SPOKANE, Wash.--Oct. 17, 2001--Potlatch Corporation today reported that poor market conditions for most of its products and substantially higher interest expense resulted in a loss for the third quarter of 2001. For the third quarter of 2001, the company incurred a net loss of $6.6 million, or $.23 per diluted common share, compared to a loss of $10.5 million, or $.37 per diluted common share, for the same period in 2000. The 2000 results include an after-tax charge totaling $11.3 million, or $.40 per diluted common share, for costs related to the closure of a plywood mill in Idaho. Net sales for the third quarter of 2001 were $456.6 million, slightly higher than the $452.0 million recorded in the third quarter of 2000. For the first nine months of 2001 the company incurred a net loss totaling $47.7 million, or $1.69 per diluted common share. Comparatively, the net loss for the first nine months of 2000 was $17.5 million, or $.61 per diluted common share, which included charges for a salaried workforce reduction and the plywood mill closure. Before these charges, net earnings for the first nine months of 2000 were $9.6 million, or $.34 per diluted common share. Net sales for the first nine months of 2001 were $1.36 billion, compared with $1.39 billion for 2000's first nine months. The resource segment reported operating income of $17.9 million for the third quarter of 2001, down from the $23.5 million earned in the third quarter of 2000. The results reflect lower net sales realizations for log sales to external customers in Idaho and internal customers in Arkansas combined with higher production costs in Idaho and Arkansas. Operating income for the wood products segment was slightly above breakeven for the third quarter of 2001, compared to a loss of $29.0 million in the third quarter of 2000. Results for 2000 include an $18.5 million charge related to the closure of a plywood mill in Idaho. "A 15 percent increase in shipments and modestly higher net sales realizations for lumber were primarily responsible for the favorable comparison,'' said L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Results for the company's panel products improved slightly,'' Siegel said. "Oriented strand board and plywood shipments increased 8 percent and 21 percent, respectively, offsetting declines in net sales realizations of 1 percent and 6 percent, respectively, compared to 2000's third quarter.'' Markets for the company's wood products weakened noticeably in mid-to-late September. The printing papers segment recorded a third quarter operating loss of $7.0 million, versus income of $2.3 million reported a year ago. "Lower net sales realizations for printing papers and pulp adversely affected results for the segment,'' Siegel said. "Unfavorable economic conditions and foreign imports have had a negative effect on both price and product mix for printing papers,'' Siegel added. Net sales realizations for printing papers and pulp were down 12 percent and 44 percent, respectively, compared to the third quarter of 2000. Shipments for printing papers and pulp increased 2 percent and 17 percent, respectively, partially offsetting the negative effects of lower net sales realizations. The pulp and paper segment reported operating income for the third quarter of $10.0 million, compared to $6.9 million for 2000's third quarter. "An 11 percent increase in shipments for consumer tissue products together with slightly higher net sales realizations were responsible for the improvement during the period,'' Siegel said. Lower net sales realizations for paperboard and pulp of 6 percent and 51 percent, respectively, and a 25 percent decrease in pulp shipments partially offset the positive consumer tissue results. "Energy costs were not a factor in the quarter-to-quarter comparison. The company's efforts to increase energy production and reduce consumption, combined with a more stable energy marketplace, kept those costs comparable to the prior year's third quarter, although the company's year-to-date results were significantly affected by higher energy costs,'' Siegel added. Higher interest expense during the current quarter was due largely to the greater amount of debt the company currently has outstanding compared to last year and to a reduction in the amount of interest capitalized for major construction projects.