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Potlatch Reports Improved Q2 Results

Wednesday, July 20, 2005

Press release from the issuing company

Potlatch Corporation today reported higher earnings for the second quarter of 2005, compared to earnings from continuing operations for the second quarter of 2004, due to improved operating results for its Resource and Consumer Products operating segments. The company reported earnings of $8.2 million, or $.28 per diluted common share, for the second quarter of 2005, compared to earnings from continuing operations of $7.1 million, or $.24 per diluted common share, for the second quarter of 2004. Including discontinued operations, the company reported net earnings of $49.6 million, or $1.68 per diluted common share, for 2004's second quarter. Discontinued operations in 2004 consisted of three oriented strand board mills in Minnesota, which the company sold in September 2004. Net sales for the second quarter of 2005 were $367.6 million, compared to net sales from continuing operations of $343.2 million recorded in the second quarter of 2004. Net earnings from continuing operations for the first half of 2005 totaled $12.0 million, or $.41 per diluted common share, versus net earnings from continuing operations for the first half of 2004 of $0.8 million, or $.03 per diluted common share. Including discontinued operations, net earnings for the first half of 2004 totaled $71.4 million, or $2.42 per diluted common share. Net sales for the first half of 2005 were $703.8 million, compared with net sales from continuing operations of $659.8 million for 2004's first half. The Resource segment reported operating income of $14.1 million for the second quarter of 2005, compared to $6.8 million earned in the second quarter of 2004. Increased harvests of fee timber in Idaho and Arkansas, combined with higher sales prices for logs, were responsible for the favorable comparison. Operating income for the Wood Products segment totaled $13.9 million for the second quarter of 2005, compared to income of $23.9 million recorded in the second quarter of 2004. "Higher log costs and lower selling prices for our lumber and panel products were responsible for the lower earnings," noted L. Pendleton Siegel, Potlatch chairman and chief executive officer. "However, increased lumber shipments partially offset these unfavorable comparisons," Siegel added. "Homebuilding activity in 2005 has remained strong despite a series of short-term interest rate hikes, and selling prices for lumber and panels remain at good levels compared to historical averages." For the second quarter of 2005, the Pulp and Paperboard segment reported operating income of $0.3 million, versus operating income of $5.9 million for 2004's second quarter. "Although selling prices for paperboard increased 10% compared to the prior year, results for the segment were lower due largely to decreased pulp and paperboard shipments and higher wood fiber and maintenance costs," Siegel said. The Consumer Products segment reported operating income of $2.2 million for the second quarter of 2005, compared to an operating loss of $1.2 million for 2004's second quarter. "Selling prices for our consumer tissue products continued to increase during the quarter and largely contributed to the improved operating results," Siegel noted. "In addition, higher production resulted in lower per-ton costs for the segment," he added. Interest expense for the second quarter of 2005 totaled $7.2 million, significantly lower than the $12.5 million charged against results for the second quarter of 2004. The reduction in interest expense was the result of the repayment of approximately $282 million in debt during the fourth quarter of 2004, using a portion of the proceeds from the sale of our oriented strand board mills.

 

 

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