Nevada County Picayune and Gurdon Times Newspaper Archive

Potlatch Reports Higher Earnings

Potlatch Corporation recently reported significantly higher earnings for the third quarter of 1999, compared to 1998's third quarter. The favorable comparison was largely due to the very positive market condition for the company's wood products during the quarter.

During the quarter, the company made certain changes in its management structure designed to separate the operations of the company's timberlands from its wood products manufacturing facilities. The results for the newly created Resource Management Group are reported as a separate segment beginning this quarter. Prior segment information has been restated to reflect this change.

Net earnings for the third quarter of 1999 were $22.6 million or $.77 per diluted common share. For 1999's third quarter, net earnings were $12.5 million or $.43 per diluted common share. Net sales were $445.5 million, compared with $404.6 million in the third quarter of 1998.

Net earnings for the first nine months of 1999 were $37.2 million or $1.28 per diluted common share, before a nonrecurring after tax charge of $4.6 million taken in the first quarter. Including the charge, net earnings for the first nine months of 1999 were $32.6 million or $1.12 per diluted common share. Net sales for the first nine months of 1999 were $1.28 billion, versus $1.21 billion in 1998.

Operating income for the Wood Products segment was $35.4 million for the third quarter of 1999, substantially higher than the $15.2 million earned in 1998's third quarter. "Higher net sales realizations for all of the company's wood products were primarily responsible for the favorable results," sated L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Prices for oriented strand board, plywood and particle board reached record highs during the quarter, before declining by the end of the period." Prior year results for the segment have been restated to remove the operations of the new Resources Management Group.

The resources segment had operation income of $19.1 million for 1999's third quarter, compared to $17.5 million in the previous year's third quarter. The segment derives its income mainly from the sale of logs at market prices to company manufacturing facilities and to third parties. The increase in income for the quarter compared to 1998 was principally due to higher market prices for logs.

The printing papers segment recorded a third quarter operating loss of $5.1 million, compared to a loss of $1.7 million reported a year ago. "Higher operating costs, largely associated with the phased startup of the pulp mill in Cloquet, Minn., adversely effected earnings for the segment," Siegel said.

The last phase of the pulp mill startup will occur late in the fourth quarter, which will lead to substantial increases in pulp production. Net sales realizations declined compared tot he third quarter of 1998, as markets for printing papers remain soft.

The pulp and paper segment reported third quarter operating income of $7.1 million, versus $11.5 million for1998's third quarter. "A decline in net sales realizations for paperboard and tissue products was the primary reason for the unfavorable comparison with last year's quarter," Siegel noted. "However, the segment's third quarter results represented a substantial improvement from this year's second quarter, caused by improved markets and realizations for pulp and paperboard," Siegel added.

Potlatch is a diversified forest products company with timberlands in Arkansas, Idaho and Minnesota.