<B>Potlatch Sees Sharply Lower Figures</B>

The earnings decline was largely due to rapidly deteriorating market conditions for the company's wood products during the quarter, which contrasts sharply with the very favorable conditions during the same period a year ago. The company also recorded an $18.5 million charge in September for costs related to the previously announced closure of a plywood plant in Idaho. The after tax effect of the charge totaled $11.3 million or $.39 per diluted common share.

Net earnings for the third quarter of 2000 were $4.4 million before the charge. Including the charge, the company posted a net loss of $6.9 million. Third quarter net earnings were $22.6 million. Net sales were $416.8 million, compared with $446.6 million in the third quarter of 1999.

Net earnings for the first nine months of 2000 were $15.3 million before restructuring and other charges totaling $27.1 million after taxes taken in the second and third quarters. Including the charges, the company had a net loss for the first nine months of $11.8 million. Net earnings for the first nine months of 1999 were $32.6 million. Net sales for the first nine months of 2000 were $1.28 billion, equal to the total in 1999.

The Printing Papers segment recorded third quarter operating income of $8.2 million, compared to a loss of $5.1 million reported a year ago.

The Pulp and Paper segment reported third quarter operating income of $6.9 million, versus $7.1 million for 1999's third quarter. ``Net sales realizations for paperboard and tissue were higher compared to last year's third quarter,'' noted L. Pendleton Siegel, Potlatch chairman and CEO. ``However, shipments declined for paperboard and pulp, which negatively affected results.'' Higher energy costs, namely electricity and natural gas, also contributed to the slightly unfavorable quarter to quarter income comparison. In addition, results were adversely affected due to downtime resulting from a complete rebuild of the internal components of the recovery boiler at the company's pulp and paperboard mill in Arkansas. It is anticipated that the rebuild, which commenced on September 7, 2000, will be completed by October 21, 2000.