Fitch Ratings Affirms Potlatch Corp.'s Ratings; Revises Outlook to Stable.

Business Editors

CHICAGO--(BUSINESS WIRE)--March 18, 2004

Fitch Ratings has affirmed Potlatch Corporation's (Potlatch) debt ratings of senior secured at 'BBB-', senior unsecured at 'BB+', senior subordinated at 'BB', and commercial paper at 'B.' The Rating Outlook for Potlatch has been revised to Stable from Negative. Potlatch had $619 million of debt at last year-end.

For the full year 2003, the company reported earnings of $51 million due to significantly higher earnings for Potlatch's Wood Products segment and improved results for its Pulp and Paperboard segment. Wood Products had a very strong fourth quarter with earnings of $55 million compared to an ($18 million) loss in the prior year. This was driven primarily by very strong structural panel markets and higher oriented strand board (OSB) selling prices. Continuing on a streak that began in the third quarter, OSB realizations jumped an average $57/Mft2 in the fourth quarter; a benchmark mean index rose $115/Mft2 year over year. Plywood was up $30-$35/Mft2 on average in the fourth quarter and $87/Mft2 ahead of 2002 averages, all due to a robust demand for housing. Potlatch's leverage and interest coverage for the year-ended December 31, 2003, has improved to 2.8 times (x) and 4.3x from 6.7x and 1.7x, respectively at the end of 2002. The company is banking cash and continues to remain focused on rebuilding its balance sheet. Fitch anticipates improving credit statistics in 2004.