SPOKANE, Wash.--Oct. 18, 2005-- Potlatch Corporation today reported lower earnings for the third quarter of 2005, compared to earnings from continuing operations for the third quarter of 2004, due to lower operating results for its Resource, Wood Products and Pulp and Paperboard operating segments. Results for the 2005 third quarter were negatively affected by the high cost of energy, exacerbated by petroleum and natural gas supply curtailments in the wake of recent Gulf Coast hurricanes. The company reported earnings of $10.5 million, or $.36 per diluted common share, for the third quarter of 2005, compared to third quarter 2004 earnings from continuing operations of $24.2 million, or $.81 per diluted common share. Including discontinued operations, the company reported net earnings for 2004's third quarter of $209.8 million, or $7.05 per diluted common share. Discontinued operations in 2004 consisted of three oriented strand board mills in Minnesota, which the company sold in September 2004 for a pre-tax gain of approximately $269.5 million. Net sales from continuing operations for the third quarter of 2005 were $404.7 million, compared to net sales from continuing operations of $370.1 million recorded in the third quarter of 2004. Net earnings from continuing operations for the first nine months of 2005 totaled $22.5 million, or $.77 per diluted common share, versus net earnings from continuing operations for the first nine months of 2004 of $25.0 million, or $.85 per diluted common share. Including discontinued operations, net earnings for the first nine months of 2004 totaled $281.2 million, or $9.51 per diluted common share. Net sales from continuing operations for the first nine months of 2005 were $1,108.5 million, compared with net sales from continuing operations of $1,029.9 million for the first nine months of 2004. The Resource segment reported operating income of $25.9 million for the third quarter of 2005, compared to $30.2 million earned in the third quarter of 2004. Lower land sales revenue, which totaled $6.9 million in the third quarter of 2005 versus $12.0 million in the 2004's third quarter, was largely responsible for the decreased income. Land sales revenue for the 2004 quarter included $4.1 million received from the sale of conservation easements on portions of the company's Idaho timberlands. Higher sales prices for logs partially offset the lower land sales revenue. Operating income for the Wood Products segment was $6.1 million for the third quarter of 2005, compared to income of $26.4 million recorded in the third quarter of 2004. "The significantly lower earnings were primarily due to lower selling prices for our lumber and panel products," noted L. Pendleton Siegel, Potlatch chairman and chief executive officer The Pulp and Paperboard segment reported operating income of $0.2 million for 2005's third quarter, versus operating income of $12.2 million for the third quarter of 2004. "Results for the segment were lower due largely to higher energy and chemical costs and lower pulp selling prices," Siegel said. "These negative comparisons were partially offset by higher paperboard selling prices and increased pulp shipments to external customers," he added. Operating income for the third quarter of 2004 included a $3.0 million payment received from the bankruptcy liquidation of Beloit Corporation. For the third quarter of 2005, the Consumer Products segment reported operating income of $2.2 million, compared to an operating loss of $5.0 million for 2004's third quarter. "Higher selling prices and increased shipments for our consumer tissue products, combined with lower per ton costs due to increased production, were largely responsible for the improved operating results," Siegel noted. "These favorable comparisons more than offset higher packaging and energy costs," he remarked. Interest expense for the third quarter of 2005 totaled $7.2 million, significantly lower than the $12.5 million charged against results for the third 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.