Potlatch Reports Q4 Results: $19.1 million net loss
Press release from the issuing company
SPOKANE, Wash.-Jan. 27, 2003--Potlatch Corporation today reported a loss for the fourth quarter of 2002, largely due to continued poor market conditions for its wood products and paperboard and a $9.0 million pre-tax charge taken for the company-wide elimination of over 100 salaried positions.
For the fourth quarter of 2002, the company incurred a net loss from continuing operations of $19.1 million, or $.67 per diluted common share, compared to a loss of $20.6 million, or $.73 per diluted common share, for the same period in 2001. Including discontinued operations, the company incurred a net loss of $34.5 million or $1.20 per diluted common share for the fourth quarter of 2002, compared to a fourth quarter 2001 net loss of $31.7 million or $1.12 per diluted common share. The results for 2002's fourth quarter include a pre-tax, net charge of $21.2 million for adjustments to disposal costs related to discontinued operations. Excluding discontinued operations, net sales for the fourth quarter of 2002 were $310.8 million, compared to $288.8 million recorded in the fourth quarter of 2001.
For the full year 2002, the company incurred a net loss from continuing operations totaling $50.9 million, or $1.79 per diluted common share. Comparatively, the net loss for 2001 was $56.6 million, or $2.00 per diluted common share. Including discontinued operations, 2002's net loss was $234.4 million or $8.23 per diluted common share, compared to a net loss of $79.4 million or $2.81 per diluted common share in 2001. Excluding discontinued operations, net sales for 2002 were $1.29 billion, compared with $1.27 billion in 2001.
The Resource segment reported operating income of $20.3 million for the fourth quarter of 2002, which was slightly higher than the $19.6 million earned in the fourth quarter of 2001. Income from the sale of surplus land, associated water rights and irrigation equipment at the Boardman, Oregon, hybrid poplar plantation more than offset a decline in income from the segment's Idaho region. During the fourth quarter of 2002, a lower percentage of logs produced in Idaho were from fee lands, which negatively affected earnings in that period.
The Wood Products segment incurred an operating loss of $17.6 million for the fourth quarter of 2002, compared to a loss of $13.9 million in the fourth quarter of 2001. "The segment's results for both quarters reflect the poor market conditions for wood products that have been ongoing since the second half of 2000," said L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Lumber shipments were down 6 percent compared to the fourth quarter of 2001 and were a significant factor in the unfavorable comparison." The decline in lumber shipments was partially offset by an 8 percent improvement in shipments and a 12 percent improvement in net sales realizations for oriented strand board. Results for the fourth quarter of 2001 include a $1.8 million partial reversal of the charge related to the permanent closure of a plywood mill in 2000.
The pulp and paper segment reported an operating loss for the fourth quarter of $2.3 million, compared to the loss of $14.1 million for 2001's fourth quarter. "After excluding approximately $13.3 million of non-recurring charges in 2001, the segment's results in the fourth quarter of 2002 were slightly worse than in 2001's fourth quarter," Siegel said. "Competitive consumer tissue product markets in the fourth quarter negatively affected performance. However, the negative results were partially offset by improved shipments for the pulp and paperboard portion of the segment." Beginning in the first quarter of 2003, results for consumer tissue products will be reported as a stand-alone segment, separate from pulp and paperboard, due to management changes effective in January 2003.
Siegel noted that in early January 2003 unions representing workers in the pulp-based businesses at Lewiston, Idaho, approved a new four-year contract. "This new contract is more competitive with others in the industry and is the direct result of the positive and constructive attitudes of the union leadership during negotiations," he said.
Interest expense for the fourth quarter of 2002 was significantly less than the amount incurred for the same period last year. The reduction was due to the retirement of over $470 million of debt during 2002, including approximately $18 million in the fourth quarter. The company has incurred one-time costs of approximately $15.4 million during the year associated with the debt retirement activity.
Other income, net, of $5.7 million for the fourth quarter of 2002 consisted largely of $4.3 million of income from the sale of surplus land and related assets at our hybrid poplar plantation, as discussed above. Other expense, net, of $7.4 million in the fourth quarter of 2001 was the result of an $11.1 million charge related to Potlatch's claim against Beloit Corporation's bankruptcy estate. That charge was partially offset by interest income and other minor non-operating income items.
In December the company recorded a minimum pension liability adjustment totaling $33.2 million, after tax, as a result of poor pension asset performance in the second half of 2002 and a reduction in the discount rate from 7.25% to 6.75%. This non-cash charge is reflected in the balance sheet as an adjustment to stockholders' equity and does not affect operating income results for the company. Pension contributions and expense in 2003 should not be materially affected by the charge or the discount rate change.
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