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 26, 2010

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 26, 2010, Plum Creek Timber Company, Inc. issued a press release reporting its results of operations for the second quarter ended June 30, 2010, and posted to its website (www.plumcreek.com) certain supplemental financial and statistical information for the second quarter ended June 30, 2010. A copy of the press release and the supplemental financial and statistical 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 26, 2010, reporting results of operations for the second quarter ended June 30, 2010.
99.2	Supplemental Financial and Statistical Information for the second quarter ended June 30, 2010, posted on July 26, 2010.

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 26, 2010

PLUM CREEK TIMBER COMPANY, INC.

Exhibit Index

Exhibit No.
99.1	Press release of Plum Creek Timber Company, Inc. issued July 26, 2010, reporting results of operations for the second quarter ended June 30, 2010.
99.2	Supplemental Financial and Statistical Information for the second quarter ended June 30, 2010, posted on July 26, 2010.

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 26, 2010	Media: Kathy Budinick 1-888-467-3751

Plum Creek Timber Company, Inc. Reports Results for Second Quarter 2010

SEATTLE – Plum Creek Timber Company, Inc. (NYSE: PCL) today announced second quarter earnings of $35 million, or $0.21 per diluted share, on revenues of $258 million. Earnings for the second quarter of 2009 were $32 million, or $0.19 per diluted share, on revenues of $272 million.

Earnings for the first six months of 2010 were $122 million, or $0.75 per diluted share, on revenues of $575 million. Results for the first six months of 2010 include an $11 million ($0.07 per diluted share) after-tax gain on the first-quarter sale of certain natural gas assets. As a result, income from continuing operations for the first six months was $111 million, or $0.68 per diluted share.

Earnings for the first six months of 2009 were $189 million, or $1.15 per diluted share, on revenues of $742 million. Results for the first six months of 2009 included the effect of a $7 million after-tax ($12 million pre-tax) impairment charge related to the company’s lumber manufacturing business, which reduced net income by $0.04 per diluted share, and approximately $2 million after-tax ($4 million pre-tax) of severance costs, reducing net income by $0.01 per diluted share. The results for the first six months also benefited from the reversal of prior period tax expenses and a reduction in the deferred tax liability. These changes resulted in a one-time tax benefit of approximately $8 million, or $0.05 per diluted share.

Cash provided by operating activities for the second quarter of 2010 totaled $78 million. The company ended the quarter with $250 million in cash and cash equivalents.

“Our second quarter results were better than expected,” said Rick Holley, Plum Creek’s president and chief executive officer. “Northern sawlog prices, both softwood in the Pacific Northwest and hardwood in the Lake States and Northeast improved more than we had initially anticipated. Pulpwood markets throughout the country remained attractive, and improved demand from industrial panel customers led to solid gains in our manufacturing segment. In addition, activity in our real estate segment was better than expected.”

Review of Operations

The Northern Resources segment reported a $3 million profit for the quarter, up $10 million from the $7 million operating loss it reported during the second quarter of 2009. Sawlog

-more-

Plum Creek Timber Company Reports Results

Page 2

demand and pricing improved from the extreme lows experienced during the second quarter of 2009. Average sawlog prices improved more than $15 per ton, or 30 percent, from the lows they reached during the second quarter of 2009. The company’s second-quarter sawlog harvest of 484,000 tons was 113,000 tons, or 30 percent, higher than the same period of 2009 as lumber customers increased demand in response to attractive lumber prices. Average pulpwood prices were unchanged, and pulpwood harvest volumes were approximately 12 percent, or 49,000 tons, lower compared to the second quarter of 2009.

Operating profit in the Southern Resources segment was $24 million compared to a $23 million profit reported during the second quarter of 2009. Higher prices for the company’s timber offset the impact of lower harvest volumes compared to the second quarter of 2009. Sawlog prices were $1 per ton, or about 5 percent higher, while sawlog harvest volumes were approximately 8 percent lower. Pulpwood prices were $12 per ton, or $3 per ton (31 percent), higher than the prices during the second quarter of 2009. The second quarter pulpwood harvest was approximately 400,000 tons lower than the volume harvested during the second quarter of 2009 as part of the company’s plan to reduce the pulpwood harvest by 1 million tons from 2009’s level.

The Real Estate segment reported total revenue of $43 million and operating income of $26 million. Second quarter 2009 Real Estate segment revenue was $78 million resulting in operating income of $44 million. The 2009 results included a $38 million sale of Wisconsin timberlands that contributed approximately $23 million to the segment’s income.

Approximately 20,000 acres were sold during the second quarter of 2010. These rural land sales consisted of approximately 18,000 acres of recreation lands and approximately 2,000 acres of small, non-strategic timberlands. The recreation lands captured average values of $2,200 per acre, consistent with those of the past 18 months. The small, non-strategic timberlands captured approximately $1,100 per acre. Conservation land sales of 215 acres captured average values of $1,450 per acre, and 60 acres of development land were sold at approximately $6,000 per acre.

The Manufacturing segment reported $10 million of operating income for the second quarter, significantly above the breakeven results for the segment during the second quarter of 2009. The segment results benefitted from $2 million of income from the sale of equipment from its closed Pablo lumber mill. Improved industrial demand drove price and volume gains for both the plywood and medium density fiberboard product lines. Lumber sales volumes were significantly lower as the result of the permanent closure of two lumber mills in 2009. Lumber prices were higher than the extreme lows set in the second quarter of 2009. While our average lumber price realization increased 54 percent over the 2009 second quarter average, a portion of the increase resulted from the favorable mix shift that occurred with the sawmill closures. The remaining sawmill produces higher-priced pine boards which had a 30 percent improvement in price.

Share Repurchase

During the second quarter, the company used $50 million of cash sourced from strategic timberland dispositions made in 2009 and the first quarter of 2010 to repurchase

-more-

Plum Creek Timber Company Reports Results

Page 3

approximately 1.37 million shares at an average price of $36.37 per share. As of June 30, 2010 Plum Creek had approximately 161.6 million shares outstanding.

Outlook

Business conditions have improved over the past year but the pace of recovery is slow. Pulpwood customers’ end markets remain healthy and industrial end-market demand for solid-wood products has improved. However, demand for sawlogs remains relatively weak as repair and remodel end-use markets and residential construction markets remain near historic lows.

During the second quarter, Northern harvests are typically at their lowest level of the year as thawing spring weather restricts harvesting activities. Both sawlog and pulpwood harvests in the Northern Resources segment are expected to increase during the third quarter and approach the harvest levels of the first quarter of 2010.

The Southern sawlog harvest is expected to be similar to the first quarter’s level while the Southern pulpwood harvest is expected to approach 1.65 million tons during the third quarter.

Third quarter Real Estate segment sales are expected to be between $50 million and $55 million. As in years past, the segment’s results are expected to exhibit a seasonal pattern of higher activity and sales levels in the second half of the year. The company expects full-year Real Estate segment sales to be between $350 million and $370 million, including the $89 million third-phase of the Montana conservation sale which will close in December.

Manufacturing results are expected to approximate the first quarter’s level as lumber prices have corrected from the strong levels experienced earlier in the year and demand for medium density fiberboard is expected to moderate during the second half of the year.

Reflecting the second quarter results and the outlook for the remainder of the year, the company now expects 2010 income from continuing operations to be between $1.35 and $1.50 per share. The company anticipates third quarter income from continuing operations to be between $0.20 and $0.25 per share.

“Disciplined capital allocation is one of the most important tools we have for long-term shareholder value creation,” continued Holley. “We continue to capture attractive arbitrage opportunities by sourcing capital from the sale of non-strategic properties at attractive private-market values and repurchasing our own stock at a significant discount to private-market value. Our proactive management of our timberland portfolio has allowed us to protect long-term shareholder value, and our conservative capital structure has provided the financial flexibility needed to make value-maximizing operating decisions.”

Earnings Conference Call and Supplemental Information

Plum Creek will hold a conference call today, July 26, at 5 p.m. EDT (2 p.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.

-more-

Plum Creek Timber Company Reports Results

Page 4

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 70045404.

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 approximately 7 million acres of timberlands in major timber producing regions of the United States and 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 or disposition 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, 2010		June 30, 2009
	(In Millions, Except Per Share Amounts)
Revenues:
Timber	$	284	$	262
Real Estate		142		346
Manufacturing		138		124
Other		11		10
Total Revenues		575		742
Costs and Expenses:
Cost of Goods Sold:
Timber		209		206
Real Estate		51		128
Manufacturing		122		140
Other		1		1
Total Cost of Goods Sold		383		475
Selling, General and Administrative		50		55
Total Costs and Expenses		433		530
Other Operating Income (Expense), net		9		—
Operating Income		151		212
Equity Earnings from Timberland Venture		29		29
Interest Expense, net:
Interest Expense (Debt Obligations to Unrelated Parties)		39		47
Interest Expense (Note Payable to Timberland Venture)		29		29
Total Interest Expense, net		68		76
Gain on Extinguishment of Debt		—		1
Income before Income Taxes		112		166
Provision (Benefit) for Income Taxes		1		(23	)
Income From Continuing Operations		111		189
Gain on Sale of Properties, net of tax		11		—
Net Income	$	122	$	189
Per Share Amounts:
Income From Continuing Operations - Basic	$	0.68	$	1.15
Income From Continuing Operations - Diluted	$	0.68	$	1.15
Net Income per Share - Basic	$	0.75	$	1.15
Net Income per Share - Diluted	$	0.75	$	1.15
Weighted Average Number of Shares Outstanding
- Basic		162.6		163.8
- Diluted		162.8		163.9

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Quarter Ended
	June 30, 2010		June 30, 2009
	(In Millions, Except Per Share Amounts)
Revenues:
Timber	$	133	$	123
Real Estate		43		78
Manufacturing		78		66
Other		4		5
Total Revenues		258		272
Costs and Expenses:
Cost of Goods Sold:
Timber		100		98
Real Estate		16		33
Manufacturing		68		64
Other		1		1
Total Cost of Goods Sold		185		196
Selling, General and Administrative		21		23
Total Costs and Expenses		206		219
Other Operating Income (Expense), net		4		—
Operating Income		56		53
Equity Earnings from Timberland Venture		15		14
Interest Expense, net:
Interest Expense (Debt Obligations to Unrelated Parties)		19		23
Interest Expense (Note Payable to Timberland Venture)		15		15
Total Interest Expense, net		34		38
Income before Income Taxes		37		29
Provision (Benefit) for Income Taxes		2		(3	)
Net Income	$	35	$	32
Per Share Amounts:
Net Income per Share - Basic	$	0.21	$	0.19
Net Income per Share - Diluted	$	0.21	$	0.19
Weighted Average Number of Shares Outstanding
- Basic		162.3		162.8
- Diluted		162.5		162.9

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June  30, 2010			December 31, 2009
	(In Millions, Except Per Share Amounts)
ASSETS
Current Assets:
Cash and Cash Equivalents	$	250		$	299
Accounts Receivable		35			24
Taxes Receivable		1			15
Inventories		45			46
Deferred Tax Asset		7			6
Assets Held for Sale		98			115
Other Current Assets		21			14
		457			519
Timber and Timberlands, net		3,455			3,487
Property, Plant and Equipment, net		149			156
Equity Investment in Timberland Venture		202			201
Deferred Tax Asset		12			14
Investment in Grantor Trusts (at Fair Value)		32			33
Other Assets		36			38
Total Assets	$	4,343		$	4,448
LIABILITIES
Current Liabilities:
Current Portion of Long-Term Debt	$	51		$	55
Line of Credit		320			—
Accounts Payable		30			32
Interest Payable		24			25
Wages Payable		14			20
Taxes Payable		16			14
Deferred Revenue		31			16
Other Current Liabilities		12			21
		498			183
Long-Term Debt		1,577			1,625
Line of Credit		—			320
Note Payable to Timberland Venture		783			783
Other Liabilities		79			71
Total Liabilities		2,937			2,982
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) - 161.6 at June 30, 2010, and 162.8 at December 31, 2009		2			2
Additional Paid-In Capital		2,239			2,233
Retained Earnings		96			110
Treasury Stock, at cost, Common Shares - 26.2 at June 30, 2010, and 24.8 at December 31, 2009		(911	)		(860	)
Accumulated Other Comprehensive Income (Loss)		(20	)		(19	)
Total Stockholders’ Equity		1,406			1,466
Total Liabilities and Stockholders’ Equity	$	4,343		$	4,448

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	June 30, 2010			June 30, 2009
	(In Millions)
Cash Flows From Operating Activities:
Net Income	$	122		$	189
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation, Depletion and Amortization (includes $10 Lumber Impairment Loss in 2009)		48			57
Basis of Real Estate Sold		43			118
Equity Earnings from Timberland Venture		(29	)		(29	)
Distributions from Timberland Venture		28			25
Deferred Income Taxes		1			(21	)
Gain on Sales of Properties and Other Assets		(13	)		—
Deferred Revenue from Long-Term Gas Leases (Net of Amortization)		6			(4	)
Working Capital Changes Impacting Cash Flow:
Like-Kind Exchange Funds		—			48
Income Tax Receivable		14			17
Other Working Capital Changes		(21	)		(8	)
Other		8			2
Net Cash Provided By Operating Activities		207			394
Cash Flows From Investing Activities:
Capital Expenditures (Excluding Timberland Acquisitions)		(31	)		(28	)
Proceeds from Sales of Properties and Other Assets		13			—
Net Cash Used In Investing Activities		(18	)		(28	)
Cash Flows From Financing Activities:
Dividends		(136	)		(138	)
Borrowings on Line of Credit		1,137			431
Repayments on Line of Credit		(1,137	)		(456	)
Principal Payments and Retirement of Long-Term Debt		(53	)		(138	)
Proceeds from Stock Option Exercises		2			—
Acquisition of Treasury Stock		(51	)		(87	)
Net Cash Used In Financing Activities		(238	)		(388	)
Increase (Decrease) In Cash and Cash Equivalents		(49	)		(22	)
Cash and Cash Equivalents:
Beginning of Period		299			369
End of Period	$	250		$	347

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Quarter Ended
	June 30, 2010			June 30, 2009
	(In Millions)
Cash Flows From Operating Activities:
Net Income	$	35		$	32
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation, Depletion and Amortization		24			24
Basis of Real Estate Sold		11			29
Equity Earnings from Timberland Venture		(15	)		(14	)
Deferred Income Taxes		—			(4	)
Gain on Sales of Properties and Other Assets		(2	)		—
Deferred Revenue from Long-Term Gas Leases (Net of Amortization)		(2	)		(2	)
Working Capital Changes Impacting Cash Flow:
Income Tax Receivable		14			18
Other Working Capital Changes		11			25
Other		2			2
Net Cash Provided By Operating Activities		78			110
Cash Flows From Investing Activities:
Capital Expenditures (Excluding Timberland Acquisitions)		(18	)		(11	)
Proceeds from Sales of Properties and Other Assets		2			—
Net Cash Used In Investing Activities		(16	)		(11	)
Cash Flows From Financing Activities:
Dividends		(68	)		(69	)
Borrowings on Line of Credit		569			206
Repayments on Line of Credit		(569	)		(211	)
Principal Payments and Retirement of Long-Term Debt		—			(33	)
Proceeds from Stock Option Exercises		2			—
Acquisition of Treasury Stock		(50	)		—
Net Cash Used In Financing Activities		(116	)		(107	)
Increase (Decrease) In Cash and Cash Equivalents		(54	)		(8	)
Cash and Cash Equivalents:
Beginning of Period		304			355
End of Period	$	250		$	347

EX-99.2

Exhibit 99.2

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Six Months Ended
	June 30, 2010		June 30, 2009
	(In Millions, Except Per Share Amounts)
Revenues:
Timber	$	284	$	262
Real Estate		142		346
Manufacturing		138		124
Other		11		10
Total Revenues		575		742
Costs and Expenses:
Cost of Goods Sold:
Timber		209		206
Real Estate		51		128
Manufacturing		122		140
Other		1		1
Total Cost of Goods Sold		383		475
Selling, General and Administrative		50		55
Total Costs and Expenses		433		530
Other Operating Income (Expense), net		9		—
Operating Income		151		212
Equity Earnings from Timberland Venture		29		29
Interest Expense, net:
Interest Expense (Debt Obligations to Unrelated Parties)		39		47
Interest Expense (Note Payable to Timberland Venture)		29		29
Total Interest Expense, net		68		76
Gain on Extinguishment of Debt		—		1
Income before Income Taxes		112		166
Provision (Benefit) for Income Taxes		1		(23	)
Income From Continuing Operations		111		189
Gain on Sale of Properties, net of tax		11		—
Net Income	$	122	$	189
Per Share Amounts:
Income From Continuing Operations - Basic	$	0.68	$	1.15
Income From Continuing Operations - Diluted	$	0.68	$	1.15
Net Income per Share - Basic	$	0.75	$	1.15
Net Income per Share - Diluted	$	0.75	$	1.15
Weighted Average Number of Shares Outstanding
- Basic		162.6		163.8
- Diluted		162.8		163.9

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Quarter Ended
	June 30, 2010		June 30, 2009
	(In Millions, Except Per Share Amounts)
Revenues:
Timber	$	133	$	123
Real Estate		43		78
Manufacturing		78		66
Other		4		5
Total Revenues		258		272
Costs and Expenses:
Cost of Goods Sold:
Timber		100		98
Real Estate		16		33
Manufacturing		68		64
Other		1		1
Total Cost of Goods Sold		185		196
Selling, General and Administrative		21		23
Total Costs and Expenses		206		219
Other Operating Income (Expense), net		4		—
Operating Income		56		53
Equity Earnings from Timberland Venture		15		14
Interest Expense, net:
Interest Expense (Debt Obligations to Unrelated Parties)		19		23
Interest Expense (Note Payable to Timberland Venture)		15		15
Total Interest Expense, net		34		38
Income before Income Taxes		37		29
Provision (Benefit) for Income Taxes		2		(3	)
Net Income	$	35	$	32
Per Share Amounts:
Net Income per Share - Basic	$	0.21	$	0.19
Net Income per Share - Diluted	$	0.21	$	0.19
Weighted Average Number of Shares Outstanding
- Basic		162.3		162.8
- Diluted		162.5		162.9

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2010			December 31, 2009
	(In Millions, Except Per Share Amounts)
ASSETS
Current Assets:
Cash and Cash Equivalents	$	250		$	299
Accounts Receivable		35			24
Taxes Receivable		1			15
Inventories		45			46
Deferred Tax Asset		7			6
Assets Held for Sale		98			115
Other Current Assets		21			14
		457			519
Timber and Timberlands, net		3,455			3,487
Property, Plant and Equipment, net		149			156
Equity Investment in Timberland Venture		202			201
Deferred Tax Asset		12			14
Investment in Grantor Trusts (at Fair Value)		32			33
Other Assets		36			38
Total Assets	$	4,343		$	4,448
LIABILITIES
Current Liabilities:
Current Portion of Long-Term Debt	$	51		$	55
Line of Credit		320			—
Accounts Payable		30			32
Interest Payable		24			25
Wages Payable		14			20
Taxes Payable		16			14
Deferred Revenue		31			16
Other Current Liabilities		12			21
		498			183
Long-Term Debt		1,577			1,625
Line of Credit		—			320
Note Payable to Timberland Venture		783			783
Other Liabilities		79			71
Total Liabilities		2,937			2,982
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) - 161.6 at June 30, 2010, and 162.8 at December 31, 2009		2			2
Additional Paid-In Capital		2,239			2,233
Retained Earnings		96			110
Treasury Stock, at cost, Common Shares - 26.2 at June 30, 2010, and 24.8 at December 31, 2009		(911	)		(860	)
Accumulated Other Comprehensive Income (Loss)		(20	)		(19	)
Total Stockholders’ Equity		1,406			1,466
Total Liabilities and Stockholders’ Equity	$	4,343		$	4,448

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	June 30, 2010			June 30, 2009
	(In Millions)
Cash Flows From Operating Activities:
Net Income	$	122		$	189
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation, Depletion and Amortization (includes $10 Lumber Impairment Loss in 2009)		48			57
Basis of Real Estate Sold		43			118
Equity Earnings from Timberland Venture		(29	)		(29	)
Distributions from Timberland Venture		28			25
Deferred Income Taxes		1			(21	)
Gain on Sales of Properties and Other Assets		(13	)		—
Deferred Revenue from Long-Term Gas Leases (Net of Amortization)		6			(4	)
Working Capital Changes Impacting Cash Flow:
Like-Kind Exchange Funds		—			48
Income Tax Receivable		14			17
Other Working Capital Changes		(21	)		(8	)
Other		8			2
Net Cash Provided By Operating Activities		207			394
Cash Flows From Investing Activities:
Capital Expenditures (Excluding Timberland Acquisitions)		(31	)		(28	)
Proceeds from Sales of Properties and Other Assets		13			—
Net Cash Used In Investing Activities		(18	)		(28	)
Cash Flows From Financing Activities:
Dividends		(136	)		(138	)
Borrowings on Line of Credit		1,137			431
Repayments on Line of Credit		(1,137	)		(456	)
Principal Payments and Retirement of Long-Term Debt		(53	)		(138	)
Proceeds from Stock Option Exercises		2			—
Acquisition of Treasury Stock		(51	)		(87	)
Net Cash Used In Financing Activities		(238	)		(388	)
Increase (Decrease) In Cash and Cash Equivalents		(49	)		(22	)
Cash and Cash Equivalents:
Beginning of Period		299			369
End of Period	$	250		$	347

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Quarter Ended
	June 30, 2010			June 30, 2009
	(In Millions)
Cash Flows From Operating Activities:
Net Income	$	35		$	32
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation, Depletion and Amortization		24			24
Basis of Real Estate Sold		11			29
Equity Earnings from Timberland Venture		(15	)		(14	)
Deferred Income Taxes		—			(4	)
Gain on Sales of Properties and Other Assets		(2	)		—
Deferred Revenue from Long-Term Gas Leases (Net of Amortization)		(2	)		(2	)
Working Capital Changes Impacting Cash Flow:
Income Tax Receivable		14			18
Other Working Capital Changes		11			25
Other		2			2
Net Cash Provided By Operating Activities		78			110
Cash Flows From Investing Activities:
Capital Expenditures (Excluding Timberland Acquisitions)		(18	)		(11	)
Proceeds from Sales of Properties and Other Assets		2			—
Net Cash Used In Investing Activities		(16	)		(11	)
Cash Flows From Financing Activities:
Dividends		(68	)		(69	)
Borrowings on Line of Credit		569			206
Repayments on Line of Credit		(569	)		(211	)
Principal Payments and Retirement of Long-Term Debt		—			(33	)
Proceeds from Stock Option Exercises		2			—
Acquisition of Treasury Stock		(50	)		—
Net Cash Used In Financing Activities		(116	)		(107	)
Increase (Decrease) In Cash and Cash Equivalents		(54	)		(8	)
Cash and Cash Equivalents:
Beginning of Period		304			355
End of Period	$	250		$	347

Plum Creek Timber Company, Inc.

Segment Data

(Unaudited)

	Six Months 2010			Six Months 2009
	(In Millions)
Revenues:
Northern Resources	$	105		$	92
Southern Resources		187			172
Real Estate		142			346
Manufacturing		138			124
Other		11			10
Eliminations		(8	)		(2	)
Total Revenues	$	575		$	742
Operating Income (Loss)
Northern Resources	$	7		$	(5	)
Southern Resources		54			43
Real Estate		88			214
Manufacturing		14			(22	)
Other (A)		15			9
Other Costs and Eliminations, net		(27	)		(27	)
Total Operating Income	$	151		$	212

^(A) During the first quarter of 2010, the company agreed to terminate a land lease for consideration of $5 million from the lessor. The land lease had been accounted for as an operating lease. The $5 million consideration is reported as Other Operating Gain/(Loss) in our Other Segment since the consideration was primarily for the release of mineral rights. The $5 million is included in Other Operating Income (Expense), net in the Consolidated Statements of Income.

Plum Creek Timber Company, Inc.

Segment Data

(Unaudited)

	Second Quarter 2010			Second Quarter 2009
	(In Millions)
Revenues:
Northern Resources	$	46		$	35
Southern Resources		89			89
Real Estate		43			78
Manufacturing		78			66
Other		4			5
Eliminations		(2	)		(1	)
Total Revenues	$	258		$	272
Operating Income (Loss)
Northern Resources	$	3		$	(7	)
Southern Resources		24			23
Real Estate		26			44
Manufacturing		10			—
Other		4			4
Other Costs and Eliminations, net		(11	)		(11	)
Total Operating Income	$	56		$	53

Plum Creek Timber Company, Inc

Selected Operating Statistics

(Unaudited)

		2010						2009
		1st Qtr		2nd Qtr		YTD		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		YTD
	Units
Sales Realization
Southern Resources
Sawlog	$/Ton Stumpage	$	23	$	23	$	23	$	24	$	22	$	22	$	21	$	22
Pulpwood	$/Ton Stumpage	$	13	$	12	$	13	$	11	$	9	$	9	$	10	$	10
Northern Resources
Sawlog	$/Ton Delivered	$	59	$	66	$	62	$	57	$	50	$	56	$	56	$	55
Pulpwood	$/Ton Delivered	$	38	$	38	$	38	$	43	$	38	$	38	$	38	$	40
Lumber (1)	$/MBF	$	501	$	522	$	512	$	374	$	340	$	448	$	477	$	397
Plywood (1)	$/MSF	$	352	$	397	$	375	$	362	$	353	$	361	$	352	$	357
Fiberboard (1)	$/MSF	$	588	$	607	$	599	$	601	$	593	$	596	$	599	$	597
Sales Volume
Southern Resources
Sawlog	1,000 Tons		1,274		1,122		2,396		942		1,217		1,250		993		4,402
Pulpwood	1,000 Tons		1,526		1,448		2,974		1,487		1,849		2,014		1,649		6,999
Total Harvest			2,800		2,570		5,370		2,429		3,066		3,264		2,642		11,401
Northern Resources
Sawlog	1,000 Tons		627		484		1,111		525		371		632		609		2,137
Pulpwood	1,000 Tons		527		348		875		613		397		691		567		2,268
Total Harvest			1,154		832		1,986		1,138		768		1,323		1,176		4,405
Lumber	MBF		28,791		30,813		59,604		35,123		60,371		40,590		28,428		164,512
Plywood	MSF		45,104		47,002		92,106		35,439		40,729		41,479		37,271		154,918
Fiberboard	MSF		35,347		50,010		85,357		34,044		32,802		34,282		30,964		132,092

(1) Represents prices at mill level.

Plum Creek Timber Company, Inc.

Land Sale Statistics

(Unaudited)

	2010						2009
	1st Qtr (1)		2nd Qtr		YTD		1st Qtr (2)		2nd Qtr		3rd Qtr		4th Qtr		YTD
Acres Sold
Small Non-strategic		29,640		1,950		31,590		1,665		9,840		5,545		2,570		19,620
Large Non-strategic		24,310		—		24,310		—		59,160		—		—		59,160
Conservation		35,120		215		35,335		113,355		3,895		43,695		4,910		165,855
HBU/Recreation		9,080		18,175		27,255		2,180		10,955		10,440		26,700		50,275
Development Properties		730		60		790		1,485		25		515		35		2,060
Conservation Easements		n/a		n/a		n/a		n/a		n/a		n/a		n/a		n/a
		98,880		20,400		119,280		118,685		83,875		60,195		34,215		296,970
Price per Acre
Small Non-strategic	$	885	$	1,120	$	900	$	1,330	$	900	$	970	$	855	$	950
Large Non-strategic	$	1,320		—	$	1,320		—	$	650		—		—	$	650
Conservation	$	545	$	1,450	$	550	$	2,225	$	1,705	$	350	$	1,280	$	1,690
HBU/Recreation	$	2,125	$	2,210	$	2,185	$	3,420	$	2,200	$	2,115	$	2,200	$	2,235
Development Properties	$	3,050	$	5,985	$	3,270	$	4,075	$	13,650	$	9,190	$	7,485	$	5,520
Conservation Easements		—		—		—		—		—		—		—		—
Revenue, ($ millions)
Small Non-strategic	$	26	$	2	$	28	$	2	$	9	$	5	$	2	$	19
Large Non-strategic	$	32		—	$	32		—	$	38		—		—	$	38
Conservation	$	19		—	$	19	$	252	$	7	$	15	$	6	$	280
HBU/Recreation	$	19	$	40	$	59	$	7	$	24	$	22	$	59	$	112
Development Properties	$	2		—	$	3	$	6		—	$	5		—	$	12
Conservation Easements		—		—		—		—		—		—		—		—
	$	99	$	43	$	142	$	268	$	78	$	48	$	67	$	461
Revenue from Non-Cash Exchange (3 )		—		—		—		—		—	$	25		—	$	25
Basis of Real Estate Sold (4)	$	32	$	11	$	43	$	89	$	29	$	21	$	16	$	155

(1) During the first quarter of 2010 the company sold 24,000 acres of Large Non-strategic lands located in Louisiana for $32 million. In addition, the company sold two larger Conservation properties totaling 35,000 acres in Wisconsin and Arkansas and an aggregation of 23,000 acres of Small Non-strategic timberlands located primarily in the Lake States region.

(2) During the 1st quarter of 2009 we sold 112,000 acres in Montana to a conservation buyer for $250 million. The sale is presented as a Conservation sale. The transaction included 56,000 acres of Conservation property, 10,000 acres of Small Non-strategic property, 45,000 acres of HBU/Recreation property, and 1,000 acres of Development property.

(3) During the 3rd quarter of 2009 we completed a non-cash exchange with the State of Washington. We relinquished 20,600 acres, in King County, in exchange for 37 parcels containing more than 6,000 acres in nine counties.

(4) Includes $7 million in the first quarter of 2010 for a 24,000 acre Large Non-strategic sale in Louisiana, $16 million in the second quarter of 2009 for a 59,000 acre Large Non-strategic sale in Wisconsin and $85 million in the first quarter of 2009 for a 112,000 acre Conservation sale in Montana.

PLUM CREEK TIMBER COMPANY, INC.

DEBT MATURITIES SCHEDULE

June 30, 2010

(UNAUDITED)

	Borrowings (1)
	Principal		Weighted Avg. Interest Rate
Quarterly Maturities through 2010:
4th Qtr 2010	$	3	8.050	%
Annual Maturities through 2014:
2011	$	308	7.732	%	(2)
2012	$	603	—		(3)
2013	$	250	6.663	%	(4)
2014	$	3	8.050	%

(1) Does not include repayments on the company’s $750 million revolving line of credit due in 2011.

(2) Principal amount composed of senior notes with principal amounts of $40 million, $3 million, $216 million and $49 million and interest rates of 7.970%, 8.050%, 7.660% and 7.830%, respectively.

(3) Includes $600 million of maturities for the company’s two term credit agreements and senior notes with principal of $3 million and an interest rate of 8.050%. The interest rate on the $350 million term credit agreement is currently based on LIBOR plus 0.45%. The interest rate on the $250 million term credit agreement is currently based on LIBOR plus 1.00%.

(4) Principal amount composed of senior notes with principal amounts of $3 million, $73 million and $174 million and interest rates of 8.050%, 7.760% and 6.180%, respectively.