8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 23, 2007

PLUM CREEK TIMBER COMPANY, INC.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	1-10239	91-1912863
(State of Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

999 Third Avenue, Suite 4300 Seattle, Washington	98104-4096
(Address of Principal Executive Offices)	(Zip Code)

(206) 467-3600

Registrant’s Telephone Number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14.d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2. Financial Information

Item 2.02 Results of Operations and Financial Condition

On July 23, 2007, Plum Creek Timber Company, Inc. issued a press release reporting its results of operations and related matters for the quarter ended June 30, 2007, and posted to its website (www.plumcreek.com) certain supplemental financial information for the quarter ended June 30, 2007. A copy of the press release and the supplemental financial information are attached hereto as Exhibits 99.1 and 99.2, respectively.

Section 9. Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d) Exhibits. The following exhibits are furnished with this report:

Exhibit No.
99.1	Press release of Plum Creek Timber Company, Inc. issued July 23, 2007, reporting results of operations and related matters for the quarter ended June 30, 2007.
99.2	Supplemental Financial Information for the quarter ended June 30, 2007, posted on July 23, 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PLUM CREEK TIMBER COMPANY, INC.
By:	/s/ David W. Lambert
	David W. Lambert
	Senior Vice President and Chief Financial Officer

DATED: July 23, 2007

PLUM CREEK TIMBER COMPANY, INC.

Exhibit Index

Exhibit No.
99.1	Press release of Plum Creek Timber Company, Inc. issued July 23, 2007, reporting results of operations and related matters for the quarter ended June 30, 2007.
99.2	Supplemental Financial Information for the quarter ended June 30, 2007, posted on July 23, 2007.

EX-99.1

Exhibit 99.1

Plum Creek Timber Company, Inc. 999 Third Avenue, Suite 4300 Seattle, Washington 98104 206 467 3600

News Release
	For more information contact:
For immediate release	Investors: John Hobbs 1-800-858-5347
July 23, 2007	Media: Kathy Budinick 1-800-467-3751

Plum Creek Timber Company, Inc. Reports Results for Second Quarter 2007

SEATTLE, Wash. – Plum Creek Timber Company, Inc. (NYSE: PCL) today announced second quarter earnings of $60 million, or $0.34 per diluted share, on revenues of $395 million. Earnings for the second quarter of 2006 were $62 million, or $0.34 per diluted share, on revenues of $380 million. Results for the second quarter of 2007 include a $2 million after-tax gain on the sale of an industrial mineral asset. As a result, income from continuing operations for the quarter was $58 million, or $0.33 per diluted share.

Earnings for the first six months of 2007 were $105 million, or $0.59 per diluted share, on revenues of $764 million. Income from continuing operations for the first six months of 2007 was $103 million, or $0.58 per diluted share. Earnings for the first six months of 2006 were $156 million, or $0.85 per diluted share, on revenues of $794 million. Results for the first six months of 2006 included a $2 million after-tax cumulative effect of accounting changes. As a result, income from continuing operations for the first six months of 2006 was $154 million, or $0.84 per diluted share.

Cash provided by operating activities in the second quarter of 2007 totaled $73 million. The company ended the second quarter with $107 million in cash and cash equivalents.

“We continue to capitalize on the operational flexibility that our broad asset base provides with the objective of maximizing its total long-term value,” said Rick Holley, Plum Creek’s president and chief executive officer. “While our performance for the quarter is similar to last year’s, we experienced weaker sawlog markets and stronger pulpwood markets than we did a year ago. Our near-term harvest decisions responded to these markets. We increased our pulpwood harvests to capture attractive price opportunities and decreased our sawlog harvests, allowing these valuable assets to continue to grow. Meanwhile, our land sales efforts are capturing excellent values for our lands with a variety of alternative uses.”

Review of Operations

The Northern Resources segment reported operating profit of $14 million compared to $21 million during the same period of 2006. During the second quarter, average sawlog prices were approximately 3 percent lower than they were during the same period of 2006. The company reduced its sawlog harvest in hardwood dominated regions where prices were

-more-

Plum Creek Timber Company Reports Results

Page 2

particularly weak. As a result, the Northern sawlog harvest was 10 percent lower than the second quarter of 2006. Average pulpwood prices were up modestly compared to the second quarter of 2006 while pulpwood harvests were similar to the previous year’s level.

Operating profit in the Southern Resources segment was $41 million, down $7 million from the $48 million reported during the same period of 2006. A combination of reduced sawlog demand and a lower-value mix of sawlogs resulted in a 13 percent decline in the company’s reported sawlog price compared to the same period of 2006. As planned, the company’s harvest mix during the second quarter included a greater proportion of smaller-diameter sawlogs than the prior year. This lower-value harvest mix accounted for 3 percent of the reported 13 percent price decline for Southern sawlogs. While the overall sawlog harvest was similar to last year’s level, the company shifted its harvest activity toward more attractive markets in western areas of the South, as extremely dry conditions in the eastern regions of the South allowed for excellent timberland access resulting in downward price pressure for timber in the region. The company increased its Southern pulpwood harvest approximately 15 percent compared to the prior year in response to favorable pulpwood demand and 16 percent higher pulpwood prices.

The Real Estate segment reported revenue of $71 million and operating income of $47 million. Second quarter 2006 Real Estate segment revenue was $52 million resulting in operating income of $27 million. During the second quarter the company sold approximately 31,000 acres of land. These sales included 21,250 acres of small, non-strategic lands at average prices approaching $1,300 per acre, 500 acres of conservation properties sold at more than $6,600 per acre, and approximately 8,700 acres of recreation property sold at an average price of more than $3,100 per acre. The sale of nearly 600 acres of development properties captured more than $21,000 per acre.

The Manufacturing segment reported operating profit of $2 million compared to $10 million for the second quarter of 2006. The segment’s strategic focus on higher-value specialty and industrial products drove a profitable quarter despite challenging commodity lumber and plywood markets. Lumber and MDF sales volumes were lower than the second quarter of 2006 while plywood sales volumes were up modestly. Lumber and plywood prices were down 12 percent and 11 percent, respectively, and MDF prices improved 10 percent over the second quarter of 2006.

Share Repurchase

In early May, the company’s board of directors increased the company’s existing share repurchase authorization to $200 million. During the quarter the company repurchased $89 million, or approximately 2.2 million shares, of common stock at an average price of $40.29 per share. The shares repurchased during the quarter represent a 1.2 percent reduction in outstanding shares. As of June 30, 2007, the company had 174.6 million shares of common stock outstanding and $111 million remaining in its current share repurchase authorization.

-more-

Plum Creek Timber Company Reports Results

Page 3

Outlook

The company expects to report income from continuing operations between $1.40 and $1.55 per share for the year. Third quarter earnings are expected to be between $0.43 and $0.48 per share.

“We’re reducing the top end of our guidance range for the year by a nickel, based on our first-half performance and our expectations of a relatively flat housing market during the second half of the year,” Holley continued. “While pulpwood markets remain healthy, sawlog markets continue to bounce along the bottom. Our real estate segment continues to capture excellent values for our lands and we expect to meet our segment business goals. We’ll continue to exercise our operational flexibility and make our near-term decisions with a view of maximizing long-term value.”

The Northern Resources segment harvest is expected to increase during the third quarter from the seasonally low second quarter levels, while in the Southern Resources segment, the company expects to maintain its harvests near second quarter levels.

Log prices are expected to be fairly stable across the regions with any price movements driven by temporary changes in local supply and demand dynamics.

The company continues to expect Real Estate segment revenues for the year to be between $330 million and $350 million. Of this amount, the sale of development properties is expected to be between $35 million and $45 million. Third quarter revenues are expected to be between $110 million and $120 million.

The Manufacturing segment is expected to report improved results in the third quarter, due to strong pricing and demand for MDF and improved specialty plywood markets.

“Disciplined and effective capital allocation remains our top priority,” Holley concluded. “We will continue to evaluate all our investment opportunities with the ultimate goal of increasing the per share value of our shareholders’ investment.”

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, July 23, at 5p.m. EDT (2p.m. PDT). A live webcast of the conference call may be accessed through Plum Creek’s Web site at www.plumcreek.com by clicking on the “Investors” link.

Investors without internet access should dial 1-800-572-9852 at least 10 minutes prior to the start time, referencing Plum Creek’s earnings. Those wishing to access the call from outside the United States/Canada should dial 1-706-645-9676, also referencing Plum Creek’s earnings. Replay of the call will be available for 48 hours after completion of the live call and can be accessed at 1-800-642-1687 or 1-706-645-9291 (international calls), using the code 7942042.

-more-

Plum Creek Timber Company Reports Results

Page 4

Supplemental financial information for Plum Creek operations, including statistical data, is available in the “Investors” information section of Plum Creek’s Web site at www.plumcreek.com.

###

Plum Creek is the largest and most geographically diverse private landowner in the nation with 8.2 million acres of timberlands in major timber producing regions of the United States and 10 wood products manufacturing facilities in the Northwest.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 as amended. Some of these forward-looking statements 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 those words or other comparable terminology. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the cyclical nature of the forest products industry, our ability to harvest our timber, our ability to execute our acquisition strategy, the market for and our ability to sell or exchange non-strategic timberlands and timberland properties that have higher and better uses, and various regulatory constraints. These and other risks, uncertainties and assumptions are detailed from time to time in our filings with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and the Securities Act of 1933, as amended. It is likely that if one or more of the risks materializes, or if one or more assumptions prove to be incorrect, the current expectations of Plum Creek and its management will not be realized. Forward-looking statements are not guarantees of performance, and speak only as of the date made, and neither Plum Creek nor its management undertakes any obligation to update or revise any forward-looking statements.

-more-

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Six Months Ended
	June 30, 2007			June 30, 2006
	(In Millions, Except Per Share Amounts)
Revenues:
Timber	$	399		$	407
Real Estate		110			113
Manufacturing		244			264
Other		11			10
Total Revenues		764			794
Costs and Expenses:
Cost of Goods Sold:
Timber		258			234
Real Estate		40			41
Manufacturing		236			240
Other		1			1
Total Cost of Goods Sold		535			516
Selling, General and Administrative		59			54
Total Costs and Expenses		594			570
Other Operating Income (Expense), net		1			2
Operating Income		171			226
Interest Expense, net		71			65
Income before Income Taxes		100			161
Provision (Benefit) for Income Taxes		(3	)		7
Income From Continuing Operations		103			154
Gain on Sale of Properties, net of tax		2			—
Income Before Cumulative Effect of Accounting Change		105			154
Cumulative Effect of Accounting Change, net of tax		—			2
Net Income	$	105		$	156
Income From Continuing Operations per Share
—Basic	$	0.58		$	0.84
—Diluted	$	0.58		$	0.84
Net Income per Share
—Basic	$	0.59		$	0.85
—Diluted	$	0.59		$	0.85
Weighted Average Number of Shares Outstanding
—Basic		176.4			183.2
—Diluted		176.8			183.7

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Quarter Ended
	June 30, 2007			June 30, 2006
	(In Millions, Except Per Share Amounts)
Revenues:
Timber	$	190		$	193
Real Estate		71			52
Manufacturing		129			130
Other		5			5
Total Revenues		395			380
Costs and Expenses:
Cost of Goods Sold:
Timber		124			113
Real Estate		23			25
Manufacturing		123			117
Other		—			—
Total Cost of Goods Sold		270			255
Selling, General and Administrative		30			26
Total Costs and Expenses		300			281
Other Operating Income (Expense), net		(1	)		—
Operating Income		94			99
Interest Expense, net		35			34
Income before Income Taxes		59			65
Provision for Income Taxes		1			3
Income from Continuing Operations		58			62
Gain on Sale of Properties, net of tax		2			—
Net Income	$	60		$	62
Income from Continuing Operations per Share
—Basic	$	0.33		$	0.34
—Diluted	$	0.33		$	0.34
Net Income per Share
—Basic	$	0.34		$	0.34
—Diluted	$	0.34		$	0.34
Weighted Average Number of Shares Outstanding
—Basic		175.7			182.3
—Diluted		176.1			182.8

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30,       2007			December 31, 2006
	(In Millions, Except Per Share Amounts)
ASSETS
Current Assets:
Cash and Cash Equivalents	$	107		$	273
Restricted Advance from Customer		—			4
Accounts Receivable		47			40
Like-Kind Exchange Funds Held in Escrow		58			—
Inventories		75			83
Deferred Tax Asset		7			7
Real Estate Development Properties		4			3
Assets Held for Sale		86			82
Other Current Assets		20			21
		404			513
Timber and Timberlands—Net		3,836			3,876
Property, Plant and Equipment—Net		206			216
Investment in Grantor Trusts		26			28
Other Assets		34			28
Total Assets	$	4,506		$	4,661
LIABILITIES
Current Liabilities:
Current Portion of Long-Term Debt	$	72		$	125
Accounts Payable		42			42
Interest Payable		29			30
Wages Payable		18			27
Taxes Payable		22			24
Deferred Revenue		12			17
Other Current Liabilities		15			16
		210			281
Long-Term Debt		1,920			1,617
Line of Credit		345			581
Deferred Tax Liability		20			25
Other Liabilities		68			68
Total Liabilities		2,563			2,572
Commitments and Contingencies
STOCKHOLDERS’ EQUITY
Preferred Stock, $0.01 par value, authorized shares—75.0, outstanding—none		—			—
Common Stock, $0.01 par value, authorized shares—300.6, outstanding (net of Treasury Stock)—174.6 at June 30, 2007, and 177.1 at December 31, 2006		2			2
Additional Paid-In Capital		2,199			2,190
Retained Earnings		170			214
Treasury Stock, at cost, Common Shares—12.3 at June 30, 2007, and 9.5 at December 31, 2006		(418	)		(307	)
Accumulated Other Comprehensive Income (Loss)		(10	)		(10	)
Total Stockholders’ Equity		1,943			2,089
Total Liabilities and Stockholders’ Equity	$	4,506		$	4,661

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	June 30, 2007			June 30, 2006
	(In Millions)
Cash Flows From Operating Activities:
Net Income	$	105		$	156
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization		65			60
Basis of Real Estate Sold		23			23
Deferred Income Taxes		(5	)		—
Gain on Sales of Properties and Other Assets		(2	)		—
Working Capital Changes Impacting Cash Flow:
Like-Kind Exchange Funds		(58	)		20
Other Working Capital Changes		(14	)		(6	)
Expenditures for Real Estate Development		(6	)		(2	)
Other		3			1
Net Cash Provided By Operating Activities		111			252
Cash Flows From Investing Activities:
Capital Expenditures (Excluding Timberland Acquisitions)		(33	)		(36	)
Timberlands Acquired		(9	)		(17	)
Proceeds from Sales of Properties and Other Assets		2			1
Other		2			(3	)
Net Cash Used In Investing Activities		(38	)		(55	)
Cash Flows From Financing Activities:
Dividends		(149	)		(147	)
Borrowings on Line of Credit		1,596			1,474
Repayments on Line of Credit		(1,832	)		(1,453	)
Repayment of Short-Term Debt		—			(50	)
Proceeds from Issuance of Long-Term Debt		350			216
Principal Payments and Retirement of Long-Term Debt		(99	)		(29	)
Proceeds from Stock Option Exercises		6			3
Acquisition of Treasury Stock		(111	)		(184	)
Net Cash Used In Financing Activities		(239	)		(170	)
Increase (Decrease) In Cash and Cash Equivalents		(166	)		27
Cash and Cash Equivalents:
Beginning of Period		273			369
End of Period	$	107		$	396

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Quarter Ended
	June 30, 2007			June 30, 2006
	(In Millions)
Cash Flows From Operating Activities:
Net Income	$	60		$	62
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization		32			29
Basis of Real Estate Sold		14			13
Deferred Income Taxes		(2	)		(1	)
Gain on Sale of Properties and Other Assets		(2	)		—
Working Capital Changes Impacting Cash Flow:
Like-Kind Exchange Funds		(48	)		(9	)
Other Working Capital Changes		17			14
Expenditures for Real Estate Development		(4	)		(2	)
Other		6			6
Net Cash Provided By Operating Activities		73			112
Cash Flows From Investing Activities:
Capital Expenditures (Excluding Timberland Acquisitions)		(22	)		(19	)
Timberlands Acquired		(9	)		(17	)
Proceeds from Sales of Properties and Other Assets		2			1
Other		—			(3	)
Net Cash Used In Investing Activities		(29	)		(38	)
Cash Flows From Financing Activities:
Dividends		(74	)		(73	)
Borrowings on Line of Credit		947			811
Repayments on Line of Credit		(1,255	)		(790	)
Repayment of Short-Term Debt		—			(50	)
Proceeds from Issuance of Long-Term Debt		350			216
Principal Payments and Retirement of Long-Term Debt		(27	)		(28	)
Proceeds from Stock Option Exercises		1			1
Acquisition of Treasury Stock		(89	)		(184	)
Net Cash Used In Financing Activities		(147	)		(97	)
Decrease In Cash and Cash Equivalents		(103	)		(23	)
Cash and Cash Equivalents:
Beginning of Period		210			419
End of Period	$	107		$	396

EX-99.2

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Six Months Ended
	June 30, 2007			June 30, 2006
	(In Millions, Except Per Share Amounts)
Revenues:
Timber	$	399		$	407
Real Estate		110			113
Manufacturing		244			264
Other		11			10
Total Revenues		764			794
Costs and Expenses:
Cost of Goods Sold:
Timber		258			234
Real Estate		40			41
Manufacturing		236			240
Other		1			1
Total Cost of Goods Sold		535			516
Selling, General and Administrative		59			54
Total Costs and Expenses		594			570
Other Operating Income (Expense), net		1			2
Operating Income		171			226
Interest Expense, net		71			65
Income before Income Taxes		100			161
Provision (Benefit) for Income Taxes		(3	)		7
Income From Continuing Operations		103			154
Gain on Sale of Properties, net of tax		2			—
Income Before Cumulative Effect of Accounting Change		105			154
Cumulative Effect of Accounting Change, net of tax		—			2
Net Income	$	105		$	156
Income From Continuing Operations per Share
—Basic	$	0.58		$	0.84
—Diluted	$	0.58		$	0.84
Net Income per Share
—Basic	$	0.59		$	0.85
—Diluted	$	0.59		$	0.85
Weighted Average Number of Shares Outstanding
—Basic		176.4			183.2
—Diluted		176.8			183.7

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Quarter Ended
	June 30, 2007			June 30, 2006
	(In Millions, Except Per Share Amounts)
Revenues:
Timber	$	190		$	193
Real Estate		71			52
Manufacturing		129			130
Other		5			5
Total Revenues		395			380
Costs and Expenses:
Cost of Goods Sold:
Timber		124			113
Real Estate		23			25
Manufacturing		123			117
Other		—			—
Total Cost of Goods Sold		270			255
Selling, General and Administrative		30			26
Total Costs and Expenses		300			281
Other Operating Income (Expense), net		(1	)		—
Operating Income		94			99
Interest Expense, net		35			34
Income before Income Taxes		59			65
Provision for Income Taxes		1			3
Income from Continuing Operations		58			62
Gain on Sale of Properties, net of tax		2			—
Net Income	$	60		$	62
Income from Continuing Operations per Share
—Basic	$	0.33		$	0.34
—Diluted	$	0.33		$	0.34
Net Income per Share
—Basic	$	0.34		$	0.34
—Diluted	$	0.34		$	0.34
Weighted Average Number of Shares Outstanding
—Basic		175.7			182.3
—Diluted		176.1			182.8

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30,       2007			December 31, 2006
	(In Millions, Except Per Share Amounts)
ASSETS
Current Assets:
Cash and Cash Equivalents	$	107		$	273
Restricted Advance from Customer		—			4
Accounts Receivable		47			40
Like-Kind Exchange Funds Held in Escrow		58			—
Inventories		75			83
Deferred Tax Asset		7			7
Real Estate Development Properties		4			3
Assets Held for Sale		86			82
Other Current Assets		20			21
		404			513
Timber and Timberlands—Net		3,836			3,876
Property, Plant and Equipment—Net		206			216
Investment in Grantor Trusts		26			28
Other Assets		34			28
Total Assets	$	4,506		$	4,661
LIABILITIES
Current Liabilities:
Current Portion of Long-Term Debt	$	72		$	125
Accounts Payable		42			42
Interest Payable		29			30
Wages Payable		18			27
Taxes Payable		22			24
Deferred Revenue		12			17
Other Current Liabilities		15			16
		210			281
Long-Term Debt		1,920			1,617
Line of Credit		345			581
Deferred Tax Liability		20			25
Other Liabilities		68			68
Total Liabilities		2,563			2,572
Commitments and Contingencies
STOCKHOLDERS’ EQUITY
Preferred Stock, $0.01 par value, authorized shares—75.0, outstanding—none		—			—
Common Stock, $0.01 par value, authorized shares—300.6, outstanding (net of Treasury Stock)—174.6 at June 30, 2007, and 177.1 at December 31, 2006		2			2
Additional Paid-In Capital		2,199			2,190
Retained Earnings		170			214
Treasury Stock, at cost, Common Shares—12.3 at June 30, 2007, and 9.5 at December 31, 2006		(418	)		(307	)
Accumulated Other Comprehensive Income (Loss)		(10	)		(10	)
Total Stockholders’ Equity		1,943			2,089
Total Liabilities and Stockholders’ Equity	$	4,506		$	4,661

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	June 30, 2007			June 30, 2006
	(In Millions)
Cash Flows From Operating Activities:
Net Income	$	105		$	156
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization		65			60
Basis of Real Estate Sold		23			23
Deferred Income Taxes		(5	)		—
Gain on Sales of Properties and Other Assets		(2	)		—
Working Capital Changes Impacting Cash Flow:
Like-Kind Exchange Funds		(58	)		20
Other Working Capital Changes		(14	)		(6	)
Expenditures for Real Estate Development		(6	)		(2	)
Other		3			1
Net Cash Provided By Operating Activities		111			252
Cash Flows From Investing Activities:
Capital Expenditures (Excluding Timberland Acquisitions)		(33	)		(36	)
Timberlands Acquired		(9	)		(17	)
Proceeds from Sales of Properties and Other Assets		2			1
Other		2			(3	)
Net Cash Used In Investing Activities		(38	)		(55	)
Cash Flows From Financing Activities:
Dividends		(149	)		(147	)
Borrowings on Line of Credit		1,596			1,474
Repayments on Line of Credit		(1,832	)		(1,453	)
Repayment of Short-Term Debt		—			(50	)
Proceeds from Issuance of Long-Term Debt		350			216
Principal Payments and Retirement of Long-Term Debt		(99	)		(29	)
Proceeds from Stock Option Exercises		6			3
Acquisition of Treasury Stock		(111	)		(184	)
Net Cash Used In Financing Activities		(239	)		(170	)
Increase (Decrease) In Cash and Cash Equivalents		(166	)		27
Cash and Cash Equivalents:
Beginning of Period		273			369
End of Period	$	107		$	396

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Quarter Ended
	June 30, 2007			June 30, 2006
	(In Millions)
Cash Flows From Operating Activities:
Net Income	$	60		$	62
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization		32			29
Basis of Real Estate Sold		14			13
Deferred Income Taxes		(2	)		(1	)
Gain on Sale of Properties and Other Assets		(2	)		—
Working Capital Changes Impacting Cash Flow:
Like-Kind Exchange Funds		(48	)		(9	)
Other Working Capital Changes		17			14
Expenditures for Real Estate Development		(4	)		(2	)
Other		6			6
Net Cash Provided By Operating Activities		73			112
Cash Flows From Investing Activities:
Capital Expenditures (Excluding Timberland Acquisitions)		(22	)		(19	)
Timberlands Acquired		(9	)		(17	)
Proceeds from Sales of Properties and Other Assets		2			1
Other		—			(3	)
Net Cash Used In Investing Activities		(29	)		(38	)
Cash Flows From Financing Activities:
Dividends		(74	)		(73	)
Borrowings on Line of Credit		947			811
Repayments on Line of Credit		(1,255	)		(790	)
Repayment of Short-Term Debt		—			(50	)
Proceeds from Issuance of Long-Term Debt		350			216
Principal Payments and Retirement of Long-Term Debt		(27	)		(28	)
Proceeds from Stock Option Exercises		1			1
Acquisition of Treasury Stock		(89	)		(184	)
Net Cash Used In Financing Activities		(147	)		(97	)
Decrease In Cash and Cash Equivalents		(103	)		(23	)
Cash and Cash Equivalents:
Beginning of Period		210			419
End of Period	$	107		$	396

Plum Creek Timber Company, Inc.

Segment Data

(Unaudited)

	Six Months 2007			Six Months 2006
	(In Millions)
Revenues:
Northern Resources	$	178		$	202
Southern Resources		253			243
Real Estate		110			113
Manufacturing		244			264
Other		11			10
Eliminations		(32	)		(38	)
Total Revenues	$	764		$	794
Operating Income (Loss)
Northern Resources	$	33		$	56
Southern Resources		87			98
Real Estate		68			71
Manufacturing		1			18
Other		10			9
Other Costs and Eliminations		(28	)		(26	)
Total Operating Income	$	171		$	226

Plum Creek Timber Company, Inc.

Segment Data

(Unaudited)

	Second Quarter 2007			Second Quarter 2006
	(In Millions)
Revenues:
Northern Resources	$	79		$	87
Southern Resources		126			121
Real Estate		71			52
Manufacturing		129			130
Other		5			5
Eliminations		(15	)		(15	)
Total Revenues	$	395		$	380
Operating Income (Loss)
Northern Resources	$	14		$	21
Southern Resources		41			48
Real Estate		47			27
Manufacturing		2			10
Other		5			4
Other Costs and Eliminations		(15	)		(11	)
Total Operating Income	$	94		$	99

Plum Creek Timber Company, Inc.

Selected Operating Statistics

(Unaudited)

		2007						2006
		1st Qtr		2nd Qtr		YTD		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Sales Realization	Units
Southern Resources
Sawlog	$/Ton Stumpage	$	32	$	31	$	31	$	35	$	36	$	33	$	33	$	34
Pulpwood	$/Ton Stumpage	$	9	$	9	$	9	$	8	$	8	$	7	$	8	$	8
Northern Resources
Sawlog	$/Ton Delivered	$	71	$	76	$	73	$	77	$	78	$	81	$	74	$	77
Pulpwood	$/Ton Delivered	$	37	$	38	$	38	$	37	$	37	$	38	$	37	$	37
Lumber (1)	$/MBF	$	390	$	400	$	395	$	467	$	456	$	410	$	385	$	431
Plywood (1)	$/MSF	$	398	$	407	$	402	$	452	$	455	$	431	$	407	$	437
Fiberboard (1)	$/MSF	$	490	$	529	$	510	$	445	$	480	$	518	$	506	$	486
Sales Volume
Southern Resources
Sawlog	1,000 Tons		1,681		1,691		3,372		1,749		1,685		1,548		1,629		6,611
Pulpwood	1,000 Tons		1,954		1,901		3,855		1,642		1,651		1,917		2,319		7,529
Total Harvest			3,635		3,592		7,227		3,391		3,336		3,465		3,948		14,140
Northern Resources
Sawlog	1,000 Tons		960		789		1,749		1,151		877		954		1,093		4,075
Pulpwood	1,000 Tons		819		527		1,346		766		517		734		725		2,742
Total Harvest			1,779		1,316		3,095		1,917		1,394		1,688		1,818		6,817
Lumber	MBF		95,265		95,701		190,966		99,367		97,059		93,925		86,880		377,231
Plywood	MSF		72,582		72,454		145,036		75,769		71,269		70,109		60,845		277,992
Fiberboard	MSF		64,872		65,938		130,810		69,076		70,411		63,698		51,502		254,687

(1) Represents prices at mill level.

Plum Creek Timber Company, Inc.

Land Sale Statistics

(Unaudited)

	2007						2006
	1st Qtr		2nd Qtr		YTD		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
Acres Sold
Small Non-strategic		8,645		21,255		29,900		15,050		11,765		19,040		14,240		60,095
Large Non-strategic		—		—		—		—		—		—		—		—
Conservation		4,210		480		4,690		2,580		2,185		4,600		15,020		24,385
HBU/Recreation		3,750		8,695		12,445		3,095		7,225		7,875		4,575		22,770
Development Properties		45		595		640		1,075		645		1,970		635		4,325
Conservation Easements		n/a		n/a		n/a		n/a		n/a		n/a		n/a		n/a
		16,650		31,025		47,675		21,800		21,820		33,485		34,470		111,575
Price per Acre
Small Non-strategic	$	1,445	$	1,295	$	1,340	$	1,465	$	1,270	$	1,765	$	1,730	$	1,585
Large Non-strategic		—		—		—		—		—		—		—		—
Conservation	$	1,740	$	6,660	$	2,240	$	2,085	$	1,500	$	3,865	$	990	$	1,695
HBU/Recreation	$	4,300	$	3,150	$	3,495	$	5,310	$	4,140	$	3,775	$	3,620	$	4,070
Development Properties	$	22,045	$	21,260	$	21,310	$	8,595	$	5,295	$	21,950	$	14,995	$	15,125
Conservation Easements		—		—		—	$	1,300		—	$	605		—	$	885
Revenue, ($ millions)
Small Non-strategic	$	13	$	28	$	41	$	22	$	15	$	33	$	26	$	96
Large Non-strategic		—		—		—		—		—		—		—		—
Conservation	$	7	$	3	$	10	$	5	$	3	$	18	$	15	$	41
HBU/Recreation	$	16	$	27	$	43	$	17	$	30	$	30	$	16	$	93
Development Properties	$	1	$	13	$	14	$	9	$	4	$	43	$	9	$	65
Conservation Easements		—		—		—	$	8		—	$	5		—	$	13
	$	37	$	71	$	108	$	61	$	52	$	129	$	66	$	308
Proceeds from Joint Ventures(1)	$	2		—	$	2		—		—		—		—		—
Basis of Real Estate Sold ($ millions)	$	9	$	14	$	23	$	10	$	13	$	43	$	19	$	85

(1) Not reflected in the Land Sale Statistics (Acres Sold, Price per Acre and Revenue)