Nevada County Picayune and Gurdon Times Newspaper Archive

Potlatch Reports Lower Earnings

Potlatch Corporation reported lower earnings for the second quarter of 1997. Net sales realizations for oriented strand board were significantly lower than a year ago and were largely responsible for the decline.

Net earnings for the second quarter were $9.9 million or $.34 per common share. For 1996's second quarter, net earnings were $18.1 million or $.63 per common share, before a $.10 per common share extraordinary charge for early extinguishment of debt. Net sales were $394.2 million, comparedwith $386.1 million in 1996's second quarter.

Net earnings for the first half of 1997 were $16.2 million or $.56 per common share. Net earnings for the first half of 1996, before the extraordinary charge, were $23.1 million or $.80 per common share. Net sales for the first half of 1997 were $793.7 million, compared with $774.7 million for 1996's first half.

Operating income for the Wood Products Group was $8.7 million for the second quarter of 1997, down from 1996's $19.3 million. "The earnings decline was primarily due to lower net sales realizations for oriented strand board, which more than offset higher lumber realizations and shipments," stated John M. Richards, Potlatch chairman and chief executive officer.

The Minnesota Pulp and Paper division's second quarter operating income of $9.6 million was down from the $11.4 million reported a year ago. "Lower net sales realizations, due to a less favorable product mix, were largely responsible for the decline," Richards said.

The other pulp-based businesses, which include the Pulp and Paperboard Group and the Consumer Products Division, reported second quarter operating income of $16.5 million, up from the $13.4 million earned last year. Shipments for pulp and paperboard were higher than a year ago, and realizations for pulp were above 1996's level. "The Consumer Products Division benefited from sliaghtly higher net sales realizations compared with the second quarter of 1996," Richards added.

Late in the quarter, a jury in the Idaho's District Court awarded the company $95 million for damages resulting from defects and deficiencies associated with a pulp washer system that was installed in the company's Lewiston, Idaho, pulp mill. The washers were supplied by Beloit Corporation, the defendant in the case. The jury award is subject to post-trial motions and appeal. Therefore, the company's financial statements for the second quarter do notinclude the award. Potlatch is diversified forest products company with timberlands in Arkansas, Idaho and Minnesota.