UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549


                                 FORM 10-Q

                              ---------------

            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                    THE SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

                      Commission File Number 33-55538


                       SCOTIA PACIFIC HOLDING COMPANY
           (Exact name of Registrant as specified in its charter)



           DELAWARE                          74-2652575
 (State or other jurisdiction             (I.R.S. Employer
      of incorporation or              Identification Number)
         organization)


         P. O. BOX 712                          95565
  125 MAIN STREET, 2ND FLOOR                 (Zip Code)
      SCOTIA, CALIFORNIA
     (Address of Principal
      Executive Offices)


     Registrant's telephone number, including area code: (707) 764-2330


     Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes /X/   No /  /

   Number of shares of common stock outstanding at April 29, 1998:  3,000


Registrant meets the conditions set forth in General Instruction H(1)(a)
and (b) of Form 10-Q and is therefore filing this Form with the reduced
disclosure format.

<PAGE>

                             TABLE OF CONTENTS


                                                                      PAGE
PART I.  -  FINANCIAL INFORMATION
     Item 1.   Financial Statements:
          Balance Sheet at March 31, 1998 and December 31, 1997       3
          Statement of Income for the three months ended
               March 31, 1998 and 1997                                4
          Statement of Cash Flows for the three months ended
               March 31, 1998 and 1997                                5
          Condensed Notes to Financial Statements                     6

     Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations               8

PART II.  -  OTHER INFORMATION

     Item 1.   Legal Proceedings                                      10
     Item 6.   Exhibits and Reports on Form 8-K                       10
     Signature                                                        S-1

<PAGE>

                       SCOTIA PACIFIC HOLDING COMPANY

                               BALANCE SHEET
              (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)


<TABLE>
<CAPTION>

                                                    MARCH 31,    DECEMBER 31,
                                                       1998          1997
                                                  ------------  ------------
                                                   (UNAUDITED)
                      ASSETS

<S>                                               <C>           <C>
Current assets:
     Cash and cash equivalents                    $      4,554  $     20,926 
     Receivables:
          Due from Pacific Lumber                        3,587         5,304 
          Accrued interest                                  76           107 
     Prepaid timber harvesting costs                     1,575         1,625 
     Other prepaid expenses and current assets             365           385 
                                                  ------------  ------------ 
          Total current assets                          10,157        28,347 
Timber and timberlands, net of accumulated
     depletion of $159,736 and $158,519,
     respectively                                      153,375       154,288 
Property and equipment, net of accumulated
     depreciation of $6,750 and $6,468,
     respectively                                       10,140        10,393 
Deferred financing costs, net                           13,172        13,475 
Deferred income taxes                                   28,740        28,753 
Restricted cash                                         28,108        28,434 
Other assets                                             1,907         1,827 
                                                  ------------  ------------ 
                                                  $    245,599  $    265,517 
                                                  ============  ============ 
     LIABILITIES AND DEFICIENCY IN NET ASSETS

Current liabilities:
     Due to Pacific Lumber                        $        139  $        147 
     Accrued interest                                    4,780        11,305 
     Other accrued liabilities                             588           846 
     Long-term debt, current maturities                 20,513        19,335 
                                                  ------------  ------------ 
          Total current liabilities                     26,020        31,633 
Long-term debt, less current maturities                288,679       300,630 
                                                  ------------  ------------ 
          Total liabilities                            314,699       332,263 
                                                  ------------  ------------ 
Contingencies

Deficiency in net assets:
     Common stock, $1.00 par value, 3,000 shares
          authorized and issued                              3             3 
     Excess of liabilities assumed and common
          stock issued over assets contributed         (59,376)      (59,376)
     Cumulative activity since inception                (9,727)       (7,373)
                                                  ------------  ------------ 
          Total deficiency in net assets               (69,100)      (66,746)
                                                  ------------  ------------ 
                                                  $    245,599  $    265,517 
                                                  ============  ============ 


<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>

<PAGE>

                       SCOTIA PACIFIC HOLDING COMPANY

                            STATEMENT OF INCOME
                         (IN THOUSANDS OF DOLLARS)


<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED
                                                           MARCH 31,
                                                  --------------------------
                                                       1998          1997
                                                  ------------  ------------
                                                          (UNAUDITED)
<S>                                               <C>           <C>
Log sales to Pacific Lumber                       $      9,223  $     17,508 
                                                  ------------  ------------
Operating expenses:
     General and administrative                          1,453         1,705 
     Depletion and depreciation                          1,514         2,557 
                                                  ------------  ------------
                                                         2,967         4,262 
                                                  ------------  ------------

Operating income                                         6,256        13,246 
Other income (expense):
     Interest and other income                             649           675 
     Interest expense                                   (6,496)       (6,854)
                                                  ------------  ------------ 
Income before income taxes                                 409         7,067 
Provision in lieu of income taxes                         (143)       (2,880)
                                                  ------------  ------------ 
Net income                                        $        266  $      4,187 
                                                  ============  ============ 


<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>

<PAGE>

                       SCOTIA PACIFIC HOLDING COMPANY

                          STATEMENT OF CASH FLOWS
                         (IN THOUSANDS OF DOLLARS)


<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED
                                                            MARCH 31,
                                                   --------------------------
                                                        1998          1997
                                                   ------------  ------------
                                                           (UNAUDITED)
<S>                                                <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                    $        266  $      4,187 
     Adjustments to reconcile net income to net
          cash provided by operating activities:
          Provision in lieu of income taxes                 143         2,880 
          Depletion and depreciation                      1,514         2,557 
          Amortization of deferred financing
               costs                                        303           308 
          Increase (decrease) in cash resulting                               
               from changes in:
               Receivables                                1,748        (2,433)
               Amounts due to Pacific Lumber                 (8)            4 
               Accrued interest                          (6,525)       (6,816)
               Other accrued liabilities                   (258)         (107)
          Other                                             (10)         (152)
                                                   ------------  ------------ 
          Net cash provided by (used for)
               operating activities                      (2,827)          428 
                                                   ------------  ------------ 

CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                  (348)         (248)
                                                   ------------  ------------
          Net cash used for investing activities           (348)         (248)
                                                   ------------  ------------ 

CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on Timber Notes                 (10,773)       (8,712)
     Dividends paid                                      (2,750)       (7,000)
     Restricted cash withdrawals, net                        326          202 
                                                   ------------  ------------ 
          Net cash used for financing activities        (13,197)      (15,510)
                                                   ------------  ------------ 

NET DECREASE IN CASH AND CASH EQUIVALENTS               (16,372)      (15,330)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD         20,926        20,345 
                                                   ------------  ------------ 
CASH AND CASH EQUIVALENTS AT END OF PERIOD         $      4,554  $      5,015 
                                                   ============  ============ 

SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND
     FINANCING ACTIVITIES:
     Assumption of net tax liabilities by Pacific
          Lumber                                   $        130  $      2,612 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Interest paid                                 $     12,718  $     13,362 


<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>

<PAGE>

                       SCOTIA PACIFIC HOLDING COMPANY

                  CONDENSED NOTES TO FINANCIAL STATEMENTS

1.        GENERAL

          The information contained in the following notes to the financial
statements is condensed from that which would appear in the annual
financial statements; accordingly, the financial statements included herein
should  be reviewed in conjunction with the financial statements and
related notes thereto contained in the Form 10-K.  Any capitalized terms
used but not defined in these Condensed Notes to Financial Statements are
defined in the "Glossary of Defined Terms" contained in Appendix A. 
Accounting measurements at interim dates inherently involve greater
reliance on estimates than at year end.  The results of operations for the
interim periods presented are not necessarily indicative of the results to
be expected for the entire year.

          The financial statements included herein are unaudited; however,
they include all adjustments of a normal recurring nature which, in the
opinion of management, are necessary to present fairly the financial
position of the Company at March 31, 1998, the results of operations for
the three months ended March 31, 1998 and 1997 and cash flows for the three
months ended March 31, 1998 and 1997.  The Company is a wholly owned
subsidiary of Pacific Lumber which is a wholly owned indirect subsidiary of
MGI.  MGI is a wholly owned subsidiary of MGHI, which is a wholly owned
subsidiary of MAXXAM.

          SFAS No. 130 was issued in June 1997 with adoption required for
fiscal years beginning after December 31, 1997.  SFAS No. 130 requires the
presentation of an additional income measure (termed "comprehensive
income"), which adjusts traditional net income for certain items that
previously were only reflected as direct charges to equity.  For the three
months ended March 31, 1998 and 1997, the Company did not have any items
which would cause such a difference between "traditional" net income and
comprehensive net income.

2.        RESTRICTED CASH

          Restricted cash represents the amount held by the trustee under
the indenture governing the Company's Timber Notes.  In addition, cash and
cash equivalents includes $3,904,000 and $17,784,000 at March 31, 1998 and
December 31, 1997, respectively, which is restricted for debt service
payments on the Timber Notes.

3.        CONTINGENCIES

          The Company's business is subject to a variety of California and
federal laws and regulations dealing with timber harvesting, threatened and
endangered species and habitat for such species, and air and water quality. 
Compliance with such laws and regulations plays a significant role in the
Company's business.  While compliance with such laws, regulations and
judicial and administrative interpretations, together with the cost of
litigation incurred in connection with certain timber harvesting operations
of Pacific Lumber, have increased the costs of the Company, they have not
had a significant adverse effect on the Company's financial position,
results of operations or liquidity.  However, these laws and related
administrative actions and legal challenges have severely restricted the
ability of Pacific Lumber to harvest virgin old growth timber, and to a
lesser extent, residual old growth timber on the Company's timberlands.

          On September 28, 1996, the Pacific Lumber Parties entered into
the Headwaters Agreement with the United States and California which
provides the framework for the acquisition by the United States and
California of the Headwaters Timberlands.  A substantial portion of the
Headwaters Timberlands contains virgin old growth timber.  Approximately
4,900 of these acres are owned by Salmon Creek, with the remaining acreage
being owned by the Company (Pacific Lumber having harvesting rights on
approximately 300 of such acres).  The Headwaters Timberlands would be
transferred in exchange for (a) cash or other consideration from the United
States and California having an aggregate fair market value of $300
million, and (b) approximately 7,800 acres of timberlands to be
acquired from a third party.  As part of the Headwaters Agreement, the
Pacific Lumber Parties agreed to not enter the Headwaters Timberlands to
conduct any logging or salvage operations.

          Closing of the Headwaters Agreement is subject to various
conditions, including federal and California funding,  approval of an SYP,
approval of a Multi-Species HCP and issuance of the Permits and the
issuance of certain tax agreements satisfactory to the Pacific Lumber
Parties.

          In November 1997, President Clinton signed an appropriations bill
which contains authorization for the expenditure of $250 million of federal
funds towards consummation of the Headwaters Agreement.  On February 27,
1998, Pacific Lumber, MAXXAM and various government agencies entered into
the HCP/SYP Agreement regarding certain understandings that they had
reached regarding the Multi-Species HCP, the Permits and the SYP.  The
HCP/SYP Agreement provides that the Permits and Multi-Species HCP would
have a term of 50 years, and would limit the activities which could be
conducted by Pacific Lumber in twelve forest groves to those which would
not be detrimental to marbled murrelet habitat.  These groves aggregate
approximately 8,000 acres and consist of substantial quantities of virgin
and residual old growth redwood and Douglas-fir timber. 

          The Company believes that the HCP/SYP Agreement is a favorable
development that enhances its position in connection with legal and
regulatory challenges to its THPs as well as the prospects for consummation
of the Headwaters Agreement, the approval of the Multi-Species HCP and SYP
and the issuance of the Permits.  Several species, including the northern
spotted owl, the marbled murrelet and the coho salmon, have been listed as
endangered or threatened under the ESA and/or the CESA.  Pacific Lumber has
developed federal and state northern spotted owl management plans which
permit harvesting activities to be conducted so long as Pacific Lumber
adheres to certain measures designed to protect the northern spotted owl. 
The potential impact of the listings of the marbled murrelet and the coho
salmon is more uncertain.  If the Multi-Species HCP is approved, Pacific
Lumber would be issued the Permits, which would allow limited incidental
"take" of listed species so long as there was no "jeopardy" to the continued
existence of the  species and the Multi-Species HCP would identify the
measures to be instituted in order to minimize and mitigate the anticipated
level of take to the greatest extent possible.  The Multi-Species HCP would
not only provide for the Company's compliance with habitat requirements for
currently listed species, it would also provide greater certainty and
protection for the Company with regard to identified species that may be
listed in the future.  Pacific Lumber is attempting to include in the
Multi-Species HCP a resolution of the effect of potential regulatory limits 
by the EPA on sedimentation, temperature and other factors for seventeen
northern California rivers and certain of their tributaries, including
rivers within Pacific Lumber's timberlands.  These limitations would be
aimed at protecting water quality.

          Lawsuits are pending or threatened which seek to prevent Pacific
Lumber from implementing certain of its approved THPs or other operations.
While challenges with respect to Pacific Lumber's young growth timber have
historically been limited, a lawsuit relating to the coho salmon was recently
filed under the ESA which relates to a significant number of THPs covering
young growth timber of Pacific Lumber. While the Company expects these
environmentally focused objections and lawsuits to continue, it believes
that the HCP/SYP Agreement will enhance its position in connection with
these challenges. The Company also believes that the Multi-Species HCP
would expedite the preparation and facilitate approval of its THPs. 

          The HCP/SYP Agreement also contains certain provisions relating
to the SYP.  The Company expects Pacific Lumber to propose an LTSY which is
approximately 10% less than Pacific Lumber's average timber harvest over
the last three years.  If the SYP is approved by the CDF, Pacific Lumber
will have complied with certain BOF regulations requiring that timber
companies project timber growth and harvest on their timberlands over a
100-year planning period and establish an LTSY harvest level.  The SYP must
demonstrate that the average annual harvest over any rolling ten-year
period will not exceed the LTSY harvest level and that Pacific Lumber's
projected timber inventory is capable of sustaining the LTSY harvest level
in the last decade of the 100-year planning period.  An approved  SYP is
expected to be valid for ten years, although it would be subject to review
after five years.  Thereafter,  revised SYPs will  be prepared every decade
that address the LTSY harvest level based upon reassessment of changes in
the resource base and other factors. 

          The final terms of the SYP, the Multi-Species HCP and the Permits
are subject to additional negotiation and agreement among the parties as
well as public review and comment.  While the parties are working
diligently to complete the Multi-Species HCP and the SYP as well as the
other closing conditions contained in the Headwaters Agreement, there can
be no assurance that the Headwaters Agreement will be consummated or that
an SYP, Multi-Species HCP or Permits acceptable to Pacific Lumber will be
approved.  If the Headwaters Agreement is not consummated and Pacific
Lumber is unable to harvest or is severely limited in harvesting on various
of its timberlands, it intends to continue and/or expand its takings
litigation seeking just compensation from the appropriate governmental
agencies on the grounds that such restrictions constitute an uncompensated
governmental taking of private property for public use.

          In the event that a Multi-Species HCP is not approved, Pacific
Lumber will not enjoy the benefits of a more streamlined THP preparation
and review process.  Furthermore, if a Multi-Species HCP acceptable to
Pacific Lumber is not approved, it is impossible for the Company to
determine the potential adverse effect of the listings of the marbled
murrelet and coho salmon or the EPA's potential regulatory limitations on river
sedimentation on the Company's financial position, results of operations or
liquidity until such time as the various regulatory and legal issues are
resolved; however, if Pacific Lumber is unable to harvest, or is severely
limited in harvesting, on significant amounts of its timberlands, such
effect could be materially adverse to the Company.

4.        DEFICIENCY IN NET ASSETS

          A reconciliation of the cumulative activity component of the
Company's deficiency in net assets is as follows (in thousands):


<TABLE>
<CAPTION>

                                                           THREE MONTHS
                                                              ENDED
                                                            MARCH 31,
                                                               1998
                                                          ------------ 
<S>                                                       <C>
Balance at beginning of period                            $     (7,373)
Net income                                                         266 
Assumption of net tax liabilities by Pacific Lumber                130 
Dividends paid                                                  (2,750)
                                                          ------------ 
Balance at end of period                                  $     (9,727)
                                                          ============ 


</TABLE>


ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS

          The following should be read in conjunction with the response to
Part I, Item 1 of this Report and Items 7 and 8 of the Form 10-K subsequent to
the filing of the Form 10-K.  Any capitalized terms used but not defined in
this Item are defined in the "Glossary of Defined Terms"contained in Appendix A.

          This section contains statements which constitute "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995.  These statements appear in several places in this Form
10-Q.  Such statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "estimates," "will,"
"should," "plans" or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of
strategy.  Readers are cautioned that any such forward-looking statements
are not guarantees of future performance and involve significant risks and
uncertainties, and that actual results may vary materially from those in
the forward-looking statements as a result of various factors.  These
factors include the effectiveness of management's strategies and decisions,
general economic and business conditions, developments in technology, new
or modified statutory or regulatory requirements and changing prices and
market conditions.  This section and the Form 10-K identify other factors
that could cause such differences.  No assurance can be given that these
are all of the factors that could cause actual results to vary materially
from the forward-looking statements.

RESULTS OF OPERATIONS

          General
          The Mbfe concept was developed for use in structuring the Timber
Notes in order to take account of the relative values of the species and
categories of timber included in the Company Timber.  Under the Mbfe
concept, one thousand board feet, net Scribner scale, of residual old
growth redwood timber equates to one Mbfe.  One thousand board feet, net
Scribner scale, of each other species and category of timber included in
the Company Timber was assigned a value in Mbfe equal to a fraction of an
Mbfe.  This fraction was generally determined by dividing the SBE Price
applicable to such species and category for the first half of 1992 by the
SBE Price applicable to residual old growth redwood for the first half of
1992.

          The Master Purchase Agreement generally contemplates that all
sales of logs by the Company to Pacific Lumber will be at the SBE Price.  The
Harvest Value Schedule, which sets forth the SBE Prices, is published by the
California State Board of Equalization at six month intervals for purposes
of computing yield taxes imposed on the harvesting of timber.  The published
SBE Prices are based on average actual log sales prices between unrelated
parties over a recent twenty-four month period.  Therefore, SBE Prices may
not necessarily be representative of actual prices that would be realized
from unrelated parties at subsequent dates.

          Logging operations on the Company's timberlands are highly
seasonal.  Logging activity is normally significantly higher in the months
of April through November than in the months of December through March. 
Management expects that the Company's revenues and cash flows will continue
to reflect that seasonality.

          Log sales to Pacific Lumber
          Net sales from logs were $9.2 million and $17.5 million for the
three months ended March 31, 1998 and 1997, respectively.  The volume of
log deliveries for such periods represented approximately 15,600 Mbfe and
30,000 Mbfe, respectively.  The decrease in volume was due largely to well-
above-normal rainfall during the 1998 period which hindered logging
operations.

     Operating income and income before income taxes
     Operating income was $6.3 million and $13.2 million for the three
months ended March 31, 1998 and 1997, respectively.  Income before income
taxes was $0.4 million and $7.1 million for the three months ended March
31, 1998 and 1997, respectively.  The decline in operating income and
income before income taxes is principally due to the decrease in log sales
discussed above.

FINANCIAL CONDITION AND INVESTING AND FINANCING ACTIVITIES

          In January 1998, the Company repaid approximately $10.8 million
of the aggregate principal amount outstanding on the Timber Notes in
accordance with Scheduled Amortization.

          The Company paid $2.8 million of dividends to Pacific Lumber
during the three months ended March 31, 1998.  At March 31, 1998, the
indenture governing the Timber Notes permitted the payment of $0.8 million
of dividends which were paid on April 20, 1998.

TRENDS

          This section contains statements which constitute "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995.  See above for cautionary information with respect to
such forward-looking statements.

          The Company's business is subject to a variety of California and
federal laws and regulations dealing with timber harvesting, threatened and
endangered species and habitat for such species, and air and water quality. 
Moreover, these laws and regulations are modified from time to time and are
subject to judicial and administrative interpretation.  The Company is
subject to certain pending matters which could have a material adverse
effect on the Company's financial position, results of operations or
liquidity.  There can be no assurance that these pending matters or future
governmental regulations, legislation or judicial or administrative
decisions would not have a material adverse effect on the Company.  See
Part II. Item 1. "Legal Proceedings" and Note 3 to the Financial Statements
for further information regarding regulatory and environmental factors and
the Headwaters Agreement affecting the Company.

          Judicial or regulatory actions adverse to the Company, increased
regulatory delays and inclement weather in northern California,
independently or collectively, could impair Pacific Lumber's ability to
conduct normal timber harvesting operations on the Company's timberlands.

                        PART II.  OTHER INFORMATION


ITEM 1.        LEGAL PROCEEDINGS

          Reference is made to Item 3 of the Form 10-K for information
concerning material legal proceedings with respect to the Company.  No
material developments have occurred with respect to such legal proceedings.


ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

          A.        EXHIBITS:

                    27   Financial Data Schedule

          B.   REPORTS ON FORM 8-K:

                    None.

<PAGE>

                                 SIGNATURE


          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 thereunto duly authorized, who has signed this report on
behalf of the Registrant and as the principal accounting officer of the
Registrant.


                                  SCOTIA PACIFIC HOLDING COMPANY



Date: May 1, 1998                 By:    /S/ GARY L. CLARK       
                                           Gary L. Clark
                                   Vice President - Finance and
                                          Administration

<PAGE>

                                                                 APPENDIX A


                         GLOSSARY OF DEFINED TERMS


BOF:  California Board of Forestry

CDF:  California Department of Forestry

CESA:  California Endangered Species Act

Company:  Scotia Pacific Holding Company, a wholly owned subsidiary of
Pacific Lumber

Company Timber:  The timber on approximately 171,000 acres of virtually
contiguous commercial timber property owned by the Company and located
along the northern California coast

EPA:  Environmental Protection Agency

ESA:  The federal Endangered Species Act

Form 10-K:  The Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the fiscal year ended December 31,
1997

HCP:  Habitat conservation plan

HCP/SYP Agreement:  A February 27, 1998 Pre-Permit Application Agreement in
Principle entered into by Pacific Lumber, MAXXAM and various government
agencies regarding certain understandings that they had reached regarding
the Multi-Species HCP, the Permits and the SYP

Headwaters Agreement:  The September 28, 1996 agreement between the Pacific
Lumber Parties, the United States and California which provides the
framework for the acquisition by the United States and California of the
Headwaters Timberlands

Headwaters Timberlands:  Approximately 5,600 acres of Pacific Lumber
timberlands consisting of two forest groves commonly referred to as the
Headwaters Forest and the Elk Head Springs Forest

Liquidity Account:  A liquidity account maintained by Scotia Pacific with
respect to the Timber Notes

LTSY:  Long-term sustained yield

Mbfe:  A concept developed for use in structuring the Timber Notes; under
this concept one thousand board feet, net Scribner scale, of residual old
growth redwood timber equates to one Mbfe

Master Purchase Agreement:  The agreement entered into between Pacific
Lumber and Scotia Pacific that governs all purchases of logs by Pacific
Lumber from Scotia Pacific

MAXXAM:  MAXXAM Inc.

MGHI:  MAXXAM Group Holdings Inc., a wholly owned subsidiary of MAXXAM

MGI:  MAXXAM Group Inc., a wholly owned subsidiary of MGHI

Multi-Species HCP:  The habitat conservation plan covering multiple species
contemplated by the Headwaters Agreement

NMFS:  National Marine Fisheries Service

Pacific Lumber:  The Pacific Lumber Company, an indirect, wholly owned
subsidiary of MGI

Pacific Lumber Parties:  Pacific Lumber, including its subsidiaries and
affiliates, and MAXXAM

Permits:  The incidental take permits related to the Multi-Species HCP

Salmon Creek:  Salmon Creek Corporation, a wholly owned subsidiary of
Pacific Lumber

SBE Price:  The applicable stumpage price for a particular species and
category of log, as set forth in the most recent Harvest Value Schedule
published by the California State Board of Equalization at six month
intervals for the purpose of computing yield taxes imposed on the
harvesting of timber

Scheduled Amortization:  The amount of principal which Scotia Pacific must
pay through each Timber Note payment date in order to avoid prepayment or
deficiency premiums

SFAS No. 130:  Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income"

SYP:  Sustained yield plan establishing long-term sustained yield harvest
levels for a company's timberlands

THP:  Timber harvesting plan required to be filed with and approved by the
CDF prior to the harvesting of timber

Timber Notes:  the 7.95% Scotia Pacific Timber Collateralized Notes due
July 20, 2015

USFWS:  United States Fish and Wildlife Service