregate cash compensation
exceeded $100,000.
SUMMARY COMPENSATION TABLE
Annual Compensation
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Name and Other Annual All Other
Principal Salary Bonus Compensation Compensation
Position Year ($) ($)(1) ($)(2) ($)(3)
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
George H. Folquet 1995 195,600 90,000 54,500
CEO & President 1994 180,400 85,000 54,500
1993 225,950 92,000 6,866
- -----------------------------------------------------------------------
Greg McCarry 1995 132,400 60,500 4,500
V.P. Development 1994 129,850 52,000 4,500
1993 127,300 29,000 5,436
- -----------------------------------------------------------------------
David Cunningham 1995 101,800 21,000 3,540
V.P. Land Use 1994 97,400 20,000 3,444
1993 93,650 19,000 2,915
- -----------------------------------------------------------------------
Tom Ringo 1995 100,850 21,000 3,510
V.P. Finance 1994 96,500 20,000 3,418
1993 91,100 18,000 2,854
- -----------------------------------------------------------------------
John Walter 1995 96,550 25,000 3,300
V.P. Timberlands 1994 92,400 14,000 3,430
1993 88,850 23,000 3,297
- -----------------------------------------------------------------------
</TABLE>
(1) Amounts represent bonuses or commissions earned in the year shown but
paid in either the current or following years.
(2) Perquisites and other personal benefits paid to each named executive
officer in each instance aggregated less than 10% of the total annual
salary and bonus for each officer and accordingly were omitted from the
table as permitted by the rules of the Securities and Exchange Commission
(SEC).
(3) Amounts represent contributions to the Partnerships 401(k) plan or a
deferred compensation plan.
COMPENSATION OF DIRECTORS.
Compensation of the directors of Pope MGP, Inc. consisted of a monthly fee
of $1,000 plus a $1,000 fee for each board meeting attended.
29
<PAGE> 30
EMPLOYEE BENEFIT PLANS.
-----------------------
Full-time salaried employees with one year of service are eligible to
receive benefits under a defined contribution plan. The Partnership is
required to contribute 3% of eligible employee compensation into the plan,
which amounted to $48,000, $56,000 and 50,000 for each of the three years in
the period ended December 31, 1995. Employees become fully vested over a six
year period in the Partnership's contribution.
The Partnership has a supplemental retirement plan for a key employee.
The plan provides for a retirement income of 70% of the employee's base salary
at retirement after taking into account both 401(k) and social security
benefits. The Partnership accrued $ 181,000 for this benefit in 1995.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
PRINCIPAL UNITHOLDERS.
As of December 31, 1995, the following persons were known or believed by
the Partnership to be the beneficial owners of more than five percent (5%) of
the outstanding Partnership units:
<TABLE>
<CAPTION>
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership (1) of Class
- -------- --------------------------- ------------------------ --------
<S> <C> <C> <C>
Units Private Capital 241,035 (2) 26.7
Management, Inc.
3003 Tamiami Trail North
Naples, FL 33940
Units Emily T. Andrews 111,420 (3) 12.3
600 Montgomery Street
35th Floor
San Franscisco, CA 94111
Units Peter B. Cannell & Co. Inc. 49,575 (4) 5.5
919 Third Avenue
New York, NY 10022
Units Peter T. Pope 62,869 (5) 7.0
1500 S.W. 1st Avenue
Units Portland, OR 97201
</TABLE>
(1) Each beneficial owner has sole voting and investment power unless
otherwise indicated.
(2) Private Capital Management, Inc. is an investment adviser shown
registered under the Investors Advisers Act of 1940. Units are held in
various accounts managed by Private Capital Management, Inc. which shares
dispositive powers as to those units.
30
<PAGE> 31
(3) Includes 218 units owned by her husband, Adolphus Andrews, Jr. as to
which she disclaims beneficial ownership. Also includes a total of 12,000
units held by Pope MGP, Inc. and Pope EGP, Inc., as to which she shares
voting and investment power.
(4) Peter B. Cannell & Co., Inc. is an investment adviser registered under
the Investment Advisers Act of 1940. Peter B. Cannell & Co., Inc. is a
wholly-owned subsidiary of Eberstadt Fleming, Inc., a broker-dealer
registered under the Securities Exchange Act of 1934.
(5) Includes 10,684 units held in trust for his children. Also includes a
total of 12,000 units held by Pope MGP, Inc., and Pope EGP, Inc., as to
which he shares investment and voting power.
MANAGEMENT.
- -----------
As of December 31, 1995, the beneficial ownership of the Partnership units
of (I) the general partners, (II) the directors of the Partnership's general
partners, and (III) the Partnership's general partners, directors and officers
of the Partnership as a group was as follows:
<TABLE>
<CAPTION>
Amount and Nature Percent
of Beneficial of
Name Position and Offices Ownership (1) Class
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Adolphus Andrews, Jr. Director, Pope MGP, Inc. 111,420 (2) 12.3
and Pope EGP, Inc. (3)
Peter T. Pope Director, Pope MGP, Inc. 62,869 (4) 6.9
and Pope EGP, Inc. (5)
Pope EGP, Inc. Equity General Partner 10,800 1.2
Pope MGP, Inc. Managing General 1,200 *
Partner
Macro Vitulli Director, Pope MGP, Inc. 200 *
and Pope EGP, Inc.
Thomas M. Ringo Vice President Finance, 100 *
Pope MGP, Inc. and the
Partnership
All general partners, directors and officers (6) 18.0
of general partners, and officers of the
Partnership as a group (10 individuals and 2
partners)
</TABLE>
* Less than 1%
(1) Each beneficial owner has sole voting and investment power unless
otherwise indicated.
31
<PAGE> 32
(2) Includes 99,202 units as to which he shares investment and voting
power. Also includes units owned by Pope MGP, Inc. or Pope EGP, Inc.,
as to all of which he disclaims beneficial ownership. See footnote
(3) under "Principal Unitholders."
(3) Mr. Andrews is also Vice President of Pope EGP, Inc.
(4) See footnote (5) under "Principal Unitholders."
(5) Mr. Pope is also President of Pope EGP, Inc.
(6) The 12,000 units held by Pope MGP, Inc. and Pope EGP, Inc. are
excluded from units beneficially owned by Mr. Pope and Mr. Andrews.
All of the outstanding stock of Pope MGP, Inc. and Pope EGP, Inc. is
owned by Mr. Pope and Mr. Andrews' wife, Emily T. Andrews.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-----------------------------------------------
Peter T. Pope serves as a director of Pope MGP, Inc., managing general
partner of the Partnership. Mr. Pope also serves on the board of directors of
P&T. P&T did not purchase any timber sold by the Partnership during 1995,
however, since it could purchase timber in 1996, a conflict of interest could
arise.
The Partnership Agreement provides that it is a complete defense to any
challenge to an agreement or transaction between the Partnership and a general
partner, or related person, due to a conflict of interest if, after full
disclosure of the material facts as to the agreement or transaction and the
interest of the general partner or related person, (1) the transaction is
authorized, approved or ratified by a majority of the disinterested directors of
the managing general partner, Pope MGP, Inc., or (2) the transaction is
authorized by partners of record holding more than fifty percent (50%) of the
units held by all partners.
Richard E. Stroble is a managing director of MRGC. MRGC is 50% owned by
Merrill & Ring, Inc. Richard E. Stroble is a director of Merrill & Ring, Inc. In
addition, he is the President and CEO of Merrill & Ring, Inc. Because MRGC
purchased 17% of the timber sold by the Partnership during 1995, a conflict of
interest could have arisen when he was a director of the Partnership. During
this period Mr. Stroble disassociated himself from any day-to-day management
decisions between MRGC and the Partnership.
In addition, it is a complete defense to any challenge to such an agreement
or transaction based upon a conflict of interest if the agreement or transaction
was fair to the Partnership at the time it was authorized, approved or ratified
by the managing general partner, Pope MGP, Inc. Approval may be before or at the
time of the transaction, or at any later time.
32
<PAGE> 33
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
-----------------------------------------------------------------
(a) Financial Statements. Page
---------------------
Financial Statements: 11
Report of Public Accountants 14
Consolidated Balance Sheets 15
Consolidated Statements of Income 16
Consolidated Statements of Cash Flows 17
Notes to Consolidated Financial Statements 18 - 25
(b) Reports on Form 8-K.
--------------------
No reports on Form 8-K were filed during the last quarter of the
fiscal year ended December 31, 1995.
(c) Exhibits.
---------
3.1 Partnership's Certificate of Limited Partnership.
(1)
3.2 Partnership's Limited Partnership Agreement,
dated as of November 7, 1985.(1)
3.3 Amendment to Partnership's Limited Partnership
Agreement dated December 16, 1986.(2)
4.1 Specimen Depositary Receipt of Registrant. (1)
4.2 Partnership's Limited Partnership Agreement
dated as of November 7, 1985 and amended
December 16, 1986 (see Exhibits 3.1 and 3.3).
9.1 Shareholders Agreement entered into by and
among Pope MGP, Inc., Pope EGP, Inc., Peter
T. Pope, Emily T. Andrews, P&T, present and
future directors of Pope MGP, Inc. and the
Partnership, dated as of November 7, 1985
included as Appendix C to the P&T Notice and
Proxy Statement filed with the Securities and
Exchange Commission on November 12, 1985,
a copy of which was filed as Exhibit 28.1 to the
Partnership's registration on Form 10 identified
in footnote (1) below. (1)
10.1 Transfer and Indemnity
Agreement between the Partnership and P&T
dated as of December 5, 1985. (1)
33
<PAGE> 34
10.2 Management Agreement between the
the Partnership and P&T dated as of
December 5, 1985. (1)
10.3 Ground Leases between the Partnership as
Lessor and P&T as Lessee dated December 3, 1985. (1)
22.1 Subsidiaries of the Partnership. (3)
28.1 Certificate of Incorporation of Pope MGP, Inc.
(1)
28.2 Amendment to Certificate of Incorporation of
Pope MGP, Inc. (3)
28.3 Bylaws of Pope MGP, Inc. (1)
28.4 Certificate of Incorporation of Pope EGP, Inc. (1)
28.5 Amendment to Certificate of Incorporation of
Pope EGP, Inc. (3)
28.6 Bylaws of Pope EGP, Inc. (1)
- --------------------------------
(1) Incorporated by reference from the Partnership's
registration on Form 10 filed under File No. 1-9035 and
declared effective on December 5, 1985.
(2) Incorporated by reference from the Partnership's
annual report on Form 10-K for the fiscal year ended December
31, 1987.
(3) Incorporated by reference from the Partnership's
annual report on Form 10-K for the fiscal year ended December
31, 1988.
34
<PAGE> 35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 RESOURCES, A Delaware
Limited Partnership
By POPE MGP, INC.
Managing General Partner
Date: March 18, 1996 By /s/Gary F. Tucker
-------------------------------
GARY F. TUCKER,
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Date: March 18, 1996 By /s/ Gary F. Tucker
--------------------------------
GARY F. TUCKER,
President, Chief Executive Officer
(principal executive officer),
Partnership and Pope MGP, Inc.;
Director, Pope MGP, Inc.
Date: March 18, 1996 By /s/ Thomas M. Ringo
--------------------------------
THOMAS M. RINGO
Vice President Finance (principal
financial officer), Partnership and
Pope MGP, Inc.
35
<PAGE> 36
Date: March 18, 1996 By /s/ Thomas A. Griffin
--------------------------------
THOMAS A. GRIFFIN
Treasurer and Controller
(principal accounting officer),
Partnership and Pope MGP, Inc.
Date: March 18, 1996 By /s/ Adolphus Andrews, Jr.
--------------------------------
ADOLPHUS ANDREWS, JR.
Director, Pope MGP, Inc.
Date: March 18, 1996 By /s/ Peter T. Pope
--------------------------------
PETER T. POPE
Director, Pope MGP, Inc.
Date: March 18, 1996 By
---------------------------------
MARCO F. VITULLI
Director, Pope MGP, Inc.
36
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 987
<SECURITIES> 0
<RECEIVABLES> 1,047
<ALLOWANCES> 0
<INVENTORY> 11,375
<CURRENT-ASSETS> 14,312
<PP&E> 53,190
<DEPRECIATION> 17,082
<TOTAL-ASSETS> 54,147
<CURRENT-LIABILITIES> 2,378
<BONDS> 18,017
<COMMON> 0
0
0
<OTHER-SE> 32,988
<TOTAL-LIABILITY-AND-EQUITY> 54,147
<SALES> 36,195
<TOTAL-REVENUES> 36,195
<CGS> 13,820
<TOTAL-COSTS> 21,746
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,712
<INCOME-PRETAX> 13,090
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,090
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,090
<EPS-PRIMARY> 14.48
<EPS-DILUTED> 14.48
</TABLE>
