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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended June 30, 1999
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 Number 1-9597
PIMCO ADVISORS HOLDINGS L.P.
(Exact name of Registrant as specified in its charter)
Delaware 13-3412614
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 Newport Center Drive
Newport Beach, California 92660
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(Address of principal executive offices)
(949) 219-2200
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, former address and former fiscal year, if changed since last
report)
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 [_]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes [_] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of June 30, 1999, there were 49,250,849 units of limited partner
interest outstanding.
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PIMCO ADVISORS HOLDINGS L.P.
PART I--FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
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Page
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PIMCO Advisors Holdings L.P.
Statements of Financial Condition as of June 30, 1999
and December 31, 1998 11
Statements of Operations for the three months ended
June 30, 1999 and June 30, 1998 and the six months
ended June 30, 1999 and June 30, 1998 12
Statements of Cash Flows for the six months ended
June 30, 1999 and June 30, 1998 13
Notes to Financial Statements 14
PIMCO Advisors L.P.
Consolidated Statements of Financial Condition as
of June 30, 1999 and December 31, 1998 15
Consolidated Statements of Operations for the three
months ended June 30, 1999 and June 30, 1998 and
the six months ended June 30, 1999 and June 30, 1998 16
Consolidated Statements of Cash Flows for the six months
ended June 30, 1999 and June 30, 1998 17
Notes to Consolidated Financial Statements 18
FORWARD LOOKING STATEMENTS
Except for the historical information and discussions contained herein,
statements contained in this Form 10-Q may constitute "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements involve a number of risks, uncertainties and other
factors that could cause actual results to differ materially, including the
performance of financial markets, the investment performance of PIMCO Advisors
L.P.'s sponsored investment products and separately managed accounts, general
economic conditions, future acquisitions, competitive conditions and government
regulations, including changes in tax laws. PIMCO Advisors Holdings L.P.
cautions readers to carefully consider such factors. Further, such forward-
looking statements speak only as of the date on which such statements are made.
PIMCO Advisors Holdings L.P. undertakes no obligation to update any forward-
looking statements to reflect events or circumstances after the date of such
statements.
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Item 2: Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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General
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PIMCO Advisors Holdings L.P. ("PIMCO Holdings") is a Delaware limited
partnership which as its sole business holds in excess of 49 million general
partnership units of PIMCO Advisors L.P. ("PIMCO Advisors"), representing a 44%
equity interest in PIMCO Advisors. PIMCO Partners, G.P. ("PGP") is the sole
general partner of PIMCO Holdings and is the controlling general partner of
PIMCO Advisors.
PIMCO Advisors is one of the largest investment management companies in the
United States with approximately $254.6 billion under management at June 30,
1999. PIMCO Advisors' business provides high quality fixed income and equity
investment management to institutional and retail clients. Its investment
advisor subsidiaries, led by Pacific Investment Management and Oppenheimer
Capital, are widely recognized for consistently posting attractive performance
and high quality service to more than 1,600 institutional clients worldwide,
including more than one-third of the nation's largest 100 corporations. In
addition, PIMCO Advisors manages a family of 50 stock and bond mutual funds.
PIMCO Advisors' business focuses on:
Fixed Income. PIMCO Advisors provides fixed income investment management to
clients including foreign and domestic corporate and public clients. Fixed
income management is led by Pacific Investment Management, which offers
impressive long-term performance records across a diverse range of product
offerings such as intermediate core bond, and other duration or sector specific
strategies.
Equity. PIMCO Advisors provides equity investment management to institutional
and retail clients offering the investment management expertise of six equity
management groups, including the highly regarded Oppenheimer Capital and
recently formed PIMCO Equity Advisors. PIMCO Advisors offers investors an
enhanced index based strategy and a variety of management styles, including
value, growth, modified growth, quantitative and international.
Institutional clients invest through separate accounts and pooled vehicles
such as the institutional share classes of the PIMCO Funds, PIMCO Advisors'
family of 50 proprietary mutual funds. PIMCO Advisors offers its investment
management services to institutional clients through client service
representatives at each of its investment managers.
Retail Distribution. PIMCO Advisors offers the investment expertise of its
investment managers to retail investors through the retail share classes of the
PIMCO Funds. They are distributed primarily through broker-dealers including
PIMCO Funds Distributors LLC ("PFD"), a wholly-owned broker-dealer which
distributes and markets shares of the retail mutual funds of PIMCO Advisors. In
addition, PIMCO Advisors offers retail investors wrap fee accounts, variable
annuity products, 401(k) programs and various investment products through
sponsored trust companies. PIMCO Advisors' investment management groups,
including Pacific Investment Management and Oppenheimer Capital also provide
investment management for a number of third-party sponsored retail products.
PIMCO Advisors' strategy is to increase the amount and diversification of its
assets under management through (i) growth in the institutional market by
providing high levels of client service and entering new markets in the United
States and overseas, (ii) growth in the retail market by building brand
awareness and marketing of the PIMCO Funds through its broker-dealer network and
by penetrating additional distribution channels and (iii) new product offerings
to institutions and retail investors.
The financial condition and results of operations of PIMCO Advisors are
discussed below under "PIMCO ADVISORS L.P."
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PIMCO ADVISORS HOLDINGS L.P.
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Comparative Results of Operations
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Quarter and Six Months Ended June 30, 1999 Compared To Quarter and Six Months
Ended June 30, 1998
PIMCO Holdings realized $27.1 million as its proportionate share of
earnings of PIMCO Advisors (approximately 44%) for the three months ended June
30, 1999 and $41.5 million for the six months ended June 30, 1999 as compared
with $23.6 million for the three months ended June 30, 1998, and $43.7 million
for the six months ended June 30, 1998. This decrease in year to date earnings
of $2.2 million (5.1%), was principally a result of a non-recurring charge of
$19.4 million at PIMCO Advisors in the first quarter of 1999 which related to
the consolidation of Oppenheimer Capital's operations into a single new facility
and for severance costs primarily related to changes in its senior management
which was offset by a non-recurring gain of $3.9 million realized in the second
quarter from the sale of Blairlogie Capital Management ("Blairlogie"). PIMCO
Holdings proportionate share of these non-recurring items resulted in a net
charge of approximately $6.8 million in the six month period ended June 30,
1999, including a $1.7 million gain in the second quarter. This amounted to a
net charge of $0.14 per unit on a diluted basis in the six month period and a
gain of $0.03 per unit in the quarter ended June 30, 1999. PIMCO Advisors'
recurring earnings increased by $2.9 million (5.3%) for the three months ended
June 30, 1999 and by $8.3 million (8.1%) for the six months ended June 30, 1999,
compared to the same periods ended June 30, 1998. The increase in recurring
earnings for the three month and six month periods ended June 30, 1999, resulted
principally from increased managed assets and the related revenues. PIMCO
Advisors' assets under management increased $5.9 billion to $254.6 billion
during the quarter ended June 30, 1999, which was comprised of $5.4 billion of
net cash inflows and $5.7 billion of market appreciation, offset by a reduction
of $5.2 billion related to the sales of two subsidiaries, Blairlogie and
Columbus Circle Investors ("CCI"). There can be no assurance that future cash
flows or market activity will occur at the rates experienced in recent years.
Taxes
PIMCO Holdings is not subject to federal, state, or local income taxes,
which are the obligations of individual partners. Under the change in the tax
laws enacted in August of 1997, PIMCO Holdings elected to continue to be treated
as a publicly traded partnership, subject to a 3.5% federal tax on allocable
gross income from active businesses. Based upon current recurring operating
margins, the publicly traded partnership tax amounts to an approximate 18%
reduction in otherwise reportable net income and an approximate 12% reduction in
cash flow otherwise available for distribution, aggregating approximately $4.0
million in the second quarter of 1999. Because the tax is a function of
allocable operating revenue, these effective rates were significantly higher in
the first quarter of 1999 when PIMCO Advisors recognized the non-recurring
charge discussed above. Similar taxes may be imposed by states in which PIMCO
Holdings does business.
Liquidity and Capital Resources
PIMCO Holdings is dependent upon the operating cash flow of PIMCO Advisors
for its liquidity and capital resources. For the quarter ended June 30, 1999,
PIMCO Holdings declared distributions to holders of PIMCO Holdings units of
$0.58 per unit compared to distributions declared during the quarter ended June
30, 1998 of $0.53 per unit. PIMCO Holdings' policy is to distribute
substantially all its net operating cash flow on an annual basis subject to
establishment of appropriate reserves. Distributions are declared to
unitholders of record on March 31, June 30, September 30 and December 31 and
paid within thirty days following the end of each calendar quarter. Because
PIMCO Holdings' sole business is to hold an investment as a general partner of
PIMCO Advisors, the operating cash flow of PIMCO Holdings consists of
distributions from PIMCO Advisors. Because PIMCO Advisors currently pays all
expenses of PIMCO Holdings other than taxes, PIMCO Holdings' per unit
distributions generally equal the
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PIMCO Advisors distributions, less applicable taxes. The Management Board of
PIMCO Advisors evaluates distribution levels on a quarterly basis.
Actual distribution levels will depend on the financial performance of
PIMCO Advisors. There can be no assurance that current distribution rates will
be maintained. Distributions made by PIMCO Holdings will depend on the
profitability of the investment management business of PIMCO Advisors, which is
affected in part by investment performance, as well as by overall economic
conditions and other factors affecting capital markets generally, which are
beyond the control of PIMCO Holdings and PIMCO Advisors.
PIMCO ADVISORS L.P.
Comparative Results of Operations
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Quarter and Six Months Ended June 30, 1999 Compared To The Quarter And Six
Months Ended June 30, 1998
Revenues
PIMCO Advisors derives substantially all its revenues from advisory fees
for investment management services provided through its investment management
subsidiaries to its institutional and individual clients and advisory,
distribution and servicing fees for services provided principally to the PIMCO
Funds.
Generally, such fees are determined based upon a percentage of client
assets under management and are billed quarterly to institutional clients,
either in advance or arrears, depending on the agreement with the client, and
monthly in arrears to the PIMCO Funds. Revenues are determined in large part
based upon the level of assets under management, which itself is dependent upon
factors including market conditions, client decisions to add or withdraw assets
from PIMCO Advisors' management, and PIMCO Advisors' ability to attract new
clients. In addition, PIMCO Advisors has certain accounts which are subject to
performance based fee schedules wherein performance relative to the S&P 500
Index or other benchmarks over a particular time period can result in additional
fees. Such performance based fees can have a significant effect on revenues,
and provide an opportunity to earn higher fees (as well as lower) than could be
obtained under fee arrangements based solely on a percentage of assets under
management. While no assurances can be given that PIMCO Advisors will continue
to earn any performance fees, such fees aggregated $6.5 million for the three
months ended June 30, 1999 and $8.5 million for the six months ended June 30,
1999 compared to $11.7 million for the three months ended June 30, 1998 and
$16.5 million for the six months ended June 30, 1998. The decrease in
performance fees occurred primarily in an equity product seeking to outperform
the S&P 500 index.
The following table sets forth the composition of PIMCO Advisors' assets
under management for the quarter ended June 30, 1999 compared to the quarter
ended June 30, 1998:
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998
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(Dollars in millions)
<S> <C> <C>
Assets under management by source:
Institutional separate accounts
Fixed income $110,698 $ 96,317
Equity 48,468 53,433
Retail products and mutual funds 95,390 79,004
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Total $254,556 $228,754
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Assets under management by type:
Fixed income $159,228 $132,338
Equity 92,195 93,639
Money market 3,133 2,777
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Total $254,556 $228,754
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</TABLE>
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PIMCO Advisors' consolidated revenues, including those of its wholly-owned
subsidiary PIMCO Funds Distributors LLC ("PFD"), were $244.7 for the three
months ended June 30, 1999 compared to $216.6 million for the three months ended
June 30, 1998 an increase of $28.1 million (13.0%). PIMCO Advisors consolidated
revenues were $473.3 for the six months ended June 30, 1999 compared to $410.5
million for the six months ended June 30, 1998, an increase of $62.8 million
(15.3%). Advisory revenues increased $20.9 million (10.6%) to $216.9 million
for the three months ended June 30, 1999 and increased $47.9 million (12.9%) to
$419.9 million for the six months ended June 30, 1999 compared to $196.0 million
and $372.0 million, respectively, for the same periods in 1998. Distribution
and servicing revenues increased $7.2 million to $27.8 million for the three
months ended June 30, 1999 and increased $14.8 million to $53.3 million for the
six months ended June 30, 1999, compared to $20.6 million and to $38.5 million,
respectively, for the same periods in 1998.
The increases in PIMCO Advisors' revenues for the three months and six
months ended June 30, 1999 resulted primarily from a $25.8 billion (11.3%)
increase in assets under management since June 30, 1998, which included $19.5
billion of net cash inflows offset by a reduction in assets under management of
$5.2 billion related to the sales of the Blairlogie and CCI subsidiaries.
Assets under management reached $254.6 billion at June 30, 1999. Assets under
management increased by $5.9 billion during the three months ended June 30, 1999
and by $10.4 billion during the six months ended June 30, 1999, including net
cash inflows of $5.4 billion for the three months ended June 30, 1999 and $9.9
billion for the six months ended June 30, 1999, both exclusive of the asset
reductions from the Blairlogie and CCI sales.
Expenses
Expenses in the quarter ended June 30, 1999 included a non-recurring gain
of $3.9 million related to the sale of Blairlogie, which was reflected as a
reduction of other expenses. Expenses in the quarter ended March 31, 1999
included a non-recurring charge of $19.4 million related to the consolidation of
Oppenheimer Capital's operations into a single new facility and for severance
costs related to changes in its senior management. This charge was reflected as
$0.5 million in compensation and benefits; $10.5 million in amortization of
restricted unit and option plans; $5.4 million in occupancy and equipment; and
$3.0 million in general and administrative expenses.
Compensation and benefits for the three months ended June 30, 1999 were
$99.6 million, which was $9.4 million or 10.4% higher than the three months
ended June 30, 1998. Compensation and benefits for the six months ended June
30, 1999 were $197.9 million, which was $23.8 million or 13.7% higher than the
three months ended June 30, 1998. The increases reflect the previously
discussed non-recurring charge and additional staffing, particularly at Pacific
Investment Management Company, as well as higher profit sharing expenses which
are based upon profits of each of the investment management subsidiaries.
Commission expenses related to sales and servicing of retail mutual funds
and similar products, increased $4.6 million to $24.4 million in the three
months ended June 30, 1999 and increased $9.5 million to $46.6 million in the
six months ended June 30, 1999 compared to the same periods in the prior year,
reflecting higher "trail" commissions due to an increased level of qualifying
assets, as well as increased "up front" commissions on higher current sales
levels. Commission expenses are primarily incurred by PFD and are paid
primarily to broker-dealers and their sales people for the sale of PIMCO
Advisors retail-oriented mutual funds. These include "up-front" commissions
paid at the time of sale of the mutual funds, "trail" commissions for the
maintenance of assets in the mutual funds and service fee commissions paid for
services provided to mutual fund shareholders. The level of commission expense
will vary according to the level of assets in the mutual funds (on which trail
and service fee commissions are determined) and on the level of sales of mutual
funds (on which up-front commissions are determined). Trail and service fee
commissions are generally paid quarterly beginning one year after sale of the
mutual funds.
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General and administrative expenses were $15.4 million during the three
months ended June 30, 1999, an increase of $4.6 million (42.0%) compared to the
three months ended June 30, 1998. General and administrative expenses were
$30.2 million during the six months ended June 30, 1999, an increase of $10.4
million (52.4%) compared to the six months ended June 30, 1998. These increases
can be primarily attributed to the previously discussed non-recurring charge of
$3.0 million in the first quarter of 1999, and expanded operations at most
subsidiaries. Occupancy and equipment increased by $1.8 million to $7.2 million
for the three months ended June 30, 1999 and by $8.9 million to $19.5 million
for the six months ended June 30, 1999 in comparison to the same periods in the
prior year. Exclusive of the previously discussed non-recurring charge of $5.4
million in the first quarter of 1999, the increases can be attributed primarily
to additional office space and equipment as a result of additional staffing.
Amortization of intangible assets was $13.8 million for the three months
ended June 30, 1999 and 1998, and was $27.5 million for the six months ended
June 30, 1999 and 1998.
Restricted unit and option plan costs were $5.2 million in the three months
ended June 30, 1999 and $21.5 million for the six months ended June 30, 1999
compared to $6.4 million and $12.3 for the same periods in the prior year, a
decrease of $1.2 million (18.7%) for the three months ended June 30, 1999 and an
increase of $9.1 million (74.4%) for the six months ended June 30, 1999.
Exclusive of the non-recurring charge of $10.5 million recorded in the first
quarter as previously discussed, this cost category remained relatively stable.
Other cash expenses increased by $2.2 million for the three months ended
June 30, 1999 and by $8.2 million for the six months ended June 30, 1999 in
comparison to the same periods of the prior year. The increases were due
principally to increases in marketing and promotional costs, interest expense
and professional fees as well as other increases reflective of inflation and
increased staffing, offset by the previously discussed $3.9 million gain on the
sale of Blairlogie realized in the second quarter of 1999.
Liquidity and Capital Resources
PIMCO Advisors business has not historically been capital intensive. In
general, working capital requirements have been satisfied out of operating cash
flow or short-term borrowings. PIMCO Advisors' policy is to make quarterly
distributions to its unitholders.
PIMCO Advisors had approximately $143.9 million of cash and cash
equivalents and short-term investments at June 30, 1999 compared to
approximately $116.1 million at December 31, 1998. PIMCO Advisors liquidity not
otherwise used for quarterly distributions will be used for general purposes
including profit-sharing payments, seed money for new mutual funds and brokers'
commissions on sales of mutual fund shares distributed without a front-end sales
load. PIMCO Advisors believes that the level of such commissions may increase
in the future due to the introduction of new products and mutual fund pricing
structures which may require an alternate financing source.
For the quarter ended June 30, 1999, PIMCO Advisors declared distributions
to holders of PIMCO Advisors units of $0.67 per unit. PIMCO Advisors' policy is
to distribute substantially all its net cash flow on an annual basis after
provision of appropriate reserves. Distributions are declared and paid to
unitholders within thirty days following the end of each calendar quarter to
holders of record on March 31, June 30, September 30 and December 31 of each
year. The Management Board of PIMCO Advisors evaluates distribution levels on a
quarterly basis. Actual distribution levels will depend on the financial
performance of PIMCO Advisors. There can be no assurance that historical
distribution rates will be maintained. Distributions made by PIMCO Holdings
will depend on the profitability of the investment management business of PIMCO
Advisors, which is affected in part by overall economic conditions and other
factors affecting capital markets generally, many of which are beyond the
control of PIMCO Holdings and PIMCO Advisors.
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PIMCO Advisors assumed $230.0 million of 6% exchangeable debt in connection
with the Oppenheimer Capital acquisition in November 1997. As of June 30, 1999,
$149.5 million of that debt had been exchanged for limited partnership units at
a rate of $33.33 per unit. The remaining $80.5 million of such debt is expected
to be exchanged for units on the same terms upon the expiration of certain tax
contingencies over the next 6 to 7 years. On May 12, 1998 PIMCO Advisors secured
a syndicated $500 million credit facility to provide liquidity for working
capital and strategic opportunities. As of June 30, 1999, $65.0 million was
outstanding under this facility.
Other Factors
General Economic and Other Factors
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The general economy including interest rates, inflation and client
responses to economic factors will affect, to some degree, the operations of
PIMCO Advisors. As a significant portion of assets under management are fixed
income funds, fluctuations in interest rates could have a material impact on the
operations of PIMCO Advisors. PIMCO Advisors' advisory business is generally not
capital intensive and therefore any effect of inflation, other than on interest
rates, is not expected to have a significant impact on its operations or
financial condition. Client responses to the economy, including decisions as to
the amount of assets deposited may also impact the operations of PIMCO Advisors.
Any resulting revenue fluctuations may or may not be recoverable in the pricing
of services offered by PIMCO Advisors.
Year 2000 Readiness Disclosure
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The United States securities industry is massive in size and complex in
function. It is characterized by a heavy reliance on computerized information
processing technology and by extensive interdependencies. Many of the world's
computer systems record years in a two-digit format. These systems may be
unable to correctly recognize, interpret or use dates beyond the year 1999.
This inability to process date information might lead to significant business
disruptions. Before discussing PIMCO Advisors' year 2000 readiness, it is
important that one essential principal (from the Report to Congress of the
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Readiness of the United States Securities Industry and Public Companies to meet
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the Information Processing Challenges of the Year 2000 (United States Securities
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and Exchange Commission (June 1997)) be understood. "It is not, and it will
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not, be possible for any single entity or collective enterprise to represent
that it has achieved complete Year 2000 compliance and thus to guarantee its
remediation efforts."
PIMCO Advisors and its subsidiaries are taking steps to assure that their
computer systems will function properly after 1999. PIMCO Advisors and its
subsidiaries have designated a team of information and business professionals to
address the Year 2000 problem and have developed a written Year 2000 Plan to
address Year 2000 issues. PIMCO Advisors presently estimates that its Year 2000
related expenditures will be approximately $17.6 million and that Year 2000 will
not have a material affect on its operations. As of June 30, 1999, PIMCO
Advisors and its subsidiaries have expended an estimated $13.4 million on Year
2000 related costs. PIMCO Advisors and its subsidiaries are in various stages of
reviewing, testing and implementing repairs and upgrades to those systems and
programs that have been identified to have Year 2000 related problems. Because
the Year 2000 project is an ongoing company-wide endeavor, the state of progress
changes daily. Year 2000 budget estimates are subject to change and revision.
See "Uncertainty" below. The PIMCO Advisors' Year 2000 Plan consists of five
general phases: Awareness, Assessment, Remediation, Testing, and Implementation.
Awareness: During the Awareness phase, the Year 2000 team informed the
employees of PIMCO Advisors and its subsidiaries, including the highest levels
of PIMCO Advisors' management, about the Year 2000 problem. A written Year 2000
Plan was prepared and Year 2000 budget estimates were compiled. The Management
Board of PIMCO Advisors formally approved the Year 2000 Plan and a preliminary
budget on July 21, 1998. The Board has approved several revised Year 2000 plans
and
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budgets and is updated quarterly.
Assessment: During the Assessment phase, the Year 2000 team prepared an
inventory of Information Technology ("IT") and non IT systems used in PIMCO
Advisors' and its subsidiaries' business. Systems are classified as software,
hardware, and embedded chips. Separately, systems are also classified as mission
critical systems and non mission critical systems. Except for voice, and data
lines, security, fire, electrical and other building facilities, PIMCO Advisors
does not currently believe that the failure of its non IT systems would have a
material adverse effect upon its business. As the inventory is compiled and
verified, each system is preliminarily assessed for Year 2000 compliance. This
preliminary assessment is made by obtaining manufacturers' representations that
a given product is Year 2000 compliant or other evidence of compliance. Systems
for which no such evidence can be obtained are identified as candidates for
correction or replacement ("Remediation"). The assessment phase is substantially
complete. On-going assessment of systems will continue as new information
becomes available or as deemed prudent.
Remediation: During the Remediation phase, software, hardware, and
embedded chips identified during the Assessment phase to be non Year 2000
compliant will be corrected or replaced. PIMCO Advisors and its subsidiaries
have substantially completed remediation of the non compliant software,
hardware, and non IT systems. Further corrections and replacements may be
required after the Remediation phase as a result of issues identified during the
Testing phase or otherwise.
Testing: The Testing phase includes internal testing, point-to-point
testing, and industry testing. Testing is conducted on both existing and new
systems as they are added. PIMCO Advisors is not testing non mission critical
systems that are not used in its business (e.g., software applications
incidentally installed on PCs with other software that is used in PIMCO Advisors
and its subsidiaries' business). PIMCO Advisors designed and implemented
internal, point-to-point, and industry testing programs that use test scripts,
portfolios and various hypothetical dates generated by PIMCO Advisors and its
subsidiaries, vendors, and industry groups. Three of PIMCO Advisors' SEC
registered investment advisory subsidiaries and two broker dealers participated
in an industry-wide testing forum sponsored by the Securities Industry
Association. Pacific Investment Management Company has been at the forefront of
this process through its participation in the Bond Market Association's Asset
Managers' Forum, a committee which is advising the Securities Industry
Association on issues associated with investment managers and Year 2000 issues.
Internal testing of PIMCO Advisors' mission critical systems and point to point
testing is substantially complete. Industry testing has been completed. PIMCO
Advisors anticipates that it may conduct additional point to point tests with as
yet unidentified third parties until December 31, 1999, as circumstances
warrant.
Implementation: During the Implementation phase, systems that have been
tested and identified as being Year 2000 compliant will be put into normal
business operation. PIMCO Advisors and its subsidiaries have completed
Implementation.
Contingency: PIMCO Advisors and its subsidiaries are continuously
reviewing and revising written contingency plans addressing possible failures of
technology and services in their various business operations. PIMCO Advisors
also anticipates that it will continuously revise its contingency plans until
December 31, 1999, as new risks and strategies become apparent. Although PIMCO
Advisors and its subsidiaries are preparing plans, no assurance can be given
that contingency plans can be developed that would avoid all problems in the
event of the failure of certain mission critical systems, counterparties, and
third-party providers.
Third Parties: PIMCO Advisors' and its subsidiaries' business operations
are heavily dependent upon a complex worldwide network of systems that contain
date fields, including data feeds to trading systems, securities transfer agent
operations and stock markets. PIMCO Advisors' and its subsidiaries' ability to
assess the effects of the Year 2000 Problem upon their clients is highly
dependent upon the efforts of third parties, particularly brokers, dealers, and
clients' custodians. With respect to the Year
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2000 Problem, the failure of third party organizations to resolve their own
processing issues in a timely manner could have a material adverse effect on
PIMCO Advisors' business. PIMCO Advisors and its subsidiaries are taking steps
to assess the Year 2000 readiness of material third parties with which they do
business. PIMCO Advisors and its subsidiaries have substantially completed an
inventory of brokers, dealers, custodians, and other material third parties with
which they have direct, significant business relationships. PIMCO Advisors and
its subsidiaries have sent written questionnaires to the identified third
parties inquiring about the status of their Year 2000 compliance programs. The
results of these questionnaires are collected, analyzed, and distributed to
appropriate internal personnel. Follow up or additional questionnaires and
inquiries will be sent to third parties that did not respond satisfactorily to
the initial questionnaire. With respect to its most significant business
partners, PIMCO Advisors is conducting on site reviews of their Year 2000
programs. PIMCO Advisors currently anticipates that its efforts with respect to
assessing the Year 2000 status of its counterparties and other third parties
will continue into the Year 2000.
Uncertainty: This discussion of PIMCO Advisors' and its subsidiaries' Year
2000 program contains forward looking statements. At present, the management of
PIMCO Advisors believes that costs associated with the Year 2000 problem will
not have a material adverse effect on PIMCO Advisors' business or operations.
However, PIMCO Advisors expects that its Year 2000 expense estimates will change
as the Year 2000 approaches and PIMCO Advisors and its subsidiaries complete the
Testing and Implementation phases. Although PIMCO Advisors' efforts and
expenditures on Year 2000 issues are substantial, there can be no assurances
that its clients, unitholders, counterparties or others will not suffer from
disruptions or adverse results arising as a consequence of entering Year 2000.
PIMCO Advisors' current expectations regarding its and its counterparties
transition to Year 2000 are based upon unfinished remediation and testing, and
are subject to a number of uncertainties and factors that are beyond its control
and which could cause actual costs to differ materially from those currently
expected. Furthermore, although management currently anticipates that its
expenditures and efforts are appropriate, complications as yet unidentified with
internal or external systems, with data providers, with other securities firms
or institutions, with other counterparties, and with general economic conditions
related to the Year 2000 in general may trigger significantly greater expenses
or losses.
10
<PAGE>
PIMCO ADVISORS HOLDINGS L.P.
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
------------- -----------------
(Dollars in thousands)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 22 $ 10,580
Distribution receivable and other current assets 33,007 32,033
-------- --------
Total current assets 33,029 42,613
Investment in operating partnership 459,130 461,230
Other non current assets 153 153
-------- --------
TOTAL ASSETS $492,312 $503,996
======== ========
LIABILITIES
Distribution payable $ 28,568 $ 27,631
Other current liabilities 3,085 14,746
-------- --------
Total liabilities 31,653 42,377
-------- --------
PARTNERS' CAPITAL
General Partner 63 63
Limited Partners (49,250,849 units issued and outstanding
at June 30, 1999 and 48,469,822 units issued and
outstanding at December 31, 1998) 460,596 461,556
-------- --------
Total Partners' Capital 460,659 461,619
-------- --------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $492,312 $503,996
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
PIMCO ADVISORS HOLDINGS L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For The For The Three For The For The
Three Months Ended Months Ended Six Months Ended Six Months Ended
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------------ ----------------- ----------------- -------------------
(Dollars in thousands, except per unit amounts)
<S> <C> <C> <C> <C>
REVENUES:
Equity in earnings of operating Partnership $27,106 $23,634 $41,463 $43,672
------- ------- ------- -------
Total revenues 27,106 23,634 41,463 43,672
------- ------- ------- -------
EXPENSES:
Taxes and other, net 4,028 4,260 7,690 7,773
------- ------- ------- -------
Total expenses 4,028 4,260 7,690 7,773
------- ------- ------- -------
Net income $23,078 $19,374 $33,773 $35,899
======= ======= ======= =======
Basic net income per unit $ 0.47 $ 0.42 $ 0.69 $ 0.78
======= ======= ======= =======
Diluted net income per unit $ 0.45 $ 0.39 $ 0.66 $ 0.73
======= ======= ======= =======
Distributions declared per unit $ 0.58 $ 0.53 $ 1.16 $ 1.06
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
PIMCO ADVISORS HOLDINGS L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For The For The
Six Months Six Months
Ended Ended
June 30, 1999 June 30, 1998
------------------ -----------------
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $33,773 $35,899
Adjustments to reconcile net income to net cash
provided by operating activities:
Distributions received greater (less) than the
equity in earnings of operating partnership 23,251 (824)
Change in operating assets and liabilities:
Change in other assets 35 (52)
Change in other liabilities (11,661) 8,112
------- -------
Net cash provided by operating activities 45,398 43,135
------- -------
Cash Flows from Investing Activities:
Investment in operating partnership (120) (120)
------- -------
Net cash used in investing activities (120) (120)
------- -------
Cash Flows from Financing Activities:
Cash distributions paid (55,956) (39,613)
Capital contribution from General Partner - 17
Issuance of limited partnership units on
Exercise of options 120 120
------- -------
Net cash used in financing activities (55,836) (39,476)
------- -------
Net (decrease) increase in cash and cash equivalents (10,558) 3,539
Cash and cash equivalents, beginning of period 10,580 15,522
------- -------
Cash and cash equivalents, end of period $ 22 $19,061
======= =======
Supplemental disclosure
Income tax paid $20,446 $ -
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
PIMCO ADVISORS HOLDINGS L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) The condensed financial statements included herein have been prepared
without audit in accordance with the instructions to Form 10-Q pursuant to
the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of PIMCO Partners, G.P., the General Partner,
all adjustments, consisting only of normal recurring adjustments, necessary
for a fair presentation of (a) the financial condition at June 30, 1999 and
December 31, 1998, (b) the results of operations for the three and six
month periods ended June 30, 1999 and 1998 and (c) the cash flows for the
six-month periods ended June 30, 1999 and 1998, for PIMCO Advisors Holdings
L.P. ("PIMCO Holdings") (formerly Oppenheimer Capital, L.P) have been
made. It is suggested that these unaudited condensed financial statements
be read in conjunction with the financial statements and notes included in
PIMCO Holdings' Annual Report on Form 10-K for the year ended December 31,
1998. Certain reclassifications have been made to conform the prior period
presentation to the current period presentation. These interim results may
not be indicative of the results which may occur in the future. (See -
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Comparative Results of Operations).
(2) PIMCO Holdings is a publicly traded limited partnership owned .01% by its
general partner, PIMCO Partners, G.P. and 99.99% by its public limited
partners ("Unitholders"). PIMCO Holdings' sole business is its ownership
of an approximate 44% interest (approximately 49.3 million GP Units) in
PIMCO Advisors L.P. ("PIMCO Advisors"), a registered investment advisor.
PIMCO Partners, G.P. and other private holders hold the remaining interests
in PIMCO Advisors. The financial statements of PIMCO Holdings should be
read in conjunction with the consolidated financial statements of PIMCO
Advisors.
(3) Basic net income per unit is computed based on the weighted average number
of units outstanding. Diluted net income per unit is computed assuming the
exercise of dilutive unit options at the operating partnership and the
resulting impact on the equity in earnings of that partnership attributable
to PIMCO Holdings. See Exhibit 11 for the computation of the effect of the
dilution at the operating partnership on PIMCO Holdings' net income per
unit during the periods.
Distributions on the units outstanding are paid quarterly in arrears 30
days after the end of the quarter to unitholders of record as of the last
day of the quarter.
(4) As a result of the Omnibus Budget Reconciliation Act of 1993 and a special
tax election which PIMCO Holdings has made, units purchased in the open
market after August 10, 1993 have a substantial portion of the purchase
price amortized over a fifteen year period. Taking into account such
amortization tax benefits (which depend in part on the particular
unitholder's purchase price), partnership distributions are expected to
significantly exceed net taxable income for units purchased after August
10, 1993. Amortization deductions will decrease the unitholder's tax basis
of such units, and will likely be recaptured as ordinary income upon
disposition of the units.
Each year, a Schedule K-1 is sent to each unitholder identifying their
amortization tax benefit, if applicable. Under federal tax law, a
unitholder is required to pay tax on their allocable share of the
partnership's income regardless of the amount of distributions made by the
partnership. As individual tax situations may vary, each prospective
purchaser of units is urged to consult their tax advisor.
14
<PAGE>
PIMCO ADVISORS L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
------------- -----------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 52,156 $ 46,134
Short term investments 91,754 69,923
Fees receivable 156,844 171,222
Other current assets 19,538 38,073
---------- ----------
Total current assets 320,292 325,352
Investment in unconsolidated partnerships 3,999 4,764
Fixed assets-net of accumulated depreciation and amortization 29,215 22,717
Intangible assets-net of accumulated amortization 978,291 1,005,817
Other non current assets 102,383 53,388
---------- ----------
Total assets $1,434,180 $1,412,038
========== ==========
LIABILITIES
Current liabilities:
Accounts payable, accrued expenses and other current liabilities $ 62,849 $ 65,244
Accrued compensation 93,356 68,476
Distribution payable 75,943 73,455
Short term borrowings 65,000 65,000
---------- ----------
Total current liabilities 297,148 272,175
Long term notes 80,467 80,467
Other non current liabilities 162 309
---------- ----------
Total liabilities 377,777 352,951
---------- ----------
PARTNERS' CAPITAL
General Partner (50,055,947 units issued and outstanding at June 30,
1999 and 49,274,920 units issued and outstanding at December 31,
1998) 777,258 801,304
Class A Limited Partners (63,292,235 units issued and outstanding at
June 30, 1999 and 62,021,252 units issued and outstanding at
December 31, 1998) 345,436 336,438
Unamortized compensation (66,139) (78,655)
Cumulative translation adjustment (152) -
---------- ----------
Total Partners' Capital 1,056,403 1,059,087
---------- ----------
Total liabilities and partners' capital $1,434,180 $1,412,038
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
PIMCO ADVISORS L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For The Three Months For The Six Months
Ended Ended
June 30, June 30, June 30, June 30,
-------- -------- -------- --------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
(Dollars in thousands)
REVENUES
Investment advisory fees:
Private accounts $144,453 $142,211 $281,542 $271,361
Proprietary Funds 72,434 53,810 138,397 100,623
Distribution and servicing fees 27,824 20,591 53,329 38,485
-------- -------- -------- --------
Total revenues 244,711 216,612 473,268 410,469
-------- -------- -------- --------
EXPENSES
Compensation and benefits 99,598 90,241 197,883 174,092
Commissions 24,356 19,784 46,553 37,025
Amortization of intangible assets, Restricted Unit and
Option Plans 18,975 20,173 48,980 39,831
General and administrative 15,440 10,876 30,189 19,807
Occupancy and equipment 7,249 5,438 19,507 10,560
Other 17,195 14,980 35,433 27,252
-------- -------- -------- --------
Total expenses 182,813 161,492 378,545 308,567
-------- -------- -------- --------
Net income 61,898 55,120 94,723 101,902
-------- -------- -------- --------
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustments (11) - (152) -
-------- -------- -------- --------
Total other comprehensive income (11) - (152) -
-------- -------- -------- --------
Comprehensive income $ 61,887 $ 55,120 $ 94,571 $101,902
======== ======== ======== ========
Net income per unit:
Basic net income per General Partner and Class A
Limited Partner Unit $ 0.55 $ 0.51 $ 0.85 $ 0.95
======== ======== ======== ========
Diluted net income per General Partner and Class A
Limited Partner Unit $ 0.53 $ 0.48 $ 0.81 $ 0.90
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
PIMCO ADVISORS L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For The Six For The Six
Months Months
Ended Ended
June 30, 1999 June 30, 1998
------------- -------------
(Dollars in thousands)
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 94,723 $ 101,902
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, amortization 41,370 34,164
Restricted unit & Option Plans 21,455 12,305
Equity in loss of unconsolidated partnership (70) 58
Unrealized gain on investments (691) (703)
Realized gain on investments (3,987) -
Issuance of restricted units in lieu of directors fees 40 21
Other (152) -
Change in operating assets and liabilities:
Change in fees receivable 14,378 (11,412)
Change in other assets (36,820) (37,706)
Change in accrued liabilities and other current
liabilities 93 4,121
Change in accrued compensation 24,880 34,827
Change in other long term liabilities (147) 17,048
--------- ---------
Net cash provided by operating activities 155,072 154,625
--------- ---------
Cash Flows from Investing Activities:
Purchase of fixed assets (12,278) (3,878)
Notes receivable advances (1,781) (943)
Purchase of investments (66,722) (51,419)
Sale of fixed assets 77 --
Sale of investments 49,942 7,406
Redemptions from (investments in) partnerships 462 (615)
--------- ---------
Net cash used in investing activities (30,300) (49,449)
--------- ---------
Cash Flows From Financing Activities:
Short term borrowings - 45,000
Cash distributions paid (149,669) (126,625)
Issuance of limited partnership units to deferred
compensation plan trust 28,743 14,826
Capital contribution from General Partner - 16
Issuance of limited partnership units on exercise of
options 2,176 3,641
--------- ---------
Net cash used in financing activities (118,750) (63,142)
--------- ---------
Net increase in cash and cash equivalents 6,022 42,034
Cash and cash equivalents, beginning of period 46,134 34,301
--------- ---------
Cash and cash equivalents, end of period $ 52,156 $ 76,335
========= =========
Supplemental disclosures
Income tax paid $ 320 $ 6,469
========= =========
Interest paid $ 4,712 $ 3,660
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
PIMCO ADVISORS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) The condensed consolidated financial statements included herein have been
prepared without audit in accordance with the instructions to Form 10-Q
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. In the opinion of the general partners, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
statement of (a) the financial condition at June 30, 1999 and December 31,
1998, (b) the results of operations for the three and six month periods
ended June 30, 1999 and 1998, and (c) the cash flows for the six-month
periods ended June 30, 1999 and 1998, for PIMCO Advisors L.P. ("PIMCO
Advisors") have been made. It is suggested that these unaudited condensed
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes included in PIMCO Advisors
Holdings' Annual Report on Form 10-K for the year ended December 31, 1998.
Certain reclassifications have been made to conform the prior period
presentation to the current period presentation. These interim results may
not be indicative of the results which may occur in the future. (See Item 2
- Management's Discussion and Analysis of Financial Condition and Results
of Operations - Comparative Results of Operations).
(2) PIMCO Advisors and its subsidiaries were formed on November 15, 1994, when
Pacific Asset Management Company (a subsidiary of Pacific Life Insurance
Company) merged certain of its investment management businesses and
substantially all of its assets (the "PFAMCo Group") into Thomson Advisory
Group L.P. ("TAG LP") (the "Consolidation").
On November 4, 1997, PIMCO Advisors acquired Oppenheimer Group, Inc.
("Opgroup"), whose subsidiary Oppenheimer Financial Corp. ("Opfin") owned
the 32.4% managing general partner interest in Oppenheimer Capital and the
one percent general partner interest in PIMCO Advisors Holdings L.P.
(formerly Oppenheimer Capital, L.P.) ("PIMCO Holdings"). In the
transaction, Opgroup became a subsidiary of PIMCO Advisors, and the Opgroup
stockholders received 2.1 million PIMCO Advisors Class A units and rights
to exchange up to $230 million of outstanding term notes of Opgroup for an
additional 6.9 million PIMCO Advisors Class A units at $33 1/3 per unit. In
connection with the transaction, PIMCO Advisors split the one percent
general partner interest in PIMCO Holdings into a .01% general partner
interest and a .99% limited partner interest, and sold the general partner
interest to its general partner for $80,000, its approximate book value.
The purchase method of accounting was used by PIMCO Advisors to record the
acquisition of Opgroup. As a result, the consolidated statement of
operations includes the operations of Oppenheimer Capital since November 4,
1997.
On November 30, 1997, Oppenheimer Capital merged with a subsidiary of PIMCO
Advisors, with Oppenheimer Capital surviving (the "OpCap Merger"). In the
OpCap Merger, PIMCO Advisors acquired from PIMCO Holdings its 67.6% general
partner interest in Oppenheimer Capital in exchange for 26.1 million PIMCO
Advisors Class A units, an approximate 24% general partner interest in
PIMCO Advisors. As a result, Oppenheimer Capital became a wholly-owned
subsidiary of PIMCO Advisors and the limited partner units of PIMCO
Holdings came to represent an indirect investment in the business of PIMCO
Advisors. The transaction was accounted for at book value of PIMCO
Advisors, as a transaction between related parties.
18
<PAGE>
PIMCO ADVISORS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(continued)
On December 31, 1997, PIMCO Advisors caused its 19.5 million publicly held
units to be contributed to PIMCO Holdings in exchange for an equal number
of PIMCO Holdings units. As a result, PIMCO Advisors ceased to be publicly
traded, and PIMCO Holdings general partner interest in PIMCO Advisors
increased to approximately 43%. Concurrently, PIMCO Holdings' New York
Stock Exchange trading symbol was changed from "OCC" to "PA".
(3) Basic net income per unit is computed based on the weighted average number
of units outstanding. Diluted net income per unit is computed assuming the
exercise of dilutive unit options. See Exhibit 11 for the computation of
the effect of the dilution per unit during the periods.
19
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities and Use of Proceeds. None
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information.
Columbus Circle Investors.
On June 30, 1999, PIMCO Advisors L.P. completed its withdrawal as a partner
of Columbus Circle Investors, resulting in ownership residing with a management
group pursuant to an Admission Agreement. The Admission Agreement and the
General Partnership Agreement of Columbus Circle Investors provide for payments
to PIMCO Advisors L.P. Columbus Circle Investors is a Stamford, Connecticut
based former investment management subsidiary of PIMCO Advisors, which as of
June 30, 1999 managed approximately $4.5 billion in assets.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
- -----------
11 Computations of Net Income Per Unit.
27 Financial Data Schedule.
(b) Reports on Form 8-K. None
20
<PAGE>
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 thereunto duly authorized.
PIMCO Advisors Holdings L.P.
By: /s/ William D. Cvengros
----------------------------------
William D. Cvengros
Chief Executive Officer
By: /s/ Robert M. Fitzgerald
----------------------------------
Robert M. Fitzgerald
Principal Accounting Officer
Date: August 12, 1999
21
<PAGE>
EXHIBIT 11
----------
PIMCO Advisors Holdings L.P.
Computation of Basic Net Income Per Unit
(Unaudited)
<TABLE>
<CAPTION>
For The Three For The Three
Months Ended Months Ended
June 30, 1999 June 30, 1998
------------- -------------
(In thousands,
except per unit amounts)
<S> <C> <C>
Net income $23,078 $19,374
Less net income applicable to the General Partner (2) (2)
------- -------
Net income available to the Limited Partners $23,076 $19,372
======= =======
Weighted average number of units outstanding 48,976 46,430
Basic net income per unit $ 0.47 $ 0.42
======= =======
</TABLE>
Computation of Diluted Net Income Per Unit
(Unaudited)
<TABLE>
<CAPTION>
For The Three For The Three
Months Ended Months Ended
June 30, 1999 June 30, 1998
------------- -------------
(In thousands,
except per unit amounts)
<S> <C> <C>
Net income $23,078 $19,374
Effect on the recognized equity in earnings of the
operating partnership resulting from the dilution
of earnings per unit at the operating partnership (1,138) (1,118)
------- -------
Net income after effect of dilution 21,940 18,256
Less net income applicable to the General Partner (2) (2)
------- -------
Diluted net income available to the Limited Partners $21,938 $18,254
======= =======
Weighted average number of units outstanding 48,976 46,430
Diluted net income per unit $ 0.45 $ 0.39
======= =======
</TABLE>
<PAGE>
EXHIBIT 11
----------
PIMCO Advisors Holdings L.P.
Computation of Basic Net Income Per Unit
(Unaudited)
<TABLE>
<CAPTION>
For The Six For The Six
Months Ended Months Ended
June 30, 1999 June 30, 1998
------------- -------------
(In thousands,
except per unit amounts)
<S> <C> <C>
Net income $33,773 $35,899
Less net income applicable to the General Partner (3) (4)
------- -------
Net income available to the Limited Partners $33,770 $35,895
======= =======
Weighted average number of units outstanding 48,842 46,182
Basic net income per unit $ 0.69 $ 0.78
======= =======
</TABLE>
Computation of Diluted Net Income Per Unit
(Unaudited)
<TABLE>
<CAPTION>
For The Six For The Six
Months Ended Months Ended
June 30, 1999 June 30, 1998
------------- -------------
(In thousands,
except per unit amounts)
<S> <C> <C>
Net income $33,773 $35,899
Effect on the recognized equity in earnings of the
operating partnership resulting from the dilution
of earnings per unit at the operating partnership (1,773) (2,250)
------- -------
Net income after effect of dilution 32,000 33,649
Less net income applicable to the General Partner (3) (4)
------- -------
Diluted net income available to the Limited Partners $31,997 $33,645
======= =======
Weighted average number of units outstanding 48,842 46,182
Diluted net income per unit $ 0.66 $ 0.73
======= =======
</TABLE>
<PAGE>
EXHIBIT 11
(continued)
PIMCO ADVISORS L.P.
COMPUTATION OF NET INCOME PER UNIT
(Unaudited)
The weighted average number of units used to compute basic and diluted net
income per unit was as follows:
<TABLE>
<CAPTION>
For The Three Months Ended
June 30 June 30
1999 1998
--------- ---------
(in thousands)
<S> <C> <C>
Basic
General Partner and Class A Limited Partner Units 111,779 108,395
Diluted
General Partner and Class A Limited Partner Units 116,646 113,756
</TABLE>
<TABLE>
<CAPTION>
For The Six Months Ended
June 30 June 30
1999 1998
--------- ---------
(in thousands)
<S> <C> <C>
Basic
General Partner and Class A Limited Partner Units 111,402 107,825
Diluted
General Partner and Class A Limited Partner Units 116,326 113,625
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PIMCO
ADVISORS HOLDINGS L.P. FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 33,007
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33,029
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 492,312
<CURRENT-LIABILITIES> 31,653
<BONDS> 0
0
0
<COMMON> 460,659<F1>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 492,312
<SALES> 0<F2>
<TOTAL-REVENUES> 41,463
<CGS> 0<F2>
<TOTAL-COSTS> 0<F2>
<OTHER-EXPENSES> 7,690
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 33,773
<INCOME-TAX> 0
<INCOME-CONTINUING> 33,773
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,773
<EPS-BASIC> 0.69
<EPS-DILUTED> 0.66
<FN>
<F1>Entity is a partnership. Amount shown represents Partners' Capital.
<F2>The partnership is in the service business and has no sales or cost of good
sold on tangible products.
</FN>
</TABLE>
