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Potlatch Reports Improved Q4 Results

Tuesday, February 08, 2005

Press release from the issuing company

SPOKANE, Wash.--Feb. 7, 2005-- Potlatch Corporation today reported improved fourth quarter results for all of its operating segments, compared to 2003's fourth quarter, but reported a loss for the fourth quarter of 2004 due primarily to $25.2 million in one-time, net pre-tax costs associated with the early repayment of approximately $282 million of debt. For the fourth quarter of 2004, the company reported a loss from continuing operations of $9.7 million, or $.33 per diluted common share, including debt repayment costs. Earnings from continuing operations for the fourth quarter of 2003 were $2.5 million, or $.09 per diluted common share. Including discontinued operations, the company lost $10.0 million or $.34 per diluted common share for the fourth quarter of 2004, compared to net earnings of $31.5 million, or $1.10 per diluted common share for the fourth quarter of 2003. Discontinued operations in 2004 consisted of our oriented strand board (OSB) operations, while 2003 included both the OSB operations and our printing papers mill in Brainerd, Minnesota. Net sales from continuing operations for the fourth quarter of 2004 were $321.6 million, compared to $297.0 million recorded in the fourth quarter of 2003. Earnings from continuing operations for the year ended December 31, 2004, totaled $15.3 million or $.52 per diluted common share, compared to a loss from continuing operations for 2003 of $3.8 million, or $.13 per diluted common share. Including discontinued operations, net earnings for 2004 totaled $271.2 million, or $9.19 per diluted common share, compared to net earnings of $50.7 million, or $1.77 per diluted common share in 2003. Net sales from continuing operations for 2004 were $1.4 billion, compared with $1.2 billion for 2003. The Resource segment reported operating income of $20.9 million for the fourth quarter of 2004, compared to $17.3 million earned in the fourth quarter of 2003. An increase in log sales and higher log sales prices in Idaho contributed significantly to the favorable comparison to the prior year quarter. The segment's lower land sales revenue partially offset the improved Idaho results. Income from land sales for the segment totaled $5.3 million in the fourth quarter of 2004, versus $9.1 million in the fourth quarter of 2003. Operating income for the Wood Products segment improved to $6.4 million for the fourth quarter of 2004, versus $4.8 million earned for the fourth quarter of 2003. "Lumber markets remained relatively firm despite a normal seasonal decline in wood products markets during the fourth quarter of 2004, resulting in a favorable comparison to the fourth quarter of 2003," stated L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Selling prices for lumber and particleboard were higher compared to the fourth quarter of 2003, with plywood slightly below 2003 levels," Siegel added. Lumber Shipments were negatively affected by downtime at the segment's Prescott, Arkansas, sawmill due to log shortages caused by exceptionally wet conditions. Particleboard shipments from the Post Falls, Idaho, mill declined 27 percent as a result of downtime to align inventories with market conditions, although the decline was partially offset by higher particleboard sales prices. The Pulp and Paperboard segment reported operating income for 2004's fourth quarter of $0.7 million, versus a loss of $1.3 million for the fourth quarter of 2003. "Increased shipments and higher sales prices for both paperboard and pulp were responsible for the favorable comparison to the fourth quarter of 2003," Siegel noted. "Paperboard market conditions for this time of the year are as encouraging as we have seen them for some time," Siegel added. During the quarter, the segment's Lewiston, Idaho, facility continued to make production rate gains compared to the same period a year ago, and the resulting decrease in unit costs contributed to the positive results. However, the segment's costs and production were negatively affected by fourth quarter 2004 maintenance downtime at the Lewiston and Cypress Bend, Arkansas, pulp and paperboard mills, as well as extended downtime on one of Lewiston's two paperboard machines to install new equipment. The Consumer Products segment incurred an operating loss of $0.1 million, compared to a loss of $0.7 million recorded in the fourth quarter of 2003. "Markets for consumer tissue products continue to be competitive, although net selling prices improved over the fourth quarter of 2003, partially due to the addition of our new ultra towel product to the segment's product mix," Siegel remarked. Increased production costs and a decrease in shipments compared to the fourth quarter of 2003 partially offset the benefits from the increased sales prices. Energy costs for the entire company were approximately $5 million higher for the fourth quarter of 2004 compared to the fourth quarter of 2003, with more than half the increase attributable to usage at the new Las Vegas tissue mill. "Proceeds from the sale of our OSB operations in the third quarter of 2004 allowed us to reduce outstanding debt -- most of it paying a high interest rate -- during the fourth quarter, thus strengthening our balance sheet. We have successfully brought our long-term debt to stockholders' equity ratio below our historically preferred range, which has been a priority. We also returned a portion of the OSB sale proceeds to our shareholders in the form of a $2.50 per share special cash dividend and the repurchase of approximately 1.5 million outstanding shares of the company's stock through an accelerated repurchase program," Siegel added.

 

 

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