Spokane -- 10/16/00 - Potlatch Corporation (NYSE:PCH) today reported significantly lower earnings for the third quarter of 2000, compared to the third quarter of 1999. The earnings decline was largely due to rapidly deteriorating market conditions for the company's wood products during the quarter, which contrasts sharply with the very favorable conditions during the same period a year ago. The company also recorded an $18.5 million charge in September for costs related to the previously announced closure of a plywood plant in Idaho. The after tax effect of the charge totaled $11.3 million or $.39 per diluted common share. Net earnings for the third quarter of 2000 were $4.4 million or $.15 per diluted common share, before the charge. Including the charge, the company posted a net loss of $6.9 million or $.24 per diluted common share. Third quarter 1999 net earnings were $22.6 million or $.77 per diluted common share. Net sales were $416.8 million, compared with $446.6 million in the third quarter of 1999. Net earnings for the first nine months of 2000 were $15.3 million or $.53 per diluted common share, before restructuring and other charges totaling $27.1 million after taxes taken in the second and third quarters. Including the charges, the company had a net loss for the first nine months of $11.8 million or $.41 per diluted common share. Net earnings for the first nine months of 1999 were $32.6 million or $1.12 per diluted common share. Net sales for the first nine months of 2000 were $1.28 billion, equal to the total in 1999. The Resource segment had operating income of $23.5 million for 2000's third quarter, compared to $23.1 million in the previous year's third quarter. Increased timber harvest volumes in Arkansas and income from the sale of timberland in Minnesota offset lower volumes and prices for timber in Idaho. The Wood Products segment reported an operating loss of $29.0 million for the third quarter of 2000, which includes the charge for the closure of the Idaho plywood plant. The segment earned $35.4 million in 1999's third quarter. "The industry is operating in a drastically different environment than a year ago," noted L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Interest rate increases in the last twelve months by the Federal Reserve have slowed construction activity and, combined with increased foreign imports, have caused net sales realizations to decline substantially for all of the company's solid wood products. For example, net sales realizations for oriented strand board were approximately 40% lower compared to the third quarter of 1999." The Printing Papers segment recorded third quarter operating income of $8.2 million, compared to a loss of $5.1 million reported a year ago. "The improved results are largely due to sales of market pulp, which began this year as a result of the completion of the pulp mill expansion in Cloquet, Minnesota," Siegel said. Demand for printing papers was soft during the quarter. The Pulp and Paper segment reported third quarter operating income of $6.9 million, versus $7.1 million for 1999's third quarter. "Net sales realizations for paperboard and tissue were higher compared to last year's third quarter," Siegel noted. "However, shipments declined for paperboard, which negatively affected results." Higher energy costs, namely electricity and natural gas, also contributed to the slightly unfavorable quarter to quarter income comparison. In addition, results were adversely affected due to downtime resulting from a complete rebuild of the internal components of the recovery boiler at the company's pulp and paperboard mill in Arkansas. It is anticipated that the rebuild, which commenced on September 7, 2000, will be completed by October 21, 2000. Looking forward to the fourth quarter, Siegel commented that: "We agree with the opinion of industry analysts that general economic conditions, low market pricing and the strength of the dollar will continue to inhibit earnings." Potlatch is a diversified forest products company with timberlands in Arkansas, Idaho and Minnesota.