Edgar Filing: POTLATCH CORP

Dated: March 3, 2009

POTLATCH CORPORATION

/s/ Eric J. Cremers

Eric J. Cremers

Vice President and Chief Financial Officer

Amendment No. 1 to Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

Amendment No. 1

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report: December 15, 2008

(Date of Earliest Event Reported)

POTLATCH CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

001-32729

82-0156045

(State or Other Jurisdiction of

Incorporation)

(Commission File Number)

(I.R.S. Employer

Identification Number)


601 W. First Avenue, Suite 1600, Spokane WA		99201
(Address of principal executive offices)		(Zip Code)

(509) 835-1500

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01.

Completion of Acquisition or Disposition of Assets

As previously disclosed in the Current Report on Form 8-K filed on December 18, 2008 by Potlatch Corporation, or Potlatch, with the U.S. Securities and Exchange Commission, the distribution by Potlatch of all the outstanding shares of common stock of Clearwater Paper Corporation, or Clearwater Paper, to the stockholders of Potlatch was completed on December 16, 2008 in a spin-off intended to qualify for tax-free treatment. Clearwater Paper includes the assets and liabilities of Potlatch’s former pulp-based manufacturing businesses, consisting of Potlatch’s former pulp and paperboard and consumer products segments, as well as the Lewiston, Idaho lumber mill.

Item 9.01.

Financial Statements and Other Exhibits

The following Unaudited Pro Forma Condensed Consolidated Financial Statements are based on and should be read in conjunction with Potlatch’s historical consolidated financial statements and related notes filed in Potlatch’s Annual Report on Form 10-K for the year ended December 31, 2008 and the unaudited condensed consolidated financial statements filed in Potlatch’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.

The following Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2008 is prepared as though the Clearwater Paper spin-off occurred as of January 1, 2008. The following Unaudited Pro Forma Condensed Consolidated Statement of Operations for the twelve months ended December 31, 2007 is prepared as though the Clearwater Paper spin-off occurred as of January 1, 2007. The following Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2008 is prepared as if the Clearwater Paper spin-off occurred as of September 30, 2008. Pro forma adjustments are described in the Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

The following Unaudited Pro Forma Condensed Consolidated Financial Statements are presented for illustrative and informational purposes only and are not intended to represent or be indicative of the financial condition or results of operations that would actually have been recorded if the Clearwater Paper spin-off had occurred during the periods presented. In addition, the Unaudited Pro Forma Condensed Consolidated Financial Statements are not intended to represent Potlatch’s financial position or results of operations for any future date or period.

The discontinued operations presented in Potlatch’s historical consolidated financial statements reflect the following differences from the Unaudited Pro Forma Condensed Consolidated Financial Statements:

•

The Pro Forma Condensed Consolidated Statement of Operations are each adjusted to add back the revenues, costs, and profits between Potlatch and the Clearwater Paper businesses that were previously eliminated in the consolidated financial statements as intercompany transactions.

•

Interest expense for Potlatch is reduced by the amount of interest that would not have been incurred under our revolving credit facility had we received the $50 million from Clearwater Paper at January 1, 2007 and January 1, 2008, respectively.

Potlatch Corporation

Unaudited Pro Forma Condensed Consolidated Balance Sheet

September 30, 2008

(Dollars in thousands)


	Historical		Discontinued Operations (1)			Pro Forma Adjustments			Pro Forma
Assets
Current assets:
Cash	$	3,790	$	9		$			$	3,781
Short-term investments		8,453		—						8,453
Receivables, net		132,249		101,438						30,811
Note receivable		—		—			100,000	(2)		100,000
Inventories		172,594		144,891						27,703
Prepaid expenses		19,986		12,560						7,426
Assets held for sale		3,135		—						3,135

Total current assets		340,207		258,898			100,000			181,309

Land		8,250		4,729						3,521
Plant and equipment		473,583		390,564						83,019
Timber, timberlands and related deposits		566,071		—						566,071
Pension assets		118,886		40,540						78,346
Deferred tax assets		—		(31,355	)					31,355
Other assets		21,621		323						21,298

	$	1,528,618	$	663,699		$	100,000		$	964,919

Liabilities and Shareholders’ Equity
Current liabilities:
Current installments on long-term debt	$	410	$	—		$			$	410
Current notes payable		113,700		—			(50,000	)(3)		63,700
Accounts payable and accrued liabilities		187,520		137,411						50,109

Total current liabilities		301,630		137,411			(50,000	)		114,219

Long-term debt		320,918		—						320,918
Pensions and other postretirement employee benefits		262,735		129,613						133,122
Other long-term obligations		20,026		1,907						18,119
Deferred tax liabilities		37,371		37,371						—
Shareholders’ equity		585,938		357,397			150,000			378,541

	$	1,528,618	$	663,699		$	100,000		$	964,919

Potlatch Corporation

Unaudited Pro Forma Condensed Statement of Operations

Nine Months ended September 30, 2008

(Dollars in thousands)


	Historical (9)			Discontinued Operations Adjustments (1)			Continuing Operations			Pro Forma Adjustments			Pro Forma
Revenues	$	1,289,876		$	943,502		$	346,374		$	55,397	(5)	$	401,771

Costs and expenses:
Depreciation, depletion and amortization		57,204			35,178			22,026						22,026
Materials, labor and other operating expenses		1,081,574			864,359			217,215			54,131	(5)		271,346
Selling, general and administrative expenses		67,285			24,079	(4)		43,206			—			43,206

		1,206,063			923,616			282,447			54,131			336,578

Earnings from continuing operations before interest and taxes		83,813			19,886			63,927			1,266			65,193
Interest expense		(25,280	)		(9,750	)(6)		(15,530	)		1,541	(8)		(13,989	)
Interest income		552			—			552			—			552

Earnings from continuing operations before taxes		59,085			10,136			48,949			2,807			51,756
Income tax (benefit) provision		(12,841	)		3,953	(7)		(16,794	)		1,095	(7)		(15,699	)

Earnings from continuing operations		71,926			6,183			65,743			1,712			67,455

Discontinued operations:
Loss from discontinued operations including loss on disposal of $(387)		(24,490	)		—			(24,490	)		—			(24,490	)
Income tax benefit		(9,551	)		—			(9,551	)		—			(9,551	)

		(14,939	)		—			(14,939	)		—			(14,939	)

Net earnings	$	56,987		$	6,183		$	50,804		$	1,712		$	52,516

Earnings per common share from continuing operations:
Basic	$	1.82					$	1.67					$	1.71
Diluted		1.81						1.66						1.70
Loss per common share from discontinued operations:
Basic	$	(0.38	)				$	(0.38	)				$	(0.38	)
Diluted		(0.38	)					(0.38	)					(0.38	)
Average shares outstanding (in thousands)
Basic		39,432						39,432						39,432
Diluted		39,713						39,713						39,713

Potlatch Corporation

Unaudited Pro Forma Condensed Statement of Operations

Year ended December 31, 2007

(Dollars in thousands)


	Historical (9)			Discontinued Operations Adjustments (1)			Continuing Operations			Pro Forma Adjustments			Pro Forma
Revenues	$	1,596,063		$	1,172,592		$	423,471		$	94,337	(5)	$	517,808

Costs and expenses:
Depreciation, depletion and amortization		77,727			51,211			26,516						26,516
Materials, labor and other operating expenses		1,304,210			1,032,445			271,765			91,620	(5)		363,385
Selling, general and administrative expenses		90,158			36,175			53,983			—			53,983
Restructuring charge		2,653			—			2,653						2,653

		1,474,748			1,119,831			354,917			91,620			446,537

Earnings from continuing operations before interest and taxes		121,315			52,761			68,554			2,717			71,271
Interest expense		(30,711	)		(13,000	)(6)		(17,711	)		2,500	(8)		(15,211	)
Interest income		2,281			3			2,278			—			2,278

Earnings from continuing operations before taxes		92,885			39,764			53,121			5,217			58,338
Income tax (benefit) provision		(3,750	)		15,508	(7)		(19,258	)		2,035	(7)		(17,223	)

Earnings from continuing operations		96,635			24,256			72,379			3,182			75,561

Discontinued operations:
Loss from discontinued operations including loss on disposal of $(35,774)		(45,264	)		—			(45,264	)		—			(45,264	)
Income tax benefit		(5,060	)		—			(5,060	)		—			(5,060	)

		(40,204	)		—			(40,204	)		—			(40,204	)

Net earnings	$	56,431		$	24,256		$	32,175		$	3,182		$	35,357

Earnings per common share from continuing operations:
Basic	$	2.47					$	1.85					$	1.93
Diluted		2.46						1.84						1.92
Loss per common share from discontinued operations:
Basic	$	(1.03	)				$	(1.03	)				$	(1.03	)
Diluted		(1.02	)					(1.02	)					(1.02	)
Average shares outstanding (in thousands)
Basic		39,094						39,094						39,094
Diluted		39,284						39,284						39,284

Potlatch Corporation

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

(Unaudited)

Reflects the elimination of the financial results, assets, liabilities and accumulated other comprehensive income amounts associated with Clearwater Paper, the distribution of Clearwater Paper to Potlatch shareholders and the effect of the adjustments described in Notes 2-9 below.

The $100 million note receivable represents the amount due from Clearwater Paper under the Retained Obligation Agreement, whereby Clearwater Paper has retained the obligation to repay principal and interest due on Potlatch’s outstanding credit sensitive debentures.

The $50 million reduction in notes payable represents the amount of cash that would have been transferred to Potlatch from Clearwater Paper upon the spin-off.

Non-recurring pre-tax transaction costs of $4.2 million were recognized by Potlatch during the nine months ended September 30, 2008 and are eliminated in the “Selling, General and Administrative Expenses” line in this discontinued operations presentation.

The adjustment to revenues, and materials, labor and other operating expenses, relates to adding back the intercompany sales to Clearwater Paper that were eliminated in the consolidated financial statements. Such revenues and the applicable costs will be presented as external sales in the future.

The $9.75 million of interest expense for the nine months ended September 30, 2008 and the $13.0 million for the twelve months ended December 31, 2007, related to the credit sensitive debentures is included in discontinued operations, given the Retained Obligation Agreement described in Note 2.

The income tax provision for the adjustments is calculated based on an effective tax rate of 39%.

Interest expense is adjusted at the average rate of our credit facility borrowings during the period, due to the reduction in notes payable described in Note 3.

The historical amounts in the condensed statements of operations for the nine months ended September 30, 2008 and the year ended December 31, 2007 are adjusted to show the Prescott, Arkansas lumber mill and the Boardman, Oregon hybrid poplar operations as discontinued operations.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.