Salaried 401(k) 11-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________ 
Form 11-K
_____________________________________________________________ 
(Mark One)
x
Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2011
Or 
¨
Transition Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the transition period from             to             
Commission File Number 1-32729
_____________________________________________________________ 
A.
Full title of the plan and the address of the plan, if different from that of the issuer named below:
Potlatch Salaried 401(k) Plan
B.
Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 Potlatch Corporation
601 West First Avenue, Suite 1600
Spokane, Washington 99201




Report of Independent Registered Public
Accounting Firm and Financial Statements
with Supplemental Schedule for

Potlatch Salaried 401(k) Plan

December 31, 2011 and 2010



TABLE OF CONTENTS
 


 
PAGE
1

FINANCIAL STATEMENTS
 
2

3

4-12

SUPPLEMENTAL SCHEDULE REQUIRED BY THE DEPARTMENT OF LABOR
 
13

14

EXHIBIT 23
 
Consent of Independent Registered Public Accounting Firm
 




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Plan Administrator
Potlatch Salaried 401(k) Plan

We have audited the accompanying statements of net assets available for benefits of Potlatch Salaried 401(k) Plan (the Plan) as of December 31, 2011 and 2010, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2011 and 2010, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule H, Line 4i - Schedule of assets (held at end of year) as of December 31, 2011, is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated, in all material respects in relation to the basic financial statements taken as a whole.


Spokane, Washington
June 19, 2012


1

 
Potlatch Salaried 401(k) Plan
Statements of Net Assets Available for Benefits
 
 
December 31,
Assets
2011
 
2010
Participants directed investments at fair value
 
 
 
Registered investment company funds:
 
 
 
Vanguard Institutional Index Fund
$
7,567,932

 
$
—

Vanguard Total International Stock Index Fund Institutional Class
6,829,962

 
—

Vanguard Total Bond Market Index Fund Institutional Shares
5,011,553

 
—

Vanguard Extended Market Index Fund Institutional Shares
3,858,116

 
—

PIMCO Total Return Fund
3,728,658

 
4,259,501

Dodge & Cox Stock Fund
2,673,532

 
3,756,660

Mainstay Large Cap Growth Fund
2,377,242

 
4,672,300

Artisan Mid-Cap Value Fund
1,769,039

 
2,354,322

Artisan Mid-Cap Fund Institutional
1,603,877

 
—

Dodge & Cox International Fund
1,040,690

 
1,615,889

Timesquare Mid-Cap Growth Fund
1,028,555

 
2,143,658

TWC Small Cap Growth Class I
721,054

 
—

Artisan International Fund Institutional
567,967

 
—

T. Rowe Price Emerging Market Stock Fund
251,930

 
799

Artisan Mid-Cap Fund
—

 
2,723,710

Artisan International Fund
—

 
1,438,675

Morgan Stanley Small Company Growth Fund
—

 
1,630,645

Vanguard Extended Market Index Fund
—

 
451,952

Vanguard Total Bond Market Index Fund
—

 
310,496

Vanguard International Index Fund
—

 
211,334

T. Rowe Price Retirement Income Fund
246

 
348

T. Rowe Price Retirement 2005 Fund
26,188

 
85,870

T. Rowe Price Retirement 2010 Fund
265,336

 
454,057

T. Rowe Price Retirement 2015 Fund
947,216

 
1,963,562

T. Rowe Price Retirement 2020 Fund
829,905

 
1,384,419

T. Rowe Price Retirement 2025 Fund
734,902

 
1,219,102

T. Rowe Price Retirement 2030 Fund
402,465

 
585,521

T. Rowe Price Retirement 2035 Fund
202,502

 
613,199

T. Rowe Price Retirement 2040 Fund
155,243

 
359,258

T. Rowe Price Retirement 2045 Fund
61,380

 
48,361

T. Rowe Price Retirement 2050 Fund
59,896

 
40,416

T. Rowe Price Retirement 2055 Fund
1,444

 
1,220

Common and collective trusts:
 
 
 
Putnam Stable Value Fund
18,127,441

 
23,581,914

Putnam S&P 500 Index Fund
—

 
2,711,388

Common stock:
 
 
 
Potlatch Stock Fund
7,568,773

 
14,811,725

Total
68,413,044

 
73,430,301

Notes receivable from participants
641,483

 
838,413

Cash and cash equivalents
9,897

 
67,886

Employer contribution receivable
19,666

 
27,443

Assets available for benefits
69,084,090

 
74,364,043

Adjustment from fair value to contract value for fully benefit-responsive investment contracts
(598,148
)
 
(1,276,673
)
Net assets available for benefits
$
68,485,942

 
$
73,087,370

See accompanying notes.

2

 
Potlatch Salaried 401(k) Plan
Statements of Changes in Net Assets Available for Benefits
 

 
Years Ended December 31,
 
2011
 
2010
Investment income:
 
 
 
Interest income
$
701,426

 
$
890,029

Dividend income
1,556,941

 
1,571,135

Net appreciation (depreciation) of fair value investments
(1,840,084
)
 
4,654,138

Net investment income
418,283

 
7,115,302

Interest income on notes receivable from participants
27,226

 
32,698

Contributions:
 
 
 
Participant
1,846,775

 
2,000,940

Employer
819,184

 
806,765

Total contributions
2,665,959

 
2,807,705

Less distributions, fees, and transfers to other accounts:
 
 
 
Distributions to participating employees:
 
 
 
Cash
(7,547,463
)
 
(10,545,863
)
Market value of shares distributed in settlement of participants’ accounts
(82,460
)
 
(1,140,577
)
Loan and administrative fees
(67,016
)
 
(23,187
)
 
(7,696,939
)
 
(11,709,627
)
Net decrease prior to transfers
(4,585,471
)
 
(1,753,922
)
Transfers of Plan assets to Potlatch Hourly 401(k) Plan
(15,957
)
 
(2,307
)
Transfers of Plan assets to Clearwater Paper Salaried 401(k) Plan
—

 
(244,350
)
Net decrease
(4,601,428
)
 
(2,000,579
)
Net assets available for benefits:
 
 
 
Beginning of year
73,087,370

 
75,087,949

End of year
$
68,485,942

 
$
73,087,370

See accompanying notes.



3

 
Potlatch Salaried 401(k) Plan
Notes to Financial Statements
 

Note 1 - Description of Plan

The following description of the Potlatch Salaried 401(k) Plan (the Plan) is provided for general information. Participants should refer to the summary Plan description for the appropriate participating unit for a more complete description of the Plan's provisions.

General - The Plan is a defined contribution plan established under the provisions of Section 401(a) of the Internal Revenue Code (IRC), which includes a cash or deferred arrangement under 401(k) of the IRC, and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.

Plan sponsor, administration, and spin-off - On December 16, 2008, Potlatch Forest Products Corporation was renamed Clearwater Paper Corporation (Clearwater Paper) and was spun-off from Potlatch Corporation as a publicly traded corporation. Accordingly, as of that date, the Potlatch Forest Products Corporation Savings Plan for Salaried Employees was renamed the Clearwater Paper Salaried 401(k) Plan (Clearwater Paper Plan) and Clearwater Paper assumed responsibility as the Plan sponsor.

Coincident with the spin-off, Potlatch Corporation (the Company) established this Plan, the Potlatch Salaried 401(k) Plan. Effective December 17, 2008 (the transfer date), the participant account balances and assets related to participating Potlatch salaried employees were transferred to the Plan.

The Plan is administered by the Potlatch Benefits Committee. Mercer Trust Company and Mercer HR Services (collectively Mercer) serve as the Trustee and record keeper, respectively.

Eligibility and contributions - Employees are eligible to participate in the Plan on the first of the month following their hire date.

The Plan provides that each eligible salaried employee may elect a deferred contribution up to 25% of his or her monthly earnings on a pre-tax or after-tax basis. Participants may also make rollover contributions representing distributions from other qualified plans. Eligible participants age 50 or older may elect additional catch-up contributions.

Regular status employees hired by the Company are automatically enrolled in the Plan at a 3% deferral rate 30 days after the employee becomes eligible unless they elect otherwise. This deferral percentage is increased by 1% annually until the percentage has reached 6% unless the participant elects otherwise.

The Company makes matching contributions to the Plan equal to 70% of participating contributions, not in excess of 6%, although the Company may approve a higher or lower rate.

For employees hired after January 1, 2011, the Company makes a nonelective base contribution of 3% of their eligible compensation to their respective 401(k) plans. The new benefit vests on the same schedule as his or her employer matching account as described below.

4

Note 1 - Description of Plan (continued)

Eligibility and contributions (continued) - All contributions are limited by certain restrictions as defined by the IRC.

Participant accounts - A separate account is maintained for each participant of the Plan. Each account is credited with the participant and employer contributions and earnings thereon. Participant accounts are valued daily based on quoted market prices.

Investment options - Participants may direct their account balance in any amount equal to any whole percentage increment into the investment options offered under the Plan, including registered investment company funds, common and collective trusts, and the Potlatch Stock Fund. Participants with an investment in the Clearwater Paper Stock Fund as of the transfer date could maintain their balances, but were not able to direct future contributions into a Clearwater Paper Stock Fund. On June 30, 2010, the Plan closed the Clearwater Paper Stock Fund. Unless otherwise directed, participant balances in the Clearwater Paper Stock Fund were transferred into T. Rowe Price age-appropriate Retirement Funds at that time. Participants may change their investment elections and make transfers between investment options daily subject to restrictions imposed by the registered investment companies.

The accounts of participants automatically enrolled in the Plan and not electing otherwise are invested in the T. Rowe Price Retirement Fund with the target date closest to the year in which the participant will reach age 65, which is the Plan's normal retirement age. Any contributions or other payments made to the Plan without investment instructions will be invested in the age-appropriate T. Rowe Price Retirement Fund until such time as the participant chooses to reinvest them.

Contributions may be temporarily held as cash prior to the execution of the investment according to the participants' direction.

Vesting and forfeitures - A participant's interest in all participant contribution accounts is fully vested and not forfeitable at any time. A participant's interest in his or her matching account becomes vested based on the participant's years of service as defined in the Plan as follows:

Years of Service
% Vested
Less than 2
0
%
2 or more
100
%

A participant's interest in his or her matching account becomes 100% vested if the Plan terminates, or if the participant attains age 65 as an employee of the Company, becomes totally and permanently disabled, or dies while an employee. The portion of a participant's matching account not vested will be forfeited when the participant's employment terminates.

5

Note 1 - Description of Plan (continued)

Vesting and forfeitures (continued) - As of the end of each year, forfeitures and the earnings of such forfeitures not used to restore the matching accounts of former participants re-hired during the year may be credited against matching contributions for the following year, used to pay Plan expenses, or a combination thereof. Forfeitures for the years ended December 31, 2011 and 2010 totaled $31,637 and $53,797, respectively. Forfeitures used for the years ended December 31, 2011 and 2010 totaled $57,745 and $10,139, respectively.

Notes receivable from participants - Participants may borrow up to 50% of their vested account balance up to a maximum of $50,000 as provided by the Plan. The loans are secured by the balance in the participant's account and bear interest at market rate, which has been determined for the applicable loans during the applicable periods to be the prime rate in effect at the beginning of the month in which the loan is taken. Repayment of principal and interest is paid ratably through payroll deductions. Loans outstanding at December 31, 2011 and 2010, bear interest at various rates ranging from 3.25% to 8.50% and mature at various times through October 2016 and December 2015, respectively.

Distributions and benefits - On termination of employment, participants may elect to receive payment in a lump sum equal to the participant's vested interest in his or her account, roll their account balances into an individual retirement account (IRA) or another employer's plan, or maintain their accounts in the Plan, subject to certain restrictions. If a terminated participant's vested account balance is $5,000 or less, they are generally not permitted to leave their account balance in the Plan. Therefore, depending on the value of the vested account balance, one of the following will occur:

•
If the vested value is $5,000 or less, but greater than $1,000, a participant's account will be automatically rolled over to a Putnam Automatic Rollover IRA unless they elect otherwise.

•
If the vested value is less than $1,000 and the participant does not elect to have such distribution paid to an eligible retirement plan in a direct rollover, the participant will receive the distribution directly in a single lump sum in cash, less associated taxes and penalties.

Participants are permitted to receive hardship distributions while still employed by the Company under certain conditions specified under the Plan, including the purchase of a primary residence, tuition payments, medical and funeral expenses, and disabilities. A participant's right to contribute to the Plan is suspended for six months upon receiving a hardship distribution.

Plan and administrative fees - Plan expenses are generally paid by the Company except to the extent those expenses are paid from participant forfeitures of employer matching contributions. Loan service fees and fees associated with processing of qualified domestic relations orders are paid by the participant.


6

Note 1 - Description of Plan (continued)

Party in interest and related party transactions - Certain Plan investments are managed by Mercer. These transactions and transactions within the Company Common Stock Fund are considered party in interest transactions.


Note 2 - Summary of the Significant Accounting Policies

The financial statements of the Plan are prepared on the accrual basis of accounting. Distributions to participants are recorded when paid.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan sponsor to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets available for benefits during the reporting period. Actual results could differ from those estimates and assumptions.

Investment valuation - Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan.

The Plan invests in the Putnam Stable Value Fund, a common and collective trust that invests in investment contracts through a collective trust. As required by the Financial Accounting Standards Board Staff Position (FSP), the statement of net assets available for benefits presents the fair value of the investment in the collective trust as well as the adjustment of the investment in the collective trust from fair value to contract value relating to the investment contracts. Guaranteed Investment Contracts are fully benefit-responsive and are recorded at contract value, which approximates fair value. Fair value is calculated by discounting the related cash flows based on current yields and similar investments. The statement of changes in net assets available for benefits is prepared on a contract value basis. The contract value of the Putnam Stable Value Fund represents contributions made under the contracts, plus earnings, less withdrawals and administrative expenses on an annualized basis. The average yield and crediting interest rate for the Putnam Stable Value Fund was approximately 3.11% and 3.23%, respectively, at December 31, 2011, and 4.02% and 4.15%, respectively, at December 31, 2010.

Investments in shares of the stock funds and mutual funds are stated at fair value, based on quoted market prices. Investments in common and collective trusts are stated at fair value based on the quoted value of the underlying investments and are expressed in units.


7

Note 2 - Summary of the Significant Accounting Policies (continued)

Income recognition - Net appreciation (depreciation) in fair value of investments represents realized gains and losses and the change in fair value of investments from one period to the next. Interest is recorded when earned. Dividends are recorded on the ex-dividend date. Purchases and sales of securities are recorded on a trade date basis.

Notes receivable from participants - Notes receivable from participants are measured at amortized cost, which represents the unpaid principal balance plus accrued but unpaid interest, and are classified as notes receivable.

Recent accounting pronouncements - In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. ASU No. 2011-04 requires disclosure of valuation techniques for Level 2 and Level 3 measurements and for Level 3 measurements requires disclosure of valuation processes used by the reporting entity and quantitative information about significant unobservable inputs. ASU No. 2011-04 requires information about all transfers between levels 1 and 2, not just significant transfers, as well as additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. It also requires disclosure of the categorization by level for items that are not measured at fair value in the statement of net assets available for benefits but are disclosed at fair value. The new guidance is effective for reporting periods beginning after December 15, 2011. Plan management does not expect the adoption of ASU No. 2011-04 to have a material effect on the statements of net assets available for benefits and statements of changes in net assets available for benefits.


Note 3 - Investments

During the years ended December 31, the Plan's investments appreciated (depreciated) (including gains and losses on investments sold during the period and the change in unrealized gains and losses at the end of the year) as follows:
 
2011
 
2010
Potlatch Stock Fund
$
163,303

 
$
567,764

Common and collective trusts
133,249

 
364,148

Clearwater Paper Stock Fund
—

 
(47,697
)
Registered investment company funds
(2,136,636
)
 
3,769,923

 
$
(1,840,084
)
 
$
4,654,138



8

Note 3 - Investments (continued)

Fair value measurements - The Plan classifies its investments based upon an established fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

Level 1
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets the Plan has the ability to access.
Level 2
Inputs to the valuation methodology include:
•
Quoted prices for similar assets or liabilities in active markets;
•
Quoted prices for identical or similar assets or liabilities in inactive markets;
•
Inputs other than quoted prices that are observable for the asset or liability;
•
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets measured at fair value:
•
Registered investment company funds and Company stock are valued at the net asset value (NAV) of shares held by the Plan at year end.
•
Investments in common and collective trusts (Putnam Stable Value Fund and Putnam S&P 500 Index Fund) are recorded at fair value and adjusted to contract value. See Note 2, Investment Valuation, under Summary of Significant Accounting Policies for further discussion.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Plan management believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.


9

Note 3 - Investments (continued)

Fair value measurements (continued) - The following table sets forth by level, within the fair value hierarchy, the Plan's assets at fair value as of December 31:
 
Assets at Fair Value as of December 31, 2011
 
Level 1
 
Level 2
 
Level 3
 
Total
Registered investment company funds:
 
 
 
 
 
 
 
Index funds
$
16,437,602

 
$
—

 
$
—

 
$
16,437,602

Balanced funds
3,686,722

 
—

 
—

 
3,686,722

Growth funds
8,404,260

 
—

 
—

 
8,404,260

Fixed income funds
3,728,659

 
—

 
—

 
3,728,659

International funds
8,438,619

 
—

 
—

 
8,438,619

Other funds
2,020,968

 
—

 
—

 
2,020,968

Total registered investment company funds
42,716,830

 
—

 
—

 
42,716,830

Common stocks:
 
 
 
 
 
 
 
REIT-Industrial
7,568,773

 
—

 
—

 
7,568,773

Total common stocks
7,568,773

 
—

 
—

 
7,568,773

Common and collective trusts:
 
 
 
 
 
 
 
Putnam Stable Value Fund
—

 
18,127,441

 
—

 
18,127,441

Total common and collective trusts
—

 
18,127,441

 
—

 
18,127,441

Total assets at fair value
$
50,285,603

 
$
18,127,441

 
$
—

 
$
68,413,044

 
 
 
 
 
 
 
 
 
Assets at Fair Value as of December 31, 2010
 
Level 1
 
Level 2
 
Level 3
 
Total
Registered investment company funds:
 
 
 
 
 
 
 
Index funds
$
973,782

 
$
—

 
$
—

 
$
973,782

Balanced funds
6,755,333

 
—

 
—

 
6,755,333

Growth funds
14,926,973

 
—

 
—

 
14,926,973

Fixed income funds
4,259,501

 
—

 
—

 
4,259,501

International funds
3,054,564

 
—

 
—

 
3,054,564

Other funds
2,355,121

 
—

 
—

 
2,355,121

Total registered investment company funds
32,325,274

 
—

 
—

 
32,325,274

Common stocks:
 
 
 
 
 
 
 
REIT-Industrial
14,811,725

 
—

 
—

 
14,811,725

Total common stocks
14,811,725

 
—

 
—

 
14,811,725

Common and collective trusts:
 
 
 
 
 
 
 
Putnam Stable Value Fund
—

 
23,581,914

 
—

 
23,581,914

Putnam S&P 500 Index Fund
—

 
2,711,388

 
—

 
2,711,388

Total common and collective trusts
—

 
26,293,302

 
—

 
26,293,302

Total assets at fair value
$
47,136,999

 
$
26,293,302

 
$
—

 
$
73,430,301



10

Note 4 - Investment Risk

The Plan invests in shares of mutual funds, common and collective trusts, and the Company Common Stock Fund. The underlying investments of such funds, in general, are exposed to various risks such as interest rate, credit, and overall market volatility. Due to the level of risk associated with such investments, it is reasonably possible that changes in the values of underlying investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits.

Certain funds invest in securities with contractual cash flows, such as asset backed securities, collateralized mortgage obligations, and commercial mortgage backed securities, including securities backed by subprime mortgage loans. The value, liquidity, and related income of these securities are sensitive to changes in economic conditions, including real estate value, delinquencies or defaults, or both, and may be adversely affected by shifts in the market's perception of the issuers and changes in interest rates.


Note 5 - Plan Termination

Although the Company expects to continue the Plan indefinitely, inasmuch as future conditions cannot be foreseen, the Company reserves the right to amend or terminate the Plan at any time subject to the rules of ERISA. In the event of Plan termination, participants will become 100% vested in their employer accounts.


Note 6 - Tax Status

The Company has applied for and is in the process of obtaining a letter of determination from the Internal Revenue Service regarding the tax-qualified status of the Plan and the related tax-exempt status of the accompanying trust. The Company believes the Plan is designed and operated in compliance with the applicable requirements of the IRC.

Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS.  The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2011 there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.


11

Note 7 - Reconciliation of Financial Statements to the Form 5500

The following is a reconciliation of the net assets available for benefits per the financial statements to the Form 5500 at December 31:

 
2011
 
2010
 
 
 
 
Net assets available for benefits per the financial statements
$
68,485,942

 
$
73,087,370

Loans in deemed distributed status
(113,567
)
 
(114,154
)
Adjustment from contract value to fair value of fully benefit-responsive investment contracts
598,148

 
1,276,673

 
 
 
 
Net assets available for benefits per Form 5500
$
68,970,523

 
$
74,249,889


The following is a reconciliation of the net decrease in net assets available for Plan benefits per the financial statements to the Form 5500 for the years ended December 31:

 
2011
 
2010
 
 
 
 
Net decrease in net assets available for benefits prior to transfers per the financial statements
$
(4,585,471
)
 
$
(1,753,922
)
Change in deemed distributed loans
587

 
68,498

Add reversal of prior year adjustment from contract value to fair value for fully benefit-responsive investment contracts
(1,276,673
)
 
(992,153
)
Plus current year adjustment from contract value to fair value for fully benefit-responsive investment contracts
598,148

 
1,276,673

 
 
 
 
Total net loss per Form 5500
$
(5,263,409
)
 
$
(1,400,904
)


12

 
Potlatch Salaried 401(k) Plan
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
 

Plan Sponsor's EIN:     82-0156045
Plan Number:         105

 
 
(b)
 
(c)
 
December 31, 2011
(a)
 
Identify of Issue, Borrower, Lessor, or Similar Party
 
Description, Including Maturity Date, Rate of Interest, Par, Maturity Value, Number of Shares
 
(d) Cost
 
(e) Current Value
 
 
Shares in registered investment
 
 
 
 
 
 
 
 
company funds
 
 
 
 
 
 
 
 
Vanguard Funds
 
Vanguard Institutional Index Fund
 
**
 
$
7,567,932

 
 
Vanguard Funds
 
Vanguard Total International Stock Index Fund Institutional Class
 
**
 
$
6,829,962

 
 
Vanguard Funds
 
Vanguard Total Bond Market Index Fund Institutional Shares
 
**
 
5,011,553

 
 
Vanguard Funds
 
Vanguard Extended Market Index Fund Institutional Shares
 
**
 
3,858,116

 
 
PIMCO Funds
 
PIMCO Total Return Fund
 
**
 
3,728,658

 
 
Dodge & Cox Funds
 
Dodge & Cox Stock Fund
 
**
 
2,673,532

 
 
Mainstay Funds
 
Mainstay Large Cap Growth Fund
 
**
 
2,377,242

 
 
Artisan Funds
 
Artisan Mid-Cap Value Fund
 
**
 
1,769,039

 
 
Artisan Funds
 
Artisan Mid-Cap Fund Institutional
 
**
 
1,603,877

 
 
Dodge & Cox Funds
 
Dodge & Cox International Fund
 
**
 
1,040,690

 
 
Timesquare Funds
 
Timesquare Mid-Cap Growth Fund
 
**
 
1,028,555

 
 
TCW Small Cap Growth
 
TCW Small Cap Growth Class 1
 
**
 
721,054

 
 
Artisan Funds
 
Artisan International Fund Institutional
 
**
 
567,967

 
 
T. Rowe Price Funds
 
T. Rowe Price Emerging Market Stock Fund
 
**
 
251,930

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement Income Fund
 
**
 
246

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2005 Fund
 
**
 
26,188

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2010 Fund
 
**
 
265,336

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2015 Fund
 
**
 
947,216

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2020 Fund
 
**
 
829,905

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2025 Fund
 
**
 
734,902

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2030 Fund
 
**
 
402,465

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2035 Fund
 
**
 
202,502

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2040 Fund
 
**
 
155,243

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2045 Fund
 
**
 
61,380

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2050 Fund
 
**
 
59,896

 
 
T. Rowe Price Funds
 
T. Rowe Price Retirement 2055 Fund
 
**
 
1,444

 
 
Common and collective trusts:
 
 
 
 
 
 
 
 
Putnam Investments
 
Putnam Stable Value Fund
 
**
 
18,127,441

 
 
Common stock:
 
 
 
 
 
 
*
 
Potlatch Corporation
 
Potlatch Stock Fund
 
**
 
7,568,773

*
 
Plan participant loans
 
Participant loans with interest from 3.25% to 8.50% and mature through October 2016
 
 
 
641,483

 
 
 
 
 
 
 
 
$
69,054,527


*Represents a party in interest at December 31, 2011.
**The cost of participant-directed investments is not required to be disclosed.


13

 
Potlatch Salaried 401(k) Plan
Signatures
 


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator of the Plan has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized:
 
Potlatch Salaried 401(k) Plan


By /S/ Terry L. Carter            
Terry L. Carter, Controller/Treasurer
On behalf of the administrator
Date: June 19, 2012



14