<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to ___________________
Commission File No. 0-l4985
Pitcairn Group L. P.
--------------------
(Exact name of registrant as specified in its charter)
Delaware 23-2419636
-------- ----------
(State of organization) (I.R.S. Employer
Identification No.)
165 Township Line Road, Jenkintown, PA 19046
-------------------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (215) 887-6700
--------------
Indicate by check mark whether 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 90 days. Yes x No ___
---
Exhibit Index located at page: 31
-----
Total number of pages: 45
-----
<PAGE>
<TABLE>
<CAPTION>
PART I -- FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements
Unconsolidated Statements of Assets and Liabilities
at September 30, 1995 (Unaudited) and December 31,
1994............................................... 4
Unconsolidated Statements of Operations and Changes
in Net Assets for the Three Months Ended
September 30, 1995 and September 30, 1994(Unaudited) 5
Unconsolidated Statements of Operations and Changes
in Net Assets for the Nine Months Ended
September 30, 1995 and September 30, 1994(Unaudited) 6
Unconsolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1995 and September 30, 1994
(Unaudited)........................................ 7
Unconsolidated Statements of Changes in Partners'
Capital for the Nine Months Ended September 30, 1995
and September 30, 1994 (Unaudited)................. 8
Consolidated Statements of Assets and Liabilities at
September 30, 1995 (Unaudited) and December 31, 1994 9
Consolidated Statements of Operations and Changes in
Net Assets for the Three Months Ended September 30,
1995 and September 30, 1994 (Unaudited)............ 10
Consolidated Statements of Operations and Changes in
Net Assets for the Nine Months Ended September 30,
1995 and September 30, 1994 (Unaudited)............ 11
Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1995 and September 30,
1994(Unaudited).................................... 12
Consolidated Schedule of Short-Term Investments at
September 30, 1995 (Unaudited)..................... 13
Consolidated Schedule of Investments at September 30,
1995 (Unaudited)................................... 15
Notes to Financial Statements........................ 16
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 26
PART II -- OTHER INFORMATION
Item 5. Other Matters 30
Item 6. Exhibits and Reports on Form 8-K.. 31
(a) Exhibits
(b) Reports on Form 8-K
SIGNATURES............................................... 32
</TABLE>
2
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF ASSETS AND LIABILITIES
------------------------------------
(UNCONSOLIDATED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ------------
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS:
Short-term investments, at cost
which approximates market $11,774,000 $15,144,000
Investments in and advances to
operating subsidiaries 8,758,000 9,360,000
Investments, at value
(cost: 1995 - $5,751,000;
1994 - $7,756,000) 9,332,000 15,767,000
Cash 5,000 11,000
Accounts receivable and
other assets 1,286,000 158,000
----------- -----------
Total assets 31,155,000 40,440,000
----------- -----------
LIABILITIES:
Accrued expenses 641,000 502,000
----------- -----------
Total liabilities 641,000 502,000
----------- -----------
Commitments (Note 10)
NET ASSETS $30,514,000 $39,938,000
=========== ===========
NET ASSETS PER UNIT (based upon
419,490 and 569,019 units out-
standing at September 30, 1995 and
December 31, 1994, respectively) $72.74 $70.19
====== ======
</TABLE>
The accompanying notes are an integral
part of these financial statements.
3
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(a Delaware limited partnership)
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
--------------------------------------------------
(Unconsolidated)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30,
-------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING AND INVESTMENT INCOME:
Interest income $ 164,000 $ 65,000
Other income 1,000 14,000
----------- -----------
165,000 79,000
----------- -----------
OPERATING EXPENSES:
General and administrative 60,000 109,000
----------- -----------
60,000 109,000
----------- -----------
Net operating and
investment income 105,000 (30,000)
Realized gains on
investments sold 2,758,000
Unrealized depreciation
of investments (1,193,000) (2,016,000)
----------- -----------
Change in net assets before
equity in net loss
of subsidiaries 1,670,000 (2,046,000)
Equity in net loss of
subsidiaries (71,000) (409,000)
----------- -----------
NET CHANGE IN NET ASSETS 1,599,000 (2,455,000)
NET ASSETS:
BEGINNING OF PERIOD 28,915,000 42,009,000
----------- -----------
END OF PERIOD $30,514,000 $39,554,000
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
4
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
--------------------------------------------------
(UNCONSOLIDATED)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING AND INVESTMENT INCOME:
Interest income $ 570,000 $ 379,000
Other income 61,000 38,000
----------- -----------
631,000 417,000
----------- -----------
OPERATING EXPENSES:
Management fees 57,000 98,000
General and administrative 107,000 146,000
----------- -----------
164,000 244,000
----------- -----------
Net operating and
investment income 467,000 173,000
Realized gains on
investments sold 4,147,000 42,000
Unrealized depreciation
of investments (4,430,000) (6,207,000)
----------- -----------
Change in net assets before
equity in net loss
of subsidiaries 184,000 (5,992,000)
Equity in net loss of
subsidiaries (603,000) (2,029,000)
----------- -----------
NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS (419,000) (8,021,000)
Redemption payment for limited
partnership interest (14,342,000)
Capital contribution from
limited partners 5,337,000
-----------
NET CHANGE IN NET ASSETS (9,424,000) (8,021,000)
NET ASSETS:
BEGINNING OF PERIOD 39,938,000 47,575,000
----------- -----------
END OF PERIOD $30,514,000 $39,554,000
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
5
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
------------------------
(UNCONSOLIDATED)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net change in net assets
resulting from operations ($ 419,000) ($8,021,000)
Adjustments to reconcile net
change in net assets
from operations to net cash
provided by operating activities:-
Realized gains on investments sold (4,147,000) (42,000)
Unrealized depreciation
of investments 4,430,000 6,207,000
Equity in undistributed net
loss of subsidiaries 603,000 2,029,000
Net redemption of
short-term investments 3,370,000 508,000
Purchase of investments (842,000) (1,582,000)
Proceeds from sales of investments 4,738,000 81,000
Cash distributions from investments 390,000 831,000
Decrease in accounts
receivable and other assets 72,000 13,000
Decrease in accrued
expenses (78,000) (22,000)
---------- ----------
Cash provided by (used in)
operating activities 8,117,000 2,000
---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Redemption payment for limited
partnership interest (10,010,000)
Capital contribution by
limited partners 5,337,000
Notes receivable from affiliate (3,450,000)
----------
Cash used in financing activities (8,123,000)
NET CHANGE IN CASH (6,000) 2,000
CASH:
BEGINNING OF PERIOD 11,000 10,000
---------- ----------
END OF PERIOD $ 5,000 $ 12,000
========== ==========
Supplemental disclosure of
non-cash activities:
Land improvements
in lieu of sale proceeds $1,392,000
==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
6
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
------------------------------------------
(UNCONSOLIDATED)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1995 1994
---- ----
<S> <C> <C>
PARTNERS' CAPITAL AT BEGINNING
OF PERIOD:
Individual General Partners $ 21,600 $ 25,600
Limited Partners 39,916,400 47,549,400
---------- ----------
39,938,000 47,575,000
---------- ----------
NET CHANGE IN NET
ASSETS RESULTING
FROM OPERATIONS:
Individual General Partners (218) (4,171)
Limited Partners (418,782) (8,016,829)
---------- ----------
(419,000) (8,021,000)
---------- ----------
REDEMPTION PAYMENT FOR LIMITED
PARTNERSHIP INTEREST:
Limited Partners (14,342,000)
----------
CAPITAL CONTRIBUTION FROM
LIMITED PARTNERS:
Limited Partners 5,337,000
----------
PARTNERS' CAPITAL AT END OF PERIOD:
Individual General Partners 21,382 21,429
Limited Partners 30,492,618 39,532,571
---------- ----------
$30,514,000 $39,554,000
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
7
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
-------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ------------
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS:
Short-term investments, at cost
which approximates market, of:
Parent $11,774,000 $15,144,000
Operating subsidiaries 4,782,000 4,881,000
----------- -----------
16,556,000 20,025,000
Investments, at value
(cost: 1995 - $5,751,000;
1994 - $7,756,000) 9,332,000 15,767,000
Marketable equity securities,
carried at cost 1,020,000
Loans receivable 2,041,000
Cash 121,000 124,000
Office equipment, net 64,000 60,000
Accounts receivable and
other assets 4,738,000 3,287,000
Deferred federal income
tax benefit 1,310,000 930,000
Prepaid pension cost 147,000 279,000
----------- -----------
Total assets 33,288,000 42,513,000
----------- -----------
LIABILITIES:
Accrued expenses 2,774,000 2,575,000
----------- -----------
Total liabilities 2,774,000 2,575,000
----------- -----------
Commitments (Note 10)
NET ASSETS $30,514,000 $39,938,000
=========== ===========
NET ASSETS PER UNIT (based upon
419,490 and 569,019 units out-
standing at September 30, 1995 and
December 31, 1994, respectively) $72.74 $70.19
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
8
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
---------------------------------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING AND INVESTMENT INCOME:
Investment advisory and
trust service fees $ 1,894,000 $ 1,576,000
Interest income 313,000 133,000
Other income 313,000 80,000
----------- -----------
2,520,000 1,789,000
----------- -----------
OPERATING EXPENSES:
Compensation costs 1,399,000 1,204,000
General and administrative 1,118,000 1,118,000
Depreciation 6,000 4,000
----------- -----------
2,523,000 2,326,000
----------- -----------
(3,000) (537,000)
Pension expense 44,000 149,000
----------- -----------
Net operating and investment
loss before income taxes (47,000) (686,000)
Realized gain on investments sold 2,758,000
Unrealized depreciation of
investments (1,193,000) (2,016,000)
----------- -----------
Change in net assets resulting
from operations before income
taxes 1,518,000 (2,702,000)
Provision for income taxes (benefit) (133,000) (308,000)
----------- -----------
NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 1,651,000 (2,394,000)
Credit (debit) to operating
subsidiary additional
paid-in capital (52,000) (61,000)
----------- -----------
NET CHANGE IN NET ASSETS 1,599,000 (2,455,000)
NET ASSETS:
BEGINNING OF PERIOD 28,915,000 42,009,000
----------- -----------
END OF PERIOD $30,514,000 $39,554,000
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
9
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
---------------------------------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING AND INVESTMENT INCOME:
Investment advisory and
trust service fees $ 5,274,000 $ 4,776,000
Interest income 863,000 559,000
Other income 737,000 271,000
----------- -----------
6,874,000 5,606,000
----------- -----------
OPERATING EXPENSES:
Compensation costs 4,168,000 4,283,000
Management fees 57,000 98,000
General and administrative 2,975,000 2,674,000
Interest expense 609,000
Depreciation 19,000 10,000
----------- -----------
7,828,000 7,065,000
----------- -----------
(954,000) (1,459,000)
Pension expense 132,000 1,503,000
----------- -----------
Net operating and investment
loss before income taxes (1,086,000) (2,962,000)
Realized gain on investments sold 4,717,000 42,000
Unrealized depreciation of
investments (4,430,000) (6,207,000)
----------- -----------
Change in net assets resulting
from operations before income
taxes (799,000) (9,127,000)
Provision for income taxes (benefit) (218,000) (1,009,000)
----------- -----------
NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS (581,000) (8,118,000)
Redemption payment for limited
partnership interest (14,342,000)
Capital contribution from
limited partners 5,337,000
Credit to operating
subsidiary additional
paid-in capital 162,000 97,000
----------- -----------
NET CHANGE IN NET ASSETS (9,424,000) (8,021,000)
NET ASSETS:
BEGINNING OF PERIOD 39,938,000 47,575,000
----------- -----------
END OF PERIOD $30,514,000 $39,554,000
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
10
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net change in net assets resulting
from operations ($ 581,000) ($8,118,000)
Adjustments to reconcile net
change in net assets from
operations to net cash
provided by
operating activities:-
Realized gains on
investments sold (4,717,000) (42,000)
Unrealized depreciation
of investments 4,430,000 6,207,000
Depreciation 19,000 10,000
Pension expense 132,000 1,503,000
Net redemption
of short-term investments 3,469,000 943,000
Purchase of marketable
equity securities (1,020,000)
Purchase of investments (14,160,000) (1,582,000)
Proceeds from sales of
investments 18,626,000 81,000
Distributions from
investments 390,000 831,000
Receipts from loans receivable 2,041,000 901,000
Increase in accounts
receivable and other assets (251,000) (1,052,000)
Increase (decrease) in accrued
expenses (17,000) 476,000
Increase in deferred federal
income tax (380,000) (178,000)
------------ ------------
Cash provided by (used in)
operating activities 7,981,000 (20,000)
------------ ------------
CASH FLOWS FROM INVESTMENT ACTIVITIES:
Purchases of office equipment (23,000) (67,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption payment for limited
partnership interest (10,010,000)
Capital contribution by
limited partners 5,337,000
Notes receivable from affiliate (3,450,000)
Pre-quasi reorganization credit 162,000 97,000
------------ ------------
Cash provided by (used in)
financing activities (7,961,000) 97,000
------------ ------------
NET CHANGE IN CASH (3,000) 10,000
CASH:
BEGINNING OF PERIOD 124,000 112,000
------------ ------------
END OF PERIOD $ 121,000 $ 122,000
============ ============
Supplemental disclosure of
non-cash activities:
Land improvements
in lieu of sale proceeds $ 1,392,000
============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
11
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED SCHEDULE OF INVESTMENTS
------------------------------------
SEPTEMBER 30, 1995
------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION COST
- --------- ----------- ----
<S> <C> <C>
SHORT-TERM INVESTMENTS OF PARENT:
--------------------------------
GOVERNMENT OBLIGATIONS:
----------------------
$1,100,000 United States Treasury Bills, 6.078%,
10/05/95 1,068,000
10,706,000 Temporary Investment Fund 10,706,000
-----------
11,774,000
SHORT-TERM INVESTMENTS OF OPERATING
-------------------------------------
SUBSIDIARIES:
------------
155,000 United States Treasury Bills, 6.382%,
11/09/95 153,000
4,629,000 First Fidelity Bank -
Cash Management Fund 4,629,000
-----------
4,782,000
-----------
TOTAL SHORT-TERM INVESTMENTS $16,556,000
===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
12
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED SCHEDULE OF INVESTMENTS
------------------------------------
SEPTEMBER 30, 1995
------------------
<TABLE>
<CAPTION>
SHARES DESCRIPTION COST VALUE
- ------ ----------- ---- -----
<S> <C> <C> <C>
INVESTMENTS OF PARENT:-
---------------------
INVESTMENTS IN NOT READILY
--------------------------
MARKETABLE SECURITIES:
---------------------
200 Cairntrust Company, common $ 80,000 $ 80,000
500 Dyna Software & Consulting,
Inc., preferred 20,000 20,000
120,000 Viking Oil & Gas Ltd., common 120,000 112,000
-------- --------
220,000 212,000
-------- --------
INVESTMENTS IN UNDEVELOPED
--------------------------
REAL ESTATE:-
-----------
Wake County, North Carolina 2,833,000 1,710,000
---------- ----------
</TABLE>
The accompanying notes are an integral
part of these financial statements.
13
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
CONSOLIDATED SCHEDULE OF INVESTMENTS
------------------------------------
SEPTEMBER 30, 1995
------------------
<TABLE>
<CAPTION>
DESCRIPTION COST VALUE
----------- ---- -----
<S> <C> <C>
PARTNERSHIP INVESTMENTS:
-----------------------
1421 Associates $ 676,000 $ -
American Benefactor L. P. 30,000 30,000
Bachtel Liquidity L. P. - 480,000
Thomas H. Lee
Equity Partners, L. P. 1,992,000 6,900,000
---------- ----------
2,698,000 7,410,000
---------- ----------
TOTAL INVESTMENTS $5,751,000 $9,332,000
========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
14
<PAGE>
PITCAIRN GROUP L. P.
--------------------
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 - NATURE OF BUSINESS:-
- ---------------------------
Pitcairn Group L. P. ("the Partnership") is a limited partnership organized on
July 22, 1986 under the Revised Uniform Limited Partnership Act of the State of
Delaware to operate for the purpose of achieving long-term capital appreciation
by making investments in companies (including partnerships and divisions or
subsidiaries of other companies) which its Managing General Partner (Pitcairn
Company) believes offer significant growth opportunities. It has elected to be
regulated as a Business Development Company pursuant to the Investment Company
Act of 1940.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:-
- ----------------------------------------
Basis of Presentation: The financial statements have been prepared using
- ---------------------
accounting principles appropriate for companies investing in securities as their
primary business activity. Under these principles, investments are stated at
value.
Certain reclassifications have been made to the 1994 amounts to conform with the
1995 presentation.
Principles of Consolidation: The consolidated financial statements include the
- ---------------------------
accounts of Pitcairn Group L. P. and its wholly-owned operating subsidiary,
Pitcairn Company, and Pitcairn Company's wholly-owned subsidiary, Pitcairn Trust
Company. These subsidiaries provide investment advisory and trust services and
manage other investments.
Unconsolidated financial statements of the Partnership reflect the equity method
of accounting for investments in operating subsidiaries and partnerships.
Short-Term Investments, representing investments in government obligations and
- ----------------------
money market funds, are stated at cost (see Consolidated Schedule of
Investments), which approximates market value. Accrued interest income of
$32,000 and $116,000 relating to these investments is included in accounts
receivable and other assets at September 30, 1995 and December 31, 1994,
respectively.
15
<PAGE>
Investments are stated at estimated value. Investments, which primarily consist
- -----------
of partnership interests, restricted stock of other private companies and
undeveloped land, have no readily ascertainable market value. The fair value of
these investments has been determined in good faith by the General Partners.
Ownership interest in companies which are held for investment purposes are not
consolidated, regardless of percentage of ownership.
Marketable Equity Securities held by the Partnership's wholly-owned subsidiary
- ----------------------------
are carried at their aggregate lower of cost or market value and are included in
current assets. As of September 30, 1995, their aggregate cost was $1,020,000
and their aggregate market value was $1,075,000, the largest position of which
was $59,000 at market. At September 30, 1995, gross unrealized appreciation
pertaining to the marketable equity securities totals $55,000.
Office Equipment: Additions of office equipment of operating subsidiaries are
- ----------------
stated at cost. Depreciation expense is calculated using an accelerated method
based upon an estimated useful life of three years.
Income Taxes are accounted for in accordance with Statement of Financial
- ------------
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes". The
Partnership's wholly-owned subsidiary recognizes a current income tax liability
or asset for estimated taxes payable or refundable on tax returns for the
current year and deferred tax liabilities or assets for the estimated future tax
effects attributable to temporary differences in the bases of assets and
liabilities for income tax and financial reporting purposes and carryforwards
using the enacted tax rate.
Investment Advisory and Trust Service Fees are recognized when earned under the
- ------------------------------------------
terms of the investment advisory contracts and trust instruments, by certain
wholly-owned operating subsidiaries and are based upon a percentage of assets
under management.
Gains or Losses on Sales of Investments are calculated using the specific
- ---------------------------------------
identification method of determining the cost of securities sold.
Pension Costs are accounted for in conformity with SFAS No. 87 "Employers
- -------------
Accounting for Pensions." (See Note 7).
16
<PAGE>
NOTE 3 - PARTNERS' CAPITAL:-
- --------------------------
Pursuant to its 1990 Investment Advisory and Administrative Agreement with the
Partnership, Pitcairn Company has waived the right, to which it would otherwise
be entitled under the Partnership Agreement, to share in up to 20% of the
Partnership's net realized capital gains. Consequently, Pitcairn Company, as
successor Managing General Partner, will be allocated net gains to the same
extent as if it were a limited partner of the Partnership. The Partnership
Agreement provides that 10% of net realized losses from the sale of "New
Investment Assets" (as defined in the Partnership Agreement) are allocated to
the Managing General Partner and the remainder to all Partners in accordance
with their percentage interests.
During the third quarter of 1994, approximately 39% of the Partnership's limited
partnership interests was acquired by a new limited partnership, Johnstone L. P.
("Johnstone"). The Partnership filed an application seeking appropriate
exemptive orders from the SEC to permit the Partnership to repurchase
Johnstone's Partnership units for consideration consisting of cash and other
assets of the Partnership, notably including pro rata interests in the
Partnership's holdings of Thomas H. Lee Equity Partners L. P. ("Thomas Lee") and
of Bachtel Cellular Liquidity L. P. ("Bachtel"), but excluding any shares of
Pitcairn Company, the Partnership's wholly-owned Managing General Partner (and
Pitcairn Trust Company, Pitcairn Company's wholly-owned subsidiary). On April
26, 1995, the Securities and Exchange Commission issued an order (the "SEC
Order") approving the exemptive application, as amended, of the Partnership and
Johnstone (a 39% limited partner of the Partnership) for the Partnership to
repurchase Johnstone's Partnership Units for consideration consisting of cash
and other assets of the Partnership, notably including pro rata interests in the
Partnership's holdings of Thomas Lee and Bachtel, but excluding any shares of
Pitcairn Company (and Pitcairn Trust Company, Pitcairn Company's wholly-owned
subsidiary). During May 1995, in connection with the repurchase of Johnstone's
Partnership Units, the Partnership advanced $3.5 million in cash to Moreland L.
P. ("Moreland') in exchange for a note secured by certain real estate holdings
of Moreland L. P. The Managing General Partner of the Partnership is also the
Managing General Partner of Moreland and certain Unitholders of the Partnership
are also unitholders of Moreland. The Partnership repurchased the respective
ownership interests of Johnstone during May 1995 for approximately $10 million
in cash, a
17
<PAGE>
$2.25 million note receivable from Moreland, ABS Ventures II and Johnstone's pro
rata interest in Thomas Lee and Bachtel. Finally, also during May 1995, the
Partnership issued additional Partnership Units totaling $5.3 million pursuant
to a private offering held by the Partnership. These additional Partnership
Units were issued at the net asset value of the Partnership as of the date of
issuance.
NOTE 4 - LOANS RECEIVABLE:-
- -------------------------
On November 29, 1991, Pitcairn Company acquired for $1 million a 50% preferred
participation ("Agreement") in a pool of loans previously written off by
Pitcairn Private Bank ("PPB"). In April 1993, PPB and its parent, Pitcairn
Bancorp Inc. ("Bancorp"), were liquidated and all of the remaining assets and
liabilities of these corporations, including the pool of loans, were contributed
to a new entity, The Liquidating Trust of Pitcairn Bancorp Inc. ("BLT").
Certain former stockholders of Bancorp who are now unitholders of BLT are also
holders of limited partnership interests in the Partnership. Under the
Agreement, PPB agreed to remit the first $1 million in recoveries on the pool of
loans ("recoveries") to Pitcairn Company and to share any additional proceeds
from recoveries with Pitcairn Company based on a formula set forth in the
Agreement. As of
December 31, 1994, Pitcairn Company has recovered substantially all of its
investment in the pool of loans. During September 1995, Pitcairn Company
received $216,000 as final proceeds on these recoveries.
In April 1993, Pitcairn Company advanced $1.6 million in cash to BLT. This
advance is secured by certain assets of BLT. During September 1995, Pitcairn
Company received the entire $1.6 million in cash previously advanced to BLT as
well as all accrued and unpaid interest due from BLT.
NOTE 5 - OFFICE EQUIPMENT:-
- -------------------------
Depreciation is provided on either straight-line or accelerated methods based
upon an estimated useful life of three years for office equipment.
Office equipment is summarized as follows:
18
<PAGE>
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------
1995 1994
---- ----
<S> <C> <C>
Office equipment $3,475,000 $3,452,000
Less: accumulated
depreciation 3,411,000 3,392,000
---------- ------------
$ 64,000 $ 60,000
========== ============
</TABLE>
NOTE 6- INCOME TAXES:-
- ---------------------
As of September 30, 1995 and December 31, 1994, the net deferred tax asset is
$1,310,000 and $930,000, respectively. Deferred tax assets at September 30,
1995 and December 31, 1994 are reduced by a valuation allowance of $1,358,000
and $1,419,000, respectively. The valuation allowance reflects management's
assessment that, based on available information, it is more likely than not that
the tax benefits from certain carryforwards will not be realized. Adjustments
to the valuation allowance will be made if there is a change in management's
assessment of the amount of deferred tax asset that is realizable.
The tax effects of temporary differences which give rise to deferred income tax
assets and liabilities as of
September 30, 1995 and December 31, 1994, are as follows:
19
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ------------
1995 1994
---- ----
<S> <C> <C>
Deferred tax assets:
Fixed assets $ 85,000 $ 44,000
Investments, net 32,000 32,000
Alternative minimum tax
credit carryforwards 105,000 105,000
Operating loss carryforwards 1,364,000 880,000
Passive loss carryforwards 140,000 157,000
Capital loss carryforwards 1,028,000 1,256,000
Vested vacation benefits 32,000 32,000
Rent payable 187,000 193,000
Contributions carryforwards 16,000 16,000
----------- -----------
Total deferred tax assets
before valuation allowance 2,989,000 2,715,000
Valuation allowance for
deferred assets (1,358,000) (1,419,000)
----------- -----------
Total deferred tax assets, net
of valuation allowance 1,631,000 1,296,000
----------- -----------
Deferred tax liabilities:
Real estate (200,000) (200,000)
Benefit plans (50,000) (95,000)
State income taxes (71,000) (71,000)
----------- -----------
Total deferred tax liabilities (321,000) (366,000)
----------- -----------
Deferred income taxes, net $ 1,310,000 ($ 930,000)
=========== ===========
</TABLE>
No provision has been made for federal or state income taxes in the
unconsolidated financial statements of the Partnership, because as a partnership
it is not subject to federal or state income tax and the tax effect of its
activities accrues to its partners. Significant differences exist between the
tax bases of the partners' interest in the Partnership and the Partnership's
unconsolidated financial statements. However, taxes are provided in the
consolidated financial statements to reflect the tax expense or benefit of its
consolidated operating subsidiaries which as corporations incur federal and
state taxes on their income.
Certain operating subsidiaries of the Partnership have capital loss
carryforwards of $3,024,000 for income tax purposes, which expire in 1997 and
1998.
20
<PAGE>
Certain operating subsidiaries have net operating loss carryforwards of
$4,013,000 for income tax purposes. These net operating loss carryforwards
expire beginning in 2005 through 2010.
The consolidated provision (benefit) for income taxes comprises:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1995 1994
---- ----
<S> <C> <C>
Deferred:
Federal ($380,000) ($1,106,000)
Credit to additional
paid-in capital for
recognition of pre-quasi
reorganization tax attributes 162,000 97,000
--------- -----------
($218,000) ($1,009,000)
========= ===========
</TABLE>
As of December 31, 1992, the Partnership's wholly-owned subsidiary effected a
quasi-reorganization whereby the Partnership's wholly-owned subsidiary's
accumulated deficit was eliminated by a charge against additional paid-in
capital.
The federal tax provisions for each the periods shown above differ from the
amount computed by applying the federal statutory income tax rate then in effect
to the increase (decrease) in net assets resulting from operations before income
taxes. A reconciliation of the amounts computed by applying the federal
statutory income tax rate to the increase (decrease) in net assets resulting
from operations before income taxes and the federal tax provision (benefit) is
as follows:
21
<PAGE>
<TABLE>
<CAPTION>
Nine months ended
September 30,
------------------------
1995 1994
---- ----
<S> <C> <C>
Expected tax benefit
at federal statutory
income rate of 34% ($272,000) ($3,103,000)
Change in net assets of
the Partnership not
subject to tax at
Partnership level (63,000) 2,037,000
Pre-quasi reorganization credit 162,000 97,000
Other items, net (45,000) (40,000)
--------- -----------
($218,000) ($1,009,000)
======== ==========
</TABLE>
NOTE 7 - EMPLOYEE BENEFITS:-
- ---------------------------
The Pitcairn Retirement Plan, a non-contributory defined benefit pension plan,
covers all eligible employees of the Partnership's Managing General Partner and
its wholly-owned subsidiary and the former employees of the Plan's former
sponsor, The Pitcairn Company.
NOTE 8 - LEASE COMMITMENT:-
- --------------------------
Effective January 1, 1994, Pitcairn Trust Company entered into a ten year master
lease agreement with OPLP. Under this new master lease agreement, Pitcairn
Trust Company will continue to bear the operating costs of the Building in
addition to paying OPLP rent which will vary depending on the level of occupancy
of the Building. Pitcairn Trust Company occupies approximately 27,000 square
feet (40% of total rentable square footage) and has paid approximately $580,000
in cash to OPLP for office rent for the nine month period ended September 30,
1995. Assuming the Company obtains subtenants and provides tenant improvements
at the rate it currently projects, annual minimum rent, excluding operating
expenses and utility costs, should approximate $750,000 for each of the years
1995 through 2000. The actual amount of rent to be paid to OPLP is likely to
differ from these estimates as the actual terms of subtenant leases are
determined.
OPLP has obtained a commercial mortgage loan (the "Loan") in order to finance
the renovations (the "Improvements") necessary
22
<PAGE>
to convert the Building to a multi-tenant facility. In conjunction with the loan
agreement of OPLP which matures December 31, 2003, Pitcairn Trust Company, as
Master Tenant of the Building, has agreed to maintain a minimum tangible net
worth of not less than $1,500,000 plus fifty percent (50%) of all future net
income, until tangible net worth, in conformity with generally accepted
accounting principles, equals or exceeds $2,200,000. Pitcairn Trust Company
meets the tangible net worth requirement at September 30, 1995. In addition,
Pitcairn Company has guaranteed all the terms and provisions of the Loan with
respect to the construction of the Improvements and the performance by OPLP of
all other terms, covenants and agreements with respect to the performance and
completion of the Improvements. Notwithstanding anything in the guarantee to the
contrary, but without otherwise limiting Pitcairn Company's obligations, under
no circumstances shall Pitcairn Company be liable for the repayment of the Loan.
NOTE 9 - REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:-
- ---------------------------------------------------------------
During April 1995, Pitcairn Company entered into a short bond sale transaction
in the amount of $10,000,000. As a result of these transactions, Pitcairn
Company realized a net loss of $39,000 which is reflected in the Consolidated
Statement of Operations as a realized gain of $570,000 and interest expense of
$609,000. The interest expense of $609,000 was paid in its entirety during the
second quarter of 1995. The average amount of borrowings outstanding during
1995 related to this and other transactions amounted to $10,000,000 and the
weighted average interest rate was 12.17%.
During 1993, the Partnership entered into an option agreement, development
agreement and a profits participation and assignment agreement ("agreements")
pertaining to the North Carolina undeveloped real estate ("land") with Lichtin
Properties, Inc. ("Lichtin"). During December 1993, as a result of these
agreements, the Partnership sold 7.51 acres of land to Lichtin for an exchange
price of $50,000 per acre. In lieu of cash proceeds, the Partnership received
approximately $588,000 in land improvements, which included $212,000 as a
deposit to be credited to Lichtin at the closing of subsequent land purchases.
During February 1995, the Partnership sold approximately 18.997 acres of land to
Lichtin for an exchnage price of approximately $50,000 per acre. In lieu of
cash proceeds, the Partnership
23
<PAGE>
received approximately $750,000 in improvements to its remaining undeveloped
land which were completed by Lichtin during September, 1995 as well as $212,000
of land improvements previously completed by Lichtin which was held as a deposit
by the Partnership. In addition, approximately $429,000 of additional
improvements to the Partnership's remaining undeveloped land were completed by
Lichtin and will be credited to Lichtin at the closing of a future land
purchase. As a result of the sale of the 18.997 acres of land to Lichtin, the
Partnership recognized a gain of approximately $361,000.
24
<PAGE>
Consolidated realized and unrealized gains (losses) comprise:
<TABLE>
<CAPTION>
Nine months ended
September 30,
----------------------------------
1995 1994
---- ----
<S> <C> <C>
Realized:
Sale proceeds and
investment distributions $ 18,988,000 $ 81,000
Cost of
investments sold 14,271,000 39,000
------------- -------------
Realized gain $ 4,717,000 $ 42,000
============= =============
Unrealized:
At beginning of year:
Total value of
investments $ 15,767,000 $ 26,534,000
Less cost of
investments 7,756,000 6,564,000
------------- -------------
8,011,000 19,970,000
------------- -------------
At end of period:
Total value of
investments 9,332,000 21,039,000
Less cost of
investments 5,751,000 7,276,000
------------- -------------
3,581,000 13,763,000
------------- -------------
Unrealized depreciation ($ 4,430,000) ($ 6,207,000)
============= =============
</TABLE>
NOTE 10 - ACCRUED EXPENSES AND COMMITMENTS:-
- ------------------------------------------
Pitcairn Company is committed to make additional advances of $2.2 million in
cash to purchase an interest in the assets of, or to make loans to, BLT (see
Note 4).
The Partnership has committed to purchase a limited partnership interest in
Thomas Lee, an unaffiliated private leveraged buyout partnership. Subsequent to
the pro rata distribution of Johnstone's interest in Thomas Lee (see Note 4),
the Partnership's capital commitment to Thomas Lee will not exceed $4.9 million,
nor will more than three percent of Thomas Lee's outstanding securities be owned
by the Partnership and all affiliated persons of the Partnership. The
Partnership has a commitment to Thomas Lee of $130,000 for new investments of
Thomas Lee which terminates no
25
<PAGE>
later than November 29, 1995. The Partnership's commitment for follow-on
investments in existing portfolio companies held by Thomas Lee approximates
$650,000 and terminates no later than February, 1997. The Partnership has funded
approximately $4.1 million of its commitment to Thomas Lee as of September 30,
1995.
The Partnership has committed to acquire a non-voting limited partnership
interest in Bachtel, a Delaware limited partnership that invests in cellular
telephone licenses and systems. Subsequent to the pro rata distribution of
Johnstone's interest in Bachtel (see Note 4), the Partnership is committed to
invest up to $1.83 million to acquire a less than 10% interest in Bachtel. The
Partnership has funded $1,480,000 of its commitment to Bachtel as of September
30, 1995.
NOTE 11 - INTERIM FINANCIAL STATEMENTS:-
- --------------------------------------
The financial statements included herein have been prepared without audit and
reflect all adjustments which management considers necessary for the fair
presentation of the results of the interim period. Due to potential
fluctuations in interest rates, market value of assets under management and
periodic timing of realized gains or losses on sales of investments, these
interim results are not necessarily indicative of results to be obtained for the
full year. These financial statements should be read in conjunction with the
Partnership's December 31, 1994 financial statements.
26
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Partnership continues to hold short-term liquid investments with
maturities of less than 30 days. At September 30, 1995, short-term investments
held directly by the Partnership, consisting of United States Treasury Bills and
shares in a money market fund, amounted to $11,774,000.
As a result of what the Partnership believes to be fundamental
differences in management and investment philosophy between (a) Pitcairn Company
and Pitcairn Trust Company and (b) a significant minority of individual Pitcairn
family members who were, during 1993, clients of Pitcairn Trust Company ("Former
Family Clients"), Pitcairn Trust Company accounts of those Former Family Clients
were closed at their request. Those Former Family Clients also advised the
Partnership of their desire to either liquidate their Partnership interests (if
feasible) or be afforded a means to permit them to own, control and manage
Partnership assets representing the value of their approximate aggregate
interests in the Partnership. The Former Family Clients owned, directly and
through their trusts, Partnership units representing approximately 39% of the
Partnership's total units. In December 1993, the Partnership's General Partners
unanimously agreed in principle to use their reasonable best efforts to
accommodate the desire of the Former Family Clients for liquidity (the
"Agreement in Principle"). Coincident with that agreement, three Former Family
Clients who were then directors of Pitcairn Company resigned. Moreover, another
individual who was also one of the Former Family Clients indicated that he would
resign as an Independent General Partner of the Partnership as soon as the
remaining Individual General Partners advised him that they had identified an
individual they believed to be willing and appropriate to serve as his
successor, provided such resignation would not constitute a breach of his
fiduciary duty as a General Partner. The Independent General Partner was
advised that the remaining Independent General Partners had identified an
individual who was willing and appropriate to serve as his successor, and that
his resignation would not constitute a breach of his fiduciary duty as a General
Partner. Effective July 21, 1995 the Independent General Partner resigned.
27
<PAGE>
The Former Family Clients created a new limited partnership, Johnstone
L. P. ("Johnstone"), which acquired their Units and interests in exchange for
Johnstone limited partnership interests. The Partnership filed an application
seeking an exemptive order from the SEC to permit the Partnership to repurchase
Johnstone's Partnership units for consideration consisting of cash and other
assets of the Partnership, notably including pro rata interests in the
Partnership's holdings of Thomas Lee and Bachtel, but excluding any shares of
Pitcairn Company, the Partnership's wholly-owned Managing General Partner (and
Pitcairn Trust Company, Pitcairn Company's wholly-owned subsidiary). The
Partnership received notification from the SEC that such exemptive application
had been granted effective April 26, 1995. The Partnership repurchased
Johnstone's partnership units and effected the other transactions in connection
with the Agreement in Principle on May 10, 1995. As a result of the closing
pursuant to the Agreement in Principle, the Partnership's liquid assets
decreased approximately $13.4 million.
Also during May 1995, the Partnership raised $5.3 million in cash in a
private offering to Pitcairn family members who are clients of Pitcairn Trust
Company and who had previously expressed an interest in purchasing additional
Partnership units. The Partnership Units were issued at their net asset value as
of May 10, 1995, the date of the closing of the private offering. The
Partnership believes it has sufficient cash and other resources available to be
able to fulfill any future capital calls under its commitments with respect to
its remaining limited partnership interests in Thomas Lee and Bachtel, and to
otherwise operate effectively.
At September 30, 1995, the Partnership's recorded liabilities included a
reserve for loss contingencies of $187,000 related to contingent liabilities to
creditors of one investee company of the Partnership, the satisfaction of which
would be funded by the Partnership if the liabilities came due.
In 1990 the Partnership committed to purchase a limited partnership
interest in an unaffiliated private leveraged buyout partnership, Thomas Lee.
Subsequent to the pro rata distribution of Johnstone's interest in Thomas Lee by
the Partnership, the Partnership's capital commitment to Thomas Lee will not
exceed $4.9 million, nor will more than three percent of Thomas Lee's
outstanding securities be owned by the Partnership and all
28
<PAGE>
affiliated persons of the Partnership. During the nine month period ended
September 30, 1995, the Partnership funded $344,000 of its commitment to Thomas
Lee bringing the Partnership's total investment in this partnership to
$4,143,000 as of September 30, 1995.
Subsequent to the pro rata distribution of Johnstone's interest in
Bachtel by the Partnership, the Partnership is committed to invest up to $1.83
million to acquire a less than 10% non-voting limited partnership interest in
Bachtel, an unaffiliated Delaware limited partnership that was organized to
invest in cellular telephone licenses and systems. The Partnership's total cash
invested in Bachtel is $1,480,000 as of September 30, 1995.
Consolidated Results of Operations
----------------------------------
The value of the net assets of the Partnership decreased $9,424,000
(23.6%) during the first nine months of 1995 from $39,938,000 at December 31,
1994 to $30,514,000 at September 30, 1995. This decrease reflects the net
operating and investment loss before income taxes of $1,086,000 and net realized
and unrealized gain on investments of $287,000 as well as the redemption payment
by the Partnership of limited partnership interests in the amount of $14.342
million and the $5.337 million capital contribution received from limited
partners.
Investment advisory and trust service fees of $5,274,000 for the nine
months ended September 30, 1995 represents an increase of $498,000 (10.4%) as
compared to the similar period in 1994. This increase is a result of new client
assets received during the past eighteen months as well as an increase in
overall market conditions for the nine month period ended September 30, 1995.
While management cannot readily predict or prevent such market fluctuations and
many other changes in account assets, it does monitor their effects on its
operating income.
Pitcairn Trust Company was notified in February 1995 that a partnership,
affiliated with the Pitcairn Family, whose assets are endowments of
Swedenborgian religious institutions, had made a policy decision not to have
business relationships with organizations -- such as Pitcairn Trust Company --
that are controlled by members of the Swedenborgian religion. That client
relationship generates approximately $650,000 in annual trust
29
<PAGE>
service fees for Pitcairn Trust Company. Accordingly, Pitcairn Trust Company was
advised that the client intends to terminate its relationship by withdrawing
assets currently under management, with the termination to be completed by
September 30, 1996. Many factors, including the associated loss of revenue from
the withdrawing account as well as possible increases of revenue resulting from
additional assets under management of new and existing clients, may affect the
registrant's financial condition and results of operations. Management currently
believes that Pitcairn Trust Company will experience net losses during 1995 and
1996. However, management believes that the Trust Company will continue to have
sufficient cash and other resources available to be able to operate and compete
effectively.
Consolidated interest income is 54.3% higher for the nine month period
ended September 30, 1995 than during the similar period in 1994. This increase
primarily reflects the higher short-term investment base resulting from cash
distributions from limited partnerships during the past twelve months offset by
a decrease in the short-term investment base in May 1995 as a result of the
transactions in connection with the Agreement in Principle. Interest income
from short-term investments could be significantly affected both by
corresponding changes in liquid funds available for such investments and changes
in relevant interest rates.
Consolidated operating expenses for the nine month period ended
September 30, 1995 totaled $7,828,000 versus $7,065,000 during the corresponding
period in 1994, a 10.8% increase. The increase in operating expenses is a result
of an increase in general and administrative costs due to an increase in
consultant fees as well as interest expense incurred as a result of a short bond
transaction consummated by a wholly-owned subsidiary of the Partnership during
the second quarter of 1995.
Consolidated realized gains on investments of $4,717,000 during the nine
month period ended September 30, 1995 represents an increase of $4,675,000 over
consolidated realized gains of $42,000 for the period ended September 30, 1994.
The realized gain during the nine month period ended September 30, 1995 is a
result of cash distributions received from Thomas Lee and Bachtel as well as a
gain recognized by a wholly-owned subsidiary of the Partnership as a result of a
short bond transaction.
30
<PAGE>
Consolidated unrealized appreciation on investments decreased $4,430,000
during the nine month period ended September 30, 1995, as compared with a
$6,207,000 decrease during the similar period in 1994. This decrease during the
first nine months of 1995 reflects primarily the pro rata distribution by the
Partnership of Johnstone's interest in Thomas Lee and Bachtel as part of the
Agreement in Principle discussed above.
The Partnership is likely to encounter significant competition from other
persons or entities with similar investment objectives. Those competitors
include banks, trust companies, investment advisers, financial services
companies (including full service broker-dealers), other business development
companies and corporations, small business investment companies, hedge funds,
large industrial and financial companies investing directly or through
affiliates, foreign investors of various types and individuals. Many of these
competitors may have substantially more experience, as well as greater financial
and personnel resources than are available to the Partnership.
31
<PAGE>
Item 5. Other Matters.
In July, 1995 the Partnership filed an application with the Securities
and Exchange Commission (the "SEC"), pursuant to Section 6(c) of the Act,
requesting that the SEC exempt the Partnership from future regulation under the
Act. The Partnership amended its application in October, 1995 in response to
comments received from the staff of the SEC. While the Partnership believes its
application is consistent with exemptions previously granted by the SEC for
private, family-owned investment companies, and believes there is a reasonable
likelihood that the exemption will be granted, there can be no assurance that
the SEC will grant the requested relief.
In light of Section 58 of the Act, as well as Section 10.02(a)(ii) of
the Partnership Agreement, the general partners called a meeting of the limited
partners for November 10, 1995 for the purpose of voting on the withdrawal of
the Partnership's election as a business development company. The general
partners also solicited the vote of the limited partners on another matter
related to the exemptive application, namely, the amendment of the Partnership
Agreement to impose certain restrictions on the transferability of Units such
that the Partnership will remain at least 90% owned by the Pitcairn family,
related trusts and non-profit organizations associated with the family. Proxy
materials pertaining to these two matters were mailed to all partners on October
18, 1995. Each of these two matters was approved on November 10, 1995 by the
requisite majority in interest of the limited partners and neither matter is
effective unless and until the SEC grants the exemptive relief requested under
Section 6(c) of the Act.
32
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(4) Agreement of Limited Partnership dated
July 22, 1986.*
(25) Powers of Attorney.
(b) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
__________
* Incorporated herein by reference to registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 filed with the Securities and
Exchange Commission on March 31, 1995.
33
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.
PITCAIRN GROUP L. P.
By: Pitcairn Company
Managing General Partner
By: /s/Lawrence R. Bardfeld*
------------------------
Alvin A. Clay III
President and Chief
Operating Officer
Date: November 8, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been duly signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
PITCAIRN COMPANY Managing General Partner
By: /s/Lawrence R. Bardfeld* President and November 8, 1995
-----------------------
Alvin A. Clay III Chief Operating
Officer
/s/Lawrence R. Bardfeld* President and November 8, 1995
-----------------------
Alvin A. Clay III Director of the
Managing General
Partner
/s/William C. McCormick Senior Vice November 8, 1995
-----------------------
William C. McCormick President, Treasurer
and Chief Financial
Officer (principal
financial officer,
Managing General
Partner)
</TABLE>
34
<PAGE>
<TABLE>
<S> <C> <C>
/s/Lawrence R. Bardfeld* Chairman and Chief November 8, 1995
-----------------------
Dirk Junge Executive Officer
of the Managing
General Partner
/s/ Jack W. Robbins Director of the November 8, 1995
-------------------
Jack W. Robbins Managing General
Partner
/s/Lawrence R. Bardfeld* Director of the November 8, 1995
-----------------------
Anthony P. Terracciano Managing General
Partner
/s/Lawrence R. Bardfeld* Director of the November 8, 1995
-----------------------
Clark D. Pitcairn Managing General
Partner
/s/Lawrence R. Bardfeld* Director of the November 8, 1995
-----------------------
Feodor Pitcairn Managing General
Partner
/s/Lawrence R. Bardfeld* Director of the November 8, 1995
-----------------------
Lachlan Pitcairn Managing General
Partner
/s/Lawrence R. Bardfeld* Director of the November 8, 1995
-----------------------
Stephen Pitcairn Managing General
Partner
/s/Lawrence R. Bardfeld* General Partner November 8, 1995
-----------------------
Alan Pitcairn
</TABLE>
35
<PAGE>
<TABLE>
<S> <C> <C>
/s/Lawrence R. Bardfeld* Director of November 8, 1995
-----------------------
Garthowen Pitcairn Managing General
Partner
/s/Lawrence R. Bardfeld* General Partner November 8, 1995
-----------------------
N. Clara Pitcairn
</TABLE>
* Signed pursuant to the attached Powers of Attorney
36
<PAGE>
INDEX TO EXHIBIT
----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
(4) Agreement of Limited Partnership
dated July 22, 1986 *
(25) Powers of Attorney
</TABLE>
___________
* Incorporated herein by reference to registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 filed with the Securities and
Exchange Commission on March 31, 1995.
37
<PAGE>
PITCAIRN GROUP L. P.
POWER OF ATTORNEY
N. Clara Pitcairn, whose signature appears below, does hereby constitute
and appoint Alvin A. Clay III and Lawrence R. Bardfeld, and either of them, her
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Pitcairn Group L. P.
(the "Partnership") to comply with the Securities and Exchange Act of 1934, as
amended ("Act"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing of the
Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30,
1995, pursuant to said Act including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as director and/or officer of the managing general
partner of the Partnership any such Report and any amendments thereto filed with
the Securities and Exchange Commission under said Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
/s/N. Clara Pitcairn
--------------------
N. Clara Pitcairn
Dated: 10-24-95
38
<PAGE>
PITCAIRN GROUP L. P.
POWER OF ATTORNEY
Alvin A. Clay III, whose signature appears below, does hereby constitute
and appoint Lawrence R. Bardfeld as his true and lawful attorney and agent, with
power of substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorney may deem necessary or
advisable or which may be required to enable Pitcairn Group L. P. (the
"Partnership") to comply with the Securities and Exchange Act of 1934, as
amended ("Act"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing of the
Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30,
1995 pursuant to said Act including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as director and/or officer of the managing general
partner of the Partnership any such Report and any amendments thereto filed with
the Securities and Exchange Commission under said Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorney shall do or cause to be done by virtue thereof.
/s/Alvin A. Clay III
--------------------
Alvin A. Clay III
Dated: 10-23-95
39
<PAGE>
PITCAIRN GROUP L. P.
POWER OF ATTORNEY
Dirk Junge, whose signature appears below, does hereby constitute and
appoint Alvin A. Clay III and Lawrence R. Bardfeld, and either of them, his true
and lawful attorneys and agents, with power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments which
said attorneys and agents, or either of them, may deem necessary or advisable or
which may be required to enable Pitcairn Group L. P. (the "Partnership") to
comply with the Securities and Exchange Act of 1934, as amended ("Act"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing of the Partnership's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995, pursuant to said
Act including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as director and/or officer of the managing general partner of the
Partnership any such Report and any amendments thereto filed with the Securities
and Exchange Commission under said Act, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue thereof.
/s/Dirk Junge
-------------
Dirk Junge
Dated: October 30, 1995
40
<PAGE>
PITCAIRN GROUP L. P.
POWER OF ATTORNEY
Feodor Pitcairn, whose signature appears below, does hereby constitute
and appoint Alvin A. Clay III and Lawrence R. Bardfeld, and either of them, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Pitcairn Group L. P.
(the "Partnership") to comply with the Securities and Exchange Act of 1934, as
amended ("Act"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing of the
Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30,
1995, pursuant to said Act including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as director and/or officer of the managing general
partner of the Partnership any such Report and any amendments thereto filed with
the Securities and Exchange Commission under said Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
/s/Feodor Pitcairn
------------------
Feodor Pitcairn
Dated: 11-1-95
41
<PAGE>
PITCAIRN GROUP L. P.
POWER OF ATTORNEY
Clark D. Pitcairn, whose signature appears below, does hereby constitute
and appoint Alvin A. Clay III and Lawrence R. Bardfeld, and either of them, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Pitcairn Group L. P.
(the "Partnership") to comply with the Securities and Exchange Act of 1934, as
amended ("Act"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing of the
Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30,
1995, pursuant to said Act including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as director and/or officer of the managing general
partner of the Partnership any such Report and any amendments thereto filed with
the Securities and Exchange Commission under said Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
/s/ Clark D. Pitcairn
---------------------
Clark D. Pitcairn
Dated: 10-23-95
42
<PAGE>
PITCAIRN GROUP L. P.
POWER OF ATTORNEY
Anthony P. Terracciano, whose signature appears below, does hereby
constitute and appoint Alvin A. Clay III and Lawrence R. Bardfeld, and either of
them, his true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Pitcairn Group L. P.
(the "Partnership") to comply with the Securities and Exchange Act of 1934, as
amended ("Act"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing of the
Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30,
1995, pursuant to said Act including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as director and/or officer of the managing general
partner of the Partnership any such Report and any amendments thereto filed with
the Securities and Exchange Commission under said Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
/s/Anthony P. Terracciano
-------------------------
Anthony P. Terracciano
Dated: October 30, 1995
43
<PAGE>
PITCAIRN GROUP L. P.
POWER OF ATTORNEY
Lachlan Pitcairn, whose signature appears below, does hereby constitute
and appoint Alvin A. Clay III and Lawrence R. Bardfeld, and either of them, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Pitcairn Group L. P.
(the "Partnership") to comply with the Securities and Exchange Act of 1934, as
amended ("Act"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing of the
Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30,
1995, pursuant to said Act including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as director and/or officer of the managing general
partner of the Partnership any such Report and any amendments thereto filed with
the Securities and Exchange Commission under said Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
/s/Lachlan Pitcairn
-------------------
Lachlan Pitcairn
Dated: October 30, 1995
44
<PAGE>
PITCAIRN GROUP L. P.
POWER OF ATTORNEY
Stephen Pitcairn, whose signature appears below, does hereby constitute
and appoint Alvin A. Clay III and Lawrence R. Bardfeld, and either of them, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Pitcairn Group L. P.
(the "Partnership") to comply with the Securities and Exchange Act of 1934, as
amended ("Act"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing of the
Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30,
1995, pursuant to said Act including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as director and/or officer of the managing general
partner of the Partnership any such Report and any amendments thereto filed with
the Securities and Exchange Commission under said Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
/s/ Stephen Pitcairn
--------------------
Stephen Pitcairn
Dated: 10-25-95
45
<PAGE>
PITCAIRN GROUP L. P.
POWER OF ATTORNEY
Alan Pitcairn, whose signature appears below, does hereby constitute and
appoint Alvin A. Clay III and Lawrence R. Bardfeld, and either of them, his true
and lawful attorneys and agents, with power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments which
said attorneys and agents, or either of them, may deem necessary or advisable or
which may be required to enable Pitcairn Group L. P. (the "Partnership") to
comply with the Securities and Exchange Act of 1934, as amended ("Act"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing of the Partnership's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995, pursuant to said
Act including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as director and/or officer of the managing general partner of the
Partnership any such Report and any amendments thereto filed with the Securities
and Exchange Commission under said Act, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue thereof.
/s/ Alan Pitcairn
-----------------
Alan Pitcairn
Dated: 10-23-95
46
<PAGE>
PITCAIRN GROUP L. P.
POWER OF ATTORNEY
Garthowen Pitcairn, whose signature appears below, does hereby
constitute and appoint Alvin A. Clay III and Lawrence R. Bardfeld, and either of
them, his true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Pitcairn Group L. P.
(the "Partnership") to comply with the Securities and Exchange Act of 1934, as
amended ("Act"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the filing of the
Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30,
1995, pursuant to said Act including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as director and/or officer of the managing general
partner of the Partnership any such Report and any amendments thereto filed with
the Securities and Exchange Commission under said Act, and any other instruments
or documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
/s/ Garthowen Pitcairn
----------------------
Garthowen Pitcairn
Dated: 10-9-95
47
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
Consolidated Statements Assets and Liabilities as of September 30, 1995 and
December 31, 1994 as well as the Consolidated Statement of operations and
changes in Net Assets for the nine month ended September 30, 1995 and 1994
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-START> JAN-01-1995 JAN-01-1994
<PERIOD-END> SEP-30-1995 SEP-30-1994
<INVESTMENTS-AT-COST> 5,751,000 7,756,000
<INVESTMENTS-AT-VALUE> 9,332,000 15,767,000
<RECEIVABLES> 4,738,000 3,287,000
<ASSETS-OTHER> 17,761,000 22,250,000
<OTHER-ITEMS-ASSETS> 1,457,000 1,209,000
<TOTAL-ASSETS> 33,288,000 42,513,000
<PAYABLE-FOR-SECURITIES> 0 0
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 2,774,000 2,575,000
<TOTAL-LIABILITIES> 2,774,000 2,575,000
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 0 0
<SHARES-COMMON-STOCK> 0 0
<SHARES-COMMON-PRIOR> 0 0
<ACCUMULATED-NII-CURRENT> 0 0
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 0 0
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 0 0
<NET-ASSETS> 30,514,000 39,938,000
<DIVIDEND-INCOME> 0 0
<INTEREST-INCOME> 863,000 559,000
<OTHER-INCOME> 6,011,000 5,047,000
<EXPENSES-NET> 7,960,000 8,568,000
<NET-INVESTMENT-INCOME> (1,086,000) (2,962,000)
<REALIZED-GAINS-CURRENT> 4,717,000 42,000
<APPREC-INCREASE-CURRENT> (4,430,000) (6,207,000)
<NET-CHANGE-FROM-OPS> (799,000) (9,127,000)
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 0 0
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 0 0
<NUMBER-OF-SHARES-REDEEMED> 0 0
<SHARES-REINVESTED> 0 0
<NET-CHANGE-IN-ASSETS> (9,424,000) (8,021,000)
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 5,274,000 4,776,000
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 0 0
<AVERAGE-NET-ASSETS> 0 0
<PER-SHARE-NAV-BEGIN> 0 0
<PER-SHARE-NII> 0 0
<PER-SHARE-GAIN-APPREC> 0 0
<PER-SHARE-DIVIDEND> 0 0
<PER-SHARE-DISTRIBUTIONS> 0 0
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> $72.74 $70.19
<EXPENSE-RATIO> 0 0
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
</TABLE>
