-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CcPHqX1kVD/HTLM0kETkP4xtlCAjFcNtz8OLS4dxkMo4KxDmZ2goR+VWQmKqdOmK fUpexH8gqRqksg/N0UlEBg== 0000891020-96-000272.txt : 19960328 0000891020-96-000272.hdr.sgml : 19960328 ACCESSION NUMBER: 0000891020-96-000272 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960327 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: POPE & TALBOT INC /DE/ CENTRAL INDEX KEY: 0000311871 STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621] IRS NUMBER: 940777139 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07852 FILM NUMBER: 96539051 BUSINESS ADDRESS: STREET 1: 1500 SW FIRST AVE CITY: PORTLAND STATE: OR ZIP: 97201 BUSINESS PHONE: 5032289161 MAIL ADDRESS: STREET 1: 1500 S W FIRST AVE CITY: PORTLAND STATE: OR ZIP: 97201 10-K 1 FORM 10-K FOR THE PERIOD END 12/31/95 1 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, 1995 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. (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 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 $170,937,419 as of March 8, 1996 ($13.50 per share). 13,363,779 (Number of shares of common stock outstanding as of March 8, 1996) Part I and Part II incorporate specified information by reference from the annual report to shareholders for the year ended December 31, 1995 and from the Company's Current Report on Form 8-K dated February 8, 1996. Part III incorporates specified information by reference from the proxy statement for the annual meeting of shareholders on April 30, 1996. 2 PART I Item 1. Business INTRODUCTION AND DEVELOPMENTS IN 1995 Pope & Talbot, Inc. (the "Company") is engaged principally in the wood products and pulp and paper products 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 private label consumer tissue, bleached kraft pulp for newsprint and writing paper, and brokers wood chips. On December 11, 1995, the Company entered into a definitive agreement to sell its disposable diaper business to Paragon Trade Brands, Inc. ("Paragon"). The sale of this business was completed on February 8, 1996 and the disposable diaper business results for 1995, 1994 and 1993 have been reflected as discontinued operations. During 1995, wood products accounted for approximately 51 percent of the Company's revenues from continuing operations of $524.4 million, consumer tissue accounted for 20 percent and bleached kraft pulp and brokered wood chips 29 percent. Disposable diaper revenues were $144.0 million in 1995. 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 presently having more stable timber supplies, namely 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 shareholders through interests in a newly formed master limited partnership. In 1989, the Company sold its Oregon sawmill, and the Company has since sold its remaining Oregon timberlands. In 1992, the Company acquired a sawmill and related timber cutting rights in Castlegar, British Columbia. At the end of 1995, the Company permanently closed its Port Gamble, Washington sawmill. The Company currently operates five sawmills with an estimated annual capacity of 526 million board feet, of which approximately 73 percent is located in British Columbia and 27 percent in the Black Hills. The Company no longer has any lumber capacity in Oregon and Washington. 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 manufacturers and a writing paper manufacturer 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. The Company sells its tissue products under private labels to supermarkets, drugstores, mass merchandisers, food and drug distribution companies and warehouse club stores. In early 1994, the Company completed projects resulting in significant product and cost improvements to its pulp mill. Up to the completion of the previously mentioned diaper business sale in early 1996, the Company produced private label diapers at four mills in the U.S. 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 market is 2 3 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 operating costs and capital 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", "Pulp and Paper Products Business" and "Environmental Matters." 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:
Classes of Wood Products 1995 1994 1993 ------------------------ -------- -------------- -------- (In thousands) Lumber $194,350 $261,322 $256,842 Wood chips 46,514 30,284 29,695 Logs and other 24,712 12,599 13,498 -------- -------- -------- Total wood products sales $265,576 $304,205 $300,035 ======== ======== ========
In 1995, lumber revenues decreased $67.0 million, or 26 percent, compared with 1994. These reduced lumber revenues were due to a combination of 13 percent lower average lumber prices and 9 percent lower sales volumes. The volume decreases related to reduced Port Gamble, Washington sawmill operations and the Grand Forks, British Columbia sawmill operating at one shift, down from the two-shift basis operated prior to 1995. The 1995 wood chip revenues increased $16.2 million, or 54 percent, over 1994 as average chip prices nearly doubled which more than offset lower chip volumes. Log sales were higher in 1995 due mainly to the liquidation of Port Gamble log inventories related to the fourth quarter 1995 sawmill closure. In 1994, lumber revenues increased $4.5 million, or 2 percent, compared with 1993. These increased revenues were due to higher lumber sales prices which more than offset the impact of lower sales volumes, primarily due to downtime taken at the Port Gamble sawmill. 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 were also obtained from direct chipping of whole logs in 1993. 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 lands. During 1995, the Port Gamble sawmill was either shut down or operating on a reduced one-shift basis due to a lack of acceptably priced timber in relation to end-product prices. Timber harvest levels in the mill's operating region were significantly reduced in recent years as a result of environmental pressures to reduce the amount of timber available for harvest. A strong export log market further reduced domestic log supplies in the region. These reduced log volumes, combined with weakened lumber markets, resulted in operating losses at Port Gamble over the last two years and significantly below-capacity production. With no prospect of a resolution to the timber supply situation, the Company permanently closed the Port Gamble sawmill in the fourth quarter of 1995. 3 4 Approximately 73 percent of the Company's current lumber capacity is located in British Columbia, Canada and 27 percent in the Black Hills region of South Dakota and Wyoming, where timber supplies are presently more stable than in the U.S. Pacific Northwest. 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 30 percent of the Company's Canadian log requirements are satisfied through open market log purchases. The Provincial Government of British Columbia has the authority to modify prices and harvest volumes at any time. During 1994, the Provincial Government of British Columbia adjusted upward the price charged for a substantial portion of the wood used by the Company's three Canadian sawmills effective May 1, 1994. The new pricing formula, which is based on a relationship to end-product prices, had the effect of increasing 1995 log costs by approximately $7 million in both 1995 and 1994. 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 Black Hills contracts, prices are subject to periodic adjustment based upon formulas set forth therein. During the early 1990's, the Company's Canadian sawmills benefited from processing additional volumes of pine timber which had been killed by the mountain pine beetle. This beetle kill volume was essentially harvested by the end of 1994. As a result, Canadian timber harvest levels were reduced and resulted in the January 1, 1995 curtailment of the Grand Forks, British Columbia sawmill to a one-shift production basis. This Grand Forks curtailment reduced lumber capacity by 60 million board feet annually, or approximately 8 percent of the Company's then existing lumber capacity. During 1994, the Provincial Government of British Columbia's Commission of Resources and Environment ("CORE") began reviewing the future use of the forest resources in the province, including reserving additional forest resources to park lands. This review continued into 1995. Based on preliminary reports of the Commission, it appears that the amount of timber available to the Company's Canadian sawmills could be reduced in future years by 5 percent to 10 percent from current levels. These reductions in allowable timber harvests may result in further decreases in lumber production levels at one or more of the Company's Canadian sawmills. On February 16, 1996, U.S. and Canadian trade negotiators reached an agreement in principle establishing quotas on Canadian softwood lumber shipments to the U.S. The 5-year agreement takes effect April 1, 1996. Although the final terms of the agreement are not yet settled, based on preliminary terms, the Company believes this agreement will not have a significant effect on the results of its Canadian sawmill operations. MARKETING AND DISTRIBUTION. The Company's lumber products are sold primarily to wholesale distributors. 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 U.S. and Canadian forest products companies. Marketing of the Company's wood products is centralized in its Portland, Oregon offices. Although the Company does not have distribution facilities at the retail level, the Company does utilize several reload facilities around the U.S. to assist in moving the product closer to the customer. The Company sold wood products to numerous customers during 1995, the ten largest of which accounted for approximately 37 percent of total wood products sales. No single wood products customer accounted for more than 10 percent of the Company's revenues in 1995. BACKLOG. The Company maintains a minimal finished goods inventory of wood products. At December 31, 1995, orders were approximately $4.7 million, compared with approximately $7.5 million at December 31, 1994. This backlog represented an order file for the Company which generally would be shipped in two weeks to one month. The decrease from 1994 to 4 5 1995 reflects both reduced lumber sales prices and lower order volume. The lower order volume is a function of timing, the fourth quarter 1995 closing of the Company's Port Gamble sawmill and the changing of the Grand Forks sawmill from two shifts at the end of 1994 to one shift for all of 1995. 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. 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 1995 Annual Report to Shareholders. 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:
Classes of Pulp and Paper Products 1995 1994 1993 ---------------------------------- -------- -------------- -------- (In thousands) Tissue products $107,013 $104,885 $105,041 Bleached kraft pulp 124,361 77,950 40,319 Brokered wood chips 27,459 15,767 13,404 -------- -------- -------- Total pulp and paper products sales $258,833 $198,602 $158,764 ======== ======== ========
As discussed previously, at the end of 1995 the Company entered into a definitive agreement to sell its disposable diaper business to Paragon. The disposable diaper business results for the three years ended 1995 were reflected as discontinued operations. Revenues for this discontinued diaper business were $144.0 million, $157.1 million and $170.1 million in 1995, 1994 and 1993, respectively. Pulp and paper revenues from continuing operations increased $60.2 million, or 30 percent, from 1994 to 1995 due mainly to improved pulp sales prices. The Company's pulp sales prices were nearly 70 percent higher on average in 1995 than 1994. In tissue, a 17 percent average price improvement more than offset a 13 percent drop in volume related mainly to a seven-month labor strike at the Ransom, Pennsylvania facility. Higher brokered wood chip revenues reflected the significant chip price improvement from 1994 to 1995. Pulp and paper revenues increased $39.8 million, or 25 percent, from 1993 to 1994 due mainly to higher pulp sales. From 1993 to 1994, pulp volumes and prices increased 54 percent and 25 percent, respectively. The volume increase related primarily to the Halsey pulp mill's return to essentially full production for the majority of 1994. In tissue, a 2 percent drop in volume was offset by a 2 percent price improvement from 1993 to 1994. 1. PAPER PRODUCTS The Company produces a line of private label consumer tissue products including towels, napkins, bathroom tissue and facial tissue. 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 5 6 East Coast. Prices for wastepaper generally follow the pricing trends of world pulp markets. During 1995, wastepaper pricing was pushed to record levels by a combination of strong pulp markets and shortages of certain wastepaper grades caused primarily by the start-up of new recycled fiber mills in the U.S. As a result of these pressures, the Company's wastepaper prices during 1995 doubled over 1994 pricing. However, by year-end 1995, wastepaper prices were declining and prices paid for wastepaper in December 1995 were 5 percent lower than the same time in 1994. The Company believes that there will continue to be an adequate supply of wastepaper 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, food and drug distribution companies and warehouse club stores. 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 67 percent of tissue products sales in 1995. No single paper products customer accounted for 10 percent or more of total Company revenues in 1995. BACKLOG. The Company carries a minimal finished goods inventory of tissue products. At the end of 1995 the tissue order file was approximately $4.2 million compared to a backlog of approximately $6.3 million at December 31, 1994. The lower order backlog at year-end 1995 as compared to year-end 1994 relates to timing of order receipts and the reduction of orders due to the effects of the 1995 Ransom mill strike. The Company does not believe the lower backlog is indicative of a business trend. At the end of 1995, the diaper order file for the discontinued diaper operations was approximately $3.2 million compared to a backlog of approximately $5.5 million at December 31, 1994. The lower order backlog at year-end 1995 as compared to year-end 1994 relates to reduced diaper sales prices and lower order volume. Both the tissue and diaper backlogs are generally shipped in less than one month. COMPETITION. The tissue market is extremely competitive, with approximately 10 major producers. Of these, Kimberly-Clark Corporation, Fort Howard Corporation, James River Corporation and Procter & Gamble Corporation are dominant and account for approximately 67 percent of the market. Within the tissue market, the Company estimates that the private label tissue segment accounts for approximately 12 percent to 30 percent of the total, depending on the product. In the tissue business, tissue industry capacity increases in the late 1980's and early 1990's resulted in capacity which exceeded demand growth causing tissue prices to decline an average of 14 percent from 1989 through 1993. This condition began to stabilize in 1994, and in 1995 industry-wide tissue operating rates improved to approximately 93 percent of capacity generating tissue price increases for the Company at the end of 1995 of approximately 30 percent over year-end 1994 levels. The 1995 price increases were the first general price increases for the Company's tissue products since 1990. 2. PULP PRODUCTS The Company owns a pulp mill at Halsey, Oregon. This mill produces bleached kraft pulp which is sold in various forms in the open market and to newsprint manufacturers and a writing paper manufacturer in the Pacific Northwest. 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; 175,000 metric tons were produced in 1995, 158,000 metric tons were produced in 1994 and 109,000 metric tons were produced in 1993. The Company's pulp business was affected in 1992 and to a greater extent in 1993 by relatively high wood chip costs, weak demand, declining pulp prices and by the loss of a major customer. However, the pulp market rebounded dramatically in 1994 which, along with sales to a significant new pulp customer in 1994, allowed the Company to increase its pulp sales volume 54 percent over the 1993 level. The market improvement continued into 1995 and resulted in the near capacity production. 6 7 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 were completed in early 1994, to improve pulp quality and expand pulp drying capabilities. These modifications were in addition to a $24 million oxygen delignification project which reduced both the use of chlorine in the bleaching process and dioxin discharges. This oxygen delignification project, which was completed late in 1993, was necessary to comply with an agreement entered into with the Oregon Department of Environmental Quality on meeting target emission levels. These mill improvements have allowed 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. The pulp mill modifications mentioned previously made it possible for the Company to enter into a significant pulp supply agreement in late 1993. Under this agreement with Grays Harbor Paper L.P. ("Grays Harbor"), the Company began supplying pulp to the Grays Harbor writing grade paper mill. Grays Harbor purchased approximately 103,000 metric tons and 89,000 metric tons of pulp from the Company in 1995 and 1994, respectively. All output from the paper mill is sold to one customer. 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. A portion of the pulp sold to the paper mill is 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 is computed using a formula based on prices for white paper. Weyerhaeuser Company ("Weyerhaeuser") owns a pulp mill, which it recently upgraded and expanded, located adjacent to the North Pacific Paper Company ("Norpac") newspaper manufacturing facility in Longview, Washington. Weyerhaeuser is a part owner of Norpac. Norpac purchased 22,000 metric tons, 48,000 metric tons and 46,000 metric tons from the Company in 1995, 1994 and 1993, respectively. Norpac began to phase out its purchases from the Company in early 1995 and discontinued its purchases in the third quarter 1995 as Weyerhaeuser completed its upgrade and expansion project. As a result of the mill's pulp enhancements brought about by the previously mentioned mill modifications, the Company does not anticipate that the discontinuation of Norpac sales volume will have a material adverse effect on the Company's pulp business or results of operations. 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 caused high log costs and led to the shutdown of 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 past several 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 approximately 50 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. Although chip costs remained essentially constant during 1993 and 1994, the environmental restrictions on timber harvests coupled with the strong pulp market resulted in a 71 percent increase in chip prices from year-end 1994 levels to mid 1995 levels. A weakening pulp market in late 1995 and early 1996, however, has reduced chip demand and greatly reduced chip prices from their mid 1995 highs. Unless environmental 7 8 restrictions on timber harvests are relaxed, chip prices likely will remain relatively high, and sawdust and hardwood chip prices may also increase. The Company believes that its third-party chip and sawdust purchases 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. A large majority of the Company's pulp products are sold in the Pacific Northwest. In 1995, sales to Grays Harbor represented 52 percent of the Company's pulp revenues, sales to Norpac represented 14 percent of the Company's pulp revenues and the remaining eight largest customers accounted for an additional 25 percent of pulp revenues. Grays Harbor accounted for 12 percent of total Company revenues from continuing operations in 1995. BACKLOG. The Company's pulp customers either enter into contracts for periods of one to three years or purchase products without obligation for future purchases. The contractual customers provide the Company with annual estimates of their requirements, followed by periodic orders based on more definitive information. As of December 31, 1995, the Company's backlog of orders for contractual customers for the first quarter of 1996 was $16 million, including $11 million attributable to Grays Harbor, compared to $27 million at December 31, 1994, including $15 million attributable to Grays Harbor. The backlog of orders for non-contractual customers at December 31, 1995 and December 31, 1994 was not significant. The decrease in order backlog from year-end 1994 to year-end 1995 reflects lower order volume and prices due to weakened pulp markets in the first quarter of 1996 compared to the first quarter of 1995. 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 1995 Annual Report to Shareholders. ENVIRONMENTAL MATTERS The Company is subject to federal, state, Canadian and local air, water and land pollution control, solid and hazardous waste management, disposal and remediation laws and regulations in all areas where it has operations. Compliance with these laws and regulations generally requires operating costs as well as capital expenditures. It is difficult to estimate the costs related solely to environmental matters of many capital projects which have been completed in the past or which may be required in the future. Changes required to comply with environmental standards will affect other areas such as facility life and capacity, changes in raw material requirements and costs and product value. It is estimated that during 1995, capital expenditures for environmental controls amounted to less than $1 million. It is expected that capital expenditures will continue into the future and may increase over time. Based on the understanding of future compliance standards, expenditures for such purposes are currently estimated to be minimal in 1996 and 1997; however, the ultimate outcome of future compliance is uncertain due to various factors such as the interpretation of environmental laws and evolving technologies. 8 9 In response to environmental concerns in Western Oregon and Western Washington, specifically the preservation of old-growth forests and wildlife habitat, 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 Halsey, Oregon pulp mill. The Halsey pulp mill is affected by the decrease in timber availability, since its primary raw materials, wood chips, sawdust and hardwood chips, are by-products of the lumber manufacturing process. The Company believes 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. In Canada during 1994, the Provincial Government of British Columbia's Commission of Resources and Environment ("CORE") began reviewing the future use of the forest resources in the province, including reserving additional forest resources to park lands. This review continued into 1995. Based on preliminary reports of the Commission, it appears that the amount of timber available to the Company's Canadian sawmills in the future could be reduced by 5 to 10 percent. The Environmental Protection Agency ("EPA") has published proposed regulations which would establish standards and limitations for non-combustion sources under the Clean Air Act and revised regulations under the Clean Water Act. These proposals are collectively referred to as the "cluster rules" and have been the subject of extensive discussions between the pulp and paper industry and the EPA. The Company's primary exposure to these proposals relate to the Company's Halsey pulp mill, and to a much lesser degree the Company's two tissue mills. Based on preliminary evaluation of the proposed rules, required modifications to the Company's mills could range from $15 million to $30 million. The proposed rules could be made effective in 1999, although later enactment is possible. In 1992, the Company was contacted by the local governmental owner of a vacant industrial site in Oregon on which the Company 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 cleanup 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 has performed preliminary assessment of soil contamination on the site and, in conjunction with the site owner, is beginning to make more extensive site assessments which will take up to two years. The results of the preliminary assessment indicate there is some soil contamination present from creosote and coal tar as well as pollutants from other sources, and that the responsibility for the contamination is not clear. The total estimated cost of cleaning up the known contamination at this time could be in the range of $1 million to $3 million although no determination of the responsibility for the cleanup has been established. If the more extensive site assessment indicates additional contamination which has not been shown at this time, the costs of remediation could be much higher. The Company believes it is reasonably possible that the costs associated with the cleanup of this site may exceed current accruals by amounts which may range from insignificant up to approximately $5 million over several years. This upper range estimate of possible outcomes is substantially less certain than the estimates upon which accruals are currently based, and utilizes assumptions substantially less favorable to the Company among the range of reasonably possible outcomes. EMPLOYEES At December 31, 1995, the Company employed approximately 2,800 employees of whom 2,300 were paid hourly and a majority of which were members of various labor unions. Included in these numbers were approximately 400 salaried and hourly employees who were 9 10 employed by the discontinued diaper operations. Approximately 54 percent of the Company's employees from continuing operations were associated with the Company's wood products business, 43 percent were associated with the Company's pulp and paper business and 3 percent were 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 from continuing operations are pulp sold to Europe and brokered wood chips sold to Japan. The Company's export sales from continuing operations from the United States were $26.3 million for 1995, $18.2 million for 1994 and $13.4 million for 1993. Export sales from the discontinued diaper operations were $12.6 million, $13.7 million and $15.7 million for 1995, 1994 and 1993, respectively, primarily to Canada. Of the total 1995 export sales, 35 percent were to Canada, 38 percent were to Japan and 23 percent were to France and Italy. Financial information regarding the Company's domestic and foreign operations is included in Note 11 of "Notes to Consolidated Financial Statements" on page 29 of the Company's 1995 Annual Report to Shareholders. Item 2. Properties WOOD PRODUCTS PROPERTIES 1. Mills and Plants The following tabulation briefly states the location, character, capacity and 1995 production of the Company's lumber mills:
Estimated Annual 1995 Location Capacity (4) Production(4) ----------------------------- ---------------------- ------------------- Port Gamble, Washington -(1) 53,000,000 bd. ft. Spearfish, South Dakota 110,000,000 bd. ft.(2) 106,000,000 bd. ft. Newcastle, Wyoming 31,000,000 bd. ft.(2) 31,000,000 bd. ft. Grand Forks, British Columbia 50,000,000 bd. ft.(3) 50,000,000 bd. ft. Midway, British Columbia 145,000,000 bd. ft.(3) 140,000,000 bd. ft. Castlegar, British Columbia 190,000,000 bd. ft.(3) 222,000,000 bd. ft.
- -------------- (1) The Port Gamble, Washington sawmill was permanently closed late in 1995. (2) Based on operating two shifts, five days per week for the Spearfish, South Dakota lumber mill and one shift, five days per week for the Newcastle, Wyoming lumber mill. (3) Based on operating two shifts, five days per week for the Midway and Castlegar, British Columbia mills and one shift, five days per week for the Grand Forks, British Columbia mill. Additionally, these capacities reflect reduced operations resulting from timber license quota limitations. (4) Wood chips are 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 300,000 bone dry units. In 1995, 339,000 bone dry units were produced. 10 11 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. The Company owns all of its wood products manufacturing facilities. PULP AND PAPER PROPERTIES 1. Tissue and Diaper Mills The following table briefly states the location, character, capacity and 1995 production of the Company's tissue and diaper products manufacturing facilities: Estimated Annual 1995 Location Capacity(1) Production -------- ---------------- ---------- Tissue Products --------------- Eau Claire, Wisconsin 55,000 tons 53,000 tons Ransom, Pennsylvania(3) 55,000 tons 29,000 tons Diapers(2) ---------- Shenandoah, Georgia - 171,000,000 diapers Eau Claire, Wisconsin - 210,000,000 diapers Oneonta, New York - 353,000,000 diapers Porterville, California - 250,000,000 diapers Incontinents(2) --------------- Shenandoah, Georgia - 21,000,000 pads
- ---------------- (1) Based on normal industry practice of operating three shifts per day, seven days per week, less scheduled downtime. (2) The Company's diaper and incontinent businesses were sold in February of 1996, therefore, capacity information is not included. (3) Ransom's below-capacity production reflects production curtailments caused by a seven-month labor strike in 1995. The Company believes that its tissue manufacturing facilities are adequate and suitable for current operations. In 1994, the Company began a project to significantly upgrade the Eau Claire wastepaper pulping capabilities. This pulping upgrade project was completed in mid 1995. The Company owns all of its tissue production facilities. 2. Pulp Mill The Company owns a bleached kraft pulp mill near Halsey, Oregon. In 1995, 175,000 air dry metric tons of pulp were produced, compared with an estimated annual capacity of 180,000 metric tons. The Company believes that its pulp facility is adequate and suitable for current operations. 11 12 Item 3. Legal Proceedings In 1985, shareholders 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 shareholders 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 was argued before the U.S. Tax Court during the third quarter 1995 and follow-up legal briefs were then filed into December 1995. The Tax Court will likely render a decision on the case in 1996. Primarily in 1995, the Company incurred costs defending its tax position in this case. In 1995, these defense costs, together with related tax settlements and interest charges totaling $4.9 million, net of tax benefits of $1.4 million, were recognized as a reduction in equity with respect to the partnership transaction. The Company believes, based upon consultation with independent tax counsel, that the additional tax due in this matter, if any, will 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 also be recognized as a reduction in equity. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. EXECUTIVE OFFICERS OF THE REGISTRANT WHO ARE NOT DIRECTORS In addition to the executive officers who are also directors of the Company, the following executive officers are not directors: CARLOS M. LAMADRID, 60, Senior Vice President, Secretary, and Chief Financial Officer since August 1987. WILLIAM G. FROHNMAYER, 57, Vice President - Division Manager, Fiber Products since August 1987. All officers hold office at the pleasure of the Board of Directors. 12 13 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 1995 and 1994 were 1,243 and 1,372, 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 ----------- --------- -------------- 1995 1st Quarter $16-7/8 $15-1/8 $.19 2nd Quarter 17-7/8 15-3/8 .19 3rd Quarter 17 15-1/4 .19 4th Quarter 15-5/8 12-1/2 .19 ---- $.76 1994 1st Quarter $32-5/8 $23-3/4 $.19 2nd Quarter 25-5/8 17-3/8 .19 3rd Quarter 22-1/4 17-1/4 .19 4th Quarter 18-7/8 15-1/4 .19 ---- $.76
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 12 of the Company's 1995 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 The information required by Item 7 of Part II is presented on pages 13, 14, 15, 16 and 17 of the Company's 1995 Annual Report to Shareholders. Such information is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required by Item 8 of Part II is incorporated by reference to the Company's Current Report on Form 8-K dated February 8, 1996 and presented on pages 18 through 29 of the Company's 1995 Annual Report to Shareholders. Additionally, the required supplementary quarterly financial information is incorporated herein by reference to page 30 of the Company's 1995 Annual Report to Shareholders. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 13 14 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS The information required by Item 10 of Part III is presented on page 12 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 and 3 (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 30, 1996. Such information is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 of Part III is presented on pages 4 through 12 of the Company's Definitive Proxy Statement for the Annual Meeting of Shareholders on April 30, 1996. Such information is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by Item 12 of Part III is presented on page 3 and on page 4 (beginning just after the title "Beneficial Ownership of Over Five Percent of Pope & Talbot Common Stock" on page 4) of the Company's Definitive Proxy Statement for the Annual Meeting of Shareholders on April 30, 1996. Such information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not applicable 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 All schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the related schedule, or because the information required is included in the financial statements and notes thereto. (a) (3) Exhibits The following exhibits are filed as part of this annual report. Exhibit No. - ----------- 3.1 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.) 3.2 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.) 14 15 4.1 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.) 4.2 Revolving Credit Agreement, dated May 6, 1992, among the Company and 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.) 4.3 Rights Agreement, dated as of April 13, 1988, between the Company and The Bank of California, as rights agent. (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.) 4.4 Extension Agreement, dated as of June 30, 1994, to the Revolving Credit Agreement, dated May 6, 1992, among the Company and 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 4.6 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.) 4.5 Modification Agreement, dated as of October 31, 1994, to the Revolving Credit Agreement, dated May 6, 1992, among the Company and 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 4.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.) 4.6 Modification Agreement, dated as of December 31, 1994, to the Revolving Credit Agreement, dated May 6, 1992, among the Company and 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 4.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.) 4.7 Extension/Modification Agreement, dated as of June 30, 1995, to the Revolving Credit Agreement, dated May 6, 1992, among the Company and United States National Bank of Oregon; CIBC, Inc.; ABN AMRO Bank N.V.; Bank of America Illinois, fka Continental Bank; and Wachovia Bank of Georgia, National Association. (Incorporated herein by reference to Exhibit 4.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.) 4.8 Modification Agreement dated as of October 16, 1995, to the Revolving Credit Agreement, dated May 6, 1992, among the Company and United States National Bank of Oregon; CIBC, Inc.; ABN AMRO Bank N.V.; Bank of America Illinois; and Wachovia Bank of Georgia, National Association. (Incorporated herein by reference to Exhibit 4.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995.) 15 16 4.9 Modification Agreement, dated as of January 22, 1996, to the Revolving Credit Agreement, dated May 6, 1992, among the Company and United States National Bank of Oregon; CIBC Inc.; ABN AMRO Bank N.V.; Bank of America Illinois; and Wachovia Bank of Georgia, National Association. (Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed February 8, 1996.) 10.1 Executive Compensation Plans and Arrangements --------------------------------------------- 10.1.1 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.) 10.1.2 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.) 10.1.3 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.) 10.1.4 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.) 10.1.5 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.) 10.1.6 Form of Severance Pay Agreement among the Company 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.) 10.2 Lease agreement between the Company and 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.) 10.3 Lease agreement between the Company and 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.) 10.4 Lease agreement between the Company and 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.) 10.5 Grays Harbor Paper L.P. Amended and Restated Pulp Sales Supply Contract, dated September 28, 1994 (with certain confidential information deleted). (Incorporated herein by reference to Exhibit 10(j) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1994.) 16 17 11.1 Statement showing computation of per share earnings. 13.1 Portions of the annual report to shareholders for the year ended December 31, 1995 which have been incorporated by reference in this report. 21.1 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.) 23.1 Consent of Arthur Andersen LLP. 27.1 Financial Data Schedule. The undersigned registrant hereby undertakes to file with the Commission a copy of any agreement not filed under exhibit item (4) above on the basis of the exemption set forth in the Commission's rules and regulations. (b) Reports on Form 8-K A Current Report on Form 8-K was filed on December 11, 1995 reporting that a definitive agreement had been reached to sell the Company's disposable diaper business to Paragon Trade Brands, Inc. 17 18 INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Annual Report to Shareholders ------------ Report of Independent Public Accountants 17 Consolidated balance sheets at December 31, 1995 and 1994 18 Consolidated statements of income for each of the three years in the period ended December 31, 1995 19 Consolidated statements of stockholders' equity for each of the three years in the period ended December 31, 1995 20 Consolidated statements of cash flows for each of the three years in the period ended December 31, 1995 21 Notes to consolidated financial statements 22-29 Supplementary information: Quarterly financial information (unaudited) 30
All 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 are included in the Annual Report to Shareholders of Pope & Talbot, Inc. for the year ended December 31, 1995. The financial information listed in the above index has been incorporated by reference to the Company's Current Report on Form 8-K dated February 8, 1996, except for the supplementary quarterly financial information (unaudited) which has been incorporated by reference to the Company's 1995 Annual Report to Shareholders. With the exception of the items referred to in Items 1, 6, 7 and 8, the 1995 Annual Report to Shareholders is not to be deemed filed as part of this report. 18 19 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 26th day of March, 1996. POPE & TALBOT, INC. BY: \s\ Peter T. Pope ------------------------------------- Peter T. Pope Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Chairman of the Board and \s\ Peter T. Pope Chief Executive Officer March 26, 1996 ------------------------------ Peter T. Pope \s\ Gordon P. Andrews Director March 26, 1996 ------------------------------ Gordon P. Andrews \s\ Hamilton W. Budge Director March 26, 1996 ------------------------------ Hamilton W. Budge \s\ Charles Crocker Director March 26, 1996 ------------------------------ Charles Crocker \s\ Michael Flannery President and Director March 26, 1996 ------------------------------ Michael Flannery \s\ Warren E. McCain Director March 26, 1996 ------------------------------ Warren E. McCain \s\ Robert Stevens Miller, Jr. Director March 26, 1996 ------------------------------ Robert Stevens Miller, Jr. \s\ Hugo G. L. Powell Director March 26, 1996 ------------------------------ Hugo G. L. Powell \s\ Brooks Walker, Jr. Director March 26, 1996 ------------------------------ Brooks Walker, Jr. Senior Vice President, Secretary and \s\ Carlos M. Lamadrid Chief Financial Officer March 26, 1996 ------------------------------ Carlos M. Lamadrid \s\ Robert L. Bluhm Financial Controller March 26, 1996 ------------------------------ Robert L. Bluhm
19 EX-11.1 2 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11.1 POPE & TALBOT, INC. AND SUBSIDIARIES Statement Showing Calculation of Average Common Shares Outstanding and Earnings Per Average Common Share Years Ended December 31, 1995, 1994 and 1993
1995 1994(1) 1993 ---- ---- ---- Weighted average number of common shares outstanding 13,363,520 13,109,640 11,685,313 Weighted average of common stock equivalent shares attributable to convertible debentures - 249,258 1,542,020 Application of the "treasury stock" method to the stock option plan 3,903 108,755 264,323 ------------ ----------- ----------- Total common and common equivalent shares, assuming full dilution 13,367,423 13,467,653 13,491,656 ============ =========== =========== Net income (loss) $(24,838,000) $15,897,000 $21,013,000 Add: interest on convertible debentures, net of applicable income taxes - 244,000 1,464,000 ------------ ----------- ----------- Net income (loss), assuming full dilution $(24,838,000) $16,141,000 $22,477,000 ============ =========== =========== Net income (loss) per common share, assuming full dilution $(1.86) $1.20 $1.67 ====== ===== =====
(1) The 1994 calculation reflects the February 1994 month-end conversion of convertible debentures to 1.5 million shares of common stock. The computation of primary net income per common share is not included because the computation can be clearly determined from the material contained in this report. EX-13.1 3 PORTIONS OF 1995 ANNUAL REPORT 1 EXHIBIT 13.1 FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA Pope & Talbot, Inc. and Subsidiaries
Years ended December 31 (Dollars in thousands except per share) 1995 1994 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS Revenues $ 524,409 $ 502,807 $ 458,799 $ 404,830 $ 383,764 Depreciation and amortization 45,066 39,061 29,303 28,564 27,948 Interest expense, net 13,784 9,322 8,714 5,622 3,941 Income (loss) from continuing operations (13,796) 15,952 10,770 (7,507) (9,957) Income (loss) from discontinued operations (11,042) (55) 10,805 5,255 4,862 Cumulative effect of accounting changes - - (562) - (6,467) ------------------------------------------------------------ Net income (loss) $ (24,838) $ 15,897 $ 21,013 $ (2,252) $ (11,562) ============================================================ Effective tax rate (32)% 40% 41% (9)% (28)% PER COMMON SHARE Income (loss) from continuing operations - primary $ (1.03) $ 1.21 $ .92 $ (.63) $ (.86) Income (loss) from continuing operations - fully diluted (1.03) 1.20 .85 (.63) (.86) Income (loss) from discontinued operations - primary (.83) - .93 .44 .42 Income (loss) from discontinued operations - fully diluted (.83) - .86 .44 .42 Effect of accounting changes - primary - - (.05) - (.56) Effect of accounting changes - fully diluted - - (.04) - (.56) Cash dividends .76 .76 .76 .76 .76 Stockholders' equity 14.19 17.08 15.73 14.85 16.09 YEAR-END COMMON SHARES OUTSTANDING, NET OF TREASURY STOCK 13,363,779 13,362,729 11,715,798 11,610,664 11,597,560 FINANCIAL POSITION (at December 31) Current assets $ 207,252 $ 223,050 $ 169,897 $ 138,288 $ 122,393 Properties, net 225,760 282,827 269,200 222,500 213,964 Deferred income tax assets, net 16,531 - - - - Other assets 22,684 33,507 16,724 8,893 10,626 ------------------------------------------------------------ $ 472,227 $ 539,384 $ 455,821 $ 369,681 $ 346,983 ============================================================ Current liabilities $ 113,495 $ 103,576 $ 101,162 $ 79,668 $ 64,545 Long-term obligations 30,526 28,777 27,803 24,227 16,934 Long-term debt 138,514 177,471 134,599 89,500 69,000 Deferred income tax liabilities, net - 1,365 7,936 3,892 9,896 Stockholders' equity 189,692 228,195 184,321 172,394 186,608 ------------------------------------------------------------ $ 472,227 $ 539,384 $ 455,821 $ 369,681 $ 346,983 ============================================================ CASH FLOW Operating activities: Net income (loss) $ (24,838) $ 15,897 $ 21,013 $ (2,252) $ (11,562) Depreciation and amortization 45,066 39,061 29,303 28,564 27,948 Other (gains) losses, net - (13,845) - 1,589 1,940 Cumulative effect of accounting changes - - 562 - 6,467 Working capital and other 29,519 (51,686) (13,990) 10,833 2,717 ------------------------------------------------------------ Cash provided by (used for) operating activities 49,747 (10,573) 36,888 38,734 27,510 Investing activities: Capital expenditures (27,777) (55,582) (82,585) (32,276) (37,268) Acquisition of sawmill - - - (19,417) - Cash provided by restructuring activities - - - 11,480 2,750 Proceeds from sale of other properties 1,004 722 1,156 1,158 1,848 ------------------------------------------------------------ Cash used for investing activities (26,773) (54,860) (81,429) (39,055) (32,670) Financing activities: Net increase (decrease) in borrowings (16,428) 91,899 51,017 9,483 8,440 Change in restricted bond funds 15,458 (15,458) - - - Partnership transaction tax settlement costs (4,884) - - - - Cash dividends (10,156) (9,855) (8,871) (8,821) (8,806) Other 15 1,926 1,819 229 293 ------------------------------------------------------------ Cash provided by (used for) financing activities (15,995) 68,512 43,965 891 (73) ------------------------------------------------------------ Increase (decrease) in cash and cash equivalents $ 6,979 $ 3,079 $ (576) $ 570 $ (5,233) ============================================================
12 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION POPE & TALBOT, INC. AND SUBSIDIARIES OVERVIEW Several adverse factors resulted in Pope & Talbot incurring a $24.8 million, or $1.86 per share, loss in 1995, the largest loss in the Company's history. These included a seven-month strike at the Company's Ransom, Pennsylvania tissue mill, rapidly escalating wastepaper prices, continued losses at the Company's Port Gamble, Washington sawmill and losses in the diaper business. Earnings were $15.9 million, or $1.21 per share ($1.20 on a fully diluted basis), and $21.0 million, or $1.80 per share ($1.67 on a fully diluted basis), in 1994 and 1993, respectively. In December 1995, the Company announced it had reached a definitive agreement to sell the Company's diaper business to Paragon Trade Brands, Inc. and the sale was completed on February 8, 1996. The diaper business has been reflected as a discontinued operation in the 1995 financial statements. The loss from continuing operations in 1995 was $13.8 million, or $1.03 per share, versus income of $15.9 million, or $1.21 per share in 1994, and of $10.8 million, or $.92 per share, in 1993. The seven-month strike at the Ransom tissue mill and high wastepaper costs combined to create record tissue losses. By the end of 1995, the Ransom strike had been settled and wastepaper costs were declining. Continued competitive pricing and increased fluff pulp prices generated a loss in the Company's diaper business after a break-even year in 1994. The Company's lumber business, which in 1994 and 1993 produced the two best wood products segment earnings in the Company's history, declined to a small profit in 1995 on 13 percent lower lumber selling prices. During 1995, it became increasingly difficult to obtain an adequate supply of acceptably priced logs for the Company's Port Gamble sawmill, and during 1995, this mill was permanently closed after incurring numerous temporary shutdowns during the last two years. The only improved business for the Company during 1995 was in pulp where a full year of strong pulp prices resulted in profitable pulp operations after four years of losses. Revenues increased to a record $524.4 million from $502.8 million (after restatement for discontinued operations) in 1994. Effects of the seven-month strike at the Ransom tissue mill and lower lumber sales prices were offset by higher pulp, tissue and wood chip sales prices to produce the higher revenues. LIQUIDITY AND CAPITAL RESOURCES The Company's primary source of internally generated cash is operating income before depreciation and the principal external source of cash is debt financing. Despite the loss of $24.8 million in 1995, $20.2 million was generated from operating income before depreciation in 1995. During the year, total long-term and short-term debt declined $16.4 million as the Company focused on conserving cash during this loss year. The long-term debt to total capitalization ratio was 42 percent at the end of 1995 and 44 percent at the end of 1994. The current ratio at December 31, 1995 was 1.8 to 1 compared to 2.2 to 1 at the end of 1994. At the end of 1995, the Company reached an agreement to sell its diaper business to Paragon. The sale was completed on February 8, 1996. The sale includes essentially all of the Company's diaper assets, except receivables. The Company will collect the diaper receivables and pay the remaining diaper liabilities. Total consideration for the sale was $65.0 million. This consideration was comprised of $50.5 million of cash and Paragon common stock valued at $14.5 million, subject to post closing adjustments, if any. The Company will use the cash received, less expenses, to pay down bank debt. Although no assurances can be given as to the ultimate disposition of the Paragon stock acquired in the transaction, it is currently anticipated that when the stock is sold, any net cash proceeds will be used to pay down debt. See Note 9 of Notes to Consolidated Financial Statements for further discussion of the sale of the diaper business. Cash generated from operations was $49.7 million in 1995. Operating income before non-cash charges for depreciation and amortization generated cash of $20.2 million in 1995. Net deferred income tax assets increased $15.9 million as the income tax benefit recognized was not realized as cash, resulting in a reduction in cash generated from operations. Inventories declined $40.9 million from the liquidation of the Port Gamble sawmill log and lumber inventories, a reduction in the volume of purchased log inventories at the Company's Canadian sawmills and reductions in tissue and diaper raw material and finished goods inventories. These inventory reductions were partially offset by higher pulp inventories, which were required as the Company increased its export pulp sales business, where longer inventory lead times are required. Receivables declined due to collection of the remaining $16.1 million Canadian duty refund during 1995. Income taxes payable were lower due to the timing of 13 3 recognition and payment of 1995 Canadian taxes. Deferred charges and other were higher primarily due to recognition of a profit sharing receivable from a pulp customer, Grays Harbor Paper Company. Accounts payable were lower due to the timing of the payment of liabilities. Cash provided by operations was used to pay dividends of $10.2 million, reduce net short- and long-term debt by $16.4 million and, when combined with the remaining $15.5 million proceeds available from a City of Eau Claire, Wisconsin solid waste disposal revenue bond program, were used to finance capital expenditures of $27.8 million. Scheduled long-term debt repayments were $928 thousand in 1995 and are anticipated to be $457 thousand in 1996. Capital spending was reduced to $27.8 million in 1995 from $55.6 million in 1994 and $82.6 million in 1993. During 1993 and 1994, the Company spent record amounts upgrading and modernizing its facilities and completing necessary pollution control projects. With the projects completed in 1993 and 1994, the only significant project during 1995 was the completion of a project to improve the quality of the recycled pulp at the Eau Claire tissue facility. This project was started in 1994 and financed almost entirely from the $18.8 million Eau Claire solid waste disposal revenue bond proceeds. At the end of 1994, $15.5 million remained available under this bond and was held in escrow for the completion of the project in 1995. All other 1995 capital expenditures were undertaken to sustain existing operations. There were no significant capital projects in process at year-end and to complete existing projects in 1996 will require about about $1 million. With the projects completed in the last three years, the Company's facilities are suitable for existing operations and 1996 capital projects will be to sustain existing operations, with total capital spending expected to be less than 1995. Projected 1996 capital spending will be funded with internally generated cash and supplemented, if necessary, with borrowings on the Company's line of credit. At December 31, 1995, the Company had available $100 million under an existing credit line, of which $73 million was outstanding at December 31, 1995. The amount available under the existing credit line was reduced to $75 million concurrent with the sale of the diaper business in February 1996 and the total outstanding was $20 million after the cash proceeds of the diaper sale received at closing were used to pay down bank debt. The impact of fluctuations in foreign currency exchange rates has not had, and is not expected to have, a significant effect on the Company's liquidity or results of operations. RESULTS OF OPERATIONS WOOD PRODUCTS Earnings from the Company's wood products business, which comprised 51 percent of 1995 consolidated revenues, declined to slightly above break-even in 1995 after generating earnings of $55.2 million in 1994 and $62.1 million in 1993. Lumber earnings in 1994 and 1993 were the two best years in the Company's history. Income of $13.8 million representing the return by the United States government of a duty paid in 1993 and 1992 to the government for Canadian lumber sold in the United States was recognized in 1994 and is in addition to the $55.2 million. Wood Products revenues were $265.6 million in 1995, down 13 percent from $304.2 million in 1994 and $300.0 million in 1993. The 1995 decrease was a combination of lower sales volumes as a result of reduced Port Gamble operations and the Grand Forks, British Columbia sawmill operating at one shift, down from the two shifts prior to 1995, and lumber sales prices which averaged 13 percent lower than 1994. Relatively good housing markets and restricted lumber supplies as a result of environmental restrictions on timber harvests in the Pacific Northwest led to generally strong, although volatile, lumber prices during 1993 and 1994. Housing starts in 1995 of 1.35 million were only slightly lower than 1994; however, a very strong pulp market pushed wood chip prices to record levels, inducing increased lumber production which resulted in downward pressure on lumber pricing. The Company's lumber sales volume decreased to 624 million board feet in 1995, or 86 percent of the estimated 726 million board feet of 1995 capacity. Sales volumes in 1995 declined from 686 million board feet in 1994 and 726 million board feet in 1993. This decline has been the result of curtailed production at the Company's Port Gamble sawmill and reduced timber availability in Canada. Log costs averaged approximately 20 percent higher in Canada in 1995 compared to 1994, primarily because of a full year under a new stumpage pricing formula in 1995, and only a partial year in 1994. 14 4 During 1995, the Port Gamble sawmill was either shut down or operating on a reduced one-shift basis due to a lack of acceptably priced timber in relation to end-product prices. Timber harvest levels in the Port Gamble operating region have been significantly reduced in recent years as a result of environmental pressures to reduce the amount of timber available for harvest. A strong log export market further reduced domestic log supplies in this region. These reduced log supplies resulted in the Port Gamble mill, which has an annual capacity of 150 million board feet, operating at 87 million board feet in 1994 and 53 million board feet in 1995. These reduced volumes, combined with weakened lumber markets, have resulted in losses at Port Gamble over the last two years, and with no prospect of a resolution to the timber supply situation, the Company permanently closed the Port Gamble sawmill in the fourth quarter of 1995. The mill equipment will be sold during 1996 and it is anticipated that the sale of the assets will not generate a significant gain or loss. Port Gamble plant and equipment of $30 million, net of related accumulated depreciation of $29 million, were reclassified to current assets at year-end 1995. Annual timber harvest levels under the Canadian timber harvesting licenses declined effective January 1, 1995 to more normal levels following several years of accelerated harvests to remove mountain pine beetle damaged trees. With the lower wood supply in Canada, the Company reduced its Grand Forks sawmill to a one-shift basis effective January 1, 1995, reducing the Company's lumber production capacity by approximately 8 percent of the Company's 1994 lumber capacity. Except for Port Gamble and Grand Forks, all of the remaining Company sawmills operated essentially at capacity in 1995. Following the closure of the Port Gamble sawmill and reduction of Grand Forks to one shift, the Company's lumber capacity is now approximately 526 million board feet, of which approximately 27 percent is in the Black Hills region of the United States, and the remainder in British Columbia, Canada. During 1994, the provincial government of British Columbia's Commission of Resources and Environment (CORE) began reviewing the future use of the forest resources in the province, including reserving additional forest resources for park lands. This review continued into 1995. Based on preliminary reports of the Commission, it appears that the amount of timber available to the Company's Canadian sawmills in the future could be reduced by 5 to 10 percent. PULP AND PAPER PRODUCTS The pulp and paper segment, which in 1995 produced market pulp and private label tissue and diapers generated 49 percent of 1995 revenues. The pulp and paper segment has posted losses for the last four years although the loss in 1995 was substantially reduced from either 1994 or 1993. Pulp and paper operating losses (after reflecting diapers as discontinued operations in the financial statements) were $1.5 million in 1995, $23.1 million in 1994 and $26.9 million in 1993. Pulp operations returned to profitability in 1995 on sharply improved pulp prices after four years of losses. Although tissue selling prices increased during 1995, the tissue loss in 1995 was greater than the 1994 loss as a result of a seven-month strike at the Company's Ransom tissue facility and high wastepaper costs. Diapers, which are presented as discontinued operations, incurred losses in 1995 after essentially break-even results in 1994. Pulp and paper revenues increased 30 percent in 1995 with sales of $258.8 million. The sales increase (after restatement for discontinued operations) was due to pulp business revenues increasing to $151.8 million in 1995 from $93.7 million in 1994 as a result of higher pulp selling prices. Tissue revenues remained essentially unchanged as the lost volume from the Ransom strike was offset by 17 percent higher selling prices. The Company's market pulp business, which comprised 29 percent of total Company revenues in 1995, returned to profitability in 1995 as the world pulp markets continued strong throughout the majority of the year. Industry pricing for a standard grade of bleached softwood pulp increased 70 percent in 1994 and increased another 37 percent in 1995 over 1994 levels. Although industry-wide pulp prices began to escalate rapidly in 1994, due to fixed price contracts the Company was not able to take full advantage of the price improvements until late in that year, which was not adequate to prevent a full year loss in 1994. Pricing for the Company's pulp in 1995 was more consistent with industry-wide pricing. The Company currently sells approximately 40 percent of its pulp production into domestic and foreign markets at pricing based on market prices for various grades of pulp. The remaining 60 percent is sold to the Grays Harbor Paper Company, with pricing tied to a formula based on white paper prices. During 1994, white paper prices did not increase as rapidly as pulp pricing; however, during 1995 these paper prices increased so that by the end of 1995 the 15 5 pricing obtained for the pulp sold under this pricing arrangement was only slightly below that obtained from other customers. A significant portion of the pulp not sold to Grays Harbor was sold under pricing arrangements which were for the majority of 1994 below industry pricing. Late in the third quarter of 1994 these pricing provisions expired and during 1995 prices for these sales returned to a normal relationship to market. Overall, pulp prices in 1995 for the Company's pulp sales were 70 percent higher than 1994 prices and 1994 prices were 25 percent higher than 1993 pricing. During 1995, the pulp mill operated essentially at capacity except for a one-week shutdown at the end of the year to align production with demand. Industry pulp pricing and demand during the fourth quarter of 1995 and early in the first quarter of 1996 have declined from the 1995 peak levels. Over the last several years environmental restrictions on timber harvests in the Pacific Northwest have resulted in higher wood chip costs, and reduced chip availability. Additionally during 1995, the strong pulp market placed additional pressure on chip prices and availability. Chip prices increased 71 percent from year-end 1994 levels during the middle of 1995; however, reduced demand for chips as a result of a reduced pulp demand at the end of 1995 reduced chip prices by year-end from the mid-year highs. Overall, chip costs were 42 percent higher in 1995 than 1994. In order to maintain an adequate supply of wood fiber to the mill, the Company began in 1994 to use sawdust as a raw material for a portion of its pulp production, and during 1995 sawdust pulp comprised 38 percent of the mill's production. Sawdust has historically been in greater supply and less expensive than the wood chips normally used as the primary raw material for the pulp mill. The Company's tissue business, which comprised 20 percent of total Company revenues, incurred a loss in 1995 for the fourth consecutive year. The losses in 1995 were incurred, however, for different reasons than the prior years' losses. Tissue losses in 1992 through 1994 were caused primarily by poor pricing within the industry. Tissue capacity increases in the late 1980's and early 1990's resulted in capacity which exceeded demand growth causing tissue prices to decline an average of 14 percent from 1989 through 1993. This condition began to stabilize in 1994, and in 1995 industry-wide tissue operating rates improved to approximately 93 percent of capacity generating tissue price increases for the Company at the end of 1995 of approximately 30 percent over year-end 1994 levels. The 1995 price increases were the first general price increases for the Company's tissue products since 1990. Prices for wastepaper, the primary raw material component for tissue, generally follows the pricing trends of world pulp markets. During 1995, wastepaper pricing was pushed to record levels by a combination of strong pulp markets and shortages of certain wastepaper grades caused primarily by the start-up of new recycled fiber mills in the United States. As a result of these pressures, wastepaper prices during 1995 doubled over 1994 pricing although by year-end 1995 wastepaper prices were declining and the prices paid for wastepaper in December 1995 were 5 percent lower than the same time in 1994. In addition to poor tissue pricing, losses have also been incurred because of a high cost structure at the Company's Ransom tissue mill. To reduce these losses the Company in 1995 implemented a labor contract having a revised, lower cost structure for Ransom. The union employees rejected this contract and were on strike for seven months in 1995 over this contract implementation. In December 1995, the union employees accepted a revised contract and returned to work. The losses caused by the strike, which were a significant reason for the 1995 tissue loss, included costs for operating the mill with temporary workers and salaried employees and higher shipping and packaging costs, all of which were necessary to supply some of the Company's East Coast customers. The Ransom tissue mill represents approximately 50 percent of the Company's tissue capacity and, as a result of the strike, Ransom operated at approximately 53 percent of capacity in 1995. The Company's other tissue mill at Eau Claire, Wisconsin operated at capacity during the year. In total, the Company's tissue business operated at 75 percent of capacity. As of the end of 1995 tissue operating conditions had improved over most of 1995. These improvements include the settlement of the Ransom strike, 35 percent higher tissue sales prices in the fourth quarter of 1995 than the fourth quarter 1994, and wastepaper prices which, after peaking in mid 1995, were 5 percent lower in December 1995 than December 1994. In the Company's diaper business (which has been reflected as a discontinued operation in the financial statements) higher prices for fluff pulp and continued competitive pricing for diapers resulted in a loss in the Company's diaper business for 1995 after essentially a break-even year in 1994. In December 1995, the Company entered into a 16 6 definitive agreement to sell the diaper business to Paragon. The sale was completed on February 8, 1996. To remain cost competitive in the diaper business would have required substantial capital investments to consolidate facilities and, even if such capital investments were made, it was unclear if the size of the Company's diaper operations would have enabled the Company to effectively compete against the larger branded producers. The competitive pricing environment continued into 1995 and under pressure from both branded producers and other private label producers, sales prices declined another 3 percent in 1995, after a 3 percent price decline in 1994. In this competitive environment, overall demand for diapers has not increased significantly during the last three years, which has impacted capacity utilization. During 1995, diapers operated at approximately 75 percent of capacity, largely unchanged from 81 percent of capacity in 1994. Contributing to the diaper losses was also the rising costs for fluff pulp, a primary component for disposable diapers. Costs for fluff pulp in 1995 were 50 percent higher than average 1994 levels. OTHER MATTERS The Environmental Protection Agency (EPA) has published proposed regulations which would establish standards and limitations for non-combustion sources under the Clean Air Act and revised regulations under the Clean Water Act. These proposals are collectively referred to as the "cluster rules" and have been the subject of extensive discussions between the pulp and paper industry and the EPA. The Company's primary exposure to these proposals relate to the Company's Halsey pulp mill, and to a much lesser degree the Company's two tissue mills. Based on preliminary evaluation of the proposed rules, the costs of modifications to the Company's mills could range from $15 million to $30 million. The proposed rules could be made effective in 1999, although later enactment is possible. 17 7 QUARTERLY FINANCIAL INFORMATION The following quarterly information is unaudited, but includes all adjustments which management considers necessary for a fair presentation of such information. For interim quarterly statements, the income tax provision (benefit) is estimated using the best available information for projected results for the entire year. The 1995 fourth quarter results include year-end adjustments to certain accruals and valuation reserves approximating $3,200,000, net of tax. During the fourth quarter of 1994, the Company recognized other gains of $13,845,000 relating to the announced refund of countervailing duties originally paid in 1992 and 1993 (see Note 8).
Quarter --------------------------------------------------- (Thousands except per share) First Second Third Fourth Year - ----------------------------------------------------------------------------------------------------------- 1995 Revenues $133,837 $124,491 $131,773 $134,308 $524,409 Gross profit (loss) 7,146 (2,108) 3,598 5,110 13,746 Loss from continuing operations (1,043) (6,323) (3,380) (3,050) (13,796) Loss from discontinued operations (191) (2,688) (3,265) (4,898) (11,042) ------------------------------------------------------------------ Net loss $ (1,234) $ (9,011) $ (6,645) $ (7,948) $ (24,838) ================================================================== Primary and fully diluted loss per common share: Loss from continuing operations $(.08) $(.48) $(.25) $(.22) $(1.03) Loss from discontinued operations (.01) (.20) (.24) (.38) (.83) ------------------------------------------------------------------ Net loss $(.09) $(.68) $(.49) $(.60) $(1.86) ================================================================== 1994 Revenues $130,550 $119,177 $126,195 $126,885 $502,807 Gross profit 19,857 10,942 9,100 5,171 45,070 Other gains (losses) - - - 13,845 13,845 Income (loss) from continuing operations 7,439 1,919 (30) 6,624 15,952 Income (loss) from discontinued operations 1,149 882 951 (3,037) (55) ------------------------------------------------------------------ Net income $ 8,588 $ 2,801 $ 921 $ 3,587 $ 15,897 ================================================================== Primary income (loss) per common share: Income from continuing operations $.61 $.14 $ - $ .50 $1.21 Income (loss) from discontinued operations .09 .07 .07 (.23) - ------------------------------------------------------------------ Primary net income $.70 $.21 $.07 $ .27 $1.21 ================================================================== Fully diluted income (loss) per common share: Income from continuing operations $.56 $.14 $ - $ .50 $1.20 Income (loss) from discontinued operations .09 .07 .07 (.23) - ------------------------------------------------------------------ Fully diluted net income $.65 $.21 $.07 $ .27 $1.20 ==================================================================
30 EX-23.1 4 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report incorporated by reference in this Form 10-K into the Company's previously filed Registration Statement No. 33-34996 on Form S-8 and Registration Statement No. 33-64764 on Form S-8. ARTHUR ANDERSEN LLP Portland, Oregon March 26, 1996 EX-27.1 5 FINANCIAL DATA SCHEDULE
5 1000 12-MOS DEC-31-1995 DEC-31-1995 13826 0 52931 0 68710 207252 457959 232199 472227 113495 138514 0 0 13972 175720 472227 524409 524409 510663 510663 0 0 13784 (21347) (7551) (13796) (11042) 0 0 (24838) (1.86) (1.86)
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