Pope & Talbot Announces Results for Full Year, Fourth Quarter 2006

  
    
  
  
    
      Pope & Talbot, Inc. (NYSE:POP) today reported net income of $45.3 
      million for the year ended December 31, 2006 compared with a net loss of 
      $50.0 million reported for the prior year. The earnings for 2006 were 
      $2.79 per share on 16.3 million shares, compared with a loss of $3.09 
      per share for 2005 on 16.2 million shares. Revenues were $841.1 million 
      for 2006 compared with $848.8 million for the prior year.
    
    
      For the fourth quarter of 2006, earnings were $82.9 million or $5.09 per 
      share on revenues of $190.0 million, which compares with a net loss of 
      $33.6 million or a loss of $2.07 per share on revenues of $226.8 million 
      for the same period a year ago, and a loss of $0.62 per share on 
      revenues of $214.6 million for the third quarter of 2006.
    
    
      The results for the full year and the fourth quarter of 2006 reflect 
      non-recurring duty refunds of approximately $113.3 million, of which 
      $101.2 million related to duty deposits paid in prior years, and accrued 
      interest of approximately $14.2 million. In total, the Company received 
      $127.5 million from the settlement of the softwood lumber dispute.
    
    
      With the receipt of the duty refunds in November 2006, the Company 
      prepaid $63 million of term debt and reduced revolver cash borrowings to 
      zero. This provided both capital structure and liquidity improvement as 
      of the end of the year. Further liquidity enhancement was achieved with 
      an amendment to the Company’s credit agreement 
      signed in December 2006. The Company remained in full compliance with 
      its credit agreement at December 31, 2006. The credit agreement contains 
      financial covenants including one based on defined EBITDA, which is 
      tested on a quarterly basis. Compliance with this covenant cannot be 
      assured because the Company’s results of 
      operations are highly dependent on price fluctuations in pulp and lumber 
      markets and in the Canadian to US dollar exchange rate. The Company’s 
      independent auditors cited uncertainty over the Company’s 
      ability to comply in future periods with the EBITDA covenant contained 
      in the credit agreement. As a result, their report included in the 2006 
      Annual Report on Form 10-K contained an explanatory paragraph that this 
      factor raises substantial doubt about the Company’s 
      ability to continue as a going concern. In its evaluation and assessment 
      of internal controls over financial reporting as of December 31, 2006, 
      the Company concluded that such control over financial reporting was 
      effective thereby eliminating the material weakness noted in prior years 
      relative to its accounting for income taxes.
    
    
      The Company’s operating income and earnings 
      before interest, taxes, depreciation and amortization (EBITDA) for 2006 
      were $83.4 million and $125.6 million, respectively. After excluding the 
      effects of the lumber import duty refunds, the annual results were an 
      operating loss of $26.2 million and EBITDA of $16.0 million, which 
      favorably compared with an operating loss of $29.2 million and EBITDA of 
      $8.9 million for the prior year. The decreased operating loss was due 
      primarily to increased pulp revenues caused by higher price realizations 
      and lower costs for the combination of lumber import duties and export 
      taxes expensed. The results for 2006 were negatively impacted by lower 
      wood products revenues due to lower price realizations and lower 
      shipments, reduced pulp shipments, increased pulp cost per ton and 
      increased selling general and administrative (SG&A) costs, primarily due 
      to a $4.5 million increase in environmental reserves.
    
    
      For the fourth quarter of 2006, operating income and EBITDA were $93.0 
      million and $103.7 million, respectively. Excluding the effects of the 
      lumber import duty refunds on the quarter, an operating loss of $16.6 
      million and negative EBITDA of $5.9 million were realized, which 
      compares with an operating loss of $16.4 million and negative EBITDA of 
      $6.0 million for the corresponding quarter one year ago. As compared 
      with the third quarter of 2006, which showed operating profit of $1.0 
      million and EBITDA of $11.7 million, the adjusted numbers for the fourth 
      quarter of 2006 reflect lower contribution from pulp, lower revenues 
      from wood products and a significant increase in SG&A costs.
    
    
      “The securing of the credit agreement, the 
      receipt of the duty refunds and subsequent prepayment of a portion of 
      our term debt, and the remediation of our material weakness all result 
      in a stronger financial position for us to begin the new year,” 
      stated Michael Flannery, Chairman and Chief Executive Officer. “While 
      I am disappointed in the fourth quarter operating results, I am 
      encouraged by the strength of the pulp market. Our challenge as we look 
      forward into 2007 is to fully optimize this market for the benefit of 
      our shareholders. To do this we must overcome the significant negative 
      impact on wood chip pricing, availability, and quality caused by the 
      weakness in the lumber markets.”
    
    
      Pulp
    
    
      Revenues from Pope & Talbot’s Pulp 
      business totaled $466.9 million in 2006 compared with $442.6 million in 
      2005, an increase of five percent. The increase related to higher prices 
      offset in part by a decrease in volumes sold in 2006. Pulp generated 
      operating income before corporate expenses, interest and income taxes of 
      $18.2 million in 2006, compared with an operating loss of $13.6 million 
      in 2005. EBITDA from the Company’s pulp 
      operations totaled $46.6 million in 2006 compared with $12.8 million in 
      2005.
    
    
      Pulp cost of sales was $435.8 million in 2006, compared with $445.1 
      million in 2005, a decrease of two percent. Per metric ton, the average 
      cost of pulp sold increased four percent in 2006 compared with 2005. A 
      significant factor affecting pulp cost of sales is the average exchange 
      rate used to translate operating costs of the Company’s 
      Canadian pulp mills from Canadian dollars to U.S. dollars. The average 
      value of the Canadian dollar relative to the U.S. dollar strengthened 
      significantly in 2006, and the Company estimates that the increase in 
      the average daily Canadian to U.S. dollar exchange rate from 2005 to 
      2006 resulted in an approximate $20.2 million increase in pulp cost of 
      sales, or a five percent increase in the average cost per metric ton of 
      pulp sold in 2006. Excluding the effect of the stronger Canadian dollar, 
      the average cost per ton of pulp sold was slightly lower in 2006 
      compared with 2005 primarily due to lower freight costs. Higher fiber 
      costs in the fourth quarter of 2006 were offset by lower fiber costs 
      experienced in the first half of the year.
    
    
      Pulp production totaled 800,700 metric tons in 2006 compared with 
      820,400 metric tons in 2005. This decrease is primarily due to reduced 
      pulp production at the Company’s Nanaimo and 
      Mackenzie mills due to a shortage of wood chips in the fourth quarter of 
      2006. The Company’s Mackenzie mill also 
      experienced operational difficulties from the restart of the mill after 
      its planned annual maintenance shutdown in September 2006.
    
    
      Pope & Talbot’s fourth quarter pulp 
      revenues decreased 6 percent to $114.5 million due to sales volume 
      decreasing 24 percent to 177,800 metric tons, as compared with the 
      fourth quarter of 2005. The reduction in shipments was due to lower 
      production, higher than normal shipment levels in December 2005 and 
      inventory building stemming from transportation issues over the year 
      end. The average price realized per metric ton sold during the quarter 
      increased 25 percent to $644 from $517 in the fourth quarter of 2005. As 
      compared with the third quarter of 2006, the fourth quarter of 2006 
      pricing represented a 2 percent increase from $630 per metric ton, but 
      revenues for the quarter decreased 9 percent with shipments decreasing 
      11 percent for the period.
    
    
      In the fourth quarter of 2006, cost of sales for the pulp segment 
      decreased $18.9 million, or 15 percent as compared with the fourth 
      quarter of 2005, due primarily to the decrease in volume, partially 
      offset by a significant increase in fiber costs. The Company estimates 
      that the increase in the average daily Canadian to U.S. dollar exchange 
      rate resulted in an approximate $2.5 million, or 3 percent increase in 
      pulp cost of sales. Excluding the impact of foreign exchange, cost of 
      sales on a per ton basis increased by 10% compared with the fourth 
      quarter of 2005; this was due in part to the decrease in production of 
      7% and an increase in fiber costs primarily due to supply constraints 
      from weakness in the lumber industry. The Company’s 
      finished pulp inventory levels at December 31, 2006 were approximately 
      36 days of shipments compared with 27 days of shipments at December 31, 
      2005.
    
    
      Wood Products
    
    
      Revenues from Pope & Talbot’s Wood 
      Products business totaled $374.3 million in 2006 compared with $406.2 
      million in 2005, an eight percent decrease. The decrease primarily 
      related to lower lumber prices and lower volumes sold, offset in part 
      from the inclusion of a full year of volume from the Fort St. James mill 
      acquired on April 25, 2005 and an estimated $7.1 million increase from 
      the effect of the strengthening of the Canadian dollar on Canadian 
      dollar revenues. For 2006, Wood Products generated an operating loss 
      before lumber duty refund for prior years, corporate expenses, interest 
      and income taxes of $10.5 million and EBITDA of $2.4 million. Excluding 
      the effects of the current year lumber import duty refunds which were 
      recorded as a reduction to wood products cost of sales, an operating 
      loss of $21.1 million and negative EBITDA of $8.2 million were realized, 
      which compares with operating income of $2.9 million and EBITDA of $13.2 
      million for the prior year.
    
    
      Wood Products cost of sales was $378.0 million in 2006 compared with 
      $397.2 million in 2005, a five percent decrease. Total cost of sales 
      comparisons were affected by the full year inclusion of the Fort St. 
      James sawmill in the 2006 amounts offset by $12.1 million for the 
      current year portion of the lumber import duties refunds. Per thousand 
      board feet, the average cost of lumber sold in 2006 was three percent 
      lower compared with 2005. The combined costs of lumber import duties and 
      export taxes of $6.2 million after refund for 2006 compared with $37.3 
      million for 2005. The change in the combined costs decreased the average 
      cost per thousand board feet of lumber sold in 2006 by eight percent and 
      all other costs increased five percent. A significant factor affecting 
      Wood Products cost of sales is the average exchange rate used to 
      translate operating costs of the Company’s 
      Canadian lumber operations from Canadian dollars to U.S. dollars. The 
      value of the Canadian dollar relative to the U.S. dollar strengthened 
      significantly between 2005 and 2006 and the Company estimates that the 
      increase in the average daily Canadian to U.S. dollar exchange rate 
      resulted in an approximately $18.3 million increase in Wood Products 
      cost of sales, or a five percent increase in the average cost per 
      thousand board feet of lumber sold in 2006. Lower log costs in 2006 were 
      offset in part by higher production costs related to training and 
      equipment operational issues at the Company’s 
      Grand Forks sawmill due to integration of the new planer installed at 
      the end of the first quarter of 2006. These startup issues were largely 
      resolved in the fourth quarter of 2006. Lumber inventory write-downs 
      were $3.9 million at December 31, 2006 and there were no lumber 
      inventory write-downs at December 31, 2005. Inventory write-downs 
      reflect the difference between production costs and anticipated sales 
      prices of year-end inventories.
    
    
      Pope & Talbot’s fourth quarter wood 
      products revenues decreased 28 percent to $75.5 million, with lumber 
      sales volume decreasing 21 percent to 187.6 million board feet as 
      compared with the fourth quarter of 2005. The average price realized per 
      thousand board feet sold during the quarter decreased 16 percent to $328 
      from $391 in the fourth quarter of 2005. As compared with the third 
      quarter of 2006, fourth quarter of 2006 pricing represented a 10 percent 
      decrease from average price realization of $368 per thousand board feet. 
      Shipments for the fourth quarter decreased 12 percent from the third 
      quarter totals of 214.4 million board feet. The reduction in shipments 
      reflects the continued decline in demand as a result of the significant 
      downturn in residential housing construction combined with normal 
      seasonal slowing during the period.
    
    
      In the fourth quarter of 2006, cost of sales for the wood products 
      segment decreased $34.4 million or 32 percent compared with the fourth 
      quarter of 2005. Cost of sales for the period was favorably impacted by 
      the return of approximately 82% of the lumber import duties paid during 
      the current year, which was $12.1 million. The decrease in shipments 
      discussed above also contributed to the decline in the segment’s 
      cost of sales for the period as compared with the fourth quarter of 
      2005. Pope & Talbot estimates the impact of changes in the foreign 
      currency exchange rates for the quarter to be approximately $2.3 
      million, or a 3 percent increase in the average cost per thousand board 
      feet as compared with the fourth quarter of 2005. This increase was 
      fully offset by a decrease of $5.1 million in the combined cost of 
      import duties and export taxes, or a 4 percent decrease in average cost 
      per thousand board feet. The cost of sales for the fourth quarter 
      decreased 22 percent as compared with the third quarter of 2006, due 
      primarily to the receipt of the lumber import duty refunds and lower 
      shipments, partially offset by inventory write-downs of $2.4 million 
      taken due to the decline in net sales prices as compared with inventory 
      write-downs of $0.6 million taken during the third quarter of 2006.
    
    
      Since October 12, 2006, the Company’s lumber 
      shipments to the United States have been subject to a 15% export tax. 
      The benchmark Prevailing Monthly Price, as established by an average of 
      the Random Lengths Framing Lumber Composite Index, was below $315 for 
      the effective period of the export tax in 2006.
    
    
      Selling, General & Administration
    
    
      SG&A expenses of $45.1 million for 2006 increased by $5.9 million 
      compared with SG&A expenses for 2005. SG&A expenses for 2006 were 
      impacted by incentive compensation triggered by positive financial 
      results and by increases to the Company’s 
      environmental reserves associated with two former sawmill locations. 
      SG&A costs increased by $3.2 million and $5.3 million, respectively, for 
      these items. The Company increased its environmental reserves $4.5 
      million for 2006 for these sites, compared with a benefit of $0.8 
      million recorded in the fourth quarter of 2005. These increases were 
      partially offset by a reduction in legal and other professional fees, 
      charges associated with terminated financing agreements and costs 
      charged to SG&A in 2005 associated with obtaining debt covenant waivers.
    
    
      SG&A costs for the fourth quarter of 2006 totaled $16.8 million compared 
      with $11.9 million in the same period of 2005 and $9.3 million in the 
      third quarter of 2006, with the increase over the corresponding periods 
      caused by the impact of the incentive compensation and the increase in 
      the environmental reserves. Excluding the effect of these items, SG&A 
      costs decreased $3.6 million from the fourth quarter of 2005 and $0.3 
      million from the prior quarter. The decrease in SG&A costs as compared 
      with the fourth quarter of 2005 was due primarily to a reduction in 
      legal and other professional fees and in charges associated with 
      financing agreements terminated earlier in the year.
    
    
      Interest Expense
    
    
      Interest expense was $37.0 million for 2006, increasing from $21.9 
      million for 2005. The increase in interest expense for 2006 as compared 
      with the corresponding period a year ago was primarily due to increased 
      interest rates under the Company’s new credit 
      agreement and the amortization of the issue costs associated with that 
      agreement. The Company’s weighted average 
      interest rate on its outstanding debt was 11.6% at December 31, 2006, 
      compared with 11.7% at September 30, 2006 and 7.3% at December 31, 2005.
    
    
      Income Tax Expense
    
    
      The Company’s effective tax rate was 20 
      percent for 2006 compared with an effective tax benefit rate of two 
      percent for 2005. The 2006 tax rate resulted from the taxable effect of 
      current year earnings and the recording of additional deferred tax 
      liabilities for undistributed Canadian earnings of $5.1 million. These 
      items were offset by a net reversal of prior year’s 
      valuation allowance in the fourth quarter of $6.7 million caused by the 
      generation of earnings for the current year, a benefit due to Canadian 
      income tax rate reduction of $3.5 million, and the reversal of prior year’s 
      tax liabilities of $1.6 million.
    
    
      Selected Statistics
    
    
      
        
        
        
          
            Fourth Quarter
          
        
        
        
        
          Third

          
            Quarter
          
          
            2006
          
        
        
        
        
          Year ended 

          
            December 31,
          
        
      
      
        
        
        
          
            2006 
          
        
        
        
        
          
            2005 
          
        
        
        
        
        
        
          
            2006 
          
        
        
        
        
          
            2005 
          
        
      
      
        
          Sales Volumes:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Pulp (metric tons)
        
        
          177,800 
        
        
        
        
          235,200 
        
        
        
        
          199,400 
        
        
        
        
          784,300 
        
        
        
        
          836,400 
        
      
      
        
          
            Lumber (thousand board feet)
          
        
        
          187,600 
        
        
        
        
          238,500 
        
        
        
        
          214,400 
        
        
        
        
          871,800 
        
        
        
        
          885,800 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Production Volumes:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Pulp (metric tons)
        
        
          202,600 
        
        
        
        
          217,900 
        
        
        
        
          198,500 
        
        
        
        
          800,700 
        
        
        
        
          820,400 
        
      
      
        
          
            Lumber (thousand board feet)
          
        
        
          208,600 
        
        
        
        
          226,300 
        
        
        
        
          209,500 
        
        
        
        
          883,400 
        
        
        
        
          883,800 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Average Price Realizations: (A)
          
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Pulp (metric tons)
        
        
          $644 
        
        
        
        
          $517 
        
        
        
        
          $630 
        
        
        
        
          $595 
        
        
        
        
          $529 
        
      
      
        
          
            Lumber (thousand board feet)
          
        
        
          $328 
        
        
        
        
          $391 
        
        
        
        
          $368 
        
        
        
        
          $377 
        
        
        
        
          $405 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Notes:
          
          
            (A) Gross invoice price less trade discounts.
          
        
      
    
    
      Capital
    
    
      In the fourth quarter of 2006, Pope & Talbot’s 
      capital expenditures were $5.8 million and depreciation and amortization 
      was $10.7 million. For the full year, capital expenditures were $27.2 
      million and depreciation and amortization was $42.2 million. Under the 
      terms of its credit agreement, the Company’s 
      capital spending limit for 2007 is $32.8 million.
    
    
      At the end of 2006, total debt was $321.0 million, a decrease of $68.2 
      million and $11.1 million from September 30, 2006 and December 31, 2005, 
      respectively. The decrease in total debt from September 30, 2006 
      primarily reflects the mandatory prepayment resulting from the receipt 
      of the lumber duty refunds and the full repayment of cash borrowings 
      under its revolving credit facility. At December 31, 2006, stockholders’ 
      equity was $120.4 million, an increase of $36.2 million from September 
      30, 2006 and $8.4 million from year-end 2005. The Company’s 
      adoption of a new pension and postretirement benefit accounting 
      standard, Statement of Financial Accounting Standards No. 158, on 
      December 31, 2006, resulted in a $37.2 million charge, net of taxes, to 
      stockholders’ equity, partially offsetting 
      the increase from current year earnings. At December 31, 2006, the ratio 
      of long-term debt to total capitalization was 73 percent, down from 82 
      percent at September 30, 2006 and 75 percent at year-end 2005.
    
    
      At December 31, 2006, the borrowing base under the Company’s 
      revolving facility was $69.0 million and the Company was utilizing $18.2 
      million for outstanding letters of credit, leaving $50.8 million of 
      total availability for cash borrowings. There were no cash borrowings 
      outstanding under the revolving facility at December 31, 2006. The 
      Company held cash and cash equivalents of $19.1 million at December 31, 
      2006, an increase of $11.6 million from September 30, 2006 and $13.6 
      million from year-end 2005. The Company was in compliance with all debt 
      covenants for its credit agreement at December 31, 2006.
    
    
      Pope & Talbot, Inc. will be holding a conference call on Tuesday, April 
      3, 2007, at 10:00 a.m. PDT (1:00 p.m. ET.) The call-in number is 
      706-645-9773 Conference ID: 1768580. The conference call will also be 
      webcast simultaneously on the Company’s 
      website: www.poptal.com.
    
    
      Statements in this press release or in other Company communications may 
      relate to future events or the Company’s 
      future performance. Such statements are forward-looking statements and 
      are based on present information the Company has related to its existing 
      business circumstances. Investors are cautioned that such 
      forward-looking statements are subject to an inherent risk that actual 
      results may differ materially from such forward-looking statements. 
      Further, investors are cautioned that the Company does not assume any 
      obligation to update forward-looking statements based on unanticipated 
      events or changed expectations.
    
    
      The Company’s financial performance depends 
      on operating efficiencies and the prices it receives for its products, 
      as well as other factors such as foreign exchange fluctuations. Prices 
      for the Company’s products are highly 
      cyclical and have fluctuated significantly in the past and may fluctuate 
      significantly in the future. A decrease in pricing may result in the 
      Company taking downtime or other unanticipated actions at its 
      manufacturing facilities. The Company’s 
      sensitivity to these and other factors that may affect future results 
      are discussed in the Company’s Annual Report 
      on Form 10-K and Quarterly Reports on Form 10-Q.
    
    
      Pope & Talbot is a pulp and wood products company. The Company is based 
      in Portland, Oregon and trades on the New York stock exchange under the 
      symbol POP. Pope & Talbot was founded in 1849 and produces pulp and 
      softwood lumber in the U.S. and Canada. Markets for the Company's 
      products include: the U.S.; Europe; Canada; South America; Japan; and 
      other Pacific Rim countries. For more information on Pope & Talbot, 
      Inc., please check the website: www.poptal.com.
    
    
      
        
          POPE & TALBOT, INC. AND SUBSIDIARIES
        
      
      
        
          (Thousands except per share, unaudited)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          CONSOLIDATED STATEMENTS OF INCOME
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          Third Quarter 2006
        
        
        
        
          
            Year endedDecember 31,
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
          Fourth Quarter
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
          Revenues:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Pulp
        
        
        
        
        
        
          $ 114,494 
        
        
        
        
          $ 121,699 
        
        
        
        
          $ 125,698 
        
        
        
        
          $ 466,851 
        
        
        
        
          $ 442,635 
        
      
      
        
        
        
          Wood Products
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Lumber
        
        
        
        
        
        
          61,607 
        
        
        
        
          93,286 
        
        
        
        
          78,982 
        
        
        
        
          328,436 
        
        
        
        
          359,089 
        
      
      
        
        
        
        
        
          Chips, logs and other
        
        
        
        
        
        
          13,884 
        
        
        
        
          11,821 
        
        
        
        
          9,903 
        
        
        
        
          45,853 
        
        
        
        
          47,121 
        
      
      
        
        
        
        
        
          Total Wood Products
        
        
        
        
        
        
          75,491 
        
        
        
        
          105,107 
        
        
        
        
          88,885 
        
        
        
        
          374,289 
        
        
        
        
          406,210 
        
      
      
        
        
        
        
        
          
            Total revenues
          
        
        
        
        
        
        
          189,985 
        
        
        
        
          226,806 
        
        
        
        
          214,583 
        
        
        
        
          841,140 
        
        
        
        
          848,845 
        
      
      
        
          Costs and expenses:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Pulp cost of sales
        
        
        
        
        
        
          107,028 
        
        
        
        
          125,975 
        
        
        
        
          109,167 
        
        
        
        
          435,799 
        
        
        
        
          445,113 
        
      
      
        
        
        
          Wood Products cost of sales
        
        
        
        
        
        
          74,351 
        
        
        
        
          108,790 
        
        
        
        
          95,135 
        
        
        
        
          377,997 
        
        
        
        
          397,193 
        
      
      
        
        
        
          Lumber duty refund for prior years
        
        
        
        
        
        
          (101,209)
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          (101,209)
        
        
        
        
          - 
        
      
      
        
        
        
          Gain on timber take-back
        
        
        
        
        
        
          - 
        
        
        
        
          (3,451)
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          (3,451)
        
      
      
        
        
        
          Selling, general and administrative
        
        
        
        
        
        
          16,831 
        
        
        
        
          11,860 
        
        
        
        
          9,255 
        
        
        
        
          45,112 
        
        
        
        
          39,172 
        
      
      
        
          Operating income (loss)
        
        
        
        
        
        
          92,984 
        
        
        
        
          (16,368)
        
        
        
        
          1,026 
        
        
        
        
          83,441 
        
        
        
        
          (29,182)
        
      
      
        
          Interest expense
        
        
        
        
        
        
          (11,459)
        
        
        
        
          (5,808)
        
        
        
        
          (12,206)
        
        
        
        
          (36,980)
        
        
        
        
          (21,865)
        
      
      
        
          Interest income
        
        
        
        
        
        
          14,716 
        
        
        
        
          28 
        
        
        
        
          193 
        
        
        
        
          15,066 
        
        
        
        
          265 
        
      
      
        
          Loss on extinguishment of debt
        
        
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          (4,910)
        
        
        
        
          - 
        
      
      
        
          Income (loss) before income taxes
        
        
        
        
        
        
          96,241 
        
        
        
        
          (22,148)
        
        
        
        
          (10,987)
        
        
        
        
          56,617 
        
        
        
        
          (50,782)
        
      
      
        
          Income tax expense (benefit)
        
        
        
        
        
        
          13,350 
        
        
        
        
          11,406 
        
        
        
        
          (826)
        
        
        
        
          11,298 
        
        
        
        
          (773)
        
      
      
        
          Net income (loss)
        
        
        
        
        
        
          $ 82,891 
        
        
        
        
          $ (33,554)
        
        
        
        
          $ (10,161)
        
        
        
        
          $ 45,319 
        
        
        
        
          $ (50,009)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss) per common share - basic and diluted
        
        
          $ 5.09 
        
        
        
        
          $ (2.07)
        
        
        
        
          $ (0.62)
        
        
        
        
          $ 2.79 
        
        
        
        
          $ (3.09)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Average shares outstanding - basic and diluted
        
        
        
        
          16,270 
        
        
        
        
          16,227 
        
        
        
        
          16,269 
        
        
        
        
          16,250 
        
        
        
        
          16,208 
        
      
    
    
    
    
      
        
          CONSOLIDATED BALANCE SHEETS
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
          December 31,
        
        
        
        
          
            September 30,2006
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
        
          2006 
        
        
        
        
           
        
        
          2005 
        
        
        
        
           
        
      
      
        
          Assets:
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Current assets
        
        
        
        
          $
        
        
          258,336 
        
        
        
        
          $
        
        
          218,049 
        
        
        
        
          $
        
        
          243,911 
        
      
      
        
        
        
          Properties, net
        
        
        
        
        
        
          371,806 
        
        
        
        
        
        
          386,401 
        
        
        
        
        
        
          390,425 
        
      
      
        
        
        
          Deferred charge
        
        
        
        
        
        
          6,847 
        
        
        
        
        
        
          7,562 
        
        
        
        
        
        
          7,028 
        
      
      
        
        
        
          Other assets
        
        
        
        
           
        
        
          25,030 
        
        
        
        
           
        
        
          18,641 
        
        
        
        
           
        
        
          36,494 
        
      
      
        
        
        
        
        
          Total assets
        
        
        
        
          $
        
        
          662,019 
        
        
        
        
          $
        
        
          630,653 
        
        
        
        
          $
        
        
          677,858 
        
      
      
        
          Liabilities and stockholders' equity:
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Current portion of long-term debt
        
        
        
        
          $
        
        
          474 
        
        
        
        
          $
        
        
          63,800 
        
        
        
        
          $
        
        
          423 
        
      
      
        
        
        
          Other current liabilities
        
        
        
        
        
        
          102,030 
        
        
        
        
        
        
          105,363 
        
        
        
        
        
        
          118,643 
        
      
      
        
        
        
          Long-term debt, excluding current portion
        
        
        
        
        
        
          320,476 
        
        
        
        
        
        
          268,200 
        
        
        
        
        
        
          388,758 
        
      
      
        
        
        
          Deferred income tax liability, net
        
        
        
        
        
        
          15,689 
        
        
        
        
        
        
          9,042 
        
        
        
        
        
        
          10,140 
        
      
      
        
        
        
          Other long-term liabilities
        
        
        
        
           
        
        
          102,925 
        
        
        
        
           
        
        
          72,216 
        
        
        
        
           
        
        
          75,698 
        
      
      
        
        
        
        
        
          Total liabilities
        
        
        
        
        
        
          541,594 
        
        
        
        
        
        
          518,621 
        
        
        
        
        
        
          593,662 
        
      
      
        
        
        
          Stockholders' equity
        
        
        
        
           
        
        
          120,425 
        
        
        
        
           
        
        
          112,032 
        
        
        
        
           
        
        
          84,196 
        
      
      
        
        
        
        
        
          Total liabilities and stockholder's equity
        
        
        
        
          $
        
        
          662,019 
        
        
        
        
          $
        
        
          630,653 
        
        
        
        
          $
        
        
          677,858 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Long-term debt to total capitalization
        
        
        
        
           
        
        
          73%
        
        
        
        
           
        
        
          75%
        
        
        
        
           
        
        
          82%
        
      
    
    
    
    
      
        
          SEGMENT INFORMATION
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          
            Third Quarter 2006
          
        
        
        
        
          
            Year endedDecember 31,
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
          Fourth Quarter
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
          EBITDA: (A)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Pulp
        
        
        
        
        
        
          $ 11,031 
        
        
        
        
          $ (496)
        
        
        
        
          $ 20,226 
        
        
        
        
          $ 46,567 
        
        
        
        
          $ 12,825 
        
      
      
        
        
        
        
        
          Wood Products
        
        
        
        
        
        
          2,115 
        
        
        
        
          (2,065)
        
        
        
        
          (4,309)
        
        
        
        
          2,444 
        
        
        
        
          13,206 
        
      
      
        
        
        
        
        
          Lumber duty refund for prior years
        
        
        
        
        
        
          101,209 
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          101,209 
        
        
        
        
          - 
        
      
      
        
        
        
        
        
          Gain on timber take-back
        
        
        
        
        
        
          - 
        
        
        
        
          3,451 
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          3,451 
        
      
      
        
        
        
        
        
          General Corporate
        
        
        
        
        
        
          (10,688)
        
        
        
        
          (6,850)
        
        
        
        
          (4,246)
        
        
        
        
          (24,619)
        
        
        
        
          (20,534)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
          103,667 
        
        
        
        
          (5,960)
        
        
        
        
          11,671 
        
        
        
        
          125,601 
        
        
        
        
          8,948 
        
      
      
        
          Depreciation and amortization:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Pulp
        
        
        
        
        
        
          $ 7,152 
        
        
        
        
          $ 6,925 
        
        
        
        
          $ 7,121 
        
        
        
        
          $ 28,382 
        
        
        
        
          $ 26,429 
        
      
      
        
        
        
        
        
          Wood Products
        
        
        
        
        
        
          3,334 
        
        
        
        
          3,117 
        
        
        
        
          3,311 
        
        
        
        
          12,927 
        
        
        
        
          10,269 
        
      
      
        
        
        
        
        
          General Corporate
        
        
        
        
        
        
          197 
        
        
        
        
          366 
        
        
        
        
          213 
        
        
        
        
          851 
        
        
        
        
          1,432 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
          10,683 
        
        
        
        
          10,408 
        
        
        
        
          10,645 
        
        
        
        
          42,160 
        
        
        
        
          38,130 
        
      
      
        
          Operating income (loss):
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Pulp
        
        
        
        
        
        
          $ 3,879 
        
        
        
        
          $ (7,421)
        
        
        
        
          $ 13,105 
        
        
        
        
          $ 18,185 
        
        
        
        
          $ (13,604)
        
      
      
        
        
        
        
        
          Wood Products
        
        
        
        
        
        
          (1,219)
        
        
        
        
          (5,182)
        
        
        
        
          (7,620)
        
        
        
        
          (10,483)
        
        
        
        
          2,937 
        
      
      
        
        
        
        
        
          Lumber duty refund for prior years
        
        
        
        
        
        
          101,209 
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          101,209 
        
        
        
        
          - 
        
      
      
        
        
        
        
        
          Gain on timber take-back
        
        
        
        
        
        
          - 
        
        
        
        
          3,451 
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          3,451 
        
      
      
        
        
        
        
        
          General Corporate
        
        
        
        
        
        
          (10,885)
        
        
        
        
          (7,216)
        
        
        
        
          (4,459)
        
        
        
        
          (25,470)
        
        
        
        
          (21,966)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Operating income (loss)
        
        
        
        
        
        
          $ 92,984 
        
        
        
        
          $ (16,368)
        
        
        
        
          $ 1,026 
        
        
        
        
          $ 83,441 
        
        
        
        
          $ (29,182)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Additional Information:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Lumber import duties paid (refund received)
        
        
        
        
        
        
          $ (12,100)
        
        
        
        
          $ 8,300 
        
        
        
        
          $ 4,400 
        
        
        
        
          $ 3,000 
        
        
        
        
          $ 37,300 
        
      
      
        
        
        
        
        
          Lumber export taxes
        
        
        
        
        
        
          3,200 
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          3,200 
        
        
        
        
          - 
        
      
      
        
        
        
        
        
          Capital expenditures
        
        
        
        
        
        
          5,794 
        
        
        
        
          11,811 
        
        
        
        
          6,450 
        
        
        
        
          27,202 
        
        
        
        
          43,716 
        
      
      
        
        
        
        
        
          Capital expenditures - acquisition of sawmill
        
        
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          37,596 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Notes:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          (A)
        
        
        
        
          
            EBITDA equals net income (loss) before net interest expense, loss 
            on extinguishment of debt, income tax provision (benefit) and 
            depreciation and amortization. Segment EBITDA equals operating 
            income (loss) before segment depreciation and amortization. EBITDA 
            is a measure used by the Company's chief operating decision makers 
            to evaluate operating performance on both a consolidated and 
            segment-by-segment basis. The Company believes EBITDA is useful to 
            investors because it provides a means to evaluate the operating 
            performance of the Company and its segments on an ongoing basis 
            using criteria that are used by the Company's internal decision 
            makers and because it is frequently used by investors and other 
            interested parties in the evaluation of companies with substantial 
            financial leverage. The Company believes EBITDA is a meaningful 
            measure because it presents a transparent view of the Company's 
            recurring operating performance and allows management to readily 
            view operating trends, perform analytical comparisons, and 
            identify strategies to improve operating performance. For example, 
            the Company believes that excluding items such as taxes and net 
            interest expense enhances management's ability to assess and view 
            the core operating trends in its segments. EBITDA is not a measure 
            of the Company's liquidity or financial performance under 
            generally accepted accounting principles (GAAP) and should not be 
            considered as an alternative to net income (loss), income (loss) 
            from operations, or any other performance measure derived in 
            accordance with GAAP or as an alternative to cash flow from 
            operating activities as a measure of the Company's liquidity. The 
            use of EBITDA instead of net income (loss) or segment income 
            (loss) has limitations as an analytical tool, including the 
            inability to determine profitability; the exclusion of net 
            interest expense, loss on extinguishment of debt and associated 
            significant cash requirements, given the level of the Company's 
            indebtedness; and the exclusion of depreciation and amortization 
            which represent significant and unavoidable operating costs, given 
            the capital expenditures needed to maintain the Company's 
            businesses. Management compensates for these limitations by 
            relying on GAAP results. The Company's measures of EBITDA are not 
            necessarily comparable to other similarly titled captions of other 
            companies due to potential inconsistencies in the methods of 
            calculation.
          
        
      
    
    
      
        
        
        
          The following table reconciles net income (loss) to EBITDA for the 
          periods indicated:
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          Third Quarter 2006
        
        
        
        
          
            Year endedDecember 31,
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
          Fourth Quarter
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
          
             
          
        
        
        
        
        
        
          
            (thousands)
          
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Net income (loss)
        
        
        
        
        
        
          $ 82,891 
        
        
        
        
          $ (33,554)
        
        
        
        
          $ (10,161)
        
        
        
        
          $ 45,319 
        
        
        
        
          $ (50,009)
        
      
      
        
        
        
          Interest expense (income), net
        
        
        
        
        
        
          (3,257)
        
        
        
        
          5,780 
        
        
        
        
          12,013 
        
        
        
        
          21,914 
        
        
        
        
          21,600 
        
      
      
        
        
        
          Loss on extinguishment of debt
        
        
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          4,910 
        
        
        
        
          - 
        
      
      
        
        
        
          Income tax provision (benefit)
        
        
        
        
        
        
          13,350 
        
        
        
        
          11,406 
        
        
        
        
          (826)
        
        
        
        
          11,298 
        
        
        
        
          (773)
        
      
      
        
        
        
          Depreciation and amortization
        
        
        
        
        
        
          10,683 
        
        
        
        
          10,408 
        
        
        
        
          10,645 
        
        
        
        
          42,160 
        
        
        
        
          38,130 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          EBITDA
        
        
        
        
        
        
          $ 103,667 
        
        
        
        
          $ (5,960)
        
        
        
        
          $ 11,671 
        
        
        
        
          $ 125,601 
        
        
        
        
          $ 8,948 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          The following table reconciles operating income (loss) to EBITDA for 
          each of the Company's Pulp and Wood Products operating segments:
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          Third Quarter 2006
        
        
        
        
          
            Year endedDecember 31,
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
          Fourth Quarter
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
        
        
          Pulp
        
        
        
        
        
        
          
             
          
        
        
        
        
        
        
          
            (thousands)
          
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Operating income (loss)
        
        
        
        
        
        
          $ 3,879 
        
        
        
        
          $ (7,421)
        
        
        
        
          $ 13,105 
        
        
        
        
          $ 18,185 
        
        
        
        
          $ (13,604)
        
      
      
        
        
        
        
        
          Depreciation and amortization
        
        
        
        
        
        
          7,152 
        
        
        
        
          6,925 
        
        
        
        
          7,121 
        
        
        
        
          28,382 
        
        
        
        
          26,429 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          EBITDA
        
        
        
        
        
        
          $ 11,031 
        
        
        
        
          $ (496)
        
        
        
        
          $ 20,226 
        
        
        
        
          $ 46,567 
        
        
        
        
          $ 12,825 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Wood Products
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Operating income (loss)
        
        
        
        
        
        
          $ (1,219)
        
        
        
        
          $ (5,182)
        
        
        
        
          $ (7,620)
        
        
        
        
          $ (10,483)
        
        
        
        
          $ 2,937 
        
      
      
        
        
        
        
        
          Depreciation and amortization
        
        
        
        
        
        
          3,334 
        
        
        
        
          3,117 
        
        
        
        
          3,311 
        
        
        
        
          12,927 
        
        
        
        
          10,269 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          EBITDA
        
        
        
        
        
        
          $ 2,115 
        
        
        
        
          $ (2,065)
        
        
        
        
          $ (4,309)
        
        
        
        
          $ 2,444 
        
        
        
        
          $ 13,206 
        
      
    
    
      
        
          
            The Company's senior secured credit agreement subjects the Company 
            to a financial covenant based on EBITDA. EBITDA is defined 
            differently in the credit agreement and requires additional 
            adjustments, among other items, to (i) eliminate any refunds of 
            prior years lumber import duties, (ii) include income tax benefits 
            recognized in any quarter, and (iii) exclude certain other 
            non-cash income and expense items. EBITDA as defined in the credit 
            agreement was $39.4 million for the year ended December 31, 2006. 
            The following table reconciles net income to credit agreement 
            EBITDA for the year ended December 31, 2006:
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
          Year ended
        
      
      
        
        
        
        
        
        
        
        
        
          December 31, 2006
        
      
      
        
        
        
        
        
        
        
        
        
          (thousands)
        
      
      
        
        
        
          Net income
        
        
        
        
          $
        
        
          45,319 
        
      
      
        
        
        
          Interest expense, net
        
        
        
        
        
        
          21,914 
        
      
      
        
        
        
          Loss on extinguishment of debt
        
        
        
        
        
        
          4,910 
        
      
      
        
        
        
          Income tax provision (benefit)
        
        
        
        
        
        
          11,298 
        
      
      
        
        
        
        
        
          Add back: quarterly income tax benefits recognized
        
        
        
        
        
        
          2,052 
        
      
      
        
        
        
          Depreciation and amortization
        
        
        
        
        
        
          42,160 
        
      
      
        
        
        
          Lumber duty refunds for prior years
        
        
        
        
        
        
          (101,209)
        
      
      
        
        
        
          Other non-cash income and expenses:
        
        
        
        
        
      
      
        
        
        
        
        
          Net periodic benefit costs for pension and postretirement plans, net 
          of benefits paid and cash contributions
        
        
        
        
        
        
          4,560 
        
      
      
        
        
        
        
        
          Net unrealized foreign exchange gains recognized in earnings
        
        
        
        
        
        
          (424)
        
      
      
        
        
        
        
        
          Environmental accruals
        
        
        
        
        
        
          4,536 
        
      
      
        
        
        
        
        
          Inventory write downs, net
        
        
        
        
        
        
          2,580 
        
      
      
        
        
        
        
        
          Stock compensation and other
        
        
        
        
           
        
        
          1,696 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Credit agreement EBITDA
        
        
        
        
          $
        
        
          39,392 
        
      
    
    
      
        
          SELECTED FINANCIAL RESULTS
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          Third Quarter 2006
        
        
        
        
          Year endedDecember 31,
        
      
      
        
        
        
        
        
        
        
        
        
          Fourth Quarter
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Selected consolidated results as adjusted:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Adjusted operating income (loss) (B)
        
        
        
        
          $ (16,628)
        
        
        
        
          $ (16,368)
        
        
        
        
          $ 1,026 
        
        
        
        
          $ (26,171)
        
        
        
        
          $ (29,182)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Adjusted EBITDA(B)
        
        
        
        
          $ (5,945)
        
        
        
        
          $ (5,960)
        
        
        
        
          $ 11,671 
        
        
        
        
          $ 15,989 
        
        
        
        
          $ 8,948 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Selected Segment results as adjusted:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Adjusted operating income (loss):(B)
          
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Pulp
        
        
        
        
          $ 4,475 
        
        
        
        
          $ (7,421)
        
        
        
        
          $ 13,105 
        
        
        
        
          $ 18,781 
        
        
        
        
          $ (13,604)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Wood Products
        
        
        
        
          $ (11,836)
        
        
        
        
          $ (5,182)
        
        
        
        
          $ (7,620)
        
        
        
        
          $ (21,100)
        
        
        
        
          $ 2,937 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Adjusted EBITDA:(B)
          
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Pulp
        
        
        
        
          $ 11,627 
        
        
        
        
          $ (496)
        
        
        
        
          $ 20,226 
        
        
        
        
          $ 47,163 
        
        
        
        
          $ 12,825 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Wood Products
        
        
        
        
          $ (8,502)
        
        
        
        
          $ (2,065)
        
        
        
        
          $ (4,309)
        
        
        
        
          $ (8,173)
        
        
        
        
          $ 13,206 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Notes:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          (B)
        
        
        
        
          
            Adjusted operating income for the fourth quarter and full year of 
            2006 equals operating income excluding the non-recurring lumber 
            duty refunds received in the fourth quarter and costs that 
            resulted from the receipt of these refunds (principally incentive 
            compensation resulting from achieving the Company’s 
            return on equity goal for the year). Adjusted EBITDA equals EBITDA 
            (as described above) excluding the same refunds and costs. The 
            Company believes that Adjusted operating income and Adjusted 
            EBITDA are meaningful measures for investors because the lumber 
            import duty refunds had a very significant one-time impact that 
            obscures the Company’s recurring 
            operating performance. For all other periods presented, Operating 
            income (loss) and EBITDA are presented as there were no 
            significant one-time adjustments for these periods.
          
        
      
    
    
      
        
          The following table reconciles operating income to adjusted 
          operating income for the periods indicated:
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
          Fourth
        
        
        
        
          Year ended
        
      
      
        
        
        
        
        
        
        
        
        
          Quarter
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
        
        
        
        
           
        
        
          2006 
        
        
        
        
           
        
        
          2006 
        
      
      
        
        
        
        
        
        
        
        
        
          (thousands)
        
      
      
        
        
        
          Operating income
        
        
        
        
          $
        
        
          92,984 
        
        
        
        
          $
        
        
          83,441 
        
      
      
        
        
        
          Current year lumber duty refund in cost of sales
        
        
        
        
        
        
          (12,123)
        
        
        
        
        
        
          (12,123)
        
      
      
        
        
        
          Lumber duty refund for prior years
        
        
        
        
        
        
          (101,209)
        
        
        
        
        
        
          (101,209)
        
      
      
        
        
        
          Incentive compensation earned due to lumber duty refund
        
        
        
        
        
        
          3,298 
        
        
        
        
        
        
          3,298 
        
      
      
        
        
        
          Other cost of sales related to lumber duty refund
        
        
        
        
           
        
        
          422 
        
        
        
        
           
        
        
          422 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Adjusted operating loss
        
        
        
        
          $
        
        
          (16,628)
        
        
        
        
          $
        
        
          (26,171)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          The following table reconciles net income (loss) to adjusted EBITDA 
          for the periods indicated:
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
          Fourth
        
        
        
        
          Year ended
        
      
      
        
        
        
        
        
        
        
        
        
          Quarter
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
        
        
        
        
           
        
        
          2006 
        
        
        
        
           
        
        
          2006 
        
      
      
        
        
        
        
        
        
        
        
        
          (thousands)
        
      
      
        
        
        
          Net income
        
        
        
        
          $
        
        
          82,891 
        
        
        
        
          $
        
        
          45,319 
        
      
      
        
        
        
          Interest expense (income), net
        
        
        
        
        
        
          (3,257)
        
        
        
        
        
        
          21,914 
        
      
      
        
        
        
          Loss on extinguishment of debt
        
        
        
        
        
        
          - 
        
        
        
        
        
        
          4,910 
        
      
      
        
        
        
          Income tax provision
        
        
        
        
        
        
          13,350 
        
        
        
        
        
        
          11,298 
        
      
      
        
        
        
          Depreciation and amortization
        
        
        
        
        
        
          10,683 
        
        
        
        
        
        
          42,160 
        
      
      
        
        
        
          Current year lumber duty refund in cost of sales
        
        
        
        
        
        
          (12,123)
        
        
        
        
        
        
          (12,123)
        
      
      
        
        
        
          Lumber duty refund for prior years
        
        
        
        
        
        
          (101,209)
        
        
        
        
        
        
          (101,209)
        
      
      
        
        
        
          Incentive compensation earned due to lumber duty refund
        
        
        
        
        
        
          3,298 
        
        
        
        
        
        
          3,298 
        
      
      
        
        
        
          Other cost of sales related to lumber duty refund
        
        
        
        
           
        
        
          422 
        
        
        
        
           
        
        
          422 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Adjusted EBITDA
        
        
        
        
          $
        
        
          (5,945)
        
        
        
        
          $
        
        
          15,989 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            The following table reconciles operating income (loss) to adjusted 
            operating income (loss) for each of the Company's Pulp and Wood 
            Products operating segments for the periods indicated:
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
          Fourth
        
        
        
        
          Year ended
        
      
      
        
        
        
        
        
        
        
        
        
          Quarter
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
        
        
        
        
           
        
        
          2006 
        
        
        
        
           
        
        
          2006 
        
      
      
        
        
        
          Pulp
        
        
        
        
          (thousands)
        
      
      
        
        
        
        
        
          Operating income
        
        
        
        
          $
        
        
          3,879 
        
        
        
        
          $
        
        
          18,185 
        
      
      
        
        
        
        
        
          Incentive compensation earned due to lumber duty refund
        
        
        
        
           
        
        
          596 
        
        
        
        
           
        
        
          596 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Adjusted operating income
        
        
        
        
          $
        
        
          4,475 
        
        
        
        
          $
        
        
          18,781 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Wood Products
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Operating loss
        
        
        
        
          $
        
        
          (1,219)
        
        
        
        
          $
        
        
          (10,483)
        
      
      
        
        
        
        
        
          Current year lumber duty refund in cost of sales
        
        
        
        
        
        
          (12,123)
        
        
        
        
        
        
          (12,123)
        
      
      
        
        
        
        
        
          Incentive compensation earned due to lumber duty refund
        
        
        
        
        
        
          1,084 
        
        
        
        
        
        
          1,084 
        
      
      
        
        
        
        
        
          Other cost of sales related to lumber duty refund
        
        
        
        
           
        
        
          422 
        
        
        
        
           
        
        
          422 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Adjusted operating loss
        
        
        
        
          $
        
        
          (11,836)
        
        
        
        
          $
        
        
          (21,100)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            The following table reconciles operating income (loss) to adjusted 
            EBITDA for each of the Company's Pulp and Wood Products operating 
            segments for the periods indicated:
          
        
      
      
        
        
        
          
             
          
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
          Fourth
        
        
        
        
          Year ended
        
      
      
        
        
        
        
        
        
        
        
        
          Quarter
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
        
        
        
        
           
        
        
          2006 
        
        
        
        
           
        
        
          2006 
        
      
      
        
        
        
          Pulp
        
        
        
        
          (thousands)
        
      
      
        
        
        
        
        
          Operating income
        
        
        
        
          $
        
        
          3,879 
        
        
        
        
          $
        
        
          18,185 
        
      
      
        
        
        
        
        
          Depreciation and amortization
        
        
        
        
        
        
          7,152 
        
        
        
        
        
        
          28,382 
        
      
      
        
        
        
        
        
          Incentive compensation earned due to lumber duty refund
        
        
        
        
           
        
        
          596 
        
        
        
        
           
        
        
          596 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Adjusted EBITDA
        
        
        
        
          $
        
        
          11,627 
        
        
        
        
          $
        
        
          47,163 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Wood Products
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Operating loss
        
        
        
        
          $
        
        
          (1,219)
        
        
        
        
          $
        
        
          (10,483)
        
      
      
        
        
        
        
        
          Depreciation and amortization
        
        
        
        
        
        
          3,334 
        
        
        
        
        
        
          12,927 
        
      
      
        
        
        
        
        
          Current year lumber duty refund in cost of sales
        
        
        
        
        
        
          (12,123)
        
        
        
        
        
        
          (12,123)
        
      
      
        
        
        
        
        
          Incentive compensation earned due to lumber duty refund
        
        
        
        
        
        
          1,084 
        
        
        
        
        
        
          1,084 
        
      
      
        
        
        
        
        
          Other cost of sales related to lumber duty refund
        
        
        
        
           
        
        
          422 
        
        
        
        
           
        
        
          422 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Adjusted EBITDA
        
        
        
        
          $
        
        
          (8,502)
        
        
        
        
          $
        
        
          (8,173)