PotlatchDeltic (PCH) 2002年年度報告「NYSE」.pdf

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1、P O T L A T C H 2 0 0 2 A N N U A L R E P O R TF I N A N C I A L R E V I E WF I N A N C I A L H I G H L I G H T S(Dollars in thousands except per-share amounts)200220012000Net sales$1,286,217$1,274,585$1,293,193Loss from continuing operations(50,933)(56,566)(33,393)Net loss(234,381)(79,445)(33,214)N

2、et cash provided by(used for)operations(69,144)34,47472,384Per common share:Basic net loss$(8.23)$(2.81)$(1.16)Diluted net loss(8.23)(2.81)(1.16)Cash dividends paid.601.171.74Stockholders equity15.0724.9828.69Working capital$102,693$612,384$745,052Depreciation,amortization and cost of fee timber har

3、vested115,469115,033108,722Capital expenditures51,61442,679142,812Total assets1,616,3262,487,1462,542,445Long-term debt(noncurrent portion)622,645820,522801,549Stockholders equity430,791707,304813,236Average common shares outstanding(in thousands)28,46228,28228,523Certain amounts for 2000 and 2001 h

4、ave been conformed to the 2002 presentation.Potlatch Corporation,founded in 1903 in Potlatch,Idaho,is a diversified forest products company with1.5 million acres of timber-lands in Arkansas,Idaho and Minnesota.Our manufacturing facilitiesconvert wood fiber into two main product lines:bleached fiber

5、products(bleached kraft pulp,paperboard and consumer tissue)andwood products(oriented strand board,lumber,plywood and particle-board).Potlatchs business philosophyis committed to increased earningsand a superior rate of return,achieved by talented,well-trained andhighly motivated people who are prop

6、erly supported by a soundfinancial structure and a keen sense of responsibility for the environ-ment and to all of the publics with whom the company has contact.O N T H E C O V E R:An important commercial species that Potlatch manufacturesinto premium decking and siding,Western Red Cedar is alsoperm

7、anently protected in Potlatchs privately maintainedWalker Park in North Central Idaho.T A B L E O F C O N T E N T SLetter to Shareholders2Principal Facilities72002 Capacities,Production and Fiber Flow8Managements Report10Financial Review11Consolidated Financial Statements22Eleven-Year Record40Direct

8、ors and Officers44Corporate Information45T O O U R S H A R E H O L D E R Sotlatch,along with much of the forestproducts industry,endured another difficult and challenging year in 2002.While Potlatchs overall financialperformance during the year was disap-pointing,our Board of Directors andmanagement

9、 team continued to advancethe company-wide strategy of refocusingour resources on those businesses with the greatest potential for growing earnings and adding shareholdervalue over time.This past year we pursued that strategyby making significant changes in the companys structurethrough the sale of

10、assets and the exit from some productlines and businesses.We also built on the strategythrough investments in new proprietary products andexpansion of existing businesses.Asset sales and related activities,coupled with asalaried workforce restructuring in the fourth quarter,resulted in significant n

11、on-recurring charges during theyear most of them non-cash which in combinationwith challenging market conditions for our businesssegments contributed to a substantial loss for the year.Despite the reported loss,the company maintained apositive cash flow that allowed us to continue strengtheningour b

12、alance sheet through retirement of debt as well asinvesting in potential high-return projects.In summary,all business segment performance wasinfluenced by general economic sluggishness and theunusual strength of the U.S.dollar,which peaked againstforeign currencies early in 2002 and then began a mod

13、estdecline in the first half that continued through the yearand into 2003.Although the dollar presently remainsovervalued on an historic basis,the declines over the past12 months are beginning to exert positive influences onmany of our markets.Our Resource Division experienced strongerearnings in 20

14、02 due to improved external sales volumesand realizations as well as the sale of surplus property inOregon,Minnesota and Arkansas.Oversupplied international markets for most lumberand panel products challenged our Wood ProductsDivision throughout the year despite a robust domestichousing industry.Th

15、is pattern first emerged in mid-2000and has prevailed each year since,negatively influencingprices for all wood products.Lumber prices fell to historiclows as imports accelerated in spite of U.S.-imposedduties for Canadian softwood lumber.At this writing,weare hopeful that a long-term negotiated sol

16、ution willfinally resolve our long-standing concern over Canadassubsidized resource allocation practices.In the interim,however,the Canadians continue to push wood productsacross our border and thus contribute to lower pricing for all North American producers.A 23-day strike at the companys Southern

17、 Unit inWarren,Arkansas,contributed to the wood productsegments losses,but ultimately concluded with agree-ment on a competitive contract.The Bradley hardwoodlumber mill in Warren was permanently closed in thethird quarter and Potlatch exited the hardwood lumberbusiness.Although recent capital impro

18、vements hadenhanced this mills productivity,ongoing raw materiallimitations prevented attainment of optimum efficiency.We subsequently sold the Bradley property to anindependent Arkansas entrepreneur.Our pulp-based businesses experienced a net lossfor the year,despite the beginning of demand and pri

19、ceimprovements for paperboard and a relatively stabletissue market.In January of 2003,unions representingemployees at our pulp-based operations in Lewiston,Idaho,approved a new four-year contract.The newcontract brings our Idaho pulp and paperboard laborcosts more in line with our competitors and wa

20、s a directresult of positive and constructive attitudes on the part 2P“Potlatch has long understood that our financial success is tied to maintaining publictrust and acceptance of our resource managementpractices.”L.Pendleton Siegel(left),Chairman and Chief Executive Officer,and Richard L.Paulson,Pr

21、esident and Chief Operating OfficerT O O U R S H A R E H O L D E R Sof the union leadership in Lewiston.To assure ourcustomers of adequate product supply during negotiations,we substantially increased inventories of paperboard and tissue,which had a short-term adverse impact onearnings during the ye

22、ar.In the first quarter of 2003,our printing paper mill in Brainerd,Minnesota,was sold to Missota PaperCompany LLC for$4.44 million in cash.Efforts to sell Brainerd had been underway since the mill was permanently closed in mid-May 2002 in conjunction withthe sale of most of our printing papers segm

23、ents assets in Cloquet,Minnesota,to a domestic subsidiary of Sappi Limited.Proceeds from sale of our printing papers assetswere used to retire over$470 million in debt in 2002,which significantly strengthened our balance sheet byreducing interest charges and also freed capital forinvestment in our r

24、esource,wood products and consumertissue business segments.Each of our business segments implemented activi-ties during the year that collectively moved us towardrealization of our company-wide strategy.For example,the Resource Division continued tobuild on its strategy of expanding revenue opportun

25、itiesby systematically evaluating all lands and resourcesunder its management for their highest and best uses,including recreation leases and conservation easements.In the second half of 2002,independent third-partyforest management audits were conducted on all 1.5 million acres of our forestland in

26、 Idaho,Minnesotaand Arkansas.Potlatchs management practices weresubsequently certified as meeting both the InternationalOrganization for Standardization(ISO)EnvironmentalManagement System and the Sustainable ForestryInitiative(SFI)requirements for 2002-2004.As wereported last year,the Forest Steward

27、ship Council(FSC)certified management practices at our Boardman,Oregon,hybrid poplar plantation in 2001 as part of ourplan to capitalize on growing markets for certifiedhardwood lumber.Potlatch has long understood that our financialsuccess is tied to maintaining public trust and acceptanceof our res

28、ource management practices.Certification issimply an extension of our commitment to responsibleland stewardship.However,the endorsement of theserespected organizations provides an extra measure ofassurance for our customers,the public and governmentpolicy leaders.While certification facilitates Potl

29、atchs explorationof high-return niche markets for certified wood products,it also lays necessary groundwork for developing non-timber revenue opportunities such as conservationeasements.A major step toward the latter objective wasmade late in the year when Potlatch signed an optionagreement with the

30、 internationally recognized Trust forPublic Land(TPL)to pursue a working forest conservationeasement on a substantial portion of our Idaho timber-lands.The agreement calls for a phased evaluation of3demonstrate consistent quality,we are concentrating onupgrading Lewistons product mix.We continue to

31、believeour paperboard business has the scale to be competitive,and progress achieved in the past year appears to confirmthat belief.Throughout the year we continued our efforts toreduce costs company-wide and late in 2002 restructuredour salaried workforce through job consolidation andphasing out of

32、 non-essential activities on an operation-by-operation basis.We expect the restructuring will resultin combined annual savings of approximately$7 million.Potlatch has been fortunate to have outstanding leadership on our Board of Directors through the verychallenging decade of the 1990s.We note with

33、sadnessthe passing of Richard A.Clarke.A Potlatch director for17 years,Dick was just short of his mandatory retirement.Vivian W.Piasecki reached mandatory retirement age in2002,after 10 years on our Board.We will all miss theirwisdom and guidance.We are pleased to have obtained the services of two n

34、ew Board members,both with extensive consumerproducts experience.Michael T.Riordan,52,joinedPotlatchs Board of Directors effective December 31,2002.He was most recently Chairman,Chief Executive Officer and President of Paragon Trade Brands,followingseveral years of service as Chairman,Chief Executiv

35、eOfficer and President of Fort Howard Corporation.Lawrence S.Peiros,47,Group Vice President of TheClorox Company,was elected to the Board,effective2004,will produce an additional 30,000 tons(3.6 millioncases)of premium towel for retail store customers in theWest and to service expanding markets in t

36、he Midwestand East.In January of 2003 we separated our paperboardand consumer tissue businesses into two separatedivisions.This change reflects the increasing require-ments of our private label consumer tissue operations inresponse to our plans for growth.Our paperboard business enjoyed improved dem

37、andfor most of its products during the year,with extendedorder backlogs at both Cypress Bend,Arkansas,andLewiston.Mid-year price improvements began to take holdgradually during the latter half of 2002,and we expectthose improvements to continue into the current year.Our pulp and paperboard operation

38、 in CypressBend remains one of the industrys low-cost producersand continues to enhance its reputation for quality as aresult of capital improvements completed two years ago.In recognition of the mills emphasis on quality,CypressBend last year earned the Arkansas Governors QualityAchievement Award.A

39、s we noted in last years annualreport,this relentless pursuit of quality has allowedPotlatch to capture an increasing share of the market forhigh-end packaging,particularly for cosmetics.Due in large part to the continued dedication andcommitment of its workforce,our Lewiston pulp andpaperboard oper

40、ation began achieving quality andproductivity targets late in 2002 and into 2003.As weT O O U R S H A R E H O L D E R S4easement candidate properties,starting in 2003.Ifapproved by our Board of Directors,properties selectedduring the evaluation process will be permanentlyprotected from commercial an

41、d residential development,which are inconsistent with sustainable timber produc-tion and recreational and scenic uses.In exchange forforegoing development opportunities,Potlatch will receive compensation raised from public and privatesources that TPL believes can exceed$40 million.Our Resource Divis

42、ion has also accepted an invitation from the highly respected Pinchot Institute forConservation to participate in an independent evaluationof our Idaho forest management practices against SFI andFSC,the two primary North American environmentalperformance standards.We are the first publicly tradedfor

43、est products company to participate in such an opencomparison of these standards and,as such,we aredemonstrating our stewardship commitment and enhancingthe credibility of our certification efforts.Results of thecomparison,which will be made public,should provideuseful information for improving mana

44、gement practicesand certification approaches.In mid-year,our Wood Products Division completeddevelopment of new,proprietary panel products that offer great values for both builders and homeowners.Three new oriented strand board(OSB)products includeOXTerminatorTM,a new panel that resists rot and inse

45、ctsand has superior mold inhibiting qualities,and LuminOX,which has a radiant barrier to reduce heating and coolingcosts.Both of these products have patent protection.Inaddition,we have added OXTremeTM,a sub-flooring panelthat resists edge swelling due to moisture,to our OSBSturd-I-Floor line.Each o

46、f these new products has metwith market acceptance,and we will aggressively expandtheir market presence in 2003.The division is alsoexploring other proprietary wood products,which weexpect to announce later in the year.Late last year we began a 30 percent expansion of softwood lumber production at o

47、ur Arkansas sawmillsin Warren and Prescott through the addition of a thirdshift.That expansion,coupled with productivity improve-ments throughout the division,should reduce unit costsand increase Potlatchs overall lumber production byroughly 15 percent in 2003.As previously reported,we believe our p

48、rivate labelconsumer tissue business will be the companys growthengine through the remainder of this decade as Potlatchcontinues to meet the expanding needs of our existingcustomers and broadens our customer base through anaggressive sales effort.Accordingly,the Board ofDirectors in September approv

49、ed a$66 million capitalproject to add a new tissue machine and related convertingfacilities adjacent to our operations in Las Vegas,Nevada.The new machine employs licensed proprietarythrough-air-dried(TAD)technology that will enable us to manufacture premium towel products equal to thebest quality c

50、urrently available in the U.S.The new 102-inch-wide machine,scheduled for startup early inrivate label consumer tissue willbe Potlatchs growth engine in thecurrent decade as we meet existingcustomers growing needs andexpand our customer base.A new$66 million tissue machine at LasVegas,Nevada,will ad

51、d premiumquality towels to the product line byearly 2004.uality improvements at ourCypress Bend,Arkansas,paper-board mill permitted Potlatch to capture an increasing share of thehigh-end packaging market in 2002.The Lewiston,Idaho,operation started achieving new quality andproductivity targets late

52、in the year,allowing the mill to begin upgradingits product mix.ne of Potlatchs new patent-protected wood products,LuminOXis an oriented strandboard panel with a foil-radiant barrierthat reduces heating and coolingcosts in residential and commercialbuildings.Other proprietary woodproducts are under

53、development.T O O U R S H A R E H O L D E R S5POQP O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E SP R I N C I P A L F A C I L I T I E S7R E G I O N A L L A N D B A S E SArkansas,Idaho,Minnesota,Oregon(a)S A W M I L L S (C A P A C I T Y)Prescott,Arkansas200,0

54、00 m.bd.ft.Warren,Arkansas200,000 m.bd.ft.Lewiston,Idaho165,000 m.bd.ft.St.Maries,Idaho100,000 m.bd.ft.Bemidji,Minnesota90,000 m.bd.ft.P L Y W O O D M I L L (C A P A C I T Y)(b)St.Maries,Idaho145,000 m.sq.ft.O R I E N T E D S T R A N D B O A R D M I L L S (C A P A C I T Y)(b)Bemidji,Minnesota535,000

55、 m.sq.ft.Cook,Minnesota435,000 m.sq.ft.Grand Rapids,Minnesota375,000 m.sq.ft.P A R T I C L E B O A R D M I L L (C A P A C I T Y)(c)Post Falls,Idaho70,000 m.sq.ft.B L E A C H E D K R A F TP U L P M I L L S (C A P A C I T Y)Cypress Bend,Arkansas265,000 tonsLewiston,Idaho505,000 tonsB L E A C H E D P A

56、 P E R B O A R D M I L L S (C A P A C I T Y)Cypress Bend,Arkansas285,000 tonsLewiston,Idaho355,000 tonsT I S S U E M I L L (C A P A C I T Y)Lewiston,Idaho175,000 tonsT I S S U E C O N V E R T I N G F A C I L I T I E S (C A P A C I T Y)Lewiston,Idaho120,000 tonsBenton Harbor,Michigan(d)5,000 tonsLas

57、Vegas,Nevada45,000 tons(a)Potlatch owns a 17,000-acrehybrid poplar plantation inBoardman,Oregon.(b)3/8 basis(c)3/4 basis(d)Leased facilityA R K A N S A SM I N N E S O T AN E V A D AI D A H OO R E G O NC Y P R E S S B E N DW A R R E NP R E S C O T TG R A N D R A P I D SC O O KB E M I D J IB O A R D M

58、 A NS T.M A R I E SP O S T F A L L SL E W I S T O NS P O K A N E E X E C U T I V E O F F I C E SL A S V E G A SM I C H I G A NB E N T O N H A R B O RT O O U R S H A R E H O L D E R SFebruary 1,2003,and brings over 20 years of strategyand marketing experience in the consumer productsindustry.We enter

59、 the new year with a mixed economicoutlook,which is currently heavily influenced by yetunresolved international issues.However,the weakness in the U.S.dollar over the past nine months is beginningto exert favorable effects on our product lines.While it is impossible to predict just how events will u

60、nfold orhow they may influence our respective businesses,we can report with certainty that Potlatch is continuing itsprogress toward a return to sustained profitability.Thekey to that progress is continued implementation of ourstrategy of focusing on businesses that have provenpotential for growth a

61、nd in which we have and canmaintain competitive advantages.As we have outlinedhere,each of our business segments has implementedspecific actions in the past year that collectivelycontribute to that strategy.In the months to come,theywill continue on that course,which we are convinced will result in

62、stronger earnings and,ultimately,increaseshareholder value.L.Pendleton SiegelChairman and Chief Executive OfficerRichard L.PaulsonPresident and Chief Operating OfficerMarch 7,20036R E S O U R C EOperations:Arkansas,Idaho,Minnesota and OregonProducts:1.5 million acres of timberland producing a variet

63、y of softwoodand hardwood species and 17,000 acres of agricultural land growinghybrid poplar.Sales&Distribution:Arkansas,Idaho and Minnesota.200220012000Sales($in 000s)Internal sales$339,169$367,737$315,116External sales 65,33538,07337,208Total$404,504$405,810$352,324W O O D P R O D U C T SOperation

64、s:Arkansas,Idaho and MinnesotaProducts:Oriented strand board,lumber,plywood and particleboard.Sales&Distribution:Throughout the United States.200220012000Sales*($in 000s)$496,669$484,843$525,967Shipments:Oriented strand board(m.sq.ft.,3/8 basis)1,276,8971,127,4741,083,695Lumber(m.bd.ft.)679,772683,8

65、28602,823Plywood(m.sq.ft.,3/8 basis)118,820142,424171,438Particleboard(m.sq.ft.,3/4 basis)61,42766,04968,209Realizations($per unit):Oriented strand board(m.sq.ft.,3/8 basis)$129$129$172Lumber(m.bd.ft.)347351372Plywood(m.sq.ft.,3/8 basis)268259280Particleboard(m.sq.ft.,3/4 basis)189195239*Excludes in

66、ternal sales.P U L P A N D P A P E ROperations:Lewiston,Idaho;Cypress Bend,Arkansas;Las Vegas,Nevada,and Benton Harbor,MichiganProducts:Bathroom and facial tissue,towels and napkins packaged for various store labels;bleached paperboard for packaging liquids and otherproducts and for paper cups and p

67、lates;bleached softwood pulp.Sales&Distribution:Bleached paperboard products and pulp worldwide;tissue products throughout the United States and Canada.200220012000Sales*($in 000s)$724,213$751,669$730,018Shipments(tons):Paperboard 597,968606,396574,744Tissue 164,229160,748148,607Pulp*42,23237,78741,

68、175Realizations($per ton):Paperboard$601$642$687Tissue 1,7251,7821,715Pulp267273466*Excludes internal sales.*Excludes pulp used internally.2 0 0 2 C A P A C I T I E S,P R O D U C T I O N A N D F I B E R F L O WS O L I D W O O D C O N V E R T I N GL A N D B A S E S1 S A W M I L LCapacity:90,000 m.bd.

69、ft.Production:88,000 m.bd.ft.3 O R I E N T E D S T R A N DB O A R D M I L L S (a)Capacity:1,345,000 m.sq.ft.Production:1,282,000 m.sq.ft.C H I P S A L E S24,000 tonsP U L P W O O D (d)Own:112,000 tonsPurchased:881,000 tonsP U L P W O O D S A L E S246,000 tonsS A W T I M B E R/O S B L O G SOwn:212,00

70、0 tonsPurchased:2,226,000 tonsL O G S A L E S5,000 tonsP U L P W O O DOwn:170,000 tonsPurchased:105,000 tonsP U L P W O O D S A L E S61,000 tonsS A W T I M B E ROwn:1,178,000 tonsPurchased:287,000 tonsL O G S A L E S306,000 tons2 S A W M I L L SCapacity:265,000 m.bd.ft.Production:246,000 m.bd.ft.1 P

71、 L Y W O O D M I L L (a)Capacity:145,000 m.sq.ft.Production:123,000 m.sq.ft.1 P A R T I C L E B O A R D M I L L (b)Capacity:70,000 m.sq.ft.Production:63,000 m.sq.ft.P U L P W O O D F I B E ROwn:51,000 cunits(c)Purchased:32,000 cunits(c)F I B E R F R O M M I L L SOwn:84,000 cunits(c)Purchased:21,000

72、cunits(c)P U R C H A S E D F I B E R526,000 cunits(c)P U L P W O O D F I B E ROwn:50,000 cunits(c)Purchased:253,000 cunits(c)F I B E R F R O M M I L L SOwn:11,000 cunits(c)Purchased:23,000 cunits(c)P U R C H A S E D F I B E R21,000 cunits(c)2 S A W M I L L SCapacity:400,000 m.bd.ft.Production:354,00

73、0 m.bd.ft.C H I P S A L E S294,000 tonsP U L P W O O DOwn:587,000 tonsPurchased:821,000 tonsP U L P W O O D S A L E S478,000 tonsS A W T I M B E ROwn:722,000 tonsPurchased:1,040,000 tonsL O G S A L E S238,000 tonsM I N N E S O T A330,000 acresAspen,jack pine,red pine,balsam firI D A H O670,000 acres

74、Western white pine,white fir,red cedar,Douglas-fir,larchA R K A N S A S496,000 acresSouthern yellow pine,various fine hardwoods8P O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E S(a)3/8 basis(b)3/4 basis(c)One cunit equals100 cubic feet ofsolid wood.(d)Harvest

75、 amountsinclude tons usedby our Cloquet pulpmill,which was soldin May 2002.Note:Fiber transfersrepresent quantities provided without con-sideration for changes in inventories.P A P E R A N D P A P E R B O A R D M A N U F A C T U R I N GT I S S U E C O N V E R T I N GP U L P M A N U F A C T U R I N G

76、C Y P R E S S B E N D P U L P M I L LBleached kraft pulpCapacity:265,000 tonsProduction:263,000 tonsO W N P U L P263,000 tonsC Y P R E S S B E N D P A P E R B O A R DBleached paperboardCapacity:285,000 tonsProduction:283,000 tonsL E W I S T O N P A P E R B O A R DBleached paperboardCapacity:355,000

77、tonsProduction:346,000 tonsL E W I S T O N T I S S U ETissueCapacity:175,000 tonsProduction:174,000 tonsO W N T I S S U E116,000 tonsP U R C H A S E D T I S S U E14,000 tonsO W N T I S S U E44,000 tonsP U R C H A S E D T I S S U E2,000 tonsO W N T I S S U E1,000 tonsP U R C H A S E D T I S S U E2,00

78、0 tonsL E W I S T O NCapacity:120,000 tonsProduction:119,000 tonsL A S V E G A SCapacity:45,000 tonsProduction:42,000 tonsB E N T O N H A R B O RCapacity:5,000 tonsProduction:3,000 tonsO W N P U L P348,000 tonsO W N P U L P 99,000 tonsO W N W A S T E P A P E R19,000 tonsP U R C H A S E D P U L P62,0

79、00 tonsL E W I S T O N P U L P M I L LBleached kraft pulpCapacity:505,000 tonsProduction:505,000 tonsP U L P S A L E S42,000 tonsP O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E S9S E L E C T E D F I N A N C I A L D A T A(Dollars in thousands except per-share

80、 amounts)20022001200019991998Net sales$1,286,217$1,274,585$1,293,193$1,343,773$1,243,506Earnings(loss)from continuing operations(50,933)(56,566)(33,393)52,21029,406Net earnings(loss)(234,381)(79,445)(33,214)40,94737,232Net cash provided by(used for)operations(69,144)34,47472,384191,422145,622Working

81、 capital 102,693612,384745,052780,003687,210Current ratio1.4 to 12.1 to 12.7 to 13.1 to 13.2 to 1Long-term debt(including current portion)$638,252$1,150,125$801,874$712,121$722,134Stockholders equity430,791707,304813,236921,039930,906Long-term debt to stockholders equity ratio1.5 to 11.6 to 1.99 to

82、1.77 to 1.78 to 1Capital expenditures$51,614$42,679$142,812$65,277$58,544Total assets1,616,3262,487,1462,542,4452,446,5002,377,306Basic net earnings(loss)from continuing operations per common share$(1.79)$(2.00)$(1.17)$1.80$1.01Basic net earnings(loss)per common share(8.23)(2.81)(1.16)1.411.28Averag

83、e common shares outstanding(in thousands)28,46228,28228,52328,94729,000Diluted net earnings(loss)from continuing operations per common share$(1.79)$(2.00)$(1.17)$1.80$1.01Diluted net earnings(loss)per common share(8.23)(2.81)(1.16)1.411.28Average common shares outstanding,assuming dilution(in thousa

84、nds)28,46228,28228,52328,96729,020Cash dividends per common share$.60$1.17$1.74$1.74$1.74Certain amounts for 1998-2001 have been reclassified for discontinued operations and to conform to the 2002 presentation.See Note 17,Discontinued Operations,on pages 37-38.M A N A G E M E N T S R E P O R T10P O

85、T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E Sotlatch Corporations management has prepared and is responsible for the financialstatements,including the estimates and judgments required for their preparation.Management maintains and supports a system of intern

86、al controls and internal auditingto provide reasonable assurance that the companys assets are safeguarded and thattransactions and events are recorded in accordance with managements authorizationand accounting principles generally accepted in the United States.The companysaccounting policies and pro

87、cedures are communicated to all divisions of the organization.In addition,the companys business ethics policy requires employees to maintain a high level of ethical standardsin the conduct of the companys business.The companys financial statements have been audited by KPMG LLP.The independent audito

88、rsreport,which is based on an audit made in accordance with generally accepted auditing standards,expresses an opinion as to whether the companys financial statements,considered in their entirety,arepresented fairly,in all material respects,in accordance with accounting principles generally accepted

89、in the United States.In performing its audit,KPMG LLP considers the companys internal controlstructure to the extent it deems necessary in order to issue its opinion on the financial statements.The board of directors audit committee,comprised of three outside directors,meets regularlywith management

90、,the internal auditors and the independent auditors to assure that each is meetingits responsibilities regarding the objectivity and integrity of the companys financial statements.The committee reviews the scope and results of the companys internal and external audit activities,nominates the indepen

91、dent auditors to be appointed each year by the board of directors,and reviewswith management and the independent auditors current and emerging accounting and financial requirements and practices affecting the company.L.P E N D L E T O N S I E G E LChairman of the Board and Chief Executive OfficerG E

92、 R A L D L.Z U E H L K EVice President,Finance,Chief Financial Officer and TreasurerT E R R Y L.C A R T E RControllerP11F I N A N C I A L R E V I E WP O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E SM A N A G E M E N T S D I S C U S S I O N A N D A N A L Y S

93、I S O F F I N A N C I A L C O N D I T I O N A N D R E S U L T S O F O P E R A T I O N SProducts segment and the Pulp and Paperboard segment.In2003 results for these two segments will be reported separately,with prior year amounts reclassified for comparative purposes.In May 2002,we exited our Printi

94、ng Papers segment,which produced primarily high-grade coated printing papersand bleached hardwood market pulp.We sold our Cloquet,Minnesota,pulp and printing papers facilities and certain associated assets to a domestic subsidiary of Sappi Limited for$485.5 million in cash,after closing adjustments.

95、We closedour Brainerd,Minnesota,printing papers mill at the same time.O V E R V I E WWe are a vertically integrated and diversified forest productscompany.We own approximately 1.5 million acres of timber-land and operate 15 manufacturing facilities,located primarilyin Arkansas,Idaho and Minnesota.As

96、 of December 31,2002,our business was organized into three segments:(i)Resource,which manages our timberlands and supplies wood fiber to our manufacturing segments and to third parties;(ii)WoodProducts,which manufactures oriented strand board(OSB),plywood,lumber and particleboard;and(iii)Pulp and Pa

97、per,which manufactures consumer tissue,bleached paperboard andbleached softwood market pulp.As a result of managementchanges effective in January 2003,the Pulp and Paper segmentwas split into two separate business segments,the Consumer13F I N A N C I A L R E V I E WP O T L A T C H C O R P O R A T I

98、O N A N D C O N S O L I D A T E D S U B S I D I A R I E S12P O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E SF I N A N C I A L R E V I E WOur operating results generally reflect the cyclical pattern of the forest products industry.Historical prices for our pr

99、oductshave been volatile,and we,like other manufacturers in the forest products industry,have limited direct influence over thetiming and extent of price changes for our products.Productpricing is significantly affected by the relationship betweensupply and demand in the forest products industry.Pro

100、ductsupply is influenced primarily by fluctuations in available manufacturing capacity.Demand is affected by the state of theeconomy in general and a variety of other factors.The demandfor our timber resources and wood products is affected by thelevel of new residential construction activity and,to

101、a lesserextent,home repair and remodeling activity,which are subjectto fluctuations due to changes in economic conditions,interestrates,population growth,weather conditions and other factors.The demand for most of our pulp and paper products is pri-marily affected by the general state of the global

102、economy,andthe economies in North America and east Asia in particular.The markets for our products are highly competitive andcompanies that have substantially greater financial resourcesthan we do compete with us in each of our markets.Our woodproducts are subject to competition from manufacturers i

103、nNorth and South America.In addition,our pulp-based products,other than tissue products,are globally traded commodity products.Because our competitors are located throughout theworld,variations in exchange rates between the U.S.dollar andother currencies significantly affect our competitive position

104、compared to our international competitors.In addition,ourindustry is capital intensive,which leads to high fixed costsand generally results in continued production as long as pricesare sufficient to cover variable costs.These conditions havecontributed to substantial price competition,particularly d

105、uring periods of reduced demand.Some of our competitors are currently lower-cost producers in some of the businesses in which we operate,and accordingly these competitors may be less adversely affected than we are by price decreases.Energy has become one of our most volatile operating expenses over

106、the past several years.Substantial price increases commenced in late 2000 and continued in the first half of 2001,before moderating in the second half of 2001.These priceincreases were substantial and contributed to the net losses weincurred during these periods.Energy prices returned to morenormal

107、historical levels in 2002,which had a favorable effecton our results compared to 2001.In periods of high energy prices,market conditions may prevent us from passing higher energycosts on to our customers through price increases and thereforecould adversely affect our operating results.We have takens

108、teps through conservation and electrical production to reduceour exposure to the volatile spot market for energy.Our energycosts in future periods will depend principally on our ability tocontinue to produce internally a substantial portion of our elec-tricity needs and on changes in market prices f

109、or natural gas.Another significant expense is the cost of wood fiber neededto supply our manufacturing facilities.Our timberlands providedapproximately 52%of log requirements for our sawmill and plywood manufacturing facilities in 2002 and an average ofapproximately 63%over the past five calendar ye

110、ars,afteradjustment for our exit from the hardwood lumber business.Including logs used for pulp and OSB,the percentages of ourfiber requirements supplied by our timberlands were approxi-mately 30%in 2002 and an average of approximately 38%over the past five calendar years,adjusted for our exit from

111、theprinting papers and hardwood lumber businesses.The percent-age of our wood fiber requirements supplied by our timberlandswill fluctuate based on a variety of factors,including changes in our timber harvest levels,changes in our manufacturingcapacity and changes in the amount of timber sales to th

112、ird parties.The cost of various types of wood fiber that we purchasein the market has at times fluctuated greatly because of eco-nomic or industry conditions.Selling prices of our products have not always increased in response to wood fiber price increasesnor have wood fiber prices always decreased

113、in conjunction withdeclining product prices.On occasion,our results of operationshave been and may in the future be adversely affected if we are unable to pass cost increases through to our customers.Finally,changes in our manufacturing capacity,primarily as a result of capital spending programs or

114、asset dispositions,havesignificantly affected our results of operations in recent periods.In September 2000,we closed our plywood mill in Jaype,Idaho,as a result of poor plywood markets,lack of adequate raw materials and long-term transportation concerns.In January2001,we completed a modernization a

115、nd expansion of our OSB mill in Cook,Minnesota,which resulted in an increase in annual production capacity from 250.0 million square feet to 435.0 million square feet.In May 2002,we sold a majority of our Printing Papers segment assets to a domestic subsidiary of Sappi Limited and exited the printin

116、g papers business.InAugust 2002,we sold a hardwood sawmill in Arkansas and exitedM A N A G E M E N T S D I S C U S S I O N A N D A N A L Y S I S O F F I N A N C I A LC O N D I T I O N A N D R E S U L T S O F O P E R A T I O N S (C O N T I N U E D)In late October 2002 we entered into a memorandum of

117、under-standing with a buyer for the sale of the Brainerd facility.Thefacility was sold on February 28,2003,for$4.44 million in cash.The sale of the printing papers business reflects a strategicrealignment to focus on our natural resources,wood productsand consumer tissue businesses,which we believe

118、have thegreatest potential for growth.In June 2002,we announced that we would close ourBradley hardwood mill in Warren,Arkansas,and exit the hard-wood lumber business.We sold the facility in August 2002.For the year 2002,the Printing Papers segment and theBradley hardwood mill have been accounted fo

119、r and reported as discontinued operations.Our consolidated financial state-ments and this discussion reflect the reclassification of theseoperations as discontinued operations for all periods presented.C R I T I C A L A C C O U N T I N G P O L I C I E SOur principal accounting policies are discussed

120、 on pages 26-28of this Annual Report.The preparation of financial statementsin accordance with accounting principles generally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported financialposition and operating results of the company

121、.Managementbelieves the accounting policies discussed below represent the most complex,difficult and subjective judgments it makesin this regard.L O N G-L I V E D A S S E T S.We account for long-lived assets inaccordance with Financial Accounting Standards Board(FASB)Statement No.144.The Statement r

122、equires that long-livedassets be reviewed for impairment whenever events or changesin circumstances indicate that the carrying amount of an asset may not be recoverable.The test for impairment requiresmanagement to estimate future cash flows,which can differmaterially from actual future results base

123、d upon many factors,including but not limited to changes in economic conditions,environmental requirements,and capital spending.R E S T R U C T U R I N G A N D O T H E R C H A R G E S.In 2000,2001 and2002 we recorded charges for the restructuring of our salariedworkforce,the closure of a plywood man

124、ufacturing plant and thereduction of the hourly workforce at another site.In May 2002we also completed the sale of a majority of the assets of ourPrinting Papers segment and closed a printing papers facility in Brainerd,Minnesota.In July 2002 we closed a hardwoodlumber mill in Warren,Arkansas.The mi

125、ll was sold in August2002.These events required us to record estimates of liabilitiesfor employee benefits,demolition,environmental clean-up and other costs at the time of the event,and these estimated liabilities could differ materially from actual costs incurred.E N V I R O N M E N T A L L I A B I

126、 L I T I E S.We record accruals for estimated environmental liabilities in accordance with FASBStatement No.5.These estimates reflect assumptions and judgments as to the probable nature,magnitude and timing ofrequired investigation,remediation and monitoring activities.Due to the numerous uncertaint

127、ies and variables associatedwith these assumptions and judgments,and changes in govern-mental regulations and environmental technologies,our accrualsare subject to substantial uncertainties and our actual costscould be materially more or less than the estimated amounts.P E N S I O N A N D P O S T R

128、E T I R E M E N T B E N E F I T S.Substantiallyall of our employees are covered by noncontributory definedbenefit pension plans,and certain salaried and hourly employeesare covered by company-sponsored defined benefit retireehealth care and life insurance plans.The cost of these plans isaccounted fo

129、r in accordance with FASB Statement Numbers 87,106 and 132.These Statements require assumptions regardingdiscount rates and asset returns and,with respect to the post-retirement benefits plans,assumptions regarding medical costtrends.Actual asset returns and medical costs which are morefavorable tha

130、n our assumptions can have the effect of loweringour expense and cash contributions,and conversely,actualresults which are less favorable than our assumptions couldincrease our expense and cash contributions.F A C T O R S I N F L U E N C I N G O U R R E S U L T S O F O P E R A T I O N SOur operating

131、 results have been and will continue to be influenced by a variety of factors,including the cyclical natureof the forest products industry,competition,the efficiency andlevel of capacity utilization of our manufacturing operations,changes in our principal expenses,such as wood fiber andenergy costs,

132、changes in the production capacity of our manu-facturing operations as a result of major capital spending projects,asset dispositions or acquisitions and other factors.15F I N A N C I A L R E V I E WP O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E S14P O T L

133、A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E SF I N A N C I A L R E V I E W In December 2001,we reversed$1.8 million of an$18.5million pre-tax charge,taken in September 2000,for costsassociated with the closure of our Jaype,Idaho,plywoodmill.Our initial estimate

134、of the cost to close the mill included expected costs for some aspects of maintenance and demolition that were not incurred.Interest expense was$59.9 million for the year endedDecember 31,2002,substantially less than the$77.9 millioncharged against income in 2001.The decrease reflected our net reduc

135、tion of over$470 million of debt during 2002.We incurred one-time,pre-tax costs of$15.4 million during 2002 related to our early retirement of over$380 million of outstanding debt.These costs included cash fees and premiums of$10.6 million and the non-cash write-off of related debt financing costs t

136、otaling$4.8 million.For the year ended December 31,2002,“Other income,net”totaled$15.2 million,compared to expense of$2.2 million in 2001.The 2002 amount was largely due to gainsfrom the sale of nonstrategic timberland and other surplus land sales,interest income and recreational fee income.The2001

137、amount included an$11.1 million charge for the cost of equipment removed from service and deferred litigationcosts associated with our lawsuit against Beloit Corporation.Interest income of$2.6 million and gains from asset sales of$3.9 million partially offset the charge.For the year ended December 3

138、1,2002,we recorded anincome tax benefit of$32.6 million,reflecting our net loss from continuing operations before taxes,based on an estimatedtax rate of 39%.For the year ended December 31,2001,werecorded an income tax benefit of$36.2 million,also reflectinga tax rate of 39%.We recorded a net loss fr

139、om continuing operations of$50.9million for the year ended December 31,2002,compared to a net loss from continuing operations of$56.6 million for theyear ended December 31,2001.We incurred a pre-tax loss on our discontinued operations of$300.7 million in 2002.The discontinued operations includedour

140、former Printing Papers segment and a hardwood sawmill.Included in the amount was$276.2 million for loss on the disposition of the properties and$24.5 million in operationallosses.In 2001 these operations incurred pre-tax losses of$37.5 million.Our net loss for 2002 was$234.4 million,compared to$79.4

141、million in 2001.The unfavorable comparison was due to recog-nition of the substantial charge for our discontinued operations.In December,as a result of market declines in our pensionassets in the second half of 2002 and a reduction in the discount rate from 7.25%to 6.75%,we recorded in“Othercomprehe

142、nsive loss”an adjustment for a minimum pension liability totaling$33.2 million,after tax.The charge is reflectedin the Balance Sheets as an adjustment to Stockholders equity.We do not expect pension contributions or expense in 2003 tobe materially affected by the charge or discount rate change.D I S

143、 C U S S I O N O F B U S I N E S S S E G M E N T S The Resource segment reported operating income of$62.6 million for the year ended December 31,2002,up from$55.3 million reported in 2001.Segment net sales were$404.5 million,compared to$405.8 million in 2001.A decreasein internal net sales was large

144、ly offset by increased net salesrealizations and higher sales volumes to third parties in Idaho,Minnesota and Arkansas.Resource segment expenses decreased2%to$342.0 million in 2002,compared to$350.5 million in2001.Decreased purchases of residual fiber reduced costs butwere partially offset by increa

145、sed logging costs.The Wood Products segment incurred an operating loss of$27.0 million for the year ended December 31,2002,comparedto an operating loss of$26.6 million incurred in 2001.Marketconditions were difficult for our wood products due to theindustrys oversupply position,which persisted throu

146、ghout theyear,despite a positive new home construction environment.Foreign imports continued to affect pricing during all of 2002,even after imposition of a U.S.duty on Canadian productsbeginning in May.Net sales for the segment were$509.2 million,slightly higher compared to$502.3 million reported i

147、n 2001.Net sales of oriented strand board increased 12%in2002,to$187.3 million,due to a 13%increase in shipments.A small decrease in lumber shipments,combined with slightlylower net sales realizations,resulted in a net sales decrease to$249.8 million from$251.9 million in 2001.Net sales ofplywood de

148、creased 14%to$34.9 million.Plywood shipmentswere down 17%,due in large part to lower production in 2002compared to 2001.Production was higher in 2001 due to extrashifts above the normal operating schedule at our St.Maries,Idaho,mill.Net sales of particleboard were$14.1 million,com-pared to$15.8 mill

149、ion in 2001.Expenses were$536.2 millionfor the segment in 2002,compared to$528.9 million in 2001.Higher wood fiber costs were partially offset by small declinesM A N A G E M E N T S D I S C U S S I O N A N D A N A L Y S I S O F F I N A N C I A LC O N D I T I O N A N D R E S U L T S O F O P E R A T I

150、 O N S (C O N T I N U E D)the hardwood lumber business.We are currently in the processof constructing a tissue machine in Las Vegas,Nevada,whichwe anticipate will increase our tissue-making capacity by 30,000tons a year when completed in early 2004.Each of these changeshas affected or will affect ou

151、r levels of net sales and expenses,as well as the comparability of our operating results from periodto period.Additionally,the profitability of our manufacturingsegments depends largely on our ability to operate our manu-facturing facilities efficiently and at or near full capacity.Our operating res

152、ults would be adversely affected if market demanddoes not justify operating at these levels or if our operations are inefficient or suffer significant interruption for any reason.R E S U L T S O F O P E R A T I O N SAt December 31,2002,our business was organized into threereporting segments:Resource

153、,Wood Products,and Pulp andPaper.Sales or transfers between segments are recorded asintersegment sales based on prevailing market prices.Becauseof the role of the Resource segment in supplying our manufac-turing segments with wood fiber,intersegment sales represent a significant portion of the Resou

154、rce segments total net sales.Intersegment sales represent a substantially lower percentage of net sales for our other segments.In the period-to-period discussion of our results of operationsbelow,when we discuss our consolidated net sales,contributionsby each of the segments to our net sales are rep

155、orted after elimi-nation of intersegment sales.In the“Discussion of BusinessSegments”sections below,each segments net sales are set forthbefore elimination of intersegment sales.Additionally,in discuss-ing our operating results we refer to net sales realizations,whichfor each product line are calcul

156、ated by subtracting freight fromnet sales and then dividing the result by relevant quantities ofthe product shipped for the period.We believe net sales realiza-tions are helpful in showing trends in the pricing of our products.Y E A R E N D E D D E C E M B E R 3 1,2 0 0 2 C O M P A R E D T O Y E A R

157、 E N D E D D E C E M B E R 3 1,2 0 0 1Net sales of$1,286.2 million for the year ended December 31,2002,were slightly higher compared to net sales of$1,274.6million recorded for the year ended December 31,2001.Increases in Resource and Wood Product segment net sales of$27.3 million and$11.8 million,r

158、espectively,were partiallyoffset by a decrease in net sales for the Pulp and Paper segment of$27.5 million.Resource sales were greater due to increased sales to external customers,while Wood Productsnet sales increased as a result of an increase in OSB net sales.The decrease in net sales for Pulp an

159、d Paper was primarily due to lower net sales for paperboard.Expenses for depreciation,amortization and cost of fee timber harvested were$115.5 million for the year endedDecember 31,2002,an increase of$.5 million from the prioryear amount of$115.0 million.For the year ended December 31,2002,materials

160、,labor and other operating expenses increased$18.9 million or 2%to$1,102.1 million from$1,083.1 million in 2001.Repair and maintenance expense and wood fiber costs were higher in 2002,but were partially offset by lower energy costs.Selling,general and administrative expenses totaled$83.2million for

161、the year ended December 31,2002,compared to 2001s expense of$86.3 million.The change was primarilydue to bad debt expense incurred in 2001 as a result of a$2.2 million charge related to the insolvency of a pulp broker.In 2002,we expensed the remaining balance due from the pulp broker,totaling$.8 mil

162、lion,after it was determined thatcollection was not reasonably likely to occur.In addition,bank fees were lower in 2002 versus 2001.The following three charges were included in the“Restruc-turing and other charges”line in the Statements of Operations:In 2002 we recorded a$9.0 million pre-tax charge

163、for costsassociated with the elimination of 106 salaried productionand administrative positions.We expect to record an addi-tional$.4 million during the first half of 2003 for costs related to terminated employees whose services have beenretained beyond the initial 60-day period following theannounc

164、ed job elimination,as required by Statement ofFinancial Accounting Standards(SFAS)No.146.As ofDecember 31,2002,82 employees had been terminated,three had assumed other positions within the company as aresult of job openings,and 21 were scheduled for terminationin the first half of 2003.We expect to

165、pay all material costsrelated to the reduction by the end of the first half of 2003.In March 2001,we recorded a$4.2 million pre-tax chargeassociated with a workforce reduction plan at our pulp,paperboard and consumer products operations in Idaho.In September 2001,an additional$.4 million pre-tax cha

166、rge was recorded as a result of final cost determinationsfor pension and medical benefits.The plan permanentlyreduced the workforce by 124 hourly production and maintenance positions.As of December 31,2001,all material costs associated with the plan had been incurred.17F I N A N C I A L R E V I E WP

167、 O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E S16P O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E SF I N A N C I A L R E V I E WDecember 31,2001,$27.0 million had been recordedagainst the accrued liability associated

168、 with the charge.All remaining costs associated with the workforce reductionprogram were paid in the first half of 2002.In September 2000,we recorded an$18.5 million pre-taxcharge for costs associated with the closure of our Jaype,Idaho,plywood mill.As of December 31,2000,five salariedand 200 hourly

169、 production and maintenance employees hadbeen terminated due to the closure.As of December 31,2001,a total of five salaried and 207 hourly production and mainte-nance employees had been terminated due to the closure.As of December 31,2001,$16.5 million had been recordedagainst the accrued liability

170、associated with the charge,whichrepresented all material costs we expect to incur.Our initialestimate of the cost to close the mill included expected costsfor some aspects of maintenance and demolition that were not incurred.As a result,in December 2001 we reversed$1.8 million of the liability and r

171、ecorded it as income.Interest expense was$77.9 million for the year endedDecember 31,2001,a substantial increase compared to the$59.4 million charged against income in 2000.The increasereflected greater indebtedness in 2001 as well as a higher overall weighted average interest rate on our outstandin

172、g debt.For the year ended December 31,2001,“Other expense,net”totaled$2.2 million,compared to expense of$3.0 millionin 2000.The 2001 amount included an$11.1 million charge for the cost of equipment removed from service and deferred litigation costs associated with our lawsuit against BeloitCorporati

173、on,which were determined to be uncollectable due to a reduction in the value of assets available for distribution to unsecured creditors.Interest income of$2.6 million andgains from asset sales of$3.9 million partially offset the charge.For the year ended December 31,2001,we recorded anincome tax be

174、nefit of$36.2 million,reflecting our net loss fromcontinuing operations before taxes,based on an estimated taxrate of 39%.For the year ended December 31,2000,we record-ed a benefit of$21.3 million,also reflecting a tax rate of 39%.We recorded a net loss from continuing operations of$56.6million for

175、the year ended December 31,2001,compared to a net loss from continuing operations of$33.4 million for theyear ended December 31,2000.We incurred a pre-tax loss on our discontinued operations of$37.5 million in 2001,compared to income of$.3 million in 2000.Discontinued operations included our former

176、PrintingPapers segment and a hardwood sawmill.Our net loss,including discontinued operations,for 2001was$79.4 million,compared to$33.2 million in 2000.D I S C U S S I O N O F B U S I N E S S S E G M E N T S The Resource segment reported operating income of$55.3 million for the year ended December 31

177、,2001,lowerthan the$61.4 million reported in 2000.Segment net salesincreased to$405.8 million,compared to$352.3 million in2000.The increase in net sales was due to increased wood fibersales to our other operating segments in Arkansas,Idaho andMinnesota.Most of the increased volume was procured from

178、outside sources and resold internally.Expenses for the Resourcesegment were$350.5 million in 2001,greater than the$290.9 million recorded in 2000 due to increased outside woodpurchases and higher production costs.The Wood Products segments operating loss of$26.6 millionfor the year ended December 31

179、,2001,was greater than theoperating loss of$17.0 million incurred in 2000,which includ-ed an$18.5 million pre-tax charge related to the closure of our Jaype,Idaho,plywood mill.Difficult market conditions prevailed throughout 2001 and worsened in the fourth quarter,necessitating extended shutdowns du

180、ring the holiday period atmost of the segments mills,adversely affecting earnings.Netsales for the segment were$502.3 million,compared to$538.9million reported in 2000.A decline in net sales realizations for all of the segments product lines was largely responsible for the sales decrease.Net sales o

181、f oriented strand boarddecreased 20%in 2001 to$167.2 million,net sales of plywooddecreased 21%to$40.5 million,and net sales of particleboarddecreased 19%to$15.8 million.An increased volume of shipments offset lower net sales realizations for lumber,as net sales increased to$251.9 million from$232.1

182、million in2000.Expenses were$528.9 million for the segment in 2001,compared to$555.9 million in 2000.Wood fiber and energycosts increased in 2001,but overall expenses were lower due to the absence of operating costs related to the Jaype,Idaho,plywood mill,which we closed in September 2000.The Pulp a

183、nd Paper segment incurred an operating loss of$14.5 million in 2001,versus operating income of$12.9 millionin 2000.Segment net sales increased to$751.7 million for2001,compared to$730.1 million in 2000.The increase wasdue to a$35.1 million increase in tissue product net sales.Tissue product shipment

184、s were 8%higher,and net sales realiza-tions increased 4%compared to the 2000 period.A$7.5 milliondecline in pulp net sales,due to an 8%decrease in shipmentsand a 41%decrease in net sales realizations,partially offset theincrease in tissue product net sales.Market-related downtime M A N A G E M E N T

185、 S D I S C U S S I O N A N D A N A L Y S I S O F F I N A N C I A LC O N D I T I O N A N D R E S U L T S O F O P E R A T I O N S (C O N T I N U E D)in energy and labor costs.Wood fiber costs were higher due in large part to the full years operation of the Cook,Minnesota,oriented strand board mill.The

186、 mill was shut down for a portionof the first quarter of 2001 to complete a modernization andexpansion project.The Pulp and Paper segment reported a slight loss of lessthan$.1 million in 2002,versus an operating loss of$14.5 million in 2001.Segment net sales decreased to$725.4 millionfor 2002,compar

187、ed to$751.7 million in 2001.The decreasewas due to lower net sales realizations for paperboard and tissue,combined with a decrease in paperboard shipments.Paperboard net sales declined 6%to$395.1 million from$420.6 million in 2001 due to a 6%decline in net sales realizations.The markets for paperboa

188、rd reflected the difficultgeneral economic conditions in 2002,as well as increasedcompetition from international producers of paperboard.Consumer tissue product net sales realizations were down 3%,resulting in a decline in 2002 net sales to$315.7 million from$317.7 million in 2001.A$1.2 million incr

189、ease in pulp netsales,due to a 12%increase in shipments,partially offset thedecrease in paperboard and tissue net sales.Segment expenseswere$725.4 million in 2002,compared to$766.2 million in2001.Energy expense was significantly lower in 2002 butwas partially offset by higher repair and maintenance

190、expenseand wood fiber costs.Repair and maintenance expense washigher due to a scheduled major maintenance shutdown at theCypress Bend,Arkansas,pulp and paperboard mill and some equipment improvements at the Lewiston,Idaho,pulpand paperboard mill.Included in expenses for 2001 was an$11.1 million char

191、ge related to our Beloit Corporation lawsuitand bad debt expense of$2.2 million related to the pulp broker insolvency.Y E A R E N D E D D E C E M B E R 3 1,2 0 0 1 C O M P A R E D T O Y E A R E N D E D D E C E M B E R 3 1,2 0 0 0Net sales of$1,274.6 million for the year ended December 31,2001,were s

192、lightly less than net sales of$1,293.2 millionrecorded for the year ended December 31,2000.The decreasewas largely due to a decrease in net sales for the WoodProducts segment.Net sales for Wood Products fell by$41.1million,as a result of net sales decreases in OSB,plywood andparticleboard.The decrea

193、se in net sales for the segment waspartially offset by an increase in net sales for the Pulp andPaper segment,which benefited from increased net sales of tissue products.Pulp and Paper segment net sales increased by$21.7 million in 2001.Resource segment net sales were$38.1 million,comparable to 2000

194、s$37.2 million.Expenses for depreciation,amortization and cost of fee timber harvested were$115.0 million for the year endedDecember 31,2001,an increase of$6.3 million from the prioryear amount of$108.7 million.The increase was primarily due to increased amortization expense as a result of our debtr

195、efinancing activities during the second quarter of 2001 andincreased depreciation in the Wood Products segment related to the Cook OSB mill.For the year ended December 31,2001,materials,labor andother operating expenses rose by 4%to$1,083.1 million from$1,044.9 million in 2000.An increase in the ove

196、rall volume of product shipments in 2001 and higher energy costs werelargely responsible for the increase.Energy costs were$14.6million higher in 2001,and included a$1.2 million net chargefor fair value adjustments to natural gas derivative hedging contracts used during the year.Selling,general and

197、administrative expenses totaled$86.3million for the year ended December 31,2001,a slight increasefrom 2000s expense of$85.5 million.The increase was pri-marily due to increased bad debt expense incurred in 2001 as a result of a$2.2 million charge related to the insolvency of apulp broker,and was par

198、tially offset by cost savings from thereduction in our salaried workforce in June 2000 and a declinein selling expenses related to our consumer tissue products.The following three charges were included in the“Restruc-turing and other charges”line in the Statements of Operations:In March 2001,we reco

199、rded a$4.2 million pre-tax chargeassociated with a workforce reduction plan at our pulp,paperboard and consumer products operations in Idaho.In September 2001,an additional$.4 million pre-tax chargewas recorded as a result of final cost determinations for pension and medical benefits.The plan perman

200、ently reducedthe workforce by 124 hourly production and maintenancepositions.As of December 31,2001,all material costs associated with the plan had been incurred.In 2000,we recorded a$27.9 million pre-tax charge to covercosts associated with a company-wide reduction and reorgan-ization of our salari

201、ed production and administrative work-force.In establishing the initial liability,we estimated 261employees would be terminated.As of December 31,2001and 2000,a total of 273 employees had been terminatedunder the reduction and reorganization plan.As of 19F I N A N C I A L R E V I E WP O T L A T C H

202、C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E S18P O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E SF I N A N C I A L R E V I E Wdue to the acquisition of environmental permits,acquisition ofequipment,engineering,weather and other f

203、actors.Net cash used for financing totaled$484.0 million in 2002,compared to cash provided by financing of$84.2 million in2001 and$73.8 million in 2000.The majority of cash used in 2002 was for the retirement of$511.9 million of long-termdebt.As discussed above,we used restricted cash to repay our$1

204、00 million 6.25%Debentures,and we retired other debtusing proceeds from asset sales.Notes payable increased$40.0million,partially offsetting cash used for debt payments.Theincrease in cash provided by financing in 2001 compared to2000 was due primarily to our debt restructuring completed inJune 2001

205、 in which we issued$450.0 million of debt,partiallyoffset by debt repayments of$101.7 million and repayment of$188.9 million of notes payable.We also purchased lesstreasury stock in 2001,spending$10.5 million versus$25.9million in 2000.In addition,our dividend payments declinedsubstantially in 2001,

206、to$33.1 million from$49.7 million paid in 2000,largely as a result of a dividend rate reductionannounced in August 2001.Cash from discontinued operations in 2002 totaled$488.9million,most of which was cash received from the sale of ourPrinting Papers segment assets and the sale of our hardwoodsawmil

207、l in Arkansas.In connection with the sale of our PrintingPapers segment assets in May 2002,we were required underthe terms of our bank credit facility to use the proceeds to repay$198.5 million under the term loan portion of our bank creditfacility,and all outstanding debt under our revolving credit

208、 lineat the date of sale,totaling$33.2 million.We also used a portionof the proceeds to retire approximately$164.9 million of addi-tional debt.The discontinued operations generated cash of$42.9 million in 2001 and used cash of$4.2 million in 2000.These amounts were generally the result of the normal

209、 operatingactivities of the discontinued operations during 2001 and 2000.Our current bank credit facility is comprised of a three-yearrevolving line of credit of up to$150.0 million that expiresJune 28,2004,including a$70.0 million subfacility for lettersof credit,usage of which reduces availability

210、 under the revolv-ing line of credit.Our obligations under the bank credit facilityare secured by our accounts receivable and inventory.As ofDecember 31,2002,$40.0 million was outstanding under therevolving line of credit and approximately$36.1 million of therevolving line of credit was used to supp

211、ort outstanding lettersof credit.In December 2002 we converted$36.1 million of ourfloating rate municipal bonds to fixed-rate bonds,and retiredthe remaining$17.8 million of our floating rate municipalbonds.As a result,we cancelled the related letters of creditunder the bank credit facility.During th

212、e third and fourth M A N A G E M E N T S D I S C U S S I O N A N D A N A L Y S I S O F F I N A N C I A LC O N D I T I O N A N D R E S U L T S O F O P E R A T I O N S (C O N T I N U E D)quarters of 2002,we negotiated amendments to our bank credit facility,which,among other changes,included reductiono

213、f commitments from$200 million to$150 million,approval of the conversion of our floating rate municipal bonds to fixed-rate bonds and revisions to certain financial covenants.Both the agreement governing our credit facility and theindenture governing our$250 million 10%senior subordinatednotes conta

214、in certain covenants that,among other things,restrict our ability and our subsidiaries ability to create liens,merge or consolidate,dispose of assets,incur indebtedness andguarantees,pay dividends,repurchase or redeem capital stockand indebtedness,make certain investments or acquisitions,enter into

215、certain transactions with affiliates,make capitalexpenditures,or change the nature of our business.The creditfacility also contains financial maintenance covenants estab-lishing a maximum funded indebtedness to capitalization ratio,a minimum consolidated net worth requirement,and a mini-mum interest

216、 coverage ratio.Events of default under the creditfacility and the indenture include,but are not limited to,pay-ment defaults,covenant defaults,breaches of representationsand warranties,cross defaults to certain other material agree-ments and indebtedness,bankruptcy and other insolvencyevents,materi

217、al adverse judgments,actual or asserted invalidityof security interests or loan documentation,and certain changeof control events involving our company.We have obtained anamendment to our credit facility modifying the interest coverageratio calculation,and as a result of this modification,we were in

218、 compliance with the covenants of our credit facility as ofDecember 31,2002.We believe that our cash,cash flows from operations andavailable borrowings under our revolving credit facility will besufficient to fund our operations,capital expenditures and debtservice obligations for the next twelve mo

219、nths.When our creditfacility expires in June 2004,we will either need to extend the facility or enter into a new credit facility.We cannot assure,however,that our business will generate sufficient cash flowfrom operations or that we will be in compliance with the finan-cial covenants in our credit f

220、acility so that future borrowingsthereunder will be available to us.This will be dependent upon our future financial performance,which will be affectedby general economic,competitive and other factors,includingthose discussed under“Factors Influencing Our Results ofOperations,”many of which are beyo

221、nd our control.at the segments Lewiston pulp and paperboard mill contributedto the unfavorable results for 2001.Higher energy and woodfiber costs,combined with increases in the volume of paper-board and tissue product shipments,were largely responsiblefor the$49.0 million increase in segment expense

222、s.Also included in expenses for 2001 were the$11.1 million chargerelated to our Beloit Corporation lawsuit and bad debt expenseof$2.2 million related to the pulp broker insolvency.L I Q U I D I T Y A N D C A P I T A L R E S O U R C E SAt December 31,2002,our financial position included long-termdebt

223、 of$638.3 million,including current installments on long-term debt of$15.6 million.Long-term debt(including currentinstallments and early maturing long-term debt)to stockholdersequity was 1.48 to 1 at December 31,2002,compared to 1.63to 1 at December 31,2001.Long-term debt at December 31,2002(includ

224、ing current installments and early maturing long-term debt)declined$511.9 million from the December 2001balance due to normal payments on maturing debt of$132.6million and the early retirement of$379.3 million of long-termdebt,using a portion of the proceeds from the sale of thePrinting Papers segme

225、nt assets.Stockholders equity declined$276.5 million,largely due to a net loss of$234.4 million for2002,the recording of a minimum pension liability adjustmentof$33.2 million and dividend payments of$17.1 million.Scheduled payments due on long-term debt during each ofthe five years subsequent to Dec

226、ember 31,2002 are as follows:(Dollars in thousands)2003$15,607200460720051,60820062,95820076,759In September 2002,we placed$15.0 million into an interest-bearing escrow account under the terms of an amendment toour credit agreement.The escrow accounts use is restricted tothe repayment of$15 million

227、of our medium-term notes,bear-ing an interest rate of 9.42%,which mature on April 4,2003.We had working capital of$102.7 million at December 31,2002,a decrease of$509.7 million from December 31,2001.Items decreasing working capital included reductions in assetsheld for sale of$767.0 million,restrict

228、ed cash of$83.1 million,short-term investments of$28.5 million and an increase innotes payable of$40.0 million.The decrease in working capitalcaused by these changes was partially offset by an increase in inventory of$52.1 million and decreases in current install-ments on long-term debt of$117.0 mil

229、lion,early maturing debt of$197.0 million and liabilities related to assets held for sale of$33.9 million.Net cash used for operations in 2002 totaled$69.1 million,compared with cash provided by operations of$34.5 million in 2001 and$72.4 million in 2000.An increase in cash usedfor working capital i

230、tems in 2002 accounts for a majority of the unfavorable comparison to 2001.The net decrease in cashgenerated in 2001 compared to 2000 resulted primarily fromthe following items:a 2001 net loss from continuing operationsof$56.6 million versus a 2000 net loss of$33.4 million;adecrease in deferred taxe

231、s of$83.4 million in 2001 versus anincrease of$18.3 million in 2000;and working capital changescontributing cash of$54.2 million in 2001 compared to usingcash of$19.1 million in 2000.Net cash provided by investing was$65.8 million in 2002,while net cash used for investing was$164.7 million in 2001an

232、d$142.7 million in 2000.Cash was provided in 2002 largelyfrom the use of restricted cash and short-term investments torepay long-term debt.Capital spending of$51.6 million in 2002was modestly higher than the$42.7 million spent in 2001.InSeptember 2002,we announced plans to spend$66 million toconstru

233、ct a new tissue machine in LasVegas,Nevada.Spendingon this project in 2002 totaled$19.2 million.The balance ofcapital spending in 2002 focused on routine general replace-ment,safety,forest resource and environmental projects.Theincrease in cash used in 2001 compared to 2000 was primarilyattributable

234、 to the establishment of a restricted cash accounttotaling$98.2 million at December 31,2001,and an increase in short-term investments of$30.5 million.These amounts were partially offset by lower capital expenditures,totaling$42.7 million in 2001 compared to$142.8 million in 2000.Capital spending in

235、2001 focused on routine general replace-ment,safety,forest resource and environmental projects.Approximately$4.0 million was spent for the completion of the modernization and expansion project at our Cook,Minnesota,OSB mill and another$6.5 million on developmentof our hybrid poplar plantation in Boa

236、rdman,Oregon.Authorized but unexpended capital appropriations totaled$93.3 million at December 31,2002,all of which is budgetedfor expenditure in 2003.As in 2002,spending in 2003 will beconcentrated on the new tissue machine in Las Vegas as well asvarious routine general replacement,safety,forest re

237、source andenvironmental projects.Spending on projects may be delayedE N V I R O N M E N TWe are subject to extensive federal and state environmentalregulations at our operating facilities and timberlands,particu-larly with respect to air emissions,wastewater discharges,solidand hazardous waste manag

238、ement,site remediation,forestryoperations and endangered species.We endeavor to complywith all environmental regulations and regularly monitor ouractivities for such compliance.Compliance with environmentalregulations is a significant factor in our business and requirescapital expenditures as well a

239、s additional operating costs.Capital expenditures specifically designated for environmentalcompliance totaled approximately$1 million during 2002 and are budgeted to be approximately$1 million in 2003.In early 1998 the Environmental Protection Agency(EPA)published the“Cluster Rule”regulations specif

240、ically applica-ble to the pulp and paper industry.These extensive regulationsgovern both air and water emissions.During 2001,we com-pleted modifications to process equipment and operating procedures to comply with Phase I of the regulations.Phase II of the regulations relates to control of high volu

241、me,low con-centration emissions at kraft pulp mills,and our complianceefforts are scheduled to be completed in 2006 at an expectedcost of approximately$5 million.We do not expect that suchcompliance costs will have a material adverse effect on ourcompetitive position.Our pulp mill at Lewiston,Idaho,

242、discharges treated milleffluent into the nearby Snake River.Federal law requires thatwe comply with provisions of a National Pollution DischargeElimination System(NPDES)permit.As allowed by federalregulations,we are operating under an NPDES permit whichexpired in 1997,but which continues to be in fo

243、rce until theeffective date of a new NPDES permit.Negotiations for a new permit have been ongoing since its expiration.The EPApublished a draft NPDES permit in December 1999,whichincludes an end-of-the-pipe discharge temperature requirementof 68 degrees Fahrenheit to be achieved within five years of

244、 the date a new permit becomes effective.Meeting this require-ment would necessitate installation of refrigeration equipmentat a total capital cost between$25 million and$30 million.Discussions are ongoing with the EPA and other agenciesinvolved in the reissuance of the NPDES permit.There areregiona

245、l precedents for a higher temperature limit.Compliancewith a higher temperature limit,should it be allowed,could beachieved with process modifications and less costly equipmentconfigurations than refrigeration.If we are required to installand operate the refrigeration equipment,we believe the pulpmi

246、ll will be substantially less competitive than similar mills,none of which face such requirements.21The EPA is currently developing its Total Maximum DailyLoad(TMDL)regulations for temperature.This process is notexpected to be completed until late 2003,and may clarify therequirements to be placed on

247、 the Lewiston mill discharge.Thecurrently proposed temperature TMDL,in conjunction withrecently promulgated Idaho Water Quality Standards,wouldrequire considerably less significant temperature reduction to our discharge,consistent with other pulp mill discharges in the region.If approved as drafted,

248、the new TMDL and waterquality standards would likely result in a modification to ourdraft NPDES permit,allowing for a mixing zone for temperature,rather than an end-of-the-pipe temperature limit.The EPA is currently developing environmental regulations,collectively known as Maximum Achievable Contro

249、l Technology(MACT)rules,which could affect our wood products operationsas well as our power boiler generating facilities.The MACT rulesfor power boiler facilities were proposed in November 2002,and those for wood products operations are not expected to be proposed until early 2003.Compliance is not

250、expected to berequired before 2006.We are currently studying the proposedMACT rules for power boiler operations,and after the proposedrules for wood products operations are published,we will be ableto reasonably estimate the capital expenditures necessary forcompliance,although we do not expect such

251、 compliance costs to have a material adverse effect on our competitive position.We believe that our facilities are currently in substantialcompliance with applicable environmental laws and regulations.We cannot assure,however,that situations which will give rise to material environmental liabilities

252、 will not be discovered orthat the enactment of new environmental laws or regulations or changes in existing laws or regulations will not require significant expenditures by us.I N C O M E T A X E SOur effective tax rate for 2002,2001and 2000 was 39.0 percent.Q U A N T I T A T I V E A N D Q U A L I

253、T A T I V E D I S C L O S U R E S A B O U T M A R K E T R I S K SOur exposure to market risks on our financial instrumentsincludes interest rate risk on our bank credit facility.InDecember 2002 all of our other variable rate debt was con-verted to fixed-rate debt or was retired.As of December 31,200

254、2,we had$40.0 million of credit facility debt outstanding.The interest rates applied to borrowings under the credit facility are adjusted often and therefore react quickly to anymovement in the general trend of market interest rates.All of our long-term debt is fixed-rate,and therefore changesin mar

255、ket interest rates do not expose us to risk for these finan-cial instruments.However,in December 2001 we entered into F I N A N C I A L R E V I E WP O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E S20At December 31,2001,Standard&Poors Ratings Services,a divisi

256、on of The McGraw-Hill Companies,Inc.,MoodysInvestors Service Inc.and Fitch,Inc.rated our senior unsecuredlong-term debt BBB-,Baa3 and BBB-,respectively,all with anegative outlook.In addition,all three organizations listed us on CreditWatch with negative implications.On July 12,2002,Standard&Poors an

257、nounced that it had affirmed its ratings on our debt,including our BBB-corporate rating,and removedus from CreditWatch.On September 23,2002,it announced that its ratings and outlook would remain unchanged at BBB-with a negative outlook following the announcement that ourBoard of Directors had approv

258、ed$66 million to construct a new tissue machine in Las Vegas,Nevada.During the secondquarter of 2002 Fitch affirmed our BBB-rating,classified us as stable,and removed us from CreditWatch.Moodys rating of our debt has remained unchanged at Baa3 with a negativeoutlook.On January 30,2003,Standard&Poors

259、 announcedthat it had lowered our senior unsecured debt rating to BB+and affirmed our senior secured bank loan rating at BBB-.The ratings downgrade by Standard&Poors caused the interest rate on our$100 million Credit Sensitive Debentures to increase from 9.425%to 12.5%,effective January 30,2003.Sinc

260、e December1999,we have been authorized under a stockrepurchase program to repurchase up to two million shares of our common stock.Under the plan,purchases of common stockmay be made from time to time through open market and pri-vately negotiated transactions at prices deemed appropriate by managemen

261、t.Through December 31,2001,a total of 910,900 shares had been acquired under the stock repurchase program.No shares were acquired in 2002,and we do not expect to repurchase additional common stock in the foreseeable future.It is our practice to periodically review strategic and opera-tional alternat

262、ives to improve our operating results and financialposition.In this regard,we consider and plan to continue to consider,among other things,adjustments to our capital expen-ditures and overall spending,the restructuring of our operations to achieve greater efficiencies,and the disposition of assets t

263、hatmay have greater value to others.There can be no assurancethat we will be successful in implementing any new strategic oroperational initiatives or,if implemented,that they will have theeffect of improving our operating results and financial position.P O T L A T C H C O R P O R A T I O N A N D C

264、O N S O L I D A T E D S U B S I D I A R I E SF I N A N C I A L R E V I E WM A N A G E M E N T S D I S C U S S I O N A N D A N A L Y S I S O F F I N A N C I A LC O N D I T I O N A N D R E S U L T S O F O P E R A T I O N S (C O N T I N U E D)a fixed-to-variable interest rate swap to hedge a portion of

265、 our10%senior subordinated debentures.The swap has been desig-nated as a fair value hedge and calls for the company to pay a variable interest amount,based on London Interbank OfferedRate(LIBOR)rates,and receive a fixed-rate payment from afinancial institution,calculated on$165.0 million of our 10%s

266、enior subordinated debentures.We assume there is no ineffec-tiveness in the hedge and,accordingly,a fair value increase or decrease in the swap is offset by a corresponding decrease or increase in the value of the underlying debt instrument.At December 31,2002,we were not a party to any derivativefi

267、nancial instruments other than the interest rate swap.C O M M O N S T O C K:M A R K E T S,P R I C E S,V O T I N G R I G H T S A N D D I V I D E N D SThe companys common stock is traded on the NewYork,Chicagoand Pacific Stock Exchanges.The quarterly and yearly highand low sales price per share of our

268、 common stock,as reportedin the New York Stock Exchange Composite Transactions in the Wall Street Journal for 2002 and 2001,were as follows:20022001QuarterHighLowHighLow1st$34.44$27.85$34.88$29.262nd36.1332.3236.2231.033rd33.6928.3534.3426.554th29.8823.8829.8024.90Year36.1323.8836.2224.90In general,

269、all holders of Potlatch common stock who own shares48 consecutive calendar months or longer(“long-term holders”)are entitled to exercise four votes per share of stock so held,while stockholders who are not long-term holders are entitled to one vote per share.All stockholders are entitled to only one

270、vote per share on matters arising under certain provisions of thecompanys charter.There were approximately1,900 commonstockholders of record at December 31,2002.See the discussion under the caption“Liquidity and CapitalResources”in Managements Discussion and Analysis ofFinancial Condition and Result

271、s of Operations on page 19for information regarding restrictions on our ability to pay dividends.Quarterly dividend payments per common share for 2002 and2001 were:Quarter200220011st$.15$.4352nd.15.4353rd.15.1554th.15.155$.60$1.17F I N A N C I A L R E V I E W23P O T L A T C H C O R P O R A T I O N A

272、 N D C O N S O L I D A T E D S U B S I D I A R I E SF I N A N C I A L R E V I E W22P O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E SB A L A N C E S H E E T SAt December 31(Dollars in thousands except per-share amounts)20022001A S S E T SCurrent assets:Cash(N

273、ote 11)$8,973$7,475Restricted cash(Notes 1 and 8)15,06998,200Short-term investments(Note 11)2,00030,509Receivables,net of allowance for doubtful accounts of$1,624($1,589 in 2001)(Notes 2 and 8)117,919118,632Inventories(Notes 3 and 8)159,798107,713Prepaid expenses(Note 7)39,00531,274Assets held for s

274、ale(Note 17)5,000772,033Total current assets347,7641,165,836Land,other than timberlands8,7508,668Plant and equipment,at cost less accumulated depreciation of$1,260,487($1,180,412 in 2001)(Note 4)758,168808,763Timber,timberlands and related logging facilities,net(Note 5)396,426395,668Other assets(Not

275、e 6)105,218108,211$1,616,326$2,487,146L I A B I L I T I E S A N D S T O C K H O L D E R S E Q U I T YCurrent liabilities:Notes payable(Notes 8 and 11)$40,000$Current installments on long-term debt(Notes 8 and 11)15,607132,603Accounts payable and accrued liabilities(Note 9)189,452189,916Early maturin

276、g long-term debt(Note 8)197,000Liabilities related to assets held for sale(Note 17)1233,933Total current liabilities245,071553,452Long-term debt(Notes 8 and 11)622,645820,522Other long-term obligations(Note 10)261,165195,258Deferred taxes(Note 7)56,654210,610Stockholders equity:Preferred stock,Autho

277、rized 4,000,000 sharesCommon stock,$1 par valueAuthorized 40,000,000 shares,issued 32,721,980 shares32,72232,722Additional paid-in capital131,065129,978Retained earnings409,692661,144Accumulated other comprehensive loss:Minimum pension liability adjustment(33,207)Common shares in treasury 4,143,329(

278、4,410,528 in 2001)(109,481)(116,540)Total stockholders equity430,791707,304$1,616,326$2,487,146Certain amounts for 2001 have been conformed to the 2002 presentation.The accompanying notes and summary of principal accounting policies are an integral part of these financial statements.For the years en

279、ded December 31(Dollars in thousands except per-share amounts)200220012000Net sales$1,286,217$1,274,585$1,293,193Costs and expenses:Depreciation,amortization and cost of fee timber harvested115,469115,033108,722Materials,labor and other operating expenses1,102,0651,083,1411,044,894Selling,general an

280、d administrative expenses83,17786,31885,469Restructuring and other charges(Note 15)8,9632,75046,4111,309,6741,287,2421,285,496Earnings(loss)from operations(23,457)(12,657)7,697Interest expense,net of capitalized interest of$300($1,032 in 2001 and$3,964 in 2000)(59,882)(77,853)(59,438)Debt extinguish

281、ment costs(15,360)Other income(expense),net(Note 16)15,202(2,221)(3,001)Loss before taxes on income(83,497)(92,731)(54,742)Provision(benefit)for taxes on income(Note 7)(32,564)(36,165)(21,349)Loss from continuing operations(50,933)(56,566)(33,393)Discontinued operations(Note 17):Earnings(loss)from d

282、iscontinued operations(including loss on disposal of$276,218,$0 and$0)(300,734)(37,507)293Income tax provision(benefit)(117,286)(14,628)114Net loss$(234,381)$(79,445)$(33,214)Other comprehensive loss:Minimum pension liability adjustment,net of income tax benefit of$21,231(33,207)Comprehensive loss$(

283、267,588)$(79,445)$(33,214)Net loss per common share:Basic$(8.23)$(2.81)$(1.16)Diluted(8.23)(2.81)(1.16)Certain amounts for 2000 and 2001 have been conformed to the 2002 presentation.The accompanying notes and summary of principal accounting policies are an integral part of these financial statements

284、.S T A T E M E N T S O F O P E R A T I O N S A N D C O M P R E H E N S I V E L O S SF I N A N C I A L R E V I E W25P O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E SF I N A N C I A L R E V I E W24P O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T

285、 E D S U B S I D I A R I E SAccumulatedAdditionalOtherTotal(Dollars in thousands Common Stock IssuedPaid-InRetainedComprehen-Treasury StockStockholdersexcept per-share amounts)SharesAmountCapital Earningssive LossSharesAmountEquityBalance,December 31,199932,721,980$32,722$128,678$856,609$3,749,748$(

286、96,970)$921,039Exercise of stock options and stock awards306(35,102)8611,167Shares purchased at cost660,900(22,253)(22,253)Put options(4,240)(4,240)Premium on issuance of put options435435Net loss(33,214)(33,214)Common dividends,$1.74 per share(49,698)(49,698)Balance,December 31,200032,721,980$32,72

287、2$128,984$773,697$4,375,546$(122,167)$813,236Exercise of stock options and stock awards5(750)1924Shares purchased at cost*250,000Issuance of treasury stock989(214,268)5,6086,597Net loss(79,445)(79,445)Common dividends,$1.17 per share(33,108)(33,108)Balance,December 31,200132,721,980$32,722$129,978$6

288、61,144$4,410,528$(116,540)$707,304Exercise of stock options and stock awards141(25,050)662803Issuance of treasury stock946(242,149)6,3977,343Net loss(234,381)(234,381)Minimum pensionliability adjustment(33,207)(33,207)Common dividends,$.60 per share(17,071)(17,071)Balance,December 31,200232,721,980$

289、32,722$131,065$409,692$(33,207)4,143,329$(109,481)$430,791*Represents shares purchased pursuant to previously issued put option contracts.The cost of the shares($10,453)was recorded in treasury stock at the time the put option contract was issued.The accompanying notes and summary of principal accou

290、nting policies are an integral part of these financial statements.S T A T E M E N T S O F S T O C K H O L D E R S E Q U I T YFor the years ended December 31(Dollars in thousands)200220012000C A S H F L O W S F R O M C O N T I N U I N G O P E R A T I O N SNet loss$(234,381)$(79,445)$(33,214)Adjustmen

291、ts to reconcile net loss to net operating cash flows:Loss(earnings)from discontinued operations14,95522,879(179)Loss on disposal of discontinued operations229,023Depreciation,amortization and cost of fee timber harvested115,469115,033108,722Debt extinguishment costs15,360Deferred taxes(153,956)(83,3

292、51)18,317Other,net(5,999)5,114(2,129)Decrease in receivables71327,4992,691Decrease(increase)in inventories(52,085)19,077(17,286)Decrease(increase)in prepaid expenses(7,731)29,879(37,386)Increase(decrease)in accounts payable and accrued liabilities9,488(22,211)32,848Net cash provided by(used for)oper

293、ations(69,144)34,47472,384C A S H F L O W S F R O M I N V E S T I N GDecrease(increase)in restricted cash83,131(98,200)Decrease(increase)in short-term investments28,500(30,500)150Additions to plant and equipment,and to land other than timberlands(36,956)(29,063)(133,633)Additions to timber,timberlan

294、ds and related logging facilities(14,658)(13,616)(9,179)Disposition of plant and properties8,09710,5813,151Other,net(2,333)(3,893)(3,149)Net cash provided by(used for)investing65,781(164,691)(142,660)C A S H F L O W S F R O M F I N A N C I N GChange in book overdrafts(9,952)(2,366)415Increase(decrea

295、se)in notes payable40,000(188,943)67,479Proceeds from long-term debt450,000100,000Retirement of long-term debt(511,873)(101,749)(10,247)Premiums and fees on debt retirement(10,584)Long-term debt issuance fees(15,553)Issuance of treasury stock8,1466,620952Purchase of treasury stock(10,453)(25,892)Div

296、idends on common stock(17,071)(33,108)(49,698)Other,net17,285(20,293)(9,256)Net cash provided by(used for)financing(484,049)84,15573,753Cash from continuing operations(487,412)(46,062)3,477Cash from discontinued operations488,91042,880(4,179)Increase(decrease)in cash1,498(3,182)(702)Balance at begin

297、ning of year7,47510,65711,359Balance at end of year$8,973$7,475$10,657Net interest paid(net of amounts capitalized)in 2002,2001 and 2000 was$65.1 million,$66.1 million and$59.3 million,respectively.Net income tax payments(refunds)in 2002,2001 and 2000 were$(16.0)million,$.3 million and$.2 million,re

298、spectively.Certain amounts for 2000 and 2001 have been conformed to the 2002 presentation.The accompanying notes and summary of principal accounting policies are an integral part of these financial statements.S T A T E M E N T S O F C A S H F L O W SN O T E S T O C O N S O L I D A T E D F I N A N C

299、I A L S T A T E M E N T S27P O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E SN O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S26P O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E SI N V E N T O

300、R I E SInventories are stated at the lower of cost or market.The last-in,first-out method is used to determine cost of logs,lumber,plywood,particleboard and chips.The average cost method is used to determine cost of all other inventories.P R O P E R T I E SProperty,plant and equipment are valued at

301、cost less accumu-lated depreciation.Depreciation of buildings,equipment andother depreciable assets is determined using the straight-linemethod of depreciation.Estimated useful lives range from 30 to 40 years for buildings and structures and 2 to 25 yearsfor equipment.Timber,timberlands and related

302、logging facilities are valuedat cost,net of the cost of fee timber harvested and depreciationor amortization.Cost of fee timber harvested is determinedannually based on costs incurred and the related current estimated recoverable volume.Recoverable volume includesgrowth that has occurred to-date and

303、 does not include anyanticipated future cost or future growth.Permit timber is timberpurchased under contracts where the company does not own the underlying land.The cost of permit timber is capitalized in timber accounts,and these costs are classified as depletionexpense as the volume of timber is

304、harvested.Expenditures for reforestation include all costs related tostand establishment,such as site preparation,costs of seeds or seedlings,and tree planting.All reforestation expendituresrepresenting direct costs incurred for stand establishment arecapitalized in reproduction accounts until the t

305、imber reachesmaturity.Costs are then depleted when harvesting activitiesbegin.Expenditures for forest management,which consist of regularly recurring items necessary to the ownership andadministration of our timber and timberlands,are accounted for as current operating expenses.Logging roads and rel

306、ated facilities on land not owned by usare amortized as the related timber is removed.Logging roadsand related facilities on our land are presumed to become a partof our road system unless it is known at the time of constructionthat the road will be abandoned.Therefore,the base cost of theroad,such

307、as the clearing,grading,and ditching,is not amor-tized and remains a capitalized item until abandonment or other disposition,while other portions of the initial cost,such as bridges,culverts and gravel surfacing,are depreciated over their useful lives,which range from 10 to 20 years.When it is known

308、 at the time of construction or purchase that a road will be abandoned after a given event has occurred,the total cost is amortized in the same manner as for roads on non-owned land.Major improvements and replacements of property are capi-talized.Maintenance,repairs,and minor improvements andreplace

309、ments are expensed.Upon retirement or other disposi-tion of property,applicable cost and accumulated depreciationor amortization are removed from the accounts.Any gains orlosses are included in earnings.L O N G-L I V E D A S S E T SWe account for long-lived assets in accordance with SFAS No.144,“Acc

310、ounting for the Impairment or Disposal of Long-Lived Assets.”The Statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an assetmay not be recoverable.Assets to be disposed of are reported at the lower of

311、carrying amount or fair value less cost to sell.I N C O M E T A X E SThe provision for taxes on income is based on earnings or lossreported in the financial statements.Deferred income taxes arerecorded under the asset and liability method for the temporarydifferences between reported earnings and ta

312、xable incomeusing current tax laws and rates.S U M M A R Y O F P R I N C I P A L A C C O U N T I N G P O L I C I E SC O N S O L I D A T I O NThe financial statements include the accounts of PotlatchCorporation and its subsidiaries after elimination of significantintercompany transactions and account

313、s.There are no significant unconsolidated subsidiaries.Potlatch Corporation is an integrated forest products companywith substantial timber resources.We are engaged principallyin the growing and harvesting of timber and the manufactureand sale of wood products and pulp and paper products.Ourtimberla

314、nds and all of our manufacturing facilities are locatedwithin the continental United States.The primary market forour products is the United States,although we sell a significantamount of paperboard to countries in the Pacific Rim.U S E O F E S T I M A T E SThe preparation of financial statements in

315、 conformity withaccounting principles generally accepted in the United Statesof America requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities,the disclosure of contingent assets and liabilities atthe date of the financial statements and the r

316、eported amounts of revenues and expenses during the reporting period.Actualresults could differ from those estimates and assumptions.E A R N I N G S (L O S S)P E R C O M M O N S H A R EEarnings(loss)per common share are computed by dividingnet earnings by the weighted average number of commonshares

317、outstanding in accordance with SFAS No.128,“Earnings Per Share.”The following table reconciles the number of common shares used in the basic and diluted earnings per share calculations:200220012000Basic average common shares outstanding28,461,81728,281,78528,522,659Incremental shares due to:Common s

318、tock optionsPut optionsDiluted average common shares outstanding28,461,81728,281,78528,522,659Incremental shares due to common stock options of 17,042 forthe year ended December 31,2002,common stock options of2,162 and put options of 34,147 for the year ended December31,2001,and common stock options

319、 of 4,209 and put optionsof 40,039 for the year ended December 31,2000,were notincluded in the diluted average common shares outstandingtotals for 2002,2001 and 2000 due to their antidilutive effectas a result of our net losses for each of those years.Stockoptions to purchase 1,981,907,2,508,375 and

320、 2,025,050shares of common stock for 2002,2001 and 2000,respectively,were not included in the computation of diluted earnings pershare because the exercise prices of the stock options weregreater than the average market price of the common shares.S T O C K B A S E D C O M P E N S A T I O NWe apply A

321、ccounting Principles Board Opinion No.25 andrelated Interpretations in accounting for our stock based compensation.No compensation cost has been recognizedwhen options are granted under the plans,as all stock options are granted with an exercise price equal to marketvalue at the grant date.Had compe

322、nsation costs for the plansbeen determined based on the fair value at the grant dates for option awards under those plans as prescribed by SFAS No.123,our net loss and loss per share would have beenincreased to the pro forma amounts indicated below:(Dollars in thousands except per-share amounts)2002

323、20012000Net loss,as reported$(234,381)$(79,445)$(33,214)Stock based employee compensation determined under SFAS No.123,net of tax(1,912)(1,993)(2,568)Pro forma net loss$(236,293)$(81,438)$(35,782)Basic and diluted loss per share,as reported$(8.23)$(2.81)$(1.16)Pro forma basic and dilutedloss per sha

324、re(8.30)(2.88)(1.25)S U M M A R Y O F P R I N C I P A L A C C O U N T I N G P O L I C I E SN O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S29P O T L A T C H C O R P O R A T I O N A N D C O N S O L I D A T E D S U B S I D I A R I E Sreductions in quantities of LIFO inventor

325、ies(primarily due tooperations sold in 2002)valued at lower costs prevailing inprior years had the effect of increasing earnings,net of incometaxes,by approximately$3.2 million($.11 per common share).4P L A N T A N D E Q U I P M E N T(Dollars in thousands)20022001Land improvements$58,724$59,433Build

326、ings and structures283,585282,701Machinery and equipment1,590,6951,561,960Other56,89056,890Construction in progress28,76128,191$2,018,655$1,989,175Depreciation charged against income amounted to$84.5 millionin 2002($85.1 million in 2001 and$83.4 million in 2000).Authorized but unexpended appropriati

327、ons for capital projectstotaled$93.3 million at December 31,2002,all of which isbudgeted to be expended in 2003.We have capital commitmentstotaling approximately$45.0 million in 2003 related to our construction of a new tissue machine in Las Vegas,Nevada.T I M B E R,T I M B E R L A N D S A N D 5R E

328、L A T E D L O G G I N G F A C I L I T I E S(Dollars in thousands)20022001Timber and timberlands$347,853$348,287Related logging facilities48,57347,381$396,426$395,668The cost of timber harvested from company-owned landsamounted to$10.6 million in 2002($8.9 million in 2001 and$8.3 million in 2000).The

329、 cost of permit timber harvested from non-company owned lands amounted to$15.8 million in 2002($14.8 million in 2001 and$14.3 million in 2000).Amortization of logging roads and related facilities amounted to$2.0 million in 2002($2.4 million in 2001 and$2.1 million in 2000).1R E S T R I C T E D C A S

330、 HIn June 2001,under the terms of our bank credit facility,weplaced$96.6 million of the proceeds from borrowings under thecredit facility into an interest-bearing escrow account.Theescrow accounts use was restricted to the repayment of our$100million 6.25%Debentures,which occurred on March 15,2002.I

331、n September 2002,we placed$15.0 million into an interest-bearing escrow account under the terms of an amend-ment to our credit agreement.The escrow accounts use isrestricted to the repayment of$15 million of our medium-termnotes,which mature on April 4,2003.2R E C E I V A B L E S,N E TThe receivable

332、s balance at December 31,2002 and 2001includes approximately$22.3 million due to settlementsreached with the Internal Revenue Service for the years 1989through 1994.The settlements exceed the threshold amountthat requires review by the congressional Joint Committee on Taxation.The review is currentl

333、y in process.3I N V E N T O R I E S(Dollars in thousands)20022001Logs,pulpwood,chips and sawdust$25,212$12,260Lumber and other manufactured wood products14,9548,809Pulp,paper and converted paper products79,69048,348Materials and supplies39,94238,296$159,798$107,713Valued at lower of cost or market:Last-in,first-out basis$36,125$18,505Average cost basis123,67389,208$159,798$107,713If the last-in,fi