Authorizes $200 Million Share Repurchase Program

SEATTLE, Oct 17, 2002 (BUSINESS WIRE) -- Plum Creek Timber Company, Inc.(NYSE:PCL) today announced third quarter earnings of $70 million, or $0.38 perdiluted share, on revenues of $310 million.

Results for the first nine months of 2002 were $179 million, or $0.97 perdiluted share, on revenues of $856 million.

The Company declared a quarterly cash dividend of $0.35 per share, a 39%reduction from the prior quarterly dividend. The cash dividend is payable onNovember 27, 2002, to shareholders of record as of November 13, 2002. Thetaxable portion of Plum Creek's dividend consists mainly of long-term capitalgain income because the income generated by the sale of timber is consideredlong-term capital gains.

The Company also announced that its Board of Directors authorized a $200 millionshare repurchase program. The program authorizes the Company, at its owndiscretion, to buy back shares of its outstanding common stock from time to timewith open-market purchases as market conditions warrant. Plum Creek hasapproximately 185 million shares outstanding.

Rick Holley, President and CEO, said, "Since becoming a publicly traded companyin 1989, Plum Creek has managed its valuable timberland assets to deliver anattractive, competitive total return for its shareholders. This remainsmanagement's number one priority. However, despite our ability to enhance thevalue of the Company's assets and execute our key strategies, persistent priceweakness in timber markets has not enabled the Company to generate cash flowadequate to meet its dividend for the past several quarters. Although ourfinancial performance in the third quarter exceeded our expectations, we did notsee any notable improvement in markets or pricing this quarter and we do notforecast meaningful improvement in the foreseeable future.

"Given our overriding goal of delivering a competitive total return to ourshareholders through capital appreciation and dividend income, the Board andmanagement concluded that a dividend that more appropriately matches oursustainable cash flow is the right decision for the Company and itsshareholders. This step will enable us to continue to invest in our corebusinesses and grow the value of the Company.

"After carefully considering our cash flow, cash on hand, market conditions, andcapital expenditures -- all in the context of the Company's overarchingcommitment to shareholder value -- we are adopting a dividend level of $1.40 peryear. This is a sound and sustainable dividend level. Even if market conditionsremain soft, we expect our cash flow to be sufficient to pay the dividend atthis new rate, fund maintenance capital expenditures and provide cash forinvestment in attractive, high-return opportunities, including -- as our Boardhas authorized -- share repurchases if market conditions warrant."

Plum Creek completed its merger with The Timber Company on October 6, 2001. Foraccounting purposes, The Timber Company is considered the surviving entitybecause of the structure of the merger. Therefore, reported financial resultsfor periods prior to the merger reflect the financial results of The TimberCompany. Results for 2002 reflect the performance of the combined companies andare not comparable to the results reported for 2001.

Funds from operations were $106 million for the third quarter of 2002 and $281million for the first nine months of the year. Funds from operations is definedas net income plus depreciation, depletion, amortization and basis in higher andbetter use lands sold. The Company ended the quarter with $270 million in cashand cash equivalents.

Review of Operations

Operating profit in the Northern Resources segment was $23 million in the thirdquarter compared to $11 million for the previous quarter. Harvesting activitytypically reaches its peak during the third quarter due to favorable loggingconditions and seasonally good demand during the summer months. Harvest levelsin the segment were 51% higher than in the second quarter, a typical seasonalimprovement. Northern segment sawlog prices were up nearly 4% due primarily to atemporary mix shift to higher value logs. Localized market improvements in theNortheast drove a price increase of approximately 3% for Northern pulpwood.

Third quarter operating profit in the Southern Resources segment was $57million, compared to the $64 million reported in the second quarter. Prices forboth sawlogs and pulpwood were unchanged versus the second quarter. The pulpwoodharvest increased nearly 7% compared to the second quarter while the sawlogharvest declined a similar amount resulting in a flat total harvest. The declinein operating profits is due primarily to the reduction in the sawlog harvest.

Real Estate sales during the third quarter were $38 million, $20 million morethan sales recorded in the second quarter. Sales during the quarter were a mixof conservation easements and the sale of conservation, recreation, anddevelopment properties.

The Company's Manufacturing segment reported a $3 million operating profit, up$2 million from the prior quarter. Demand in lumber markets remained strongduring the quarter with good construction demand and home center activity. Thisallowed price increases in board products. Dimension lumber markets wereoversupplied and price weakness in that market largely offset the increasesexperienced in board markets. Plywood experienced modest price declines due tocontinued soft demand for specialty and industrial panels. The medium densityfiberboard (MDF) product line reported improved results as compared to thesecond quarter. MDF sales volumes increased 8% from the second quarter due toincreased production on the Company's new thin MDF line. The Company's MDF pricerealizations rose 6% due to an improved mix of higher value products.

Outlook

Log prices have not shown any material improvement over the past several months.The Company has, however, experienced some pricing strength due to demandimprovement in certain regional markets. The Company does not anticipate anysignificant improvement in timber prices over the next six to twelve months asthe seasonally slower winter months approach, uncertain economic growth keepslog buyers cautious, and low lumber prices prevent material price increases. Thepositive influence of a weaker U.S. dollar has not translated into significantimprovements in wood or paper markets, largely due to anemic worldwide economicgrowth. At the same time, lumber markets have been oversupplied and will likelyremain so as the onset of winter reduces new construction and repair and remodelactivity.

The Company continues to receive strong interest in its real estate propertiesfrom conservation buyers and developers. We continue to execute our strategy ofevaluating our real estate holdings to determine which properties should bepositioned for sale or exchange rather than for continued use as timberlands.Anticipated real estate revenue for the year is expected to be between $85 and$95 million.

The Company expects lumber and plywood prices to decline in the fourth quarterfrom third quarter levels due to sufficient supply of both products and seasonaldemand slowdown as housing activity slows during the winter months. MDF salesvolume should continue to increase as the new MDF line adds production, and MDFprices should hold at current levels.

The Company expects fourth quarter earnings to be between $0.24 and $0.29 pershare.

"Today's actions bring certainty for our investors in an uncertain equity marketand will allow us to continue delivering the value generated by our portfolio oflands, over time, through price appreciation and sustainable dividend income,"concluded Holley.

Earnings Conference Call, Webcast, and Supplemental Information

Plum Creek's conference call is scheduled today at 2:00 PM Pacific time.Executive management will discuss today's actions, current business conditions,and the outlook for the fourth quarter of 2002.

Live access to today's conference call is available on Plum Creek's website. Goto Plum Creek's Internet site, www.plumcreek.com , and click on the "Investor"link.

To access the call via telephone, dial 877/679-9051 or 952/556-2804 (outsideNorth America) prior to the scheduled start time and reference the Plum Creekearnings call. A recorded replay of the call will be available for 48 hoursafter the call by dialing 800/615-3210 or 703/326-3020 (outside North America)and entering the conference code 5761547.

Supplemental financial information for Plum Creek operations is availableattached to the earnings release in the investor information section of PlumCreek's website at www.plumcreek.com.

Plum Creek is one of the largest landowners in the nation, with over 7.8 millionacres of timberlands in every region of the United States and ten wood productmanufacturing facilities in the Northwest.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of thePrivate Litigation Reform Act of 1995, as amended. Some of these forward-lookingstatements can be identified by the use of forward-looking words such as"believes," "expects," "may," "will," "should," "seek," "approximately,""intends," "plans," "estimates," or "anticipates," or the negative of thosewords or other comparable terminology. A number of important factors could causeactual results to differ materially from those described in the forward-lookingstatements. Some of these factors include, but are not limited to, changes ingovernmental, legislative and environmental restrictions; catastrophic lossesfrom fires, floods, windstorms, earthquakes, volcanic eruptions, insectinfestations or diseases; changes in economic conditions and competition in ourdomestic and export markets; our failure to qualify as a REIT or our failure toachieve the expected competitive advantages of operating as a REIT; anunanticipated reduction in the demand for timber products and/or anunanticipated increase in the supply of timber products; our failure to makestrategic acquisitions or to integrate any such acquisitions effectively or,conversely, our failure to make strategic divestitures; the failure to meet ourexpectations with respect to our likely future performance; and other factorsdescribed in our filings with the Securities and Exchange Commission, which areavailable at the web site maintained by the Securities and Exchange Commissionat "http://www.sec.gov." It is likely that if one or more of the risksmaterializes, or if one or more assumptions proves to be incorrect, the currentexpectations of Plum Creek and its management will not be realized.Forward-looking statements speak only as of the date made, and neither PlumCreek nor its management undertakes any obligation to update or revise anyforward-looking statements.

More information on Plum Creek Timber Co. may be accessed at:http://www.businesswire.com/cnn/pcl.shtml.

                    PLUM CREEK TIMBER COMPANY, INC.                   CONSOLIDATED STATEMENT OF INCOME                              (UNAUDITED)                                                Quarter Ended                                       -------------------------------                                         September 30,   September 29,                                            2002            2001                                       --------------   --------------                                       (In Millions, Except Per Share)Revenues:   Timber                              $         170    $         119   Real Estate                                    38               19   Manufacturing                                 101                -   Other                                           1                3                                       --------------   --------------     Total Revenues                              310              141Costs and Expenses:   Cost of Goods Sold:     Timber                                       87               41     Real Estate                                  11                2     Manufacturing                                95                -     Other                                         1                1                                       --------------   --------------        Total Cost of Goods Sold                 194               44   Selling, General and Administrative            19               10                                       --------------   --------------           Total Costs and Expenses              213               54                                       --------------   --------------Operating Income                                  97               87Interest Expense, net                             25                9                                       --------------   --------------Income before Income Taxes                        72               78Provision for Income Taxes                         2               30                                       --------------   --------------Net Income                             $          70    $          48                                       ==============   ==============Net Income per Share - Basic           $        0.38    $        0.43                                       ==============   ==============Net Income per Share - Diluted         $        0.38    $        0.42                                       ==============   ==============Weighted average number of Shares outstanding - Basic                           184.8            112.7                                       --------------   --------------Weighted average number of Shares outstanding - Diluted                         185.5            113.9                                       --------------   --------------                    PLUM CREEK TIMBER COMPANY, INC.                   CONSOLIDATED STATEMENT OF INCOME                              (UNAUDITED)                                              Nine Months Ended                                        ------------------------------                                         September 30,  September 29,                                             2002           2001                                        --------------- --------------                                       (In Millions, Except Per Share)Revenues:    Timber                              $          481  $         297    Real Estate                                     79             53    Manufacturing                                  291              -    Other                                            5              8                                        --------------- --------------      Total Revenues                               856            358Costs and Expenses:    Cost of Goods Sold:      Timber                                       232            111      Real Estate                                   29              8      Manufacturing                                278              -      Other                                          1              1                                        --------------- --------------         Total Cost of Goods Sold                  540            120    Selling, General and Administrative             53             28                                        --------------- --------------            Total Costs and Expenses               593            148                                        --------------- --------------Operating Income                                   263            210Interest Expense, net                               77             30                                        --------------- --------------Income before Income Taxes                         186            180Provision for Income Taxes                           7             68                                        --------------- --------------Net Income                              $          179  $         112                                        =============== ==============Net Income per Share - Basic            $         0.97  $        1.00                                        =============== ==============Net Income per Share - Diluted          $         0.97  $        0.98                                        =============== ==============Weighted average number of Shares outstanding - Basic                             184.7          112.7                                        --------------- --------------Weighted average number of Shares outstanding - Diluted                           185.4          113.9                                        --------------- --------------                   PLUM CREEK TIMBER COMPANY, INC.                      CONSOLIDATED BALANCE SHEET                                        September 30,    December 31,                                            2002             2001                                       --------------- ---------------                                         (Unaudited)                                      (In Millions, Except Share Data)ASSETSCurrent Assets:    Cash and Cash Equivalents          $          270  $          193    Restricted Advance from     Customer                                      23               -    Accounts Receivable                            50              35    Inventories                                    52              52    Investment in Grantor Trust                    10              12    Other Current Assets                           14              14                                       --------------- ---------------                                                  419             306Timber and Timberlands -  Net                   3,477           3,480Property, Plant and Equipment  -  Net                                307             316Other Assets                                        5              20                                       --------------- ---------------    Total Assets                       $        4,208  $        4,122                                       =============== ===============LIABILITIESCurrent Liabilities:    Current Portion of     Long-Term Debt                    $           34  $           34    Accounts Payable                               25              27    Interest Payable                               35              21    Wages Payable                                  19              21    Taxes Payable                                  15               9    Deferred Revenue                               41              14    Liabilities Associated with     Grantor Trust                                 10              11    Other Current Liabilities                      16              12                                       --------------- ---------------                                                  195             149Long-Term Debt                                  1,171           1,178Line of Credit                                    527             469Deferred Tax Liability                             42              38Long-Term Timberland Obligations                   19              20Other Liabilities                                  21              21                                       --------------- ---------------    Total Liabilities                           1,975           1,875                                       --------------- ---------------Commitments and ContingenciesSTOCKHOLDERS' EQUITYPreferred Stock, $0.01 par value, authorized shares - 75 million, outstanding - none                                 -               -Common Stock, $0.01 par value, authorized shares - 300 million, outstanding - 184,859,619 at September 30, 2002 and 183,825,407 at December 31, 2001                   2               2Additional Paid-In Capital                      2,197           2,227Retained Earnings                                  34              17Other Equity                                        -               1                                       --------------- ---------------    Total Stockholders' Equity                  2,233           2,247                                       --------------- ---------------    Total Liabilities and     Stockholders' Equity              $        4,208  $        4,122                                       =============== ===============

CONTACT:
Plum Creek Timber Company, Inc.
John Hobbs, 800/858-5347 (Investor Relations)
www.plumcreek.com

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