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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1 TO
SCHEDULE 13E-3
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
---------------
PIMCO ADVISORS HOLDINGS L.P.
(Name of Issuer)
---------------
PACIFIC LIFE INSURANCE COMPANY
PACIFIC ASSET MANAGEMENT LLC
PIMCO HOLDING LLC
PIMCO PARTNERS, LLC
PIMCO PARTNERS, G.P.
PIMCO ADVISORS HOLDINGS L.P.
(Name of Person(s) Filing Statement)
---------------
Units of Limited Partner Interest
(Title of Class of Securities)
---------------
69338P10
(CUSIP Number of Class of Securities)
---------------
David Carmichael
PACIFIC LIFE INSURANCE COMPANY
700 Newport Center Drive
Newport Beach, California 92660
(949) 219-3011
Richard M. Weil
PIMCO ADVISORS HOLDINGS L.P.
800 Newport Center Drive
Newport Beach, California 92660
(949) 219-2200
(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
Copies to:
Karen Bertero David C. Flattum
Gibson, Dunn & Crutcher LLP Latham & Watkins
333 South Grand Avenue 650 Town Center Drive
Los Angeles, CA 90071 Costa Mesa, CA 92626
(213) 229-7000 (714) 540-1235
This statement is filed in connection with (check the appropriate box):
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a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under
the Securities Exchange Act of 1934.
b. [_] The filing of a registration statement under the Securities Act of
1933.
c. [_] A tender offer.
d. [_] None of the above.
</TABLE>
Check the following box if soliciting material or information statement
referred to in checking box (a) are preliminary copies: [X]
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee**
$1,921,362,097.50 $384,273
===============================================================================
</TABLE>
* This amount is based upon a merger involving the purchase of 49,583,538
units of limited partnership interest in PIMCO Advisors Holdings L.P. at
$38.75 per unit. Pursuant to, and as provided by, Rule 0-11(b)(1), the
amount required to be paid with the filing of this Schedule 13E-3 is
$384,273.
** The amount of the filing fee calculated in accordance with Exchange Act
Rule 0-11 equals 1/50th of 1% of the value of the securities proposed to
be acquired.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $384,273
Form or Registration No.: Preliminary Schedule 14A
Filing Party: PIMCO Advisors Holdings L.P.
Date Filed: December 20, 1999
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INTRODUCTION
This Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-
3") is being filed by Pacific Life Insurance Company, a California corporation
("Pacific Life"), Pacific Asset Management LLC, a Delaware limited liability
company ("PAM"), PIMCO Holding LLC, a Delaware limited liability company
("PHLLC"), PIMCO Partners, LLC, a California limited liability company
("PPLLC"), PIMCO Partners, G.P., a California general partnership ("Partners
GP") and PIMCO Advisors Holdings L.P., a Delaware limited partnership (the
"Partnership"), in connection with the acquisition of the Partnership by
Allianz AG through the merger of an indirect subsidiary of Allianz of America,
Inc., a Delaware corporation ("Allianz of America") with the Partnership
pursuant to an Implementation and Merger Agreement, dated October 31, 1999, by
and among Allianz of America, PAM, the Partnership, PIMCO Advisors L.P.
("PIMCO Advisors"), PPLLC, PHLLC, Partners GP, and other parties named therein
(the "Merger Agreement"). By filing this Schedule 13E-3, the signatories do
not concede that Rule 13e-3 under the Securities Exchange Act of 1934 is
applicable to the merger or other transactions contemplated by the Merger
Agreement.
Allianz of America, a subsidiary of Allianz AG, will acquire the Partnership
by merging an indirect subsidiary of Allianz of America into the Partnership,
with the Partnership as the surviving entity. In the merger, all of the
outstanding limited partner and general partner units in the Partnership will
be converted into the right to receive cash in an amount per unit equal to the
Unit Price which will be $38.75, without interest and subject to potential
downward adjustment as described in the Merger Agreement. As a result of the
merger, the Partnership will become an indirect wholly-owned subsidiary of
Allianz of America. Following the merger, all of the equity interests in the
Partnership will be indirectly owned by Allianz of America. The former
unitholders in the Partnership will no longer have an interest in the
Partnership and therefore will not participate in its future earnings and
growth. Additionally, the Partnership's units will no longer trade on the New
York Stock Exchange, price quotations for the units will no longer be
available and the registration of the Partnership's units under the Securities
Exchange Act of 1934 will be terminated.
Following the merger, subsidiaries of Allianz of America will, in a series
of transactions, acquire substantially all of the remaining interests in PIMCO
Advisors at the Unit Price, other than those interests beneficially owned by
PAM. PAM will retain an investment in PIMCO Advisors through a new general
partner to be formed by PAM and a subsidiary of Allianz of America. As a
result of the transactions, Allianz of America will control PIMCO Advisors,
having acquired approximately 70% of the outstanding partnership interests in
PIMCO Advisors.
This Schedule 13E-3 is being filed with the Securities and Exchange
Commission concurrently with a preliminary proxy statement filed by the
Partnership pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Proxy Statement"). A copy of the Proxy Statement is
attached hereto as Exhibit (d)(1). The following cross reference sheet is
being supplied pursuant to General Instruction F to Schedule 13E-3 and shows
the location in the Proxy Statement of the information required to be included
in this Schedule 13E-3. The information contained in the Proxy Statement,
including all exhibits thereto, is expressly incorporated herein by reference
and the responses to each item are qualified in their entirety by reference to
the information contained in the Proxy Statement and the exhibits thereto.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Proxy Statement.
CROSS REFERENCE SHEET
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<CAPTION>
Item in Schedule 13E-3 Location in Proxy Statement
---------------------- ---------------------------
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1. Issuer and Class of Security
Subject to the Transaction
(a)................................ Cover Page and "SUMMARY--Parties to the
Merger--The Partnership"
(b)................................ "SUMMARY--The Transactions and --Record
Date and Quorum"
(c)................................ "PRICE RANGE OF UNITS AND DISTRIBUTIONS"
</TABLE>
1
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<TABLE>
<CAPTION>
Item in Schedule 13E-3 Location in Proxy Statement
---------------------- ---------------------------
<S> <C>
(d)............................. "PRICE RANGE OF UNITS AND DISTRIBUTIONS"
(e)............................. *
(f)............................. "DIRECTORS AND MANAGEMENT"
2. Identity and Background
(a)-(d); (g).................... "SUMMARY--Parties to the Merger;" "THE
TRANSACTION--Parties Involved in the
Transactions;" and "DIRECTORS
AND MANAGEMENT"
(e)-(f)......................... *
3. Past Contacts, Transactions or
Negotiations
(a)(1).......................... "DIRECTORS AND MANAGEMENT"
(a)(2).......................... "DIRECTORS AND MANAGEMENT"
(b)............................. "DIRECTORS AND MANAGEMENT"
4. Terms of the Transaction
(a)............................. "SUMMARY;" "THE TRANSACTION;" "SPECIAL
FACTORS--Financial Interests of Certain
Persons in the Transaction;" and "THE
MERGER AGREEMENT"
(b)............................. "SUMMARY--Financial Interests of Certain
Persons in the Transaction;" "THE
TRANSACTION;" "SPECIAL FACTORS--Financial
Interests of Certain Persons in the
Transaction;" and "THE MERGER AGREEMENT"
5. Plans or Proposals of the
Issuer or Affiliate
(a)-(g)......................... "THE TRANSACTION--Plans for the Partnership
After the Merger and--The Subsequent
Transactions;" "SPECIAL FACTORS--Financial
Interests of Certain Persons in the
Transaction;" "THE MERGER
AGREEMENT;""EFFECT OF THE MERGER ON THE
PARTNERSHIP UNITS;" and "PRICE RANGE OF
UNITS AND DISTRIBUTIONS"
6. Source and Amount of Funds or
Other Consideration
(a)............................. "SUMMARY--Financing for the Merger" and
"FINANCING FOR THE MERGER"
(b)............................. "THE TRANSACTION--Payment of Expenses"
(c)............................. *
(d)............................. *
7. Purpose(s), Alternatives,
Reasons and Effects
(a)-(c)......................... "SPECIAL FACTORS--Recommendation; Reasons
for the Merger" and "THE TRANSACTION"
</TABLE>
2
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<TABLE>
<CAPTION>
Item in Schedule 13E-3 Location in Proxy Statement
---------------------- ---------------------------
<S> <C>
(d).............................. "SPECIAL FACTORS--Recommendation; Reasons
for the Merger; --Background to the
Transaction; --Opinion of Our Financial
Advisor and --Financial Interests of
Certain Persons in the Transaction;"
"EFFECT OF THE MERGER ON THE PARTNERSHIP'S
UNITS;" "THE TRANSACTION--The Subsequent
Transactions and --Financial Interests of
Certain Persons in the Transaction;" and
"MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES"
8. Fairness of the Transaction
(a)--(b)......................... "SPECIAL MEETING OF UNITHOLDERS--
Recommendation of Our General Partner" and
"SPECIAL FACTORS--Recommendation; Reasons
for the Merger; --Background to the
Transaction; --Opinion of Our Financial
Advisor and --Other Information Considered"
(c).............................. "SUMMARY--Vote Required" and "SPECIAL
MEETING OF UNITHOLDERS--Voting of Proxies
and Quorum"
(d).............................. "SPECIAL FACTORS--Opinion of our Financial
Advisor and --Other Information Considered"
and "DIRECTORS AND MANAGEMENT"
(e).............................. "DIRECTORS AND MANAGEMENT"
(f).............................. *
9. Reports, Opinions, Appraisals
and Certain Negotiations
(a)--(c)......................... "SPECIAL FACTORS--Recommendation; Reasons
for the Merger; --Background to the
Transaction; --Opinion of Our Financial
Advisor; and --Other Information
Considered;" "Appendix B: Opinion of
Salomon Smith Barney," "Appendix C: Opinion
of McLagan Partners, Inc.," and "Appendix
D: Opinion of Goldman, Sachs & Co."
10. Interest in Securities of the
Issuer
(a).............................. "VOTING SECURITIES AND PRINCIPAL HOLDERS
THEREOF" and "SPECIAL FACTORS--Financial
Interests of Certain Persons in the
Transaction"
(b).............................. *
11. Contracts, Arrangements or
Understandings with Respect to "SPECIAL FACTORS--Background to the
the Issuer's Securities........ Transaction and --Financial Interests of
Certain Persons in the Transaction;" "THE
TRANSACTION--The Subsequent Transactions
and --Financial Interests of Certain
Persons in the Transaction;" "THE MERGER
AGREEMENT" and "DIRECTORS AND MANAGEMENT"
</TABLE>
3
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<TABLE>
<CAPTION>
Item in Schedule 13E-3 Location in Proxy Statement
---------------------- ---------------------------
<S> <C>
12. Present Intention and
Recommendation of Certain
Persons with Regard to the
Transaction
(a)............................. "THE TRANSACTION--Purpose and Structure of
the Transaction;" "SPECIAL FACTORS--
Recommendation; Reasons for the Merger" and
"DIRECTORS AND MANAGEMENT"
(b)............................. *
13. Other Provisions of the
Transaction
(a)............................. "THE TRANSACTION--No Appraisal Rights"
(b)............................. *
(c)............................. *
14. Financial Information
(a)............................. "SELECTED CONSOLIDATED FINANCIAL DATA" and
"WHERE YOU CAN FIND MORE INFORMATION"
(b)............................. *
15. Persons and Assets Employed,
Retained or Utilized
(a)............................. "SPECIAL MEETING OF THE UNITHOLDERS--
Solicitation of Proxies; Expenses;" "THE
TRANSACTION--Payment of Expenses;" "SPECIAL
FACTORS--Background of the Transaction" and
"FINANCING FOR THE MERGER"
(b)............................. "SPECIAL FACTORS--Background of the
Transaction; --Opinion of Our Financial
Advisor and --Other Information Considered"
and "SPECIAL MEETING OF THE UNITHOLDERS--
Solicitation of Proxies; Expenses"
16. ADDITIONAL INFORMATION........ *
17. MATERIAL TO BE FILED AS
EXHIBITS
(a)-(f)......................... Separately filed with this Schedule 13E-3.
</TABLE>
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* The Item is inapplicable or the answer thereto is in the negative.
Item 1. Issuer and Class of Security Subject to the Transaction.
(a) The information set forth in Cover Page and "SUMMARY--Parties to the
Merger--The Partnership" in the Proxy Statement is hereby incorporated herein
by reference.
(b) The information set forth in "SUMMARY--The Transactions" and "SUMMARY--
Record Date and Quorum" in the Proxy Statement is hereby incorporated herein
by reference.
(c) The information set forth in "PRICE RANGE OF UNITS AND DISTRIBUTIONS" in
the Proxy Statement is hereby incorporated herein by reference.
(d) The information set forth in "PRICE RANGE OF UNITS AND DISTRIBUTIONS" in
the Proxy Statement is hereby incorporated herein by reference.
4
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(e) Not Applicable.
(f) The information set forth in "DIRECTORS AND MANAGEMENT" in the Proxy
Statement is hereby incorporated herein by reference.
Item 2. Identity and Background.
This Schedule 13E-3 is being filed by Pacific Life, PAM, PHLLC, PPLLC,
Partners GP and the Partnership. The information set forth in "SUMMARY--
Parties to the Holdings Merger;" "THE TRANSACTION--Parties Involved in the
Transactions" and "DIRECTORS AND MANAGEMENT" in the Proxy Statement is hereby
incorporated herein by reference.
The information set forth in "DIRECTORS AND MANAGEMENT" as to each executive
officer of each of the filing parties is incorporated herein by this
reference.
(e)--(f) Each of Pacific Life, PAM, PHLLC, PPLLC, Partners GP and the
Partnership represents that, during the last five years, neither it, nor any
person controlling it, nor, to the best of its knowledge, any of the persons
described in "DIRECTORS AND MANAGEMENT" in the proxy with reference to it, has
(i) been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree, or final order enjoining
further violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations.
(a)(1) The information set forth in "DIRECTORS AND MANAGEMENT" in the Proxy
Statement with respect to transactions by affiliates involving the issuer is
hereby incorporated herein by reference.
(a)(2) The information set forth in "DIRECTORS AND MANAGEMENT" in the Proxy
Statement with respect to contracts and negotiations by affiliates involving
the issuer is hereby incorporated herein by reference.
(b) The information set forth in "DIRECTORS AND MANAGEMENT" in the Proxy
Statement with respect to contracts and negotiations by affiliates involving
the issuer is hereby incorporated herein by reference.
Item 4. Terms of the Transaction.
(a) The information set forth in "SUMMARY;" "THE TRANSACTION;" "SPECIAL
FACTORS--Interests of Certain Persons in the Transaction;" and "THE MERGER
AGREEMENT" in the Proxy Statement is hereby incorporated herein by reference.
(b) The information set forth "SUMMARY--Financial Interests of Certain
Persons in the Transaction;" "THE TRANSACTION;" "SPECIAL FACTORS--Financial
Interests of Certain Persons in the Transaction;" and "THE MERGER AGREEMENT"
in the Proxy Statement is hereby incorporated herein by reference.
Item 5. Plans or Proposals of the Issuer or Affiliate.
(a)--(g) "THE TRANSACTION--Plans for the Partnership After the Merger;"
"SPECIAL FACTORS--Background of the Transaction;" and "--Financial Interests
of Certain Persons in the Transaction;" "THE TRANSACTION--The Subsequent
Transactions;" "THE MERGER AGREEMENT;" "EFFECT OF THE MERGER ON THE
PARTNERSHIP'S UNITS;" and "PRICE RANGE OF UNITS AND DISTRIBUTIONS" in the
Proxy Statement is hereby incorporated herein by reference.
Item 6. Source and Amount of Funds or Other Consideration.
(a) The information set forth in "SUMMARY--Financing for the Merger" and
"FINANCING FOR THE MERGER" in the Proxy Statement is hereby incorporated
herein by reference.
5
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(b) The information set forth in "THE TRANSACTION--Payment of Expenses" in
the Proxy Statement is hereby incorporated herein by reference.
(c) Not Applicable
(d) Not Applicable.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
(a)--(c) The information set forth in "SPECIAL FACTORS--Recommendation;
Reasons for the Merger" and "THE TRANSACTION" in the Proxy Statement is hereby
incorporated herein by reference.
(d) The information set forth in "SPECIAL FACTORS--Recommendation; Reasons
for the Merger;--Background to the Transaction;--Opinion of Our Financial
Advisor; and --Interests of Certain Persons in the Transaction;" "EFFECT OF
THE MERGER ON THE PARTNERSHIP'S UNITS;" "THE TRANSACTION--The Subsequent
Transactions and --Financial Interests of Certain Persons in the Transaction;"
and "MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES" in the Proxy
Statement is hereby incorporated herein by reference.
Item 8. Fairness of the Transaction.
(a)--(b) The information set forth in "SPECIAL MEETING OF UNITHOLDERS--
Recommendation of Our General Partner" and "SPECIAL FACTORS--Recommendation;
Reasons for the Merger; --Background to the Transaction; --Opinion of Our
Financial Advisor and --Other Information Considered" in the Proxy Statement
is hereby incorporated herein by reference.
(c) The information set forth in "SUMMARY--Vote Required" and "SPECIAL
MEETING OF UNITHOLDERS--Voting of Proxies and Quorum" in the Proxy Statement
is hereby incorporated herein by reference.
(d) The information set forth in "SPECIAL FACTORS--Opinion of Our Financial
Advisor and --Other Information Considered" and "DIRECTORS AND MANAGEMENT" in
the Proxy Statement is hereby incorporated herein by reference.
(e) The information set forth in "DIRECTORS AND MANAGEMENT" in the Proxy
Statement is hereby incorporated herein by reference.
(f) Not Applicable.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
(a)--(c) The information set forth in "SPECIAL FACTORS--Recommendation;
Reasons for the Merger;--Background to the Transaction; --Opinion of Our
Financial Advisor; and --Other Information Considered;" "Appendix B: Opinion
of Salomon Smith Barney," "Appendix C: Opinion of McLagan Partners, Inc." and
"Appendix D: Opinion of Goldman, Sachs & Co." in the Proxy Statement is hereby
incorporated herein by reference.
Item 10. Interest in Securities of the Issuer.
(a) The information set forth in "VOTING SECURITIES AND PRINCIPAL HOLDERS
THEREOF" and "SPECIAL FACTORS--Financial Interests of Certain Persons in the
Transaction" in the Proxy Statement is hereby incorporated herein by
reference.
(b) Not Applicable.
6
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Item 11. Contracts, Arrangements or Understandings with Respect to the
Issuer's Securities.
The information set forth "SPECIAL FACTORS--Background to the Transaction
and --Financial Interests of Certain Persons in the Transaction;" "THE
TRANSACTION--The Subsequent Transactions and --Financial Interests of Certain
Persons in the Transaction;" "THE MERGER AGREEMENT" and "DIRECTORS AND
MANAGEMENT" in the Proxy Statement is hereby incorporated herein by reference.
Item 12. Present Intention and Recommendation of Certain Persons with Regard
to the Transaction.
(a) The information set forth in "THE TRANSACTION--Purpose and Structure of
the Transaction;" "SPECIAL FACTORS--Recommendation; Reasons for the Merger"
and "DIRECTORS AND MANAGEMENT" in the Proxy Statement is hereby incorporated
herein by reference.
(b) Not Applicable.
Item 13. Other Provisions of the Transaction.
(a) The information set forth in "THE TRANSACTION--No Appraisal Rights" in
the Proxy Statement is hereby incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
Item 14. Financial Information.
(a) The information set forth in "SELECTED CONSOLIDATED FINANCIAL DATA" and
"WHERE YOU CAN FIND MORE INFORMATION" in the Proxy Statement is hereby
incorporated herein by reference.
(b) Not applicable.
Item 15. Persons and Assets Employed, Retained or Utilized.
(a) The information set forth in "SPECIAL MEETING OF THE UNITHOLDERS--
Solicitation of Proxies; Expenses;" "THE TRANSACTION--Payment of Expenses;"
"SPECIAL FACTORS--Background of the Transaction;" and "FINANCING FOR THE
MERGER" in the Proxy Statement is hereby incorporated by reference.
(b) The information set forth in "SPECIAL FACTORS--Background of the
Transaction; --Opinion of Our Financial Advisor and --Other Information
Considered;" and "SPECIAL MEETING OF THE UNITHOLDERS--Solicitation of Proxies;
Expenses."
Item 16. Additional Information.
The information set forth in the Proxy Statement and the Appendices thereto
and the Exhibits hereto is incorporated herein by reference.
7
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Item 17. Material to be Filed as Exhibits.
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(a) Not Applicable.
(b)(1)* Fairness Opinion of Salomon Smith Barney, dated October 29, 1999, is
incorporated by reference from Appendix B of the Proxy Statement
attached hereto in Exhibit (d)(1).
(b)(2) Financial Presentation of Salomon Smith Barney to PIMCO Partners,
G.P. dated October 29, 1999.
(b)(3)* Presentation of Lazard Freres & Co. LLC to certain managing
directors of Pacific Investment Management Company and Kenneth M.
Poovey dated July 30, 1999.
(b)(4)* Presentation of Lazard Freres & Co. LLC to certain managing
directors of Pacific Investment Management Company and Mr. Poovey
dated August 24, 1999.
(b)(5)* Presentation of Lazard Freres & Co. LLC to William S. Thompson and
Mr. Poovey dated September 20, 1999.
(b)(6)* Presentation of Lazard Freres & Co. LLC to the members of PIMCO
Partners, LLC, dated October 29, 1999.
(b)(7)* Opinion of McLagan Partners, Inc., dated October 29, 1999.
(b)(8)* Presentation of Goldman, Sachs & Co. to directors of Pacific Life
Insurance Company dated October 29, 1999.
(b)(9)* Opinion of Goldman, Sachs & Co. dated October 31, 1999.
(c)(1)* The Implementation and Merger Agreement, dated October 31, 1999, by
and among Allianz of America, PAM, the Partnership, PIMCO Advisors
L.P. ("PIMCO Advisors"), PIMCO Partners, LLC, PIMCO Holding LLC,
PIMCO Partners, G.P., and other parties named therein is
incorporated by reference from the Proxy Statement attached hereto
in Exhibit (d)(1).
(d)(1)* Copies of each of the Proxy Statement of PIMCO Advisors Holdings
L.P., Letter to Unitholders and Notice of Special Meeting of
Unitholders, filed with the SEC on February 28, 2000.
(d)(2) Press Release Issued on October 31, 1999 incorporated by reference
from Exhibit 99.1 of Form 8-K filed on November 1, 1999.
(e) Not Applicable.
(f) Not Applicable.
</TABLE>
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* Previously filed.
8
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: February 28, 2000
PACIFIC LIFE INSURANCE COMPANY, a
California corporation
/s/ Khanh T. Tran
By ___________________________________
Name: Khanh T. Tran
Title: Chief Financial Officer
PACIFIC ASSET MANAGEMENT LLC,
a Delaware limited liability company
By: Pacific Life Insurance
Company, a California
corporation, member
/s/ Khanh T. Tran
By ________________________________
Name: Khanh T. Tran
Title: Chief Financial Officer
PIMCO HOLDING LLC,
a Delaware limited liability company
By: Pacific Asset Management LLC, a
Delaware limited liability
company, Member
By: Pacific Life Insurance
Company, a California
corporation, Member
/s/ Khanh T. Tran
By __________________________
Name: Khanh T. Tran
Title: Chief Financial
Officer
PIMCO PARTNERS, LLC, a California limited
liability company
/s/ William S. Thompson
By ______________________________
Name: William S. Thompson
Title: Chief Executive Officer
1
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PIMCO PARTNERS, G.P., a California
general partnership
By: PIMCO Partners, LLC, a California
limited liability company,
General Partner
/s/ William S. Thompson
By _______________________________
Name: William S. Thompson
Title: Chief Executive Officer
By: PIMCO Holding LLC, a Delaware
limited liability company,
General Partner
By: Pacific Asset Management LLC,
a Delaware limited liability
company, Member
By: Pacific Life Insurance
Company, a California
corporation, Member
/s/ Khanh T. Tran
By _______________________
Name: Khanh T. Tran
Title: Chief Financial
Officer
PIMCO ADVISORS HOLDINGS L.P.,
a Delaware limited partnership
By: PIMCO Partners, G.P., a
California general partnership,
General Partner
By: PIMCO Holding LLC, a Delaware
limited liability company,
General Partner
By: Pacific Asset Management
LLC, a Delaware limited
liability company, Member
By: Pacific Life Insurance
Company, a California
corporation, Member
/s/ Khanh T. Tran
By ___________________________
Name: Khanh T. Tran
Title: Chief Financial
Officer
2
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By: PIMCO Partners, LLC, a California
limited liability company, General
Partner
/s/ William S. Thompson
By ______________________________
Name: William S. Thompson
Title: Chief Executive Officer
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
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<C> <S>
(a) Not Applicable.
(b)(1)* Fairness Opinion of Salomon Smith Barney, dated October 29, 1999, is
incorporated by reference from Appendix B of the Proxy Statement
attached hereto in Exhibit (d)(1).
(b)(2) Financial Presentation of Salomon Smith Barney to PIMCO Partners, G.P.
dated October 29, 1999.
(b)(3)* Presentation of Lazard Freres & Co. LLC to certain managing directors
of Pacific Investment Management Company and Kenneth M. Poovey dated
July 30, 1999.
(b)(4)* Presentation of Lazard Freres & Co. LLC to certain managing directors
of Pacific Investment Management Company and Mr. Poovey dated August
24, 1999.
(b)(5)* Presentation of Lazard Freres & Co. LLC to William S. Thompson and Mr.
Poovey dated September 20, 1999.
(b)(6)* Presentation of Lazard Freres & Co. LLC to the members of PIMCO
Partners, LLC, dated October 29, 1999.
(b)(7)* Opinion of McLagan Partners, Inc., dated October 29, 1999.
(b)(8)* Presentation of Goldman, Sachs & Co. to directors of Pacific Life
Insurance Company dated October 29, 1999.
(b)(9)* Opinion of Goldman, Sachs & Co. dated October, 31 1999.
(c)(1)* The Implementation and Merger Agreement, dated October 31, 1999, by
and among Allianz of America, PAM, the Partnership, PIMCO Advisors
L.P. ("PIMCO Advisors"), PIMCO Partners, LLC, PIMCO Holding LLC, PIMCO
Partners, G.P., and other parties named therein is incorporated by
reference from the Proxy Statement attached hereto in Exhibit (d)(1).
(d)(1)* Copies of each of the Proxy Statement of PIMCO Advisors Holdings L.P.,
Letter to Unitholders and Notice of Special Meeting of Unitholders,
filed with the SEC on February 28, 2000.
(d)(2) Press Release Issued on October 31, 1999 incorporated by reference
from Exhibit 99.1 of Form 8-K filed on November 1, 1999.
(e) Not Applicable.
(f) Not Applicable.
</TABLE>
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* Previously filed.
<PAGE>
Exhibit 99 (b)(2)
Confidential
Project Apostle
PRESENTATION TO THE GENERAL PARTNERS
October 29, 1999
[LOGO OF SOLOMON SMITH BARNEY]
<PAGE>
Table of Contents
1 TRANSACTION OVERVIEW
2 OVERVIEW OF PIMCO ADVISORS
3 COMPARATIVE OPERATING PERFORMANCE
4 VALUATION
APPENDIX
A. Comparable Company Analysis
B. Precedent Transactions
C. Weighted Average Cost of Capital Analysis
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
1 TRANSACTION OVERVIEW
[LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Transaction Overview
Assumed Purchase Price: $38.75 (the "Unit Price") per Class A limited
partnership unit ("Unit") of PIMCO Advisors LP
("PIMCO Advisors" or "PALP");
$4,661 million in aggregate as follows:
<TABLE>
<CAPTION>
Allocation: Units % of Total Amount
---------- ---------- ----------
<S> <C> <C> <C> <C>
Holdings 49.6 41.2% $1,920
Pacific Life and subsidiaries 37.2 30.9 1,442 (a)
Units underlying ETAs (b) 17.4 14.5 674
Other (c) 9.7 8.1 376
---------- ---------- ----------
Units Outstanding 113.9 94.7 4,413
Options, net (d) 4.1 3.4 159
Other 2.3 1.9 89
---------- ---------- ----------
Total 120.3 100.0% $4,661
========== ========== ==========
</TABLE>
Adjustment If the Revenue Run-rate declines by more than 15%,
excluding the impact of market changes, the Unit
Price will be adjusted by 2% for every 1% change
in the Revenue Run-rate in excess of 15% (with a
price floor of $31.00).
N.B Transaction structure based on conversations with management.
(a) Pacific life will receive Class E units at closing. Amount in table is
based on a vale at closing of $38.75 per Unit.
(b) Employee Termination Agreements. Amount in table includes cash and Allianz
common stock and assumes a value of $38.75 per Unit.
(c) Includes 3.7 million private units.
(d) Calculated using treasury stock method.
[LOGO OF SALOMON SMITH BARNEY]
1
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Transaction Overview
Transaction Structure:
- - Allianz acquires all Units of PIMCO Advisors, except Units held by Pacific
Life
. 17.4 million Units held under ETAs receive, in the aggregate,
approximately 16% of their consideration in common shares of Allianz
A.G. and the balance in cash (a)
. All other Units acquired receive $38.75 in cash
- - Pacific Life exchanges its retained Units for an equivalent number of newly
issued Class E units to be held indirectly and subject to a put/call
structure with Allianz
- - Pacific Life will receive annual cash distributions after closing on its
Class E units, equivalent to $1.05 per unit plus 20% of defined LTM "PIMCO
Classic" pre-bonus profits (b)
- - Pacific Life has the right to put all of its Class E units to Allianz at
any time post-closing: ---
. At a per-unit price equal to the Liquidity Multiple times the sum of
$1.05 and 20% of LTM PIMCO Classic pre-bonus profits per-unit for the
preceding four quarters (the "Put Price")
. Liquidity Multiple equal to 14.Ox ($38.75 divided by projected 1999
Operating Profit Available for Distribution of $2.77)
. Maximum Put Price of $60.00 per Class E unit
- - Allianz has the right to call all of Pacific Life's Class E units:
---
. In case of change of control of Pacific Life: At the end of the
calendar year during which a change of control transaction is closed,
at the higher of the Put Price and $38.75
. At any time after December 31, 2002: If the Put Price exceeds $50.00,
at that price, but not to exceed $60.00 per Class E unit
- - Pacific Life has indicated that it desires continued participation in PALP
so as to permit continued inclusion of PALP assets in Pacific Life
promotional and business development materials
(a) We have assumed, based on discussions with management, that the per Unit
value of such cash and stock is $38.75.
(b) Based on discussions with PALP management, we have assumed that (i) the
$1.05 fixed portion of such distributions is substantially equivalent to
the projected distributions that would have been received on the non-PIMCO
Classic business, and (ii) the transaction with Allianz will not have a
material impact on the amount of PIMCO Classic distributions.
[LOGO OF SALOMON SMITH BARNEY]
2
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Transaction Overview
Retention Arrangements: In connection with the execution by PIMCO Advisors
employees of customary non-solicitation/non-compete
agreements, Allianz will establish four retention
pools, contingent upon employment, as follows:
<TABLE>
<CAPTION>
Eligible
Amount NPV (a) Employees Consideration Vesting
------- --------- ------------------ ------------- -----------
<C> <C> <S> <C> <C>
Restricted
$50 $50 Gross/Thompson Stock 5 years
391 296 Senior MDs Cash 5
105 81 Other employees* Cash 5
------- --------- ------------------ ------------- -----------
Fixed Component $546 $427
Performance Based Up to 120 103 Other employees* Cash 7
------- ---------
$666 $530
======= =========
</TABLE>
Compensation:
Options and Deferred 8.585 million options on Units will be redeemed for
Compensation cash based on a price of $38.75. Employees deferred
compensation and deferred restricted unit plan will
be cashed out based on a value of $38.75 per Unit.
Bonus Pool PIMCO Advisors will amend its existing Profit Sharing
Plan to "equitize" a reduction in its bonus pool from
45% to 30% of pre-tax, pre-bonus income.
* Not required to execute non-compete/non-solicitation agreements.
(a) Assumes 10% discount rate per management.
[LOGO OF SALOMON SMITH BARNEY]
3
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNER
Transaction Overview
Representations and Customary for transactions of this kind
Warranties:
Tax Treatment: The transaction will be taxable. The acquisition of
PIMCO Advisors will create Section 197 intangibles
which can be amortized for tax purposes over 15 years.
The structure of the acquisition of Units underlying
ETAs and options is intended to achieve treatment as
compensation expense for Allianz (a)
Closing Conditions: Customary for transactions of this kind, including (i)
a condition to the obligations of Allianz of a Revenue
Run-Rate flow not less than 75% of the level at
September 30, 1999, and (ii) a condition to the
obligations of all parties of the receipt of the
approval of the transaction by a majority of the
outstanding units of limited partnership interest in
PIMCO Advisors Holdings L.P.
(a) Based on discussions with PIMCO Advisors management, we have assumed that
(i) the agreement of Pacific Life is required in order for this tax benefit
to be realized by Allianz, and (ii) that it has approximate incremental
value to Allianz of $4.00 per Unit held by Pacific Life.
[LOGO OF SALOMON SMITH BARNEY]
4
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Transaction Overview
TRANSACTION MULTIPLES
Reference Per Unit Price
Data (a) $38.75
Equity Value (b) $4,661
Firm Value (c) 4,754
PALP:
AUM ($B) $256.2 1.86 %
LTM Revenues $944.2 5.0 x
LTM OPAD 303.0 (d) 15.7
Net Income:
LTM As Reported $224.8 (d) 20.7 x
LTM Tax-Effected (d) 132.6 (d)(e) 35.1
1999E 265.6 17.6
2000E 323.9 14.4
PAH:
Diluted Net Income per Unit:
LTM $1.70 (g) 22.8 x
1999E 1.68 (h) 23.1
2000E 2.03 (h) 19.1
Distributions per Unit:
LTM $2.32 16.7 x
1999E 2.48 (h) 15.6
2000E 2.71 (h) 14.3
Premium to Market Based on:
Current Price (10/28/99) $34.13 13.6 %
Day Prior to WSJ Article (7/6/99) 29.56 31.1
Normalized Price 24.76 56.5
___________________________________________________________
(a) At or for the twelve months ended September 30, 1999.
(b) Excludes management retention package. Based on diluted units outstanding.
(c) Firm value has been adjusted for existing debt (long and short term) of
$145.5 million, less existing cash of $52.2 million.
(d) Adjusted to exclude non-recurring items.
(e) Assumes 41% tax rate.
(f) Based on projections driven by management assumptions. See page 31.
(g) SSB estimate.
(h) Based on IBES median estimates dated October 15. 1999.
[LOGO OF SALOMON SMITH BARNEY]
5
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
2 OVERVIEW OF PIMCO ADVISORS
[LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors - Highlights
BACKGROUND
. PIMCO Advisors is the nation's 17th largest asset manager with
approximately $256.2 billion in assets under management /(1)/
. PIMCO Advisors provides a broad range of fixed income and equity
investment advisory services to institutional and retail clients
. November 1997 acquisition of Oppenheimer Capital added approximately $60
billion in equity AUM
AUM: $256.2B
Equity: 33%
Fixed Inc.: 66%
Money Market: 1%
Mutual Funds /(2)/: 37%
Separate Accts: 63%
Domestic(3): 92%
International /(3)/: 8%
ASSET GROWTH
[CHART]
CAGR (1995 - September 30, 1999) = 19.2%
1995 1996 1997 1998 September 30, 1999
Equity $ 54,900 $ 68,389 $ 84,405 $ 92,040 $ 84,818
Fixed Income $ 77,500 $ 89,860 $115,140 $152,126 $171,335
-------- -------- -------- -------- --------
$132,400 $158,249 $199,545 $244,166 $256,153
(1) AUM data is as of 9/30/99; ranking data as of 12/31/98 per Institutional
Investor.
(2) Includes institutional mutual fund, retail mutual funds and other retail
products.
(3) From discussion with management.
Source: Company-provided financials. Pro forma for acquisition of Oppenheimer
Capital.
[LOGO OF SALOMON SMITH BARNEY]
6
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors - Subsidiary Summary
- - PALP is a limited partnership. Publicly traded units are issued by PIMCO
Advisors Holdings L.P. itself a GP of PALP
- - PALP is structured as a series of relatively autonomous affiliates each of
which controls its own investment process
<TABLE>
<CAPTION>
Pacific Oppenheimer PIMCO
Investments Capital Equity Advisors Cadence Parametric NFJ
--------------------------- -------------- --------------- -------------- --------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Account Type Institutional / Mutual Fund Institutional Mutual Fund Institutional Institutional Institutional
Primary Style Fixed Income - Total Return Equity - Value Equity - Growth Equity - Blend Equity - Quantitative Equity - Value
9/30/99 AUM ($B) $ 181.5 $ 55.7 $ 6.2 $ 6.5 $ 3.9 $ 2.2
AUM CAGR 26.0 % 10.8 % NM 30.8 % 27.4 % 12.0 %
(1995 - 9/30/99)
</TABLE>
Comment - AUM growth (driven by increase in market share in the
slow-growing defined benefit market
- Premier Fixed Income Manager (Bill Gross): 1998 Fixed
Income Manager of the Year by Morningstar
- Acquired November 1997
- After poor performance (absolute, relative, and dispersion),
upgraded investment professionals, replacing three
portfolio managers, including its Chief Investment Officer
- Represents renamed retail operation of Columbus Circle
- Recently hired a new team of investment managers.
- Innovation Fund: 1998 Fund of the Year by Mutual Funds
magazine based on a return of 79% for the year
- - In June 1999, PALP sold institutional portion of Columbus Circle Investors
($4.5 B in AUM) to management
- - In October 1998, PALP sold Blairlogie Capital Management ($800 MM in AUM)
to Allegheny Financial Group
- - PALP distributes its retail funds primarily through the broker-dealer
channel. It had 2% share of net flows in 1998 and 5% share through June 30,
1999, placing it 9th among broker-distributed managers
Source: Company, Financial Research Corporation.
7 [LOGO OF SALOMOM SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
America's Top Money Managers
($ in Millions)
- --------------------------------------------------------------------------------
Total Assets Under Management
-------------------------------
Rank Firm 12/31/1998 12/31/1997
- --------------------------------------------------------------------------------
1 Fidelity Investments $773,124 $625,864
2 Barclays Global Investors 615,500 485,800
3 Merrill Lynch & Co. 501,229 447,945
4 State Street Global Advisors 492,797 398,682
5 Capital Group Cos. 424,235 343,526
6 Mellon Bank Corp. 400,975 313,431
7 Bankers Trust Co. 361,884 317,753
8 Equitable Cos. 359,169 262,837
9 Morgan Stanley Dean Witter & Co. 345,731 288,671
10 SSB Citi Asset Mgmt Group 327,027 -
11 J.P. Morgan Inv. Mgmt 316,193 256,609
12 UBS Brinson Division 303,703 150,801
13 Putnam Investments 294,056 235,086
14 Scudder Kemper Investments 281,188 218,668
15 Vanguard Group 276,318 215,347
16 TIAA CREF 244,171 209,569
17 PIMCO Advisors 244,166 199,544
18 Prudential Insurance Co. 242,838 213,632
19 Bank of America Corp. 233,500 -
20 Northern Trust Global Investments 225,781 196,619
21 Franklin Group of Funds 220,200 221,000
22 AMVESCAP 216,917 156,686
23 Wellington Mgmt Co. 211,318 174,550
24 American Express Co. 196,051 170,872
25 Chase Manhattan 189,603 160,038
Source: Institutional Investor
PALP is the 17th largest asset manager in the U.S. as of December 31, 1998...
8 [LOGO OF SOLOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
America's Largest Tax-Exempt Money Managers
<TABLE>
<CAPTION>
($ in Millions)
- ------------------------------------------------------------------------------------------
Total Assets Under Management
---------------------------------
Rank Firm 12/31/1998 12/31/1997
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
1 Barclays Global Investors $577,800 $462,600
2 State Street Global Advisors 448,928 368,899
3 Fidelity Investments 445,798 349,654
4 Bankers Trust Co. 252,385 228,153
5 J.P. Morgan Inv. Mgmt 228,971 183,377
6 Capital Group International 215,671 176,580
7 Mellon Bank Corp. 209,034 181,600
8 PIMCO Advisors 190,652 157,200
9 UBS Brinson Division 169,742 91,153
10 Northern Trust Global Investments 154,858 153,593
11 Equitable Cos. 151,283 122,851
12 Prudential Insurance Co. 137,978 138,944
13 United Asset Mgmt Corp. 133,008 134,274
14 Vanguard Group 123,271 102,849
15 Putnam Investments 117,169 98,624
16 Metropolitan Life 111,337 103,211
17 Nvest Cos. 88,964 79,609
18 Goldman Sachs Asset Mgmt. 88,551 66,520
19 T. Rowe Price Associates 75,235 66,415
20 AMVESCAP 74,595 51,881
</TABLE>
Source: Institutional Investor
... and the 8th largest manager of tax-exempt assets.
[LOGO OF SALOMON SMITH BARNEY]
9
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors AUM Breakdown
AUM BREAKDOWN FOR PIMCO ADVISORS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Client Breakdown (9/30/99): Total = $256.2 B Asset Allocation (9/30/99): Total = $256.2 B
- ------------------------------------------------------------------------------------------------------
<S> <C>
[PIE CHART] [PIE CHART]
Source: Company AUM Data Source: Company AUM Data
- --------------------------------------------------
Geographic Breakdown (9/30/99): Total = $256.2 B
- --------------------------------------------------
[PIE CHART]
Source: Management Discussion
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Total Asset Style Breakdown (6/30/99): Total Equity Asset Style Breakdown (6/30/99):
Total = $254.6 B Total = $100.6 B
- ------------------------------------------------------------------------------------------------------
<S> <C>
[PIE CHART] [PIE CHART]
Source: Financial Research Corporation, Source: Financial Research Corporation,
InvestWorks, Nelsons InvestWorks, Nelsons
- --------------------------------------------------
Separate Account Breakdown (6/30/99):
Total = $159.2 B
- --------------------------------------------------
[PIE CHART]
Source: Nelsons
</TABLE>
10 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors Market Share
<TABLE>
<CAPTION>
PIMCO ADVISORS MARKET SHARE BY NET FLOWS IN THE BROKER-DEALER DISTRIBUTED CHANNEL
($ in millions)
Channel Net Flows
- ----------------------------------------------------------------------------------------------------------------------------
Complex Name YTD 1999 % of Total 1998 % of Total 1997 % of Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alliance Capital $7,010.8 20.4% $13,945.0 13.6% $4,306.8 4.4%
MFS Investment Management 6,673.6 19.4 11,567.4 11.3 5,400.1 5.5
American Fund Distributors 4,246.4 12.4 12,235.5 11.9 12,516.2 12.8
Fidelity Advisors 3,931.5 11.4 3,472.0 3.4 1,677.0 1.7
Putnam Investments 3,271.1 9.5 13,269.0 12.9 19,965.0 20.5
Munder Capital Management 2,490.7 7.2 401.5 0.4 209.8 0.2
Eaton Vance Distributors 2,268.2 6.6 3,648.1 3.5 679.7 0.7
OppenheimerFunds, Inc. 2,226.4 6.5 9,901.5 9.6 8,888.4 9.1
PIMCO Advisors 1,792.8 5.2 1,989.7 1.9 525.1 0.5
Van Kampen Funds 1,411.0 4.1 3,254.4 3.2 2,546.0 2.6
American Skandia 1,238.0 3.6 562.4 0.5 34.6 0.0
Hartford Investment Mgmt. 1,158.7 3.4 1,304.7 1.3 741.2 0.8
Fidelity Distributors 828.4 2.4 832.0 0.8 376.0 0.4
Dreyfus Premier 591.8 1.7 1,055.7 1.0 124.3 0.1
WM Group of Funds 541.2 1.6 (1,139.2) -1.1 (611.5) -0.6
BlackRock Funds 531.5 1.5 601.3 0.6 447.2 0.5
Enterprise Capital Mgt. 507.8 1.5 866.0 0.8 447.2 0.5
AIM Distributors Inc. 447.9 1.3 1,129.6 1.1 4,375.9 4.5
Alger (Fred) Management, Inc. 437.1 1.3 246.1 0.2 74.0 1.1
SunAmerica Inc. 368.3 1.1 500.1 0.5 243.6 0.2
</TABLE>
Source: Financial Research Corporation. Year-to-date data as of June 30, 1999.
PIMCO Advisors has significantly increased its volume and share of broker-dealer
net flows.
11 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PIMCO Advisors Historical AUM
<TABLE>
<CAPTION>
HISTORICAL AUM
--------------
--------- --------- --------- --------- --------- CAGR
($ in billions) 1995 1996 1997 1998 9/30/99 1995-9/30/99
--------- --------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Institutional Products
Separate - Fixed Income $ 50.3 $ 57.3 $ 83.0 $ 106.6 $ 117.4 25.4%
Mutual Funds - Fixed Income 16.7 19.6 24.2 33.2 40.0 26.2
Separate - Equities 16.2 18.1 51.1 50.8 44.4 30.8
Mutual Funds - Equities 3.8 5.1 6.1 9.3 9.9 29.4
--------- --------- --------- --------- ---------
Total Institutional AUM 87.0 100.0 164.4 200.0 211.8 26.8
--------- --------- --------- --------- ---------
Retail Products
Mutual Funds - Fixed Income 2.0 2.5 5.1 9.0 10.7 55.4
Mutual Funds - Equities 5.5 6.7 27.2 31.9 30.5 58.0
Money Market 0.6 0.7 2.8 3.3 3.3 54.3
--------- --------- --------- --------- ---------
Total Retail AUM 8.2 10.0 35.1 44.2 44.4 57.0
--------- --------- --------- --------- ---------
Total Products AUM $ 95.2 $ 110.0 $ 199.5 $ 244.2 $ 256.2 30.2
========= ========= ========= ========= =========
<CAPTION>
PERCENT OF TOTAL
--------- --------- --------- --------- -----------
1995 1996 1997 1998 9/30/99
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Institutional Products
As a % of Total AUM
Separate - Fixed Income 52.8% 52.1% 41.6% 43.7% 45.8%
Mutual Funds - Fixed Income 17.6 17.8 12.1 13.6 15.6
Separate - Equities 13.7 13.1 20.5 16.6 13.9
Mutual Funds - Equities 4.0 4.6 3.1 3.8 3.9
--------- --------- --------- --------- -----------
Total Institutional AUM 91.4 90.9 82.4 81.9 82.7
--------- --------- --------- --------- -----------
Retail Products
As a % of Total AUM
Mutual Funds - Fixed Income 2.1 2.3 2.6 3.7 4.2
Mutual Funds - Equities 5.8 6.1 13.6 13.1 11.9
Money Market 0.7 0.6 1.4 1.3 1.3
--------- --------- --------- --------- -----------
Total Retail AUM 8.6 9.1 17.6 18.1 17.3
--------- --------- --------- --------- -----------
Total AUM 100.0% 100.0% 100.0% 100.0% 100.0%
========= ========= ========= ========= ===========
</TABLE>
Source: Company AUM Data
12 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors Asset Flow
<TABLE>
<CAPTION>
ASSET FLOW BY PRODUCT
($ in billions) 1995 1996 1997 1998 September 30, 1999
------------------ ------------------- ------------------- -------------------- ---------------------------
BOP Net Market BOP Net Market BOP Net Market BOP Net Market BOP Net Market Ending
AUM Flows Change AUM Flows Change AUM Flows Change AUM Flows Change AUM Flows Change AUM
------------------ ------------------- ------------------- -------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Products
Separate - Fixed Income $38.8 $3.5 $8.0 $50.3 $5.1 $1.9 $57.3 $19.1 $6.6 $83.0 $14.5 $9.2 $106.6 $11.8 $(1.1) $117.4
Mutual Funds - Fixed
Income 11.8 2.7 2.2 16.7 1.7 1.1 19.6 2.3 2.3 24.2 7.2 1.8 33.2 6.6 0.2 40.0
Separate - Equities 12.5 (0.4) 4.2 16.2 (1.4) 3.3 18.1 29.2 3.9 51.1 (8.0) 7.6 50.8 (7.8) 1.5 44.4
Mutual Funds - Equities 2.5 0.5 0.8 3.8 0.4 0.9 5.1 (0.3) 1.3 6.1 1.6 1.6 9.3 0.3 0.3 9.9
------------------ ------------------- ------------------- -------------------- ---------------------------
Total Institutional
Products 65.6 6.3 15.1 87.0 5.8 7.2 100.0 50.3 14.1 164.4 15.3 20.3 200.0 10.9 0.9 211.8
Retail Products
Mutual Funds - Fixed
Income 1.7 0.1 0.2 2.0 0.4 0.1 2.5 2.4 0.2 5.1 2.9 0.9 9.0 1.8 (0.1) 10.7
Mutual Funds - Equities 4.1 0.3 1.2 5.5 0.4 0.8 6.7 19.5 0.9 27.2 2.4 2.4 31.9 (1.1) (0.4) 30.5
Money Market 0.8 (0.2) -- 0.6 0.1 -- 0.7 2.1 -- 2.8 0.5 -- 3.3 -- -- 3.3
------------------ ------------------- ------------------- -------------------- ---------------------------
Total Retail Products 6.6 0.2 1.4 8.2 0.9 0.9 10.0 24.1 1.1 35.1 5.7 3.4 44.2 0.7 (0.5) 44.4
------------------ ------------------- ------------------- -------------------- ---------------------------
Total Products 72.2 6.6 16.5 95.2 6.7 8.2 110.0 74.4 15.1 199.5 21.0 23.6 244.2 11.5 0.4 256.2
================== =================== =================== ==================== ===========================
AS A PERCENTAGE OF BOP AUM
Institutional Products
Separate - Fixed Income 9.1% 20.6% 10.1% 3.9% 33.3% 11.5% 17.4% 11.1% 11.1% (1.0)%
Mutual Funds - Fixed Income 23.0 18.5 10.3 6.8 11.8 11.6 29.8 7.6 19.7 0.7
Separate - Equities (3.1) 33.5 (8.9) 20.1 161.4 21.5 (15.6) 14.9 (15.4) 3.0
Mutual Funds - Equities 19.7 30.1 11.3 23.5 (5.6) 26.0 26.1 26.7 3.0 3.1
------------ ------------ ------------ ------------ -------------
Total Institutional Products 9.7 23.0 6.7 8.3 50.3 14.1 9.3 12.3 5.4 0.5
Retail Products
Mutual Funds - Fixed Income 6.3 10.8 19.3 5.0 95.9 6.5 56.2 18.3 20.0 (1.1)
Mutual Funds - Equities 6.5 28.8 7.5 15.2 290.1 13.5 8.7 8.9 (3.4) (1.2)
Money Market (19.1) -- 11.4 -- 295.2 -- 16.0 -- (0.3) --
------------ ------------ ------------ ------------ -------------
Total Retail Products 3.4 20.6 10.7 11.5 241.0 10.7 16.3 9.6 1.6 (1.1)
------------ ------------ ------------ ------------ -------------
Total Products 9.1% 22.8% 7.0% 8.6% 67.6% 13.8% 10.5% 11.8% 4.7% 0.2%
============ ============ ============ ============ =============
</TABLE>
Source: Company AUM Data
13 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors Product Performance
($ in billions)
SELECT PRODUCT AUM ANALYSIS
Separate Mutual
Account Fund Total As a %
Select PIMCO Assets Assets Product of Total
Products 6/30/99 08/31/99 Assets AUM
----------------- ---------- ---------- --------- --------
Total Return $ 98.5 $ 28.4 $ 126.9 49.9%
Large Cap Value 35.0 na 35 17.5
StockPlus 19.3 1.4 21 8
Innovation na 1.4 1 1
---------------------------------------------------------------
Total $ 152.9 $ 31.2 $ 184.1 76.8 %
SELECT PRODUCT PERFORMANCE ANALYSIS
<TABLE>
<CAPTION>
Separate Account
-------------------------------------------------------------------
Annualized Return Decile Rank
YTD (as of 6/30/99) (as of 6/30/99)
Select PIMCO Return ------------------------ ----------------------------
Products 6/30/99 1 Year 3 Year 5 year YTD 1 Year 3 Year 5 Year
------------ ------- ------ ------ ------ --- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Return (1.3)% 3.7% 8.6% 9.4% 4 2 1 1
Large Cap Value 11.6 11.9 23.0 24.7 5 7 5 4
StockPlus 11.6 22.8 29.9 29.0 7 4 3 2
Innovation na na na na na na na na
-------------- -------------------------------------------------------------------
<CAPTION>
Mutual Fund
----------------------------------------------------------
Net Flows
Annualized Return ----------------
YTD (as of 8/31/99) (as of 8/31/99)
Select PIMCO Return ----------------------- ---------------- M-Star
Products 08/31/99 1 Year 3 Year 5 Year YTD 1998 Rank
------------ -------- ------ ------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Return (1.8)% 1.3% 8.0% 8.1% $ 5,566 $ 6,614 5
Large Cap Value na na na na 0 0 na
StockPlus 7.0 39.5 28.1 25.4 347 317 5
Innovation 31.2 113.1 43.0 na 533 99 5
</TABLE>
Mutual Funds
% of 4,5 Star Morningstar Rated Funds to Total Rated Funds: 59.5%
-----
% of 4,5 Star Morningstar Rated Assets to Total Rated Assets: 92.6%
------
Separate Accounts
% of Products in Top 4 Deciles (1): 50.0%
% of AUM in Top 4 Deciles: 70.0%
Source: Financial Research Corporation, InvestWorks, Nelsons.
(1) For products with available InvestWorks data.
14 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors - Historical Results
<TABLE>
<CAPTION>
HISTORICAL CONSOLIDATED FINANCIAL RESULTS OF OPERATIONS
($ in millions except per unit data) Year Ended Year Ended 9 Months Ended
---------------------------- ----------------------- ----------------
Actual Pro Forma Last 12 Normalized
12/31/95 12/31/96 12/31/97 12/31/1997(1) 12/31/98 9/30/98 9/30/99 Months Basis
-------- -------- -------- ------------- -------- ------- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Investment Advisory Fees
Private Accounts $ 192.7 $ 213.9 $ 291.9 NA $ 551.4 $ 406.5 $ 417.2 $ 562.1
Proprietary Funds 90.8 128.9 165.8 NA 218.8 158.1 215.9 276.5
Distribution and Servicing Fees 38.2 48.2 56.8 NA 76.8 59.8 75.4 92.4
Other 1.3 1.1 2.2 NA 5.5 NA 7.7 NA
------- ------- ------- ------------- ------- ------- ------- -------
Total Revenues 323.0 392.0 516.7 690.3 852.4 624.4 716.2 944.2
------- ------- ------- ------------- ------- ------- ------- -------
EXPENSES
Compensation and Benefits 149.2 173.5 225.8 299.3 359.6 263.0 295.3 391.9
Commissions 28.7 37.7 46.7 NA 77.8 57.1 67.8 88.6
Restricted Units and Option Plans 6.7 5.2 8.2 NA 25.8 18.9 16.3 23.2
Marketing and Promotional 9.1 11.0 16.6 NA 28.7 NA 26.9 NA
Occupancy and Equipment 8.7 9.2 11.8 NA 23.6 16.7 25.0 31.9
General and Administrative 11.4 17.6 27.4 NA 43.7 31.3 43.2 55.6
Amortization of Intangibles 36.0 36.0 43.5 103.2 55.1 41.3 41.3 55.1
Others 4.8 10.7 18.3 NA 29.9 43.0 30.8 17.7
------- ------- ------- ------------- ------- ------- ------- -------
Total Operating Expenses (2) $ 254.5 300.9 398.3 537.4 644.1 471.3 546.7 719.5
------- ------- ------- ------------- ------- ------- ------- -------
OPERATING INCOME 68.5 91.1 118.3 152.9 208.4 153.2 169.6 224.8
Non-Recurring Gain/ (Charge) (3) 0.0 0.0 0.0 4.4 0.0 0.0 (15.7) (15.7)
------- ------- ------- ------------- ------- ------- ------- -------
NET INCOME $68.5 $91.1 $ 118.3 $ 157.3 $ 208.4 $ 153.2 $ 153.9 $ 209.1 $ 224.8
======= ======= ======= ============= ======= ======= ======= ======= =======
Basic Net Income Per Unit $ 1.16 $ 1.29 $ 1.54 $ 1.44 $ 1.92 $ 1.42 $ 1.38 $ 1.88 $ 2.02
Diluted Net Income Per Unit $ 1.16 $ 1.29 $ 1.45 $ 1.39 $ 1.83 $ 1.35 $ 1.32 $ 1.80 $ 1.93
OPAD (4) $ 111.2 $ 132.3 $ 170.0 $ 260.5 $ 289.2 $ 213.4 $ 221.9 $ 297.8 $ 303.0
OPAD Per Unit (4) $ 1.88 $ 1.87 $2.21 $ 2.38 $ 2.66 $ 1.98 $ 1.99 $ 2.67 $ 2.72
Average AUM $ 83.7 $ 102.6 $ 154.8 $ 179.0 $ 211.9 $ 226.5 $ 240.2 $ 218.7
($ in billions)
Advisory Fees/Average AUM 33.9 33.4 29.6 NA 36.4 24.9 26.4 37.1
(in basis points)
- -------------------------------------------------------------------------------------------------------------------------------
Memo Items
Performance Fees $ 19.1 $ 22.5 $ 31.6 NA $ 34.7 $ 22.9 $ 15.1 $ 26.9
<CAPTION>
CAGR
------------------
1995- PF 1997-
LTM LTM
--- ---
<S> <C> <C>
REVENUES
Investment Advisory Fees
Private Accounts 33.0% NA
Proprietary Funds 34.6 NA
Distribution and Servicing Fees 26.5 NA
Other NA NA
Total Revenues 33.1 19.6
EXPENSES
Compensation and Benefits 29.4 16.7
Commissions 35.0 NA
Restricted Units and Option Plans 39.1 NA
Marketing and Promotional NA NA
Occupancy and Equipment 41.5 NA
General and Administrative 52.4 NA
Amortization of Intangibles 12.0 (30.2)
Others 42.0 NA
Total Operating Expenses (2) 31.9 18.1
OPERATING INCOME 37.3 24.6
Non-Recurring Gain/ (Charge) (3) NA NA
NET INCOME 34.7% 17.7%
Basic Net Income Per Unit 13.8% 16.6%
Diluted Net Income Per Unit 12.4% 15.9%
OPAD (4) 30.0% 7.9%
OPAD Per Unit (4) 9.8% 6.7%
Average AUM 29.2% 12.1%
($ in billions)
Advisory Fees/Average AUM
(in basis points)
- ----------------------------------------------------
Memo Items
Performance Fees 9.5% NA
</TABLE>
Source: "PIMCO Advisors LP Consolidating Results of Operations" (company-
provided), Form 10-K dated 12/31/98 and 12/31/97, Form 10-Q dated 9/30/98.
Historical Financials are not restated for acquisition of Oppenheimer Capital,
which closed on November 4, 1997.
(1) Pro forma for acquisition of Oppenheimer Capital.
(2) Includes PIMCO Advisors estimates of $6.7 million related to Year 2000
expenses for June 30, 1999.
(3) Excludes gain on sale of Quest for Value funds in 1997. Excludes gain on
sale of Blairlogie and charge associated with restructuring of OPCap in
1999.
(4) OPAD (Operating Profit Available for Distribution) is defined as the sum of
net income plus non-cash charges arising from amortization of compensation,
and losses of any subsidiary which is not a flow-through entity for tax
purposes.
15 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors - Historical Results
HISTORICAL CONSOLIDATED FINANCIAL RESULTS OF OPERATIONS - COMMON SIZE
<TABLE>
<CAPTION>
Year Ended Year Ended 9 Months Ended
----------------------------- ------------------------ ---------------------------
Actual Pro Forma Last 12
12/31/95 12/31/96 12/31/97 12/31/1997(1) 12/31/98 9/30/98 9/30/99 Months
-------- -------- -------- ------------- -------- ------- ------- --------
REVENUES
Investment Advisory Fees
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Private Accounts 59.7% 54.6% 56.5% NA 64.7% 65.1% 58.2% 57.8%
Proprietary Funds 28.1 32.9 32.1 NA 25.7 25.3 30.1 30.5
Distribution and Servicing Fees 31.8 12.3 11.0 NA 9.0 9.6 10.5 10.0
Others 0.4 0.3 0.4 NA 0.6 NA 1.1 NA
-------- -------- -------- ------------- -------- ------- ------- --------
Total Revenues 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
EXPENSES
Compensation and Benefits 46.2 44.3 43.7 43.4 42.2 42.1 41.2 41.3
Commissions 8.9 9.6 9.0 NA 9.1 9.1 9.5 9.5
Restricted Units and Option Plans 2.1 1.3 1.6 NA 3.0 3.0 2.3 2.3
Marketing and Promotional 2.6 2.8 3.2 NA 3.4 NA 3.8 NA
Occupancy and Equipment 2.7 2.3 2.3 NA 2.8 2.7 3.5 3.6
General and Administrative 3.5 4.5 5.3 NA 5.1 5.0 6.0 6.1
Amortization of Intangibles 11.1 9.2 8.4 15.0 6.5 6.6 5.8 5.6
Other 3.5 2.7 3.5 NA 3.5 6.9 4.3 0.9
-------- -------- -------- ------------- -------- ------- ------- --------
Total Operating Expenses 78.8 76.8 77.1 77.9 75.6 75.5 76.3 76.4
OPERATING INCOME 21.2 23.2 22.9 22.1 24.4 24.5 23.7 23.6
Non-Recurring Gain/(Charge) 0.0 0.0 0.0 0.8 0.0 0.0 (2.2) (2.2)
-------- -------- -------- ------------- -------- ------- ------- --------
NET INCOME 21.2% 23.2% 22.9% 22.8% 24.4% 24.5% 21.5% 21.4%
======== ======== ======== ============= ======== ======= ======= ========
Memo Items
Performance Fees 5.9% 5.7% 6.1% NA 4.1% 3.7% 2.1% 2.5%
OPAD 34.4 33.7 32.9 37.7 33.9 34.2 31.0 31.5
</TABLE>
(1) Pro forma for acquisition of Oppenheimer Capital.
16
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors Holdings L.P. - Historical Results
HISTORICAL FINANCIAL RESULTS
<TABLE>
<CAPTION>
Year Ended Year Ended 9 Months Ended CAGR
---------------------------- ---------- ----------------- -------------
($ in millions) Last 12 Normalized 1995- PF 1997-
12/31/95 12/31/96 12/31/97 12/31/98 9/30/98 9/30/99 Months Basis LTM LTM
-------- -------- -------- -------- -------- -------- -------- ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Equity in Earnings of Operating
Partnership $ 34.2 $ 45.9 $ 66.0 $ 90.7 $ 66.4 $ 67.4 $ 91.7 $ 98.8 32.7% 26.0%
Total Revenues 34.2 45.9 66.0 90.7 66.4 67.4 91.7 98.8 32.7 26.0
EXPENSES
Taxes and Other, Net 3.5 0.0 0.0 14.5 10.7 11.7 15.5 15.5 NA NA
Total Expenses 3.5 0.0 0.0 14.5 10.7 11.7 15.5 15.5 48.8 NA
-------- -------- -------- -------- -------- -------- -------- ----------
NET INCOME $ 30.8 $ 45.9 $ 66.0 $ 76.1 $ 55.7 $ 55.7 $ 76.1 $ 83.3 30.4% 14.2%
======== ======== ======== ======== ======== ======== ======== ==========
Distributions Declared NA NA NA $ 103.1 $ 76.0 $ 86.3 $ 113.5 $ 113.5 NA NA
Distributions Per Unit NA NA NA $ 2.18 $ 1.61 $ 1.76 $ 2.32 $ 2.32 NA NA
Basic Net Income Per Unit $ 1.21 $ 1.00 $ 1.44 $ 1.61 $ 1.18 $ 1.14 $ 1.56 $ 1.70 9.5% 10.0%
Diluted Net income Per Unit $ 1.21 $ 0.98 $ 1.39 $ 1.52 $ 1.11 $ 1.08 $ 1.49 $ 1.63 8.3% 9.6%
Selected Statistics
Revenue/Advisors Net income 50.0% 50.4% 55.8% 43.5% 43.4% 43.8% 43.8% 44.0% (3.4)% (12.9)%
Taxes/Revenue 10.2 0.0 0.0 16.0 16.1 17.4 17.0 15.7 14.4 NA
Taxes/Share of PIMCO Revenue 2.2 0.0 0.0 3.9 4.0 3.7 3.8 3.7 15.8 NA
</TABLE>
Source: PIMCO Advisors Holdings L.P. Form 10-K dated December 31, 1997 and 1998;
Form 10-Q dated September 30, 1998 and management.
17 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors - Financial Condition
<TABLE>
<CAPTION>
($ in millions)
At 12/31/97 At 12/31/98 At 9/30/99
----------- ----------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 34.3 $ 46.1 $ 74.6
Investment advisory fees receivable:
Private Accounts 132.3 146.2 146.0
Proprietary Funds 10.6 17.5 20.4
Distribution and servicing fees receivable 5.4 7.6 8.4
----------- ----------- ----------
Total fees receivable 148.3 171.2 174.8
Notes receivable 1.8 1.0 1.0
Receivable from affiliates 0.5 0.5 0.6
Short term investments 33.6 69.9 95.3
Other current assets 12.7 36.5 91.6
----------- ----------- ----------
Total current assets 231.2 325.4 363.3
Investment in partnerships 4.3 4.8 3.7
Fixed assets 15.4 22.7 43.1
Intangible assets 1,060.9 1,005.8 964.5
Other non current assets 23.1 53.4 105.2
----------- ----------- ----------
Total assets $ 1,334.9 $ 1,412.0 $ 1,479.8
=========== =========== ==========
LIABILITIES
Accounts payable and accrued expenses 22.8 28.0 34.4
Commissions payable 10.9 3.9 14.6
Other related current liabilities 19.5 33.4 29.6
----------- ----------- ----------
Total accounts payable, accrued expenses and other 53.2 65.2 78.7
Accrued compensation 50.0 68.5 97.9
Distribution payable 61.8 73.5 78.6
Short term borrowings 30.0 65.0 90.0
----------- ----------- ----------
Total current liabilities $ 195.0 $ 272.2 $ 345.2
Long term notes 83.1 80.5 80.5
Other non current liabilities 2.6 0.3 1.8
----------- ----------- ----------
Total liabilities $ 280.8 $ 353.0 $ 427.5
----------- ----------- ----------
PARTNERS' CAPITAL
General Partners 812.9 801.3 771.2
Class A Limited Partners 247.0 336.4 344.0
Class B Limited Partners 65.7 -- --
Class D Limited Partners -- -- 3.2
Unamortized compensation (71.4) (78.7) (66.1)
----------- ----------- ----------
Total partners' capital $ 1,054.1 $ 1,059.1 $ 1,052.3
----------- ----------- ----------
Total liabilities and partners' capital $ 1,334.9 $ 1,412.0 $ 1,479.8
=========== =========== ==========
</TABLE>
Source: Form 10-K dated 12/31/98 and company-provided "Consolidated Balance
Sheet Comparative" dated 9/30/99.
18 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
PIMCO Advisors Holdings L.P. - Market Price & Volume
- --------------------------------------------------------------------------------
Price - Volume (1999 YTD)
- --------------------------------------------------------------------------------
[GRAPH]
Price on Day Prior to Rumor (7/6/99): $29.56
Price on Day Prior to Confirmation of Talks (10/4/99): $33.75
- --------------------------------------------------------------------------------
Valuation Multiples
- --------------------------------------------------------------------------------
Trading Multiples as of:
------------------------
7/6/99 10/28/99
---------- -----------
Price $29.56 $34.13
Firm Value/PALP AUM (a) 1.4 % 1.6 %
Firm Value/PALP LTM Revenue (a) 3.9 x 4.4 x
Firm Value/PALP LTM OPAD (a) 12.0 13.9
Price/PAH Earnings:
LTM 17.4 x 20.1 x
1999E: (b) 17.6 20.3
2000E: (b) 14.6 16.8
Price/PAH LTM Distributions 12.8 14.7
(a) Firm value has been adjusted for existing debt (long and short term) of
$145.5 million, less existing cash of $52.2 million.
(b) IBES median estimates as of October 15, 1999.
[LOGO OF SALOMON SMITH BARNEY]
19
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Analyst Estimates - PIMCO Advisors Holdings L.P.
<TABLE>
<CAPTION>
Earnings Estimates
Last -------------------- LT Growth Target
Firm Name Analyst Report Rating 1999E 2000E Rate Price
- --------------------- ------------------ --------- ---------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Salomon Smith Barney Guy Moszkowski 9/30/99 Buy (2M) $1.65 $2.05 16.0% $37.00
Schroder Securities James Hanbury 8/11/99 Outperform NA NA NA NA
Lazard Freres Luke Fichthorn 7/28/99 Buy 1.68 2.02 NA 36.00
Putnam, Lovell Neal Epstein 7/21/99 Buy 1.67 2.04 NA 38.00
Merrill Lynch Mark Constant(1) 4/29/99 Buy 1.73 2.09 14.0 35.00
Crowell, Weedon & Co Ben Wei 3/29/99 Buy 1.70 2.06 NA NA
Goldman Sachs Strauss, Richard 3/19/99 Outperform NA NA NA NA
Anderson & Strudwick Charles Mills NA NA NA NA NA NA
Lehman Brothers Mark Constant(1) NA NA NA NA NA NA
- ------------------------------------------------------------------------------------------------------------
High $1.73 $2.09 16.0% $38.00
Mean 1.69 2.05 15.0 36.50
Median 1.68 2.05 15.0 36.50
Low 1.65 2.02 14.0 35.00
IBES 1.68 2.03 10.0 NA
</TABLE>
Source: Investext and Bloomberg
(1) Mr. Constant left Merrill Lynch for Lehman Brothers in 1999.
20 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Comparative Yield
- --------------------------------------------------------------------------------
PIMCO Advisors Yield vs. 30 year T-Bond Yield
- --------------------------------------------------------------------------------
[GRAPH]
- --------------------------------------------------------------------------------
Comparative Spread
- --------------------------------------------------------------------------------
[GRAPH]
21 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
3 COMPARATIVE OPERATING PERFORMANCE
[LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Comparative Operating Statistics -- LTM 6/30/99
<TABLE>
<CAPTION>
LTM data as of 6/30/99
Dollars in millions LTM Profitability Statistics
-----------------------------------------------------
Last Twelve Month Performance Adv. Comp. Margin (%): As % of AUM:
---------------------------------------- Rev./ Exp./ ------------------- -------------------
Total Advisory Net Op. Cash Total Total Net Total Adv.
Rev. Rev. EBITDA Inc. Flow(1) Rev. Rev. EBITDA EBT Inc. Rev. Rev. EBT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PIMCO Advisors $915.2 $818.1 $296.2 $216.7 $296.1 89.4% 54.0% 32.4% 23.7% 23.7% 0.36% 0.32% 0.09%
C-Corporations
- --------------
Affiliated Managers Group, Inc. $286.0 $282.9 $136.4 $32.2 $55.6 98.9% 35.8% 47.7% 19.0% 11.3% 0.40% 0.40% 0.08%
AMVESCAP PLC(2) 1,563.0 1,546.8 483.5 124.3 241.1 99.0 -- 30.9 18.4 8.0 0.53 0.52 0.10
BlackRock Inc. 400.0 368.7 118.3 52.2 61.8 92.2 39.5 29.6 24.0 13.0 0.28 0.26 0.07
Eaton Vance Corporation 326.9 191.2 167.8 63.8 125.2 58.5 20.7 51.3 31.5 19.5 0.84 0.49 0.26
Federated Investors, Inc. 564.8 491.5 264.6 107.7 161.4 87.0 26.6 46.8 30.1 19.1 0.48 0.42 0.14
Franklin Resources, Inc. 2,339.1 1,333.0 768.2 465.0 642.7 57.0 22.4 32.8 26.1 19.9 1.03 0.59 0.27
Gabelli Asset Management Inc. 149.2 138.2 55.3 27.4 27.4 92.7 45.4 37.0 30.4 18.4 0.79 0.74 0.24
John Nuveen 328.5 290.0 167.0 91.4 105.4 88.3 28.5 50.8 45.8 27.8 0.55 0.49 0.25
Neuberger Berman Inc. 578.2 368.5 259.5 141.6 155.3 63.7 38.6 44.9 42.5 24.5 1.02 0.65 0.43
Phoenix Investment Partners 254.7 216.8 93.7 20.9 51.7 85.1 39.7 36.8 17.1 8.2 0.43 0.36 0.07
T. Rowe Price Associates, Inc. 945.0 726.3 346.2 195.1 195.1 76.9 34.1 36.6 33.2 20.6 0.59 0.46 0.20
United Asset Management Corp. 902.7 902.7 286.9 64.3 177.0 100.0 49.8 31.8 12.5 7.1 0.44 0.44 0.05
Waddell & Reed Financial Inc. 315.6 147.2 151.2 88.0 92.9 46.6 10.7 47.9 44.8 27.9 1.07 0.50 0.48
--------------------------------------------------------------------------
Mean 80.5% 40.4% 28.9% 17.3% 0.65% 0.48% 0.20%
Median 87.0 37.0 30.1 19.1 0.55 0.49 0.20
--------------------------------------------------------------------------
Master Limited Partnerships
- ---------------------------
Alliance Capital
Management, L.P. $1,514.6 $1,076.4 $556.7 $343.4 $482.6 71.1% 25.9% 36.8% 26.8% 22.7% 0.47% 0.34% 0.13%
Nvest 656.3 599.4 182.7 107.5 156.3 91.3 50.0 27.8 17.1 16.4 0.48 0.44 0.08
--------------------------------------------------------------------------
Mean 81.2% 32.3% 22.0% 19.5% 0.48% 0.39% 0.10%
Median 81.2 32.3 22.0 19.5 0.48 0.39 0.10
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Low 46.6% -- 27.8% 12.5% 7.1% 0.28% 0.26% 0.05%
Mean 80.5 31.2 39.3 28.0 17.6 0.63 0.47 0.19
Median 87.0 34.1 36.8 26.8 19.1 0.53 0.46 0.14
High 100.0 50.0 51.3 45.8 27.9 1.07 0.74 0.48
--------------------------------------------------------------------------
</TABLE>
NB Financial data excludes all non-recurring and extraordinary items.
(1) Represents Net Income plus Depreciation and Amortization.
(2) Financial data is adjusted to reflect US GAAP.
22 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Summary Operating Statistics
<TABLE>
<CAPTION>
Total Revenue as a % of AUM
-------------------------------------
1997 1998 LTM 6/30/99
------ ------ -------------
<S> <C> <C> <C>
PIMCO Advisors 0.34% 0.35% 0.36%
Mean /(1)/ 0.61 0.65 0.63
C-Corporations
- --------------
Affiliated Managers Group, Inc. 0.21 0.39 0.40
AMVESCAP PLC (2) 0.46 0.50 0.53
BlackRock Inc. 0.21 0.27 0.28
Eaton Vance Corporation 0.89 0.96 0.84
Federated Investors, Inc. 0.44 0.47 0.48
Franklin Resources, Inc. 1.09 1.16 1.03
Gabelli Asset Management Inc. 0.89 0.88 0.79
John Nuveen 0.54 0.56 0.55
Neuberger Berman Inc. 0.93 1.04 1.02
Phoenix Investment Partners 0.37 0.43 0.43
T. Rowe Price Associates, Inc. 0.61 0.60 0.59
United Asset Management Corp. 0.48 0.48 0.44
Waddell & Reed Financial Inc. 1.08 1.04 1.07
Master Limited Partnerships
- ---------------------------
Alliance Capital Management, L.P. 0.45 0.46 0.47
Nvest 0.45 0.50 0.48
<CAPTION>
Advisory Revenue as a % of AUM
---------------------------------------
1997 1998 LTM 6/30/99
------ ------ -------------
<S> <C> <C> <C>
PIMCO Advisors 0.30% 0.32% 0.32%
Mean /(1)/ 0.44 0.49 0.47
C-Corporations
- --------------
Affiliated Managers Group, Inc. 0.21 0.38 0.40
AMVESCAP PLC (2) 0.46 0.49 0.52
BlackRock Inc. 0.18 0.25 0.26
Eaton Vance Corporation 0.51 0.59 0.49
Federated Investors, Inc. 0.37 0.45 0.42
Franklin Resources, Inc. 0.62 0.63 0.59
Gahelli Asset Management Inc. 0.73 0.77 0.74
John Nuveen 0.45 0.49 0.49
Neuberger Berman Inc. 0.61 0.68 0.65
Phoenix Investment Partners 0.30 0.36 0.36
T. Rowe Price Associates, Inc. 0.47 0.46 0.46
United Asset Management Corp. 0.48 0.48 0.44
Waddell & Reed Financial Inc. 0.50 0.50 0.50
Master Limited Partnerships
- ---------------------------
Alliance Capital Management, L.P. 0.32 0.33 0.34
Nvest 0.41 0.46 0.44
</TABLE>
(1) Mean is of all C-Corporations and MLPs.
[LOGO OF SALOMON SMITH BARNEY]
23
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Summary Operating Statistics
<TABLE>
<CAPTION>
EBITDA Margin EBT Margin
---------------------------------------- -----------------------------------------
1997 1998 LTM 6/30/99 1997 1998 LTM 6/30/99
---------- ---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
PIMCO ADVISORS 33.4% 33.9% 32.4% 23.3% 24.5% 23.7%
Mean (1) 40.7 40.6 39.3 27.5 27.7 28.0
C-Corporations
- --------------
Affiliated Managers Group, Inc. 33.5 47.8 47.7 3.1 17.7 19.0
AMVESCAP PLC (2) 39.8 33.1 30.9 24.8 21.4 18.4
BlackRock Inc. 35.9 28.7 29.6 22.2 22.1 24.0
Eaton Vance Corporation 60.0 46.4 51.3 32.8 22.3 31.5
Federated Investors, Inc. 35.4 43.9 46.8 20.3 27.9 30.1
Franklin Resources, Inc. 32.7 31.5 32.8 27.3 25.0 26.1
Gabelli Asset Management Inc. 36.6 40.4 37.0 33.6 35.9 30.4
John Nuveen 50.8 50.2 50.8 45.4 44.8 45.8
Neuberger Berman Inc. 44.4 46.2 44.9 44.4 44.7 42.5
Phoenix Investment Partners 34.4 36.1 36.8 19.2 16.8 17.1
T. Rowe Price Associates, Inc. 57.5 57.4 36.6 31.0 31.7 33.2
United Asset Management Corp. 32.4 32.0 31.8 17.4 14.3 12.5
Waddell & Reed Financial Inc. 51.6 51.7 47.9 45.5 46.8 44.8
Master Limited Partnerships
- ---------------------------
Alliance Capital Management, L.P. 36.1 35.4 36.8 27.5 26.3 26.8
Nvest 28.8 27.7 27.8 17.4 17.3 17.1
</TABLE>
(1) Mean is of all C-Corporations and MLPs.
24 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Summary Operating Statistics
<TABLE>
<CAPTION>
EBT as a % of AUM Comp. Expense to Total Revenue
------------------------------------------ ------------------------------------------
1997 1998 LTM 6/30/99 1997 1998 LTM 6/30/99
----------- ----------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
PIMCO Advisors 0.08% 0.09% 0.09% 54.1% 54.3% 54.0%
Mean /(1)/ 0.19 0.19 0.19 32.4 31.5 31.2
C-Corporations
- --------------
Affiliated Managers Group, Inc. 0.01 0.07 0.08 43.1 36.4 35.8
AMVESCAP PLC (2) 0.11 0.11 0.10 -- -- --
BlackRock Inc. 0.05 0.06 0.07 38.0 44.0 39.5
Eaton Vance Corporation 0.29 0.21 0.26 22.5 23.2 20.7
Federated Investors, Inc. 0.09 0.13 0.14 34.5 28.1 26.6
Franklin Resources, Inc. 0.30 0.29 0.27 20.0 21.6 22.4
Gabelli Asset Management Inc. 0.30 0.31 0.24 47.4 43.3 45.4
John Nuveen 0.25 0.25 0.25 28.7 28.9 28.5
Neuberger Berman Inc. 0.41 0.46 0.43 38.7 37.2 38.6
Phoenix Investment Partners 0.07 0.07 0.07 41.9 39.6 39.7
T. Rowe Price Associates, Inc. 0.19 0.19 0.20 33.6 34.3 34.1
United Asset Management Corp. 0.08 0.07 0.05 50.0 49.4 49.8
Waddell & Reed Financial Inc. 0.49 0.49 0.48 10.5 10.9 10.7
Master Limited Partnerships
- ---------------------------
Alliance Capital Management, L.P. 0.12 0.12 0.13 27.1 25.7 25.9
Nvest 0.08 0.09 0.08 49.4 50.0 50.0
</TABLE>
(1) Mean is of all C-Corporations and MLPs.
25 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Analysis of PIMCO Advisors Holdings L.P. Normalized Unit Price
<TABLE>
<CAPTION>
Pre-Rumor PIMCO Advisors
Stock Stock Holdings L.P.
Price Price Percent Normalized
10/28/1999 7/1/1999 Change Unit Price
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PIMCO Advisors Holdings L.P. $34.13 $29.38 16.2%
C-Corporations
- --------------
Affiliated Managers Group, Inc. $25.00 $30.81 (18.9)%
AMVESCAP PLC(1) 40.88 46.00 (11.1)
Eaton Vance Corporation 33.81 36.00 (6.1)
Federated Investors, Inc. 17.75 16.94 4.8
Franklin Resources, Inc. 32.94 41.88 (21.3)
Gabelli Asset Management Inc. 14.81 15.94 (7.1)
John Nuveen 35.56 42.13 (15.6)
Phoenix Investment Partners 8.50 8.69 (2.2)
T. Rowe Price Associates, Inc. 32.56 39.13 (16.8)
United Asset Management Corp. 20.63 22.06 (6.5)
Waddell & Reed Financial Inc. 23.50 27.94 (15.9)
Master Limited Partnerships
- ---------------------------
Alliance Capital Management, L.P. $26.13 $32.44 (19.5)%
Nvest 19.63 24.38 (19.5)
- -------------------------------------------------------------------------------------------------------------
PIMCO Advisors Holdings L.P. Normalized Unit Price (15.7)% (2) $24.76
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents performance of the American Depository Shares (which each
represent 5 ordinary shares).
(2) Represents change in industry market cap since 7/1/99.
26 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
4 VALUATION
[LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Summary Valuation
<TABLE>
<CAPTION>
Valuation Methodology $18.00 $20.00 $22.00 $24.00 $26.00 $28.00
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
---------------------------
Public Market - C Corporations (a) $21.04 - $25.78
---------------------------
---------------------------
Public Market - Selected C Corps. (b) $22.92 - $25.19
---------------------------
---------------------------
Public Market - MLPs (c) $17.86 - $21.90
---------------------------
Precedent Transactions Analysis
DCF Analysis - PAH Distributions
DCF Analysis - PALP Distributions
<CAPTION>
Valuation Methodology $30.00 $32.00 $34.00 $36.00 $38.00
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Public Market - C Corporations (a)
Public Market - Selected C Corps. (b)
Public Market - MLPs (c)
--------------------------------
Precedent Transactions Analysis $29.24 - $35.84
--------------------------------
--------------------------------
DCF Analysis - PAH Distributions $33.38 - $37.14
--------------------------------
--------------------------------
DCF Analysis - PALP Distributions $33.07 - $36.98
--------------------------------
<CAPTION>
----------------
Normalized Price
$24.76
----------------
Apostle Ref.
Valuation Data (d) $18.00 $20.00 $22.00 $24.00 $26.00 $28.00
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity Value (e) $2,165 $2,406 $2,646 $2,887 $3,127 $3,368
Premium/Market Price (10/28/99) $34.13 (47.3)% (41.4)% (35.5)% (29.7)% (23.8)% (17.9)%
Premium/Pre-Rumour Price (7/6/99) 29.56 (39.1) (32.3) (25.6) (18.8) (12.1) (5.3)
Premium/Normalized Price 24.76 (27.3) (19.2) (11.1) (3.1) 5.0 13.1
Firm Value/Assets Under Mgmt. (%) (f) $256.2 0.88 % 0.98 % 1.07 % 1.16 % 1.26 % 1.35 %
Firm Value/LTM Revenues (f) 944.2 2.4 x 2.6 x 2.9 x 3.2 x 3.4 x 3.7 x
Firm Value/LTM OPAD (f) 303.0 7.5 8.2 9.0 9.8 10.6 11.4
Price/PALP LTM OPAD per unit 2.72 6.6 x 7.4 x 8.1 x 8.8 x 9.6 x 10.3 x
Price/PALP 1999E OPAD per unit 2.81 6.4 7.1 7.8 8.5 9.2 10.0
Price/PAH Earnings per Unit:
LTM 1.70 10.6 x 11.8 x 12.9 x 14.1 x 15.3 x 16.5 x
1999E (g) 1.68 10.7 11.9 13.1 14.3 15.5 16.7
2000E (g) 2.03 8.9 9.9 10.8 11.8 12.8 13.8
Price/PAH Distributions per Unit:
LTM 2.32 7.8 x 8.6 x 9.5 x 10.4 x 11.2 x 12.1 x
1999E (g) 2.48 7.3 8.1 8.9 9.7 10.5 11.3
2000E (g) 2.71 6.6 7.4 8.1 8.8 9.6 10.3
<CAPTION>
------------- ----------
Current Price Deal Price
$34.13 $38.75
------------- ----------
Valuation $30.00 $32.00 $34.000 $36.00 $38.00 $38.75
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Equity Value (e) $3,608 $3,849 $4,089 $4,330 $4,571 4,661
Premium/Market Price (10/28/99) (12.1)% (6.2)% (0.4)% 5.5% 11.4 % 13.6 %
Premium/Pre-Rumour Price (7/6/99) 1.5 8.2 15.0 21.8 28.5 31.1
Premium Normalized Price 21.2 29.2 37.3 45.4 53.5 56.5
Firm Value/Assets Under Mgmt. (%) (f) 1.45 % 1.54 % 1.63 % 1.73 % 1.82 % 1.86 %
Firm Value/LTM Revenues (f) 3.9 x 4.2 x 4.4 x 4.7 x 4.9 x 5.0 x
Firm Value/LTM OPAD (f) 12.2 13.0 13.8 14.6 15.4 15.7
Price/PALP LTM OPAD per unit 11.0 x 11.8 x 12.5 x 13.2 x 14.0 x 14.3 x
Price/PALP 1999E OPAD per unit 10.7 11.4 12.1 12.8 13.5 13.8
Price/PAH Earnings per Unit:
LTM 17.6 x 18.8 x 20.0 x 21.2 x 22.3 x 22.8 x
1999E (g) 17.9 19.0 20.2 21.4 22.6 23.1
2000E (g) 14.8 15.8 16.7 17.7 18.7 19.1
Price/PAH Distributions per Unit:
LTM 12.9 x 13.8 x 14.7 x 15.5 x 16.4 x 16.7 x
1999E (g) 12.1 12.9 13.7 14.5 15.3 15.6
2000E (g) 11.1 11.8 12.5 13.3 14.0 14.3
</TABLE>
N.B. Data LTM as of September 30, 1999.
(a) Public market comparables (complete list) consists of Affiliated Managers
Group, Inc., AMVESCAP Plc. BlackRock Inc., Eaton Vance Corp., Federated
Inv., Franklin Resources, Inc., Gabelli Asset Mgmt., John Nuveen, Nueberger
Berman, Phoenix Investment Partners, T. Rowe Price, UAM and Waddell & Reed.
(b) Public market comparables (selected list) consists of BlackRock Inc.,
Phoenix Investment Partners, T. Rowe Price and Kansas City Southern.
(c) Comparables MLPs consist of Alliance Capital and Nvest.
(d) Normalized for non-recurring items.
(e) Based on 120.3 diluted units outstanding.
(f) Firm value has been adjusted for existing debt (long and short term) of
$145.5 million, less existing cash of $52.2 million.
(g) Based on IBES median estimates.
[LOGO OF SALOMON SMITH BARNEY]
27
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Valuation Summary - Public Market Comparables
<TABLE>
<CAPTION>
(Dollars in millions)
- ---------------------------------------------------------------------------------------------------------------------------
PALP Reference Implied Equity
Data Mean Valuation (a) Valuation Range
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PUBLIC MARKET ANALYSIS - C CORPORATIONS (b)(c)
Firm Value as a % of AUM (d) (in billions) $254.6 1.9% --- 2.3% $4,752 --- $5,829
Firm Value/LTM Revenues (d) 915.2 2.8x --- 3.5x 2,505 --- 3,083
Firm Value/LTM EBITDA (d) 296.2 7.2 --- 8.8 2,029 --- 2,500
Market Value/LTM Cash Flow (e) 207.3 11.1 --- 13.6 2,311 --- 2,825
Market Value/LTM Earnings 127.8 16.5 --- 20.1 2,103 --- 2,571
Market Value/1999E Earnings (IBES Projections) (f) 145.4 13.7 --- 16.8 1,998 --- 2,443
Market Value/2000E Earnings (IBES Projections) (f) 175.7 11.5 --- 14.0 2,012 --- 2,459
Average Valuation Range $2,530 --- $3,101
Per Unit (g) $21.04 --- $25.78
PUBLIC MARKET ANALYSIS - SELECTED C CORPS. (c) (h)
Firm Value as a % of AUM (d) (in billions) $254.6 1.9% --- 2.3% $4,645 --- $5,698
Firm Value/LTM Revenues (d) 915.2 3.3x --- 3.2x 2,894 --- 2,859
Firm Value/LTM EBITDA (d) 296.2 9.3 --- 7.5 2,652 --- 2,123
Market Value/LTM Cash Flow (e) 207.3 13.0 --- 15.9 2,699 --- 3,299
Market Value/LTM Earnings 127.8 17.8 --- 18.3 2,273 --- 2,333
Market Value/1999E Earnings (IBES Projections) (f) 145.4 13.9 --- 16.0 2,027 --- 2,325
Market Value/2000E Earnings (IBES Projections) (f) 175.7 12.0 --- 14.7 2,107 --- 2,575
Average Valuation Range $2,757 --- $3,030
Per Unit (g) $22.92 --- $25.19
PUBLIC MARKET ANALYSIS - MLPs (i)
Firm Value as a % of AUM (d) (in billions) $254.6 1.0% --- 1.2% $2,459 --- $3,026
Firm Value/LTM Revenues (d) 915.2 2.1x --- 2.6x 1,837 --- 2,266
Firm Value/LTM EBITDA (d) 296.2 6.3 --- 7.8 1,787 --- 2,205
Market Value/LTM Cash Flow (e) 296.1 6.4 --- 7.8 1,900 --- 2,323
Market Value/LTM Earnings 216.7 9.1 --- 11.2 1,978 --- 2,417
Market Value/1999E Earnings (IBES Projections) (f) 246.4 9.8 --- 12.0 2,427 --- 2,967
Market Value/2000E Earnings (IBES Projections) (f) 297.8 8.9 --- 10.9 2,645 --- 3,232
Average Valuation Range $2,148 --- $2,634
Per Unit (g) $17.86 --- $21.90
</TABLE>
N.B.L.M data used for PALP is LTM as of June 30, 1999 to be consistent with
public data available for other market comparables.
(a) Range is +/- 10% of the mean multiple.
(b) C Corporation comparables (complete list) consists of Affiliated Managers
Group, Inc., AMVESCAP Plc, BlackRock Inc., Eaton Vance Corp., Federated
Inv., Franklin Resources. Inc., Gabellie Asset Mgmt., John Nuveen, Neuberger
Berman, Phoenix Investment Partners, T. Rowe Price, UAM, Wadell & Reed.
(c) PALP earnings and cash flow numbers have been tax adjusted at Allianz's tax
rate of 41% when compared with C Corporations and the Selected C
Corporations.
(d) Firm value has been adjusted for existing debt (long and short term) of
$145.5 million, less existing cash of $52.2 million.
(e) Cash flow defined as net income plus amortization.
(f) IBES median estimates.
(g) Assumes PALP diluted units of 120.3 million.
(h) Public market comparables (selected list) consists of BlackRock Inc.,
Phoenix Investment Partners, T. Rowe Price and Kansas City Southern.
(i) Comparable MLPs consist of Alliance Capital and Nvest.
[LOGO OF SALOMON SMITH BARNEY]
28
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Valuation Summary - Precedent Transactions
<TABLE>
<CAPTION>
(Dollars in millions)
- ------------------------------------------------------------------------------------------------------------
PALP Reference Implied Equity
Data Mean Valuation (a) Valuation Range
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRECEDENT TRANSACTIONS ANALYSIS
Firm Value / AUM (%) (b) (in billions) $256.2 1.8% -- 2.2% $4,581 - $5,620
Firm Value / LTM Revenues (b) 944.2 3.9x -- 4.8x 3,623 - 4,449
Firm Value / LTM EBITDA (b) 303.0 11.3 -- 13.8 3,318 - 4,076
Equity Value / LTM Pre-Tax Income 225.3 10.4 -- 12.7 3,150 - 3,850
Equity Value / LTM Earnings 132.9 21.9 -- 26.8 2,912 - 3,559
Average Valuation Range $3,517 - $4,311
Per Unit (c) $29.24 - $35.84
</TABLE>
N.B. PALP data as of or for the last twelve months ended September 30, 1999.
(a) Range is +/-10% of the mean multiple.
(b) Firm value has been adjusted for existing debt (long and short term) of
$145.5 million, less existing cash of $52.2 million.
(c) PALP earnings have been tax adjusted at Allianz's tax rate of 41%.
(d) Assumes PALP diluted units of 120.3 million.
29 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Projection Assumptions
- - PIMCO Advisors' projections are based on assumptions provided by management
as follows:
. Annual growth in total assets under management of 13% (8% net performance,
5% net cash flow), with a growing percentage of AUM
. Revenue growth consistent with AUM growth:
- Investment advisory fees equal to 34.8 basis points in 1999 and 34.7
basis points going forward of average assets under management
- Distribution and servicing fees constant at 11.5 basis points of
average mutual fund assets under management
. OPAD margin of 32% in 1999 and 2000 and 33% going forward
. Compensation and benefits constant at 41.5% of revenues
. Commissions equal to 85% of distribution and servicing fees
. Annual general and administrative expense growth of 13%
30 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Projected Income Statement - PALP: Mgmt. Assumptions
<TABLE>
<CAPTION>
(Dollars in millions, except per unit data and as indicated)
Historical Actual Projected
------------------------ ---------------- ------------------------
1997 1998 LTM - 9/99 (a) 1999 2000
-------- -------- ---------------- -------- --------
<S> <C> <C> <C> <C> <C>
Assets Under Management (in billions) $200 $244 $256 $260 $293
Mutual Fund Assets Under Management 65 87 95 97 113
(in billions)
Revenues
Investment Advisory Fees $457.7 $770.2 $838.7 $876.4 $959.0
Distribution and Servicing Fees 59.0 82.3 105.5 105.9 120.9
-------- -------- ---------------- ------------------------
Total Revenues 516.7 852.4 944.2 982.2 1,079.9
-------- -------- ---------------- -------- ---------
Expenses
Compensation and Benefits 225.8 359.6 391.9 407.6 448.1
Commissions 46.7 77.8 88.6 90.0 102.7
General and Administrative 27.4 43.7 55.6 58.0 65.6
Restricted Unit and Option Plans 8.2 25.8 23.2 24.9 24.9
Amortization of Intangible Assets 43.5 55.1 55.1 55.1 55.1
Other Expenses 47.5 90.4 113.4 112.3 117.9
-------- -------- ---------------- ------------------------
Total Expenses 399.1 652.3 727.7 747.9 814.3
-------- -------- ---------------- -------- ---------
Operating Income $117.6 $200.2 $216.5 $234.3 $265.6
Equity in Income/(Loss) of Partnerships (0.4) 0.1 0.1 0.0 0.0
Other Income (net) 2.9 8.6 8.6 0.0 0.0
-------- -------- ---------------- ------------------------
Pre-Tax Income $120.1 $208.9 $225.3 $234.3 $265.6
-------- -------- ---------------- ------------------------
Taxes 1.7 0.6 0.6 0.0 0.0
-------- -------- ---------------- ------------------------
Net Income $118.3 $208.4 $224.8 $234.3 $265.6
======== ======== ================ ========================
Number of Basic Units (in millions) 76.9 108.5 111.5 111.8 112.2
Number of Diluted Units (in millions) 81.6 113.9 116.2 116.7 117.4
Basic Earnings per unit $1.54 $1.92 $2.02 $2.10 $2.37
Diluted Earnings per unit 1.45 1.83 1.93 2.01 2.26
OPAD $173.2 $289.2 $303.0 $314.3 $345.6
OPAD per Basic Unit 2.10 2.66 2.72 (d) 2.81 (d) 3.08
Distributions Declared $167.0 (c) $271.3 $300.9 $314.3 $345.6
---------
Distributions/OPAD 96.4 % 93.8 % 99.3 % 100.0 % 100.0 %
---------
Distributions Declared Per Unit $2.17 (c) $2.50 $2.70 $2.81 $3.08
--------- ---------
OPAD Margin 33.5 % 33.9 % 32.1 % 32.0 % 32.0 %
--------- ---------
Operating Margin 22.8 23.5 22.9 23.9 24.6
---------
Investment Advisory Fees / Average AUM 0.340 % 0.347 % 0.348 % 0.348 % 0.347 %
---------
Distribution and Servicing Fees / Avg. MF AUM 0.101 0.108 0.121 0.115 0.115
---------
Mutual Fund Assets / AUM 32.8 35.5 37.2 37.5 38.5
---------
Compensation and Benefits / Revenues 43.7 % 42.2 % 41.5 % 41.5 % 41.5 %
---------
Growth in General and Administrative Expense 55.5 59.3 27.3 13.0 13.0
---------
Commissions/Distribution and Servicing Fees 79.3 94.6 83.9 85.0 85.0
---------
<CAPTION>
(Dollars in millions, except per unit data and as indicated)
Projected
-----------------------------------------------------------------------------
2001 2002 2003 2004 GAGR 00-04
-------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Assets Under Management (in billions) $331 $374 $423 $478 13.0 %
----------------
Manual Fund Assets Under Management 131 152 176 203 15.8
(in billions) ----------------
Revenues
Investment Advisory Fees $1,083.7 $1,224.5 $1,383.7 $1,563.6 13.0 %
Distribution and Servicing Fees 140.2 162.5 188.2 217.8 15.9
-------- -------- ---------------- --------
Total Revenues 1,223.8 1,387.0 1,571.9 1,781.4 13.3
-------- -------- ---------------- --------
Expenses
Compensation and Benefits 507.9 575.6 652.3 739.3 13.3
Commissions 119.1 138.1 159.9 185.1 15.9
General and Administrative 74.1 83.7 94.6 106.9 13.0
Restricted Unit and Option Plans 24.9 24.9 10.0 10.0 (20.4)
Amortization of Intangible Assets 55.1 55.1 55.1 55.1 0.0
Other Expenses 118.9 131.9 146.3 162.2 8.3
-------- -------- ---------------- --------
Total Expenses 900.0 1,009.3 1,118.3 1,258.7 11.5
-------- -------- ---------------- --------
Operating Income $323.9 $377.7 $453.6 $522.8 18.5 %
Equity in Income/(Loss) of Partnerships 0.0 0.0 0.0 0.0 NA
Other Income (net) 0.0 0.0 0.0 0.0 NA
-------- -------- ---------------- --------
Pre-Tax Income $323.9 $377.7 $453.6 $522.8 18.5 %
Taxes 0.0 0.0 0.0 0.0 NA
-------- -------- ---------------- --------
Net Income $323.9 $377.7 $453.6 $522.8 18.5 %
======== ======== ================ ========
Number of Basic Units (in millions) 112.6 113.0 113.4 113.8 (b) 0.4 %
Number of Diluted Units (in millions) 118.0 118.7 119.3 120.0 (b) 0.6
Basic Earnings per unit $2.88 $3.34 $4.00 $4.59 18.0 %
Diluted Earnings per unit 2.74 3.18 3.80 4.36 17.8
OPAD $403.9 $457.7 $518.7 $587.9 14.2 %
OPAD per Basic Unit 3.59 4.05 4.57 5.17 13.8
Distributions Declared $403.9 $457.7 $518.7 $587.9
Distributions/OPAD 100.0 % 100.0 % 100.0 % 100.0 %
Distributions Declared Per Unit $3.59 $4.05 $4.57 $5.17
--------
OPAD Margin 33.0 % 33.0 % 33.0 % 33.0 %
--------
Operating Margin 26.5 27.2 28.9 29.3
--------
Investment Advisory Fees / Average AUM 0.347 % 0.347 % 0.347 % 0.347 %
--------
Distribution and Servicing Fees / Avg. MF AUM 0.115 0.115 0.115 0.115
--------
Mutual Fund Assets / AUM 39.5 40.5 41.5 42.5
--------
Compensation and Benefits / Revenues 41.5 % 41.5 % 41.5 % 41.5 %
--------
Growth in General and Administrative Expense 13.0 13.0 13.0 13.0
--------
Commissions/Distribution and Servicing Fees 85.0 85.0 85.0 85.0
--------
</TABLE>
(a) Normalized for the LTM period ended September 30, 1999. Excludes
non-recurring charges of $15.7 million.
(b) Assumes full vesting of all units and options.
(c) Adjusted to reflect four quarters only. Form 10K dated 12/31/98 reflects
distributions declared for five quarters.
(d) Including non-recurring items, OPAD per unit was $2.67 and $2.77 for the LTM
period and 1999E, respectively.
31 [LOGO OF SOLOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Projected Income Statement - PIMCO Advisors Holdings L.P: Mgmt. Assumptions
<TABLE>
<CAPTION>
(Dollars in millions, except per unit data and as indicated)
Historical Actual (a) Projected
---------------- ---------- ---------------------------------------------------------
1997 1998 LTM - 9/99 1999 2000 2001 2002 2003 2004 CAGR 00-04
------- ------- ---------- -------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $66.0 $90.7 $98.8 $103.7 $117.4 $142.7 $165.8 $198.4 $227.8 18.0%
Expenses 0.0 14.5 15.5 16.5 18.1 20.5 23.1 26.1 29.5 12.9
------- ------- ---------- -------- -------- -------- -------- -------- --------
Net income $66.0 $76.1 $83.3 $87.2 $99.3 $122.2 $142.7 $172.3 $198.3 18.9
======= ======= ========== ======== ======== ======== ======== ======== ========
Average Units Outstanding 45.8 47.3 48.9 49.5 49.6 49.6 49.6 49.6 49.6 0.0%
Basic Net Income per Unit $1.44 $1.61 $1.70 $1.76 $2.00 $2.46 $2.88 $3.47 $4.00 18.9
Diluted Net Income per Unit 1.39 1.52 1.63 1.69 1.91 2.35 2.74 3.30 3.79
Total Distributions Declared $103.0 $113.5 $122.6 $134.6 $157.4 $177.8 $200.8 $226.7 13.9
Distributions Per Unit $2.18 $2.32 $2.48 $2.71 $3.17 $3.58 $4.05 $4.57
Revenues/PALP Net Income 55.8% 43.5% 44.0% 44.3% 44.2% 44.0% 43.9% 43.7% 43.6%
Expenses/Revenues 0.0 16.0 15.7 15.9 15.5 14.4 14.0 13.2 12.9
Tax on Gross Revenues (b) 3.9 3.7 3.8 3.8 3.8 3.8 3.8 3.8
</TABLE>
(a) Normalized to exclude PAH' share of non-recurring items.
(b) Gross Revenues refers to a proportionate share of PALP revenues.
32 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Discounted Cash Flow Analysis - PALP
- --------------------------------
Discount Rate 13.0 %
Terminal Value Multiple 9.0 x
- --------------------------------
<TABLE>
<CAPTION>
Projected ---------
-------------------------------------------------------------- CAGR
1999 2000 2001 2002 2003 2004 ('00-'04)
------ ------ ------ ------ ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Advisors Distributions $314.3 $345.6 $403.9 $457.7 $518.7 $587.9 14.2 %
Terminal Value 0.0 0.0 0.0 0.0 0.0 5,290.8
------ ------ ------ ------ ------ -------- ---------
Total Flows $314.3 $345.6 $403.9 $457.7 $518.7 $5,878.7 N/A
====== ====== ====== ====== ====== ======== =========
</TABLE>
- -----------------------------------------
Net Present Value (at 12/31/99): $4,448
Per Unit (a): $36.98
- -----------------------------------------
SENSITIVITY ANALYSIS:
- ---------------------
Multiple of 2004 Distributions
-----------------------------------------------------
7.0 x 8.0 x 9.0 x 10.0 x 11.0 x
---------- --------- --------- --------- --------
11.0 % $4,106 $4,455 $4,804 $5,153 $5,502
12.0 3,955 4,288 4,622 4,955 5,289
---------------------
Discount 13.0 3,810 4,129 4,448 4,767 5,086
Rate 14.0 3,673 3,978 4,283 4,588 4,894
---------------------
15.0 3,542 3,834 4,126 4,418 4,711
16.0 3,417 3,697 3,977 4,257 4,536
Per Unit:
Multiple of 2004 Distributions
-----------------------------------------------------
7.0 x 8.0 x 9.0 x 10.0 x 11.0 x
---------- --------- --------- --------- --------
11.0 % $34.14 $37.04 $39.94 $42.84 $45.74
12.0 32.88 35.65 38.43 41.20 43.97
---------------------
Discount 13.0 31.68 34.33 36.98 39.64 42.29
Rate 14.0 30.53 33.07 35.61 38.15 40.69
---------------------
15.0 29.45 31.88 34.31 36.74 39.17
16.0 28.41 30.74 33.06 35.39 37.72
(a) Based on 120.3 million diluted units.
[LOGO OF SALOMON SMITH BARNEY]
33
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Discounted Cash Flow Analysis - PAH
- ---------------------------------
Discount Rate 13.0%
Terminal Value Multiple 10.0x
- ---------------------------------
<TABLE>
<CAPTION>
Projected -------------
-------------------------------------------------------- CAGR
Per Unit: 1999 2000 2001 2002 2003 2004 (00-04)
------ ------ ------ ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
PAH Distributions $2.48 $2.71 $3.17 $3.58 $4.05 $4.57 13.9% (a)
Terminal Value 0.0 0.0 0.0 0.0 0.0 45.71
------ ------ ------ ------ ------ ------ -------------
Total Flows $2.48 $2.71 $3.17 $3.58 $4.05 $50.28 N/A
====== ====== ====== ====== ====== ====== =============
</TABLE>
- -----------------------------------------
Net Present Value (at 12/31/99): $37.14
Implied Equity Value (a) $4,468
- -----------------------------------------
SENSITIVITY ANALYSIS:
- ---------------------
Multiple of 2004 Distributions
------------------------------------------------
8.0 x 9.0 x 10.0 x 11.0 x 12.0 x
------- --------- --------- --------- ----------
11.0% $34.72 $37.43 $40.15 $42.86 $45.57
12.0 33.42 36.01 38.61 41.20 43.79
-------------------
Discount 13.0 32.18 34.66 37.14 39.62 42.11
Rate 14.0 31.00 33.38 35.75 38.13 40.50
-------------------
15.0 29.88 32.16 34.43 36.70 38.97
16.0 28.82 30.99 33.17 35.35 37.52
Implied PALP Equity Value (b):
Multiple of 2004 Distributions
------------------------------------------------
8.0 x 9.0 x 10.0 x 11.0 x 12.0 x
------- --------- --------- --------- ----------
11.0% $4,176 $4,502 $4,829 $5,155 $5,481
12.0 4,020 4,332 4,644 4,956 5,267
-------------------
Discount 13.0 3,871 4,169 4,468 4,766 5,064
Rate 14.0 3,729 4,015 4,300 4,586 4,871
-------------------
15.0 3,594 3,868 4,141 4,141 4,688
16.0 3,466 3,728 3,989 4,251 4,513
(a) IBES implies a growth rate of approximately 7%.
(b) Based on 120.3 million diluted units.
[LOGO OF SALOMON SMITH BARNEY]
34
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Valuation of Units Retained by Pacific Life
The base case assumes:
. a 15% discount rate for the variable component of PacLife units
. a 7% discount rate for the fixed component of PacLife units
. 7.5% annual growth in the variable component
. 14.0x Liquidity Multiple
<TABLE>
<CAPTION>
Three Year Horizon
- ------------------
1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Variable:
Payments $1.72 $1.85 $1.99 $2.13
Future Value 29.88
-------- -------- -------- --------
Total $1.72 $1.85 $1.99 $32.01
- ---------------------------------
NPV (at 12/31/99) $24.15
- ---------------------------------
Fixed:
Payments $1.05 $1.05 $1.05 $1.05
Future Value 14.70
-------- -------- -------- --------
Total $1.05 $1.05 $1.05 $15.75
- ---------------------------------
NPV (at 12/31/99) $14.76
- ---------------------------------
- --------------------------------
Total $38.91
- --------------------------------
</TABLE>
35 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Valuation of Units Retained by Pacific Life
PRESENT VALUE PER UNIT ASSUMING A DISCOUNT RATE OF 11.0%
<TABLE>
<CAPTION>
Annual Growth of Variable Component
-------------------------------------------------------------------------------------------
2.5% 5.0% 7.5% 10.0% 12.5% 15.0% 17.5% 20.0%
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $38.51 $39.09 $39.67 $40.26 $40.84 $41.42 $42.00 $42.58
2001 38.30 39.42 40.57 41.75 42.95 44.18 45.43 46.71
Exit Year 2002 38.10 39.73 41.44 43.22 45.09 47.03 49.06 51.18
2003 37.91 40.02 42.27 44.68 47.25 49.99 52.55 52.99
2004 37.74 40.29 43.09 46.13 49.45 51.23 51.89 52.59
</TABLE>
PRESENT VALUE PER UNIT ASSUMING A DISCOUNT RATE OF 13.0%
<TABLE>
<CAPTION>
Annual Growth of Variable Component
-------------------------------------------------------------------------------------------
2.5% 5.0% 7.5% 10.0% 12.5% 15.0% 17.5% 20.0%
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $38.09 $38.66 $39.23 $39.80 $40.37 $40.94 $41.51 $42.08
2001 37.50 38.58 39.69 40.83 41.99 43.17 44.39 45.62
Exit Year 2002 36.96 38.51 40.13 41.82 43.60 45.44 47.37 49.38
2003 36.47 38.44 40.54 42.79 45.19 47.75 50.14 50.56
2004 36.03 38.37 40.94 43.74 46.78 48.43 49.04 49.70
</TABLE>
PRESENT VALUE PER UNIT ASSUMING A DISCOUNT RATE OF 15.0%
<TABLE>
<CAPTION>
Annual Growth of Variable Component
-------------------------------------------------------------------------------------------
2.5% 5.0% 7.5% 10.0% 12.5% 15.0% 17.5% 20.0%
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $37.69 $38.25 $38.81 $39.37 $39.93 $40.49 $41.05 $41.61
2001 36.74 37.79 38.86 39.96 41.08 42.22 43.39 44.59
-------------------------------
Exit Year 2002 35.90 37.37 38.91 40.52 42.20 43.96 45.79 47.70
-------------------------------
2003 35.15 36.99 38.96 41.06 43.30 45.69 47.92 48.32
2004 34.48 36.64 39.00 41.57 44.38 45.90 46.47 47.08
</TABLE>
36 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Valuation of Units Retained by Pacific Life
PRESENT VALUE PER UNIT ASSUMING A DISCOUNT RATE OF 17.0%
<TABLE>
<CAPTION>
Annual Growth of Variable Component
-------------------------------------------------------------------------------------------
2.5% 5.0% 7.5% 10.0% 12.5% 15.0% 17.5% 20.0%
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $37.29 $37.84 $38.40 $38.95 $39.50 $40.05 $40.60 $41.15
2001 36.02 37.03 38.07 39.13 40.21 41.32 42.45 43.61
Exit Year 2002 34.90 36.30 37.77 39.30 40.90 42.57 44.31 46.13
2003 33.93 35.65 37.50 39.47 41.56 43.80 45.89 46.27
2004 33.07 35.07 37.24 39.62 42.20 43.61 44.15 44.72
</TABLE>
PRESENT VALUE PER UNIT ASSUMING A DISCOUNT RATE OF 19.0%
<TABLE>
<CAPTION>
Annual Growth of Variable Component
-------------------------------------------------------------------------------------------
2.5% 5.0% 7.5% 10.0% 12.5% 15.0% 17.5% 20.0%
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $36.91 $37.46 $38.00 $38.54 $39.08 $39.62 $40.16 $40.70
2001 35.34 36.32 37.32 38.34 39.39 40.46 41.56 42.67
Exit Year 2002 33.98 35.31 36.70 38.16 39.69 41.28 42.93 44.66
2003 32.81 34.42 36.15 38.00 39.96 42.06 44.02 44.38
2004 31.80 33.64 35.65 37.84 40.23 41.53 42.04 42.58
</TABLE>
37 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Comparison of Transaction Retention Packages
<TABLE>
<CAPTION>
Retention as a % Retention as a %
of Purchase Price of Total Consideration
---------------------- -------------------------
Number
of Deals Nominal NPV Nominal NPV
<S> <C> <C> <C> <C> <C>
PIMCO Advisors Holdings (a)
No Performance 11.7% 9.2% 10.5% 8.4%
100% Performance 14.3 11.4 12.5 10.2
Broker/Dealer
All Deals 10
High 103.3 96.3 50.8 49.0
Mean 18.2 16.9 12.1 11.4
Median 9.4 8.8 8.6 8.1
1998 - 1999 Only 5
High 103.3 96.3 50.8 49.0
Mean 30.0 28.1 18.5 17.8
Median 13.9 12.3 12.2 11.0
Asset Managers 3
High 17.7 17.7 15.1 15.1
Mean 8.8 8.8 7.7 7.7
Median 8.6 8.6 7.9 7.9
</TABLE>
Source: SEC filings and Salomon Smith Barney estimates
(a) Assumes 100% purchase at $38.75 per Unit.
38
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
APPENDIX
[LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
A. Comparable Company Analysis
[LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Public Market Comparables -- C-Corporations
Dollars in millions, except per share amounts.
<TABLE>
<CAPTION>
52 Week Firm Value
Stock Price --------------- Div. Mkt. Firm as % of
10/28/99 High Low Yield Cap. Value (1) AUM AUM
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PIMCO Advisors - Normalized (4) $24.76 38.00 26.50 8.9 2,806 2,835 254,600 1.1%
PIMCO Advisors - Current (4) 34.13 38.00 26.50 6.4 3,868 3,896 254,600 1.5
C-Corporations
- --------------
Affiliated Managers Group, Inc. $25.00 $33.94 $22.00 -- 582 784 $70,900 1.1%
AMVESCAP PLC (5) 40.88 56.50 33.75 2.4 5,494 7,515 295,900 2.5
BlackRock Inc. 14.13 15.25 12.50 -- 901 1,096 141,801 0.8
Eaton Vance Corporation 33.81 40.00 18.69 0.9 1,213 1,167 39,000 3.0
Federated Investors, Inc. 17.75 19.81 15.06 0.9 1,496 1,735 117,334 1.5
Franklin Resources, Inc. 32.94 45.63 27.00 2.1 8,305 7,958 227,700 3.5
Gabelli Asset Management Inc. 14.81 18.75 13.06 -- 442 410 18,800 2.2
John Nuveen 35.56 43.69 34.38 2.9 1,119 1,111 59,538 1.9
Neuberger Berman Inc. 28.75 31.63 23.88 -- 1,438 1,433 56,764 2.5
Phoenix Investment Partners 8.50 10.25 6.94 2.8 373 420 59,494 0.7
T. Rowe Price Associates, Inc. 32.56 43.25 25.88 2.5 3,953 3,670 159,200 2.3
United Asset Management Corp. 20.63 26.50 17.38 3.9 1,215 2,002 205,900 1.0
Waddell & Reed Financial Inc. 23.50 28.00 18.56 2.3 1,399 1,348 29,600 4.6
--------------------------------
High 4.6%
Mean 2.1
Median 2.2
Low 0.7
--------------------------------
PALP Data (6): $254,556
Implied PALP Equity
Valuation:
--------------------------------
High $11,498
Mean 5,290
Median 5,458
Low 1,705
--------------------------------
<CAPTION>
Firm Value
as a Multiple of: Market Cap. as a Multiple of:
---------------------- ---------------------------------------------------
Calendar:
LTM LTM LTM LTM Cash -------------------- Long Term
Rev. EBITDA Pre-Tax Net.Inc. Flow(2) 99EE(3) 00EE(3) Growth Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PIMCO Advisors - Normalized (4) 3.1x 9.6x 12.9x 13.0x 10.3x 12.1x 10.0x 14.0%
PIMCO Advisors - Current (4) 4.3 13.2 17.8 17.8 14.2 16.7 13.8 14.0
C-Corporations
- --------------
Affiliated Managers Group, Inc. 2.7x 5.7x 10.7x 18.1x 10.5x 14.7x 12.0x 21.3x
AMVESCAP PLC (5) 4.8 15.5 19.1 44.2 22.8 17.5 14.5 19.5
BlackRock Inc. 2.7 9.3 9.4 17.3 14.6 15.0 12.6 N/A
Eaton Vance Corporation 3.6 7.0 11.8 19.0 9.7 21.2 12.0 13.0
Federated Investors, Inc. 3.1 6.6 8.8 13.9 9.3 13.1 11.1 16.0
Franklin Resources, Inc. 3.4 10.4 13.6 17.9 12.9 14.4 12.5 14.0
Gabelli Asset Management Inc. 2.7 7.4 9.8 16.1 16.1 10.7 9.6 15.0
John Nuveen 3.4 6.7 7.4 12.2 10.6 12.7 11.7 10.0
Neuberger Berman Inc. 2.5 5.5 5.8 10.2 9.3 10.8 10.0 N/A
Phoenix Investment Partners 1.7 4.5 8.6 17.8 7.2 14.7 12.1 12.5
T. Rowe Price Associates, Inc. 3.9 10.6 12.6 20.3 20.3 18.7 17.1 15.0
United Asset Management Corp. 2.2 7.0 10.8 18.9 6.9 19.8 17.7 11.0
Waddell & Reed Financial Inc. 4.3 8.9 9.9 15.9 15.1 15.0 12.4 14.5
- ------------------------------------------------------------------------------------------------------------------------------------
High 4.8x 15.5x 19.1x 44.2x 22.8x 21.2x 17.7x 21.3%
Mean 3.2 8.1 10.6 18.6 12.7 15.3 12.7 14.7
Median 3.1 7.0 9.9 17.8 10.6 14.7 12.1 14.5
Low 1.7 4.5 5.8 10.2 6.9 10.7 9.6 10.0
- ------------------------------------------------------------------------------------------------------------------------------------
PALP Data (6): $915 $272 $217 $128 $183 $145 $176
Implied PALP Equity
Valuation:
- ------------------------------------------------------------------------------------------------------------------------------------
High $4,307 $4,139 $4,141 $5,649 $4,168 $3,089 $3,110
Mean 2,791 2,106 2,311 2,377 2,323 2,220 2,236
Medium 2,719 1,807 2,148 2,279 1,942 2,138 2,133
Low 1,417 1,128 1,270 1,298 1,255 1,561 1,679
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NB Financial data excludes all non-recurring and extraordinary items.
(1) Represents market capitalization plus debt and minority interest less cash.
(2) Represents Net Income plus Depreciation and Amortization.
(3) Earnings estimates represent IBES median estimates from IDD.
(4) Data for PIMCO Advisors. Multiples driven by pricing for PIMCO Advisors
Holdings, LP.
(5) Market data represents that of the American Depository Shares (which each
represent 5 ordinary shares). Financial data is adjusted to reflect US GAAP.
(6) PIMCO Advisors earnings and cash flow numbers taxed at a tax rate of 41%.
39 [LOGO OF SALOMON SMITH BARNEY]
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Public Market Comparables - Selected List
Dollars in millions, except share amounts.
<TABLE>
<CAPTION>
52 Week
Stock Price ------------- Div. Mkt. Firm
10/28/1999 High Low Yield Cap. Value (1) AUM
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PIMCO Advisors - Normalized (4) $24.76 38.00 26.50 8.9 $2,806 $2,835 $254,600
PIMCO Advisors - Current (4) 34.13 38.00 26.50 6.4 3,868 3,896 254,600
Selected C-Corporations
- -----------------------
BlackRock Inc. $14.13 15.25 12.50 $901 $1,096 $141,801
Federated Investors, Inc. 17.75 19.81 15.06 0.9 1,496 1,735 117,334
Franklin Resources, Inc. 32.94 45.63 27.00 2.1 8,305 7,958 227,700
Selected Fast Growing Companies
- -------------------------------
BlackRock Inc. $14.13 15.25 12.50 $901 $1,096 $141,801
T. Rowe Price Associates, Inc. 32.56 43.25 25.88 2.5 3,953 3,670 159,200
Kansas City Southern Industries 46.06 66.44 37.50 0.3 5,089 5,795 161,700
</TABLE>
<TABLE>
<CAPTION>
Firm Value as a Multiple of
Firm Value ------------------------------------------------------------
as % of LTM LTM LTM LTM
AUM Rev. EBITDA Pre-Tax Net Inc.
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PIMCO Advisors - Normalized (4) 1.1% 3.1x 9.6x 12.9% 13.0x
PIMCO Advisors - Current (4) 1.5 4.3 13.2 17.8 17.8
Selected C-Corporations
- -----------------------
BlackRock Inc. 0.8% 2.7x 9.3x 9.4x 17.3x
Federated Investors, Inc. 1.5 3.1 6.6 8.8 13.9
Franklin Resources, Inc. 3.5 3.4 10.4 13.6 17.9
- -----------------------------------------------------------------------------------------------------------------
High 3.5% 3.4x 10.4x 13.6x 17.9%
Mean 1.9 3.1 8.7 10.6 16.3
Median 1.5 3.1 9.3 9.4 17.3
Low 0.8 2.7 6.6 8.8 13.9
- -----------------------------------------------------------------------------------------------------------------
Selected Fast Growing Companies
- -------------------------------
BlackRock Inc. 0.8% 2.7x 93x 9.4x 17.3x
T. Rowe Price Associates, Inc. 2.3 3.9 10.6 12.6 20.3
Kansas City Southern Industries 3.6 3.7 9.6 12.9 20.1
- -----------------------------------------------------------------------------------------------------------------
High 3.6% 3.9x 10.6x 12.9% 20.3x
Mean 2.2 3.5 9.8 11.6 19.2
Median 2.3 3.7 9.6 12.6 20.1
Low 0.8 2.7 9.3 9.4 17.3
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Mean 2.1% 3.3x 9.3x 11.1x 17.8x
- -----------------------------------------------------------------------------------------------------------------
PALP Data (5): $254,556 $915 $272 $217 $128
Implied PALP Equity Valuation:
- -----------------------------------------------------------------------------------------------------------------
High $8,803 $3,020 $2,728 $2,958 $2,283
Mean 5,171 2,894 2,431 $2,414 2,273
Median 1,875 2,415 2,429 2,044 2,279
Low 1,705 1,417 1,128 1,864 2,208
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Market Cap as a Multiple of:
-------------------------------------------------
Calendar:
Cash ----------------- Long Term
Flow (2) 99EE (3) OOEE (3) Growth Rate
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PIMCO Advisors - Normalized (4) 10.3x 12.lx l0.0% 14.0%
PIMCO Advisors - Current (4) 14.2 16.7 13.8 14.0
Selected C-Corporations
- -----------------------
BlackRock Inc. 14.6 15.0x 12.6x N/A
Federated Investors, Inc. 9.3 13.1 11.1 16.0
Franklin Resources Inc. 12.9 14.4 12.5 14.0
- -------------------------------------------------------------------------------------------------
High 14.6x 15.0x 12.6x 16.0%
Mean 12.3 14.2 12.1 15.0
Median 12.9 14.4 12.5 15.0
Low 9.3 13.1 11.1 14.0
- -------------------------------------------------------------------------------------------------
Selected Fast Growing Companies
- -------------------------------
BlackRock Inc. 14.6x 15.0x 12.6x N/A
T. Rowe Price Associates, Inc. 20.3 18.7 17.1 15.0
Kansas City Southern Industries 15.2 16.6 14.0 14.3
- -------------------------------------------------------------------------------------------------
High 20.3x 18.7x 17.1x 15.0%
Mean 16.7 16.8 14.6 14.6
Median 15.2 16.6 14.0 14.6
Low 14.6 15.0 12.6 14.3
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Mean 14.5x 15.5x 13.3x 14.8%
- -------------------------------------------------------------------------------------------------
PALP Data (5): $183 $145 $176
Implied PALP Equity Valuation:
- -------------------------------------------------------------------------------------------------
High $2,666 $2,185 $2,216
Mean 2,646 2,253 2,341
Median 2,363 2,131 2,201
Low 1,320 2,096 2,133
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents market capitalization plus debt and minority interest less cash.
(2) Represents Net Income plus Depreciation and Amortization.
(3) Earnings estimates represent IBES median estimates from IDD.
(4) Data for PIMCO Advisors. Multiples driven by pricing for PIMCO Advisors
Holdings, LP.
(5) PIMCO Advisors earnings and cash flow numbers taxed at a corporate tax rate
of 41%.
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Selected List - AUM Breakdown
<TABLE>
<CAPTION>
Assets Under Management
----------------------------------------------------------------
Client Type Asset Type
--------------------- -----------------------------------------
Retail Inst'I Equity Fl Dom. Int'l
--------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PIMCO Advisors 37.5% 62.5% 36.2% 63.8% 95.0% 5.0%
BlackRock Inc. 41.5 58.5 11.0 57.8 57.6 12.7
Federated Investors, Inc. 96.2 3.9 14.0 86.0 98.0 2.0
Franklin Resources, Inc. 79.0 21.0 62.5 37.5 53.5 46.5
---------------------------------------------------------------------------------------
Mean 72.2% 27.8% 29.2% 60.4% 69.7% 20.4%
Median 79.0 21.0 14.0 57.8 57.6 12.7
---------------------------------------------------------------------------------------
BlackRock Inc. 41.5 58.5 11.0 57.8 57.6 12.7
T. Rowe Price Associates, Inc. 64.0 36.0 73.0 27.0 61.7 38.3
Kansas City Southern Industries 87.0 13.0 90.0 10.0 77.0 23.0
---------------------------------------------------------------------------------------
Mean 64.2% 35.8% 58.0% 31.6% 65.4% 24.7%
Median 64.0 36.0 73.0 27.0 61.7 23.0
---------------------------------------------------------------------------------------
Alliance Capital Management, L.P. 43.9 56.1 58.0 42.0 86.0 14.0
Nvest 27.9 72.1 48.5 51.5 92.0 8.0
---------------------------------------------------------------------------------------
Mean 35.9% 64.1% 53.3% 46.7% 89.0% 11.0%
Median 35.9 64.1 53.3 46.7 89.0 11.0
---------------------------------------------------------------------------------------
</TABLE>
[LOGO OF SALOMON SMITH BARNEY]
41
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Public Market Comparables - MLPs
<TABLE>
<CAPTION>
Dollars in millions, except per share amounts.
Firm Value Firm Value as a Multiple of:
----------------------------
Stock Price 52 Week Div. Mkt. Firm as % of LTM LTM
-------------
10/28/1999 High Low Yield Cap. Value(1) AUM AUM Rev. EBITDA
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PIMCO Advisors - Normalized (4) $24.76 38.00 26.50 8.9 $2,806 $2,835 254,600 1.1% 3.1x 9.6x
PIMCO Advisors - Current (4) 34.13 38.00 26.50 6.4 3,868 3,896 254,600 1.5 4.3 13.2
Master Limited Partnerships
- ---------------------------
Alliance Capital Management, L.P. 26.13 33.44 24.13 8.3 $4,471 $4,741 321,000 1.5 3.1 8.5
Nvest 19.63 29.50 18.75 15.7 781 1,021 136,000 0.8 1.6 5.6
----------------------------------------------------------------------
High 1.5% 3.1x 8.5x
Mean 1.1 2.3 7.1
Median 1.1 2.3 7.1
Low 0.8 1.6 5.6
----------------------------------------------------------------------
PALP Data: $254,556 $915 $272
Implied PALP Equity Valuation:
----------------------------------------------------------------------
High $3,666 $2,772 $2,226
Mean 2,743 2,051 1,828
Median 2,743 2,051 1,828
Low 1,819 1,331 1,429
----------------------------------------------------------------------
<CAPTION>
Market Cap. as a Multiple of:
----------------------------------------------
LTM LTM Cash Calendar Long Terms
----------------
Pre-Tax Net-Inc. Flow(2) 99EE(3) 00EE(3) Growth Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PIMCO Advisors - Normalized (4) 12.9x 13.Ox 10.3x 12.1x lO.Ox 14.0%
PIMCO Advisors - Current (4) 17.8 17.8 14.2 16.7 13.8 14.0
Master Limited Partnerships
- ---------------------------
Alliance Capital Management, L.P. 11.0 13.0 9.3 11.6 10.3 14.8
Nvest 6.9 7.3 5.0 10.3 9.4 10.0
--------------------------------------------------------------------------------------------------------
High 11.0x 13.0x 9.3x 11.6x 10.3x 14.8%
Mean 9.0 111.1 7.1 10.9 9.9 12.4
Median 9.0 10.1 7.1 10.9 9.9 12.4
Low 6.9 7.3 5.0 10.3 9.4 10.0
--------------------------------------------------------------------------------------------------------
PALP Data: $217 $217 $272 $246 $298
Implied PALP Equity Valuation:
-------------------------------------------------------------------------------------
High $2,392 $2,821 $2,517 $2,849 $3,081
Mean 1,951 2,198 1,938 2,697 2,938
Median 1,951 2,198 1,938 2,697 2,938
Low 1,510 1,574 1,358 2,545 2,796
-------------------------------------------------------------------------------------
</TABLE>
(1) Represents market capitalization plus debt and minority interests less
cash.
(2) Represents Net Income plus Depreciation and Amortization.
(3) Earnings estimates represent IBES median estimates from IDD.
(4) Data for PIMCO Advisors. Multiples driven by pricing for PIMCO Advisors
Holdings, LP.
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42
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
B. Precedent Transactions
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<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Precedent Transactions
<TABLE>
<CAPTION>
Dollars in Millions
Announce % Mut. % Sep. % % Fixed % Money Purchase
Date Acquiror Target AUM Fund Accts Equity Income Market Price
- -------- ------------------- ------------------------ -------- ------ ------- ------ ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
02/15/99 Credit Suisse Warburg Pincus AM $22,000 45.0% 55.0% 85.0% 15.0% 0.0% $602.2
08/10/98 Northwestern Mutual Frank Russell Company 42,000 0.0 100.0 67.0 23.0 10.0 1,200.0
05/08/98 Robeco Groep Weiss Peck & Greer 16,000 8.0 92.0 35.0 65.0 0.0 509.1
08/15/97 Fleet Columbia Mgmt. Company 22,000 30.0 70.0 62.0 33.0 5.0 550.0
11/19/97 Merrill Lynch Mercury Asset Mgmt. 176,614 12.0 88.0 75.0 25.0 0.0 5,100.0
06/27/97 Zurich Scudder, Stevens & Clark 177,000 33.0 67.0 42.0 58.0 0.0 1,600.0
02/14/97 PIMCO Advisors Oppenheimer Capital 16,000 13.0 87.0 82.0 13.0 5.0 265.1
11/04/96 INVESCO PLC AIM Mgmt. Group 57,000 74.0 26.0 68.0 7.0 25.0 1,690.0
07/24/96 LGT Chancellor Capital Mgmt. 33,000 0.0 100.0 62.0 33.0 5.0 300.0
06/24/96 Morgan Stanley Van Kampen American 57,123 87.0 13.0 35.0 33.0 31.0 1,175.0
12/15/95 Dresdner Bank RCM Capital Mgmt. 26,000 6.0 94.0 62.0 38.0 0.0 300.0
06/29/95 Morgan Stanley Miller Anderson & Sherard 33,000 20.0 80.0 40.0 59.0 0.5 350.0
06/17/94 PNC Bank BlackRock Financial 23,400 35.0 65.0 0.0 100.0 0.0 240.0
<CAPTION>
Dollars in Millions
Price as a Price as a Multiple of:
------------------------------------------------
Announce Percent of LTM LTM LTM LTM
Date Acquiror Target AUM Revenues EBITDA Pretax Inc. Net Inc.
- -------- ------------------- ------------------------ ---------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
02/15/99 Credit Suisse Warburg Pincus AM 2.74% na na na na
08/10/98 Northwestern Mutual Frank Russell Company 2.86 3.1x 20.Ox na 47.8x
05/08/98 Robeco Groep Weiss Peck & Greer 3.18 na na na na
08/15/97 Fleet Columbia Mgmt. Company 2.50 na na 8.1x na
11/19/97 Merrill Lynch Mercury Asset Mgmt. 2.89 8.2x 17.2x 18.0x 25.4x
06/27/97 Zurich Scudder, Stevens & Clark 1.37 3.3x na na na
02/14/97 PIMCO Advisors Oppenheimer Capital 1.66 4.5x 10.3x 10.6x 17.8x
11/04/96 INVESCO PLC AIM Mgmt. Group 2.96 5.1x 10.5x 12.8x 20.4x
07/24/96 LGT Chancellor Capital Mgmt. 0.91 na na na na
06/24/96 Morgan Stanley Van Kampen American 2.06 3.8x lO.Ox 12.8x 21.3x
12/15/95 Dresdner Bank RCM Capital Mgmt. 1.15 3.5x 11.2x 13.7x 22.8x
06/29/95 Morgan Stanley Miller Anderson & Sherard 1.06 3.5x na 7.8x na
06/17/94 PNC Bank BlackRock Financial 1.03 4.3x 8.2x 8.6x 14.8x
---------------------------------------------------------------------
High 3.18% 8.2x 20.0x 18.0x 47.8x
Mean 2.03 4.4 12.5 11.6 24.3
Median 2.06 3.8 10.5 11.7 21.3
Low 0.91 3.1 8.2 7.8 14.8
---------------------------------------------------------------------
PALP Data: $256,153 $944 $280 $225 $133
Implied PALP Valuation
---------------------------------------------------------------------
High $8,180 $7,772 $5,643 $4,056 $6,339
Mean 5,224 4,159 3,537 2,603 3,227
Median 5.299 3,589 2,985 2,643 2,823
Low 2,358 2,957 2,334 1,753 1,967
---------------------------------------------------------------------
</TABLE>
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43
<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
C. Weighted Average Cost of Capital Analysis
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<PAGE>
PROJECT APOSTLE - PRESENTATION TO THE GENERAL PARTNERS
Weighted Average Cost of Capital Analysis
<TABLE>
<CAPTION>
Reported Betas
------------------------------------------------------------------------------------------
Selected Comparable C-Corporations Bloomberg (a) IDD (a) S&P Historical Barra Projected Barra Median
- ---------------------------------- --------------- ---------- ------ ---------------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Franklin Resources, Inc. 1.52 1.45 1.70 1.71 1.39 1.52
Federated Investors, Inc. 0.91 N/A 0.97 1.29 1.25 0.97
T. Rowe Price Associates, Inc. 1.59 1.58 1.16 1.17 1.28 1.28
- ------------------------------------------------------------------------------------------------------------------------------
High 1.59 1.58 1.70 1.71 1.39 1.52
Median 1.52 1.52 1.16 1.29 1.28 1.28
Low 0.91 1.45 0.97 1.17 1.25 0.97
Median Discount Rate -- Selected Comparable C-Corporations (b) 13.83%
- ------------------------------------------------------------------------------------------------------------------------------
Other Asset Management C-Corporations
- -------------------------------------
Affiliated Managers Group, Inc. 1.26 N/A N/A 2.64 1.42 1.34
AMVESCAP PLC 1.27 1.14 N/A 1.16 1.28 1.18
Phoenix Investment Partners 0.74 0.76 1.27 1.25 1.14 0.76
John Nuveen 1.62 0.57 0.43 0.44 0.78 0.44
Eaton Vance Corporation 0.93 0.80 0.66 0.72 1.20 0.72
Gabelli Asset Management, Inc. 0.60 N/A N/A N/A 1.12 0.60
United Asset Management Corp. 0.86 0.85 1.00 1.02 1.16 0.86
Waddell & Reed Financial Inc. 0.99 N/A N/A 1.66 1.24 1.11
- ------------------------------------------------------------------------------------------------------------------------------
High 1.27 1.14 1.27 2.64 1.42 1.34
Median 0.90 0.80 0.83 1.16 1.18 0.81
Low 0.60 0.57 0.43 0.44 0.78 0.44
Median Discount Rate -- All Asset Management C-Corporations (b) 11.01%
- ------------------------------------------------------------------------------------------------------------------------------
Selected Master Limited Partnerships
- ------------------------------------
Alliance Capital Management, L.P. 0.95 0.88 1.14 1.10 1.07 0.95
Nvest 0.81 0.74 N/A 0.82 0.61 0.68
- ------------------------------------------------------------------------------------------------------------------------------
High 0.95 0.88 1.14 1.10 1.07 0.95
Median 0.88 0.81 1.14 0.96 0.84 0.81
Low 0.81 0.74 1.14 0.82 0.61 0.68
Median Discount Rate -- Selected Master Limited Partnerships (b) 11.03%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Based on adjusted Beta calculations for the two years ended September 28,
1999.
(b) Discount rate calculated using an equity risk premium of 6% and a 30-year
risk free rate of 6.15% as of October 28, 1999. Equity risk premium based
on Salomon Smith Barney Research.
44 [LOGO OF SALOMON SMITH BARNEY]
