Exhibit 99.1
Potlatch Reports Improved Fourth Quarter Results
SPOKANE, Wash.--(BUSINESS WIRE)--Feb. 6, 2006--Potlatch
Corporation (NYSE:PCH) today reported earnings for the fourth quarter
of 2005, compared to a loss from continuing operations for the fourth
quarter of 2004, due in part to improved results for its Resource and
Consumer Products operating segments. Fourth quarter 2004 results were
negatively affected by a $25.2 million net pre-tax charge resulting
from the early repayment of approximately $282 million of debt.
The company reported earnings of $9.9 million, or $.34 per diluted
common share, for the fourth quarter of 2005, compared to a loss from
continuing operations of $9.7 million, or $.33 per diluted common
share, for the fourth quarter of 2004. Including discontinued
operations, the company reported a net loss of $10.0 million, or $.34
per diluted common share, for 2004's fourth quarter. Discontinued
operations in 2004 consisted of our oriented strand board (OSB)
operations. Net sales for the fourth quarter of 2005 were $387.6
million, compared to net sales from continuing operations of $321.6
million recorded in the fourth quarter of 2004.
Net earnings for the year ended December 31, 2005 totaled $33.0
million, or $1.13 per diluted common share, compared with net earnings
from continuing operations for the year ended December 31, 2004 of
$15.3 million, or $.52 per diluted common share. Including
discontinued operations, net earnings for 2004 totaled $271.2 million,
or $9.19 per diluted common share. Net sales for 2005 were $1.5
billion, compared with net sales from continuing operations of $1.4
billion for 2004.
Results for the fourth quarter of 2005 included $4.2 million in
non-recurring costs associated with our conversion to a real estate
investment trust (REIT), which became effective January 1, 2006. For
the year, total costs associated with the REIT conversion were $5.9
million. Results for the fourth quarter of 2005 were favorably
affected by an adjustment to our effective income tax rate, which was
due primarily to the application of tax credits.
The Resource segment reported operating income of $28.3 million
for the fourth quarter of 2005, compared to $20.9 million earned in
the fourth quarter of 2004. Higher income from land sales, which
totaled $15.4 million in the fourth quarter of 2005 compared with $5.3
million in 2004's fourth quarter, was responsible for the favorable
comparison to the prior year quarter. Income from land sales for the
2005 quarter included $6.1 million received from the sale of
conservation easements on portions of the company's Idaho and
Minnesota timberlands, compared with no income from the sale of
conservation easements in the fourth quarter of 2004. Lower results
for our Boardman, Oregon, hybrid poplar operation, which transitioned
from a development stage to an operating stage during the fourth
quarter of 2005, partially offset the higher income from land sales.
Operating income for the Wood Products segment was $0.3 million
for the fourth quarter of 2005, compared to income of $6.4 million
recorded in the fourth quarter of 2004. "The lower earnings were
primarily due to higher log costs," noted L. Pendleton Siegel,
Potlatch chairman and chief executive officer. Lower lumber prices
combined with higher energy and freight costs also contributed to the
lower income in the fourth quarter of 2005.
The Pulp and Paperboard segment reported an operating loss of $4.5
million for 2005's fourth quarter, compared with operating income of
$0.7 million for the fourth quarter of 2004. "Increased shipments and
higher selling prices for paperboard, combined with increased pulp
shipments to external customers, were more than offset by higher
maintenance, chemical and energy costs," Siegel said.
For the fourth quarter of 2005, the Consumer Products segment
reported operating income of $7.2 million, compared to an operating
loss of $0.1 million for 2004's fourth quarter. "Higher selling prices
for our consumer tissue products were responsible for the improved
operating results," Siegel noted. "These favorable comparisons were
partially offset by decreased shipments and higher energy costs," he
remarked.
The continued high cost of petroleum and natural gas had a
negative effect on 2005 results. Energy costs for the entire company
were approximately $5 million higher for the fourth quarter of 2005
compared to the fourth quarter of 2004. In addition, the high
petroleum costs negatively affected other costs, especially for
chemicals and transportation,
Interest expense for the fourth quarter of 2005 totaled $7.3
million, compared to $9.0 million charged against results for the
fourth quarter of 2004. The reduction in interest expense was the
result of the repayment of the approximately $282 million in debt
during the fourth quarter of 2004, using a portion of the proceeds
from the sale of our OSB mills.
Potlatch is a real estate investment trust with 1.5 million acres
of timberlands in Arkansas, Idaho, Minnesota and Oregon with a taxable
REIT subsidiary that produces forest products.
This news release contains, in addition to historical information,
certain forward-looking statements. These forward-looking statements
are based on management's best estimates and assumptions regarding
future events, and are therefore subject to known and unknown risks
and uncertainties and are not guarantees of future performance. The
company's actual results could differ materially from those expressed
or implied by forward-looking statements. Factors that could cause
actual results to differ materially include those risks and
uncertainties described from time to time in the company's public
filings with the Securities and Exchange Commission. The company
disclaims any intent or obligation to update these forward-looking
statements.
Potlatch Corporation and Consolidated Subsidiaries
Statements of Operations and Comprehensive Income
(Dollars in thousands - except per-share amounts)
Quarter Ended Twelve Months Ended
December 31 December 31
2005 2004 2005 2004
- ----------------------------------------------------------------------
Net sales $387,639 $321,598 $1,496,144 $1,351,472
- ----------------------------------------------------------------------
Costs and expenses:
Depreciation,
amortization
and cost of
fee timber
harvested 25,235 21,523 89,386 88,319
Materials,
labor and
other operating
expenses 321,689 261,922 1,246,620 1,083,660
Selling,
general and
administrative
expenses 23,602 21,917 85,959 85,571
Restructuring
charge - - - 1,193
- ----------------------------------------------------------------------
370,526 305,362 1,421,965 1,258,743
- ----------------------------------------------------------------------
Earnings from
operations 17,113 16,236 74,179 92,729
Interest expense (7,323) (9,041) (29,045) (45,863)
Debt retirement
costs - (25,186) - (25,186)
Interest income 679 1,920 2,506 3,617
- ----------------------------------------------------------------------
Earnings (loss)
before taxes 10,469 (16,071) 47,640 25,297
Provision
(benefit) for
taxes 551 (6,373) 14,676 9,967
- ----------------------------------------------------------------------
Earnings (loss)
from continuing
operations 9,918 (9,698) 32,964 15,330
Discontinued operations:
Earnings (loss) from discontinued
operations (including
gain on disposal of
$-, $43, $-
and $269,587) - (1,463) - 422,017
Income tax
provision
(benefit) - (1,177) - 166,098
- ----------------------------------------------------------------------
- (286) - 255,919
- ----------------------------------------------------------------------
Net earnings
(loss) 9,918 (9,984) 32,964 271,249
- ----------------------------------------------------------------------
Other comprehensive loss, net
of tax:
Cash flow hedges:
Net derivative
losses, net
of income tax
benefit of
$-, $-, $-
and $44 - - - (68)
Minimum pension liability adjustment,
net of income tax provision
(benefit) of
$(441), $20,554,
$(441) and
$20,554 (720) 32,178 (720) 32,178
- ----------------------------------------------------------------------
Comprehensive
income $9,198 $22,194 $32,244 $303,359
======================================================================
Earnings (loss)
per common share
from continuing
operations:
Basic $.34 $(.33) $1.13 $.52
Diluted .34 (.33) 1.13 .52
Earnings (loss)
per common share
from discontinued
operations:
Basic - (.01) - 8.71
Diluted - (.01) - 8.67
Net earnings (loss) per
common share:
Basic .34 (.34) 1.13 9.23
Diluted .34 (.34) 1.13 9.19
Average shares outstanding
(in thousands):
Basic 29,313 29,206 29,120 29,397
Diluted 29,425 29,396 29,252 29,515
Potlatch Corporation and Consolidated Subsidiaries
Condensed Balance Sheets
(Dollars in thousands - except per-share amounts)
December 31, December 31,
2005 2004
- -------------------------------------------------------------------
Assets
Current assets:
Cash and short-term investments $63,833 $120,621
Receivables, net 114,641 103,474
Inventories 209,696 167,015
Prepaid expenses 14,420 16,260
- ---------------------------------------------------------------------
Total current assets 402,590 407,370
Land other than timberlands 8,507 8,351
Plant and equipment, at cost less
accumulated depreciation 589,161 567,471
Timber, timberlands and
related logging facilities 400,595 401,078
Other assets 227,944 210,402
- ---------------------------------------------------------------------
$1,628,797 $1,594,672
=====================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Current installments on long-term debt $2,357 $1,107
Accounts payable and accrued
liabilities 144,635 151,198
- ---------------------------------------------------------------------
Total current liabilities 146,992 152,305
Long-term debt 333,097 335,415
Other long-term obligations 246,175 234,311
Deferred taxes 197,385 201,252
Stockholders' equity 705,148 671,389
- ---------------------------------------------------------------------
$1,628,797 $1,594,672
=====================================================================
Stockholders' equity per common share $24.01 $23.22
Working capital $255,598 $255,065
Current ratio 2.7:1 2.7:1
Highlights
(Dollars in thousands - except per-share amounts)
Quarter Ended Twelve Months Ended
December 31 December 31
2005 2004 2005 2004
- ---------------------------------------------------------------------
Net sales $387,639 $321,598 $1,496,144 $1,351,472
Earnings (loss) from
continuing
operations 9,918 (9,698) 32,964 15,330
Net earnings
(loss) 9,918 (9,984) 32,964 271,249
Earnings
(loss) per
common share
from continuing
operations:
Basic $.34 $(.33) $1.13 $.52
Diluted .34 (.33) 1.13 .52
Earnings
(loss) per
common share
from discontinued
operations:
Basic - (.01) - 8.71
Diluted - (.01) - 8.67
Net earnings (loss) per
common share:
Basic .34 (.34) 1.13 9.23
Diluted .34 (.34) 1.13 9.19
Dividends per
common share
(1) (annual rate) .60 3.10 .60 3.10
=====================================================================
(1) Cash dividends for 2004 included a special dividend of $2.50
per common share.
Segment Information
(Dollars in thousands)
Quarter Ended Twelve Months Ended
December 31 December 31
2005 2004 2005 2004
- ----------------------------------------------------------------------
Net sales
Resource $87,911 $74,679 $304,992 $274,292
Wood products 120,306 98,679 488,278 451,004
Pulp and
paperboard 147,435 128,176 566,115 529,313
Consumer
products 87,215 80,585 368,418 320,052
- ----------------------------------------------------------------------
442,867 382,119 1,727,803 1,574,661
Intersegment
sales (55,228) (60,521) (231,659) (223,189)
- ---------------------------------------------------------------------
Total net
sales $387,639 $321,598 $1,496,144 $1,351,472
======================================================================
Operating
income (loss)
Resource $28,280 $20,886 $79,199 $69,901
Wood products 273 6,355 29,099 68,330
Pulp and
paperboard (4,535) 689 (810) 11,012
Consumer
products 7,211 (123) 11,340 (10,155)
Eliminations (1,935) (313) (1,310) (508)
- ----------------------------------------------------------------------
29,294 27,494 117,518 138,580
Corporate (18,825) (43,565) (69,878) (113,283)
- ---------------------------------------------------------------------
Earnings (loss) from
continuing operations
before taxes $10,469 $(16,071) $47,640 $25,297
CONTACT: Potlatch Corporation
(Media)
Michael D. Sullivan, 509-835-1516
509-951-3405 (cell)
or
(Investors)
Douglas D. Spedden, 509-835-1549