Potlatch Reports 4Q Results, Net Loss of $31.7 Million
Press release from the issuing company
SPOKANE, Wash.--Jan. 25, 2002--Potlatch reported a loss for the fourth quarter of 2001, largely due to continued poor market conditions for most of its products, resulting market-related shutdowns at several facilities, and substantially higher interest expense.
Results for the quarter were adversely affected by extended shutdowns at the company's two printing paper mills in Minnesota. Additionally, the company experienced market-related production curtailments at its pulp and paperboard mill in Idaho as well as two of the company's lumber mills and its plywood, particleboard and oriented strand board mills.
Fourth quarter results were also negatively affected by an unusual $7.6-million charge to bad debt expense, due to a pulp broker's insolvency, as well as an $11.1 million charge for costs of removing defective equipment from service and deferred litigation costs, recently determined to be uncollectible, from the company's lawsuit against Beloit Corporation.
For the fourth quarter of 2001 the company incurred a net loss of $31.7 million, or $1.12 per diluted common share, compared to a loss of $15.7 million, or $.55 per diluted common share, for the same period in 2000. Net sales for the fourth quarter of 2001 were $394.9 million, $24.8 million lower than the $419.7 million recorded in the fourth quarter of 2000.
The company incurred a net loss for the full year 2001 of $79.4 million, or $2.81 per diluted common share. Comparatively, the net loss for 2000 was $33.2 million, or $1.16 per diluted common share, which included charges for a salaried workforce reduction and plywood mill closure. Before these charges, net earnings for 2000 were $4.9 million, or $.17 per diluted common share. Net sales for 2001 were $1.75 billion, compared with $1.81 billion in 2000.
The resource segment reported operating income of $19.6 million for the fourth quarter of 2001, substantially higher than the $13.1 million earned in the fourth quarter of 2000. Favorable weather conditions during the fourth quarter resulted in a substantial increase in Idaho fee timber production compared to 2000. Higher net sales realizations for sawlogs in Idaho also favorably affected results for the quarter.
The wood products segment incurred an operating loss of $13.9 million for the fourth quarter of 2001, compared to a loss of $18.9 million in the fourth quarter of 2000. "Although better than the prior year, the segment's results for the quarter continued to reflect the poor market conditions the segment has experienced for most of 2001,'' said L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Lumber and oriented strand board shipments increased 11 percent and 16 percent, respectively, but the benefits were partially offset by decreased net sales realizations for all of our wood products compared to the fourth quarter of 2000.'' Shutdowns affected segment results for the fourth quarter of both years. Most facilities took extended market-related downtime in 2001 and the oriented strand board mill in Cook, Minnesota, was down during a significant portion of 2000's fourth quarter to complete a modernization and expansion project.
The printing papers segment recorded a fourth quarter operating loss of $18.3 million, versus income of $3.0 million reported in 2000. "A less desirable product mix and pricing pressures caused net sales realizations for printing papers to decline over 15 percent while pulp pricing pressures resulted in a 40 percent decline in pulp realizations,'' Siegel said. "Depressed market conditions were the reason for extended shutdowns at the segment's facilities during the quarter, which contributed substantially to the operating loss for the period.'' The segment's portion of the charge to bad debt expense for the pulp broker insolvency amounted to $5.4 million.
The pulp and paper segment reported an operating loss for the fourth quarter of $14.1 million, compared to a loss of $3.9 million for 2000's fourth quarter. "Excluding the segment's $11.1 million charge related to the Beloit lawsuit and its $2.2 million share of the pulp broker bad debt charge, fourth quarter 2001 results were approximately break even, slightly better than the fourth quarter of 2000,'' Siegel said. Energy costs were over $11 million lower for the segment compared to 2000's fourth quarter, but the benefits were offset in large part by a 12 percent decrease in net sales realizations for paperboard and by market-related shutdowns taken during the quarter at the Lewiston, Idaho, pulp and paperboard mill.
The higher interest expense during the fourth quarter was due largely to the greater amount of debt the company currently has outstanding compared to 2000 and to a reduction in the amount of interest capitalized for major construction projects.
Potlatch is a diversified forest products company with timberlands in Arkansas, Idaho and Minnesota.
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