Plum Creek Legacy News Releases

Plum Creek Timber Company, Inc. Reports Results for Second Quarter and Six Months 2003

Jul 21, 2003

SEATTLE--(BUSINESS WIRE)--July 21, 2003--Plum Creek TimberCompany, Inc. (NYSE:PCL) today announced second quarter earnings of$58 million, or $0.31 per diluted share, on revenues of $318 million.Earnings for the second quarter 2002 were $53 million, or $0.29 perdiluted share, on revenues of $271 million. Earnings for the first sixmonths of 2003 were $91 million, or $0.49 per diluted share, onrevenues of $591 million. Earnings for the first six months of 2002were $109 million, or $0.59 per diluted share, on revenues of $546million.

Cash provided by operating activities in the second quartertotaled $144 million. Of this amount, reductions in working capitalprovided $28 million, while $13 million was related to the previouslyannounced sale of 29,000 acres of non-strategic timberlands inMontana. Cash provided by operating activities for the same period of2002 was $102 million. Of the $102 million, $9 million was provided byseasonal reductions in working capital and $9 million was provided byother non-cash adjustments. Cash provided by operating activities inthe first six months of 2003 totaled $190 million compared to $175million for the same period of 2002. The Company ended the secondquarter of 2003 with $243 million in cash and cash equivalents.

"Earnings for second quarter were better than expected due tohigher than anticipated real estate sales and improvement in theresults from the Northern Resources segment due to the fourth quarter2002 Wisconsin timberland acquisition. Other segments were flat todown as compared to last year due primarily to continued oversuppliedlumber markets," said Rick Holley, president and CEO.

Review of Operations

Operating profit in the Northern Resources segment was $15 millionin the second quarter, up $4 million compared to the same period of2002. Harvest volumes increased 15% over second quarter of 2002 due totimber sales from the recently acquired timberland in Wisconsin.Persistently low lumber prices have caused a number of Northwestlumber producers to take extended downtime over the past six months.As a result of this reduced demand, second quarter sawlog prices were4% lower than those experienced in the second quarter of 2002. Theweakening of the U.S. dollar over the past year has helped Northernpulpwood customers improve their competitive position in worldwidepulp and paper markets, leading to good pulpwood demand and improvedprices which were up an average of 9% from the levels experienced insecond quarter 2002.

Operating profit in the Southern Resources segment was $55 millioncompared to $64 million for the same period of 2002. Continued wetweather in eastern portions of the U.S. South limited timberaccessibility. As a result, the Southern harvest was 4% lower whencompared to the same period last year. Steady pulpwood demand andrestricted logging in wet areas led to pulpwood prices that wereslightly higher than those experienced in the second quarter of 2002.Difficult market conditions for Southern softwood lumber producershave kept downward pressure on sawlog prices. Sawlog prices in thesecond quarter were 8% lower than those experienced a year ago.

The Real Estate segment reported revenue of $57 million including$13 million related to the Montana timberland sale. The Montana salehad no impact on reported earnings. Second quarter 2002 revenue was$18 million. Second quarter sales were made to a mix of recreation andconservation buyers. Interest in the Company's properties remains highfrom a diverse range of conservation interests, developers, andindividuals.

The Company's Manufacturing segment reported a $4 million loss forthe second quarter compared to a $1 million profit in the same periodof 2002. Lumber prices in the second quarter 2003 were 14% lower thanthe same period last year as a result of oversupplied U.S. lumbermarkets. Medium density fiberboard (MDF) prices and sales volumesincreased 11% and 6%, respectively, due to production improvements inthe Company's second MDF line when compared to the same period of2002. Increased costs, most notably for resin, offset the revenuegains derived from higher MDF prices and production volumes. Pricesand sales volumes for the Company's plywood products were similar tothose in the second quarter of 2002.

Outlook

For the third quarter, the Company expects prices for its timberproducts to approximate second quarter levels. Harvest volumes forboth the Northern and Southern Resource segments will be higher due tonormal seasonal factors.

The Company expects Real Estate sales for the year, excludingstrategic sales such as this quarter's Montana transaction, to bebetween $90 and $110 million.

Results from the Manufacturing Segment are expected to improve inthe third quarter due to higher lumber prices and continuedimprovements in the MDF business. Lumber prices have shown recentimprovements due to increased construction activity and a tighterlumber supply resulting from production curtailments. Plywoodproduction and prices are expected to remain largely unchanged andthat business is expected to remain profitable.

Negotiations aimed at reaching an interim solution to theU.S./Canadian lumber dispute have recently resumed. Ultimately anagreement with Canada should have a positive effect on U.S. lumber andlog markets. However, the extent and timing of any influence is notpossible to determine at this time.

The Company expects third quarter earnings to be between $0.23 and$0.28 per share as profits from seasonally higher timber harvests areoffset by a lower level of real estate activity in the third quarter.The Company expects to report full year earnings between $1.00 and$1.15 per share including the impact of the $9 million assetimpairment recorded in the first quarter.

"As we look to the second half of the year, we expect improvedearnings from our lumber and MDF businesses and continued strongdemand for our real estate properties. Resolution of the lumber tradedispute with Canada could provide for additional improvement in lumberand sawlog prices. Plum Creek's geographic and business diversity andfocus on executing our key strategies will continue to position theCompany well even in these uncertain economic times," concluded RickHolley, president and CEO.

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, July 21, at 5:00 PMEDT (2:00 PM 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 code1573821.

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

Plum Creek is one of the largest land and timber owners in thenation, with over 8 million acres of timberlands in major timberproducing regions of the United States and ten wood productmanufacturing 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,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 proves to be incorrect,the current 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                                                   -------------------                                                   June 30,   June 30,                                                      2003       2002                                                   --------   --------                                                     (In Millions,                                                    Except Per Share                                                         Amounts)Revenues:   Timber                                         $    159   $    154   Real Estate                                          57         18   Manufacturing                                        99         97   Other                                                 3          2                                                   --------   --------     Total Revenues                                    318        271Costs and Expenses:   Cost of Goods Sold:     Timber                                             79         71     Real Estate                                        36          7     Manufacturing                                      99         94     Other                                               1          -                                                   --------   --------        Total Cost of Goods Sold                       215        172   Selling, General and Administrative                  19         17                                                   --------   --------        Total Costs and Expenses                       234        189                                                   --------   --------Operating Income                                        84         82Interest Expense, net                                   29         26                                                   --------   --------Income before Income Taxes                              55         56Benefit (Provision) for Income Taxes                     3         (3)                                                   --------   --------Net Income                                        $     58   $     53                                                   ========   ========Net Income per Share - Basic                      $   0.32   $   0.29                                                   ========   ========Net Income per Share - Diluted                    $   0.31   $   0.29                                                   ========   ========Weighted average number of Shares outstanding - Basic                                               183.0      184.7                                                   --------   --------Weighted average number of Shares outstanding - Diluted                                             183.5      185.4                                                   --------   --------                   PLUM CREEK TIMBER COMPANY, INC.                   CONSOLIDATED STATEMENT OF INCOME                             (UNAUDITED)                                                     Six Months Ended                                                     -----------------                                                  June 30,    June 30,                                                     2003        2002                                                  --------    --------                                                     (In Millions,                                                    Except Per Share                                                         Amounts)Revenues:   Timber                                        $    315    $    311   Real Estate                                         80          41   Manufacturing                                      191         190   Other                                                5           4                                                  --------    --------     Total Revenues                                   591         546Costs and Expenses:   Cost of Goods Sold:     Timber                                           160         145     Real Estate                                       55          18     Manufacturing                                    195         183     Other                                              2           -                                                  --------    --------        Total Cost of Goods Sold                      412         346   Selling, General and Administrative                 36          34                                                  --------    --------           Total Costs and Expenses                   448         380                                                  --------    --------Operating Income                                      143         166Interest Expense, net                                  57          52                                                  --------    --------Income before Income Taxes                             86         114Benefit (Provision) for Income Taxes                    5          (5)                                                  --------    --------Net Income                                       $     91    $    109                                                  ========    ========Net Income per Share - Basic                     $   0.50    $   0.59                                                  ========    ========Net Income per Share - Diluted                   $   0.49    $   0.59                                                  ========    ========Weighted average number of Shares outstanding - Basic                                              183.5       184.6                                                  --------    --------Weighted average number of Shares outstanding - Diluted                                            184.1       185.4                                                  --------    --------                   PLUM CREEK TIMBER COMPANY, INC.                     CONSOLIDATED BALANCE SHEETS                             (UNAUDITED)                                                    June 30,  Dec. 31,                                                       2003      2002                                                    --------  --------                                                       (In Millions)                      ASSETSCurrent Assets: Cash and Cash Equivalents                         $    243  $    246 Restricted Advance from Customer                         2         4 Accounts Receivable                                     46        33 Inventories                                             54        58 Investment in Grantor Trust                             12        10 Deferred Tax Asset                                      12        11 Other Current Assets                                    14        16                                                    --------  --------                                                        383       378Timber and Timberlands -  Net                         3,557     3,599Property, Plant and Equipment  -  Net                   303       307Other Assets                                              7         5                                                    --------  -------- Total Assets                                      $  4,250  $  4,289                                                    ========  ========                   LIABILITIESCurrent Liabilities: Current Portion of Long-Term Debt                 $     33  $     33 Accounts Payable                                        28        25 Interest Payable                                        28        21 Wages Payable                                           15        23 Taxes Payable                                           13        11 Deferred Revenue                                        20        18 Liabilities Associated with Grantor Trust               12        10 Other Current Liabilities                               16        14                                                    --------  --------                                                        165       155Long-Term Debt                                        1,440     1,170Lines of Credit                                         433       669Deferred Tax Liability                                   39        44Other Liabilities                                        28        29                                                    --------  -------- Total Liabilities                                    2,105     2,067                                                    --------  --------Commitments and Contingencies               STOCKHOLDERS' EQUITYPreferred Stock, $0.01 par value,authorized shares - 75.0, outstanding - none              -         -Common Stock, $0.01 par value, authorized shares - 300.0, issued (including Treasury Stock) - 185.0 at June 30, 2003 and 184.9 at December 31, 2002                                        2         2Additional Paid-In Capital                            2,161     2,197Retained Earnings                                        25        23Treasury Stock, at cost, Common shares - 2.0 at June 30, 2003                                          (43)        -                                                    --------  -------- Total Stockholders' Equity                           2,145     2,222                                                    --------  -------- Total Liabilities and Stockholders' Equity        $  4,250  $  4,289                                                    ========  ========                   PLUM CREEK TIMBER COMPANY, INC.                 CONSOLIDATED STATEMENT OF CASH FLOWS                             (UNAUDITED)                                                   Quarter Ended                                             -------------------------                                                June 30,      June 30,                                                   2003          2002                                             -----------   -----------                                                   (In Millions)Cash Flows From Operating Activities:Net Income                                  $        58   $        53Adjustments to Reconcile Net Income to   Net Cash Provided By Operating    Activities:   Depreciation, Depletion and    Amortization                                     26            24   Basis of Real Estate Sold                         32             7   Deferred Income Taxes                             (3)            4   Working Capital Changes                           28             9   Other                                              3             5                                             -----------   -----------Net Cash Provided By Operating Activities                                         144           102                                             -----------   -----------Cash Flows From Investing Activities:   Property Additions (Excluding Tax-    Deferred Exchanges)                             (22)          (21)   Timberlands Acquired with Tax-    Deferred Exchange Proceeds, Net                 (16)           (6)                                             -----------   -----------Net Cash Used In Investing Activities               (38)          (27)                                             -----------   -----------Cash Flows From Financing Activities:   Dividends                                        (64)         (105)   Borrowings of Long-term Debt and    Lines of Credit                                 496           377   Repayments of Long-term Debt and    Lines of Credit                                (503)         (394)   Proceeds from Stock Option Exercises               -             2                                             -----------   -----------Net Cash Used In Financing Activities               (71)         (120)                                             -----------   -----------Increase (Decrease) In Cash and Cash Equivalents                                         35           (45)Cash and Cash Equivalents:   Beginning of  Period                             208           285                                             -----------   -----------   End of Period                            $       243   $       240                                             ===========   ===========                  PLUM CREEK TIMBER COMPANY, INC.                CONSOLIDATED STATEMENTS OF CASH FLOWS                             (UNAUDITED)                                                    Six Months Ended                                                   -------------------                                                   June 30,   June 30,                                                       2003      2002                                                   ---------  --------                                                      (In Millions)Cash Flows From Operating Activities:Net Income                                        $      91  $    109Adjustments to Reconcile Net Income to   Net Cash Provided By Operating Activities:   Depreciation, Depletion and Amortization              51        50   Basis of Real Estate Sold (including    Impairment Loss)                                     49        16   Deferred Income Taxes                                 (5)        4   Working Capital Changes                                5        (6)   Other                                                 (1)        2                                                   ---------  --------Net Cash Provided By Operating Activities               190       175                                                   ---------  --------Cash Flows From Investing Activities:   Property Additions (Excluding Tax-Deferred    Exchanges)                                          (38)      (38)   Timberlands Acquired with Tax-Deferred    Exchange Proceeds, Net                              (17)       (6)                                                   ---------  --------Net Cash Used In Investing Activities                   (55)      (44)                                                   ---------  --------Cash Flows From Financing Activities:   Dividend                                            (129)     (105)   Borrowings of Long-term Debt and Lines of    Credit                                            1,278       640   Repayments of Long-term Debt and Lines of    Credit                                           (1,244)     (635)   Proceeds from Stock Option Exercises                   -        16   Acquisition of Treasury Stock                        (43)        -                                                   ---------  --------Net Cash Used In Financing Activities                  (138)      (84)                                                   ---------  --------Increase (Decrease) In Cash and Cash Equivalents         (3)       47Cash and Cash Equivalents:   Beginning of  Period                                 246       193                                                   ---------  --------   End of Period                                  $     243  $    240                                                   =========  ========

Click Here for 2nd Quarter 2003 Financial Supplements (in Excel)

CONTACT: Plum Creek Timber Company
John Hobbs, 800-858-5347
www.plumcreek.com

SOURCE: Plum Creek Timber Company

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