SEATTLE--(BUSINESS WIRE)--Oct. 27, 2008--Plum Creek TimberCompany, Inc., (NYSE:PCL) today announced third quarter earnings of$69 million, or $0.40 per diluted share, on revenues of $414 million.Earnings for the third quarter of 2007 were $59 million, or $0.34 perdiluted share, on revenues of $407 million. Third quarter earnings for2007 included a $4 million non-cash expense, or $0.02 per dilutedshare, related to fire losses experienced in Montana during thequarter.

Earnings for the first nine months of 2008 were $138 million, or$0.80 per diluted share, on revenues of $1.15 billion. These resultsinclude the effect of a $6 million after-tax ($10 million pre-tax)impairment charge related to the company's lumber manufacturingbusiness recognized during the second quarter. The impairment chargereduced net income by $0.04 per diluted share. Earnings for the firstnine months of 2007 were $164 million, or $0.93 per diluted share, onrevenues of $1.17 billion. Results for the first nine months of 2007include a $2 million after-tax gain on the sale of an industrialmineral asset. As a result, income from continuing operations was $162million, or $0.92 per diluted share.

Cash provided by operating activities during the first nine monthsof the year totaled $225 million. The company ended the third quarterwith $175 million in cash and cash equivalents.

"We're pleased to report increased income during the thirdquarter, reflecting the benefits of Plum Creek's geographic, resourceand business diversity," said Rick Holley, president and chiefexecutive officer. "While the extended housing downturn has influencedthe near-term results of our timber and manufacturing businesses, ourrural land sales and non-timber resource businesses continued toperform well during the third quarter. In addition, we temporarilyincreased pulpwood harvest levels in many markets to serve strongcustomer demand and capture attractive prices. While we are concernedabout the state of the overall economy, we are confident that we cancontinue to build and deliver value for our shareholders by managingour resources and effectively allocating capital for long-term totalreturns."

"Plum Creek enters the final quarter of the year in excellentfinancial shape," continued Holley. "We have a strong balance sheet,and following our recently completed Southern timberland joint venturewe have an untapped $750 million line of credit and cash in excess of$270 million. We will continue to capitalize on this position to makeopportunistic investments, in both complementary timberlands and stockrepurchases, consistent with our disciplined capital allocation focus.With our broad and diverse portfolio of valuable hard assets and ourstrong financial position, we are in an excellent position to makeoperational decisions today that protect and enhance long-termshareholder value, despite difficult economic conditions."

Review of Operations

The Northern Resources segment reported a $12 million operatingprofit during the quarter. Segment operating profit for the sameperiod a year ago was $8 million and included the impact of a $4million non-cash loss resulting from fire damage to Montanatimberlands in 2007. The segment's sawlog harvest volume was similarto the same period of 2007 while prices were approximately 2 percentlower. Northern pulpwood prices have increased approximately 24percent over the past year due to continued strong demand for pulpwoodin the Northeast and Lake States regions. The company increased itspulpwood harvest 14 percent compared to the prior year's level toserve this customer demand and capture these attractive prices.

Operating profit in the Southern Resources segment was $29 millionfor the third quarter of 2008, down approximately $10 million from the$39 million reported during the third quarter of 2007. As in theNorthern segment, weak sawlog markets were partially offset by strongpulpwood markets across the South. Sawlog prices have been underpressure for the past year as lumber mills curtailed production in theface of weakening housing activity. During the third quarter, averagesawlog prices declined approximately 4 percent and, as a result, weredown approximately 18 percent year-over-year. The company reduced itssawlog harvest approximately 13 percent in response to these marketconditions.

Pulp and paper mills' demand for pulpwood remained favorableacross the South. Pulpwood prices gained approximately 15 percent overthe prior year's level. In response to the attractive marketconditions, the company maintained an accelerated pace of pulpwoodproduction, increasing its pulpwood harvest approximately 13 percentcompared to the same period last year.

The Real Estate segment reported revenue of $108 million andoperating income of $73 million compared to revenue of $94 million andoperating income of $61 million for the third quarter of 2007. Thedifferences between the periods are due to the transactional nature ofthe business. During the third quarter, the company sold approximately70,000 acres of land. These sales included nearly 15,000 acres ofsmall, non-strategic lands at an average price of $1,150 per acre,nearly 40,000 acres of conservation properties at more than $1,000 peracre, and approximately 15,600 acres of recreation property sold at anaverage price of more than $3,200 per acre.

The Manufacturing segment reported an operating loss of $4 millioncompared to $2 million of operating income for the third quarter of2007. The results include a $3 million expense as the company wrotedown the value of purchase log commitments. The declines in housingand industrial activity reduced demand for lumber, plywood and mediumdensity fiberboard (MDF). Demand for MDF was particularly weak withsales volume down approximately 30 percent from the same period oflast year as customers sought to match supply with weakening demandfor products manufactured from MDF such as doors, flooring andmillwork.

The Other segment, consisting of the company's non-timber resourcebusinesses, continued to grow, increasing its contribution tooperating income to $7 million, up $4 million from the same period of2007.

Acquisitions

During the quarter the company acquired approximately 120,000acres of timberland in three separately negotiated transactions valuedat $64 million. The timberlands are located in Oregon, Georgia andVermont. The Vermont acquisition, valued at $23 million, was thelargest transaction, consisting of approximately 86,000 acres oftimberlands in northeast Vermont. These mixed hardwood timberlands aresubject to an existing conservation easement and complement thecompany's existing ownership in New Hampshire and Maine.

Subsequent Events: Formation of Southern Timberland Joint Ventureand Subsequent Capital Allocation

On October 1, the company completed the formation of a previouslyannounced joint venture with The Campbell Group LLC. The transactionvalued approximately 454,000 acres of Southern timberlands,contributed into the joint venture by Plum Creek, at $1,725 per acre.

Also on October 1, the company received $783 million from thejoint venture. Previously, the company announced its plans to utilizehalf of these proceeds to permanently retire existing debt, and usethe balance of the proceeds for general corporate purposes, includingthe opportunistic repurchase of the company's common stock.

The company has proceeded as planned, and on October 1,permanently retired $75 million of private placement notes and plansto permanently retire other existing private placement notes as theymature over the next twelve months. In the interim, the company paiddown $432 million, the entire drawn amount, on its $750 millionrevolving line of credit.

Between October 1 and October 24, the company used a portion ofthe cash available to repurchase approximately $172 million, orapproximately 4.3 million shares, of common stock at an average priceof $40.08 per share.

Outlook

The company expects timber market conditions during the fourthquarter to continue as they have for the past several quarters withsawlog demand continuing to be weak and pulpwood demand remainingrelatively strong.

In the Northern Resources segment, the company expects to maintainits sawlog harvest at approximately third-quarter levels. Thefourth-quarter pulpwood harvest is expected to moderate somewhat fromthe accelerated third-quarter levels.

The Southern Resources harvest is expected to be lower for bothsawlogs and pulpwood, primarily due to the harvest attributable to thelands contributed to the joint venture. In addition, the company plansto reduce the pace of its pulpwood harvest from the accelerated levelsof the past several quarters.

Given the recent financial market turmoil, the company hastempered its expectations for Real Estate segment revenues. During thefourth quarter, the company expects to report rural land sales between$75 and $85 million.

The company's previously announced sale of approximately 310,000acres of Montana timberlands to the Nature Conservancy and Trust forPublic Land is expected to clear its contingencies during the fourthquarter. The sale is expected to close in three phases betweenDecember of 2008 and December of 2010. The first phase is nowprojected to be $150 million and is scheduled to close in December ofthis year. Once the contingencies are cleared, the company expects toincrease its earnings outlook for the fourth quarter to include theearnings benefit from this transaction.

Lumber, plywood and MDF sales are expected to decline seasonallyduring the fourth quarter. As a result, the Manufacturing segment isexpected to report lower results during the fourth quarter.

The company expects to report income between $0.17 and $0.22 pershare for the fourth quarter of the year, excluding the earnings fromthe Montana conservation sale.

"Plum Creek is very-well positioned today. Our diverse asset baseand sound balance sheet combine to provide us with the operational andfinancial flexibility to execute our strategies for long-term valuecreation. Closing the first phase of the Montana conservationtransaction in December will further improve our strong financialposition. We remain committed to our strategies for long-term valuecreation and understand that disciplined capital allocation is key tothe company's continued success," Holley concluded.

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, Oct. 27, at 5 p.m.EDT (2 p.m. PDT). A live webcast of the conference call may beaccessed through Plum Creek's Web site at www.plumcreek.com byclicking on the "Investors" link.

Investors without Internet access should dial 1-800-572-9852 atleast 10 minutes prior to the start time, referencing Plum Creek'searnings. Those wishing to access the call from outside the UnitedStates/Canada should dial 1-706-645-9676, also referencing PlumCreek's earnings. Replay of the call will be available for 48 hoursafter completion of the live call and can be accessed at1-800-642-1687 or 1-706-645-9291 (international calls), using the code23090286.

Supplemental financial information for Plum Creek operations,including statistical data, is available in the "Investors"information section of Plum Creek's Web site at www.plumcreek.com.

Plum Creek is the largest and most geographically diverse privatelandowner in the nation with more than 7 million acres of timberlandsin major timber producing regions of the United States and 10 woodproducts manufacturing facilities in the Northwest.

Forward-Looking Statements

This press release contains forward-looking statements within themeaning of the Private Litigation Reform Act of 1995 as amended. Someof these forward-looking statements can be identified by the use offorward-looking words such as "believes," "expects," "may," "will,""should," "seek," "approximately," "intends," "plans," "estimates," or"anticipates," or the negative of those words or other comparableterminology. The accuracy of such statements is subject to a number ofrisks, uncertainties and assumptions including, but not limited to,the cyclical nature of the forest products industry, our ability toharvest our timber, our ability to execute our acquisition strategy,the market for and our ability to sell or exchange non-strategictimberlands and timberland properties that have higher and betteruses, and various regulatory constraints. These and other risks,uncertainties and assumptions are detailed from time to time in ourfilings with the Securities and Exchange Commission under theSecurities Exchange Act of 1934, as amended, and the Securities Act of1933, as amended. It is likely that if one or more of the risksmaterializes, or if one or more assumptions prove to be incorrect, thecurrent expectations of Plum Creek and its management will not berealized. Forward-looking statements are not guarantees ofperformance, and speak only as of the date made, and neither PlumCreek nor its management undertakes any obligation to update or reviseany forward-looking statements.

                   PLUM CREEK TIMBER COMPANY, INC.                  CONSOLIDATED STATEMENTS OF INCOME                             (UNAUDITED)                                                    Nine Months Ended                                                   -------------------                                                   September September                                                      30,       30,                                                     2008      2007                                                   --------- ---------                                                     (In Millions,                                                    Except Per Share                                                         Amounts)Revenues: Timber                                           $     587 $     589 Real Estate                                            217       204 Manufacturing                                          330       363 Other                                                   19        15                                                   --------- ---------   Total Revenues                                     1,153     1,171                                                   --------- ---------Costs and Expenses: Cost of Goods Sold:   Timber                                               420       391   Real Estate                                           69        69   Manufacturing                                        345       349   Other                                                  2         2                                                   --------- ---------      Total Cost of Goods Sold                          836       811 Selling, General and Administrative                     94        91                                                   --------- ---------         Total Costs and Expenses                       930       902                                                   --------- ---------Other Operating Income (Expense), net                     2         -                                                   --------- ---------Operating Income                                        225       269Interest Expense, net                                   105       109                                                   --------- ---------Income before Income Taxes                              120       160Benefit for Income Taxes                                (18)       (2)                                                   --------- ---------Income From Continuing Operations                       138       162Gain on Sale of Properties, net of tax                    -         2                                                   --------- ---------Net Income                                        $     138 $     164                                                   ========= =========Per Share Amounts: Income From Continuing Operations - Basic        $    0.81 $    0.93 Income From Continuing Operations - Diluted      $    0.80 $    0.92 Net Income per Share - Basic                     $    0.81 $    0.94 Net Income per Share - Diluted                   $    0.80 $    0.93Weighted Average Number of Shares Outstanding - Basic                                              171.3     175.3 - Diluted                                            171.8     175.7

                   PLUM CREEK TIMBER COMPANY, INC.                  CONSOLIDATED STATEMENTS OF INCOME                             (UNAUDITED)                                                      Quarter Ended                                                   -------------------                                                   September September                                                      30,       30,                                                     2008      2007                                                   --------- ---------                                                     (In Millions,                                                    Except Per Share                                                         Amounts)Revenues: Timber                                           $     194 $     190 Real Estate                                            108        94 Manufacturing                                          104       119 Other                                                    8         4                                                   --------- ---------   Total Revenues                                       414       407                                                   --------- ---------Costs and Expenses: Cost of Goods Sold:   Timber                                               144       133   Real Estate                                           33        31   Manufacturing                                        105       113   Other                                                  1         1                                                   --------- ---------      Total Cost of Goods Sold                          283       278 Selling, General and Administrative                     31        30                                                   --------- ---------         Total Costs and Expenses                       314       308                                                   --------- ---------Other Operating Income (Expense), net                    (1)       (1)                                                   --------- ---------Operating Income                                         99        98Interest Expense, net                                    35        38                                                   --------- ---------Income before Income Taxes                               64        60Provision (Benefit) for Income Taxes                     (5)        1                                                   --------- ---------Net Income                                        $      69 $      59                                                   ========= =========Per Share Amounts: Net Income per Share - Basic                     $    0.40 $    0.34 Net Income per Share - Diluted                   $    0.40 $    0.34Weighted Average Number of Shares Outstanding - Basic                                              171.2     173.2 - Diluted                                            171.8     173.6

                   PLUM CREEK TIMBER COMPANY, INC.                     CONSOLIDATED BALANCE SHEETS                             (UNAUDITED)                                                    September December                                                       30,       31,                                                      2008     2007                                                    --------- --------                                                      (In Millions,                                                     Except Per Share                                                         Amounts)                      ASSETSCurrent Assets: Cash and Cash Equivalents                         $     175 $    240 Accounts Receivable                                      48       33 Like-Kind Exchange Funds Held in Escrow                  69        - Inventories                                              80       82 Deferred Tax Asset                                        7        7 Real Estate Development Properties                        4        5 Assets Held for Sale                                    132       64 Other Current Assets                                     21       25                                                    --------- --------                                                         536      456Timber and Timberlands, net                            3,863    3,949Property, Plant and Equipment, net                       179      202Investment in Grantor Trusts (at Fair Value)              25       27Other Assets                                              41       30                                                    --------- -------- Total Assets                                      $   4,644 $  4,664                                                    ========= ========                    LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt                 $     300 $    147 Accounts Payable                                         48       48 Interest Payable                                         39       29 Wages Payable                                            22       25 Taxes Payable                                            20       23 Deferred Revenue                                         22       13 Other Current Liabilities                                22       18                                                    --------- --------                                                         473      303Long-Term Debt                                         1,870    1,820Line of Credit                                           432      556Deferred Tax Liability                                     9       20Other Liabilities                                         72       64                                                    --------- -------- Total Liabilities                                     2,856    2,763                                                    --------- --------Commitments and Contingencies               STOCKHOLDERS' EQUITYPreferred Stock, $0.01 par value, authorized shares - 75.0, outstanding - none                         -        -Common Stock, $0.01 par value, authorized shares - 300.6, outstanding (net of Treasury Stock) - 171.6 at September 30, 2008, and 172.3 at December 31, 2007                                         2        2Additional Paid-In Capital                             2,222    2,204Retained Earnings                                        124      202Treasury Stock, at cost, Common Shares - 15.9 at September 30, 2008, and 14.6 at December 31, 2007      (560)    (509)Accumulated Other Comprehensive Income                     -        2                                                    --------- -------- Total Stockholders' Equity                            1,788    1,901                                                    --------- -------- Total Liabilities and Stockholders' Equity        $   4,644 $  4,664                                                    ========= ========

                   PLUM CREEK TIMBER COMPANY, INC.                CONSOLIDATED STATEMENTS OF CASH FLOWS                             (UNAUDITED)                                                    Nine Months Ended                                                   -------------------                                                   September September                                                      30,       30,                                                     2008      2007                                                   --------- ---------                                                      (In Millions)Cash Flows From Operating Activities:Net Income                                        $     138 $     164Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization  (includes $10 Lumber Impairment Loss in 2008  and $4 Loss Related to Forest Fires in 2007)          109       102 Basis of Real Estate Sold                               49        45 Expenditures for Real Estate Development                (6)      (13) Deferred Income Taxes                                  (11)       (7) Gain on Sales of Properties and Other Assets            (3)       (2) Deferred Revenue from Long-Term Gas Leases (Net  of Amortization)                                       17         - Working Capital Changes Impacting Cash Flow:     Like-Kind Exchange Funds                           (69)      (13)     Other Working Capital Changes                       (1)       18 Other                                                    2        10                                                   --------- ---------Net Cash Provided By Operating Activities               225       304                                                   --------- ---------Cash Flows From Investing Activities: Capital Expenditures (Excluding Timberland  Acquisitions)                                         (47)      (59) Timberlands Acquired                                   (65)      (96) Other                                                   (1)        5                                                   --------- ---------Net Cash Used In Investing Activities                  (113)     (150)                                                   --------- ---------Cash Flows From Financing Activities: Dividends                                             (216)     (222) Borrowings on Line of Credit                         1,275     2,179 Repayments on Line of Credit                        (1,399)   (2,246) Proceeds from Issuance of Long-Term Debt               250       350 Principal Payments and Retirement of Long-Term  Debt                                                  (50)     (125) Proceeds from Stock Option Exercises                    14         7 Acquisition of Treasury Stock                          (51)     (202)                                                   --------- ---------Net Cash Used In Financing Activities                  (177)     (259)                                                   --------- ---------Decrease In Cash and Cash Equivalents                   (65)     (105) Cash and Cash Equivalents:   Beginning of Period                                  240       273                                                   --------- ---------   End of Period                                  $     175 $     168                                                   ========= =========

                   PLUM CREEK TIMBER COMPANY, INC.                CONSOLIDATED STATEMENTS OF CASH FLOWS                             (UNAUDITED)                                                      Quarter Ended                                                   -------------------                                                   September September                                                      30,       30,                                                     2008      2007                                                   --------- ---------                                                      (In Millions)Cash Flows From Operating Activities:Net Income                                        $      69 $      59Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization  (includes $4 Loss Related to Forest Fires in  2007)                                                  33        37 Basis of Real Estate Sold                               27        22 Expenditures for Real Estate Development                (1)       (7) Deferred Income Taxes                                   (3)       (2) Deferred Revenue from Long-Term Gas Leases (Net  of Amortization)                                       (1)        - Working Capital Changes Impacting Cash Flow:     Like-Kind Exchange Funds                            (8)       45     Other Working Capital Changes                       16        32 Other                                                   (1)        7                                                   --------- ---------Net Cash Provided By Operating Activities               131       193                                                   --------- ---------Cash Flows From Investing Activities: Capital Expenditures (Excluding Timberland  Acquisitions)                                         (18)      (26) Timberlands Acquired                                   (64)      (87) Other                                                   (1)        1                                                   --------- ---------Net Cash Used In Investing Activities                   (83)     (112)                                                   --------- ---------Cash Flows From Financing Activities: Dividends                                              (72)      (73) Borrowings on Line of Credit                           520       583 Repayments on Line of Credit                          (457)     (414) Principal Payments and Retirement of Long-Term  Debt                                                   (3)      (26) Proceeds from Stock Option Exercises                    13         1 Acquisition of Treasury Stock                            -       (91) Other                                                    1         -                                                   --------- ---------Net Cash Provided By (Used In) Financing Activities                                               2       (20)                                                   --------- ---------Increase In Cash and Cash Equivalents                    50        61 Cash and Cash Equivalents:   Beginning of Period                                  125       107                                                   --------- ---------   End of Period                                  $     175 $     168                                                   ========= =========

Click Here for 3rd Quarter 2008 Financial Supplement (in PDF)

CONTACT:
Plum Creek Timber Company, Inc.
Investors: John Hobbs 1-800-858-5347
Media: Kathy Budinick 1-888-467-3751

SOURCE: Plum Creek Timber Company, Inc.