SEATTLE--(BUSINESS WIRE)--Jan. 30, 2006--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced fourth quarter earnings of$67 million, or $0.36 per diluted share, on revenues of $391 million.Earnings for the fourth quarter of 2004 were $73 million, or $0.40 perdiluted share, on revenues of $327 million.

Earnings for the fourth quarter of 2005 included a $3 millionafter-tax gain on the sale of industrial mineral assets. The fourthquarter 2004 results included a $23 million after-tax gain on the saleof coal assets. As a result, income from continuing operations for thefourth quarter of 2005 was $64 million, or $0.34 per diluted share.Income from continuing operations for the same period of 2004 was $50million, or $0.28 per diluted share.

Earnings for 2005 were $354 million, or $1.92 per diluted share,on revenues of $1.576 billion. Earnings for 2004 were $362 million, or$1.97 per diluted share, on revenues of $1.528 billion.

Results for 2005 included the $3 million after-tax gain mentionedabove as well as a $20 million after-tax gain on the sale of thecompany's remaining coal assets during the first quarter of 2005. Fullyear 2004 results included the $23 million after-tax coal sale gainmentioned above. As a result, income from continuing operations for2005 was $331 million, or $1.79 per diluted share compared to $339million, or $1.84 per diluted share for 2004.

"We are pleased with our results for 2005, concluding another yearof excellent strategic progress and profitability," said Rick Holley,president and chief executive officer. "Our 2005 income fromcontinuing operations approached our 2004 level, one of the best yearsin Plum Creek's history."

Cash provided by operating activities for 2005 totaled $516million and included approximately $31 million from the sale of large,non-strategic timberlands. Cash provided by operating activitiesduring 2004 totaled $582 million and included approximately $129million from the sale of large, non-strategic timberlands. The companyended 2005 with $369 million in cash and cash equivalents.

"The contributions of our core businesses grew as profits from oursustainable timber harvest increased and we continued to captureexcellent value from the sale of higher and better use lands,"continued Holley. "The timber resource segments collectively grewoperating profit approximately 5 percent despite increased costpressures associated with higher fuel prices. We continued to expandour sales of conservation, recreation and small, non-strategictimberland parcels, capturing $90 million of value beyond theunderlying timberland value of these assets. These sales rose 53percent from 2004 to approximately $260 million. In addition, we soldour Idaho timberlands at an attractive price -- a large, non-strategictimberland sale. As expected, our manufacturing profits were down $28million following 2004's record profits in that segment."

2005 Strategic Progress

"During 2005, we continued to execute on our strategies designedto grow the long-term cash flows from sustainable timber managementand to capture the value of select properties for conservation,recreation or development purposes," continued Holley.

During November 2005, the company completed the acquisition of650,000 acres of timberlands in the Upper Peninsula of Michigan forapproximately $345 million, financed in part by the issuance of $300million of 5.875 percent 10-year notes. This accretive acquisitionadds to 2006 and future harvests and provides opportunities foradditional value recognition from higher and better use lands.

During 2005, the company made significant progress towardrealizing the value of 129 exceptional properties; totaling 225,000acres, with high development potential. The company expects theentitlement and sale of these properties will significantly growfuture revenues, earnings and cash flow.

During 2005, the company obtained entitlements and permits for 926rural residential lots on 9 properties and expects to complete thesale of the first lots during the first quarter of 2006. Plum Creek iscurrently seeking permits for an additional 19 projects.

Additionally, during 2005, the company entered into three jointventure agreements with leading land developers to entitle, permit,build and sell two residential communities in northeast Florida andone in southeast Georgia. Plum Creek's participation in these jointventures allows the company to capture significant value for the landwithout requiring the investment of financial capital. The company iscontinuing to evaluate potential joint venture partners for additionalproperties in the path of urban expansion or in exceptional recreationlocations.

Review of Quarterly Operations

The Northern Resources segment reported fourth quarter operatingprofit of $27 million, compared to $25 million in the fourth quarterof the prior year. Harvest volumes rose approximately 233,000 tons, or18 percent, compared to the same period of 2004. In the Northwest, thecompany harvested timber during the fourth quarter that had beendeferred earlier in the year due to high fire danger, while theMichigan timberland acquisition added 85,000 tons to the fourthquarter's harvest. For the full year, Northern harvests wereapproximately 3 percent higher than in 2004. Sawlog prices wereessentially unchanged from year ago levels. Tight log markets,primarily the result of limited contractor capacity, increasedNortheast pulpwood prices approximately 7 percent over those in thefourth quarter of 2004.

Operating profit in the fourth quarter of 2005 in the SouthernResources segment was $49 million compared to $54 million in thefourth quarter of 2004. Harvest volumes were approximately 5 percentlower compared to the same period of 2004. The company took advantageof particularly attractive markets early in 2005. As a result, timberwas harvested earlier in the year than was the case during 2004. Forthe full year, 2005 harvests in the South were approximately 4 percenthigher than 2004 levels. Southern sawlog prices were up, on average, 2percent compared to the fourth quarter of 2004. Increased lumberproduction over the past year increased the demand for sawlogs,leading to price increases in most regions. Average Southern pulpwoodprices were flat to down modestly when compared to prices in thefourth quarter of 2004.

The Real Estate segment reported revenue of $72 million in thefourth quarter of 2005 compared to $23 million in the fourth quarterof 2004. Operating income was approximately $25 million and $12million, respectively. During the fourth quarter of 2005, the companycompleted a large, non-strategic timberland sale of 39,000 acres ofIdaho timberlands for $30 million. This sale contributed $1 million tooperating income. The remaining sales were comprised of almostexclusively small, non-strategic timberlands and a $5 millionconservation easement.

The Manufacturing segment reported a $4 million profit for thefourth quarter of 2005, compared with a $1 million profit in theyear-ago quarter, which included a $9 million pre-tax lumber millimpairment charge. Prices for industrial plywood and medium densityfiberboard (MDF) were similar to the year-ago levels. Lumber pricesduring the fourth quarter of 2005 were approximately 8 percent lowerthan last year as North American lumber producers increased supply inresponse to continuing strong demand. Increased raw material costsreduced profitability for these products when compared to 2004.

Outlook

Lumber, plywood, and oriented strand board (OSB) customers areanticipating continued good demand for their products during the firsthalf of 2006 and the company is experiencing good pulpwood demand frompulp and paper mills in all regions. New OSB and lumber productioncapacity has increased log demand, most notably in the PacificNorthwest and Carolinas. Overall, timber markets in the Northern andSouthern segments are expected to hold at current levels during thefirst half of 2006.

During 2006, the company expects to harvest between 19.2 and 20.2million tons of timber. The majority of the 2006 harvest growth isexpected to come in the Northern Resources segment, reflecting theMichigan acquisition, and is expected to be approximately 62 percentsawlogs and 38 percent pulpwood. Southern Resources segment harvestvolumes are expected to be similar to 2005's level with a 50/50 mixbetween sawlogs and pulpwood.

The company expects Real Estate segment sales for the year toincrease to between $280 and $300 million. Of this, as much as $60million is projected to come from the sale of entitled properties on asmall portion of the company's high-value real estate properties.First quarter Real Estate segment sales are expected to approach $60million. Entitled property sales are expected to contributeapproximately $7 million to the segment's first quarter results.

While overall demand for manufactured products is expected toremain good, higher raw material costs and increased supply of lumberand panel products on the market are expected to reduce Manufacturingsegment profits during 2006.

Reflecting all of these factors, the company expects first quarter2006 earnings to be between $0.40 and $0.45 per share with full-yearearnings expected to be between $1.55 and $1.75 per share.

"We continue to execute our strategies for long-term value growthin our timber business and further expand our industry-leadingcapabilities in timberland valuation and land-use planning," saidHolley. "We will continue our efforts to create and capture additionalvalue for select properties with high development potential with aneye toward growing the revenues, earnings and cash flow from thesevaluable assets."

"Disciplined capital allocation remains our highest priority. Wewill continue to explore the opportunistic acquisition of financiallyattractive timberlands that add to our standing inventory ofmerchantable timber and grow our current and future harvests. We willpursue our strategies with discipline and patience with the ultimategoal of growing our sustainable cash flow and the per share value ofthe company," concluded Holley.

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, January 30, at 5:00p.m. EST (2:00 p.m. PST). 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 of the call, referencing PlumCreek's fourth quarter 2005 earnings conference call. Those wishing toaccess the call from outside the United States and Canada should dial1-706-645-9676, also referencing Plum Creek's conference call. Replayof the call will be available for 48 hours after completion of thelive call and can be accessed at 1-800-642-1687 or 1-706-645-9291(international calls), using the code 3473351.

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

Plum Creek is one of the largest private timberland owners in thenation, with more than 8 million acres of timber and land 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)                                                       Year Ended                                                   -------------------                                                   Dec. 31,   Dec. 31,                                                     2005       2004                                                   --------   --------                                                     (In Millions,                                                    Except Per Share                                                         Amounts)Revenues:  Timber                                          $    764   $    694  Real Estate                                          292        303  Manufacturing                                        504        518  Other                                                 16         13                                                   --------   --------    Total Revenues                                   1,576      1,528                                                   --------   --------Costs and Expenses:  Cost of Goods Sold:    Timber                                             418        368    Real Estate                                        152        149    Manufacturing                                      463        449    Other                                                3          4                                                   --------   --------       Total Cost of Goods Sold                      1,036        970    Selling, General and Administrative                 92         86                                                   --------   --------          Total Costs and Expenses                   1,128      1,056                                                   --------   --------Gain on Sale of Other Assets                             -          5                                                   --------   --------Operating Income                                       448        477Interest Expense, net                                  109        111                                                   --------   --------Income before Income Taxes                             339        366Provision for Income Taxes                               8         27                                                   --------   --------Income from Continuing Operations                      331        339Gain on Sale of Properties, net of tax                  23         23                                                   --------   --------Net Income                                        $    354   $    362                                                   ========   ========Income from Continuing Operations per Share  - Basic                                         $   1.80   $   1.85  - Diluted                                       $   1.79   $   1.84Net Income per Share  - Basic                                         $   1.92   $   1.97  - Diluted                                       $   1.92   $   1.97Weighted Average Number of Shares Outstanding  - Basic                                            184.0      183.4  - Diluted                                          184.6      184.1                   PLUM CREEK TIMBER COMPANY, INC.                  CONSOLIDATED STATEMENTS OF INCOME                             (UNAUDITED)                                                      Quarter Ended                                                    ------------------                                                    Dec. 31,  Dec. 31,                                                      2005      2004                                                    --------  --------                                                      (In Millions,                                                     Except Per Share                                                         Amounts)Revenues:  Timber                                           $    192  $    181  Real Estate                                            72        23  Manufacturing                                         121       122  Other                                                   6         1                                                    --------  --------    Total Revenues                                      391       327                                                    --------  --------Costs and Expenses:  Cost of Goods Sold:    Timber                                              110        99    Real Estate                                          47         9    Manufacturing                                       114       117    Other                                                 1         1                                                    --------  --------       Total Cost of Goods Sold                         272       226  Selling, General and Administrative                    24        24                                                    --------  --------          Total Costs and Expenses                      296       250                                                    --------  --------Operating Income                                         95        77Interest Expense, net                                    29        27                                                    --------  --------Income before Income Taxes                               66        50Provision for Income Taxes                                2         -                                                    --------  --------Income from Continuing Operations                        64        50Gain on Sale of Properties, net of tax                    3        23                                                    --------  --------Net Income                                         $     67  $     73                                                    ========  ========Income from Continuing Operations per Share  - Basic                                          $   0.34  $   0.28  - Diluted                                        $   0.34  $   0.28Net Income per Share  - Basic                                          $   0.36  $   0.40  - Diluted                                        $   0.36  $   0.40Weighted Average Number of Shares Outstanding  - Basic                                             184.0     183.7  - Diluted                                           184.6     184.4                   PLUM CREEK TIMBER COMPANY, INC.                     CONSOLIDATED BALANCE SHEETS                             (UNAUDITED)                                                    Dec. 31,  Dec. 31,                                                       2005      2004                                                    --------  --------                                                      (In Millions,                                                     Except Per Share                                                         Amounts)                       ASSETSCurrent Assets:  Cash and Cash Equivalents                        $    369  $    347  Restricted Advance from Customer                       23         4  Accounts Receivable                                    44        40  Like-Kind Exchange Funds Held in Escrow                30        11  Inventories                                            75        71  Deferred Tax Asset                                     17        10  Other Current Assets                                   16        16                                                    --------  --------                                                        574       499Timber and Timberlands -  Net                         3,961     3,595Property, Plant and Equipment  -  Net                   234       248Investment in Grantor Trusts                             26        29Other Assets                                             17         7                                                    --------  --------  Total Assets                                     $  4,812  $  4,378                                                    ========  ========                    LIABILITIESCurrent Liabilities:  Current Portion of Long-Term Debt                $    161  $     32  Short-Term Debt                                        50         -  Accounts Payable                                       45        41  Interest Payable                                       30        28  Wages Payable                                          25        25  Taxes Payable                                          18        22  Deferred Revenue                                       35        16  Other Current Liabilities                              11        20                                                    --------  --------                                                        375       184Long-Term Debt                                        1,524     1,405Lines of Credit                                         495       448Deferred Tax Liability                                   39        45Other Liabilities                                        54        56                                                    --------  --------  Total Liabilities                                   2,487     2,138                                                    --------  --------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) - 186.2 at December 31, 2005, and 185.7 at December 31, 2004                                                     2         2Additional Paid-In Capital                            2,181     2,168Retained Earnings                                       186       111Treasury Stock, at cost, Common Shares - 2.0            (44)      (43)Other Equity                                              -         2                                                    --------  --------  Total Stockholders' Equity                          2,325     2,240                                                    --------  --------  Total Liabilities and Stockholders' Equity       $  4,812  $  4,378                                                    ========  ========                   PLUM CREEK TIMBER COMPANY, INC.                CONSOLIDATED STATEMENTS OF CASH FLOWS                             (UNAUDITED)                                                        Year Ended                                                    ------------------                                                    Dec. 31,  Dec. 31,                                                     2005      2004                                                    --------  --------                                                      (In Millions)Cash Flows From Operating Activities:Net Income                                         $    354  $    362Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities:  Depreciation, Depletion and Amortization   (Includes $2 Loss Related to Hurricane in 2005   and $9 Lumber Mill Impairment Charge in 2004)        113       114  Basis of Real Estate Sold (Includes Impairment   Losses of $1 in 2005 and $21 in 2004)                124       134  Deferred Income Taxes                                 (13)        9  Gain on Sales of Properties and Other Assets          (24)      (28)  Working Capital Changes                               (36)      (12)  Other                                                  (2)        3                                                    --------  --------Net Cash Provided By Operating Activities               516       582                                                    --------  --------Cash Flows From Investing Activities:  Capital Expenditures (Excluding Timberland   Acquisitions)                                        (89)      (70)  Timberlands Acquired                                 (501)      (66)  Proceeds from Sales of Properties and Other   Assets (Including Tax-Deferred Exchange   Proceeds)                                             29        46  Other                                                  (2)       (1)                                                    --------  --------Net Cash Used In Investing Activities                  (563)      (91)                                                    --------  --------Cash Flows From Financing Activities:  Dividends                                            (279)     (260)  Borrowings under Line of Credit                     2,468     2,147  Repayments of Borrowings under Line of Credit      (2,421)   (2,295)  Proceeds from Issuance of Short-Term Debt              50         -  Proceeds from Issuance of Long-Term Debt              297         -  Principal Payments and Retirement of Long-Term   Debt                                                 (53)      (33)  Proceeds from Stock Option Exercises                    9        12  Acquisition of Treasury Stock                          (1)        -  Other                                                  (1)        -                                                    --------  --------Net Cash Provided by (Used In) Financing Activities                                              69      (429)                                                    --------  --------Increase In Cash and Cash Equivalents                    22        62  Cash and Cash Equivalents:    Beginning of  Year                                  347       285                                                    --------  --------    End of Year                                    $    369  $    347                                                    ========  ========                   PLUM CREEK TIMBER COMPANY, INC.                CONSOLIDATED STATEMENTS OF CASH FLOWS                             (UNAUDITED)                                                      Quarter Ended                                                    ------------------                                                    Dec. 31,  Dec. 31,                                                      2005      2004                                                    --------  --------                                                      (In Millions)Cash Flows From Operating Activities:Net Income                                         $     67  $     73Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities:  Depreciation, Depletion and Amortization   (Includes $9 million Lumber Mill     Impairment Charge in 2004)                          28        36  Basis of Real Estate Sold (Includes Impairment   Losses of $1 in 2004)                                 42         7  Deferred Income Taxes                                  (8)       (3)  Gain on Sales of Other Assets                          (2)      (23)  Working Capital Changes (A)                            30         4  Other                                                  (3)        3                                                    --------  --------Net Cash Provided By Operating Activities               154        97                                                    --------  --------Cash Flows From Investing Activities:  Capital Expenditures (Excluding Timberland   Acquisitions)                                        (36)      (21)  Timberlands Acquired (A)                             (383)      (34)  Proceeds from Sales of  Properties and Other   Assets       (Including Tax-Deferred Exchange Proceeds)         2        19  Other                                                  (1)       (1)                                                    --------  --------Net Cash Used In Investing Activities                  (418)      (37)                                                    --------  --------Cash Flows From Financing Activities:  Dividends                                             (70)      (66)  Borrowings under Line of Credit                       662       476  Repayments of Borrowings under Line of Credit        (668)     (495)  Proceeds from Issuance of Long-Term Debt              297         -  Principal Payments and Retirement of Long-Term   Debt                                                  (2)        -  Proceeds from Stock Option Exercises                    5         3                                                    --------  --------Net Cash Provided by (Used In) Financing Activities                                             224       (82)                                                    --------  --------Decrease In Cash and Cash Equivalents                   (40)      (22)  Cash and Cash Equivalents:    Beginning of  Period                                409       369                                                    --------  --------    End of Period                                  $    369  $    347                                                    ========  ========(A) During the fourth quarter of 2005, the company concluded that    proceeds received from a like-kind exchange should be reflected as    an investment activity under "Timberlands Acquired" in the period    in which the proceeds were reinvested in timberland assets. Prior    to the fourth quarter, the company reflected like-kind exchange    proceeds as an investment activity under "Timberlands Acquired" in    the quarter in which the company concluded that it was probable    that the proceeds would be successfully reinvested in timberland    assets. For the quarter ended December 31, 2005, "Working Capital    Changes" and "Timberlands Acquired" includes $65 million of    like-kind exchange proceeds that were reinvested in timberland    assets, which was previously reported in the Cash Flow Statement    for the nine months ended September 30, 2005. Prior year amounts    have been reclassified to conform to this year's presentation.    This change in presentation does not affect net income or    operating income for any period, nor does it affect any amounts in    the statement of cash flows for the years ended December 31, 2005    and 2004.

Click Here for 4th Quarter 2005 Financial Supplements (in PDF)

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

SOURCE: Plum Creek Timber Company, Inc.