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


                                  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 SEPTEMBER 30, 1999

                        Commission File Number 333-63825


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



                 DELAWARE                              68-0414690
       (State or other jurisdiction                 (I.R.S. Employer
     of incorporation or organization)           Identification Number)

               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 /  /


           The Registrant is a limited liability company wholly owned by an
                          affiliate of the Registrant.


      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.


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







                                TABLE OF CONTENTS


PART I.  -  FINANCIAL INFORMATION

      Item 1.       Financial Statements:
                    Balance Sheet at September 30, 1999 and December 31, 1998
                    Statement of Loss for the three and nine months ended
                          September 30, 1999 and 1998
                    Statement of Cash Flows for the nine months ended September
                          30, 1999 and 1998
                    Condensed Notes to Financial Statements

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

PART II.  -  OTHER INFORMATION

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

APPENDIX A - GLOSSARY OF DEFINED TERMS





                           SCOTIA PACIFIC COMPANY LLC

                                  BALANCE SHEET
                            (IN MILLIONS OF DOLLARS)

<TABLE>
<CAPTION>


                                                                                     SEPTEMBER 30,    DECEMBER 31,
                                                                                          1999            1998
                                                                                     --------------  --------------
                                                                                      (UNAUDITED)
                                      ASSETS
<S>                                                                                  <C>             <C>
Current assets:
   Cash and cash equivalents.......................................................  $         0.8   $        31.9
   Receivables due from Pacific Lumber.............................................            7.8             2.9
   Prepaid timber harvesting costs.................................................            3.8             2.6
   Other prepaid expenses and current assets.......................................            0.6             0.5
                                                                                     --------------  --------------
      Total current assets.........................................................           13.0            37.9
Timber and timberlands, net of accumulated depletion of $247.2 and $243.1,
   respectively....................................................................          269.2           252.0
Property and equipment, net of accumulated depreciation of $9.0 and $7.9,
   respectively....................................................................           15.9            14.4
Deferred financing costs, net......................................................           20.5            22.5
Restricted cash....................................................................            3.7            16.6
Other assets.......................................................................            2.6             2.3
                                                                                     --------------  --------------
                                                                                     $       324.9   $       345.7
                                                                                     ==============  ==============

                          LIABILITIES AND MEMBER DEFICIT

Current liabilities:
   Due to Pacific Lumber...........................................................  $         1.0   $         0.8
   Accrued interest................................................................           12.4            28.4
   Other accrued liabilities.......................................................            1.2             1.7
   Short-term borrowings and current maturities of long-term debt..................           33.6             8.2
                                                                                     --------------  --------------
      Total current liabilities....................................................           48.2            39.1
Long-term debt, less current maturities............................................          843.5           859.5
                                                                                     --------------  --------------
      Total liabilities............................................................          891.7           898.6
                                                                                     --------------  --------------

Contingencies

Member deficit.....................................................................         (566.8)         (552.9)
                                                                                     --------------  --------------
                                                                                     $       324.9   $       345.7
                                                                                     ==============  ==============


<FN>

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






                           SCOTIA PACIFIC COMPANY LLC

                                STATEMENT OF LOSS
                            (IN MILLIONS OF DOLLARS)

<TABLE>
<CAPTION>


                                                                     THREE MONTHS ENDED        NINE MONTHS ENDED
                                                                       SEPTEMBER 30,             SEPTEMBER 30,
                                                                   -----------------------  -----------------------
                                                                      1999         1998        1999        1998
                                                                   -----------  ----------  ----------  -----------
                                                                                     (UNAUDITED)

<S>                                                                <C>          <C>         <C>         <C>
Log sales to Pacific Lumber......................................  $     19.1   $    33.3   $    33.8   $     67.8
                                                                   -----------  ----------  ----------  -----------

Operating expenses:
   General and administrative....................................         3.5         3.4         8.2          6.7
   Depletion and depreciation....................................         2.4         4.3         5.2          9.3
                                                                   -----------  ----------  ----------  -----------
                                                                          5.9         7.7        13.4         16.0
                                                                   -----------  ----------  ----------  -----------

Operating income.................................................        13.2        25.6        20.4         51.8
                                                                   -----------  ----------  ----------  -----------

Other income (expense):
   Interest and other income.....................................         0.1         0.6         0.6          1.9
   Interest expense..............................................       (16.6)      (14.3)      (49.2)       (27.5)
                                                                   -----------  ----------  ----------  -----------
Income (loss) before income taxes................................        (3.3)       11.9       (28.2)        26.2
Provision in lieu of income taxes................................           -        (1.7)          -         (7.5)
                                                                   -----------  ----------  ----------  -----------
Income (loss) before extraordinary item..........................        (3.3)       10.2       (28.2)        18.7
Extraordinary item:
   Loss on early extinguishment of debt..........................           -       (35.4)          -        (35.4)
                                                                   -----------  ----------  ----------  -----------
Net loss.........................................................  $     (3.3)  $   (25.2)  $   (28.2)  $    (16.7)
                                                                   ===========  ==========  ==========  ===========


<FN>

   The accompanying notes are an integral part of these financial statements.

</FN>
</TABLE>





                           SCOTIA PACIFIC COMPANY LLC

                             STATEMENT OF CASH FLOWS
                            (IN MILLIONS OF DOLLARS)

<TABLE>
<CAPTION>

                                                                                                  NINE MONTHS ENDED
                                                                                                   SEPTEMBER 30,
                                                                                               -----------------------
                                                                                                  1999        1998
                                                                                               ----------  -----------
                                                                                                     (UNAUDITED)
<S>                                                                                            <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss.................................................................................   $   (28.2)  $    (16.7)
   Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
      Extraordinary loss on early extinguishment of debt....................................           -         35.4
      Provision in lieu of income taxes.....................................................           -          7.5
      Depletion and depreciation............................................................         5.2          9.3
      Amortization of deferred financing costs..............................................         1.2          1.0
      Gain on sale of assets................................................................        (0.2)           -
      Increase (decrease) in cash resulting from changes in:
        Receivables.........................................................................        (4.8)       (11.3)
        Prepaid expenses and other assets...................................................        (1.7)        (0.7)
        Amounts due to Pacific Lumber.......................................................         0.1          1.1
        Accrued interest....................................................................       (16.0)         1.1
        Other accrued liabilities...........................................................         0.5          0.4
                                                                                               ----------  -----------
      Net cash provided by (used for) operating activities..................................       (43.9)        27.1
                                                                                               ----------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures.....................................................................       (17.8)        (6.3)
   Restricted cash withdrawals used to acquire timberlands..................................        12.9          1.8
   Net proceeds from sale of assets.........................................................         0.3            -
                                                                                               ----------  -----------
      Net cash used for investing activities................................................        (4.6)        (4.5)
                                                                                               ----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of Timber Notes...................................................           -        867.2
   Net borrowings under line of credit agreement............................................        17.7            -
   Principal payments on Timber Notes and other timber related debt.........................        (8.3)      (327.0)
   Premium for early retirement of debt.....................................................           -        (29.2)
   Incurrence of deferred financing costs...................................................        (0.2)       (21.4)
   Dividends paid...........................................................................           -       (532.8)
   Other changes in restricted cash.........................................................           -          9.5
   Member contributions.....................................................................         8.2          8.2
                                                                                               ----------  -----------
      Net cash provided by (used for) financing activities..................................        17.4        (25.5)
                                                                                               ----------  -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS...................................................       (31.1)        (2.9)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............................................        31.9         20.9
                                                                                               ----------  -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..................................................   $     0.8   $     18.0
                                                                                               ==========  ===========


<FN>


   The accompanying notes are an integral part of these financial statements.

</FN>
</TABLE>





                           SCOTIA PACIFIC COMPANY LLC

                     CONDENSED NOTES TO FINANCIAL STATEMENTS


1.    GENERAL

      The information contained in the following notes to 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 September 30, 1999, the results of operations for the three and nine
months ended September 30, 1999 and 1998 and cash flows for the nine months
ended September 30, 1999 and 1998. 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.

      There were no reconciling differences between the Company's net income and
comprehensive income for either of the three and nine month periods ending
September 30, 1999 and 1998.

2.    HEADWATERS TRANSACTIONS

      As described in Note 4 below, on September 28, 1996, the Pacific Lumber
Parties entered into the Headwaters Agreement with the United States and
California which provided 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 were owned by Salmon Creek, with the remaining 700 acres being owned
by the Company (Pacific Lumber owned the timber and related timber harvesting
rights on the Company's acreage). On March 1, 1999, the Pacific Lumber Parties,
the United States and California consummated the Headwaters Agreement. Salmon
Creek received $299.9 million for its 4,900 acres, and for its 700 acres,
Pacific Lumber received the 7,700 acre Elk River Timberlands which Pacific
Lumber contributed to the Company in June 1999. Of these proceeds, $285.0
million was deposited into an escrow account to be made available as necessary
to support the Timber Notes, and may be released only under certain
circumstances. As of September 30, 1999, the Escrowed Funds were $288.6 million.

      The Company and Pacific Lumber also entered into the Owl Creek Agreement
and the Grizzly Creek Agreement with California regarding the future sale to
California of the Owl Creek and Grizzly Creek Groves. The Owl Creek Agreement
provides for the Company to sell the Owl Creek Grove to California, no later
than June 30, 2002, for the lesser of the appraised fair market value or $79.7
million. At California's option, 25% of the payment may be paid upon closing
with three equal annual installments thereafter and without interest. The sale
of the Owl Creek Grove will not be reflected in the Company's financial
statements until it has been concluded. With respect to the Grizzly Creek
Agreement, California may purchase from Pacific Lumber, no later than October
31, 2000, a portion of this grove for a purchase price determined based on fair
market value, but not to exceed $19.9 million. The net proceeds from the Grizzly
Creek Grove will be placed into an escrow account (on the same basis as the net
proceeds from the sale of the Headwaters Timberlands) unless, at the time of
receipt of such proceeds, the Escrowed Funds are no longer held in an escrow
account. California also has a five year option under the Grizzly Creek
Agreement to purchase additional property adjacent to the Grizzly Creek Grove
which is within the Grizzly Creek conservation area.

3.    RESTRICTED CASH

      Cash and cash equivalents include restricted cash held for debt service
payments on the Timber Notes of $28.4 million at December 31, 1998. There was no
restricted cash held in cash and cash equivalents at September 30, 1999.

      Long-term restricted cash represents the amount deposited into an account
held by the trustee under the indenture governing the Timber Notes. At September
30, 1999 and December 31, 1998, long-term restricted cash primarily consists of
$3.3 million and $16.1 million which is remaining from the $25 million of the
proceeds deposited into the Prefunding Account.

4.    CONTINGENCIES

      Regulatory and environmental matters play a significant role in the
Company's business, which is subject to a variety of California and federal laws
and regulations, as well as the Final HCP, Final SYP and Pacific Lumber's 1999
TOL, dealing with timber harvesting practices, threatened and endangered species
and habitat for such species, and air and water quality. While regulatory and
environmental concerns have resulted in restrictions on the geographic scope and
timing of the Company's timber operations, increased operational costs and
engendered litigation and other challenges to the Company's operations, prior to
1998 they had not had a significant adverse effect on the Company's financial
position, results of operations or liquidity. However, the Company's results of
operations for 1998 and for 1999 through the date of this report have been
adversely affected by certain regulatory and environmental matters, including
during the second half of 1998 through the date of this report, the absence of a
sufficient number of available THPs to enable the Company to conduct its
operations at historic levels.

      On September 28, 1996, the Pacific Lumber Parties entered into the
Headwaters Agreement with the United States and California which provided the
framework for the acquisition of the Headwaters Timberlands by the United States
and California. Consummation of the Headwaters Agreement was conditioned upon,
among other things, approval of an SYP, approval of a Multi-Species HCP and
issuance of the Permits. As further described in Note 2 "Headwaters
Transactions," on March 1, 1999, the Pacific Lumber Parties, the United States
and California consummated the Headwaters Agreement. In addition to the transfer
of the Headwaters Timberlands by the Pacific Lumber Parties described in Note 2,
the Final SYP and the Final HCP were approved and the Permits were issued. The
Pacific Lumber Parties and California also executed the California Agreement.

       The Final SYP complies with certain California Board of Forestry
regulations requiring timber companies to project timber growth and harvest on
their timberlands over a 100-year planning period and establish an LTSY harvest
level. An SYP must demonstrate that the average annual harvest over any rolling
ten-year period will not exceed the LTSY harvest level and that a timber
company's projected timber inventory is capable of sustaining the LTSY harvest
level in the last decade of the 100-year planning period. The Final SYP is
effective for 10 years and may be amended by Pacific Lumber, subject to approval
by the CDF. The Final SYP is subject to review after five years. Revised SYPs
would be prepared every decade that address the LTSY harvest level based upon
reassessment of changes in the resource base and other factors.

      Several species located on the Company's timberlands, including the
northern spotted owl, the marbled murrelet, the coho salmon and the steelhead
trout, have been listed as endangered or threatened under the ESA and/or the
CESA. The Final HCP and the Permits allow incidental "take" of these and certain
other listed species so long as there is no "jeopardy" to the continued
existence of such species. The Final HCP identifies the measures to be
instituted in order to minimize and mitigate the anticipated level of take to
the greatest extent practicable. The Final HCP not only provides for the
Company's compliance with habitat requirements for the northern spotted owl, the
marbled murrelet, the coho salmon and the steelhead trout, it also provides for
issuance of Permits for thirteen additional species that are or may be listed in
the future. The Final HCP and related Permits have a term of 50 years, and,
among other things, include the following protective measures: (i) setting aside
timberlands as marbled murrelet conservation areas; (ii) establishing streamside
"no-cut" and limited cut buffers and identifying mass wasting areas of concern
based on an assessment of each of the Company's watersheds to be completed
within five years; (iii) limiting harvesting activities during certain times of
the year and during wet weather conditions; and (iv) making certain specified
improvements to the Company's roads. The Final SYP is also subject to the
foregoing provisions. The Company believes that the Final SYP and the Final HCP
should in the long-term expedite the preparation and facilitate approval of its
THPs, although the Company is experiencing difficulties in the THP approval
process as it implements these agreements.

      Under the Federal Clean Water Act, the EPA is required to establish TMDLs
in water courses that have been declared to be "water quality impaired." The EPA
and the North Coast Regional Water Quality Control Board are in the process of
establishing TMDLs for seventeen northern California rivers and certain of their
tributaries, including certain water courses that flow within the Company's
timberlands. The final TMDL requirements applicable to the Company's timberlands
may require aquatic measures that are different from or in addition to the
prescriptions to be developed pursuant to the watershed analysis process
provided for in the Final HCP.

      Lawsuits are pending and threatened which seek to prevent the Company from
implementing the Final HCP and/or the Final SYP, implementing certain of the
Company's approved THPs or carrying out certain other operations. On or about
January 29, 1999, the Company received the EPIC Notice Letter which alleges
various violations of the ESA and challenges, among other things, the validity
and legality of the Permits. On or about May 21, 1999, EPIC and other
environmental groups sent the Supplemental EPIC Notice Letter, incorporating the
EPIC Notice Letter and threatening to sue the Company, MAXXAM, Pacific Lumber,
Salmon Creek and various government agencies for alleged violations of the ESA
relating to various aspects of the Headwaters Agreement. Separately, on March
31, 1999, the EPIC- SYP/Permits lawsuit was filed alleging various violations of
the CESA and CEQA, and challenging, among other things, the validity and
legality of the Permits issued by California and the Final SYP. On March 31,
1999, the USWA lawsuit was filed also challenging the validity and legality of
the Final SYP. The Company believes that appropriate procedures were followed
throughout the public review and approval process concerning the Final Plans,
and the Company is working with the relevant state and federal agencies to
defend these challenges. Although uncertainties are inherent in the final
outcome of the EPIC Notice Letter, the Supplemental EPIC Notice Letter, the
EPIC-SYP/Permits lawsuit and the USWA lawsuit, the Company believes that the
resolution of these matters should not result in a material adverse effect on
its financial condition or results of operations or the ability to harvest
timber. While the Company expects environmentally focused objections and
lawsuits to continue, it believes that the Final HCP, Final SYP and the Permits
should enhance its position in connection with these continuing challenges and,
over time, reduce or minimize such challenges.

5.    MEMBER DEFICIT

      A reconciliation of the activity in member deficit is as follows (in
millions):

<TABLE>
<CAPTION>

                                                                                                      NINE MONTHS
                                                                                                          ENDED
                                                                                                     SEPTEMBER 30,
                                                                                                          1999
                                                                                                     --------------
<S>                                                                                                  <C>
Balance at beginning of period...................................................................... $      (552.9)
Net loss............................................................................................         (28.2)
Member contributions................................................................................          14.3
                                                                                                     --------------
Balance at end of period............................................................................ $      (566.8)
                                                                                                     ==============
</TABLE>

6.    SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>

                                                                                               NINE MONTHS ENDED
                                                                                                SEPTEMBER 30,
                                                                                            -----------------------
                                                                                               1999        1998
                                                                                            ----------  -----------
                                                                                                 (IN MILLIONS)

<S>                                                                                         <C>         <C>
Supplemental information on non-cash investing and financing activities:
   Assumption of net tax liabilities by Pacific Lumber......................................$       -   $      6.7
   Acquisition of assets subject to other liabilities.......................................        -          0.9
   Deferred financing costs payable.........................................................        -          1.8
   Contribution of timber and timberlands by Pacific Lumber.................................      6.1            -
   Distribution of assets to Pacific Lumber.................................................        -          6.6
   Transfer of deferred tax assets to Pacific Lumber........................................        -         22.9

Supplemental disclosure of cash flow information:
   Interest paid............................................................................$    64.0   $     25.4

</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. Any capitalized terms
used but not defined in this Item are defined in the "Glossary of Defined Terms"
contained in Appendix A.

      This Quarterly Report on Form 10-Q contains statements which constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements appear in a number of places in
this section and in Part II. Item 1. "Legal Proceedings." 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 Form 10-Q 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 used 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's timberlands. Under the Mbfe concept, one thousand board feet,
net Scribner scale, of 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's timberlands was assigned a value in Mbfe equal
to a fraction of a Mbfe. This fraction was generally determined by dividing the
SBE Price applicable to such species and category for the first half of 1998 by
the SBE Price applicable to old growth redwood for the first half of 1998.
Historical harvest volumes reflected in this report are stated on a Mbfe basis.

      The New Master Purchase Agreement generally contemplates that all sales of
logs by the Company to Pacific Lumber will be at the SBE Price. Harvest Value
Schedules setting forth the SBE Prices are published by the California State
Board of Equalization twice a year for the purpose of computing a yield tax
imposed on timber harvested between January 1 and June 30 and July 1 and
December 31. Harvest Value Schedules are based on twenty-four months of actual
log and timber sales that occur within nine specified timber regions. These
sales are arms length transactions adjusted for time by indexing (using log and,
in the case of old growth redwood, lumber price trends) to a specific date,
which is approximately sixty days prior to the effective date of the Harvest
Value Schedules. However, SBE prices may not necessarily be representative of
actual prices that would be realized from unrelated parties at subsequent dates.

      Seasonality
      Logging operations on the Company's timberlands are highly seasonal and
have historically been 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 be markedly seasonal. The
impact of seasonality on the Company's results is expected to become more
pronounced than it has been historically because of the harvesting, road use,
wet weather and other restrictions imposed by the Final HCP. As a result, a
substantial majority of the future harvesting on the Company's timberlands can
be expected to be concentrated during the period from June through October of
each year. Some of these restrictions may be modified under the adaptive
management provision contained in the Final HCP, and as a result of the
watershed analysis process to be performed over the five-year period which
commenced March 1, 1999. See Note 4 to the Financial Statements.

      Log sales to Pacific Lumber
      Net sales from logs were $19.1 million and $33.3 million for the three
months ended September 30, 1999 and 1998, respectively. The volume of log
deliveries for such periods represented approximately 24,000 Mbfe and 46,900
Mbfe, respectively. Net sales from logs were $33.8 million and $67.8 million for
the nine months ended September 30, 1999 and 1998, respectively. This represents
a log volume of 47,400 Mbfe and 97,500 Mbfe, respectively. Substantially all of
the decrease in net sales between periods was due to the decline in the volume
of log deliveries, which was due largely to the absence of a sufficient number
of available THPs. See "--Trends" for further discussion of the factors
affecting the supply of approved THPs.

      Operating income and income (loss) before income taxes
      Operating income was $13.2 million and $25.6 million for the three months
ended September 30, 1999 and 1998, respectively. Operating income was $20.4
million and $51.8 million for the nine months ended September 30, 1999 and 1998,
respectively. The decline in operating income is principally due to the decrease
in log sales discussed above and an increase in general and administrative
expense due to higher road maintenance costs under the New Services Agreement
and higher professional and consulting services. Income (loss) before income
taxes was $(3.3) million and $11.9 million for the three months ended September
30, 1999 and 1998, respectively. Income (loss) before income taxes was $(28.2)
million and $26.2 million for the nine months ended September 30, 1999 and 1998,
respectively. In addition to the decline in operating income, income (loss)
before income taxes was also affected by an increase in interest expense which
was the result of the issuance of the Timber Notes in July 1998.

FINANCIAL CONDITION AND INVESTING AND FINANCING ACTIVITIES

      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 Escrowed Funds were $288.6 million as of September 30, 1999 and are to
be made available as necessary to support the Timber Notes. The Escrowed Funds
may be released by the Escrow Agent only in accordance with the terms of the
Escrow Agreement.

      On July 16, 1999, the Line of Credit Agreement was extended for an
additional year to July 16, 2000. Interest on initial borrowings outstanding for
less than six months was increased to the Base Rate (as defined in the
agreement) plus 0.25% or a one month or six month LIBOR rate plus 1%. As of
September 30, 1999, the Company had $17.7 million outstanding under the Line of
Credit Agreement.

      On the July 20, 1999 note payment date for the Timber Notes, the Company
had $6.5 million in cash available to pay the $31.6 million of interest due.
The Company borrowed the remaining $25.1 million in funds under the terms of the
Line of Credit Agreement. In addition, the Company paid approximately $2.8
million of principal on the Timber Notes (the amount equal to Scheduled
Amortization) using funds received as a capital contribution from Pacific
Lumber. Funds for the $2.8 million principal payment were provided from the
Escrowed Funds and were released in accordance with the terms of the Escrow
Agreement. The indenture governing the Timber Notes was amended to allow the
capital contribution from Pacific Lumber to be applied as a principal payment.

      The Company believes that it will not generate sufficient cash from
operations to pay all of the interest on the Timber Notes on the January 20,
2000 payment date. However, the Company expects that funds sufficient to meet
debt service obligations on the Timber Notes on such date will either be made
available from funds borrowed under the Line of Credit Agreement, through
capital contributions from Pacific Lumber or a direct or indirect parent
corporation, or from the use of funds now held under the Escrow Agreement.

      With respect to long-term liquidity, the Company believes that, without
giving effect to any use of the funds held under the Escrow Agreement, its
existing cash and funds available under the Line of Credit Agreement, together
with its ability to generate sufficient levels of cash flows from operations
over the long term, should provide sufficient funds to meet its long-term
working capital, capital expenditures and required debt service obligations. If
the Company generates excess funds after the payment of operating expenses,
capital expenditures, interest, premiums and required principal payments, it may
at its option either pay dividends, retain these funds for internal purposes or
make voluntary principal payments. Cash flows from operations may continue to be
adversely affected if the Company does not experience improvements in the THP
submission and approval process, or if inclement weather conditions or seasonal
operating restrictions under the Final HCP hamper harvesting operations. Cash
flows from operations would also be adversely affected if additional judicial or
regulatory restrictions are imposed on the Company's harvesting activities, or
if the Final Plans are not implemented in accordance with the Company's current
expectations.  See "--Trends" below.

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.

      Regulatory and environmental matters play a significant role in the
Company's business, which is subject to a variety of California and federal laws
and regulations, as well as the Final HCP, Final SYP and Pacific Lumber's 1999
TOL, dealing with timber harvesting practices, 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 has also been adversely affected by a
lack of available logs as a result of a severely diminished supply of available
THPs. Prior to the consummation of the Headwaters Agreement on March 1, 1999,
the reduced number of approved THPs was attributable to several factors,
including a significantly reduced level of THPs submitted by the Company to the
CDF during 1998 and during the first two months of 1999 due to (a) the extensive
amount of time devoted by the Company's foresters, wildlife and fisheries
biologists and other personnel to (i) amending a significant number of
previously submitted THPs to incorporate various new requirements which Pacific
Lumber agreed to as part of the Pre-Permit Agreement, (ii) preparing the
Combined Plan and all the related data, responding to comments on the Combined
Plan, assessing and responding to federal and state proposals and changes
concerning the Combined Plan, and evaluating the Final Plans, (iii) responding
to comments received by the Company from various federal and state governmental
agencies with respect to its filed THPs in light of the new and more stringent
requirements that Pacific Lumber agreed to observe pursuant to the Pre-Permit
Agreement, and (iv) assisting Pacific Lumber (in accordance with the New
Additional Services Agreement) with responding to newly filed litigation
involving certain of the Company's approved THPs and (b) implementation of a
provision contained in the Pre-Permit Agreement which required, for the first
time, a licensed geologist to review virtually all of the Company's THPs prior
to submission to the CDF. The Company also experienced an unexpected
significantly slower rate of review and approval with respect to its filed THPs
due, in large part, to the issues that emerged in applying the requirements
embodied in the Pre-Permit Agreement to the Company's THPs, certain of which
requirements imposed new forestry practices that applied solely to operations on
the Company's timberlands.

      With the consummation of the Headwaters Agreement, Pacific Lumber has
completed its work in connection with preparation of the Final Plans; however,
significant additional work continues to be required in connection with their
implementation. 1999 has been a transition period for the Company with respect
to the filing and approval of its THPs. The transition period is expected to
continue into 2000. Certain of the THPs which were approved by the CDF prior to
March 1, 1999 were grandfathered under the Implementation Agreement, and are
harvestable subject to the harvesting restrictions prescribed under the THPs and
satisfaction of certain agreed conditions. The remaining THPs which were in the
process of being reviewed but were not yet approved by the CDF at the time of
the consummation of the Final Plans each require varying degrees of revisions.
The Company believes that the rate of submissions of THPs during the fourth
quarter will increase. However, the Company believes that the review and
approval process for THPs through at least the first quarter of 2000 will
continue to be slower than the Company has historically experienced as the
Company, the CDF and other agencies continue to develop procedures for
implementing the Final Plans. Nevertheless, the Company anticipates that after a
transition period, the implementation of the Final Plans will streamline the
process of preparing THPs and potentially shorten the time to obtain approval of
THPs.

      There can be no assurance that the Company will not continue to experience
difficulties in receiving approvals of its THPs similar to those it has been
experiencing. Furthermore, there can be no assurance that certain pending legal,
regulatory and environmental matters or future governmental regulations,
legislation or judicial or administrative decisions, or adverse weather
conditions, would not have a material adverse effect on the Company's financial
position, results of operations or liquidity. See Part II. Item 1. "Legal
Proceedings" and Note 4 to the Financial Statements for further information
regarding regulatory and legal proceedings affecting the Company.

YEAR 2000 READINESS

      Management has completed its assessment of modifications to and testing of
the Company's critical information technology and embedded technology. The
principal software and equipment of the Company that will be affected by the
date change to the year 2000 are the financial information systems, the GIS and
certain personal computers and field equipment used by the foresters and other
professional staff. Year 2000 progress and readiness has also been the subject
of the Company's normal, recurring internal audit function. The modification
costs and the costs associated with new systems were less than $50,000. Systems
modification costs were expensed as incurred. Costs associated with new systems
were capitalized and will be amortized over the life of the product.

      In addition to addressing the Company's internal systems, management has
identified key vendors that could be impacted by year 2000 issues, and surveys
have been conducted regarding their compliance efforts. Management has evaluated
the responses to the surveys and made direct contact with parties which were
deemed to be critical. These inquiries were made by the Company's own staff, and
the costs associated with this program were minimal. Pacific Lumber has also
completed its assessment of the susceptibility of its internal systems and
equipment, including the cogeneration plant, to the year 2000 date change and
has completed the required modifications and testing.

      While the Company believes that its program is sufficient to identify the
critical issues and associated costs necessary to address possible year 2000
problems in a timely manner, there can be no assurance that the program, or
underlying steps implemented, will be successful in resolving all such issues
prior to the year 2000. If the steps taken by the Company (or critical third
parties) are not successful in identifying and remedying all significant year
2000 issues, business interruptions or delays could occur. However, based on the
information the Company has gathered to date and its expectations of its ability
to remedy problems encountered, the Company believes that it will not experience
significant business interruptions that would materially impact its results or
financial condition. The most reasonably likely worst case scenario which the
Company could experience would be problems with certain of the Company's
personal computers, field equipment, financial software or GIS software. The
Company believes that any such problems could be remedied at minimal cost within
a few days and that contingency plans used in the past for dealing with problems
with its equipment and software are adequate to address the types of problems
which could be encountered in such a scenario. These plans include purchases of
replacement equipment, use of third parties for processing GIS information and
working with vendors to make any needed software modifications.

                           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. The following material
developments have occurred with respect to such legal proceedings subsequent to
the filing of the Form 10-K.

      TIMBER HARVESTING LITIGATION

      With respect to the Mateel action, this case has been set for trial on
November 15, 1999.

      On March 31, 1999, the EPIC-SYP/Permits lawsuit was filed against the
Company, Pacific Lumber, Salmon Creek, and others in the Superior Court of
Sacramento County (subsequently transferred to the Superior Court of Humboldt
County pursuant to Pacific Lumber's motion). This action alleges, among other
things, that the CDF and the CDFG violated the CEQA and the CESA with respect to
the Final SYP and the Permits issued by California. The plaintiffs seek, among
other things, injunctive relief to set aside the CDF's and the CDFG's decisions
approving the Final SYP and the Permits issued by California.

      On March 31, 1999, the USWA lawsuit was also filed against the Company,
Pacific Lumber and Salmon Creek in the California Superior Court of Sacramento
County (subsequently transferred to the Superior Court of Humboldt County
pursuant to Pacific Lumber's motion). This action alleges, among other things,
violations of the Forest Practice Act in connection with the CDF's approval of
the Final SYP. The plaintiffs seek to prohibit the CDF from approving any THPs
relying on the Final SYP.

      The Company believes that appropriate procedures were followed throughout
the public review and approval process concerning the Final Plans, and the
Company is working with the relevant state and federal agencies to defend the
USWA lawsuit and the EPIC-SYP/Permits lawsuit. Although uncertainties are
inherent in the final outcome of the EPIC-SYP/Permits lawsuit and the USWA
lawsuit, the Company believes that the resolution of these matters should not
result in a material adverse effect on its financial condition or results of
operations or the ability to harvest timber.

      With respect to the EPIC lawsuit described in the Form 10-K, on May 5,
1999, the Court dissolved the preliminary injunction, granted the defendants'
motion for summary judgment and dismissed the case as moot.

      In connection with the Rollins lawsuit described in the Form 10-K, on
September 27, 1999, the Court accepted the plaintiffs' amended complaint which,
among other things, eliminated the RICO claims and reduced the number of THPs
involved in this lawsuit from 343 to seven.

      In connection with the Wrigley lawsuit described in the Form 10-K, on
September 27, 1999, the plaintiffs filed an application seeking to eliminate
allegations concerning the seven THPs involved in the Rollins lawsuit reducing
to 336 the number of THPs involved in the Wrigley lawsuit.

      HUNSAKER MATTER

      With respect to the Hunsaker  action  described in the Form 10-K, on March
30,  1999,  the Court  dismissed  the  lawsuit  with  prejudice  and ordered the
plaintiffs to pay the  defendants'  costs with respect to the lawsuit.  On April
30, 1999, the plaintiffs appealed the dismissal.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

      A.   EXHIBITS:

      *10.1   Second Amendment to Escrow Agreement dated October 6, 1999 by and
              among Pacific Lumber, Salmon Creek and Citibank, N.A.

      *27     Financial Data Schedule for the nine months ended September 30,
              1999

   *  Included with this filing

      B.      REPORTS ON FORM 8-K:

        None.



                                    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 financial and accounting officer of the
Registrant.



                                            SCOTIA PACIFIC COMPANY LLC



Date:  October 27, 1999            By:            GARY L. CLARK
                                                  Gary L. Clark
                                    Vice President - Finance and Administration
                                   (Principal Financial and Accounting Officer)





                                                                      APPENDIX A


                            GLOSSARY OF DEFINED TERMS


California Agreement: An agreement between the Pacific Lumber Parties and
California regarding the enforcement of the California bill which authorized
state funds for the purchase of the Headwaters Timberlands while imposing
certain environmental restrictions on the remaining timberlands held by the
Pacific Lumber Parties

CDF:  California Department of Forestry and Fire Protection

CDFG:  California Department of Fish and Game

CEQA:  California Environmental Quality Act

CESA:  California Endangered Species Act

Combined Plan: The combined SYP and Multi-Species HCP released by Pacific Lumber
and the Company for public review and comment in July 1998

Company: Scotia Pacific Company LLC, a limited liability company wholly owned by
Pacific Lumber

Elk River Timberlands: The 7,700 acres of timberlands transferred to Pacific
Lumber upon the consummation of the Headwaters Agreement

EPA:  Environmental Protection Agency

EPIC:  Environmental Protection Information Center, Inc.

EPIC lawsuit: An action entitled Environmental Protection Information Center,
Inc., Sierra Club v. The Pacific Lumber Company, Scotia Pacific Holding Company
and Salmon Creek Corporation (No. C-98-3129) filed August 12, 1998 in the United
States District Court for the Northern District of California

EPIC Notice Letter: A notice received by the Company on or about January 29,
1999 from EPIC and the Sierra Club of their intent to sue Pacific Lumber, the
Company and several federal agencies under the ESA

EPIC-SYP/Permits lawsuit: An action entitled Environmental Protection
Information Association, Sierra Club v. California Department of Forestry and
Fire Protection, California Department of Fish and Game, The Pacific Lumber
Company, Scotia Pacific Company LLC, Salmon Creek Corporation, et al. (No.
99CS00639) filed March 31, 1999 in the Superior Court of Sacramento County and
transferred to the Superior Court of Humboldt County on July 13, 1999 (No.
CV-990445)

ESA:  The federal Endangered Species Act

Escrow Agent:  The agent holding the Escrowed Funds under the Escrow Agreement

Escrow Agreement:  The agreement covering the Escrowed Funds

Escrowed Funds: Proceeds of $285.0 million received by Salmon Creek in
connection with the sale of the Headwaters Timberlands, plus accrued interest,
which have been deposited into an escrow account pursuant to the Escrow
Agreement as necessary to support the Timber Notes

Final HCP: The  Multi-Species  HCP approved on March 1, 1999 in connection  with
the consummation of the Headwaters Agreement

Final Plans:  The Final HCP and the Final SYP

Final SYP: The SYP approved on March 1, 1999 in connection with the consummation
of the Headwaters Agreement

Forest Practice Act:  The California Forest Practice 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, 1998

GIS:  The geographical information system of the Company

Grizzly Creek Agreement: The agreement entered into by the Company and Pacific
Lumber with California regarding the future sale of a portion of the Grizzly
Creek Grove

Grizzly  Creek Grove:  A grove of  approximately  1,000 acres of  primarily  old
growth timber owned by Pacific Lumber on land owned by the Company

Harvest Value Schedule: A schedule setting forth the SBE Prices published
bi-annually by the California Board of Equalization applicable to the timber
sold during the period covered by the schedule for purposes of computing timber
yield taxes

Headwaters Agreement: The September 28, 1996 agreement between the Pacific
Lumber Parties, the United States and California which provided 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 which were sold to the United States and
California on March 1, 1999

Hunsaker action: An action entitled William Hunsaker, et al. v. Charles E.
Hurwitz, The Pacific Lumber Company, MAXXAM Group Inc., MXM Corp., Federated
Development Company and Does (1-50) (No. C98-4515) filed November 24, 1998 in
the United States District Court for the Northern District of California

Implementation Agreement: The Implementation Agreement with Regard to Habitat
Conservation Plan agreed to in connection with the consummation of the
Headwaters Agreement

Line of Credit Agreement: The agreement between a group of lenders and the
Company pursuant to which the Company may borrow in order to pay interest on the
Timber Notes

LTSY:  Long-term sustained yield

Mateel action: An action entitled Mateel Environmental Justice Foundation v.
Pacific Lumber, Scotia Pacific Holding Company, Salmon Creek Corporation and
MAXXAM Group Inc. (No. DR 980301) brought on May 27, 1998 in the Superior Court
of Humboldt County

MAXXAM:  MAXXAM Inc.

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

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

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

Multi-Species HCP:  A habitat conservation plan covering multiple species

New Additional Services Agreement: An agreement whereby the Company is to
provide certain services to Pacific Lumber in return for which the Company is
paid a fee

New Master Purchase Agreement: The agreement entered into between Pacific Lumber
and the Company that governs all purchases of logs by Pacific Lumber from the
Company after July 19, 1998

New Services Agreement: An agreement whereby Pacific Lumber is to provide the
Company with certain operational, management and related services for which the
Company pays a service fee

Owl Creek Agreement: The agreement entered into by the Company with California
regarding the future sale of the Owl Creek Grove

Owl Creek Grove: A grove of approximately 900 acres of primarily old growth
timber owned by the Company

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 issued by the United States and California
pursuant to the Final HCP

Prefunding Account: Restricted cash held in an account by the trustee under the
indenture governing the Timber Notes to enable the Company to acquire
timberlands

Pre-Permit Agreement: The 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

RICO: Racketeering Influence and Corrupt Practices Act

Rollins lawsuit: An action entitled Jennie Rollins, et al. v. Charles Hurwitz,
John Campbell, Pacific Lumber, MAXXAM Group Holdings Inc., Scotia Pacific
Holding Company, MAXXAM Group Inc., MAXXAM Inc., Barnum Timber Company (No.
9700400) filed on December 2, 1997 in the Superior Court of Humboldt County

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 the Company must pay
through each Timber Note payment date in order to avoid prepayment or deficiency
premiums

Supplemental EPIC Notice Letter: A notice sent to the Company, MAXXAM, Pacific
Lumber, Salmon Creek and various government agencies on or about May 21, 1999
from EPIC, the Sierra Club and other environmental groups incorporating the
EPIC Notice Letter and alleging violations of the ESA relating to various
aspects of the Headwaters Agreement

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 Company's $867.2 million original aggregate principal amount
of 6.55% Series B Class A-1 Timber Collateralized Notes, 7.11% Series B Class
A-2 Timber Collateralized Notes and 7.71% Series B Class A-3 Timber
Collateralized Notes due July 20, 2028

TMDLs:  Total maximum daily load limits

TOL: Timber operator's license allowing the holder to conduct timber harvesting
operations

USWA lawsuit: An action entitled United Steelworkers of America, AFL-CIO, CLC,
and Donald Kegley v. California Department of Forestry and Fire Protection, The
Pacific Lumber Company, Scotia Pacific Company LLC and Salmon Creek Corporation
(No. 99CS00626) filed on March 31, 1999 in the Superior Court of Sacramento
County and transferred to the Superior Court of Humboldt County on July 13, 1999
(No. CV-990452)

Wrigley lawsuit: An action entitled Kristi Wrigley, et al. v. Charles Hurwitz,
John Campbell, Pacific Lumber, MAXXAM Group Holdings Inc., Scotia Pacific
Holding Company, MAXXAM Group Inc., MAXXAM Inc., Scotia Pacific Company LLC and
Federated Development Company (No. 9700399) filed December 2, 1997 in the
Superior Court of Humboldt County