<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ___________________
Commission File Number 1-09772
PIMCO ADVISORS L.P.
(Exact name of registrant as specified in its charter)
Delaware 06-1349805
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
840 Newport Center Drive
Newport Beach, CA 92660
(Address of principal executive offices)
(Zip Code)
(714) 717-7022
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.
Yes No
----- -----
As of March 31, 1995, 13,398,764 publicly traded Class A units of limited
partnership interest and 26,619,391 privately-held Class A units of limited
partnership interest were issued and outstanding. There were 800,000 units of
general partner interest issued and outstanding at March 31, 1995. In
addition, there were 32,960,826 privately-held Class B units of limited
partnership interest issued and outstanding at March 31, 1995.
1
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PIMCO ADVISORS L.P.
INDEX
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of
March 31, 1995 and December 31, 1994 3
Consolidated Statements of Operations for the three months
ended March 31, 1995 and 1994 4
Consolidated Statements of Cash Flows for the three months
ended March 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-11
PART II OTHER INFORMATION
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
2
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PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
PIMCO Advisors L.P. and Subsidiaries
Consolidated Statements of Financial Condition
As of March 31, 1995 and December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C>
Assets
------
Current Assets:
Cash and cash equivalents $ 60,589,745 $ 55,003,751
Fees receivable 42,826,322 29,134,608
Other assets - current 6,859,016 5,281,721
------------ ------------
Total current assets 110,275,083 89,420,080
Investments in limited partnerships 2,614,382 2,094,029
Fixed assets, net of accumulated
depreciation 9,399,589 7,898,697
Intangible assets, net of accumulated
amortization 270,838,668 279,840,951
Other assets - non current 405,597 454,390
------------ ------------
Total assets $393,533,319 $379,708,147
============ ============
Liabilities and Partners' Capital
---------------------------------
Current Liabilities:
Accounts payable, accrued expenses and
other current liabilities $ 19,460,837 $ 19,547,610
Accrued compensation 26,061,760 13,387,340
------------ ------------
Total current liabilities 45,522,597 32,934,950
Other liabilities - non current 459,520 1,244,423
------------ ------------
Total liabilities 45,982,117 34,179,373
------------ ------------
Partners' Capital:
General Partner (800,000 units issued
and outstanding) 3,880,468 3,863,283
Class A Limited Partners (40,018,155
units issued and outstanding) 249,233,715 248,374,088
Class B Limited Partners (32,960,826
units issued and outstanding) 115,146,730 115,177,051
Unamortized compensation (20,709,711) (21,885,648)
------------ ------------
Total Partners' capital 347,551,202 345,528,774
------------ ------------
Total liabilities and Partners' capital $393,533,319 $379,708,147
============ ============
</TABLE>
See accompanying notes.
3
<PAGE>
PIMCO Advisors L.P. and Subsidiaries
Consolidated Statements of Operations
For the three months ended March 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
Revenues:
Investment advisory fees:
Private accounts $47,282,482 $37,274,662
Proprietary Funds 14,995,731 6,227,848
Distribution and servicing fees 8,476,101
Other 363,949
-------------- --------------
Total revenues 71,118,263 43,502,510
-------------- --------------
Expenses:
Compensation and benefits 35,094,262 29,925,784
Amortization of intangibles, Restricted Unit and Option Plans 10,178,220
Commissions 6,242,478
General and administrative 2,309,389 995,106
Occupancy and equipment 1,906,719 901,361
Other 3,010,410 2,746,365
-------------- -------------
Total expenses 58,741,478 34,568,616
-------------- --------------
Net operating income 12,376,785 8,933,894
Equity in income (loss) of limited partnerships 48,287 (81,350)
Other income 758,592 25,479
-------------- --------------
Net income before taxes 13,183,664 8,878,023
Provision for taxes 43,650 3,894,164
-------------- --------------
Net income $13,140,014 $4,983,859
============== ==============
Net income allocated to:
General Partner $ 207,988
Class A Limited Partnership Units 10,404,144
Class B Limited Partnership Units 2,527,882
--------------
Total $13,140,014
==============
Net income per unit:
General Partner and Class A
Limited Partnership unit $0.26
==============
Class B Limited Partnership unit $0.07
==============
Cash distributions paid per unit:
General Partner and Class A
Limited Partnership unit $0.239
==============
Class B Limited Partnership unit $0.077
==============
</TABLE>
See accompanying notes.
4
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PIMCO Advisors L.P. and Subsidiaries
Consolidated Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 13,140,014 $ 4,983,859
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization, Restricted Unit
and Option Plans 10,788,408 505,924
Equity in (income) loss of limited
partnerships (48,287) 81,350
Deferred income taxes (2,489,290)
Change in operating assets and liabilities:
Fees receivable (13,691,714) 3,786,470
Other assets (1,594,422) (450,017)
Accounts payable, accrued expenses and other
current liabilities (86,773) (12,759,281)
Accrued compensation 12,674,420 10,512,883
Other liabilities (784,903)
Other 523 70,627
-------------- --------------
Net cash provided by operating activities 20,397,266 4,242,525
-------------- --------------
Cash flows from investing activities:
Purchases of fixed assets (2,124,793) (274,338)
Proceeds from sale of fixed assets 13,200
Notes receivable advances (106,156) (6,550)
Investments in limited partnerships (300,000)
Investments in Proprietary Funds (17,894,430)
Proceeds from sale of investments in
Proprietary Funds 17,956,426
-------------- --------------
Net cash used in investing activities (2,517,749) (218,892)
-------------- --------------
Cash flows from financing activities:
Cash distributions paid (12,293,523)
Dividends (3,200,000)
-------------- --------------
Net cash used in financing activities (12,293,523) (3,200,000)
-------------- --------------
Net increase in cash and cash equivalents 5,585,994 823,633
Cash and cash equivalents, beginning of period 55,003,751 9,299,366
-------------- --------------
Cash and cash equivalents, end of period $ 60,589,745 $ 10,122,999
============== ==============
Supplemental schedule of non-cash operating
activities:
Increase in other assets and long-term
compensation liabilities relating to a
subsidiary's long-term compensation plan $ 445,358
==============
Supplemental schedule of non-cash financing
activities:
Non-cash dividend to affiliate $ 600,000
==============
Supplemental disclosures:
Taxes paid $ 61,200 $ 580,519
============== ==============
Interest paid $ 46,217
==============
</TABLE>
See accompanying notes.
5
<PAGE>
PIMCO Advisors L.P.
Notes to Consolidated Financial Statements
(Unaudited)
_______________________
1) The condensed consolidated financial statements included herein have
been prepared without audit in accordance with the instructions to Form 10-Q
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of PIMCO Partners, G.P., the General Partner, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of (a) the financial condition at March 31, 1995 and December 31, 1994, (b) the
results of operations for the three-month periods ended March 31, 1995 and 1994,
and (c) the cash flows for the three-month periods ended March 31, 1995 and
1994, for PIMCO Advisors L.P. ("PA") have been made. It is suggested that these
unaudited condensed consolidated financial statements be read in conjunction
with the consolidated financial statements and notes included in PA's Annual
Report on Form 10-K for the year ended December 31, 1994. Certain
reclassifications have been made to conform the prior period presentation to the
current period presentation. These interim results may not be indicative of the
results which may occur in the future. (See Item 2 - Management's Discussion and
Analysis of Financial Condition and Results of Operations - Results of
Operations).
2) Earnings per unit are computed under the two-class method and are based on
the weighted average number of units outstanding, assuming the exercise of
dilutive unit options. See Exhibit 11 for the computation of the weighted
average number of units outstanding during the periods.
Distributions are paid quarterly, on the units outstanding, in arrears to
unitholders of record as of the thirtieth day of the first month following each
quarter-end.
6
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PIMCO Advisors L.P. and subsidiaries ("PA") was formed on November 15, 1994
("Date of Consolidation"), when Pacific Financial Asset Management Group
("PFAMCo Group") merged (the "Consolidation") certain of its investment
management businesses and substantially all of its assets into Thomson Advisory
Group L.P. ("TAG"). The PFAMCo Group comprised the operations of Pacific
Financial Asset Management Corporation ("PFAMCo"), an indirect wholly-owned
subsidiary of Pacific Mutual Life Insurance Company ("Pacific Mutual"), and
certain of its wholly-owned investment management subsidiaries. The businesses
of PFAMCo Group contributed to PA were then contributed to newly formed
subsidiaries of PA. The investment advisor subsidiaries are as follows:
. Pacific Investment Management Company ("Pacific Investment Management")
and its wholly-owned subsidiary, StocksPLUS Management, Inc.
("StocksPLUS"), managing primarily Fixed Income, with approximately $60.5
billion in assets under management;
. Columbus Circle Investors ("CCI"), managing primarily Equities, with
approximately $11.1 billion in assets under management;
. Cadence Capital Management ("Cadence") managing Equities, with
approximately $1.9 billion in assets under management;
. Parametric Portfolio Associates ("Parametric"), managing Equities, with
approximately $1.6 billion in assets under management;
. NFJ Investment Group ("NFJ"), managing Equities, with approximately $1.2
billion in assets under management; and
. Blairlogie Capital Management ("Blairlogie"), managing Equities, with
approximately $500 million in assets under management.
The subsidiaries are each a registered investment advisor and collectively they
provide a broad array of investment management and advisory services for clients
using distinctive investment management styles.
In addition to the investment management subsidiaries, PA sponsors three mutual
fund families: PIMCO Funds (funds for institutions); PIMCO Advisors Funds
(retail funds and Cash Accumulation Trust); and PIMCO Advisors Institutional
Funds (funds for institutional and 401 (k)/defined contribution investors).
Under generally accepted accounting principles, the Consolidation is accounted
for as an acquisition of TAG by PFAMCo Group, even though the legal form was the
reverse. Therefore, the historical financial statements include the operations
of PFAMCo Group, in its corporate form, prior to the Consolidation and the
combined results of PA, in its partnership form, for the period since the
Consolidation.
Due to the different bases of presentation and resulting difficulties in
analyzing comparative historical financial information as a result of the
required accounting presentation, management has included below certain pro
forma financial information as if the Consolidation occurred at the beginning of
1993. Pro forma results eliminate the significant comparative differences in
the historical results of operations arising primarily from different taxation
of corporations and partnerships, from the inclusion of the former TAG's results
of operations in the pro forma results for the first quarter of 1994, and from
certain transactions and restructuring effected by the Consolidation,
principally related to the creation and amortization of intangibles and revised
profit sharing arrangements.
7
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following table compares the actual results of operations for the first
quarter of 1995 to the pro forma results of operations for the first quarter of
1994 as if the Consolidation discussed above had occurred on January 1, 1993.
The pro forma operating results give effect to:
(i) The Consolidation of PFAMCo Group and TAG;
(ii) The amendment of existing options under TAG's 1993 Class A LP Unit Option
Plan;
(iii) The adoption of the 1994 Class B LP Unit Option Plan;
(iv) The contribution of PIMCO Advisors Distribution Company ("PADCo") to PA in
exchange for Class A Limited Partnership Units; and
(v) Certain transactions effected by PFAMCo Group and TAG in connection with
the Consolidation, primarily related to intangible amortization and profit
sharing.
<TABLE>
<CAPTION>
Quarter Ended March 31, Increase %
1995 1994 (Decrease) Change
------- ------- ---------- ------
(Amounts in thousands, except per unit amounts)
<S> <C> <C> <C> <C>
Revenues:
Investment advisory fees $62,278 $59,146 $3,132 5.3%
Distribution, servicing fees and other 8,840 9,611 (771) (8.0)
------- ------- --------
71,118 68,757 2,361 3.4
------- ------- --------
Expenses:
Compensation and benefits 35,094 29,576 5,518 18.7
Commissions 6,242 6,568 (326) (5.0)
Amortization of intangibles,
options and restricted units 10,178 10,178 - -
Occupancy and equipment 1,907 1,343 564 42.0
General and administrative 2,310 1,419 891 62.8
Other, net 2,247 4,099 (1,852) (45.2)
------- ------- --------
57,978 53,183 4,795 9.0
------- ------- --------
Net income $13,140 $15,574 ($2,434) (15.6%)
======= ======= ======= ======
Net income allocated to:
General Partner $ 208 $ 227 ($ 19) (8.4%)
Class A Limited Partnership Units 10,404 11,375 (971) (8.5)
Class B Limited Partnership Units 2,528 3,972 (1,444) (36.4)
------- ------- --------
Total $13,140 $15,574 ($2,434) (15.6%)
======= ======= ======== =======
Net income per unit:
General Partner and Class A
Limited Partnership Unit $0.26 $0.28 ($0.02) (7.1%)
======= ======= ======== =======
Class B Limited Partnership Unit $0.07 $0.11 ($0.04) (36.4%)
======= ======= ======== =======
</TABLE>
The pro forma information given above is not intended to reflect the results
that actually would have been obtained if the operations were consolidated
during the period presented.
8
<PAGE>
PRO FORMA FINANCIAL INFORMATION
RESULTS OF OPERATIONS FOR 1995 ACTUAL COMPARED TO 1994 PRO FORMA
PA derives substantially all its revenues and net income from advisory fees for
investment management services provided to its institutional and individual
clients and advisory, distribution and servicing fees for services provided to
its proprietary families of mutual funds ("Proprietary Funds").
Generally, such fees are determined based upon a percentage of client assets
under management and are billed quarterly to institutional clients, either in
advance or arrears, depending on the agreement with the client, and monthly in
arrears to Proprietary Funds. Revenues, therefore, are determined in large part
based upon the level of assets under management which are dependent upon market
conditions, client decisions to add or withdraw assets from PA's management and
from PA's ability to attract new clients, among other factors. In addition, PA
has certain accounts which are subject to performance based fee schedules
wherein performance relative to the S&P 500 Index or other benchmarks over a
particular time period can result in additional fees. Such performance based
fees can have a significant effect on revenues, but also provide an opportunity
to earn higher fees than could be obtained under fee arrangements based solely
on a percentage of assets under management.
PA's consolidated actual 1995 first quarter revenues, including those of its
wholly-owned distributor PADCo, were $71.1 million compared to $68.8 million pro
forma in the first quarter of 1994, up $2.3 million. Advisory revenues were
$62.3 million actual in 1995 compared to $59.2 million pro forma in 1994, up
$3.1 million. PADCo's revenues were $8.8 million actual in 1995 compared to
$9.6 million pro forma in 1994, down $0.8 million. Advisory revenue increases
resulted from the commitment of new assets by institutional clients and to a
lesser extent from favorable investment performance. These increases were
partially offset by a decline in performance based fees. Distribution revenues
declined due to lower levels of retail mutual fund assets under management.
Pro forma revenues by operating entity were as follows:
<TABLE>
<CAPTION>
Quarter ended March 31,
----------------------- Increase
(in millions) 1995 1994 (Decrease)
------------- ----- ----- ----------
<S> <C> <C> <C>
Pacific Investment Management $39.5 $37.7 $ 1.8
CCI 11.9 10.8 1.1
Cadence 3.1 3.0 0.1
Parametric 0.9 1.1 (0.2)
NFJ 1.4 1.3 0.1
PADCo 8.8 9.6 (0.8)
Other (1) 5.5 5.3 0.2
----- ----- -----
$71.1 $68.8 $ 2.3
===== ===== =====
</TABLE>
(1) Includes PA's Institutional Services (formerly PFAMCo) and Mutual Funds
divisions and Blairlogie.
Compensation and benefits expenses in the first quarter of 1995 of $35.1 million
were $5.5 million higher than 1994 pro forma reflecting additional staffing,
primarily in Pacific Investment Management's client support and administration
areas, offset by lower profit sharing expenses which are based on profits of
each of the investment advisor subsidiaries.
Commission expenses, incurred by PADCo related to sales and servicing of retail
mutual funds, declined by $0.3 million to $6.2 million reflecting lower current
levels of mutual fund sales.
Other expenses, net in the first quarter of 1995 decreased by $1.9 million from
pro forma first quarter 1994 due principally to income from invested funds of
$0.8 million. Marketing and promotional expenses (included in other, net) were
also lower in the first quarter of 1995 compared to 1994 by $0.8 million as a
result of lower sales volumes, discussed above.
9
<PAGE>
Net income per unit is computed under the two-class method which allocates net
income to Class A and Class B Limited Partnership units in proportion to the
Operating Profit Available for Distribution for each class. Operating Profit
Available for Distribution is defined by PA's partnership agreement and is
computed as the sum of net income plus non-cash charges from the amortization of
intangible assets, non-cash compensation expenses arising from option and
restricted unit plans and losses of any subsidiary which is not a flow-through
entity for tax purposes. (See Item 5). Since Class A Limited Partnership and
General Partner units are entitled to a priority distribution of $1.88 per unit
per year, the amount of net income allocated to such units is currently greater
than the net income allocated per Class B Limited Partnership unit. Due to the
priority distribution, any dilution to net income per unit from the assumed
exercise of unit options is currently applied entirely to Class B Limited
Partnership units.
HISTORICAL FINANCIAL STATEMENTS
The historical financial statements reflect the results of PFAMCo Group during
the first quarter of 1994. The results for the first quarter of 1995 include
PA's post-Consolidation combined results in its partnership form. This
accounting treatment, know as "reverse acquisition" accounting, is required
under generally accepted accounting principles.
Therefore, many of the comparative differences in the results of operations
between 1995 and 1994 are due to the reorganization of PFAMCo Group into
partnership form, the inclusion of the former TAG operations in combination with
PFAMCo Group's operations for the first quarter of 1995, and from transactions
and restructuring which occurred in the Consolidation. The 1995 results also
include certain first-time non-cash expenses related to the amortization of
intangible assets created by the Consolidation and from expenses related to
option and restricted unit plans.
RESULTS OF OPERATIONS FOR 1995 COMPARED TO 1994
PA's 1995 first quarter revenues, including PADCo, were $71.1 million compared
to $43.5 million in the first quarter of 1994, up $27.6 million. The increase
in revenues results primarily from the inclusion of the former TAG in the
results of PA's operations.
Compensation and benefits which primarily includes salaries, employee benefits
and incentive compensation is PA's largest expense category. Incentive
compensation consists of profit-sharing and other incentive awards which are
based upon profitability of the investment management subsidiaries. Profit-
sharing awards range from 15% to 45% of such profits after Consolidation. Prior
to the Consolidation, profit-sharing awards ranged from 40% to 80% of the
profits, as defined, of the operating subsidiaries of PFAMCo Group.
Commission expenses include the up-front, trail and service fee commissions from
PADCo's operations. Restricted Unit and Option Plan expenses result from grants
to key employees of restricted units and options to purchase units at
substantially reduced prices. Such plans have 5-year vesting provisions and
other restrictions and the associated expense is being amortized over the 5-year
period. There were no similar items in the 1994 results of operations for
commissions and Restricted Unit and Option Plan expenses.
Occupancy and equipment expenses increased over 1994 due to facility expansion
primarily at Pacific Investment Management and the inclusion of TAG's costs.
Other expenses includes marketing, professional fees, insurance and other costs.
Equity in income of partnerships represents earnings from StocksPLUS' investment
in a limited partnership, StocksPLUS, L.P., a pooled investment vehicle whose
investment objective is to create returns for clients above the S & P 500 index.
The amount earned by StocksPLUS will vary from year-to-year and will depend on
the relative investment performance of StocksPLUS, L.P. Other income includes
earnings on invested cash, and increased in first quarter 1995 due primarily to
higher levels of cash and cash equivalents.
Income tax expenses represents the current and deferred provision for federal
and state income taxes. Following the Consolidation, PA is organized as a
partnership whose income is generally not subject to tax at the partnership
entity level. PA does, however, have some corporate subsidiaries that may be
subject to federal and state income taxes.
10
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
PA's and its predecessor entities' combined business has not historically been
capital intensive. Prior to the Consolidation, working capital requirements had
been satisfied out of operating cash flow or short-term borrowings. PA will
make quarterly profit-sharing payments and distributions to its unitholders. PA
may need to finance profit-sharing payments using short-term borrowings.
PA had approximately $60.6 million of cash and cash equivalents at March 31,
1995 compared to approximately $55.0 million at December 31, 1994. PA's
liquidity not otherwise used for quarterly distributions will be used for
general corporate purposes including profit-sharing payments and brokers'
commissions on sales of mutual fund shares distributed without a front-end sales
load. PA believes that the level of such commissions may increase in the future
due to the introduction of new products and mutual fund pricing structures which
may require an alternate financing source; however, PA has made no formal
decision as to the source or necessity of such financing.
The Partnership distributes substantially all of its "Operating Profit Available
for Distribution", after appropriate reserves, to its partners. Distributions
are paid quarterly, in arrears, on the units outstanding to unitholders of
record of the thirtieth day of the first month following each quarter-end.
During the first quarter of 1995, the Partnership distributed $0.239 per Class A
Limited Partnership and General Partner unit and $0.077 per Class B Limited
Partnership unit related to the 1994 post-Consolidation earnings from November
16, 1994 through December 31, 1994. The Partnership declared a first quarter
distribution of $0.47 per Class A Limited Partnership and General Partner unit
payable to holders of record on April 30, 1995. The payment date for this
distribution is May 15, 1995.
PA currently has no long-term debt. The Partnership does expect to obtain a $25
million four-year revolving line of credit for working capital purposes.
ECONOMIC FACTORS
The general economy including interest rates, inflation and client responses to
economic factors will affect, to some degree, the operations of PA. As a
significant portion of assets under management are fixed income funds,
fluctuations in interest rates could have a material impact on the operations of
PA. PA's advisory business is generally not capital intensive and therefore any
effect of inflation, other than on interest rates, is not expected to have a
significant impact on its operations or financial condition. Client responses
to the economy, including decisions as to the amount of assets deposited may
also impact the operations of PA. Any resulting revenue fluctuations may or may
not be recoverable in the pricing of services offered by PA.
11
<PAGE>
PART II: OTHER INFORMATION
Item 5. Other Information
On April 25, 1995, the general partner of PIMCO Advisors L.P. adopted
the First Amendment to the Amended and Restated Agreement of Limited
Partnership of PIMCO Advisors L.P. The effect of such amendment is to
exclude the losses of incorporated subsidiaries (see paragraph a) below)
from the definition of "Operating Profit Available for Distribution". Such
amendment amends the definition of "Operating Profit Available for
Distribution" as set forth in Section 5.1 of said Partnership Agreement to
read in full as follows:
"Operating Profit Available for Distribution" of the Partnership shall
-------------------------------------------
mean, for any period, the net income of the Partnership as determined for
financial accounting purposes under generally accepted accounting
principles; provided, that Operating Profit Available for Distribution for
any period as so determined shall be adjusted in accordance with the
following special rules and/or clarifications:
a) Operating Profit Available for Distribution shall be determined
without regard to losses of any subsidiary of the Partnership,
such as a Subchapter C corporation, which is not a flow-through
entity for tax purposes.
b) Operating Profit Available for Distribution shall be determined
without regard to accrued revenues from performance fees unless
such fees are not subject to forfeiture.
c) Operating Profit Available for Distribution shall be determined
without regard to any income or deductions attributable to the
grant, amendment, vesting or exercise of any option or other right
to purchase or receive Units or other equity interests in the
Partnership.
d) Operating Profit Available for Distribution shall be determined
without regard to any amortization of goodwill and other
intangible assets.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.1 (a) First Amendment to Amended and Restated Agreement of Limited
Partnership of PIMCO Advisors L.P.
11 Computations of Net Income Per Unit.
(b) Reports on Form 8-K
During the quarter for which this report is filed: on March 15, 1995,
Amendment No. 1 to Form 8-K/A (dated December 15, 1994) was filed; such
amendment revised the information reported under Item 4 - Change in
Registrant's Certifying Accountant.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PIMCO Advisors L.P.
By /s/ William D. Cvengros
-----------------------
William D. Cvengros
Chief Executive Officer
By /s/ Steven T. Bailey
---------------------
Steven T. Bailey
Chief Financial Officer
By /s/ Robert M. Fitzgerald
-------------------------
Robert M. Fitzgerald
Principal Accounting Officer
May 15, 1995
13
<PAGE>
EXHIBIT 4.1(a)
FIRST AMENDMENT
TO
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PIMCO ADVISORS L.P.
Pursuant to the power of attorney granted to PIMCO Partners, G.P. as
General Partner of PIMCO Advisors L.P. by Section 10.1 of the Amended and
Restated Agreement of Limited Partnership ("Partnership Agreement") of PIMCO
Advisors L.P., PIMCO Partners, G.P. hereby:
(1) Amends the definition of "Operating Profit Available for Distribution"
as set forth in Section 5.1 of the Partnership Agreement to read in full as
follows:
"Operating Profit Available for Distribution" of the Partnership shall
-------------------------------------------
mean, for any period, the net income of the Partnership as determined for
financial accounting purposes under generally accepted accounting principles;
provided, that Operating Profit Available for Distribution for any period as so
determined shall be adjusted in accordance with the following special rules
and/or clarifications:
(a) Operating Profit Available for Distribution shall be determined
without regard to losses of any subsidiary of the Partnership, such as
a Subchapter C corporation, which is not a flow-through entity for tax
purposes.
(b) Operating Profit Available for Distribution shall be determined
without regard to accrued revenues from performance fees unless such
fees are not subject to forfeiture.
(c) Operating Profit Available for Distribution shall be determined
without regard to any income or deductions attributable to the grant,
amendment, vesting or exercise of any option or other right to
purchase or receive Units or other equity interests in the
Partnership.
<PAGE>
(d) Operating Profit Available for Distribution shall be determined
without regard to any amortization of goodwill and other intangible
assets.
(2) Determines that the foregoing amendment (i) does not affect the
holders of any class or series of Units or Partnership Interest in any material
respect, (ii) is required to effect the intent of the provisions of the
Partnership Agreement or otherwise contemplated by the Partnership Agreement,
and (iii) is required to cure or otherwise correct an ambiguity, error or
omission in the provisions of the Partnership Agreement relating to Unit
distributions.
This Amendment is executed in Newport Beach, California on April 25, 1995,
and shall be effective as of January 1, 1995.
PIMCO PARTNERS, G.P.,
a California general partnership
General Partner
By PIMCO PARTNERS, LLC,
a California limited liability
company
Its General Partner
By /s/ William S. Thompson
________________________________________
William S. Thompson
Chief Executive Officer
By PACIFIC INVESTMENT MANAGEMENT
COMPANY,
a California corporation
Its General Partner
By /s/ Khanh T. Tran
________________________________________
Khanh T. Tran
Treasurer
2
<PAGE>
EXHIBIT 11
PIMCO Advisors L.P.
Computations of Net Income Per Unit
(in thousands, except per unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended March 31,
------------------------------------
General Partner
and Class A Class B
--------------- ---------------
1995 1994 1995 1994
------- ---- ------- ----
<S> <C> <C> <C> <C>
Net income $13,140 $ 4,984 $13,140 $ 4,984
======= ======= ======= =======
Weighted average number of units
outstanding during period:
Actual units outstanding 40,818 N/A 32,961 N/A
Weighted average effect of Class A
Limited Partnership unit options 1,096 N/A 0 N/A
------- ---- ------- ----
Weighted average number of units
and unit equivalents used to
calculate net income per unit 41,914 N/A 32,961 N/A
======= ==== ======= ====
Net income per unit $ 0.26 N/A $ 0.07 N/A
======= ==== ======= ====
</TABLE>
