UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): April 17, 1998
PLUM CREEK TIMBER COMPANY, L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-10239 91-1443693
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
999 Third Avenue, Suite 2300
Seattle, Washington 98104-4096
Telephone: (206) 467-3600
Item 5. Other Events
Plum Creek Management Company, L.P. (the "General Partner"), which
serves as general partner of Plum Creek Timber Company, L.P. (the
"Partnership"), has established long-term incentive plans for its
executives and other key employees. These plans are designed to align
the economic interests of management with those of Unitholders by tying
incentive compensation directly to total investment returns to
Unitholders. On April 17, 1998, the fifth and final target under these
plans was achieved. During the life of these plans, Unitholders have
received an annualized total return (Unit market appreciation plus
Partnership cash distributions) of 19%.
A summary of the General Partner's long-term incentive plans, along
with both the total Unit Appreciation Rights ("UAR's) granted as of
December 31, 1997 and the related compensation expense that will be
recognized by the Partnership over the performance period as a result of
achieving four of the five Unit Value Targets ("UVTs"), was discussed in
the Partnership's 1997 Annual Report on Form 10-K. See Note 11 of Notes
to such Combined Financial Statements. Also see exhibit 10.4 of the
Partnership's 1997 Form 10-K for a copy of Plum Creek Management Company,
L.P.'s Long-Term Incentive Plan.
Below is an updated summary of the compensation expense expected to
be recognized by the Partnership along with the related funding as a
result of achieving all five UVTs under the General Partner's long-term
incentive plans.
Effective October 1, 1993, the General Partner established a Long-Term
Incentive Plan ("LTIP") which authorizes granting up to 2,000,000 UARs
to certain executives of the General Partner. When any of five UVTs
established by the LTIP are met through a combination of Unit market
appreciation plus Partnership cash distributions, a percentage of the
UARs is triggered and Units are credited to the executives' accounts.
The performance period under the LTIP during which UVTs may be met ends
December 31, 1998, at which time any earned Units will be distributed.
Earned Units generally vest at the end of the performance period. Costs
incurred by the General Partner in administering and funding the LTIP are
borne by the Partnership.
The General Partner has granted 1,436,534 UARs, net of forfeitures,
which will result in a total of 722,373 Units being earned under the LTIP
if no Units are forfeited prior to the end of the performance period.
Units in the executives' accounts will earn additional Units equal to the
amount of any subsequent Partnership cash distributions.
As of April 17, 1998, all five UVTs had been achieved and 722,373
Units had been allocated to the executives' accounts. Total compensation
expense with respect to the achievement of these five UVTs will be
approximately $21.8 million, of which $6.4 million, $3.2 million and $1.1
million was recognized in 1997, 1996 and 1995, respectively, and $10.4
million is expected to be recognized in 1998. The expense of $10.4
million includes an expense of $6.8 million that will be recognized in
the quarter ending June 30, 1998 as a result of achieving the fifth
target on April 17, 1998 with the remainder of the fifth target expense
amortized over the performance period.
Effective January 1, 1994, the General Partner established a Key
Employee Long-Term Incentive Plan ("KLTIP") for certain of its other key
employees which authorizes granting up to 500,000 UARs. The KLTIP
provisions are similar to the LTIP described above. Costs incurred by
the General Partner in administering and funding the plan are borne by
the Partnership. The General Partner has granted 357,600 UARs, net of
forfeitures, which will result in a total of 179,822 Units being earned
under the KLTIP if no Units are forfeited prior to the end of the
performance period. Units in the participants' accounts will earn
additional Units equal to the amount of any subsequent Partnership cash
distributions.
As of April 17, 1998, all five UVTs had been achieved and 179,822
Units had been allocated to the key employees' accounts. Total
compensation expense with respect to the achievement of these five UVTs
will be approximately $5.4 million, of which $1.5 million, $0.7 million
and $0.4 million was recognized in 1997, 1996 and 1995, respectively, and
$2.8 million is expected to be recognized in 1998. The expense of $2.8
million includes an expense of $2.0 million that will be recognized in
the quarter ending June 30, 1998 as a result of achieving the fifth
target on April 17, 1998 with the remainder of the fifth target expense
amortized over the performance period.
As a result of achieving the fifth target under the LTIP and KLTIP,
the Partnership will recognize an additional compensation expense of
approximately $9 million, or $0.19 per Unit in the quarter ending June
30, 1998.
The Partnership is required under the Partnership Agreement to
reimburse the General Partner for compensation costs related to the
management of the Partnership, including the costs incurred in purchasing
Units associated with these benefit plans. During 1997, the Partnership
paid the General Partner for its purchase of 280,482 Units at a total
cost of $9.2 million. Within the next year, it is anticipated that the
Partnership will pay the General Partner approximately $10 million for
the funding of the fifth target.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
PLUM CREEK TIMBER COMPANY, L.P.
(Registrant)
By: Plum Creek Management Company, L.P.
as General Partner
By: /s/ DIANE M. IRVINE
-----------------------
Diane M. Irvine
Vice President and
Chief Financial Officer
(Duly Authorized Officer)
Date: April 17, 1998
