SEATTLE--(BUSINESS WIRE)--July 23, 2007--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced second quarter earnings of$60 million, or $0.34 per diluted share, on revenues of $395 million.Earnings for the second quarter of 2006 were $62 million, or $0.34 perdiluted share, on revenues of $380 million. Results for the secondquarter of 2007 include a $2 million after-tax gain on the sale of anindustrial mineral asset. As a result, income from continuingoperations for the quarter was $58 million, or $0.33 per dilutedshare.

Earnings for the first six months of 2007 were $105 million, or$0.59 per diluted share, on revenues of $764 million. Income fromcontinuing operations for the first six months of 2007 was $103million, or $0.58 per diluted share. Earnings for the first six monthsof 2006 were $156 million, or $0.85 per diluted share, on revenues of$794 million. Results for the first six months of 2006 included a $2million after-tax cumulative effect of accounting changes. As aresult, income from continuing operations for the first six months of2006 was $154 million, or $0.84 per diluted share.

Cash provided by operating activities in the second quarter of2007 totaled $73 million. The company ended the second quarter with$107 million in cash and cash equivalents.

"We continue to capitalize on the operational flexibility that ourbroad asset base provides with the objective of maximizing its totallong-term value," said Rick Holley, Plum Creek's president and chiefexecutive officer. "While our performance for the quarter is similarto last year's, we experienced weaker sawlog markets and strongerpulpwood markets than we did a year ago. Our near-term harvestdecisions responded to these markets. We increased our pulpwoodharvests to capture attractive price opportunities and decreased oursawlog harvests, allowing these valuable assets to continue to grow.Meanwhile, our land sales efforts are capturing excellent values forour lands with a variety of alternative uses."

Review of Operations

The Northern Resources segment reported operating profit of $14million compared to $21 million during the same period of 2006. Duringthe second quarter, average sawlog prices were approximately 3 percentlower than they were during the same period of 2006. The companyreduced its sawlog harvest in hardwood dominated regions where priceswere particularly weak. As a result, the Northern sawlog harvest was10 percent lower than the second quarter of 2006. Average pulpwoodprices were up modestly compared to the second quarter of 2006 whilepulpwood harvests were similar to the previous year's level.

Operating profit in the Southern Resources segment was $41million, down $7 million from the $48 million reported during the sameperiod of 2006. A combination of reduced sawlog demand and alower-value mix of sawlogs resulted in a 13 percent decline in thecompany's reported sawlog price compared to the same period of 2006.As planned, the company's harvest mix during the second quarterincluded a greater proportion of smaller-diameter sawlogs than theprior year. This lower-value harvest mix accounted for 3 percent ofthe reported 13 percent price decline for Southern sawlogs. While theoverall sawlog harvest was similar to last year's level, the companyshifted its harvest activity toward more attractive markets in westernareas of the South, as extremely dry conditions in the eastern regionsof the South allowed for excellent timberland access resulting indownward price pressure for timber in the region. The companyincreased its Southern pulpwood harvest approximately 15 percentcompared to the prior year in response to favorable pulpwood demandand 16 percent higher pulpwood prices.

The Real Estate segment reported revenue of $71 million andoperating income of $47 million. Second quarter 2006 Real Estatesegment revenue was $52 million resulting in operating income of $27million. During the second quarter the company sold approximately31,000 acres of land. These sales included 21,250 acres of small,non-strategic lands at average prices approaching $1,300 per acre, 500acres of conservation properties sold at more than $6,600 per acre,and approximately 8,700 acres of recreation property sold at anaverage price of more than $3,100 per acre. The sale of nearly 600acres of development properties captured more than $21,000 per acre.

The Manufacturing segment reported operating profit of $2 millioncompared to $10 million for the second quarter of 2006. The segment'sstrategic focus on higher-value specialty and industrial productsdrove a profitable quarter despite challenging commodity lumber andplywood markets. Lumber and MDF sales volumes were lower than thesecond quarter of 2006 while plywood sales volumes were up modestly.Lumber and plywood prices were down 12 percent and 11 percent,respectively, and MDF prices improved 10 percent over the secondquarter of 2006.

Share Repurchase

In early May, the company's board of directors increased thecompany's existing share repurchase authorization to $200 million.During the quarter the company repurchased $89 million, orapproximately 2.2 million shares, of common stock at an average priceof $40.29 per share. The shares repurchased during the quarterrepresent a 1.2 percent reduction in outstanding shares. As of June30, 2007, the company had 174.6 million shares of common stockoutstanding and $111 million remaining in its current share repurchaseauthorization.

Outlook

The company expects to report income from continuing operationsbetween $1.40 and $1.55 per share for the year. Third quarter earningsare expected to be between $0.43 and $0.48 per share.

"We're reducing the top end of our guidance range for the year bya nickel, based on our first-half performance and our expectations ofa relatively flat housing market during the second half of the year,"Holley continued. "While pulpwood markets remain healthy, sawlogmarkets continue to bounce along the bottom. Our real estate segmentcontinues to capture excellent values for our lands and we expect tomeet our segment business goals. We'll continue to exercise ouroperational flexibility and make our near-term decisions with a viewof maximizing long-term value."

The Northern Resources segment harvest is expected to increaseduring the third quarter from the seasonally low second quarterlevels, while in the Southern Resources segment, the company expectsto maintain its harvests near second quarter levels.

Log prices are expected to be fairly stable across the regionswith any price movements driven by temporary changes in local supplyand demand dynamics.

The company continues to expect Real Estate segment revenues forthe year to be between $330 million and $350 million. Of this amount,the sale of development properties is expected to be between $35million and $45 million. Third quarter revenues are expected to bebetween $110 million and $120 million.

The Manufacturing segment is expected to report improved resultsin the third quarter, due to strong pricing and demand for MDF andimproved specialty plywood markets.

"Disciplined and effective capital allocation remains our toppriority," Holley concluded. "We will continue to evaluate all ourinvestment opportunities with the ultimate goal of increasing the pershare value of our shareholders' investment."

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, July 23, 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 code7942042.

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)                                                          Six Months                                                             Ended                                                         -------------                                                         June    June                                                           30,    30,                                                          2007   2006                                                         ------  -----                                                         (In Millions,                                                          Except Per                                                             Share                                                            Amounts)Revenues:    Timber                                              $  399  $  407    Real Estate                                            110     113    Manufacturing                                          244     264    Other                                                   11      10                                                         ------  -----        Total Revenues                                     764     794                                                         ------  -----Costs and Expenses:    Cost of Goods Sold:     Timber                                                258     234     Real Estate                                            40      41     Manufacturing                                         236     240     Other                                                   1       1                                                         ------  -----        Total Cost of Goods Sold                           535     516    Selling, General and Administrative                     59      54                                                         ------  -----        Total Costs and Expenses                           594     570                                                         ------  -----Other Operating Income (Expense), net                        1       2                                                         ------  -----Operating Income                                           171     226Interest Expense, net                                       71      65                                                         ------  -----Income before Income Taxes                                 100     161Provision (Benefit) for Income Taxes                        (3)      7                                                         ------  -----Income From Continuing Operations                          103     154Gain on Sale of Properties, net of tax                       2       -                                                         ------  -----Income Before Cumulative Effect of Accounting Change       105     154Cumulative Effect of Accounting Change, net of tax           -       2                                                         ------  -----Net Income                                              $  105  $  156                                                         ======  =====Income From Continuing Operations per Share    - Basic                                             $ 0.58  $ 0.84    - Diluted                                           $ 0.58  $ 0.84Net Income per Share    - Basic                                             $ 0.59  $ 0.85    - Diluted                                           $ 0.59  $ 0.85Weighted Average Number of Shares Outstanding    - Basic                                              176.4   183.2    - Diluted                                            176.8   183.7

                   PLUM CREEK TIMBER COMPANY, INC.                  CONSOLIDATED STATEMENTS OF INCOME                             (UNAUDITED)                                                            Quarter                                                              Ended                                                          ------------                                                          June   June                                                            30,   30,                                                           2007  2006                                                          ------ -----                                                              (In                                                           Millions,                                                           Except Per                                                             Share                                                            Amounts)                                                          ------------Revenues: Timber                                                  $  190 $  193 Real Estate                                                 71     52 Manufacturing                                              129    130 Other                                                        5      5                                                          ------ -----   Total Revenues                                           395    380                                                          ------ -----Costs and Expenses: Cost of Goods Sold:   Timber                                                   124    113   Real Estate                                               23     25   Manufacturing                                            123    117   Other                                                      -      -                                                          ------ -----      Total Cost of Goods Sold                              270    255 Selling, General and Administrative                         30     26                                                          ------ -----         Total Costs and Expenses                           300    281                                                          ------ -----Other Operating Income (Expense), net                        (1)     -                                                          ------ -----Operating Income                                             94     99Interest Expense, net                                        35     34                                                          ------ -----Income before Income Taxes                                   59     65Provision for Income Taxes                                    1      3                                                          ------ -----Income from Continuing Operations                            58     62Gain on Sale of Properties, net of tax                        2      -                                                          ------ -----Net Income                                               $   60 $   62                                                          ====== =====Income from Continuing Operations per Share - Basic                                                 $ 0.33 $ 0.34 - Diluted                                               $ 0.33 $ 0.34Net Income per Share - Basic                                                 $ 0.34 $ 0.34 - Diluted                                               $ 0.34 $ 0.34Weighted Average Number of Shares Outstanding - Basic                                                  175.7  182.3 - Diluted                                                176.1  182.8

                   PLUM CREEK TIMBER COMPANY, INC.                     CONSOLIDATED BALANCE SHEETS                             (UNAUDITED)                                                       June   December                                                        30,      31,                                                       2007     2006                                                       -----  --------                                                       (In Millions,                                                         Except Per                                                        Share Amounts)                        ASSETSCurrent Assets:  Cash and Cash Equivalents                           $  107 $     273  Restricted Advance from Customer                         -         4  Accounts Receivable                                     47        40  Like-Kind Exchange Funds Held in Escrow                 58         -  Inventories                                             75        83  Deferred Tax Asset                                       7         7  Real Estate Development Properties                       4         3  Assets Held for Sale                                    86        82  Other Current Assets                                    20        21                                                       -----  --------                                                         404       513Timber and Timberlands - Net                           3,836     3,876Property, Plant and Equipment - Net                      206       216Investment in Grantor Trusts                              26        28Other Assets                                              34        28                                                       -----  --------  Total Assets                                        $4,506 $   4,661                                                       =====  ========                     LIABILITIESCurrent Liabilities:  Current Portion of Long-Term Debt                   $   72 $     125  Accounts Payable                                        42        42  Interest Payable                                        29        30  Wages Payable                                           18        27  Taxes Payable                                           22        24  Deferred Revenue                                        12        17  Other Current Liabilities                               15        16                                                       -----  --------                                                         210       281Long-Term Debt                                         1,920     1,617Line of Credit                                           345       581Deferred Tax Liability                                    20        25Other Liabilities                                         68        68                                                       -----  --------  Total Liabilities                                    2,563     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) - 174.6 at June 30, 2007, and 177.1 at December 31, 2006             2         2Additional Paid-In Capital                             2,199     2,190Retained Earnings                                        170       214Treasury Stock, at cost, Common Shares - 12.3 at June  (418)     (307) 30, 2007, and 9.5 at December 31, 2006Accumulated Other Comprehensive Income (Loss)           (10)      (10)                                                       -----  --------  Total Stockholders' Equity                           1,943     2,089                                                       -----  --------  Total Liabilities and Stockholders' Equity          $4,506 $   4,661                                                       =====  ========

                   PLUM CREEK TIMBER COMPANY, INC.                CONSOLIDATED STATEMENTS OF CASH FLOWS                             (UNAUDITED)                                                         Six Months                                                            Ended                                                       ---------------                                                        June    June                                                         30,     30,                                                        2007    2006                                                       ------- -------                                                        (In Millions)                                                       ---------------Cash Flows From Operating Activities:Net Income                                            $   105 $   156Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization                  65      60 Basis of Real Estate Sold                                 23      23 Deferred Income Taxes                                     (5)      - Gain on Sales of Properties and Other Assets              (2)      - Working Capital Changes Impacting Cash Flow:     Like-Kind Exchange Funds                             (58)     20     Other Working Capital Changes                        (14)     (6) Expenditures for Real Estate Development                  (6)     (2) Other                                                      3       1                                                       ------- -------Net Cash Provided By Operating Activities                 111     252                                                       ------- -------Cash Flows From Investing Activities: Capital Expenditures (Excluding Timberland  Acquisitions)                                           (33)    (36) Timberlands Acquired                                      (9)    (17) Proceeds from Sales of Properties and Other Assets         2       1 Other                                                      2      (3)                                                       ------- -------Net Cash Used In Investing Activities                     (38)    (55)                                                       ------- -------Cash Flows From Financing Activities: Dividends                                               (149)   (147) Borrowings on Line of Credit                           1,596   1,474 Repayments on Line of Credit                          (1,832) (1,453) Repayment of Short-Term Debt                               -     (50) Proceeds from Issuance of Long-Term Debt                 350     216 Principal Payments and Retirement of Long-Term Debt      (99)    (29) Proceeds from Stock Option Exercises                       6       3 Acquisition of Treasury Stock                           (111)   (184)                                                       ------- -------Net Cash Used In Financing Activities                    (239)   (170)                                                       ------- -------Increase (Decrease) In Cash and Cash Equivalents         (166)     27 Cash and Cash Equivalents:   Beginning of Period                                    273     369                                                       ------- -------   End of Period                                      $   107 $   396                                                       ======= =======

                   PLUM CREEK TIMBER COMPANY, INC.                CONSOLIDATED STATEMENTS OF CASH FLOWS                             (UNAUDITED)                                                         Quarter Ended                                                         -------------                                                           June 30,                                                          2007   2006                                                         ------- -----                                                         (In Millions)                                                         -------------Cash Flows From Operating Activities:Net Income                                              $    60 $  62Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities: Depreciation, Depletion and Amortization                    32    29 Basis of Real Estate Sold                                   14    13 Deferred Income Taxes                                       (2)   (1) Gain on Sale of Properties and Other Assets                 (2)    - Working Capital Changes Impacting Cash Flow:     Like-Kind Exchange Funds                               (48)   (9)     Other Working Capital Changes                           17    14 Expenditures for Real Estate Development                    (4)   (2) Other                                                        6     6                                                         ------- -----Net Cash Provided By Operating Activities                    73   112                                                         ------- -----Cash Flows From Investing Activities: Capital Expenditures (Excluding Timberland  Acquisitions)                                             (22)  (19) Timberlands Acquired                                        (9)  (17) Proceeds from Sales of Properties and Other Assets           2     1 Other                                                        -    (3)                                                         ------- -----Net Cash Used In Investing Activities                       (29)  (38)                                                         ------- -----Cash Flows From Financing Activities: Dividends                                                  (74)  (73) Borrowings on Line of Credit                               947   811 Repayments on Line of Credit                            (1,255) (790) Repayment of Short-Term Debt                                 -   (50) Proceeds from Issuance of Long-Term Debt                   350   216 Principal Payments and Retirement of Long-Term Debt        (27)  (28) Proceeds from Stock Option Exercises                         1     1 Acquisition of Treasury Stock                              (89) (184)                                                         ------- -----Net Cash Used In Financing Activities                      (147)  (97)                                                         ------- -----Decrease In Cash and Cash Equivalents                      (103)  (23) Cash and Cash Equivalents:   Beginning of Period                                      210   419                                                         ------- -----   End of Period                                        $   107 $ 396                                                         ======= =====

Click Here for 2nd Quarter 2007 Financial Supplements (in PDF)

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

SOURCE: Plum Creek Timber Company, Inc.