Plum Creek Legacy News Releases

Plum Creek Timber Company, Inc. Reports Higher Second Quarter Earnings, Increases Guidance for 2005

Jul 25, 2005

SEATTLE, Jul 25, 2005 (BUSINESS WIRE) -- Plum Creek Timber Company, Inc. (NYSE:PCL) todayannounced second quarter earnings of $69 million, or $0.37 per dilutedshare, on revenues of $358 million. Earnings were up 21 percentcompared to the same period of 2004. Earnings for the second quarterof 2004 were $57 million, or $0.31 per diluted share, on revenues of$341 million. Results for the second quarter of 2004 included apre-tax gain of $5 million ($3 million, or $0.02 per diluted share,after-tax gain) from the sale of a working interest in a coalbedmethane project and $2 million of operating income from the sale oflarge, non-strategic timberlands.

Earnings for the first six months of 2005 were $191 million, or$1.03 per diluted share, on revenues of $758 million. Results for thefirst six months of 2005 include a $20 million after-tax gain on thefirst quarter sale of the company's remaining coal assets. As aresult, income from continuing operations for the first six months of2005 was $171 million, or $0.93 per fully diluted share. Earnings forthe first six months of 2004 were $212 million, or $1.15 per dilutedshare, on revenues of $838 million. Results for the first six monthsof 2004 included $69 million of operating income from the $133 millionsale of large, non-strategic timberlands as well as the gain from thesale of the coalbed methane working interest mentioned above.

Cash provided by operating activities in the second quarter of2005 totaled $131 million. Cash provided by operating activities inthe same period of 2004 was $148 million including approximately $15million from the sale of large, non-strategic timberlands. Cashprovided by operating activities in the first six months of 2005totaled $228 million. Cash provided by operating activities in thefirst six months of 2004 totaled $391 million and includedapproximately $129 million from the sale of large, non-strategictimberlands. The company ended the second quarter of 2005 with $384million in cash and cash equivalents.

"Our second quarter results exceeded our expectations as demandfor timber remained strong throughout the country," said Rick Holley,president and chief executive officer.

"In the first six months, operating profit from our timbersegments increased 18 percent compared to the same period of 2004. Atthe same time, we continue to experience strong interest in andcapture excellent values for our non-core timberlands. This interestcomes from a variety of buyers who value these lands for theirrecreation, conservation or other attributes. We're pleased with ourperformance so far this year and are confident that strong markets andour focused business approach position us for an excellent second halfof 2005."

Review of Operations

The Northern Resources segment reported second quarter operatingprofit of $20 million, up $4 million, compared to the same period of2004. Harvest volumes were 8 percent higher than the second quarter of2004 as the company took advantage of attractive log pricing acrossthe Northern segment. Sawmills throughout the Northern segment haveincreased lumber production in response to strong lumber demand andattractive prices. This has increased sawlog demand and has resultedin a 7 percent increase in sawlog prices over the past year. Pulpwoodprices in the segment increased 11 percent compared to the secondquarter of 2004. Low log inventories at many pulp and paper mills inthe Northeast caused many mills to increase the price paid forpulpwood to ensure adequate supplies.

Operating profit in the Southern Resources segment was $63 millionfor the second quarter of 2005, up $18 million, compared to $45million for the same period of 2004. Harvest volumes were 24 percenthigher during the second quarter of 2005 compared to the same periodof 2004. Harvest activity during the second quarter of 2004 wasunusually low, the result of extremely difficult logging conditions inthe wet western sections of the South and harvest deferrals in theSoutheast.

Southern lumber producers also enjoyed strong demand andprofitability over the past year, which allowed them to increaseproduction, but to a lesser extent than their counterparts in theNorthwest. As a result, Southern sawlog prices, on average, increasedapproximately 3 percent compared to the second quarter of 2004.Southern pulpwood demand remained good during the past year. Customersin western regions of the South had difficulty maintaining adequatepulpwood inventories during a wet winter season causing them to bid upSouthern pulpwood prices. This pushed Southern pulpwood prices up anaverage of 9 percent compared to the second quarter 2004.

The Real Estate segment reported second quarter revenue of $36million compared to $50 million in the second quarter of 2004. Thedifference reflects the transaction-driven nature of this segment.Additionally, during 2004 the company completed a $15 million sale ofa large, non-strategic timberland parcel resulting in a $2 milliongain. The segment operating profit was $20 million for the secondquarter of 2005 and $12 million for the same period of 2004. The saleof small, non-strategic timberlands accounted for nearly 80 percent ofthe land sold during the quarter, with recreation lands accounting forthe balance.

The Manufacturing segment reported operating profit of $9 millionfor the second quarter of 2005, down from the record quarterly profitof $23 million reported for the second quarter of 2004. Althoughdemand for these products remains very good, increases in lumber andstructural panel supply pushed lumber and plywood prices lower whencompared to the second quarter of last year. Lumber price realizationswere down approximately 11 percent while plywood price realizationswere down approximately 13 percent. Higher log costs, the result ofincreased competition for logs, also impacted profitability of thelumber and plywood operations. Profits from the company's mediumdensity fiberboard (MDF) business grew modestly as it continued toexpand its production of high-performance, premium products.

Timberland Acquisitions

The company completed the acquisition of approximately 35,000acres of highly productive northern Florida timberland forapproximately $50 million. The company funded the purchase with ashort-term note. This transaction was the first phase of a 56,000-acretimberland purchase from Greif, Inc. valued at approximately $90million. Plum Creek expects to complete the acquisition of theremaining 21,000 acres over the next three quarters.

Earlier in July, the company acquired approximately 18,000 acresof high-quality plantation timberlands in southwest Arkansas forapproximately $25 million. This property complements our currentownership in an attractive timber market. This acquisition was fundedwith 1031 like-kind exchange funds.

Outlook

Sawlog demand in most regions of the country should remain strong,as customers have increased production to meet the demand from homeconstruction, industrial, and repair and remodel markets. Sawmillshave comfortable log inventories in most regions and, as a result, thecompany expects sawlog prices to be steady.

Pulpwood demand appears firm in most markets. Upward pressure onpulpwood prices in the Northeast is expected to continue as acontractor shortage continues to keep mill pulpwood inventories belowtargets. Pulpwood prices in the South are expected to decline modestlyas availability increases during the dry summer months. The companyexpects to harvest between 19.0 and 19.5 million tons of timber during2005.

As a result of continued strong interest in rural timberlandproperties, the company has increased its estimate for Real Estatesegment revenues. The company now expects segment revenues to bebetween $240 to $255 million for the year. Segment revenues areexpected to exceed $120 million during the third quarter. Real estatesegment results could be higher depending on the extent of large,non-strategic timberlands sold during the remainder of the year.

The company's manufacturing segment continues to perform well.Segment results for the third quarter are expected to be similar tothose of the second quarter.

The company expects full-year income from continuing operations tobe between $1.65 and $1.75 per share. Third quarter income fromcontinuing operations is expected to be between $0.49 and $0.54 pershare. These estimates do not include the effect of any large,non-strategic timberlands sales that the company may conclude duringthe year.

"We continue to execute our strategy aimed at delivering the mostvalue possible from each tree and every acre we own," said RickHolley. "Our land sales are capturing excellent values for non-coreproperties and providing significant capital to grow shareholdervalue. We are maintaining our disciplined approach to capitalallocation with the goal of growing the per share value of thecompany."

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, July 25, 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 code3521773.

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 approximately 8 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 30,        June 30,                                         2005            2004                                   -------------   -------------                                     (In Millions, Except Per                                           Share Amounts)Revenues:  Timber                           $         392   $         335  Real Estate                                104             238  Manufacturing                              257             256  Other                                        5               9                                   -------------   -------------    Total Revenues                           758             838                                   -------------   -------------Costs and Expenses:  Cost of Goods Sold:    Timber                                   201             173    Real Estate                               40             124    Manufacturing                            235             218    Other                                      1               3                                   -------------   -------------       Total Cost of Goods Sold              477             518  Selling, General and Administrative         45              40                                   -------------   -------------          Total Costs and Expenses           522             558Gain on Sale of Other Assets                   -               5                                   -------------   -------------Operating Income                             236             285Interest Expense, net                         54              56                                   -------------   -------------Income before Income Taxes                   182             229Provision for Income Taxes                    11              17                                   -------------   -------------Income from Continuing Operations            171             212Gain on Sale of Properties, net of tax        20               -                                   -------------   -------------Net Income                         $         191   $         212                                   =============   =============Net Income from Continuing Operations per Share  - Basic                          $        0.93   $        1.16  - Diluted                        $        0.93   $        1.15Net Income per Share  - Basic                          $        1.04   $        1.16  - Diluted                        $        1.03   $        1.15Weighted Average Number of Shares Outstanding  - Basic                                  183.9           183.2  - Diluted                                184.6           184.0                    PLUM CREEK TIMBER COMPANY, INC.                   CONSOLIDATED STATEMENTS OF INCOME                              (UNAUDITED)                                            Quarter Ended                                   ------------------------------                                      June 30,         June 30,                                       2005             2004                                   -------------   --------------                               (In Millions, Except Per Share Amounts)Revenues:   Timber                          $         192   $          151   Real Estate                                36               50   Manufacturing                             128              134   Other                                       2                6                                   -------------   --------------     Total Revenues                          358              341                                   -------------   --------------Costs and Expenses:   Cost of Goods Sold:     Timber                                   99               80     Real Estate                              16               38     Manufacturing                           117              110     Other                                     -                2                                   -------------   --------------        Total Cost of Goods Sold             232              230   Selling, General and Administrative        24               22                                   -------------   --------------           Total Costs and Expenses          256              252Gain on Sale of Other Assets                   -                5                                   -------------   --------------Operating Income                             102               94Interest Expense, net                         27               27                                   -------------   --------------Income before Income Taxes                    75               67Provision for Income Taxes                     6               10                                   -------------   --------------Net Income                         $          69   $           57                                   =============   ==============Net Income per Share   - Basic                         $        0.37   $         0.31   - Diluted                       $        0.37   $         0.31Weighted Average Number of Shares Outstanding   - Basic                                 184.0            183.3   - Diluted                               184.6            184.0                    PLUM CREEK TIMBER COMPANY, INC.                      CONSOLIDATED BALANCE SHEETS                              (UNAUDITED)                                       June 30,       December 31,                                        2005             2004                                     ------------   ---------------                               (In Millions, Except Per Share Amounts)                                ASSETSCurrent Assets:   Cash and Cash Equivalents         $        384   $         347   Restricted Advance from Customer            15               4   Accounts Receivable                         49              40   Like-Kind Exchange Funds Held in Escrow     44              11   Inventories                                 62              71   Deferred Tax Asset                          11              10   Other Current Assets                        18              16                                     ------------   -------------                                              583             499Timber and Timberlands -  Net               3,623           3,590Property, Plant and Equipment  -  Net         245             253Investment in Grantor Trusts                   29              29Other Assets                                    9               7                                     ------------   -------------   Total Assets                      $      4,489   $       4,378                                     ============   =============                              LIABILITIESCurrent Liabilities:   Current Portion of Long-Term    Debt                             $         31   $          32   Short-Term Debt                             50               -   Accounts Payable                            45              41   Interest Payable                            28              28   Wages Payable                               15              25   Taxes Payable                               22              22   Deferred Revenue                            35              16   Other Current Liabilities                   12              20                                     ------------   -------------                                              238             184Long-Term Debt                              1,357           1,405Lines of Credit                               495             448Deferred Tax Liability                         44              45Other Liabilities                              57              56                                     ------------   -------------   Total Liabilities                        2,191           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)  - 186.0 at June 30, 2005,  and 185.7 at December 31, 2004                2               2Additional Paid-In Capital                  2,174           2,168Retained Earnings                             162             111Treasury Stock, at cost, Common shares - 2.0                                 (43)            (43)Other Equity                                    3               2                                     ------------   -------------   Total Stockholders' Equity               2,298           2,240                                     ------------   -------------   Total Liabilities and    Stockholders' Equity             $      4,489   $       4,378                                     ============   =============                    PLUM CREEK TIMBER COMPANY, INC.                 CONSOLIDATED STATEMENTS OF CASH FLOWS                              (UNAUDITED)                                           Six Months Ended                                       June 30,         June 30,                                        2005             2004                                    --------------   --------------                                             (In Millions)Cash Flows From Operating Activities:Net Income                          $          191   $          212Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:   Depreciation, Depletion and    Amortization                                55               51   Basis of Real Estate Sold (Includes    Impairment Losses of $19 in 2004)           28              114   Deferred Income Taxes                        (1)              12   Gain on Sales of Properties and    Other Assets                               (21)              (5)   Working Capital Changes                     (24)              10   Other                                         -               (3)                                    --------------   --------------Net Cash Provided By Operating Activities                                    228              391                                    --------------   --------------Cash Flows From Investing Activities:   Property Additions (Excluding Timberland    Acquisitions)                              (28)             (32)   Timberlands Acquired (Including Tax-Deferred    Exchange Proceeds)                         (80)             (39)   Proceeds from Sales of Properties    and Other Assets (Including Tax-Deferred    Exchange Proceeds)                           5               27                                    --------------   --------------Net Cash Used In Investing Activities         (103)             (44)                                    --------------   --------------Cash Flows From Financing Activities:   Dividends                                  (140)            (128)   Borrowings under Line of Credit           1,140            1,227   Repayments of Borrowings under    Line of Credit                          (1,093)          (1,355)   Proceeds from Issuance of Short-Term Debt    50                -   Principal Payments and Retirement of    Long-Term Debt                             (49)             (32)   Proceeds from Stock Option Exercises          4                3                                    --------------   --------------Net Cash Used In Financing Activities          (88)            (285)                                    --------------   --------------Increase In Cash and Cash Equivalents           37               62   Cash and Cash Equivalents:     Beginning of  Period                      347              267                                    --------------   --------------     End of Period                  $          384   $          329                                    ==============   ==============                    PLUM CREEK TIMBER COMPANY, INC.                 CONSOLIDATED STATEMENTS OF CASH FLOWS                              (UNAUDITED)                                                Quarter Ended                                                ------------                                           June 30,        June 30,                                            2005             2004                                         ------------   --------------                                                (In Millions)Cash Flows From Operating Activities:Net Income                              $         69   $           57Adjustments to Reconcile Net Income toNet Cash Provided By Operating Activities:   Depreciation, Depletion and Amortization       28               24   Basis of Real Estate Sold (Includes    Impairment Losses of $3 in 2004)              10               35   Deferred Income Taxes                           -                5   Gain on Sales of Other Assets                   -               (5)   Working Capital Changes                        22               29   Other                                           2                3                                        ------------   --------------Net Cash Provided By Operating Activities        131              148                                        ------------   --------------Cash Flows From Investing Activities:   Property Additions (Excluding Timberland    Acquisitions)                                (18)             (15)   Timberlands Acquired (Including    Tax-Deferred Exchange Proceeds)              (62)             (15)   Proceeds from Sales of  Properties    and Other Assets (Including Tax-Deferred    Exchange Proceeds)                             4               27                                        ------------   --------------Net Cash Used In Investing Activities            (76)              (3)                                        ------------   --------------Cash Flows From Financing Activities:   Dividends                                     (70)             (64)   Borrowings under Line of Credit               611              621   Repayments of Borrowings under    Line of Credit                              (564)            (633)   Proceeds from Issuance of Short-Term Debt      50                -   Principal Payments and Retirement of    Long-Term Debt                               (48)             (29)   Proceeds from Stock Option Exercises            1                1                                        ------------   --------------Net Cash Used In Financing Activities            (20)            (104)                                        ------------   --------------Increase In Cash and Cash Equivalents             35               41   Cash and Cash Equivalents:     Beginning of  Period                        349              288                                        ------------   --------------     End of Period                      $        384   $          329                                        ============   ==============

Click Here for 2nd Quarter 2005 Financial Supplements (in PDF)


SOURCE: Plum Creek Timber Company, Inc.

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

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