SPOKANE, Wash.--Oct. 16, 2003-- Significantly higher earnings for Potlatch Corporation's Wood Products segment resulted in improved results for the third quarter of 2003, the company reported today.
A reduction in the company's estimated effective tax rate for 2003 also positively affected third quarter and year-to-date earnings, while lower third quarter 2003 earnings for the Consumer Products and Resource segments, as compared with 2002's third quarter, partially offset positive Wood Products results.
The company reported third quarter 2003 earnings from continuing operations of $22.2 million or $.77 per diluted common share, compared to a loss from continuing operations of $10.4 million or $.36 per diluted common share for the same period in 2002. Including discontinued operations, the company incurred a net loss of $12.4 million or $.43 per diluted common share for the third quarter of 2002. Net sales for the third quarter of 2003 were $400.3 million, a substantial increase over the $326.5 million recorded in the third quarter of 2002.
For the first nine months of 2003, the company reported earnings from continuing operations totaling $20.1 million or $.70 per diluted common share, compared with a loss of $31.9 million or $1.12 per diluted common share for the first nine months of 2002. Including discontinued operations, net earnings for the first nine months of 2003 totaled $19.2 million or $.67 per diluted common share, compared to a net loss of $199.9 million or $7.03 per diluted common share in 2002. Net sales for the first nine months of 2003 were $1.1 billion, compared with $981.5 million for 2002's first nine months.
The Resource segment reported operating income of $13.6 million for the third quarter of 2003, a decline compared to the $19.7 million earned in the third quarter of 2002. Lower log prices in Idaho and a decline in log sales volumes in Arkansas were the primary factors in the segment's earnings decline.
Wood Products segment operating income for the third quarter of 2003 was $43.9 million, a significant improvement versus the $9.1 million loss recorded in the third quarter of 2002. "High oriented strand board prices, nearly double those of the same period in 2002, were the primary reason for the favorable comparison," noted L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Increased lumber and plywood shipments as well as higher plywood prices also contributed to improved income for the segment," Siegel added.
The Pulp and Paperboard segment reported an operating loss of $3.3 million for the third quarter, versus a loss of $6.5 million for 2002's third quarter. Increased shipments of paperboard and pulp were the primary cause for the favorable comparison, which was partially offset by lower prices for paperboard and extended power boiler maintenance downtime during the quarter at the Lewiston, Idaho, pulp and paperboard facility. Although productivity improvements are continuing at Lewiston, the additional maintenance downtime caused the third quarter 2003 results to compare unfavorably with second quarter 2003 results.
The Consumer Products segment reported operating income of $0.1 million, down from income of $9.4 million earned in the third quarter of 2002. "Selling prices for consumer tissue products declined approximately 6 percent, compared to the third quarter of 2002, due to continued competitive markets," Siegel said. A 12 percent increase in product shipments in the third quarter was more than offset by the combination of lower selling prices and higher production costs associated with the remaining converting downtime at the beginning of the quarter for inventory management.
Third quarter and nine months results for 2002 were negatively affected, respectively, by pre-tax costs of $9.3 million and $15.2 million that were incurred as a result of the early retirement of debt during the second and third quarters of 2002.
The company has revised its estimated annual effective income tax rate to 34 percent, down from 39 percent used in the first half of 2003. The rate change is the result of applying tax credits to the company's expected 2003 obligation for income taxes. The income tax rate for 2002 was 39 percent.
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