<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Third Quarter Ending September 30, 1999
OR
( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-9035
POPE RESOURCES, A DELAWARE
LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
DELAWARE 91-1313292
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
19245 10TH AVENUE NE, POULSBO, WA 98370
Telephone: (360) 697-6626
(Address of principal executive offices including zip code)
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or 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
------------ -------------
<PAGE>
PART I
ITEM 1
FINANCIAL STATEMENTS
<PAGE>
CONSOLIDATED BALANCE SHEETS (Unaudited)
Pope Resources
September 30, 1999 and December 31, 1998
<TABLE>
<CAPTION>
(Thousands) 1999 1998
- ---------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 5,221 $ 2,666
Accounts receivable 2,451 639
Work in progress 12,644 11,199
Current portion of contracts receivable 555 611
Prepaid expenses and other 448 368
------- -------
Total current assets 21,319 15,483
------- -------
Properties and equipment at cost:
Land and land improvements 15,828 16,701
Roads and timber (net of
accumulated depletion) 12,285 11,272
Buildings and equipment (net of
accumulated depreciation) 15,962 16,028
------- -------
44,075 44,001
------- -------
Other assets:
Contracts receivable, net of current portion 1,702 1,780
Unallocated amenities and project costs 1,158 1,073
Loan fees and other 330 369
------- -------
3,190 3,222
------- -------
$68,584 $62,706
======= =======
Liabilities and Partners' Capital
Current liabilities:
Accounts payable $ 1,116 $ 777
Accrued liabilities 1,519 1,383
Current portion of long-term debt 398 382
Minority interest 98 256
------- -------
Total current liabilities 3,131 2,798
------- -------
Long-term debt, net of current portion 13,389 13,818
Deferred profit 212 194
Partners' capital 51,852 45,896
------- -------
$68,584 $62,706
======= =======
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Pope Resources
Three Months and Nine Months Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
(Thousands, except per unit data) Three Months Ended September 30, Nine Months Ended September 30,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 14,349 $ 12,574 $ 41,143 $ 36,835
Cost of sales (4,787) (3,729) (12,237) (10,613)
Operating expenses (4,938) (3,184) (13,718) (9,065)
Selling general and administrative expenses (2,303) (2,266) (6,969) (5,960)
-------- -------- -------- --------
Income from operations 2,321 3,395 8,219 11,197
-------- -------- -------- --------
Other income (expense):
Interest expense (316) (350) (971) (1,074)
Interest income 78 175 165 463
Equity in earnings / (losses) of joint venture - 1 - (170)
Minority interest (13) (63) (48) (243)
-------- -------- -------- --------
(251) (237) (854) (1,024)
-------- -------- -------- --------
Income before income taxes 2,070 3,158 7,365 10,173
Income tax provision 19 (217) (221) (348)
-------- -------- -------- --------
Net income $ 2,089 $ 2,941 $ 7,144 $ 9,825
======== ======== ======== ========
Allocable to general partners $ 28 $ 39 $ 95 $ 131
Allocable to limited partners 2,061 2,902 7,049 9,694
-------- -------- -------- --------
$ 2,089 $ 2,941 $ 7,144 $ 9,825
======== ======== ======== ========
Earnings per unit:
Basic $ 0.46 $ 0.65 $ 1.58 $ 2.17
======== ======== ======== ========
Diluted $ 0.46 $ 0.65 $ 1.57 $ 2.17
======== ======== ======== ========
Weighted average units outstanding:
Basic 4,521 4,519 4,521 4,519
======== ======== ======== ========
Diluted 4,552 4,535 4,545 4,531
======== ======== ======== ========
</TABLE>
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Pope Resources
Nine Months Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
(Thousands) 1999 1998
-------- --------
<S> <C> <C>
Net cash flows from operating activities $ 7,830 $ 8,107
Cash flows from investing activities:
Capital expenditures (3,505) (2,178)
Joint venture investment -- (300)
-------- --------
Net cash used in investing activities (3,505) (2,478)
-------- --------
Cash flows from financing activities:
Cash distributions to unitholders (1,357) (1,808)
Minority interest distrbution (208) -
Repayment of long-term debt (393) (277)
Proceeds from exercise of unit options 188 -
-------- --------
Net cash used in financing activities (1,770) (2,085)
-------- --------
Net increase in cash and cash equivalents 2,555 3,544
Cash and cash equivalents at beginning of year 2,666 3,950
-------- --------
Cash and cash equivalents at end of the nine month period $ 5,221 $ 7,494
======== ========
Supplemental disclosure of non-cash transaction:
Land acquired through a tax-deferred exchange $ -- $ 1,791
======== ========
</TABLE>
<PAGE>
POPE RESOURCES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1999
1. The consolidated financial statements have been prepared by the
Partnership without an audit and are subject to year-end adjustments.
Certain information and footnote disclosures in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of the Partnership, the accompanying
consolidated balance sheets as of September 30, 1999 and December 31,
1998 and the consolidated statements of income for the three months and
nine months ended September 30, 1999 and 1998 and cash flows for the
nine months ended September 30, 1999 and 1998 contain all adjustments
necessary to present fairly the financial statements referred to above.
The results of operations for any interim period are not necessarily
indicative of the results to be expected for the full year.
2. The financial statements in the Partnership's 1998 annual report on
Form 10-K include a summary of significant accounting policies of the
Partnership and should be read in conjunction with this Form 10-Q.
3. Diluted earnings per unit include the impact of unit options
outstanding.
4. Supplemental disclosure of cash flow information: Interest paid
amounted to approximately $1,055,000 and $1,080,000 for the nine months
ended September 30, 1999 and 1998, respectively.
5. The general partners of the Partnership are Pope EGP, Inc., and Pope
MGP, Inc. Allocations of partner distributions are based on units held.
The following is the Partners' capital account activity, and disclosure
of comprehensive income for the nine months ended September 30, 1999
and 1998:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
PARTNERS' CAPITAL AT THE BEGINNING OF THE YEAR $ 45,896,000 $ 38,910,000
Net Income 7,144,000 9,825,000
Translation adjustment (19,000) --
------------ ------------
COMPREHENSIVE INCOME 7,125,000 9,825,000
DISTRIBUTIONS (1,357,000) (1,355,000)
UNITS ISSUED 188,000 --
------------ ------------
PARTNERS' CAPITAL AT THE END OF THE
NINE-MONTH PERIOD $ 51,852,000 $ 47,380,000
============ ============
GENERAL PARTNERS $ 690,000 $ 630,000
============ ============
LIMITED PARTNERS $ 51,162,000 $ 46,750,000
============ ============
</TABLE>
<PAGE>
6. Revenues and operating income by segment for the nine months ended
September 30 is as follows:
<TABLE>
<CAPTION>
Timberland
(Thousands) Resources Real Estate Administrative Consolidated
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
Revenues $29,650 $11,493 $ - $41,143
Income (loss) from operations 14,083 123 (5,987) 8,219
1998
Revenues 25,000 11,835 - 36,835
Income (loss) from operations 13,402 3,004 (5,209) 11,197
</TABLE>
7. Certain reclassifications have been made to 1998 amounts to conform to
1999 presentation.
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
September 30, 1999
This discussion should be read in conjunction with the Partnership's
consolidated financial statements included with this report.
RESULTS OF OPERATIONS
The Partnership operates in two primary industry segments: (1) Timberland
Resources and (2) Real Estate. The Partnership's largest segment, Timberland
Resources, encompasses the growing and harvesting of timber from the
Partnership's tree farm and management of tree farms owned by others. This
segment also includes revenue earned through providing forestry consulting
services to owners and managers of timberlands. The Partnership's other segment,
Real Estate, consists of residential development and income-producing
properties.
TIMBERLAND RESOURCES
Timberland Resources revenues for the three months ended September 30, 1999 and
1998 were $8.9 million and $8.8 million, respectively. Notwithstanding the
comparability of these respective amounts in an absolute dollar sense, each
total contained portions of revenue unique to that quarter. For instance, third
quarter 1998 revenues included a nonrecurring timberland sale for $0.9 million.
Third quarter 1999 revenues, on the other hand, included amounts related to new
forestry consulting activities in the U.S. and Canada that were not present in
the prior year. On a year-to-date basis, Timberland Resources revenues were
$29.7 million and $25.0 million in 1999 and 1998, respectively. The increase in
year-to-date revenues resulted primarily from revenues generated from the
forestry consulting business acquired in December 1998 and additionally from
accelerating the timing of planned timber harvesting from the Partnership's tree
farm in 1999 to capture higher than anticipated timber prices in the first half
of the year.
Operating income from Timberland Resources for the three months ended September
30, 1999 and 1998 were $3.8 million and $4.9 million, respectively. The decrease
in operating income during the quarter was due to the absence of a timberland
sale in 1999. Operating income for the nine months ended September 30, 1999 and
1998 was $14.1 million and $13.4 million, respectively. The increase resulted
primarily from a favorable export market for logs harvested from the
Partnership's tree farm partially offset by an increase in operating expenses
incurred in the management of Hancock Timber Resource Group (HTRG) timberlands.
Operating income in 1998 reflected the incremental build-up in infrastructure
that took place during 1998 and, accordingly, only partially captured the
normalized operating level shown in 1999's results.
In December 1998 the Partnership acquired the assets comprising Simons Reid
Collins, which had been a division of H.A. Simons Ltd. of Vancouver, British
Columbia. The acquired business, which now operates as ORM Resources Canada
Ltd., is expected to expand the Partnership's ability to market timberland
management and forestry consulting services globally to owners and managers of
timberlands. Year-to-date Timberland Resources revenues include $2.5 million
earned from ORM Resources Canada Ltd.
The HTRG timberland management services contract currently covers over 500,000
acres in Washington, Oregon, California, and British Columbia. The Partnership
was recently notified by HTRG that the California Public Employees' Retirement
System (CalPERS) is changing from a single investment manager to multiple
investment managers for its approximately $1.2 billion timberland portfolio. As
a result, timberlands owned by CalPERS in the western United States will be
changing investment managers. CalPERS represents approximately 222,000 of the
acres currently managed for HTRG in the western United States and these acres
are expected to transition to a new investment manager by early 2000.
Additionally, the State Teachers Retirement System of Ohio (STRSO), which
represents approximately 96,000 acres in the western United States, changed
investment managers as of September 1999. If we are unable to replace these
acres, this will have a significant impact to revenues and operating income for
the Timberland Resources segment.
<PAGE>
The Partnership harvested and sold the following timber from its fee timberland
ownership for the nine months ended September 30:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Softwood Hardwood
Year Sawlogs Pulp Logs and Other Totals
- ---------------------------------------------------------------------------------------------------------------
Volume Price Volume Price Volume Price Volume Price
MMBF $/MBF MMBF $/MBF MMBF $/MBF MMBF $/MBF
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 29.4 627 7.7 224 0.9 502 38.0 542
1998 25.6 584 8.2 254 0.8 452 34.6 503
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
MMBF = million board feet
MBF = thousand board feet
Log revenues from the Partnership's fee timberland ownership are significantly
affected by export log market conditions. The majority of the Partnership's
export log volume is sold to Japan. The Japanese export market showed some signs
of recovery in the first three quarters of 1999. As a result, management
accelerated the timing of planned 1999 log production into the first half of the
year and, to the extent possible, focused more heavily on timber stands with a
higher mix of export-suitable logs. Total 1999 volumes are not expected to
change significantly from 1998. Export log volumes sold through domestic
intermediaries for the nine months ended September 30, 1999 and 1998 were 10.4
MMBF and 7.5 MMBF, respectively, while the proportion of export volume to total
volume harvested increased from 22% in 1998 to 27% in 1999. In addition to the
increase in volume, the average price of export logs sold year-to-date increased
from $680 per MBF in 1998 to $693 per MBF in 1999.
The average price of domestic logs sold was $591 and $544 per MBF for the first
nine months of 1999 and 1998, respectively. Domestic conifer sawlog volumes for
the nine months ended September 30, 1999 and 1998 were 19.0 MMBF and 18.1 MMBF,
respectively. Domestic log demand is affected by the level of new home
construction, repair and remodel expenditures, weather, and market conditions in
foreign markets (especially Asia). Interest rate fluctuations, population
demographics, and changes in general economic conditions are factors that
influence housing starts. The levels of existing home sales, together with
interest rate movements, heavily influence repair and remodel expenditures. In
combination these forces affect the demand for lumber which in turn drives the
demand for logs. All of these factors affect the price the Partnership receives
from the sale of its log production.
Pulp log volumes for the nine months ended September 30, 1999 and 1998 were 7.7
MMBF and 8.2 MMBF, respectively. Pulp log markets weakened during 1999. The
average price of pulp logs sold was $224 and $254 per MBF for the first nine
months of 1999 and 1998, respectively. As management shifted log production to
capitalize on the relatively strong export log market, the proportion of the
total harvest mix attributable to pulp log volume declined from 24% in 1998 to
20% in 1999.
In January of 1999, the Partnership acquired 512 acres of timberland for $1.3
million. The property acquired is contiguous to the Partnership's Hood Canal
tree farm and will be managed with the Partnership's other properties in western
Washington.
In the operation and management of its tree farm, the Partnership is subject to
federal, state and local laws that govern land use. Management's objective is to
be in compliance with such laws and regulations at all times. Management
anticipates that increasingly strict governmental requirements and a growing
social concern relating to environmental and endangered species issues may
result in additional restrictions on the timber operations of the Partnership.
The risk of loss from fire, while possible on any timberland, is minimized on
Partnership lands by maintaining a well-developed road system, and an
established fire monitoring and suppression plan. The Washington State
Department of Natural Resources is ultimately responsible for all fire
suppression activities in the state.
<PAGE>
REAL ESTATE
Real Estate consists of residential development and income-producing
properties. Residential development consists of the sale of single-family
homes, finished lots and undeveloped acreage. Income-producing properties
center around the Port Ludlow resort community and consist of the 36-room
Heron Beach Inn on Ludlow Bay, a 27-hole championship golf course, a 300-slip
saltwater marina, a restaurant/lounge, commercial center, recreational
vehicle park, and water and sewer facilities to service Port Ludlow residents
and businesses. Income-producing properties also include properties in Port
Gamble and Kingston.
Real Estate revenues for the three months ended September 30, 1999 and 1998
were $5.4 million and $3.8 million, respectively. Revenues were shifted from
the first half of 1999 to the third quarter. The shift in revenues was due to
two factors; 1) unusually wet weather in winter and spring dampened sales in
the first two quarters, and 2) many sales occurred with unfinished inventory,
which required additional time to complete homes for delivery. On a
year-to-date basis, Real Estate revenues as of September 30, 1999 and 1998
were $11.5 million and $11.8 million, respectively. 1998 revenues benefited
from a $2.8 million dollar undeveloped acreage sale. The Partnership did not
have any significant undeveloped acreage sales during 1999, but the loss of
those revenues was largely replaced by revenues generated by the Heron Beach
Inn on Ludlow Bay (the Inn). Prior to 1999 the Partnership held a 50%
interest in the joint venture that owned the Inn. In December 1998, the
Partnership increased its ownership interest in the Inn to 100% through a
buyout of its partner. As a result of the acquisition, revenues and expenses
from the Inn are now included in the Partnership's operating income.
Operating income for the three months ended September 30, 1999 and 1998 was
$0.6 million for both periods. On a year-to-date basis, operating income was
$0.1 million and $3.0 million through September 30, 1999 and 1998,
respectively. The majority of the decrease in revenues and operating income
is due to the $2.8 million undeveloped acreage sale during the second quarter
of 1998 which resulted in $2.6 million in operating income.
Revenues from residential development for the three months ended September
30, 1999 and 1998 were $3.0 million and $2.0 million, respectively. On a
year-to-date basis residential development revenues through September 30,1999
and 1998 were $6.0 million and $7.7 million, respectively. The majority of
the decrease in residential development revenues is due to the $2.8 million
sale of undeveloped acreage in the second quarter of 1998.
The Partnership's largest development is in Port Ludlow, Washington. During
the three months ended September 30, 1999, the Partnership's development at
Port Ludlow generated revenues of $2.6 million on the sale of 10 dwellings
and three lots, compared with revenue of $1.7 million on the sale of five
dwellings and nine lots for the same period in 1998. On a year-to-date basis
as of September 30, 1999 the Partnership's development at Port Ludlow
generated revenues of $4.4 million on the sale of five finished lots and 17
homes, compared with revenue of $3.9 million on the sale of 19 finished lots
and 11 homes for the same period in 1998. Revenue realized per sale depends
on the quality and size of the home, the subdivision, and the location of the
lot.
Revenues from income-producing properties for the three months ended
September 30, 1999 and 1998 were $2.5 million and $1.8 million, respectively.
On a year-to-date basis revenues totaled $5.5 million and $4.1 million for
1999 and 1998, respectively. The increase resulted from revenue earned by the
Heron Beach Inn on Ludlow Bay.
Land holdings throughout Washington State are affected by the state's Growth
Management Act (GMA), which requires counties to submit comprehensive plans
that identify the future direction of growth and stipulate where population
densities are to be concentrated. In Jefferson County, in which Port Ludlow
is located, the GMA Hearings Board approved the County's Comprehensive Plan.
In this plan, Port Ludlow was granted status as a Master Planned Resort
facilitating future build-out and development of the resort. In July 1999,
the Partnership successfully completed a mediation process with local
residents that resulted in a proposed zoning ordinance necessary for
completion and build-out of the resort. In October 1999, the Jefferson County
Commissioners approved the zoning ordinance, which will facilitate completion
and build-out of the development at Port Ludlow.
<PAGE>
The Partnership continues to be in the planning and entitlement phases for
several developments located in the West Puget Sound region. In Kitsap
County, where Port Gamble is located, the GMA Hearings Board rendered a
decision in February 1999 invalidating Port Gamble's designation as an urban
growth area and directing the County to re-designate Port Gamble with an
appropriate rural based zoning. In July 1999, the Partnership obtained
approval from Kitsap County to designate Port Gamble as a "Rural Historic
Town." This designation provides for substantial new commercial, industrial
and residential development of the town utilizing historic land use patterns,
densities and architectural character. Kitsap County is forwarding the plan
to the State GMA Hearings Board for review, which is scheduled to occur in
January 2000. A third party filed an appeal of the plan to the GMA Hearings
Board in October 1999. A hearing to review objections raised in the appeal
will occur in January 2000.
In 1997, the City of Bremerton approved the Partnership's request for a
planned unit development on a 270-acre property. The industrial portion of
the Bremerton property is 61 acres. Construction of the off-site sewer is
completed and the Partnership is focusing on its marketing plan. With respect
to other properties, the Partnership continues to work with officials in Gig
Harbor regarding the development of a 320-acre mixed-use project located
within the Gig Harbor city limits. The Partnership has two additional ongoing
projects in Kitsap County, a 720-acre residential development in Kingston and
a 185-acre residential development in Hansville. Development of these sites
has been delayed pending resolution of a lawsuit, in which the Partnership is
not a party, which will establish the appropriate zoning and development
regulations applicable to projects pending throughout Kitsap County. In April
1999, the State Court of Appeals rendered a favorable decision but the case
has been appealed to the Washington Supreme Court for further review.
Voters in Washington State recently passed initiative 695, which is expected
to have a detrimental impact to state and county budgets. The specific impact
of this initiative to the Partnership's real estate holdings is unknown at
this time.
OTHER
The following table sets forth expenses as a percentage of revenues for the
period ended September 30, 1999:
<TABLE>
<CAPTION>
Three Months Ended Year-to-Date
1999 1998 1999 1998
------------------- ------------------
<S> <C> <C> <C> <C>
Revenues 100% 100% 100% 100%
Cost of sales 33 30 30 29
Operating expenses 35 25 33 25
Selling, general and administrative
expenses 16 18 17 16
------------------- ------------------
Operating income 16% 27% 20% 30%
=================== ==================
</TABLE>
Cost of sales as a percentage of revenues on a year-to-date basis increased
slightly from September 30, 1998, while on a quarter to date basis the increase
was more significant. The ratio of cost of sales to revenues in 1998 was
positively affected by $0.9 million in revenue resulting from the sale of a
parcel of timberland, which contributed $0.8 million of operating income.
The increase in operating expenses as a percentage of revenues is due to a
number of different factors. The partnership acquired interests in two
businesses in December 1998: the Heron Beach Inn on Ludlow Bay and a forestry
consulting business in Canada. Both of these businesses have a larger percentage
of revenues used for operating expenses than the Partnership's tree farm,
third-party timberland management business, and real estate development
business. The ratio of operating expenses to revenues was also positively
affected in the second quarter of 1998 by a $2.8 million undeveloped acreage
sale and in the third quarter of 1998 by a $0.9 million timberland sale. Both of
these transactions had no effect on operating expenses but increased revenues.
<PAGE>
INCOME TAXES
The income tax provision for the nine months ended September 30, 1999 relates to
taxable income of the Partnership's corporate subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
Funds generated internally through operations and externally through financing
will provide the required resources for the Partnership's real estate
development and other capital expenditures. Management may also consider
increasing the Partnership's debt to total capitalization ratio to participate
in investments in real property, if the investments meet the Partnership's
return requirements and provide a good fit with the Partnership's portfolio of
properties. Management considers its capital resources to be adequate for its
current plans. At September 30, 1999, the Partnership had available an unused
$20.0 million bank loan commitment.
Management has considerable discretion to increase or decrease the level of logs
cut and thereby may increase or decrease net income and cash flow, assuming log
prices and demand remain stable. Management's current plan is to harvest
approximately 39 million board feet of timber in 1999. Since harvest plans are
based on demand and pricing, actual harvesting may vary subject to management's
ongoing review.
Cash provided by operating activities was $7.8 million for the first nine months
of 1999, and overall cash and cash equivalents increased by $2.6 million during
the nine-month period. The cash generated from operations was primarily used for
capital expenditures of $3.5 million and cash distributions to unitholders of
$1.4 million. Capital expenditures include $1.3 million to purchase 512 acres of
timberland in the first quarter of 1999. The third quarter 1999 cash
distribution of ten cents per unit, payable to unitholders of record on August
31,1999, was paid on September 15, 1999.
YEAR 2000
The Partnership hired consultants to help evaluate its exposure related to year
2000 (Y2K) issues and to develop a plan to fix hardware or software that is not
Y2K compliant. Costs incurred to identify and fix software and hardware with Y2K
issues, and query major vendors and customers to determine their state of
readiness were $220,000. Management expected the Y2K project to cost $250,000.
Management has completed the process of identifying the hardware, software, and
related equipment that must be modified, upgraded, or replaced to minimize the
possibility of a material disruption of its business. Management has essentially
achieved Y2K compliance for all of its critical internal systems.
To date, over 90% of the Partnership's suppliers and customers contacted have
confirmed that they will be Y2K compliant prior to January 1, 2000 or have
indicated that the status of their Y2K compliance has yet to be determined.
However, management can give no assurance that the Y2K issue will not materially
affect its suppliers or customers. In the event that a significant customer or
vendor were not able to operate after the year 2000, the resulting interruption
in the Partnership's business could lead to costs in excess of management's
estimate of expenses related to Y2K compliance.
Contingency plans for the event of significant interruptions of internal systems
or our suppliers' or customers' businesses are being developed. Contingency
plans are expected to be complete late in 1999. Management believes that the
most likely worst case scenario relating to Y2K compliance would involve a
potential disruption in cash processing from failures of customers and/or
financial institutions.
<PAGE>
PART II
Item 1: Legal Proceedings
None
Item 2: Changes in Securities and Use of Proceeds
None
Item 3: Defaults upon Senior Securities
None
Item 4: Submission of Matters to a Vote of Security Holders
None
Item 5: Other Information
None
6. Exhibits and Reports on Form 8-K
None
Exhibit 27. Financial Data Schedule
<PAGE>
POPE RESOURCES
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 RESOURCES,
A Delaware Limited Partnership
Registrant
Date: November 12, 1999 By: POPE MGP, Inc.
Managing General Partner
Date: November 12, 1999 By: /s/ Gary F. Tucker
---------------------------------------
Gary F. Tucker
President and Chief Executive Officer
Date: November 12, 1999 By: /s/ Thomas M. Ringo
---------------------------------------
Thomas M. Ringo
Sr. Vice President Finance & Client
Relations
(Principal Financial Officer)
Date: November 12, 1999 By: /s/ Meredith R. Green
---------------------------------------
Meredith R. Green
Vice President Finance and Treasurer
(Principal Accounting Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1999
<CASH> 5,221
<SECURITIES> 0
<RECEIVABLES> 2,451
<ALLOWANCES> 0
<INVENTORY> 12,644
<CURRENT-ASSETS> 21,319
<PP&E> 68,207
<DEPRECIATION> 24,132
<TOTAL-ASSETS> 68,584
<CURRENT-LIABILITIES> 3,131
<BONDS> 13,689
0
0
<COMMON> 0
<OTHER-SE> 51,852
<TOTAL-LIABILITY-AND-EQUITY> 68,584
<SALES> 26,662
<TOTAL-REVENUES> 41,143
<CGS> 12,237
<TOTAL-COSTS> 32,924
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 971
<INCOME-PRETAX> 7,365
<INCOME-TAX> 221
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,144
<EPS-BASIC> 1.58
<EPS-DILUTED> 1.57
</TABLE>
