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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________.
Commission File Number 1-7852
POPE & TALBOT, INC.
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(Exact name of registrant as specified in its charter)
Delaware 94-0777139
- --------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1500 SW 1st Avenue, Portland, Oregon 97201
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (503) 228-9161
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of each class on which registered
------------------- ---------------------
Common Shares, par value $1.00 New York Stock Exchange
Common Shares, par value $1.00 Pacific Stock Exchange
6% Convertible Subordinated Debentures,
Due March 1, 2012 New York Stock Exchange
8-3/8% Debentures, Due June 1, 2013 None
Securities registered pursuant to Section 12(g) of the Act: None
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 or any
amendment to this Form 10-K. [ ]
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 _____
The aggregate market value of voting stock held by nonaffiliates of the
registrant is $361,801,079 as of March 14, 1994 ($28.625 per share).
13,355,680
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(Number of shares of common stock outstanding as of March 14, 1994)
Part I and Part II incorporate specified information by reference from the
annual report to shareholders for the year ended December 31, 1993. Part III
incorporates specified information by reference from the proxy statement for
annual meeting of shareholders on April 25, 1994.
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PART I
Item 1. Business
INTRODUCTION AND DEVELOPMENTS IN 1993
Pope & Talbot is engaged principally in the wood products and pulp and
paper businesses. The Company's wood products business involves the
manufacture and sale of standardized and specialty lumber and wood chips. In
its pulp and paper business, the Company manufactures and sells a full line of
private label consumer tissue and disposable diaper products, bleached kraft
pulp for newsprint and writing paper, and brokers wood chips. During 1993,
wood products accounted for approximately 48 percent of the Company's revenues,
consumer tissue accounted for 17 percent, disposable diapers 27 percent and
bleached kraft pulp and brokered wood chips 8 percent.
The Company, a Delaware corporation, was originally incorporated as a
California corporation in 1940. It is the successor to a partnership formed in
San Francisco, California in 1849 that acquired its first timberlands and
opened a lumber mill in the Seattle, Washington area in 1853. Subsequently,
the Company developed a lumber business based on timberland and facilities in
the U.S. Pacific Northwest, British Columbia, Canada, and the Black Hills
region of South Dakota and Wyoming.
Since the mid-1980s, the Company has reduced its dependency on timber
from the Pacific Northwest, where environmental concerns about the preservation
of old-growth forests have sharply restricted the availability and increased
the cost of public timber. At the same time, the Company has increased its
operations in regions of more stable timber supplies, particularly in British
Columbia and the Black Hills region of South Dakota and Wyoming. In 1985, the
Company distributed its timber and land development properties in the State of
Washington to its stockholders through interests in a newly formed master
limited partnership. In 1990, the Company sold its Oregon sawmill, and the
Company has since sold its remaining Oregon timberlands. In 1992, the Company
acquired a 225 million board feet capacity sawmill and related timber cutting
rights in Castlegar, British Columbia. The Company currently operates six
sawmills with an estimated annual capacity of 785 million board feet, of which
approximately 80% is located in British Columbia and the Black Hills.
In order to expand and broaden its sources of revenue, the Company
acquired its pulp, consumer tissue and disposable diaper businesses in the late
1970s and 1980s. The Halsey, Oregon pulp mill produces bleached kraft pulp
which is sold in the open market and to newsprint and writing paper
manufacturers in the Pacific Northwest. The Company's private label tissue
business manufactures towels, napkins, bathroom tissue and facial tissue from
recycled paper at two mills in the U.S. Disposable diapers are produced by the
Company at four mills in the U.S. The Company sells its tissue and diaper
products under private labels to supermarkets, drugstores, mass merchandisers
and food and drug distribution companies. In 1992, the Company commenced a
program to reduce costs and improve operating efficiencies in these businesses,
resulting in the consolidation of one tissue mill and one diaper plant. The
Company is also presently in the process of making significant product and cost
improvements to its pulp mill.
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The businesses in which the Company is engaged are extremely
competitive, and a number of the Company's competitors are substantially larger
than the Company with correspondingly greater resources. In particular,
competition in the tissue products and disposable diaper markets is extremely
strong, both in terms of price and product innovation. See "Pulp and Paper
Products Business - Paper Products."
Environmental regulations to which the Company is subject require the
Company from time to time to incur significant expenditures. In addition, as
discussed herein, environmental concerns have in the past materially affected
the availability and cost of raw materials used in the Company's business. See
"Wood Products Business."
WOOD PRODUCTS BUSINESS
The Company's wood products business involves the manufacture and sale
of standardized and specialty lumber and wood chips. The Company's principal
wood product categories and the sales generated by each over the past three
years are set forth in the following table:
Thousands
--------------------------------
Classes of Wood Products 1993 1992 1991
- ------------------------ ---- ---- ----
Lumber $256,842 $176,544 $120,336
Wood chips 29,695 26,376 23,137
Logs and other 13,498 11,247 9,544
------- ------- -------
Total wood products sales $300,035 $214,167 $153,017
======= ======= =======
In 1993, lumber revenues increased $80.3 million, or 45 percent,
compared with 1992. These increased revenues in 1993 were due mainly to higher
lumber sales prices, but also to greater lumber sales volumes due to operating
the Castlegar, British Columbia sawmill throughout 1993. In 1992, lumber
revenues increased $56.2 million, or 47 percent, compared with 1991. These
increased revenues were due to higher lumber sales volume, primarily from the
second quarter acquisition of the Castlegar, British Columbia sawmill, combined
with higher lumber sales prices.
The Company's lumber products consist principally of boards and
dimension lumber, some of which are specialty, value-added items, such as
stress-rated lumber. Wood chips and other similar materials are obtained as a
by-product of the Company's lumber operations. Wood chips are also obtained
from direct chipping of whole logs.
The principal sources of raw material for the Company's wood products
operations are timber obtained through long-term cutting licenses on public
lands, logs purchased in open log markets, timber offered for sale via
competitive bidding by federal and state agencies and private sources, and
timber purchased under long-term contracts to cut timber on private and public
lands.
Approximately 80% of the Company's current lumber capacity is located in
regions of relatively stable timber supply, namely Canada and the Black Hills
region of South Dakota and Wyoming. In Canada, timber requirements are
obtained primarily from the Provincial Government of British Columbia under
long-term timber harvesting licenses which allow the Company to remove timber
from defined areas annually on a sustained yield basis. Approximately 15
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percent of the Company's Canadian log requirements are satisfied through open
market log purchases. In the Black Hills, the Company obtains its timber from
various public and private sources under long-term timber harvesting contracts
in addition to buying logs on open markets. Under these licenses and
contracts, prices are subject to periodic adjustment based upon formulas set
forth therein. Additionally, the Provincial Government of British Columbia has
the authority to modify prices and harvest volumes at any time. In the
Northwest, the Company obtains its timber primarily via competitive bidding on
timber offered by federal and state agencies and private sources. Decreased
availability of federal timber caused primarily by pressures from
environmental groups to curtail harvests from public lands, thereby protecting
old-growth forests, combined with strong export demand for logs, has resulted
in reduced wood supplies in Oregon and Washington, particularly affecting the
Company's Port Gamble sawmill. The Northwest's highly competitive log supply
environment caused the Company to reduce production at its Port Gamble sawmill
to 74% of capacity in 1993. Although no assurances can be given, the Company
believes that purchases from public agencies and private sources, in addition
to its existing long-term cutting rights, will be adequate to sustain current
lumber production levels at the Company's sawmills, with the exception of Port
Gamble which will continue to operate based upon log availability.
Marketing and Distribution. The Company's lumber products are sold
primarily to wholesalers. Wood chips produced by the Company's sawmills are
sold to manufacturers of pulp and paper in the U.S. and Canada. Sales of logs
are made to other domestic forest products companies and to international
trading companies.
Marketing of the Company's wood products is centralized in its Portland,
Oregon offices. The Company does not have distribution facilities at the
wholesale or retail level. The Company sold wood products to numerous
customers during 1993, the ten largest of which accounted for approximately 32%
of total wood products sales. No wood products customer accounted for more
than 10% of the Company's revenues in 1993.
Backlog. The Company maintains a minimal finished goods inventory of
wood products. At December 31, 1993, orders were approximately $11.2 million,
compared with approximately $8.9 million at December 31, 1992. This was an
average order file for the Company and generally would be shipped in two weeks
to one month. The increase from 1992 to 1993 reflects increased lumber sales
prices.
Competition. The wood products industry is highly competitive, with a
large number of companies producing products that are reasonably standardized.
There are numerous competitors of the Company that are of comparable size or
larger, none of which is believed to be dominant. With the 1992 Castlegar
sawmill acquisition, the Company believes it is one of the larger lumber
producers in North America. The principal means of competition in the
Company's wood products business are pricing and an ability to satisfy customer
demands for various types and grades of lumber and other finished products.
For further information regarding amounts of revenue, operating profit
and loss and identifiable assets attributable to the wood products industry
segment, see Note 11 of "Notes to Consolidated Financial Statements" in the
Company's 1993 Annual Report to Shareholders.
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PULP AND PAPER PRODUCTS BUSINESS
The Company's principal pulp and paper products categories and the sales
generated by each over the last three years are set forth in the following
table:
Thousands
----------------------------
Classes of Pulp and Paper Products 1993 1992 1991
- ---------------------------------- ---- ---- ----
Tissue products $105,040 $114,647 $138,551
Disposable diapers 170,128 139,515 118,511
Bleached kraft pulp 40,319 63,410 74,885
Brokered wood chips 13,404 12,606 17,311
------- ------- -------
Total pulp and paper products sales $328,891 $330,178 $349,258
======= ======= =======
Pulp and paper revenues were essentially unchanged from 1992 to 1993 as
increased disposable diaper revenues were offset by lower tissue and pulp
revenues. The improved diaper revenues resulted from a 21 percent increase in
sales volume. Tissue and pulp volumes were off approximately 8 percent and 28
percent, respectively, from 1992 to 1993, while tissue prices dropped 1 percent
and pulp prices fell 12 percent during this same period. Pulp and paper
revenues decreased $19.1 million, or 5 percent, from 1991 to 1992, due mainly
to tissue and pulp volume and price reductions. From 1991 to 1992, tissue and
pulp volumes fell approximately 12 percent and 8 percent, respectively, while
prices dropped 6 percent for tissue and 9 percent for pulp. Diaper
improvements from 1991 to 1992 only partially offset the tissue and pulp
reductions as diaper volumes and average prices increased 10 percent and 6
percent, respectively.
1. PAPER PRODUCTS
The Company produces a full line of private label consumer tissue
products including towels, napkins, bathroom tissue, and facial tissue. The
Company also produces disposable diapers. All of these products are sold under
private and controlled labels.
The raw material for the Company's tissue mills is wastepaper purchased
from wastepaper dealers located in the upper Midwest, mid- Atlantic and, to a
lesser extent, on the East Coast. The principal raw material for disposable
diapers is fluff pulp, which is produced by pulp and paper manufacturers
throughout the United States. The Company believes that there will continue to
be an adequate supply of wastepaper and fluff pulp in the foreseeable future.
Marketing and Distribution. The Company utilizes its own sales force
and some retail consumer products brokers to sell its products to supermarkets,
drugstores, mass merchandisers and food and drug distribution companies. The
Company's products enjoy national distribution; however, the majority are sold
east of the Rocky Mountains. Sales to the Company's ten largest paper products
customers represented 54 percent of tissue products and diaper sales in 1993.
No single paper products customer accounted for 10 percent or more of total
Company revenues in 1993.
Backlog. The Company carries a minimal finished goods inventory in
tissue products and disposable diapers. At the end of 1993 the order file was
approximately $13.3 million compared to a backlog of approximately $7.9 million
at December 31, 1992. The higher order backlog at year-end 1993 than
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year-end 1992 relates to timing of order receipts and is not indicative of a
business trend. This backlog is generally shipped in less than one month.
Competition. The tissue market is extremely competitive, with
approximately 10 major producers. Of these, James River Corporation, Scott
Paper Company, Procter & Gamble Corporation and Fort Howard Paper Company are
dominant and account for approximately 64 percent of the market. Within the
tissue market, the Company estimates that the private label tissue segment
accounts for approximately 9 percent to 22 percent of the total, depending on
the product.
In the tissue business, continued low industry operating rates resulting
from industry capacity increases in recent years which have exceeded demand
growth, coupled with aggressive pricing by tissue producers, has resulted in an
extremely competitive tissue pricing environment. The Company's tissue mills
operated at 97 percent of capacity in 1993. Overall, prices for the Company's
tissue have fallen an average 13 percent from 1989 when tissue prices first
began to decline. This 13 percent price reduction includes decreases of 6
percent in 1992 and 1 percent in 1993.
Of the disposable diaper market, the Company estimates that
approximately 82 percent is in branded products, with the remaining 18 percent
relating to private label products. There are four major producers in the
disposable diaper business. Procter & Gamble and Kimberly- Clark are dominant
with a combined 76 percent of the market, all of which is in branded products.
Paragon Trade Brands, Inc. is the largest producer in the private label market
segment, followed by the Company with approximately 4 percent of the disposable
diaper market.
National branded manufacturers have introduced numerous and frequent
product innovations that have resulted in major improvements in infant
disposable diaper absorbency, leakage prevention and fit. The national branded
manufacturers have substantially larger research and development budgets than
the Company and are able to develop product innovations more rapidly than the
Company and may thereby gain market share at the Company's expense. While in
recent years the Company has been able to introduce product enhancements
comparable to those introduced by the national branded manufacturers, there can
be no assurance that the Company will be able to continue to introduce
comparable product innovations on a profitable basis or that the Company will
continue to be able to introduce such product innovations at the pace required
to remain competitive with the national branded manufacturers.
The Company believes that its national distribution capabilities, its
full product line and its reputation as a private label supplier enhance its
market efforts.
2. PULP PRODUCTS
The Company owns a pulp mill and supporting facilities at Halsey,
Oregon. This mill produces bleached kraft pulp which is sold in various forms
in the open market and to newsprint and writing paper manufacturers in the
Pacific Northwest. The mill also produces a flash dried pulp which is sold in
the open market. In conjunction with the fiber acquisition program for the
pulp mill, the Company brokers pulp chips for sale primarily into the export
market. The total annual capacity of the mill is 180,000 air dry metric tons;
109,000 metric tons were produced in 1993 and 152,000 metric tons were
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produced in 1992. The Company's pulp business was affected in 1992 and to a
greater extent in 1993 by high wood chip costs, weak demand, and declining pulp
prices.
During 1992 construction began at Halsey on a $24 million oxygen
delignification project to reduce both the use of chlorine in the bleaching
process and dioxin discharges. This multi-year project, which was necessary to
comply with an agreement entered into with the Oregon Department of
Environmental Quality on meeting target emission levels, was completed in late
1993.
Since 1985 the Company has had a pulp supply contract with James River
Corporation ("James River") to supply pulp in slush form to a tissue facility
owned by James River adjacent to the Company's pulp mill. James River began
production of its own recycled pulp at Halsey in 1992, and correspondingly
reduced its consumption of pulp from the Company's pulp mill in 1992 and
completely phased out of its Halsey pulp consumption in 1993. Approximately
10,000 metric tons were sold to James River in early 1993 compared to 31,000 in
1992.
As a result of depressed world pulp prices, selective downtime was taken
in lieu of selling pulp in the open market to replace the lost James River
tonnage. Because of the lost James River volume and the related decision to
take selective downtime, the Halsey pulp mill operated at 60 percent of
capacity in 1993.
Weyerhaeuser Company ("Weyerhaeuser") presently owns a pulp mill, which
it has announced it intends to upgrade and expand, located adjacent to the
North Pacific Paper Company ("Norpac") newspaper manufacturing facility in
Longview, Washington. Weyerhaeuser is a part owner of Norpac. The Company
believes that completion of the upgrade and expansion project by Weyerhaeuser
at its pulp mill will occur in 1995 or later. At that time, there is a
significant possibility that Norpac will begin to satisfy a portion of its pulp
needs from the Weyerhaeuser mill, and at the same time substantially reduce the
quantity of pulp it purchases from the Company at the Halsey mill. In 1993,
Norpac purchased approximately 46,000 metric tons of pulp from the Company.
In order to provide additional sales flexibility and attempt to improve
margins through higher value products, the Company initiated mill modifications
in 1993 totaling $41 million, which will be completed in early 1994 to improve
pulp quality and expand pulp drying capabilities. These modifications are in
addition to the $24 million oxygen delignification project. These mill
improvements will allow the Company to expand its pulp product offerings and to
dry its total pulp production, thus providing greater access to new pulp
markets within and outside the Pacific Northwest, which has historically been
the Company's primary pulp market region. Given these mill improvements,
management does not anticipate that elimination of the James River sales volume
will have a material adverse effect on the Company's pulp business.
The pulp mill modifications mentioned previously made it possible for
the Company to enter into a significant pulp supply agreement in the third
quarter of 1993. Under this agreement, late in the fourth quarter of 1993 the
Company began supplying pulp to a writing grade paper mill which reopened in
January 1994. The paper mill was recently purchased from its former owners by
a group of private investors. All output from the paper mill will be sold to
one
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customer. It has been anticipated that ultimately the paper mill would
purchase pulp from the Company in significant quantities, depending on sales by
the paper mill to its customer. However, to date pulp purchases have not been
at this level. In the event that the paper mill's sales to its customer
are adversely impacted for any reason, sales of the Company's pulp may be
adversely impacted. It is also anticipated that a portion of the pulp sold to
the paper mill will be produced from sawdust and hardwood chips, which have
historically been less expensive than softwood chips, which has been the
primary raw material for the pulp mill. Pricing for this pulp will be computed
using a formula based on prices for white paper. Based on prices in effect for
white paper at the end of 1993, the price that pulp would be sold under this
agreement would be 8 percent higher than the average pulp price the Company
obtained for its pulp at the end of 1993.
Substantially all of the Company's wood chip and sawdust requirements
for the Halsey pulp mill are satisfied through purchases by the Company from
third parties. The Company has long-term chip supply contracts with sawmills
in the Pacific Northwest.
Environmental concerns over timber harvests, which have caused high log
costs for the Company's Port Gamble sawmill, have also caused higher chip costs
and reduced chip availability from historic sources at the Halsey pulp mill
over the last three years. In order to maintain an adequate supply of wood
fiber for the mill, the Company has expanded its geographic base from which it
obtains the softwood chips normally used as the primary raw material for the
pulp mill. The Company has also expanded the capability of using sawdust and
hardwood chips, which historically have been less expensive than softwood
chips, as raw materials for a portion of the production. In order to maintain
an adequate supply of chips for the anticipated 60 percent of the pulp mill's
production which will remain based on softwood chips, the Company will continue
to use an expanded geographic base to obtain chips, adding to their cost.
Unless environmental restrictions on timber harvests are relaxed, chip prices
likely will remain high, and sawdust and hardwood chip prices may also
increase. The Company believes that these third-party chip purchases, in
addition to its whole-log chipping capabilities, will be adequate for the
Halsey pulp mill in the foreseeable future.
Marketing and Distribution. The Company utilizes its own sales force
and pulp brokers to sell its pulp products. Substantially all of the Company's
pulp products are sold in the Northwest. In 1993, sales to Norpac represented
46 percent of the Company's pulp revenues, sales to James River represented 7
percent of the Company's pulp revenues, and the remaining eight largest
customers accounted for an additional 37 percent of pulp revenues. No single
pulp customer accounted for 10 percent or more of total Company revenues in
1993.
Backlog. The Company's pulp customers typically enter into one- to
three-year contracts and provide the Company with annual estimates of their
requirements. More definite orders are placed by these customers on a
quarterly basis. As of December 31, 1993, the Company's backlog of orders for
pulp products for delivery during the first quarter of 1994 was $19 million,
compared to a backlog of approximately $15 million at December 31, 1992. This
increase was due primarily to scheduled pulp sales volume resulting from the
third quarter 1993 pulp supply agreement mentioned previously.
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Competition. The pulp industry is highly competitive, with a
substantial number of competitors having extensive financial resources,
manufacturing expertise and sales and distribution organizations, most of which
are larger than the Company, but none of which is believed to be dominant. The
principal methods of competition in the pulp market are price, quality, volume,
reliability of supply and customer service.
For further information regarding amounts of revenue, operating profit
and loss and identifiable assets attributable to the pulp and paper products
industry segment, see Note 11 of "Notes to Consolidated Financial Statements"
in the Company's 1993 Annual Report to Shareholders.
ENVIRONMENTAL MATTERS
The Company's wood products and pulp and paper businesses are subject to
federal, state and Canadian pollution control regulations that have required,
and are expected to continue to require, significant expenditures.
During the fiscal year ended December 31, 1993, the Company's capital
expenditures for environmental control amounted to approximately $23.4 million.
Additionally, expenditures for such purposes are expected to be $2 million and
$4 million for the years ending December 31, 1994 and 1995, respectively. The
expenditures in 1993 represent primarily the costs necessary to complete the
oxygen delignification project at the Halsey, Oregon pulp mill. $16 million of
the oxygen delignification project was financed by a note payable to the State
of Oregon under the State's Small Scale Energy Loan Program (SELP).
In response to environmental concerns in Western Oregon and Western
Washington, specifically the preservation of old-growth forests, substantial
amounts of federal timberlands have been set aside as wilderness areas. This
has affected and may continue to affect the amount and cost of timber
obtainable from public agencies in this region. Currently, the Company's
exposure in this region is the Port Gamble, Washington sawmill and the Halsey,
Oregon pulp mill. The carrying value of the Port Gamble sawmill was written
down in 1990 as a result of its inability to obtain adequate timber supply; the
sawmill now operates based upon log availability. The Halsey pulp mill is also
affected by the decrease in timber availability, since its primary raw
materials, wood chips and to a greater extent beginning in 1994, sawdust and
hardwood chips, are by-products of the lumber manufacturing process. It is
management's opinion that, based on existing wood chip and sawdust availability
both within the Willamette Valley region of Oregon and from other sources
discussed previously, wood chip and sawdust resources will be adequate for the
Company's requirements at the Halsey pulp mill in the foreseeable future. It
is also management's opinion that the reduced availability of public timber in
Western Washington will have little, if any, additional impact on the Company's
Port Gamble operations.
In 1992, the Company was contacted by the local governmental owner of a
vacant industrial site in Oregon on which Pope & Talbot previously conducted
business. The owner informed the Company that the site has been identified as
one containing creosote and coal tar, and that it plans to undertake a
voluntary clean-up effort of the site. The owner has requested that the
Company participate in the cost of the cleanup. The Company, in conjunction
with an environmental consultant, performed in 1993 a preliminary assessment of
soil contamination on the site. The results of this study indicate there is
some soil contamination present from creosote and coal tar as well as
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pollutants from other sources, and that the responsibility for the
contamination is not clear. The estimated cost of cleaning up this site and
the Company's liability, if any, has yet to be determined.
EMPLOYEES
The Company currently employs approximately 3,100 employees of whom
2,600 are paid hourly and a majority of which are members of various labor
unions. Approximately 47 percent of the Company's employees are associated
with the Company's wood products business, 51 percent are associated with the
Company's pulp and paper business and 2 percent are corporate management and
administration personnel.
FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
The Company's foreign manufacturing operations consist of three lumber
mills located in Canada. The Company's primary exports are disposable diapers
sold to Canada and brokered wood chips sold to Japan. The Company's export
sales from the United States were $29.1 million for 1993, $19.3 million for
1992 and $19.4 million for 1991. Of the 1993 export sales, 56 percent were to
Canada and 32 percent were to Japan.
Financial information regarding the Company's domestic and foreign
operations is included in Note 11 of "Notes to Consolidated Financial
State-ments" on page 32 of the Company's 1993 Annual Report to Shareholders.
Item 2. Properties
WOOD PRODUCTS PROPERTIES
1. Mills and Plants
The following tabulation briefly states the location, character,
capacity and 1993 production of the Company's primary wood products
manufacturing facilities:
Type of Estimated Annual 1993
Location Plant Capacity (1) Production
- --------- ------- ---------------- -------------------
Port Gamble, WA Lumber mill 150,000,000 bd. ft. 111,000,000 bd. ft.
Port Gamble, WA Alder chip 130,000 bone dry 16,000 bone dry
facility (2) units units
Spearfish, SD Lumber mill 110,000,000 bd. ft. 110,000,000 bd. ft.
Newcastle, WY Lumber mill 30,000,000 bd. ft. 31,000,000 bd. ft.
Grand Forks, BC Lumber mill 120,000,000 bd. ft. 112,000,000 bd. ft.
Midway, BC Lumber mill 150,000,000 bd. ft. 148,000,000 bd. ft.
Castlegar, BC Lumber mill 225,000,000 bd. ft. 214,000,000 bd. ft.
________________________________________________________________________
(1) Based on normal industry practice of operating two shifts, five days per
week for lumber mills except for the Newcastle, Wyoming mill which is
based upon one shift, five days per week. Assumes two shifts, five days
per week for the alder chip facility.
(2) Wood chips are also produced as a result of the operation of the
Company's lumber mills. It is estimated that the aggregate annual
capacity for such production is 440,000 bone dry units. In 1993,
396,000 bone dry units were produced.
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The Company believes that its wood products manufacturing facilities are
adequate and suitable for current operations. Nevertheless, the Company is
committed to continually improving its manufacturing facilities as evidenced by
the Castlegar lumber mill modernization completed in 1993.
The Company owns all of its wood products manufacturing facilities
except that it leases the ground on which the Port Gamble facilities are
located from Pope Resources, A Delaware Limited Partnership, pursuant to a
20-year lease entered into in December 1985.
2. Timber and Timberland
Restructuring activities in 1992 resulted in the sale of approximately
21,800 acres of primarily immature timber in Oregon. The Company no longer
owns any timberland in the Pacific Northwest.
PULP AND PAPER PROPERTIES
1. Tissue and Diaper Mills
The following table briefly states the location, character, capacity and
1993 production of the Company's tissue and diaper products manufacturing
facilities:
Estimated Annual 1993
Location Capacity (1) Production
- -------- ---------------- ----------
Tissue Products
- ---------------
Eau Claire, Wisconsin 55,000 tons 54,000 tons
Ransom, Pennsylvania 55,000 tons 53,000 tons
Diapers
- -------
Shenandoah, Georgia 267,000,000 diapers 177,000,000 diapers
Eau Claire, Wisconsin 265,000,000 diapers 248,000,000 diapers
Oneonta, New York 393,000,000 diapers 364,000,000 diapers
Porterville, California 358,000,000 diapers 267,000,000 diapers
Incontinents
- ------------
Shenandoah, Georgia 126,000,000 pads 26,000,000 pads
_____________________________________________________________________
(1) Based on normal industry practice of operating three shifts per day,
seven days per week, less scheduled downtime.
The Company believes that its tissue and diaper manufacturing facilities
are adequate and suitable for current operations. The Company completed
installation of equipment in 1993 to produce diaper training pants at its
Shenandoah, Georgia diaper facilities.
The Company owns all of its tissue and diaper production facilities,
except that it leases the building which contains the Shenandoah diaper and
incontinent production facilities.
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2. Pulp Mill
The Company owns a bleached kraft pulp mill near Halsey, Oregon. In
1993, 109,000 air dry metric tons of pulp were produced, compared with an
estimated annual capacity of 180,000 metric tons. During 1993 the Company (1)
began installation of a conventional Flakt pulp dryer costing approximately $37
million which will be completed in the first quarter of 1994 and will allow the
mill to produce market pulp in a form suitable for shipping to markets outside
the Pacific Northwest, (2) completed the installation of an oxygen
delignification system which, in addition to permitting the Company to meet the
Oregon State Department of Environmental Quality dioxin discharge limitations,
will improve pulp quality and slightly improve brightness, and (3) made certain
modifications to its bleach plant at the Halsey mill which will also result in
pulp quality and brightness improvements. The Flakt pulp dryer will require
additional 1994 spending of approximately $13 million. With the completion of
the above mentioned capital projects, the Company believes that its pulp
facility is adequate and suitable for current operations.
Item 3. Legal Proceedings
In 1985, stockholders of the Company approved a Plan of Distribution
pursuant to which all of the Company's timber properties and development
properties and related assets and liabilities in the State of Washington were
transferred to newly-formed Pope Resources, A Delaware Limited Partnership,
with interests in the partnership distributed to the Company's stockholders on
a pro rata basis.
The Company assigned to the assets transferred a distribution value for
federal income tax purposes based upon the public trading price of the
partnership interests at the time of distribution. The Internal Revenue
Service has asserted that the Company owes additional federal income tax in the
amount of approximately $14 million (plus applicable interest) in connection
with this transaction and the Company has disputed this asserted tax liability.
The issue is scheduled to be heard in U.S. Tax Court during the third quarter
1994. The Company will vigorously contest the assessed tax liability through
independent tax counsel. It is management's opinion, based upon consultation
with independent tax counsel, that the additional tax due in this matter, if
any, will ultimately be significantly less than the assessed amount and will
not have a material adverse effect on the Company's financial position. The
final tax settlement, if any, will be recognized as a reduction in equity with
respect to the partnership transaction.
In September 1992, Kimberly-Clark sued in the U.S. District Court for
the Western District of Washington, alleging that diapers manufactured by the
Company infringe a U.S. patent that has been assigned to Kimberly-Clark. The
Company is vigorously defending the litigation, on the basis that the patent is
invalid and unenforceable. The Company is also defending on the basis that its
products do not infringe the patent (even if it is determined to be valid and
enforceable). The Company has significant arguments to defend its position of
non-infringement, and has already prevailed on a motion for partial summary
judgment that substantially narrowed the scope of the asserted patent. If the
patent is found to be both valid and infringed, damages could consist of a
reasonable royalty on the sales of infringing products and/or profits lost by
Kimberly-Clark as a result of infringement. Kimberly-Clark has also requested
an injunction to prohibit future sales of any products ultimately found to
infringe the patent if the Company declines to accept Kimberly-Clark's offer to
license the patent. The impact of any such injunction could be limited by
accepting a patent license from Kimberly-Clark. The Company does not expect
that the ultimate resolution of this matter will have a material adverse impact
on the financial position or results of operations of the Company.
Kimberly-Clark has also threatened additional litigation with respect to a
related patent, which may issue from the U.S. Patent & Trademark Office. The
patent that is the basis for the threatened litigation has not yet been issued
and its scope has not yet been determined.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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EXECUTIVE OFFICERS OF THE REGISTRANT WHO ARE NOT DIRECTORS
In addition to the executive officers who are also directors of the
Company, there are the following executive officers who are not directors.
CARLOS M. LAMADRID, 58, Senior Vice President - Finance, Secretary, Treasurer
and Chief Financial Officer since August 1987.
MICHAEL FLANNERY, 50, Group Vice President - Wood Products Division since
August 1987.
WILLIAM G. FROHNMAYER, 55, Group Vice President - Fiber Products since August
1987.
ROBERT L. VANDERSELT, 47, Group Vice President - Consumer Products Division
since September 1991; August 1990 to September 1991 President, CKI
Consulting (a management consulting firm); September 1988 to August 1990
President, Scott Worldwide Food Service, Scott Paper Company (a
diversified consumer paper company).
RICHARD N. MOFFITT, 46, Vice President - Human Resources since June 1987.
All officers hold office at the pleasure of the Board of Directors.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
Pope & Talbot, Inc. common stock is traded on the New York and Pacific
stock exchanges under the symbol POP. The number of shareholders at year-end
1993 and 1992 were 1,398 and 1,576, respectively. The high and low sales
prices for the common stock on the New York Stock Exchange and the dividends
paid per common share for each quarter in the last two fiscal years are shown
below:
Sales price per share
--------------------- Cash dividends
High Low per share
------ ----- --------------
1993
1st Quarter $28-1/8 $16 $.19
2nd Quarter 26-7/8 21-1/2 .19
3rd Quarter 25-1/2 20 .19
4th Quarter 29-7/8 20-7/8 .19
---
$.76
1992
1st Quarter $19-3/4 $15-1/4 $.19
2nd Quarter 19-3/4 14-5/8 .19
3rd Quarter 15-7/8 13-5/8 .19
4th Quarter 16-7/8 13-3/8 .19
---
$.76
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ITEM 6. SELECTED FINANCIAL DATA
Information required by Item 6 of Part II is presented in the table
entitled "Five Year Summary of Selected Financial Data" on page 14 of the
Company's 1993 Annual Report to Shareholders. Such information is incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
An exceptionally strong lumber market and record earnings in diapers
more than offset losses in tissue and pulp to return Pope & Talbot to
profitability in 1993, after two years of losses. Pope & Talbot's earnings for
1993 were $21.0 million, or $1.80 per share ($1.67 on a fully diluted basis),
up from 1992's loss of $2.3 million, or $.19 per share. Operations contributed
$21.6 million, or $1.85 per share in 1993; however, also included was a net
charge of $562,000, or $.05 per share, reflecting the cumulative effect of
accounting changes adopted in 1993. See Note 1 of Notes to Consolidated
Financial Statements for an explanation of the accounting changes.
Widely divergent business environments affected Pope & Talbot's
businesses during 1993. An improving housing industry, combined with sharply
curtailed timber harvests in the Pacific Northwest as a result of environmental
pressures, produced lumber prices that were 34 percent higher on average in
1993 than 1992, resulting in the best wood products earnings in the Company's
history. Demand for the Company's disposable diapers remained strong in 1993
and, combined with only minor price reductions as a result of competitors'
price reduction efforts, resulted in record profits for the diaper business.
Conversely, tissue produced a loss for the second year in a row, as extremely
competitive conditions in the tissue industry continued, and world pulp markets
remained poor, resulting in losses from our pulp business for the third
consecutive year.
Revenues reached a record $628.9 million in 1993, a 16 percent increase
from $544.3 million in 1992. Higher lumber sales prices in wood products was
the most significant factor impacting the revenue increase. In pulp and paper,
revenue gains from higher diaper sales volumes were largely offset by poor
pricing and demand for tissue and pulp.
Liquidity and Capital Resources
Capital spending, largely to expand drying capabilities, improve pulp
quality and to meet environmental requirements at the Company's Halsey, Oregon
pulp mill, increased the debt-to-total-capitalization ratio to 42 percent at
year-end 1993, from 34 percent at the end of 1992. The Company continues to
have available $95 million under existing credit agreements, of which $11
million was borrowed at December 31, 1993.
The Company's primary sources of internally generated cash are operating
income plus depreciation; the principal external source of cash is debt
financing. Cash generated from operations was $36.9 million in 1993.
Additionally, during 1993 the Company completed an offering of $75 million of 8
3/8 percent, 20-year debentures, and received $16 million at 6.55 percent from
the State of Oregon under the State's Small Scale Energy Loan Program.
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See Note 4 of Notes to Consolidated Financial Statements for further long-term
debt information and subsequent years' debt repayment schedules. These cash
resources were used to finance $82.6 million of capital expenditures, $8.9
million for the payment of dividends, and to reduce borrowings on the Company's
lines of credit including repayment of $45.0 million on the Company's unsecured
revolving-credit agreement. Scheduled long-term debt repayments were $500,000
in 1993 and are anticipated to be $901,000 in 1994. The most significant
capital improvement projects included $47 million to improve pulp quality,
expand drying capabilities and reduce both the use of chlorine in the bleaching
process and the discharge of dioxins from the Halsey pulp mill. The project to
reduce chlorine usage and dioxin discharges is necessary to comply with an
agreement entered into with the Oregon Department of Environmental Quality on
meeting target dioxin emission levels. Other significant projects during 1993
included completion of the first phase of a project to improve raw material
utilization at the Castlegar, B.C. sawmill, installation of equipment to
produce diaper training pants and other cost reduction and product improvement
projects for the Company's diaper business.
At December 31, 1993, the Company had numerous capital projects in
process at its facilities. It is expected that $25 million will be required to
complete approved projects, including those in progress at year-end. The
principal projects included in this amount are for completion of the pulp
drying improvements at Halsey and the completion of diaper cost reduction
projects. In addition, the Company anticipates that additional capital
projects will be undertaken during 1994, primarily to sustain existing
operations. Projected 1994 capital spending is expected to be funded with
internally generated cash, supplemented with borrowings on the Company's lines
of credit.
The December 31, 1993 current ratio remained essentially unchanged from
year-end 1992 at 1.7 to 1. Significant changes in the components of working
capital included increases in accounts receivable, inventories, and income
taxes payable. Accounts receivable increased primarily due to a $6.1 million
United States income tax refund receivable. Inventories increased
approximately $21.6 million. Significant changes in inventory balances include
a change in accounting for supplies inventories and higher log volumes from
taking advantage of buying opportunities. Income taxes payable increased
approximately $9.2 million reflecting higher current income taxes payable on
higher earnings in Canada.
The impact of fluctuations in foreign currency exchange rates have not
had, and are not expected to have, a significant effect on the Company's
liquidity or results of operations.
Results of Operations
Wood Products
The Company's wood products business, which in 1993 comprised 48
percent of consolidated revenues, generated operating profit of $62.1 million
in 1993, a sharp increase over earnings of $15.3 million in 1992, and a loss of
$1.1 million in 1991. The 1993 earnings were more than double the previous
best wood products earnings of $29.9 million reported in 1979. Housing starts,
which historically have been a significant factor in the profitability of the
wood products business, have improved in conjunction with the general economy
and lower interest rates. Housing starts have increased from 1.0
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million in 1991 to 1.2 million in 1992 and 1.28 million in 1993. Although
these improvements in the housing market were a factor in the improved lumber
sales prices, this alone was not adequate to generate the sales price increases
and earnings improvements realized in 1993. A more significant factor
continues to be the significantly curtailed harvest levels for timber from
federal lands in the Pacific Northwest as a result of continuing environmental
pressures to reduce timber harvests. During 1991, log costs increased as a
result of constricting supply from federal lands. During 1992, lumber sales
prices increased to offset these log cost increases and returned the
relationship of log costs to sales prices to more historic levels. As log
supplies, and consequently lumber supplies, tightened further in 1993, sales
prices rose substantially. During 1993, log costs for the Company's United
States sawmills increased generally with the increase in lumber sales prices.
The Company has shifted much of its timber dependency out of Western Washington
and Western Oregon where the environmental concerns over timber harvests have
sharply restricted the volume of public timber available, and increased the
cost of remaining timber, into regions of more stable timber supplies such as
the Black Hills region of South Dakota and Wyoming and British Columbia.
Currently, 80 percent of the Company's lumber capacity is in the Black Hills
and British Columbia, with the remaining 20 percent representing the Company's
Port Gamble, Washington sawmill. In the second quarter of this year, a
Presidential Commission issued a proposal for resolving the timber supply
situation in the Pacific Northwest. The proposal has been criticized by
various environmental and industry groups. At this point, it is uncertain
whether the proposal will be adopted. Until a solution is adopted, it is
likely that timber supplies will remain restricted in the Pacific Northwest.
When an agreement ultimately is reached, it is likely that the ultimately
agreed upon harvest levels will be less than historic levels, but more than is
currently available.
During 1992, the United States government imposed a 6.51 percent tariff
on Canadian lumber sold in the United States. During 1993, the Company paid
approximately $9.2 million under this tariff resulting in higher costs for the
approximately 425 million board feet of Canadian lumber sold in the United
States. In December 1993, a bi-national commission ruled that there is no
basis for this duty. However, this decision may be appealed by the United
States Government. At this time, it is unknown if the United States Government
will make such an appeal, or if any adjustment to the tariff would be made,
either upward or downward, and if any such adjustment would be made retroactive
to March 1992, when the tariff was first imposed.
Lumber sales volume increased to 726 million board feet in 1993, up
9 percent from 669 million board feet in 1992 and 496 million board feet in
1991. The increased lumber volume over the three-year period was due primarily
to the mid 1992 acquisition of the 225 million board-feet-per-year Castlegar,
B.C. sawmill. With the acquisition of this sawmill, lumber capacity for the
Company is now approximately 785 million board feet. The Company's sawmills
operated essentially at capacity for 1993, except for the Port Gamble sawmill,
which reduced production during the year as a result of lack of acceptably
priced timber in relation to end-product prices. Port Gamble is the only
Company sawmill in the high-priced timber regions of the Pacific Northwest and
the Company, recognizing the limitation on acquiring adequate, acceptably
priced timber supplies for the mill, has previously reduced its carrying value
to its estimated recoverable value.
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Wood Products revenues climbed to a record $300 million in 1993 from
$214.2 million in 1992 and $153 million in 1991. Both 1992 and 1993 revenue
increases were a combination of volume increases and higher sales prices.
Sales volumes were up 35 percent in 1992 and 9 percent in 1993 primarily from
having the Castlegar sawmill for part of 1992, and for a full year in 1993.
Lumber sales prices were up an average of 40 percent for the Company's Canadian
sawmills and Port Gamble. These mills, which comprised approximately 80
percent of the Company's total lumber production, compete primarily in the home
construction markets which have seen the greatest lumber supply reductions from
the Pacific Northwest timber harvest restrictions. The remaining 20 percent of
the Company's lumber production comes from two mills located in the Black Hills
region of South Dakota and Wyoming. Lumber from these mills goes principally
into remodeling markets and competes less directly with Pacific Northwest
lumber. Prices for these products rose an average of 17 percent during 1993.
Overall, sales prices were up an average of 34 percent in 1993 and 13 percent
in 1992.
Pulp and Paper Products
The pulp and paper segment, which produces private label tissue and
disposable diapers as well as market pulp, generated 52 percent of 1993
revenues. Operating profits from pulp and paper have declined from $6.2
million in 1991 to losses of $4.6 million in 1992 and $9.8 million in 1993.
Disposable diapers have been increasingly profitable from 1991 through 1993;
however, losses in tissue products and market pulp in 1992 and 1993 more than
offset diaper profits. Pulp and paper revenues have remained essentially flat
over the last three years, with 1993 sales of $328.9 million, 1992 sales of
$330.2 million and 1991 sales of $349.3 million. Tissue products and market
pulp revenues declined in 1992 and again in 1993 on lower pricing and volumes.
Diaper sales volume and selling prices improved in 1992 and in 1993 volume
again improved while prices declined slightly.
Losses in the Company's market pulp business were the most significant
factor in the pulp and paper segment's 1993 loss. A combination of an
extremely depressed pulp market and the high cost of wood chips, the primary
raw material for pulp, resulted in the increasing losses for 1991 through 1993.
As a result of the weak markets, many pulp mills in the industry experienced
significantly curtailed production rates during 1993. The Company's pulp mill
at Halsey operated at 60 percent of capacity in 1993 and 83 percent of capacity
in 1992. Historically, the Company had sold pulp to an adjacent tissue
facility owned by James River Corporation. Beginning in 1992, James River
began producing recycled pulp at Halsey and began phasing out of purchases of
the Company's pulp. By mid 1993, James River no longer was purchasing any of
the Company's pulp. As a result of depressed world pulp prices, selective
downtime was taken in lieu of selling pulp in the open market to replace this
lost tonnage. Consistent with world pulp pricing, the Company's sales prices
in 1993 were approximately 12 percent below 1992's already depressed prices.
Overall, pulp revenues decreased 36 percent to $40.3 million in 1993. Of this
decline, approximately $17 million was due to volume reductions, and
approximately $6 million was due to price declines. Based on a long-term pulp
supply arrangement entered into in 1993, the Company began supplying, in
December 1993, pulp to a printing and writing grade paper mill which opened at
the beginning of 1994. The mill was purchased recently from its former owners
by a group of private investors. The total output of this paper mill will be
sold to one customer who will re-market the paper to outside customers. It has
been anticipated that ultimately the paper mill
17
18
would purchase pulp from the Company in significant quantities, depending on
sales by the paper mill to its customer. However, to date pulp purchases have
not been at this level. In the event that the paper mill's sales to its
customer are adversely impacted for any reason, sales of the Company's pulp may
be adversely impacted. Pricing for this pulp will be computed using a formula
based on prices for white paper. Based on the prices in effect for white paper
at the end of 1993, the price that pulp would be sold under this agreement
would be 8 percent higher than the average pulp price the Company obtained for
its pulp at the end of 1993.
Environmental concerns over timber harvests, which have caused high log
costs for the Company's Port Gamble sawmill, have also caused higher chip costs
and reduced chip availability from historic sources at the Halsey pulp mill
over the last three years. In order to maintain an adequate supply of wood
fiber to the mill, the Company has expanded its geographic base from which it
obtains softwood chips and has developed the capability of using sawdust and
hardwood chips as raw materials for a portion of the production, which
historically have been less expensive than the softwood chips normally used as
the primary raw material for the pulp mill. It is anticipated that a portion
of the pulp sold to the paper mill will be produced from sawdust and hardwood
chips. In order to maintain an adequate supply of chips for the anticipated 60
percent of the pulp mill's production which will remain based on these softwood
chips, the Company will continue to use an expanded geographic base to obtain
chips, adding to their cost. Unless environmental restrictions on timber
harvests are relaxed, chip prices likely will remain high, and sawdust and
hardwood chip prices may also increase.
In the tissue business, continued low industry operating rates resulting
from industry capacity increases in recent years which have exceeded demand
growth, coupled with aggressive pricing by tissue producers, resulted in a
second consecutive loss year for the Company's tissue business. Overall,
tissue operated at approximately 97 percent of capacity in 1993. Prices for
the Company's tissue products declined in 1992 an average of 6 percent from the
already depressed 1991 levels and declined by another 1 percent in 1993.
Overall, prices for the Company's tissue have declined an average 13 percent
from 1989, when tissue prices first began to decline. During 1992, the Company
permanently closed one high-cost tissue facility and instituted cost reduction
measures which reduced tissue operating costs in 1993; however, these savings
were partially offset by increases in prices paid for wastepaper, the primary
raw material for the Company's tissue products.
Diaper earnings improved substantially in 1993 over already strong
earnings in 1992 and 1991. Diaper sales volumes in 1992 were 10 percent
greater than 1991. This sales growth continued in 1993, with sales volumes 21
percent ahead of 1992 at a record 1.1 billion diapers. Based on the existing
mix of diaper sales, the Company's diaper business operated essentially at
capacity in 1993. During 1992, Procter & Gamble, a significant producer of
branded disposable diapers, instituted an everyday low price program intended
to reduce the shelf package prices to the consumer. Private label disposable
diapers, including the Company's, are priced under the pricing umbrella of
branded products; however, the Company was generally able to maintain its
diaper sales prices in 1993 at 1992 levels, which were on average 6 percent
above 1991 levels. In November 1992, the Company closed one of its five diaper
facilities and transferred the diaper machines to the remaining facilities.
This eliminated the overhead of operating one additional facility while leaving
diaper capacity essentially unchanged.
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Other Matters
In 1993, the Company adopted Financial Accounting Standards Board
Statement No. 109 on accounting for income taxes. The charge to earnings for
adopting this new standard was $2.3 million ($.20 per share) and is reflected
as part of the cumulative effect of accounting changes in the Consolidated
Statements of Income.
In 1993, expendable supplies on hand, which previously were charged to
expense as purchased, were included in supplies inventories as of January 1,
1993. The cumulative effect of this change in accounting method amounted to
$1.8 million ($.15 per share), net of tax, and is reflected as part of the
cumulative effect of accounting changes in the Consolidated Statements of
Income.
In November 1992, the Financial Accounting Standards Board issued a
pronouncement on Employers' Accounting for Postemployment Benefits. This
statement must be adopted by the Company no later than 1994. The Company will
adopt the new standard in the first quarter of 1994. The Company has reviewed
the pronouncement and does not expect its implementation to have a material
effect on the Company's financial position or results of operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 of Part II is presented on pages 20
through 33 of the Company's 1993 Annual Report to Shareholders. Such
information is incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The information required by Item 10 of Part III is presented on page 13
as a separate item entitled "Executive Officers of the Registrant Who are Not
Directors" in Part I of this Report on Form 10-K and on pages 2-5 (under the
item entitled "Certain Information Regarding Directors and Officers") of the
Company's Definitive Proxy Statement for the Annual Meeting of Shareholders on
April 25, 1994. Such information is incorporated herein by reference.
ITEM 11. MANAGEMENT REMUNERATION
The information required by Item 11 of Part III is presented on pages
5-13 of the Company's Definitive Proxy Statement for the Annual Meeting of
Shareholders on April 25, 1994. Such information is incorporated herein by
reference.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 of Part III is presented on pages
2-4 and on page 6 (beginning just after the title "Beneficial Ownership of Over
Five Percent of Pope & Talbot Common Stock" on page 6) of the Company's
Definitive Proxy Statement for the Annual Meeting of Shareholders on April 25,
1994. Such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 of Part III is presented on page 14
(beginning just after the title "Certain Relationships and Related
Transactions" on page 14) of the Company's Definitive Proxy Statement for the
Annual Meeting of Shareholders on April 25, 1994. Such information is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
--------------------
The financial statements listed in the accompanying Index to
Financial Statements and Financial Statement Schedules are filed as
part of this annual report.
(a) (2) Schedules
---------
The financial statement schedules listed in the accompanying Index
to Financial Statements and Financial Statement schedules are filed
as part of this annual report.
(a) (3) Exhibits
--------
The following exhibits are filed as part of this annual report.
Exhibit No.
- -----------
(3) (a) Certificate of Incorporation, as amended. (Incorporated
herein by reference to Exhibit 3(a) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992.)
(b) Bylaws. (Incorporated herein by reference to Exhibit 3(b) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1992.)
(4) (a) Indenture dated June 2, 1993, between the Company and Chemical
Trust Company of California as Trustee with respect to the
Company's 8-3/8% Debentures due 2013. (Incorporated herein by
reference to Exhibit 4.1 to the Company's registration
statement on Form S-3 filed April 6, 1993.)
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21
(b) A Revolving Credit Agreement with United States National Bank
of Oregon dated July 18, 1990. (Incorporated herein by
reference to Exhibit 4 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1990.)
(c) A Revolving Credit Agreement dated May 6, 1992 with United
States National Bank of Oregon; CIBC, Inc.; ABN AMRO Bank
N.V.; Continental Bank N.A.; and Wachovia Bank of Georgia,
National Association. (Incorporated herein by reference to
Exhibit 4 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1992.)
(d) Indenture dated March 1, 1987 between the Company and the Bank
of California, National Association as Trustee with respect to
the Company's 6% Convertible Subordinated Debentures due March
1, 2012. (Incorporated herein by reference to Exhibit 4(d) to
the Company's registration statement on Form S-3 filed
February 23, 1987.)
(e) Instrument of Resignation, Appointment and Acceptance dated
July 5, 1989 appointing Manufacturers Hanover Trust Company of
California as successor trustee with respect to the Company's
6% Convertible Subordinated Debentures due March 1, 2012.
(Incorporated herein by reference to Exhibit 4(c) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1989.)
(f) Rights Agreement between Pope & Talbot, Inc. and The Bank of
California, as rights agent, dated as of April 13, 1988.
(Incorporated herein by reference to Exhibit 4(e) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992.)
(10) Executive Compensation Plans and Arrangements
---------------------------------------------
(a) Stock Option and Appreciation Plan. (Incorporated herein by
reference to Exhibit 10(a) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992.)
(b) Executive Incentive Plan. (Incorporated herein by reference
to Exhibit 10(b) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992.)
(c) Restricted Stock Bonus Plan. (Incorporated herein by
reference to Exhibit 10(c) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992.)
(d) Deferral Election Plan. (Incorporated herein by reference to
Exhibit 10(d) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992.)
(e) Supplemental Executive Retirement Income Plan. (Incorporated
herein by reference to Exhibit 10(e) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990.)
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22
(f) Form of Severance Pay Agreement between the Corporation and
certain of its executive officers. (Incorporated herein by
reference to Exhibit 10(f) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1990.)
______________________________
(g) Lease agreement with Pope Resources dated December 20, 1985
for Port Gamble, Washington sawmill site. (Incorporated
herein by reference to Exhibit 10(g) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990.)
(h) Lease agreement with Shenandoah Development Group, Ltd. dated
March 14, 1988 for Atlanta diaper mill site as amended
September 1, 1988 and August 30, 1989. (Incorporated herein
by reference to Exhibit 10(h) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1990.)
(i) Lease agreement with Shenandoah Development Group, Ltd. dated
July 31, 1989 for additional facilities at Atlanta diaper mill
as amended August 30, 1989 and February 1990. (Incorporated
herein by reference to Exhibit 10(i) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990.)
(j) Grays Harbor Industrial, Inc. Pulp Sales Supply Contract.
(Incorporated herein by reference to Exhibit 10(j) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993.)
(11) Statement showing computation of per share earnings.
(13) Portions of the annual report to shareholders for the year ended
December 31, 1993 which have been incorporated by reference in this
report.
(18) Letter re change in accounting principles. (Incorporated herein by
reference to Exhibit 18 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993.)
(22) Listing of parents and subsidiaries. (Incorporated herein by
reference to Exhibit 22 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992.)
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the three months ended
December 31, 1993.
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23
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Annual
Report
to
10-K Shareholders
---- ------------
Report of Independent Public Accountants 19
Consolidated balance sheets at December 31,
1993 and 1992 20
Consolidated statements of income for each of
the three years in the period ended
December 31, 1993 21
Consolidated statements of stockholders' equity
for each of the three years in the period
ended December 31, 1993 22
Consolidated statements of cash flows for each
of the three years in the period ended
December 31, 1993 23
Notes to consolidated financial statements 24-32
Supplementary information;
Quarterly financial information (unaudited) 33
Report of Independent Public Accountants on
Financial Statement Schedules 24
Schedules for each of the three years in the
period ended December 31, 1993:
V. Consolidated property, plant and equipment 25
VI. Consolidated accumulated depreciation
of plant and equipment 26
IX. Consolidated short-term borrowings 27
X. Consolidated supplementary income
statement information 28
All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.
The consolidated financial statements listed in the above index which are
included in the Annual Report to Shareholders of Pope & Talbot, Inc. for the
year ended December 31, 1993 are hereby incorporated by reference. With the
exception of the pages listed in the above index and the items referred to in
Items 1, 6 and 8, the 1993 Annual Report to Shareholders is not to be deemed
filed as part of this report.
23
24
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Stockholders of Pope & Talbot, Inc.:
We have audited in accordance with generally accepted auditing standards
the consolidated financial statements included in the Pope & Talbot, Inc. and
subsidiaries' annual report to shareholders incorporated by reference in this
Form 10-K, and have issued our report thereon dated January 20, 1994 (except
with respect to the matter discussed in Note 12, as to which the date is
January 24, 1994). Our audits were made for the purpose of forming an opinion
on the basic financial statements taken as a whole. The schedules listed in
the index to financial statements and financial statement schedules are the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in our audits of the basic financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN & CO.
Portland, Oregon,
January 20, 1994
24
25
POPE & TALBOT, INC. AND SUBSIDIARIES
SCHEDULE V - CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT
Years ended December 31, 1991, 1992 and 1993
(Thousands)
Balance at Depletion Balance
Beginning Additions, Retirements and Translation at End
Classification of Year at Cost or Sales Amortization Adjustments of Year
- -------------- ---------- ---------- ----------- ------------ ----------- -------
1991
----
Mills, plants and
improvements $ 80,551 $ 1,424 $ 835 $ - $ 39 $ 81,179
Equipment 274,056 22,628 7,398 - 147 289,433
Mobile equipment 18,753 531 460 - 37 18,861
Construction in
progress 8,840 12,512 - - 1 21,353
------- ------ ------ --- --- -------
382,200 37,095(a) 8,693 - 224 410,826
------- ------ ------ --- --- -------
Land 4,025 15 78 10 2 3,954
Timber and timber
cutting rights 2,747 158 2,025 - 1 881
Canadian timber
cutting licenses 2,897 - - 103 11 2,805
------- ------ ------ --- --- -------
9,669 173 2,103 113 14 7,640
------- ------ ------ --- --- -------
$391,869 $37,268 $10,796 $113 $238 $418,466
======= ====== ====== === === =======
1992
----
Mills, plants and
improvements $ 81,179 $12,060 $ 104 $ - $(1,061) $ 92,074
Equipment 289,433 27,124 2,353 - (3,855) 310,349
Mobile equipment 18,861 2,345 1,022 - (949) 19,235
Construction in
progress 21,353 309 - - (50) 21,612
------- ------ ----- --- ------ -------
410,826 41,838 3,479 - (5,915) 443,270
------- ------ ----- --- ------ -------
Land 3,954 2,281 15 - (69) 6,151
Timber and timber
cutting rights 881 133 821 - (17) 176
Canadian timber
cutting licenses 2,805 2,882 - 139 (387) 5,161
------- ------ ----- --- ------ -------
7,640 5,296 836 139 (473) 11,488
------- ------ ----- --- ------ -------
$418,466 $47,134 $4,315 $139 $(6,388) $454,758
======= ====== ===== === ====== =======
1993
----
Mills, plants and
improvements $ 92,074 $ 2,441 $ 5,538 $ - $ (487) $ 88,490
Equipment 310,349 56,133 12,810 - (1,820) 351,852
Mobile equipment 19,235 2,006 1,272 - (410) 19,559
Construction in
progress 21,612 21,942 - - (39) 43,515
------- ------ ------ --- ------ -------
443,270 82,522(b) 19,620(c) - (2,756) 503,416
------- ------ ------ --- ------ -------
Land 6,151 63 272 - (36) 5,906
Timber and timber
cutting rights 176 - - - (8) 168
Canadian timber
cutting licenses 5,161 - - 146 (201) 4,814
------- ------ ------ --- ------ -------
11,488 63 272 146 (245) 10,888
------- ------ ------ --- ------ -------
$454,758 $82,585 $19,892 $146 $(3,001) $514,304
======= ====== ====== === ====== =======
NOTES:
(a) Includes $14.9 million for new converting facilities at and modernization
of Ransom, Pennsylvania tissue mill.
(b) Includes $23.8 million for Flakt pulp dryer and $19.1 million for oxygen
delignification project at the Halsey, Oregon pulp mill. Also includes
$6.4 million for Castlegar, British Columbia sawmill modernization.
(c) Includes $13.4 million related to the sale of the Ladysmith, Wisconsin
tissue facilities.
DEPRECIATION AND AMORTIZATION:
The annual provisions for depreciation have been computed principally in
accordance with the following ranges of rates applied on the straight-line
method:
Buildings 12.5% - 4.0%
Equipment 33.3% - 5.0%
Mobile equipment 33.3% - 10.0%
25
26
POPE & TALBOT, INC. AND SUBSIDIARIES
SCHEDULE VI - CONSOLIDATED ACCUMULATED DEPRECIATION OF PLANT AND EQUIPMENT
Years ended December 31, 1991, 1992 and 1993
(Thousands)
Additions
Balance at Charged to Balance
Beginning Costs and Retirements Other Changes Translation at End
Classification of Year Expenses or Sales Add (Deduct) Adjustments of Year
- -------------- ---------- ---------- ----------- ------------- ----------- -------
1991
----
Mills, plants and
improvements $ 42,697 $ 2,840 $ 748 $1,217(a) $ 15 $ 46,021
Equipment 127,802 21,867 5,670 1,253(a) 70 145,322
Mobile equipment 11,697 1,865 427 - 24 13,159
------- ------ ----- ----- --- -------
$182,196 $26,572 $6,845 $2,470 $109 $204,502
======= ====== ===== ===== === =======
1992
----
Mills, plants and
improvements $ 46,021 $ 2,976 $ 66 $2,062(b) $ (373) $ 50,620
Equipment 145,322 22,742 1,600 3,336(b) (1,822) 167,978
Mobile equipment 13,159 1,885 713 - (671) 13,660
------- ------ ----- ----- ------ -------
$204,502 $27,603 $2,379 $5,398 $(2,866) $232,258
======= ====== ===== ===== ====== =======
1993
----
Mills, plants and
improvements $ 50,620 $ 3,004 $ 3,943 $ - $ (167) $ 49,514
Equipment 167,978 24,172 9,567 - (862) 181,721
Mobile equipment 13,660 1,728 1,227 - (292) 13,869
------- ------ ------ ----- ------ -------
$232,258 $28,904 $14,737(c) $ - $(1,321) $245,104
======= ====== ====== ===== ====== =======
Notes:
(a) Amount relates to write-down of tissue machines removed from production
and building held for sale.
(b) Amount relates to write-down of the Company's Ladysmith, Wisconsin
tissue plant and Maryville, Missouri diaper plant.
(c) Includes $10.7 million related to the sale of the Ladysmith, Wisconsin
tissue facilities.
26
27
POPE & TALBOT, INC. AND SUBSIDIARIES
SCHEDULE IX - CONSOLIDATED SHORT-TERM BORROWINGS
Years ended December 31, 1991, 1992 and 1993
Notes payable to banks:
Maximum
Amount Average Weighted
Balance Weighted Outstanding Amount Average
At End Average at any Month- Outstanding Interest Rate
of Interest end during During During
Period Rate the Period the Period the Period
------- -------- ------------- ----------- -------------
(a) (b)
1991 $17,000,000 5.1% $17,000,000 $2,817,000 5.5%
1992 $ 5,483,000 4.4% $ 9,700,000 $2,013,000 4.8%
1993 $11,000,000 4.3% $14,300,000 $6,449,000 4.0%
The Company has available from a bank a short-term line of credit totaling
$20,000,000 with interest based on a negotiated rate. As of December 31, 1993,
there was $11,000,000 outstanding on this line.
Notes:
(a) The average amount outstanding during the period is computed by
dividing the total of daily outstanding principal balances by 365.
(b) The weighted average interest rate during the period was computed by
dividing the average amount of short-term debt outstanding during the
period into the actual interest expense on short-term borrowings.
27
28
POPE & TALBOT, INC. AND SUBSIDIARIES
SCHEDULE X - CONSOLIDATED SUPPLEMENTARY
INCOME STATEMENT INFORMATION
Years ended December 31, 1993, 1992 and 1991
(Thousands)
1993 1992 1991
---- ---- ----
Maintenance and repairs $34,246 $35,811 $38,885
Depreciation, depletion and
amortization 29,303(a) 28,564(a) 27,948(a)
(a)Amortization and depletion per
Schedule V:
Canadian timber cutting licenses $ 146 $ 139 $ 103
Depletable land - - 10
Amortization of goodwill and
deferred charges 253 822 1,263
Depreciation per Schedule VI 28,904 27,603 26,572
------ ------ ------
Total $29,303 $28,564 $27,948
====== ====== ======
28
29
For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933,
the undersigned registrant hereby undertakes as follows:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of the
expenses incurred or paid by a director, officer or controlling person
of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered on the Form S-8's
identified below, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933
Act and will be governed by the final adjudication of such issue.
The preceding undertaking shall be incorporated by reference into
registrant's Registration Statements on Form S-8 No. 33-34996 (filed May 21,
1990) and No. 33-64764 (filed June 21, 1993).
29
30
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K into the Company's previously filed
Registration Statement No. 33-34996 on Form S-8, Registration Statement No.
33-64764 on Form S-8 and Registration Statement No. 33-52305 on Form S-3.
ARTHUR ANDERSEN & CO.
Portland, Oregon
March 29, 1994
30
31
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, in the City of
Portland, State of Oregon, on this 29th day of March, 1993.
POPE & TALBOT, INC.
BY: \s\ Peter T. Pope
------------------------------
Peter T. Pope
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 dates indicated.
Chairman of the Board,
President and
\s\ Peter T. Pope Chief Executive Officer March 29, 1994
- ------------------------------ ---------------------------- --------------
Peter T. Pope
\s\ Adolphus Andrews, Jr. Director March 29, 1994
- ------------------------------ ---------------------------- --------------
Adolphus Andrews, Jr.
\s\ Hamilton W. Budge Director March 29, 1994
- ------------------------------ ---------------------------- --------------
Hamilton W. Budge
\s\ Edward Cooley Director March 29, 1994
- ------------------------------ ---------------------------- --------------
Edward Cooley
\s\ Charles Crocker Director March 29, 1994
- ------------------------------ ---------------------------- --------------
Charles Crocker
\s\ Warren E. McCain Director March 29, 1994
- ------------------------------ ---------------------------- --------------
Warren E. McCain
\s\ Robert Stevens Miller, Jr. Director March 29, 1994
- ------------------------------ --------------------------- --------------
Robert Stevens Miller, Jr.
\s\ Hugo G. L. Powell Director March 29, 1994
- ------------------------------ ---------------------------- --------------
Hugo G. L. Powell
\s\ Brooks Walker, Jr. Director March 29, 1994
- ------------------------------ ---------------------------- --------------
Brooks Walker, Jr.
Senior Vice President,
Secretary, Treasurer and
\s\ Carlos M. Lamadrid Chief Financial Officer March 29, 1994
- ------------------------------ ---------------------------- --------------
Carlos M. Lamadrid
\s\ Dennis E. Bunday Financial Controller March 29, 1994
- ------------------------------ ---------------------------- --------------
Dennis E. Bunday
31
32
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
(3) (a) Certificate of Incorporation, as amended. (Incorporated herein by reference to
Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992.)
(b) Bylaws. (Incorporated herein by reference to Exhibit 3(b) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.)
(4) (a) Indenture dated June 2, 1993, between the Company and Chemical Trust Company
of California as Trustee with respect to the Company's 8-3/8% Debentures due
2013. (Incorporated herein by reference to Exhibit 4.1 to the Company's
registration statement on Form S-3 filed April 6, 1993.)
(b) A Revolving Credit Agreement with United States National Bank of Oregon dated
July 18, 1990. (Incorporated herein by reference to Exhibit 4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1990.)
(c) A Revolving Credit Agreement dated May 6, 1992 with United States National Bank of
Oregon; CIBC, Inc.; ABN AMRO Bank N.V.; Continental Bank N.A.; and Wachovia Bank
of Georgia, National Association. (Incorporated herein by reference to Exhibit 4
to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992.)
(d) Indenture dated March 1, 1987 between the Company and the Bank of California, National
Association as Trustee with respect to the Company's 6% Convertible Subordinated
Debentures due March 1, 2012. (Incorporated herein by reference to Exhibit 4(d)
to the Company's registration statement on Form S-3 filed February 23, 1987.)
(e) Instrument of Resignation, Appointment and Acceptance dated July 5, 1989 appointing
Manufacturers Hanover Trust Company of California as successor trustee with respect
to the Company's 6% Convertible Subordinated Debentures due March 1, 2012.
(Incorporated herein by reference to Exhibit 4(c) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1989.)
33
Exhibit No. Description Page No.
----------- ----------- --------
(f) Rights Agreement between Pope & Talbot, Inc. and The Bank of California, as rights agent, dated as
of April 13, 1988. (Incorporated herein by reference to Exhibit 4(e) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992.)
(10) Executive Compensation Plans and Arrangements
---------------------------------------------
(a) Stock Option and Appreciation Plan. (Incorporated herein by reference to Exhibit 10(a) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1992.)
(b) Executive Incentive Plan. (Incorporated herein by reference to Exhibit 10(b) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.)
(c) Restricted Stock Bonus Plan. (Incorporated herein by reference to Exhibit 10(c) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.)
(d) Deferral Election Plan. (Incorporated herein by reference to Exhibit 10(d) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992.)
(e) Supplemental Executive Retirement Income Plan. (Incorporated herein by reference to Exhibit 10(e)
to the Company's Annual Report on Form 10-K for the year ended December 31, 1990.)
(f) Form of Severance Pay Agreement between the Corporation and certain of its executive officers.
(Incorporated herein by reference to Exhibit 10(f) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1990.)
------------------------------
(g) Lease agreement with Pope Resources dated December 20, 1985 for Port Gamble, Washington sawmill site.
(Incorporated herein by reference to Exhibit 10(g) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1990.)
34
Exhibit No. Description Page No.
----------- ----------- --------
(h) Lease agreement with Shenandoah Development Group, Ltd. dated March 14, 1988 for Atlanta diaper
mill site as amended September 1, 1988 and August 30, 1989. (Incorporated herein by reference to
Exhibit 10(h) to the Company's Annual Report on Form 10-K for the year ended December 31, 1990.)
(i) Lease agreement with Shenandoah Development Group, Ltd. dated July 31, 1989 for additional
facilities at Atlanta diaper mill as amended August 30, 1989 and February 1990. (Incorporated
herein by reference to Exhibit 10(i) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1990.)
(j) Grays Harbor Industrial, Inc. Pulp Sales Supply Contract. (Incorporated herein by reference to
Exhibit 10(j) to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993.)
(11) Statement showing computation of per share earnings.
(13) Portions of the annual report to shareholders for the year ended December 31, 1993 which have been
incorporated by reference in this report.
(18) Letter re change in accounting principles. (Incorporated herein by reference to Exhibit 18 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1993.)
(22) Listing of parents and subsidiaries. (Incorporated herein by reference to Exhibit 22 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.)