<PAGE> 1
Rule 424(b)(1)
File No. 33-64813
$100,000,000
POTLATCH CORPORATION
6.95% DEBENTURES DUE DECEMBER 15, 2015
------------------------
Interest on the Debentures is payable semiannually on June 15 and December
15 of each year,
commencing June 15, 1996. The Debentures are not redeemable prior to maturity
and are not entitled to any sinking fund. The Debentures will be represented by
one or more global securities registered in the name of the nominee of The
Depository Trust Company. Beneficial interests in the global securities will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its direct and indirect participants. Except as
described herein, Debentures in definitive form will not be issued. The
Debentures will be issued in minimum denominations of $100,000 and integral
multiples of $1,000 in excess thereof. The Debentures will trade in the
Depositary's Same-Day Funds Settlement System until maturity, and secondary
market trading activity for the Debentures will therefore settle in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds. See "Description of the
Debentures--Same-Day Funds Settlement and Payment".
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC
OFFERING UNDERWRITING PROCEEDS TO
PRICE(1) DISCOUNT(2) COMPANY(1)(3)
------------------------------------------------
<S> <C> <C> <C>
Per Debenture............................... 99.785% 0.875% 98.910%
Total....................................... $99,785,000 $875,000 $98,910,000
</TABLE>
- ---------------
(1) Plus accrued interest from December 15, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(3) Before deducting estimated expenses of $275,000 payable by the Company.
------------------------
The Debentures offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that the
Debentures will be ready for delivery in book-entry form only through the
facilities of The Depository Trust Company in New York, New York, on or about
December 18, 1995, against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO. SALOMON BROTHERS INC
------------------------
The date of this Prospectus is December 13, 1995.
<PAGE> 2
AVAILABLE INFORMATION
Potlatch Corporation (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C., as well as the regional
offices of the Commission located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois, and 7 World Trade Center, Suite 1300, New York,
New York. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. In addition, reports, proxy statements and other information
about the Company are available for inspection at the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York, 10005, the Chicago Stock Exchange,
440 South LaSalle Street, Chicago, Illinois 60605, and the Pacific Stock
Exchange, 301 Pine Street, San Francisco, California 94104.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Debentures offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
thereto, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and the Debentures, reference is made to the Registration Statement and
the exhibits thereto. Statements contained in this Prospectus as to the contents
of any contract or other document are not necessarily complete and, in each
instance, reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. Copies of the Registration Statement, including
all exhibits thereto, may be obtained from the Commission's principal office in
Washington, D.C. upon payment of the fees prescribed by the Commission, or may
be examined without charge at the offices of the Commission described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission are hereby
incorporated by reference into this Prospectus: (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1994, (ii) the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30,
1995, and (iii) the Company's Current Report on Form 8-K dated December 8, 1995.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of the filing of the Registration
Statement of which this Prospectus is a part and prior to the termination of the
offering to which this Prospectus relates shall be deemed to be incorporated by
reference into this Prospectus and to be part of this Prospectus from the date
of filing thereof.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus and
the Registration Statement of which it is a part to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated herein modifies or replaces such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus or such Registration Statement. The
Company will provide without charge to each person to whom a copy of the
Prospectus has been delivered, and who makes a written or oral request, a copy
of any and all of the documents incorporated by reference in the Registration
Statement (other than exhibits unless such exhibits are specifically
incorporated by reference into such documents). Requests should be submitted in
writing or by telephone to Potlatch Corporation, One Maritime Plaza, San
Francisco, California 94111, Attention: Secretary (telephone (415) 576-8800).
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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<PAGE> 3
THE COMPANY
The Company is an integrated forest products company with substantial
timber resources. It is engaged principally in the growing and harvesting of
timber and the manufacture and sale of wood products, printing papers and other
pulp-based products. Its timberlands and all of its manufacturing facilities are
located within the continental United States.
FIBER RESOURCES. The principal source of raw material used in the
Company's operations is timber, obtained from its own timberlands and purchased
on the open market. The Company owns in fee approximately 1.5 million acres of
timberland: 497,000 acres in Arkansas, 678,000 acres in Idaho and 345,000 acres
in Minnesota. In addition, the Company owns and is developing 10,000 acres in
Oregon as a hybrid poplar tree farm for pulp fiber and in early 1996 will
acquire an additional 12,000 acres adjacent to the existing farm for this
purpose. The Company's fee lands provided approximately 59 percent of its
sawlogs and plywood logs in 1994 and an average of 62 percent over the past five
calendar years. Including the raw materials used for pulp and oriented strand
board, the percentages were 35% for 1994 and 38% for the past five calendar
years.
WOOD PRODUCTS. The Company manufactures and markets oriented strand board,
plywood, particleboard, lumber and other wood products. These products are sold
through the Company's sales offices primarily to wholesalers for nationwide
distribution. To produce these solid wood products, the Company owns and
operates several manufacturing facilities in Arkansas, Idaho and Minnesota.
PRINTING PAPERS. The Company produces coated free sheet printing papers at
two facilities in Minnesota. Coated papers are used for annual reports, showroom
catalogs, art reproductions and high quality advertising. Printing papers are
sold principally to paper merchants for distribution.
OTHER PULP-BASED PRODUCTS. The Company produces and markets bleached kraft
pulp and paperboard, tissue, toweling and napkins. The Company is a major
producer of bleached kraft paperboard in the United States. Bleached kraft
paperboard manufactured by the Company is used for the packaging of milk and
other foods, pharmaceuticals and toiletries, and for paper cups and paper
plates. The Company does not consider itself among the larger national
manufacturers of any of its other pulp-based products. However, the Company is
the leading west coast producer of private label household tissue products.
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<PAGE> 4
The following is a tabulation of selected business segment information for
each of the past three years and for the nine months ended September 30, 1995:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------ NINE MONTHS ENDED
(DOLLARS IN THOUSANDS) 1992 1993 1994 SEPT. 30, 1995
---------------------- ---- ---- ---- -----------------
<S> <C> <C> <C> <C>
SALES TO UNAFFILIATED CUSTOMERS:
WOOD PRODUCTS:
Oriented strand board......... $ 174,557 $ 194,514 $ 224,586 $ 151,167
Lumber........................ 159,080 196,544 196,577 134,416
Plywood....................... 65,462 72,815 73,413 56,293
Particleboard................. 10,642 14,593 17,058 11,603
Other......................... 17,017 25,159 41,078 28,236
---------- ---------- ---------- -----------
$ 426,758 $ 503,625 $ 552,712 $ 381,715
PRINTING PAPERS.................. $ 365,636 $ 369,012 $ 405,553 $ 334,580
OTHER PULP-BASED PRODUCTS:
Pulp.......................... $ 17,863 $ 12,915 $ 10,812 $ 17,950
Paperboard.................... 371,511 343,419 335,803 327,521
Tissue........................ 118,162 139,883 166,378 141,271
Packaging(1).................. 26,682 -- -- --
---------- ---------- ---------- -----------
$ 534,218 $ 496,217 $ 512,993 $ 486,742
TOTAL............................ $1,326,612 $1,368,854 $1,471,258 $ 1,203,037
OPERATING INCOME (LOSS):
Wood products................. $ 99,833 $ 160,220 $ 160,345 $ 85,050
Printing papers............... 27,316 15,796 40,174 46,258
Other pulp-based products..... 33,298 (40,944) (53,462) 51,026
---------- ---------- ---------- -----------
$ 160,447 $ 135,072 $ 147,057 $ 182,334
</TABLE>
- ---------------
(1) The Company's packaging operations were sold in April 1992.
The Company was incorporated under the laws of Maine in 1903 and was
reorganized in 1955 as a Delaware corporation. The Company's principal executive
offices are located at One Maritime Plaza, San Francisco, California 94111, and
its telephone number is (415) 576-8800.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Debentures
to redeem on or after April 15, 1996 $100,000,000 aggregate principal amount of
the Company's 9 5/8% Sinking Fund Debentures Due 2016. Pending such use, the
Company intends to use the net proceeds for general corporate purposes,
primarily for investment in short-term, investment grade obligations.
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<PAGE> 5
SELECTED HISTORICAL FINANCIAL INFORMATION
The following selected historical financial information for each of the
five years in the period ended December 31 set forth below has been derived from
the consolidated financial statements of the Company audited by KPMG Peat
Marwick LLP, independent certified public accountants. The historical financial
information for the nine months ended September 30, 1994 and 1995 is derived
from the unaudited financial statements of the Company and, in the opinion of
the Company, includes all adjustments, consisting only of normal recurring
adjustments, considered necessary for a fair presentation of such information.
The results of operations for interim periods are not necessarily indicative of
the results to be expected for the full year. The information below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Company's consolidated financial
statements and related notes incorporated herein by reference.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------ ------------------
(DOLLARS IN THOUSANDS) 1990 1991 1992 1993 1994 1994 1995
---------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales.................. $1,252,906 $1,236,988 $1,326,612 $1,368,854 $1,471,258 $1,083,726 $1,203,037
Costs and expenses:
Depreciation,
amortization and cost
of fee timber
harvested................ 86,154 96,924 107,165 123,544 138,251 104,426 100,796
Materials, labor and
other operating
expenses................. 924,303 945,888 1,006,887 1,064,260 1,121,491 838,347 875,165
Selling, general and
administrative
expenses................. 66,967 74,998 83,409 83,958 82,799 62,917 67,227
---------- ---------- ---------- ---------- ---------- ---------- ----------
$1,077,424 $1,117,810 $1,197,461 $1,271,762 $1,342,541 $1,005,690 $1,043,188
Earnings from
operations............... $ 175,482 $ 119,178 $ 129,151 $ 97,092 $ 128,717 $ 78,036 $ 159,849
Interest expense, net of
capitalized interest..... (30,775) (28,882) (34,902) (46,230) (51,137) (38,167) (36,203)
Interest and dividend
income................... 16,359 5,493 3,790 1,352 348 278 1,051
Other income (expense),
net...................... (8,728) (10,594) 26,575 12,790 (1,967) (4,776) 2,000
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings before taxes on
income and cumulative
effect of accounting
changes.................. $ 152,338 $ 85,195 $ 124,614 $ 65,004 $ 75,961 $ 35,371 $ 126,697
Provision for taxes on
income................... 53,726 29,393 45,700 26,665 26,966 13,264 47,511
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings before
cumulative effect of
accounting changes....... $ 98,612 $ 55,802 $ 78,914 $ 38,339 $ 48,995 $ 22,107 $ 79,186
Cumulative effect of
accounting changes for
postretirement benefits
and income taxes, net
of tax................... -- -- -- (31,704) -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings............... $ 98,612 $ 55,802 $ 78,914 $ 6,635 $ 48,995 $ 22,107 $ 79,186
========== ========== ========== ========== ========== ========== ==========
BALANCE SHEET DATA
Working capital............ $ 86,187 $ 125,190 $ 153,537 $ 129,138 $ 142,728 $ 120,437 $ 124,859
Total assets............... 1,731,248 1,908,631 2,015,747 2,085,652 2,081,229 2,061,169 2,160,155
Long-term debt............. 391,892 563,014 634,209 707,131 633,473 637,004 601,344
Stockholders' equity....... 896,122 914,750 955,581 919,664 920,207 908,327 947,692
</TABLE>
5
<PAGE> 6
RATIO OF EARNINGS TO FIXED CHARGES
The following information is qualified in its entirety by and should be
read in conjunction with the consolidated financial statements and other
information incorporated by reference herein. See "Incorporation of Certain
Documents by Reference".
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ --------------
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1)..... 4.8x 2.5x 3.0x 2.1x 2.3x 1.8x 4.0x
</TABLE>
- ---------------
(1) For the purpose of computing this ratio, earnings represent earnings before
taxes on income and fixed charges, excluding capitalized interest. Fixed
charges represent interest expense, including capitalized interest,
one-third of total rental expense, and amortization of discount and loan
expense related to long-term debt.
DESCRIPTION OF THE DEBENTURES
The Debentures are to be issued under an Indenture dated as of December 18,
1995 (the "Indenture") between the Company and First Trust of California,
National Association, as trustee (the "Trustee"), a copy of which has been filed
as an exhibit to the Registration Statement. The following summaries of certain
provisions of the Debentures and the Indenture do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture, including the definitions therein of certain terms.
Whenever particular provisions or defined terms in the Indenture are referred
to, such provisions or defined terms are incorporated herein by reference.
Section references used herein are references to the Indenture. Capitalized
terms not otherwise defined herein shall have the meanings given to them in the
Indenture.
GENERAL
The Debentures offered hereby will mature on December 15, 2015. The
Debentures will bear interest at the rate per annum shown on the cover of this
Prospectus from December 15, 1995, payable semiannually on June 15 and December
15 of each year (each, an "Interest Payment Date"), commencing June 15, 1996, to
the persons in whose names the Debentures are registered at the close of
business on the June 1 and December 1, as the case may be, next preceding such
Interest Payment Date. The Debentures will not be redeemable prior to maturity
and are not entitled to any sinking fund. The Debentures will be nonconvertible,
unsecured obligations of the Company limited to $100,000,000 aggregate principal
amount and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The Debentures will be issued in minimum
denominations of $100,000 and integral multiples of $1,000 in excess thereof.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
No service charge will be made for any registration of transfer of
Debentures, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The provisions of the Indenture and the Debentures would not necessarily
afford protection to owners of the Debentures in the event of a highly leveraged
transaction involving the Company. The Indenture does not limit the amount of
additional unsecured indebtedness that may be incurred by the Company or any of
its Subsidiaries.
BOOK-ENTRY PROCEDURES
Upon issuance, the Debentures will be represented by one or more global
securities that will be deposited with, or on behalf of, The Depository Trust
Company (the "Depositary") in The City of New York, and will be registered in
the name of the Depositary or a nominee of the Depositary.
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<PAGE> 7
Ownership of beneficial interests in the global security or securities
representing the Debentures will be limited to institutions that have accounts
with the Depositary or its nominee ("participants") or persons that may hold
interests through participants. In addition, ownership of beneficial interests
by participants in such global security or securities will only be evidenced by,
and the transfer of that ownership interest will only be effected through,
records maintained by the Depositary or its nominee for such permanent global
security. Ownership of beneficial interests in the global securities by persons
that hold through participants will only be evidenced by, and the transfer of
that ownership interest within such participant will only be effected through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such laws may impair the ability to transfer beneficial
interests in such a global security.
The Company has been advised by the Depositary that upon the issuance of
the global security or securities representing the Debentures, the Depositary
will immediately credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debentures represented by such global
security or securities to the accounts of participants. The accounts to be
credited shall be designated by the Underwriters.
Payment of principal and interest on Debentures represented by a permanent
global security registered in the name of or held by the Depositary or its
nominee will be made to the Depositary or its nominee, as the case may be, as
the registered owner and Holder of the permanent global security representing
such Debentures. None of the Company, the Trustee or any agent of the Company or
the Trustee will have any responsibility or liability for any aspect of the
Depositary's records or any participant's records relating to, or payments made
on account of, beneficial ownership interests in a permanent global security
representing such Debentures or for maintaining, supervising or reviewing any of
the Depositary's records or any participant's records relating to such
beneficial ownership interests.
The total amount of any principal and interest due on any global security
representing one or more Debentures on any Interest Payment Date or at maturity
will be made available to the Trustee on such date. As soon as possible
thereafter, the Trustee will make such payments to the Depositary. The Company
has been advised by the Depositary that upon receipt of any payment of principal
of or interest in respect of a permanent global security, the Depositary will
immediately credit, on its book-entry registration and transfer system, accounts
of participants with payments in amounts proportionate to their respective
beneficial interests in the principal amount of such permanent global security
as shown on the records of the Depositary. Payments by participants to owners of
beneficial interests in a permanent global security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in "street name," and will be the sole responsibility of such participants.
No permanent global security described above may be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to such Depositary or another nominee of the Depositary or by such
Depositary or any such nominee to a successor depositary or nominee thereof.
A permanent global security representing the Debentures will be
exchangeable for definitive Debentures in registered form, of like tenor and of
an equal aggregate principal amount, only if (x) the Depositary notifies the
Company that it is unwilling or unable to continue as depositary for such
permanent global security or if at any time the Depositary ceases to be a
clearing agency registered under the Exchange Act, and the Company has not
appointed a successor depositary within 90 days, (y) the Company in its sole
discretion determines that such permanent global security shall be exchangeable
for definitive Debentures in registered form or (z) any event shall have
happened and be continuing which, after notice or lapse of time, or both, would
become an Event of Default with respect to the Debentures and the beneficial
owners of a majority in aggregate principal amount of the Debentures represented
by such global security advise the Depositary to
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<PAGE> 8
cease acting as depositary and the Depositary so advises the Company in writing.
Any permanent global security that is exchangeable pursuant to the preceding
sentence shall be exchangeable in whole for definitive Debentures in registered
form, of like tenor and of an equal aggregate principal amount, in denominations
of $100,000 and integral multiples of $1,000 in excess thereof. Such definitive
Debentures shall be registered in the name or names of such person or persons as
the Depositary shall instruct the Trustee. It is expected that such instructions
may be based upon directions received by the Depositary from its participants
with respect to ownership of beneficial interests in such permanent global
security.
Except as described above, owners of beneficial interests in the global
securities representing the Debentures will not be entitled to receive physical
delivery of Debentures in definitive form and will not be considered the Holders
thereof for any purpose under the Indenture, and no permanent global security
representing the Debentures shall be exchangeable, except for another permanent
global security of like denomination and tenor to be registered in the name of
the Depositary or its nominee. Accordingly, each person owning a beneficial
interest in such permanent global security must rely on the procedures of the
Depositary and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any rights
of a Holder under the Indenture. The Depositary, as a Holder, may appoint agents
and otherwise authorize participants to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action which a Holder
is entitled to give or take under the Indenture. The Company understands that
under existing industry practices, in the event that the Company requests any
action of Holders or an owner of a beneficial interest in such permanent global
security desires to give or take any action that a Holder is entitled to give or
take under the Indenture, the Depositary would authorize the participants
holding the relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
The Depositary has advised the Company that the Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. The Depositary
holds securities that its participants deposit with the Depositary. The
Depositary also facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. The Depositary is owned
by a number of its direct participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the Depositary's system is also available to others such
as securities brokers and dealers, banks and trust companies that clear through
or maintain a custodial relationship with a direct participant, either directly
or indirectly. The rules applicable to the Depositary and its participants are
on file with the Commission.
SAME-DAY FUNDS SETTLEMENT AND PAYMENT
Settlement for the Debentures will be made by the Underwriters in
immediately available funds. All payments of principal and interest on the
Debentures will be made by the Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
Debentures will trade in the Depositary's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Debentures will therefore
be required by the Depositary to settle in immediately available funds. No
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<PAGE> 9
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the Debentures.
RESTRICTIONS ON SECURED DEBT
The Company will covenant in the Indenture that it will not, nor will it
permit any Subsidiary to, create, assume or incur any Lien (except any existing
on the date of the Indenture) upon any of its or their Principal Properties,
whether owned at such date or thereafter acquired, as security for any
Indebtedness without making effective provision, and the Company will covenant
in the Indenture that in any such case effective provision will be made, whereby
the Debentures shall be secured equally and ratably with (or, at the option of
the Company, prior to) any and all other obligations and Indebtedness thereby
secured; provided, however, that the foregoing restriction shall not apply to:
(a) Liens upon any property or assets owned by any Subsidiary when it became a
Subsidiary; (b) Liens on any property or assets existing at the time of its or
their acquisition and Liens on any property or assets acquired, constructed or
improved which are created contemporaneously with or within 180 days after (or
created pursuant to financing arrangements, a firm commitment for which is
obtained within 180 days after) the completion of such acquisition, improvement
or construction to secure or provide for payment of the purchase price of
property or assets acquired or the cost of such construction or improvement,
including Liens arising in connection with cross-border or defeased lease
arrangements; (c) certain tax Liens or governmental charges and materialmen's,
mechanics', landlords' or other like Liens securing obligations not overdue or
which shall be contested in good faith; (d) certain pledges or deposits; (e) any
lease; (f) Liens to secure payments under any contract or statute, or to secure
any Indebtedness incurred in financing the acquisition, construction or
improvement of property subject thereto, including Liens on, and created or
arising in connection with the financing of, certain facilities through the
issuance of obligations by a state or local governmental unit; (g) easements or
similar encumbrances, the existence of which does not materially impair the use
of the Principal Property subject thereto for the purposes for which it is held
or was acquired; (h) Liens arising out of any final judgment for the payment of
money aggregating not in excess of $10,000,000 or Liens arising out of any
judgments which are being contested in good faith; (i) Liens on Timberlands in
connection with an arrangement under which the Company or a Subsidiary is
obligated to cut or pay for timber in order to provide the Lienholder with a
specified amount of money, however determined; (j) Liens created or assumed in
the ordinary course of the business of exploring for, developing or producing
oil, gas or other minerals (including borrowings in connection therewith) on, or
on any interest in, or on any proceeds from the sale of property acquired for
such purposes, production therefrom (including the proceeds thereof), or
material or equipment located thereon; and (k) Liens to extend, renew or replace
any Liens referred to in clauses (a) through (j) or this clause (k) or any Lien
existing on the date of the Indenture. Notwithstanding the above, the Company or
any Subsidiary may create, assume or incur any Lien that would otherwise be
subject to the foregoing restriction, provided that at no time shall the
aggregate amount of all outstanding obligations and Indebtedness secured by
Liens that would otherwise be prohibited by the above, plus the aggregate amount
of Attributable Debt in respect of sale and leaseback transactions described in
the next succeeding paragraph (other than any such transactions to the extent
that the cash portion of the net proceeds of the sale of such property shall
have been applied in compliance with clause (b) of the following paragraph),
exceed 10% of Consolidated Net Tangible Assets at the end of the immediately
preceding fiscal year of the Company (Section 1005).
RESTRICTIONS ON SALE AND LEASEBACK TRANSACTIONS
The Company will covenant in the Indenture that it will not, and will not
permit any Subsidiary to, directly or indirectly, sell or transfer (other than
to the Company or a Subsidiary) any Principal Property (other than Principal
Property sold or transferred to an industrial development corporation or state
or local governmental unit in connection with a revenue or pollution control
financing) owned on the date of the Indenture or thereafter acquired with the
intention that the Company or any
9
<PAGE> 10
Subsidiary shall take back a lease thereof (other than a lease for a term of not
more than three years, a lease entered into solely for tax purposes, or a
cross-border or defeased lease arrangement) unless (a) proceeds of such sale
shall at least be equal to the fair value (as determined in good faith by the
Board of Directors) of such Principal Property, and either (b) an amount equal
to the cash portion of the net proceeds of such sale shall be applied within 180
days either before or after the effective date of any such transaction (i) to
the retirement of Funded Indebtedness (other than any thereof owed to the
Company or any Subsidiary) or (ii) to the purchase of property, facilities or
equipment (other than the property, facilities or equipment involved in such
sale) having a value at least equal to the cash portion of the net proceeds of
such sale or (c) the property, facilities or equipment involved in such sale
could have been subjected to a Lien to secure Indebtedness in a principal amount
equal to the aggregate amount of Attributable Debt in respect of such sale
without equally and ratably securing the Debentures pursuant to the preceding
paragraph (Section 1006).
CERTAIN DEFINITIONS
"Attributable Debt" means, as to any particular lease (other than a
cross-border or defeased lease arrangement) entered into after the date of the
Indenture, the total net amount of rent required to be paid by such Person under
such lease during the remaining term thereof, discounted to present value as of
such time in accordance with generally accepted accounting principles from the
respective due dates thereof to such date.
"Consolidated Net Tangible Assets" means the total amount of assets of the
Company and its consolidated Subsidiaries (less applicable reserves) after
deducting therefrom: (a) all current liabilities of the Company and its
consolidated Subsidiaries (excluding intercompany items among the Company and
its consolidated Subsidiaries and excluding any current liabilities constituting
Funded Indebtedness by reason of being renewable or extendable and excluding
deferred income taxes) and (b) goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, such assets
and exclusions and deductions therefrom to be in such amounts, if any, as would
appear on a consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the date of computation, prepared in accordance with
generally accepted accounting principles applied on a consistent basis.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind.
"Principal Property" means (a) any building, structure or other facility in
the United States used primarily for manufacturing, in each case the gross book
value (without deduction of any depreciation reserves) of which on the date as
of which the determination is being made shall exceed 10% of Consolidated Net
Tangible Assets, and (b) any Timberlands in the United States owned in fee or
under contract for the purchase of the fee by the Company or any Subsidiary
other than such Timberlands in the aggregate not exceeding 10% of the
Timberlands acreage in the United States owned in fee or under contract for the
purchase of the fee by the Company or any Subsidiary on the date as of which any
determination shall be made; provided, however, that the term "Principal
Property" shall not include any Timberlands, buildings, structures, facilities
or any portion of any of the foregoing which, in the opinion of the Board of
Directors of the Company, shall not be of material importance to the total
business conducted by the Company and its Subsidiaries taken as an entirety; and
provided, further, that the term "Principal Property" shall not include any
land, including without limitation Timberlands, designated by the Board of
Directors as being held primarily for development or sale, or any land,
including without limitation Timberlands, held for the exploitation of minerals
or mineral rights.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not consolidate with or merge into any other Corporation or
transfer its properties and assets substantially as an entirety to any Person
unless (a) the Corporation formed
10
<PAGE> 11
by such consolidation or into which the Company is merged or the Person to which
the properties and assets of the Company are so transferred shall be a
Corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia and shall expressly assume the payment
of the principal of and interest on the Debentures and the performance of the
other covenants of the Company under the Indenture, (b) immediately after giving
effect to such transaction, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing, and (c) such surviving Corporation or such Person,
as the case may be, shall not immediately thereafter have outstanding
Indebtedness secured by any Liens not permitted by the Indenture or shall have
secured the Debentures equally and ratably with (or, at the option of the
Company, prior to) any Indebtedness secured thereby (Section 801).
The Company may not lease its properties and assets substantially as an
entirety to any Person (Section 803).
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to the Debentures as
being any one of the following events: (i) default for 30 days in any payment of
interest on any Debenture; (ii) default in the payment of principal of any
Debenture when due; (iii) default, for 60 days after appropriate notice, in
performance of any other covenant or warranty in the Indenture; and (iv) certain
events of bankruptcy, insolvency or reorganization. In case an Event of Default
shall occur and be continuing, the Trustee or the Holders of not less than 25%
in aggregate principal amount of all of the Outstanding Debentures may declare
the principal amount to be due and payable immediately (Sections 501 and 502).
The Indenture requires the Company to file annually with the Trustee an
officers' certificate as to whether there has been any default under the terms
of the Indenture (Section 1008). The Indenture provides that the Trustee may
withhold notice to the Holders of the Debentures of any default (except in
payment of principal or interest) if it considers such to be in the interest of
the Holders of the Debentures (Section 602).
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Indenture
provides that the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of the
Holders of the Debentures unless such Holders shall have offered to the Trustee
reasonable indemnity (Section 603). Subject to such provisions for
indemnification and certain other rights of the Trustee, the Indenture provides
that the Holders of a majority in aggregate principal amount of the Outstanding
Debentures shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Debentures
(Sections 512 and 603).
No Holder of any Debenture will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder unless (i) such
Holder shall have previously given to the Trustee written notice of a continuing
Event of Default, (ii) the Holders of at least 25% in aggregate principal amount
of all of the Outstanding Debentures shall have made written request to the
Trustee to institute such proceeding as Trustee, (iii) such Holder or Holders
shall have offered to the Trustee reasonable indemnity, (iv) the Trustee shall
have failed to institute such proceeding within 60 days after receipt of notice
from such Holders, and (v) the Trustee shall not have received from the Holders
of a majority in aggregate principal amount of the Outstanding Debentures a
direction inconsistent with such request (Section 507). However, the Holder of
any Debenture will have an absolute right to receive payment of the principal of
and interest on such Debenture when due and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder (Section 508).
11
<PAGE> 12
MODIFICATION AND WAIVER
Certain modifications and amendments of the Indenture may be made by the
Company and the Trustee only with the consent of the Holders of not less than a
majority in aggregate principal amount of all of the Outstanding Debentures,
provided that no such modification or amendment may, without the consent of the
Holder of each Outstanding Debenture affected thereby, (i) change the Stated
Maturity of the principal of, or any installment of interest on, any such
Debenture; (ii) reduce the principal amount of or the rate of interest on, any
such Debenture; (iii) change the place of payment where, or the coin or currency
in which, any principal of and interest on any such Debenture is payable; (iv)
impair the right to institute suit for the enforcement of any such payment on or
with respect to any such Debenture; (v) reduce the above-stated percentage of
Outstanding Debentures the consent of the Holders of which is necessary to
modify or amend the Indenture; or (vi) modify the foregoing requirements or
reduce the percentage of aggregate principal amount of Outstanding Debentures
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults (Section 902).
The Holders of not less than a majority in aggregate principal amount of
all of the Outstanding Debentures may on behalf of the Holders of all Debentures
waive (i) compliance by the Company with certain restrictive provisions of the
Indenture (Section 1009) or (ii) compliance by the Company with any other
provision of the Indenture, including a past default under the Indenture, except
a default in the payment of the principal of or interest on any Debenture or in
respect of a provision which under the Indenture cannot be modified or amended
without the consent of the Holder of each Outstanding Debenture affected
(Sections 513 and 902).
DEFEASANCE OF DEBENTURES OR CERTAIN COVENANTS
DEFEASANCE AND DISCHARGE. The Indenture provides that the Company shall be
deemed to have paid and discharged all obligations in respect of the Debentures
(except for certain obligations to register the transfer or exchange of
Debentures, to replace stolen, lost or mutilated Debentures, to maintain paying
agencies and hold money for payment in trust) on the 93rd day after the date of
deposit with the Trustee, in trust, of money or U.S. Government Obligations,
which through the payment of interest and principal in respect thereof in
accordance with their terms will provide money in an amount sufficient to pay
each installment of principal and interest on the Debentures on the Stated
Maturity of such payments, in accordance with the terms of the Indenture and
such Debentures. Such discharge may only occur if, among other things, the
Company has received from, or there has been published by, the United States
Internal Revenue Service a ruling to the effect that Holders of the Debentures
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to federal
income tax on the same amount, and in the same manner and at the same time, as
would have been the case if such deposit, defeasance and discharge had not
occurred (Section 403).
DEFEASANCE OF CERTAIN COVENANTS. The Indenture provides that the Company
may elect to omit to comply with the restrictive covenants of the Indenture
described herein under "Restrictions on Secured Debt" and "Restrictions on Sale
and Leaseback Transactions" if the Company deposits with the Trustee, in trust,
money or U.S. Government Obligations, which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay each installment of principal and interest on the
Debentures on the Stated Maturity of such payments, in accordance with the terms
of the Indenture and such Debentures. Such a trust may only be established if,
among other things, the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of the Debentures will not recognize
income, gain or loss for federal income tax purposes as a result of such deposit
and defeasance of certain covenants and will be subject to federal income tax on
the same amount, and in the same manner and at the same times, as would have
been the case if such deposit and defeasance had not occurred (Section 1007).
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<PAGE> 13
DEFEASANCE AND EVENTS OF DEFAULT. In the event the Company omits to comply
with certain covenants of the Indenture with respect to the Debentures as
described above and the Debentures are declared due and payable because of the
occurrence of any Event of Default, the amount of money and U.S. Government
Obligations on deposit with the Trustee will be sufficient to pay amounts due on
the Debentures at the time of their Stated Maturity, but may not be sufficient
to pay amounts due on the Debentures at the time of the acceleration resulting
from such Event of Default. However, the Company will remain liable for such
payments.
CERTAIN INFORMATION REGARDING THE TRUSTEE
The Trustee serves as trustee under two other Indentures pursuant to which
debt securities of the Company are outstanding. In addition, an affiliate of the
Trustee acts as trustee for several tax-exempt revenue bonds issued by local
governments in connection with the financing of certain capital projects of the
Company.
GOVERNING LAW
The Indenture and the Debentures will be governed by the laws of the State
of New York.
13
<PAGE> 14
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the underwriters named
below (the "Underwriters"), and each of the Underwriters has severally agreed to
purchase, the principal amount of the Debentures set forth opposite the name of
each such Underwriter below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER DEBENTURES
--------------------------------------------------------------------- ------------
<S> <C>
Goldman, Sachs & Co. ................................................ $ 66,650,000
Salomon Brothers Inc................................................. 33,350,000
------------
Total...................................................... $100,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Debentures, if any are
taken.
The Underwriters propose to offer Debentures in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus, and in part to certain securities dealers at such price less a
concession of 0.50% of the principal amount of the Debentures. The Underwriters
may allow, and such dealers may reallow, a concession not to exceed 0.25% of the
principal amount of the Debentures to certain brokers and dealers. After the
Debentures are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Underwriters.
The Debentures are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that they intend to
make a market in the Debentures but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Debentures.
Settlement for the Debentures will be made in immediately available funds
and all secondary trading in the Debentures will settle in immediately available
funds. See "Description of the Debentures -- Same-Day Funds Settlement and
Payment".
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
Goldman, Sachs & Co. and Salomon Brothers Inc perform various investment
banking services for the Company in the ordinary course of business.
LEGAL MATTERS
The validity of the Debentures offered hereby will be passed upon for the
Company by Pillsbury Madison & Sutro LLP, San Francisco, California, and certain
legal matters will be passed upon for the Underwriters by Shearman & Sterling,
San Francisco, California. Toni Rembe, a member of Pillsbury Madison & Sutro
LLP, is a director of the Company and at September 30, 1995 owned 2,957 shares
of the Company's Common Stock.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1994, and for each of the years in the three-year period ended
December 31, 1994, have been incorporated by reference herein in reliance upon
the report, incorporated by reference herein, of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG Peat Marwick LLP covering
the December 31, 1994 financial statements refers to changes made in 1993 to the
Company's method of accounting for income taxes, post-retirement benefits other
than pensions and post-employment benefits.
14
<PAGE> 15
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
The Company............................... 3
Use of Proceeds........................... 4
Selected Historical Financial
Information............................. 5
Ratio of Earnings to Fixed Charges........ 6
Description of the Debentures............. 6
Underwriting.............................. 14
Legal Matters............................. 14
Experts................................... 14
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</TABLE>
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$100,000,000
POTLATCH CORPORATION
6.95% DEBENTURES
DUE DECEMBER 15, 2015
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LOGO
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GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
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