SEATTLE--(BUSINESS WIRE)--July 24, 2006--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced second quarter earnings of$62 million, or $0.34 per diluted share, on revenues of $380 million.Earnings for the second quarter of 2005 were $69 million, or $0.37 perdiluted share, on revenues of $358 million.

Earnings for the first six months of 2006 were $156 million, or$0.85 per diluted share, on revenues of $794 million. Earnings for thefirst six months of 2005 were $191 million, or $1.03 per dilutedshare, on revenues of $758 million. Results for the first six monthsof 2006 included a $2 million after-tax cumulative effect ofaccounting changes. As a result, income from continuing operations forthe first six months of 2006 was $154 million, or $0.84 per fullydiluted share. Results for the first six months of 2005 included a $20million after-tax gain on the sale of coal assets. As a result, incomefrom continuing operations for the first six months of 2005 was $171million, or $0.93 per fully diluted share.

During the quarter, the company completed a previously announced$200 million share repurchase program. In early June, the company'sboard of directors authorized a new $200 million share repurchaseprogram. During the quarter the company repurchased approximately 5.1million shares of common stock at an average price of $35.73 pershare. The shares repurchased during the quarter represent a 2.8percent reduction in outstanding shares.

Cash provided by operating activities in the second quarter of2006 totaled $112 million. During the quarter the company paid $73million in dividends and repurchased approximately $184 million ofcommon stock. The company ended the second quarter with $396 millionin cash and cash equivalents.

"Timber markets experienced good demand and steady prices duringthe quarter," said Rick Holley, president and chief executive officer."In most regions of the country, timber prices were similar to pricesexperienced during the first quarter of this year and the secondquarter of last year. Even in the oversupplied log markets in thewestern regions of the South, timber prices generally held at levelswe experienced during the first quarter of 2006.

"Revenue and cash flow from our real estate segment remains ontrack for the year as the result of strong interest in rural lands. Wecontinue to realize higher prices for recreation and higher and betteruse properties throughout the nation and are positioning additionalproperties to capture the most value. The company has identified over1.7 million acres of timberlands with higher values. We expect to sellthese properties over time for conservation, recreation or developmentpurposes.

"In addition, growth in demand from industrial markets for plywoodand medium density fiberboard has contributed to improvedprofitability in our manufacturing segment."

Review of Operations

The Northern Resources segment reported operating profit of $21million compared to $19 million during the same period of 2005. Thesegment's second quarter harvest was 27 percent higher than the sameperiod of 2005 due in large part to harvests from Michigan timberlandsacquired during the fourth quarter of 2005. The harvest from theserecently acquired lands was primarily responsible for theyear-over-year increase in operating profit. Average log prices werelargely unchanged when compared to the same period of 2005.

Operating profit in the Southern Resources segment was $48 millioncompared to $62 million during the same period of 2005. Harvestlevels, log prices and profitability in eastern regions of the Southwere similar to the second quarter of 2005. The $14 million decline insegment operating profit was confined to western portions of theSouth. In this region, log markets remained oversupplied as a resultof hurricane salvage logging and dry weather that resulted inincreased harvesting activity by many timberland owners. As a resultof this temporary oversupply, log prices in the most severely affectedmarkets were down as much as 8 percent for sawlogs and 25 percent forpulpwood when compared to the same period of 2005. As planned, PlumCreek reduced harvests in the region and will resume harvesting whenlog prices return to more attractive levels.

As a result of the oversupply in western regions of the South andstable markets in eastern regions of the South, average sawlog pricesfor the Southern Resources segment were down approximately 4 percentand average pulpwood prices were down approximately 11 percent whencompared to the second quarter of 2005. The company's SouthernResources segment harvest volumes were 10 percent lower than the sameperiod of 2005, the result of the harvest deferrals in westernportions of the South.

The Real Estate segment reported revenue of $52 million andoperating income of $27 million. Second quarter 2005 Real Estatesegment revenue was $36 million and resulted in operating income of$19 million. During the second quarter the company sold approximately21,800 acres of land. The company sold approximately 12,000 acres ofsmall, non-strategic timberlands at average prices approaching $1,300per acre. These lands are generally small tracts of lower productivitytimberlands. The sale of 2,200 acres of conservation propertiescaptured approximately $1,500 per acre while 7,200 acres of recreationproperty were sold at an average price of $4,100 per acre. The sale of645 acres of development properties captured approximately $5,300 peracre, or over $3 million.

The Manufacturing segment reported operating profit of $10 millioncompared to $8 million for the second quarter of 2005. The company'smedium density fiberboard (MDF) business accounted for most of the $2million increase in profitability compared to the second quarter of2005. MDF prices and production volumes were up 5 percent and 14percent respectively. Lumber prices were similar to the second quarterof 2005, while the company's industrial plywood prices increasedapproximately 8 percent compared to the second quarter of 2005.

Outlook

The company expects to report income from continuing operationsbetween $1.65 and $1.75 per share for the year. Third quarter earningsare expected to be between $0.46 and $0.51 per share.

"We expect timber demand to remain good despite the price declinesin lumber during the second quarter," continued Holley. "Underlyingdemand for building materials remains strong by historic standards andindustrial demand for solid wood products is healthy. However, lumbercustomers are taking a more conservative approach to log procurementgiven the 9 percent decline in framing lumber prices between the endof March and the end of June. Improving pulp and paper markets anddemand from new Southern oriented strand board mills are translatinginto increased pulpwood demand.

"In our Real Estate segment, we continue to experience strongdemand for rural land. This has translated into a trend of increasingper-acre prices from the sale of higher and better use lands. Wesigned two additional joint venture agreements during the quarter andnow have five development joint ventures that we believe will make animportant contribution to our long-term cash flow in coming years."

Across all regions, log customers have been able to maintain fulllog inventories. While overall log demand remains good, lumbermanufacturers are generally buying just to satisfy their immediateneeds. The company expects full log inventories at sawmills and lowerlumber prices to keep sawlog customers cautious during the thirdquarter. As a result, sawlog prices in most markets are expected tohold at current levels while some markets may experience modest priceerosion in response to lower lumber production in some regions.

The Northern Resources segment harvest is expected to increaseduring the third quarter from the seasonally low second quarterlevels. In the Southern Resources segment, the company expects toincrease pulpwood harvests during the second half of the year inresponse to increasing demand from pulpwood customers in the region.During the first half of the year, the company reduced harvests inwestern regions of the South due to the abundant supply of hurricanesalvage wood in these markets.

The company continues to expect Real Estate segment revenues forthe year to be between $280 million and $300 million. Of this amount,the sale of development properties is expected to be between $60million and $65 million. Third quarter revenues are expected to be thehighest of the year, between $100 million and $110 million, withdevelopment property sales accounting for up to $45 million of thethird quarter revenue.

Plum Creek's real estate entitlement and development activitiesare conducted through a taxable REIT subsidiary. As income grows fromthe development business, the company expects tax expense to grow aswell. Tax expense is expected to increase during the second half ofthe year due to the growth of this business. As a result, overallcorporate tax expense is expected to be between $9 million and $11million during the third quarter.

The Manufacturing segment is expected to continue to report goodresults. Strong MDF demand should benefit the segment during thesecond half of the year while slower lumber and plywood markets areexpected to offset the improved MDF performance.

"Plum Creek has very valuable timber and land assets and we areexecuting long-term strategies designed to maximize the value of theseassets for our shareholders. Just as we are confident in the assets wemanage, we are also confident in the attractive long-term demographictrends that will drive the increasing value for our land and timberassets. We also recognize that effective capital allocation is acrucial component of long-term shareholder value delivery. Our recentshare repurchases represent an important method to deliver value toour shareholders," concluded Holley.

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, July 24, at 5:00p.m. EDT (2:00 p.m. PDT). A live webcast of the conference call may beaccessed through Plum Creek's Internet 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, 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 code3473683.

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

Plum Creek is the largest and most geographically diverse privatelandowner in the nation with more than 8 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)                                                          Six Months                                                             Ended                                                         -------------                                                          June   June                                                           30,    30,                                                          2006   2005                                                         ------ ------                                                         (In Millions,                                                          Except Per                                                             Share                                                            Amounts)Revenues:   Timber                                               $  407 $  392   Real Estate                                             113    104   Manufacturing                                           264    257   Other                                                    10      5                                                         ------ ------     Total Revenues                                        794    758                                                         ------ ------Costs and Expenses:   Cost of Goods Sold:     Timber                                                234    201     Real Estate                                            41     40     Manufacturing                                         240    235     Other                                                   1      1                                                         ------ ------        Total Cost of Goods Sold                           516    477   Selling, General and Administrative                      52     45                                                         ------ ------           Total Costs and Expenses                        568    522                                                         ------ ------Operating Income                                           226    236Interest Expense, net                                       65     54                                                         ------ ------Income before Income Taxes                                 161    182Provision for Income Taxes                                   7     11                                                         ------ ------Income from Continuing Operations                          154    171Gain on Sale of Properties, net of tax                       -     20                                                         ------ ------Net Income Before Cumulative Effect of Accounting Change   154    191Cumulative Effect of Accounting Change, net of tax           2      -                                                         ------ ------Net Income                                              $  156 $  191                                                         ====== ======Income from Continuing Operations per Share   - Basic                                              $ 0.84 $ 0.93   - Diluted                                            $ 0.84 $ 0.93Net Income per Share   - Basic                                              $ 0.85 $ 1.04   - Diluted                                            $ 0.85 $ 1.03Weighted Average Number of Shares Outstanding   - Basic                                               183.2  183.9   - Diluted                                             183.7  184.6                    PLUM CREEK TIMBER COMPANY, INC.                   CONSOLIDATED STATEMENTS OF INCOME                              (UNAUDITED)                                                          Quarter                                                           Ended                                                         ----------                                                       June      June                                                        30,       30,                                                       2006      2005                                                      ------    ------                                                        (In Millions,                                                           Except                                                          Per Share                                                          Amounts)Revenues:   Timber                                            $  193    $  192   Real Estate                                           52        36   Manufacturing                                        130       128   Other                                                  5         2                                                      ------    ------     Total Revenues                                     380       358                                                      ------    ------Costs and Expenses:   Cost of Goods Sold:     Timber                                             113        99     Real Estate                                         25        16     Manufacturing                                      117       117     Other                                                -         -                                                      ------    ------        Total Cost of Goods Sold                        255       232   Selling, General and Administrative                   26        24                                                      ------    ------           Total Costs and Expenses                     281       256                                                      ------    ------Operating Income                                         99       102Interest Expense, net                                    34        27                                                      ------    ------Income before Income Taxes                               65        75Provision for Income Taxes                                3         6                                                      ------    ------Net Income                                           $   62    $   69                                                      ======    ======Net Income per Share   - Basic                                           $ 0.34    $ 0.37   - Diluted                                         $ 0.34    $ 0.37Weighted Average Number of Shares Outstanding   - Basic                                            182.3     184.0   - Diluted                                          182.8     184.6                    PLUM CREEK TIMBER COMPANY, INC.                      CONSOLIDATED BALANCE SHEETS                              (UNAUDITED)                                                       June      Dec.                                                        30,       31,                                                       2006      2005                                                      ------  --------                                                        (In Millions,                                                           Except                                                         Per Share                                                          Amounts)                                ASSETSCurrent Assets:    Cash and Cash Equivalents                        $  396  $    369    Restricted Advance from Customer                     20        23    Accounts Receivable                                  56        44    Like-Kind Exchange Funds Held in Escrow              10        30    Inventories                                          72        75    Deferred Tax Asset                                   17        17    Real Estate Development Properties                   25        26    Assets Held for Sale                                 65        43    Other Current Assets                                 17        16                                                      ------  --------                                                        678       643Timber and Timberlands -  Net                         3,845     3,887Property, Plant and Equipment  -  Net                   226       234Investment in Grantor Trusts                             25        26Other Assets                                             23        22                                                      ------  --------    Total Assets                                     $4,797  $  4,812                                                      ======  ========                              LIABILITIESCurrent Liabilities:    Current Portion of Long-Term Debt                $  231  $    161    Short-Term Debt                                       -        50    Accounts Payable                                     40        45    Interest Payable                                     31        30    Wages Payable                                        16        25    Taxes Payable                                        21        18    Deferred Revenue                                     41        35    Other Current Liabilities                            16        11                                                      ------  --------                                                        396       375Long-Term Debt                                        1,643     1,524Lines of Credit                                         516       495Deferred Tax Liability                                   39        39Other Liabilities                                        47        54                                                      ------  --------    Total Liabilities                                 2,641     2,487                                                      ------  --------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, issued (including Treasury Stock) - 186.4 at June 30, 2006, and 186.2 at December 31, 2005            2         2Additional Paid-In Capital                            2,184     2,179Retained Earnings                                       195       186Treasury Stock, at cost, Common Shares - 7.2 at June 30, 2006, and 2.0 at December 31, 2005                (228)      (44)Other Equity                                              3         2                                                      ------  --------    Total Stockholders' Equity                        2,156     2,325                                                      ------  --------    Total Liabilities and Stockholders' Equity       $4,797  $  4,812                                                      ======  ========                    PLUM CREEK TIMBER COMPANY, INC.                 CONSOLIDATED STATEMENTS OF CASH FLOWS                              (UNAUDITED)                                                    Six Months Ended                                                       ----------                                                      June      June                                                       30,       30,                                                      2006      2005                                                     -------   -------                                                       (In Millions)Cash Flows From Operating Activities:Net Income                                          $   156   $   191Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities:    Depreciation, Depletion and Amortization             60        55    Basis of Real Estate Sold                            23        28    Deferred Income Taxes                                 -        (1)    Gain on Sales of Properties and Other Assets          -       (21)    Working Capital Changes Impacting Cash Flow:        Like-Kind Exchange Funds                         20       (46)        Other Working Capital Changes                    (6)       (8)    Other                                                (1)        -                                                     -------   -------Net Cash Provided By Operating Activities               252       198                                                     -------   -------Cash Flows From Investing Activities:    Capital Expenditures (Excluding Timberland     Acquisitions)                                      (36)      (28)    Timberlands Acquired                                (17)      (50)    Proceeds from Sales of Properties and Other     Assets                                               1         5    Other                                                (3)        -                                                     -------   -------Net Cash Used In Investing Activities                   (55)      (73)                                                     -------   -------Cash Flows From Financing Activities:    Dividends                                          (147)     (140)    Borrowings on Line of Credit                      1,474     1,140    Repayments on Line of Credit                     (1,453)   (1,093)    Proceeds from Issuance of Short-Term Debt             -        50    Repayment of Short-Term Debt                        (50)        -    Proceeds from Issuance of Long-Term Debt            216         -    Principal Payments and Retirement of Long-Term     Debt                                               (29)      (49)    Proceeds from Stock Option Exercises                  3         4    Acquisition of Treasury Stock                      (184)        -                                                     -------   -------Net Cash Used In Financing Activities                  (170)      (88)                                                     -------   -------Increase In Cash and Cash Equivalents                    27        37    Cash and Cash Equivalents:      Beginning of Period                               369       347                                                     -------   -------      End of Period                                 $   396   $   384                                                     =======   =======                    PLUM CREEK TIMBER COMPANY, INC.                 CONSOLIDATED STATEMENTS OF CASH FLOWS                              (UNAUDITED)                                                    Quarter Ended                                                    -------------                                                       June 30,                                                     2006   2005                                                     -----  -----                                                     (In Millions)Cash Flows From Operating Activities:Net Income                                           $  62  $  69Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities:     Depreciation, Depletion and      Amortization                                       29    28     Basis of Real Estate Sold                           13    10     Deferred Income Taxes                               (1)    -     Working Capital Changes Impacting      Cash Flow:         Like-Kind Exchange Funds                        (9)  (15)         Other Working Capital Changes                   14    25     Other                                                4     2                                                      ----- -----Net Cash Provided By Operating Activities                                             112   119                                                      ----- -----Cash Flows From Investing Activities:     Capital Expenditures (Excluding      Timberland Acquisitions)                          (19)  (18)     Timberlands Acquired                               (17)  (50)     Proceeds from Sales of  Properties      and Other Assets                                    1     4     Other                                               (3)    -                                                      ----- -----Net Cash Used In Investing Activities                   (38)  (64)                                                      ----- -----Cash Flows From Financing Activities:     Dividends                                          (73)  (70)     Borrowings on Line of Credit                       811   611     Repayments on Line of Credit                      (790) (564)     Proceeds from Issuance of Short-      Term Debt                                           -    50     Repayment of Short-Term Debt                       (50)    -     Proceeds from Issuance of Long-      Term Debt                                         216     -     Principal Payments and Retirement      of Long-Term Debt                                 (28)  (48)     Proceeds from Stock Option      Exercises                                           1     1     Acquisition of Treasury Stock                     (184)    -                                                      ----- -----Net Cash Used In Financing Activities                   (97)  (20)                                                      ----- -----Increase (Decrease) In Cash and Cash Equivalents                                            (23)   35     Cash and Cash Equivalents:       Beginning of Period                              419   349                                                      ----- -----       End of Period                                 $  396 $ 384                                                      ===== =====

Click Here for 2nd Quarter 2006 Financial Supplements (in PDF)

CONTACT: Plum Creek Timber Company, Inc.
Investors: John Hobbs 1-800-858-5347
Media: Kathy Budinick 1-206-467-3620

SOURCE: Plum Creek Timber Company, Inc.