SEATTLE--(BUSINESS WIRE)--April 24, 2006--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced first quarter earnings of $94million, or $0.51 per diluted share, on revenues of $414 million.Earnings for the first quarter of 2005 were $122 million, or $0.66 perdiluted share, on revenues of $400 million.

The company adopted the new accounting standard for share-basedpayments at the beginning of the year. As a result, the companyrecorded after-tax income of $2 million, or $0.01 per diluted share,representing the cumulative effect of adopting this standard.Excluding the effect of the accounting change, first quarter earningswere $92 million, or $0.50 per diluted share. The first quarter 2005results included a $20 million after-tax gain from the sale of coalassets. As a result, income from continuing operations for the firstquarter of 2005 was $102 million, or $0.56 per diluted share. Incomefrom continuing operations decreased approximately $10 million whencompared to the same period last year primarily due to marketconditions in the Southern United States.

First quarter cash provided by operating activities of $140million was $61 million higher than the same period of 2005 dueprimarily to decreases in cash held in like-kind exchange escrowaccounts. The company ended the first quarter with $419 million incash and cash equivalents.

"Although our earnings were down compared to last year, firstquarter results from most businesses exceeded our expectations," saidRick Holley, president and chief executive officer.

"While our Southern Resources segment experienced weak marketconditions, our Northern Resources segment took advantage of higherlog prices in Oregon increasing our harvest there. The segment alsobenefited from the integration of our recently-acquired Michigantimberlands. The scope and scale of our diverse timberland baseprovide us operational flexibility to respond to changing marketconditions across our ownership.

"Our Real Estate segment realized higher values on a per-acrebasis from the sale of recreation properties and small, non-strategiclands when compared to the first quarter of 2005. This segment alsocontributed $9 million in revenues from the sale of select developmentproperties. And, our Manufacturing segment benefited from continuedstrong demand for our panel products during the quarter.

"Overall current market conditions remain very good, and we areoptimistic that 2006 will be another solid year for the company."

Review of Operations

The Northern Resources segment reported operating profit of $35million compared to $29 million during the same period of 2005. A 35percent increase in the Northern Resources harvest volume drove theincrease in profitability. Harvests from the company'srecently-acquired Michigan timberlands accounted for nearly half ofthe harvest increase when compared to the first quarter of last year.The company also increased harvests in Oregon to capture attractivelog prices resulting from strong customer demand in the region.Average log prices across the Northern Resources segment were largelyunchanged from the year ago period.

Operating profit in the Southern Resources segment was $50million, down $13 million, compared to the same period of 2005. Logmarkets during the first quarter of 2005 were particularly strong ascustomers sought to build log inventories in the face of high lumberand structural panel demand and limited log availability. During thefirst quarter of 2006, end-product demand remained strong. However,customers easily maintained full log inventories as a severe droughtincreased log availability in western regions of the South, especiallyin southern Louisiana and Mississippi where hurricane salvage woodcontinued to enter the market. Average prices were down 8 percent forboth sawlogs and pulpwood when compared to the prevailing pricesduring the first quarter of 2005. As a result, the company deferredharvests in oversupplied markets and harvest volume was approximately3 percent lower than the same period of 2005.

The Real Estate segment reported revenue of $61 million andoperating income of $44 million from the sale of 21,800 acres of land.The results include $9 million of development property sales from thecompany's taxable REIT subsidiary. The 1,075 acres of developmentproperties sold at an average price of $8,600 per acre. First quarter2005 Real Estate segment revenue was $68 million and resulted inincome of $43 million from the sale of approximately 36,300 acres ofland. Sales in the first quarter of 2005 were primarily small,non-strategic timberland sales.

The Manufacturing segment reported operating profit of $8 million,unchanged from the profit reported during the first quarter of 2005.Higher raw material costs in the company's medium density fiberboard(MDF) business offset increased profits from the industrial plywoodbusiness when compared to the first quarter of 2005. Lumber priceswere approximately 3 percent lower than the first quarter of 2005,while industrial plywood prices were approximately 8 percent higher.MDF prices were similar to prior year levels.

Outlook

Harvest levels in the North are expected to decline from firstquarter levels in a typical seasonal pattern due to thawing springweather that will restrict harvesting activities during much of thequarter.

The company plans to defer a portion of its Southern harvest,originally planned for the second quarter, to the second half of theyear in western regions of the South where markets are temporarilyoversupplied due to excellent timberland accessibility and theavailability of hurricane salvage logs in Mississippi and Louisiana.In eastern portions of the South, the company plans to increasethinnings to serve growing pulpwood demand from oriented strand boardand pulp and paper customers in certain markets.

The company continues to expect Real Estate segment revenues forthe year to be between $280 million and $300 million including thesale of approximately $60 million of high-value development propertyfrom its real estate taxable REIT subsidiary. Second quarter revenuesfor the segment are expected to be between $45 million and $55million. Real estate segment revenues for the third quarter areexpected to be the highest of the year, approaching $100 million.

Earnings for the Manufacturing segment are expected to continue tobenefit from good product demand and continued strong pricing levelsfor industrial plywood and MDF products.

The company expects to report income from continuing operationsbetween $1.55 and $1.75 per share for the year. Second quarterearnings are expected to be between $0.32 and $0.37 per share.

"We continue to execute our strategies aimed at creating anddelivering the most value possible from each tree and every acre weown," continued Holley. "The demographic trends driving housingmarkets and demand for real estate properties across the nationprovide a solid economic backdrop for good future financialperformance.

"Our diverse timber and land base will continue to provide us withexcellent operational flexibility to respond to changing marketconditions and our Real Estate segment is well-positioned to captureexcellent value in growing regions of the country. Over the past fewyears, we've significantly grown the contribution of this segment.During the first quarter, our efforts aimed at creating significantvalue on select development properties began delivering results. Theseproperties represent an increasingly important component of long-termvalue and cash flow.

"As we execute our strategies for long-term value creation,disciplined capital allocation remains our most important task. Wecontinually evaluate the best use of the cash we generate with thegoal of growing the per share value of the company," concluded Holley.

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, April 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 code3473559.

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)                                                   Quarter Ended                                              ------------------------                                               March 31,    March 31,                                                 2006         2005                                              -----------  -----------                                              (In Millions, Except Per                                                   Share Amounts)Revenues:  Timber                                     $       214  $       200  Real Estate                                         61           68  Manufacturing                                      134          129  Other                                                5            3                                              -----------  -----------    Total Revenues                                   414          400                                              -----------  -----------Costs and Expenses:  Cost of Goods Sold:    Timber                                           121          102    Real Estate                                       16           24    Manufacturing                                    123          118    Other                                              1            1                                              -----------  -----------       Total Cost of Goods Sold                      261          245  Selling, General and Administrative                 26           21                                              -----------  -----------          Total Costs and Expenses                   287          266                                              -----------  -----------Operating Income                                     127          134Interest Expense, net                                 31           27                                              -----------  -----------Income before Income Taxes                            96          107Provision for Income Taxes                             4            5                                              -----------  -----------Income from Continuing Operations                     92          102Gain on Sale of Properties, net of tax                 -           20                                              -----------  -----------Net Income Before Cumulative Effect of Accounting Change                                    92          122Cumulative Effect of Accounting Change, net of tax                                                2            -                                              -----------  -----------Net Income                                   $        94  $       122                                              ===========  ===========Income from Continuing Operations per Share  - Basic                                    $      0.50  $      0.56  - Diluted                                  $      0.50  $      0.56Net Income per Share  - Basic                                    $      0.51  $      0.67  - Diluted                                  $      0.51  $      0.66Weighted Average Number of Shares Outstanding  - Basic                                          184.2        183.9  - Diluted                                        184.7        184.5                   PLUM CREEK TIMBER COMPANY, INC.                     CONSOLIDATED BALANCE SHEETS                             (UNAUDITED)                                              March 31,   December 31,                                                 2006         2005                                             -----------  ------------                                             (In Millions, Except Per                                                   Share Amounts)                    ASSETSCurrent Assets:   Cash and Cash Equivalents                $       419  $        369   Restricted Advance from Customer                  32            23   Accounts Receivable                               50            44   Like-Kind Exchange Funds Held in Escrow            1            30   Inventories                                       78            75   Deferred Tax Asset                                17            17   Other Current Assets                              16            16                                             -----------  ------------                                                    613           574Timber and Timberlands -  Net                     3,942         3,961Property, Plant and Equipment  -  Net               229           234Investment in Grantor Trusts                         26            26Other Assets                                         16            17                                             -----------  ------------   Total Assets                             $     4,826  $      4,812                                             ===========  ============                 LIABILITIESCurrent Liabilities:   Current Portion of Long-Term Debt        $       232  $        161   Short-Term Debt                                   50            50   Accounts Payable                                  36            45   Interest Payable                                  41            30   Wages Payable                                     11            25   Taxes Payable                                     19            18   Deferred Revenue                                  42            35   Other Current Liabilities                         13            11                                             -----------  ------------                                                    444           375Long-Term Debt                                    1,452         1,524Lines of Credit                                     495           495Deferred Tax Liability                               40            39Other Liabilities                                    47            54                                             -----------  ------------   Total Liabilities                              2,478         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 March 31, 2006, and 186.2 at December 31, 2005                           2             2Additional Paid-In Capital                        2,186         2,181Retained Earnings                                   206           186Treasury Stock, at cost, Common Shares - 2.0                                                (44)          (44)Other Equity                                         (2)            -                                             -----------  ------------   Total Stockholders' Equity                     2,348         2,325                                             -----------  ------------   Total Liabilities and Stockholders'    Equity                                  $     4,826  $      4,812                                             ===========  ============                   PLUM CREEK TIMBER COMPANY, INC.                CONSOLIDATED STATEMENTS OF CASH FLOWS                             (UNAUDITED)                                                   Quarter Ended                                              ------------------------                                               March 31,    March 31,                                                 2006         2005                                              -----------  -----------                                                   (In Millions)Cash Flows From Operating Activities:Net Income                                   $        94  $       122Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities:  Depreciation, Depletion and Amortization            31           27  Basis of Real Estate Sold                           10           18  Deferred Income Taxes                                1           (1)  Gain on Sale of Properties                           -          (21)  Working Capital Changes                              9          (64)  Other                                               (5)          (2)                                              -----------  -----------Net Cash Provided By Operating Activities            140           79                                              -----------  -----------Cash Flows From Investing Activities:  Capital Expenditures (Excluding Timberland   Acquisitions)                                     (17)         (10)  Other                                                -            1                                              -----------  -----------Net Cash Used In Investing Activities                (17)          (9)                                              -----------  -----------Cash Flows From Financing Activities:  Dividends                                          (74)         (70)  Borrowings on Line of Credit                       663          529  Repayments on Line of Credit                      (663)        (529)  Proceeds from Stock Option Exercises                 2            3  Other                                               (1)          (1)                                              -----------  -----------Net Cash Used In Financing Activities                (73)         (68)                                              -----------  -----------Increase In Cash and Cash Equivalents                 50            2  Cash and Cash Equivalents:    Beginning of Period                              369          347                                              -----------  -----------    End of Period                            $       419  $       349                                              ===========  ===========

Click Here for 1st Quarter 2006 Financial Supplements (in PDF)

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

SOURCE: Plum Creek Timber Company, Inc.