SEATTLE--(BUSINESS WIRE)--Oct. 22, 2007--Plum Creek TimberCompany, Inc., (NYSE: PCL) today announced third quarter earnings of$59 million, or $0.34 per diluted share, on revenues of $407 million.Third quarter earnings included a $4 million non-cash expense, or$0.02 per diluted share, related to fire losses experienced in Montanaduring the quarter. Earnings for the third quarter of 2006 were $92million, or $0.51 per diluted share, on revenues of $454 million.

Earnings for the first nine months of 2007 were $164 million, or$0.93 per diluted share, on revenues of $1.17 billion. Earnings forthe first nine months of 2006 were $248 million, or $1.36 per dilutedshare, on revenues of $1.25 billion.

Results for the first nine months of 2007 include a $2 millionafter-tax gain on the sale of an industrial mineral asset while theresults for the same period of 2006 include a $2 million after-taxcumulative benefit from accounting changes. As a result, income fromcontinuing operations were $162 million, or $0.92 per diluted share,for the first nine months of 2007 and $246 million, or $1.35 perdiluted share, for the same period of 2006.

Cash provided by operating activities during the first nine monthsof the year totaled $304 million. The company ended the third quarterwith $168 million in cash and cash equivalents.

"While the past quarter's performance was below our initialexpectations, much of the shortfall is the result of certain landsales moving from the third quarter to the fourth quarter. We continueto expect to report very good results for this segment in 2007," saidRick Holley, president and CEO. "Timber markets remained stable overthe past quarter in nearly every region while an unusually active fireseason in western Montana curtailed our harvest there and damagedabout three percent of our timberland in the state. The fire damageand lower harvest activity led to uncharacteristically low operatingprofit for our Northern Resources segment."

Review of Operations

The Northern Resources segment reported an $8 million operatingprofit that includes the impact of the $4 million non-cash fire loss.During the quarter, approximately 41,000 acres of company lands inMontana were damaged by wildfires. Segment operating profit for thesame period of 2006 was $25 million. The company halted timberharvests in Montana for approximately five weeks due to extreme firedanger. As a result, segment sawlog harvests were approximately150,000 tons below initial plans and 14 percent below thethird-quarter 2006 levels. This harvest deferral reduced operatingprofit by an estimated $4 million. Average sawlog prices of $76 perton were approximately 4 percent lower than the third quarter of 2006.As expected, pulpwood prices were approximately 5 percent lower thanthe same period of 2006 as pulpwood demand in the Northeast softenedover the past year. The company reduced its pulpwood harvest in theNortheast, which was the primary reason for the 14 percent decline inthe segment's pulpwood harvest compared to the same period of 2006.

Operating profit in the Southern Resources segment was $39 millionfor the third quarter of 2007, up slightly from third quarterperformance of 2006. Sawlog prices were approximately 8 percent lowerthan the same period of 2006. Regional market differences were evidentwith average sawlog prices down approximately 13 percent in dry,eastern portions of the South, while markets in western regions of theSouth were down an average of 4 percent over the past year. Thecompany took advantage of some attractive spot-market pricingopportunities for sawlogs in certain markets resulting in a 6 percentincrease in the sawlog harvest compared to the same period of 2006.Pulp and paper mill demand for pulpwood remained good in most Southernregions and prices moved to over $9 per ton, gaining approximately 17percent over the prior year's level. The Southern pulpwood harvest wasapproximately 4 percent lower than the same period last year.

The Real Estate segment reported revenue of $94 million andoperating income of $61 million compared to revenue of $129 millionand operating income of $72 million for the third quarter of 2006.Third quarter 2006 results were particularly strong as the result of asingle $43 million development property sale. Interest in small ruralproperties and per acre prices remained resilient during the thirdquarter of 2007. During the third quarter the company soldapproximately 45,000 acres of land. These sales included nearly 31,000acres of small, non-strategic lands at an average price of $1,400 peracre and over 10,000 acres of recreation property sold at an averageprice of $3,675 per acre. The sale of nearly 900 acres of developmentproperties captured more than $8,400 per acre. The company also soldapproximately 2,650 acres of conservation lands for approximately$2,150 per acre.

The Manufacturing segment reported operating income of $2 millioncompared to $6 million for the third quarter of 2006. Earnings for thecompany's Medium Density Fiberboard (MDF) and plywood businessesdecreased somewhat due to higher raw material costs, particularlyresins. Lumber demand remained weak and sales volume was 12 percentlower than the same period of 2006. Lumber prices remained low andwere similar to the price levels experienced during the third quarterof 2006.

Timberland Acquisition and Share Repurchase

During the quarter the company acquired approximately 33,000 acresof Oregon timberlands for $80 million in a privately negotiatedtransaction. These well-managed timberlands complement the company'sownership in the coastal Oregon markets.

The company also repurchased $91 million, or approximately 2.3million shares, of common stock at an average price of $38.94 pershare during the third quarter. For the first nine months of 2007, thecompany has repurchased approximately 5.1 million shares, representinga 2.9 percent reduction in outstanding shares, at an average price of$39.40. As of Sept. 30, 2007, the company had 172.3 million shares ofcommon stock outstanding and $20 million remaining in its currentshare repurchase authorization.

Outlook

The company expects to report income between $1.33 and $1.38 pershare for the full year, including the impact of the $0.02 per sharenon-cash fire loss.

Log prices are expected to remain stable across the South duringthe fourth quarter with any price movements driven by temporarychanges in local supply and demand dynamics. Sawlog markets in easternportions of the South remain challenging, the result of a combinationof dry weather conditions and weak lumber markets. With prices atunattractive levels in certain local markets, the company plans toreduce its Southern sawlog harvest by approximately 200,000 tons fromthird-quarter levels.

"We manage Plum Creek with the goal of maximizing the long-termvalue of our assets," continued Holley. "Although our decision toreduce harvests in certain markets impacts our near-term results, itallows us to protect and create long-term value. Those assets continueto grow and appreciate, enhancing the value of the company."

The Northern Resources segment harvest is expected to increasefrom the fire-restricted, third-quarter levels. Sawlog prices in thePacific Northwest have softened and, as a result, the company expectsaverage sawlog prices in the Northern segment to decline fromthird-quarter averages. Pulpwood prices in the segment are expected toremain stable.

The company expects Real Estate segment revenues for the year tobe on the low end of the $330 to $350 million range. Of this amount,the sale of development properties is expected to be between $35million and $45 million.

The Manufacturing segment is expected to break even during thefourth quarter.

"As always, our top priority remains disciplined and effectivecapital allocation," Holley concluded. "Our ultimate goal isincreasing the per share value of our shareholders' investment andwe'll continue to evaluate all of our operating and investment optionsto achieve that goal."

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, Oct. 22, 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 code7942594.

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 8.2 million acres of timberlands in majortimber producing regions of the United States and 10 wood productsmanufacturing 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 30,           September 30,                                     2007                   2006                               ----------------        ---------------                               (In Millions, Except Per Share Amounts)Revenues: Timber                       $           589         $          603 Real Estate                              204                    242 Manufacturing                            363                    388 Other                                     15                     15                               ----------------        ---------------   Total Revenues                       1,171                  1,248                               ----------------        ---------------Costs and Expenses: Cost of Goods Sold:   Timber                                 391                    361   Real Estate                             72                     96   Manufacturing                          349                    353   Other                                    2                      2                               ----------------        ---------------      Total Cost of Goods Sold            814                    812 Selling, General and  Administrative                           88                     78                               ----------------        ---------------         Total Costs and          Expenses                        902                    890                               ----------------        ---------------Other Operating Income (Expense), net                             -                      2                               ----------------        ---------------Operating Income                          269                    360Interest Expense, net                     109                     98                               ----------------        ---------------Income before Income Taxes                160                    262Provision (Benefit) for Income Taxes                                     (2)                    16                               ----------------        ---------------Income From Continuing Operations                               162                    246Gain on Sale of Properties, net of tax                                 2                      -                               ----------------        ---------------Income Before Cumulative Effect of Accounting Change                     164                    246Cumulative Effect of Accounting Change, net of tax              -                      2                               ----------------        ---------------Net Income                    $           164         $          248                               ================        ===============Per Share Amounts:Income From Continuing Operations per Share - Basic                      $          0.93         $         1.35 - Diluted                    $          0.92         $         1.35Net Income per Share - Basic                      $          0.94         $         1.36 - Diluted                    $          0.93         $         1.36Weighted Average Number of Shares Outstanding - Basic                                175.3                  181.7 - Diluted                              175.7                  182.1

                   PLUM CREEK TIMBER COMPANY, INC.                  CONSOLIDATED STATEMENTS OF INCOME                             (UNAUDITED)                                            Quarter Ended                               ---------------------------------------                                  September 30,       September 30,                                       2007                2006                               -------------------- ------------------                               (In Millions, Except Per Share Amounts)Revenues: Timber                       $             190    $              196 Real Estate                                 94                   129 Manufacturing                              119                   124 Other                                        4                     5                               -------------------- ------------------   Total Revenues                           407                   454                               -------------------- ------------------Costs and Expenses: Cost of Goods Sold:   Timber                                   133                   127   Real Estate                               32                    55   Manufacturing                            113                   113   Other                                      1                     1                               -------------------- ------------------      Total Cost of Goods       Sold                                 279                   296 Selling, General and  Administrative                             29                    24                               -------------------- ------------------         Total Costs and          Expenses                          308                   320                               -------------------- ------------------Other Operating Income (Expense), net                              (1)                    -                               -------------------- ------------------Operating Income                             98                   134Interest Expense, net                        38                    33                               -------------------- ------------------Income before Income Taxes                   60                   101Provision for Income Taxes                    1                     9                               -------------------- ------------------Net Income                    $              59    $               92                               ==================== ==================Per Share Amounts:Net Income per Share - Basic                      $            0.34    $             0.51 - Diluted                    $            0.34    $             0.51Weighted Average Number of Shares Outstanding - Basic                                  173.2                 178.5 - Diluted                                173.6                 178.9

                   PLUM CREEK TIMBER COMPANY, INC.                     CONSOLIDATED BALANCE SHEETS                             (UNAUDITED)                                September 30,          December 31,                                    2007                   2006                              -----------------      -----------------                              (In Millions, Except Per Share Amounts)           ASSETSCurrent Assets: Cash and Cash Equivalents   $             168      $            273 Restricted Advance from  Customer                                   -                     4 Accounts Receivable                        49                    40 Like-Kind Exchange Funds  Held in Escrow                            13                     - Inventories                                73                    83 Deferred Tax Asset                          7                     7 Real Estate Development  Properties                                 5                     3 Assets Held for Sale                       70                    82 Other Current Assets                       22                    21                              -----------------      -----------------                                           407                   513Timber and Timberlands - Net             3,918                 3,876Property, Plant and Equipment - Net                           202                   216Investment in Grantor Trusts                26                    28Other Assets                                30                    28                              -----------------      ----------------- Total Assets                $           4,583      $          4,661                              =================      =================         LIABILITIESCurrent Liabilities: Current Portion of Long-  Term Debt                  $              47      $            125 Accounts Payable                           48                    42 Interest Payable                           40                    30 Wages Payable                              19                    27 Taxes Payable                              28                    24 Deferred Revenue                           19                    17 Other Current Liabilities                  17                    16                              -----------------      -----------------                                           218                   281Long-Term Debt                           1,919                 1,617Line of Credit                             514                   581Deferred Tax Liability                      18                    25Other Liabilities                           74                    68                              -----------------      ----------------- Total Liabilities                       2,743                 2,572                              -----------------      -----------------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) -  172.3 at September 30,  2007,  and 177.1 at December 31,   2006                                      2                     2Additional Paid-In Capital               2,201                 2,190Retained Earnings                          156                   214Treasury Stock, at cost, Common Shares - 14.6 at September 30, 2007,                      (509)                 (307) and 9.5 at December 31,  2006Accumulated Other Comprehensive Income (Loss)               (10)                  (10)                              -----------------      ----------------- Total Stockholders' Equity              1,840                 2,089                              -----------------      ----------------- Total Liabilities and  Stockholders' Equity       $           4,583      $          4,661                              =================      =================

                   PLUM CREEK TIMBER COMPANY, INC.                CONSOLIDATED STATEMENTS OF CASH FLOWS                             (UNAUDITED)                                               Nine Months Ended                                         -----------------------------                                         September 30,  September 30,                                             2007            2006                                         -------------  --------------                                                 (In Millions)Cash Flows From Operating Activities:Net Income                              $         164  $          248Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization  (Includes $4 Loss Related to Forest  Fires in 2007)                                  102              94 Basis of Real Estate Sold                         45              66 Deferred Income Taxes                             (7)              8 Gain on Sales of Properties and Other  Assets                                           (2)              - Working Capital Changes Impacting Cash  Flow:     Like-Kind Exchange Funds                     (13)            (10)     Other Working Capital Changes                 18              18 Expenditures for Real Estate  Development                                     (13)             (5) Other                                             10               1                                         -------------  --------------Net Cash Provided By Operating Activities                                       304             420                                         -------------  --------------Cash Flows From Investing Activities: Capital Expenditures (Excluding  Timberland Acquisitions)                        (59)            (60) Timberlands Acquired                             (96)            (22) Proceeds from Sales of Properties and  Other Assets                                      3               1 Other                                              2              (4)                                         -------------  --------------Net Cash Used In Investing Activities            (150)            (85)                                         -------------  --------------Cash Flows From Financing Activities: Dividends                                       (222)           (219) Borrowings on Line of Credit                   2,179           2,167 Repayments on Line of Credit                  (2,246)         (2,144) Repayment of Short-Term Debt                       -             (50) Proceeds from Issuance of Long-Term  Debt                                            350             216 Principal Payments and Retirement of  Long-Term Debt                                 (125)            (29) Proceeds from Stock Option Exercises               7               6 Acquisition of Treasury Stock                   (202)           (262)                                         -------------  --------------Net Cash Used In Financing Activities            (259)           (315)                                         -------------  --------------Increase (Decrease) In Cash and Cash Equivalents                                     (105)             20 Cash and Cash Equivalents:   Beginning of Period                            273             369                                         -------------  --------------   End of Period                        $         168  $          389                                         =============  ==============

                   PLUM CREEK TIMBER COMPANY, INC.                CONSOLIDATED STATEMENTS OF CASH FLOWS                             (UNAUDITED)                                                 Quarter Ended                                          ----------------------------                                          September 30,  September 30,                                              2007           2006                                          ----------------------------                                                 (In Millions)                                          ----------------------------Cash Flows From Operating Activities:Net Income                               $         59   $          92Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization  (Includes $4 Loss Related to Forest  Fires in 2007)                                   37              34 Basis of Real Estate Sold                         22              43 Deferred Income Taxes                             (2)              8 Working Capital Changes Impacting Cash  Flow:     Like-Kind Exchange Funds                      45             (30)     Other Working Capital Changes                 32              24 Expenditures for Real Estate Development          (7)             (3) Other                                              7               -                                          ------------   -------------Net Cash Provided By Operating Activities         193             168                                          ------------   -------------Cash Flows From Investing Activities: Capital Expenditures (Excluding  Timberland Acquisitions)                        (26)            (24) Timberlands Acquired                             (87)             (5) Proceeds from Sales of Properties and  Other Assets                                      1               - Other                                              -              (1)                                          ------------   -------------Net Cash Used In Investing Activities            (112)            (30)                                          ------------   -------------Cash Flows From Financing Activities: Dividends                                        (73)            (72) Borrowings on Line of Credit                     583             693 Repayments on Line of Credit                    (414)           (691) Principal Payments and Retirement of  Long-Term Debt                                  (26)              - Proceeds from Stock Option Exercises               1               3 Acquisition of Treasury Stock                    (91)            (78)                                          ------------   -------------Net Cash Used In Financing Activities             (20)           (145)                                          ------------   -------------Increase (Decrease) In Cash and Cash Equivalents                                       61              (7) Cash and Cash Equivalents:   Beginning of Period                            107             396                                          ------------   -------------   End of Period                         $        168   $         389                                          ============   =============

Click Here for 3rd Quarter 2007 Financial Supplements (in PDF)

CONTACT:
Plum Creek Timber Company, Inc.
Investors:
John Hobbs, 1-800-858-5347
or
Media:
Robin Keegan, 1-800-467-3751

SOURCE: Plum Creek Timber Company, Inc.