<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 June 30, 1997
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)
<TABLE>
<S> <C>
Delaware 06-1349805
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
800 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 June 30, 1997, 13,588,764 publicly traded Class A units of limited
partner interest and 26,557,391 privately-held Class A units of limited partner
interest were issued and outstanding. There were 800,000 units of general
partner interest issued and outstanding at June 30, 1997. In addition, there
were 32,991,856 privately-held Class B units of limited partner interest issued
and outstanding at June 30, 1997.
<PAGE>
PIMCO ADVISORS L.P.
INDEX
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Consolidated Statements of Financial Condition as of
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations for the three months
ended June 30, 1997 and 1996 4
Consolidated Statements of Operations for the six months
ended June 30, 1997 and 1996 5
Consolidated Statements of Cash Flows for the six months
ended June 30, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
PART II OTHER INFORMATION
Item 5. Other information 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
PIMCO Advisors L.P. and Subsidiaries
Consolidated Statements of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents $ 29,395,899 $ 41,311,545
Fees receivable 72,018,525 66,272,441
Short term investments 29,206,390 11,520,726
Notes receivable 1,582,353 1,569,950
Other assets - current 3,852,098 4,387,208
------------- --------------
Total current assets 136,055,265 125,061,870
Investments in limited partnerships 3,746,123 2,629,864
Fixed assets, net of accumulated depreciation 10,273,448 10,561,346
Intangible assets, net of accumulated amortization 189,818,121 207,822,687
Other non current assets 19,223,396 12,424,534
------------- --------------
Total assets $ 359,116,353 $ 358,500,301
============= ==============
Liabilities and Partners' Capital
- ---------------------------------
Current liabilities:
Accounts payable, accrued expenses and other
current liabilities $ 23,242,777 $ 33,813,925
Accrued compensation 48,582,255 26,027,732
------------- --------------
Total current liabilities 71,825,032 59,841,657
Other non current liabilities 5,819,325 2,415,883
------------- --------------
Total liabilities 77,644,357 62,257,540
------------- --------------
Partners' Capital
General Partner (800,000 units issued and outstanding) 2,764,605 2,986,983
Class A Limited Partners (40,146,155 units issued
and outstanding) 194,261,070 205,420,612
Class B Limited Partners (32,991,856 and 32,960,826
units issued and outstanding) 92,884,339 98,369,570
Unamortized compensation (8,438,018) (10,534,404)
------------- --------------
Total Partners' Capital 281,471,996 296,242,761
------------- --------------
Total liabilities and partners' capital $ 359,116,353 $ 358,500,301
============= ==============
</TABLE>
See accompanying notes.
3
<PAGE>
PIMCO Advisors L.P. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
-----------------------------
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Revenues:
Investment advisory fees:
Private accounts $ 63,281,371 $ 54,887,506
Proprietary Funds 39,217,320 31,606,081
Distribution and servicing fees 12,849,381 12,048,155
Other 438,323 300,186
------------ ------------
Total revenues 115,786,395 98,841,928
------------ ------------
Expenses:
Compensation and benefits 50,850,028 43,645,872
Amortization of intangibles, Restricted Unit and Option Plans 10,353,444 10,266,615
Commissions 10,286,301 9,478,311
General and administrative 6,404,186 4,268,931
Occupancy and equipment 2,569,645 2,314,438
Other 9,415,758 5,689,109
------------ ------------
Total expenses 89,879,362 75,663,276
------------ ------------
Operating income 25,907,033 23,178,652
Equity in income of limited partnership (256,283) 56,201
Other income 1,662,042 779,280
------------ ------------
Income before taxes 27,312,792 24,014,133
Provision for taxes (100,654) 206,548
------------ ------------
Net income $ 27,413,446 $ 23,807,585
============ ============
Net income allocated to:
General Partner $ 270,100 $ 263,290
Class A Limited Partner units 13,554,360 13,212,632
Class B Limited Partner units 13,588,986 10,331,663
------------ ------------
Total $ 27,413,446 $ 23,807,585
============ ============
Net income per unit:
General Partner and Class A Limited Partner unit $ 0.34 $ 0.33
============ ============
Class B Limited Partner unit $ 0.37 $ 0.29
============ ============
Cash distributions paid per unit during the period:
General Partner and Class A Limited Partner unit $ 0.470 $ 0.470
============ ============
Class B Limited Partner unit $ 0.435 $ 0.318
============ ============
</TABLE>
See accompanying notes.
4
<PAGE>
PIMCO Advisors L.P. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended
---------------------------------------
June 30, 1997 June 30, 1996
----------------- -----------------
<S> <C> <C>
Revenues:
Investment adivisory fees:
Private accounts $ 115,814,758 $ 103,682,216
Proprietary Funds 76,196,850 62,715,780
Distribution and servicing fees 25,672,759 23,063,662
Other 1,408,318 600,322
----------------- -----------------
Total revenues 219,092,685 190,061,980
----------------- -----------------
Expenses:
Compensation and benefits 96,027,732 84,943,604
Amortization of intangibles, Restricted Unit and Option Plans 20,646,294 20,533,230
Commissions 20,533,963 18,352,569
General and administrative 11,895,093 8,960,726
Occupancy and equipment 5,030,120 4,626,409
Other 15,902,705 10,258,781
----------------- -----------------
Total expenses 170,035,907 147,675,319
----------------- -----------------
Operating income 49,056,778 42,386,661
Equity in income of limited partnership (227,171) 91,551
Other income 2,225,342 1,288,336
----------------- -----------------
Income before taxes 51,054,949 43,766,548
Provision for taxes 452,640 595,519
----------------- -----------------
Net income $ 50,602,309 $ 43,171,029
================= =================
Net income allocated to:
General Partner $ 529,622 $ 508,325
Class A Limited Partner units 26,577,844 25,501,465
Class B Limited Partner units 23,494,843 17,161,239
----------------- -----------------
Total $ 50,602,309 $ 43,171,029
================= =================
Net income per unit:
General Partner and Class A Limited Partner unit $ 0.66 $ 0.64
================= =================
Class B Limited Partner unit $ 0.64 $ 0.47
================= =================
Cash distributions paid per unit during the period:
General Partner and Class A Limited Partner unit $ 0.940 $ 0.940
================= =================
Class B Limited Partner unit $ 0.899 $ 0.762
================= =================
</TABLE>
See accompanying notes.
5
<PAGE>
PIMCO Advisors L.P. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended
----------------------------------
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 50,602,309 $ 43,171,029
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization 21,484,293 19,553,491
Issuance of restricted units in lieu of directors fees 121,119 --
Restricted Unit and Option Plans 2,641,728 2,528,664
Equity in loss (income) of limited partnerships 227,171 (91,551)
Unrealized (gain) loss on investments (764,526) 215,948
Change in operating assets and liabilities:
Fees receivable (5,746,085) (1,317,520)
Other assets (7,742,364) (4,056,598)
Accounts payable, accrued expenses and other current liabilities (10,571,149) 10,283,847
Accrued compensation 22,554,523 18,397,759
Other liabilities 3,403,443 (37,495)
Other 910 17,767
------------- -------------
Net cash provided by operating activities 76,211,372 88,665,341
------------- -------------
Cash flows from investing activities:
Purchases of fixed assets (1,493,357) (1,330,004)
Proceeds from sale of fixed assets 400 579,970
Notes receivable advances (233,572) (573,512)
Purchase of investments (35,400,874) --
Sale of investments 19,601,306 440,075
Investments in limited partnerships (2,465,000) (500,000)
------------- -------------
Net cash used in investing activities (19,991,097) (1,383,471)
------------- -------------
Cash flows from financing activities:
Cash distributions paid (68,135,921) (63,582,035)
------------- -------------
Net cash used in financing activities (68,135,921) (63,582,035)
------------- -------------
Net (decrease) increase in cash and cash equivalents (11,915,646) 23,699,835
Cash and cash equivalents, beginning of period 41,311,545 34,915,170
------------- -------------
Cash and cash equivalents, end of period $ 29,395,899 $ 58,615,005
============= =============
Supplemental disclosures:
Taxes paid $ 238,845 $ 338,085
============= =============
Interest paid $ 67,083 $ --
============= =============
</TABLE>
See accompanying notes.
6
<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 June 30, 1997 and December 31, 1996, (b) the results of
operations for three-month and six-month periods ended June 30, 1997 and 1996,
and (c) the cash flows for the six-month periods ended June 30, 1997 and 1996,
for PIMCO Advisors L.P. ("PIMCO Advisors") have been made. It is suggested that
these unaudited condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and notes included in
PIMCO Advisors Annual Report on Form 10-K for the year ended December 31, 1996.
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, on the units outstanding, are paid quarterly in arrears to
unitholders of record as of the thirtieth day of the first month following each
quarter-end.
3) On February 13, 1997, PIMCO Advisors and its affiliate, Thomson Advisory
Group Inc. ("TAG Inc."), and Oppenheimer Group, Inc. and its subsidiary,
Oppenheimer Financial Corp. signed a definitive agreement for TAG Inc. to
acquire a one-third, managing general partner interest in Oppenheimer Capital (a
general partnership), the 1 percent general partner interest in Oppenheimer
Capital, L.P. and 100% of the stock of Advantage Advisers, an affiliate of
Oppenheimer Group, which manages eight closed-end funds. The transaction covers
only the private interests Oppenheimer Group holds in Oppenheimer Capital and
Oppenheimer Capital, L.P. and does not include the publicly traded units of
Oppenheimer Capital, L.P. On July 22, 1997 an amended and restated agreement was
signed reflecting minor financial and structural modifications. The acquisition
is subject to certain client, lender and other approvals, and is expected to
take up to six months to complete.
The amended agreement provides for the acquisition by TAG Inc. of the above
listed assets through a merger with Oppenheimer Group, Inc. in exchange for
total consideration of approximately $230 million (formerly $233 million) in
convertible preferred stock to be issued by TAG Inc. and the assumption of
approximately $32 million of debt. Subsequently, TAG Inc. will contribute all of
the acquired interests to PIMCO Advisors in exchange for approximately $262
million of newly issued Class A Limited Partner Units at $25.50 per unit. The
original agreement resulted in the contribution of only the general partner
interest in Oppenheimer Capital to PIMCO Advisors, in exchange for approximately
$233 million of newly issued Class A Limited Partner Units, at $25.50 per unit.
PIMCO Advisors may be obligated in certain circumstances to purchase such
convertible preferred stock for its issue price. PIMCO Advisors will account for
this transaction using the purchase method. After the closing, operating results
for PIMCO Advisors will include its proportionate share of the operating results
of Oppenheimer Capital.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PIMCO Advisors L.P. and subsidiaries (the "Partnership" or "PIMCO Advisors") are
primarily involved in investment advisory services. The Partnership's strategy
is to pursue growth by marketing the investment management expertise,
performance record and reputation of its six institutional investment management
firms (the "Investment Management Firms"). The Investment Management Firms are
as follows:
Pacific Investment Management Company ("Pacific Investment
Management") and its wholly owned subsidiary, StocksPLUS Management,
Inc. ("StocksPLUS"), manages primarily fixed income investments, with
approximately $99.4 billion in assets under management;
Columbus Circle Investors ("CCI") and its wholly owned subsidiary,
Columbus Circle Trust Company ("CCTC"), manages primarily equity and
equity related investments, with approximately $11.4 billion in assets
under management;
Cadence Capital Management ("Cadence") manages equity and equity
related investments, with approximately $4.1 billion in assets under
management;
Parametric Portfolio Associates ("Parametric"), manages equity and
equity related investments, with approximately $2.2 billion in assets
under management;
NFJ Investment Group ("NFJ"), manages equity and equity related
investments, with approximately $1.9 billion in assets under
management; and
Blairlogie Capital Management ("Blairlogie"), manages equity and
equity related investments, with approximately $887 million in assets
under management.
PIMCO Advisors, together with the Investment Management Firms, sponsors and
manages mutual funds for both institutional and retail investors.
PIMCO Funds. In January 1997, the Partnership restructured its proprietary
mutual funds into a single fund family called "PIMCO Funds" which is comprised
of two series: (i) PIMCO Funds: Pacific Investment Management Series ("PIMCO
Funds PIMS Series"), 20 funds advised by Pacific Investment Management, and
(ii) PIMCO Funds: Multi-Manager Series ("PIMCO Funds MMS Series"), 21 funds
advised by the Partnership and subadvised by the Investment Management Firms and
one independent subadvisor. The PIMCO Funds PIMS Series are primarily fixed
income funds and the PIMCO Funds MMS Series are primarily equity funds. All
PIMCO Funds are offered in up to five different share classes: institutional and
administrative share classes primarily for institutional investors and, for
retail investors, Class A shares (which are "front end" load), Class B shares
(which are "back-end load"), and Class C shares (which are "level load").
The PIMCO Funds now feature a "unified fee" structure which has specified
advisory and administrative fees per fund. As a result, the Partnership and
Pacific Investment Management (and not the PIMCO Funds) bear the risk of
increases in service costs (including of third-party service providers such as
transfer agents) and will directly benefit from decreases in those costs.
RESULTS OF OPERATIONS FOR 1997 COMPARED TO 1996
PIMCO Advisors 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 two proprietary series 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 are determined in large part based upon
the level of assets under management; which itself is dependent upon factors
including market conditions, client decisions to add or withdraw assets from
PIMCO Advisors management and from PIMCO Advisors ability to attract new
clients. In addition, PIMCO Advisors has certain accounts which are subject to
performance based fee schedules wherein performance relative to the S&P 500
Index or other benchmarks over a particular time period can result in additional
fees. Such performance based fees can have a significant effect on revenues, and
provide an opportunity to earn higher fees (as well as lower) than could be
obtained under fee arrangements based solely on a percentage of assets under
management.
8
<PAGE>
PIMCO Advisors consolidated 1997 second quarter revenues, including those of its
wholly owned distributor PIMCO Funds Distribution Company ("PFD"), were $115.8
million compared to $98.8 million in the second quarter of 1996, up $17.0
million. Advisory revenues were $102.5 million in the second quarter of 1997
compared to $86.5 million for the same period in 1996, up $16.0 million. For the
six months ended June 30, 1997 PIMCO Advisors consolidated revenues were $219.1
million compared to $190.1 milllion in the same period of 1996. Revenues at the
distributor for the first half of 1997 increased to $30.1 million in 1997 from
$26.3 million in 1996. Advisory revenue increases resulted from both the
commitment of new assets by institutional clients and from market appreciation.
Performance based fees amounted to $9.9 million during the second quarter of
1997 as compared to $7.9 million during the same period in 1996. For the six
months ended June 30, 1997 performance fees increased to $11.5 million, from
$11.4 million in the comparable period of 1996. The increase in performance
based fees occurred principally in fixed income portfolio products seeking to
outperform relative benchmarks.
Revenues by operating entity were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Pacific Investment Management $ 69.0 $ 56.1 $ 126.1 $ 107.2
CCI 14.6 16.2 29.5 31.7
Cadence 5.6 4.4 10.7 8.5
Parametric 1.1 0.9 2.0 1.7
NFJ 2.0 1.8 3.9 3.5
Blairlogie 1.1 0.9 2.1 1.9
PFD 14.6 13.7 30.1 26.3
Other 7.8 4.8 14.7 9.3
-------- -------- -------- --------
$ 115.8 $ 98.8 $ 219.1 $ 190.1
======== ======== ======== ========
</TABLE>
Compensation and benefits in the second quarter of 1997 of $50.9 million were
$7.2 million higher than the same period in 1996. For the six month period, this
cost category increased from $85.0 million in 1996 to $96.0 million in 1997.
These increases reflect additional staffing, at both Pacific Investment
Management and CCI, as well as higher profit sharing expenses which are based on
profits of each of the investment management subsidiaries.
Commission expenses, incurred by PFD related to sales and servicing of retail
mutual funds, increased $808,000 to $10.3 million in the second quarter of 1997
compared to the same period a year ago, and increased $2.2 million to $20.5
million for the first six months of 1997 compared to 1996, reflecting higher
trail commissions due to an increased level of qualifying assets, as well as
increased "up front" commissions on higher current sales levels.
General and administrative expenses amounted to $6.4 million during the second
quarter of 1997, an increase of $2.1 million over the same period a year ago.
This cost category increased by $2.9 million to $11.9 million for the first half
of 1997 compared to 1996. This increase can be primarily attributed to the
conversion of the retail share classes of the PIMCO Funds to a fixed
administrative fee basis resulting in increases to this cost category for
expenses previously borne directly by the funds. There is a corresponding
increase in revenues related to this conversion. These incremental costs account
for substantially all of this increase.
Occupancy and equipment increased by $255,000 to $2.6 million in the second
quarter of 1997 from the same period a year ago; during the first six months of
1997 these costs increased $404,000 to $5.0 million compared to the same period
in 1996. The increase in this expense category can be attributed primarily to
additional office space and equipment as a result of the additional staffing
discussed above.
Other expenses in the second quarter of 1997 increased by $3.7 million from
1996. Such costs for the first six months of 1997 increased $5.6 million to
$15.9 million compared to the same period in 1996 due principally to increases
in marketing and promotional costs and professional fees as well as other
increases reflective of inflation and increased staffing.
Net income per unit is computed under the two-class method which allocates net
income to Class A and Class B Limited Partner units in proportion to the
Operating Profit Available for Distribution for each class. Operating Profit
Available for
9
<PAGE>
Distribution is defined by PIMCO Advisors 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. Class A Limited Partner and General Partner units are
entitled to a priority distribution of $1.88 per unit per year until December
31, 1997. Because of this, the amount of Operating Profit Available for
Distribution allocated to such units can be greater than the amount allocated to
Class B Limited Partner units. In addition, because of the priority
distribution, the initial dilution to net income per unit from the assumed
exercise of unit options is currently applied entirely to Class B Limited
Partner units. As a result, the net income allocated per Class A Limited Partner
and General Partner units is currently greater than the net income allocated per
Class B Limited Partner unit.
CAPITAL RESOURCES AND LIQUIDITY
PIMCO Advisors and its predecessor entities' combined business has not
historically been capital intensive. In general, working capital requirements
had been satisfied out of operating cash flow or short-term borrowings. PIMCO
Advisors will make quarterly profit-sharing payments and distributions to its
unitholders. PIMCO Advisors may need to finance profit-sharing payments using
short-term borrowings.
PIMCO Advisors had approximately $58.6 million of cash and cash equivalents and
short-term investments at June 30, 1997 compared to approximately $52.8 million
at December 31, 1996. PIMCO Advisors liquidity not otherwise used for quarterly
distributions will be used for general purposes including profit-sharing
payments and for brokers' commissions on sales of mutual fund shares distributed
without a front-end sales load. PIMCO Advisors believes that the level of such
commissions may increase in the future due to the introduction of new products
and mutual fund pricing structures which may require an alternate financing
source.
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 on the thirtieth day of the first month following each quarter-end.
During the first six months of 1997, the Partnership distributed $0.940 per
Class A Limited Partner and General Partner unit and $0.899 per Class B Limited
Partner unit related to the fourth quarter of 1996's and first quarter of 1997's
earnings. During the second quarter of 1997, the Partnership distributed $0.47
per Class A Limited Partner and General Partner unit and $0.435 per Class B
Limited Partner unit related to the first quarter of 1997's earnings. The
Partnership declared a second quarter distribution of $0.47 per Class A Limited
Partner and General Partner unit payable to holders of record on July 30, 1997.
The payment date for this distribution is August 15, 1997. The Partnership also
declared a second quarter distribution of $0.505 per Class B Limited Partner
unit payable to holders of record on July 30, 1997. The payment date for this
distribution is August 30, 1997.
PIMCO Advisors currently has no long-term debt. In April 1996, the Partnership
obtained a $25 million, four year revolving line of credit for working capital
purposes. There was no outstanding balance at June 30, 1997, nor was the
facility utilized during the quarter ended June 30, 1997.
ECONOMIC FACTORS
The general economy including interest rates, inflation and client responses to
economic factors will affect, to some degree, the operations of PIMCO Advisors.
As a significant portion of assets under management are fixed income funds,
fluctuations in interest rates could have a material impact on the operations of
PIMCO Advisors. PIMCO Advisors advisory business is generally not capital
intensive and therefore any effect of inflation, other than on interest rates,
is not expected to have a significant impact on its operations or financial
condition. Client responses to the economy, including decisions as to the amount
of assets deposited may also impact the operations of PIMCO Advisors. Any
resulting revenue fluctuations may or may not be recoverable in the pricing of
services offered by PIMCO Advisors.
During the first six months of 1997, assets under management for PIMCO
Advisors and its subsidiaries increased $9.9 billion. While net cash inflows for
PIMCO Advisors, as a whole, were significant ($2.4 billion during the first six
months of 1997), CCI experienced substantial net cash outflows ($3.9 billion
during the first six months of 1997) predominantly from its "large cap" separate
account clients during this period, attributable in large part to
underperformance measured against relevant benchmarks. This trend started in
1995 and has continued into the third quarter of 1997, although the rate of net
outflow has declined subsequent to June 30, 1997.
10
<PAGE>
PART II: OTHER INFORMATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Computations of Net Income Per Unit.
27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the second quarter
of 1997.
A report on Form 8-K was filed on July 23, 1997 disclosing the
Amended and Restated Agreement and Plan of Merger dated as of
July 22, 1997 by and among Oppenheimer Group, Inc., Oppenheimer
Financial Corp., the Seller Trust under Declaration of Trust
dated July 22, 1997, the Indemnity Trust under Declaration of
Trust dated July 22, 1997, PIMCO Advisors L.P., PIMCO Advisors
Inc., PAI Transitory Corp. and Thomson Advisory Group Inc.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, 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/ Robert M. Fitzgerald
-------------------------
Robert M. Fitzgerald
Principal Accounting Officer
August 13, 1997
<PAGE>
EXHIBIT 11
PIMCO Advisors L.P.
Computations of Primary Net Income Per Unit
(in thousands, except per unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended June 30,
----------------------------------------------------
General Partner
and Class A Class B
----------------------------------------------------
1997 1996 1997 1996
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net income $27,413 $23,808 $27,413 $23,808
======= ======= ======= =======
Weighted average number of units outstanding 40,946 40,928 32,992 32,961
Weighted average effect of Limited Partnership
unit options 1,660 1,503 1,644 1,332
------- ------- ------- -------
Weighted average number of units and unit
equivalents used to calculate net income per unit 42,606 42,431 34,636 34,293
======= ======= ======= =======
Net income per unit $ 0.34 $ 0.33 $ 0.37 $ 0.29
======= ======= ======= =======
</TABLE>
PIMCO Advisors L.P.
Computations of Primary Net Income Per Unit
(in thousands, except per unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended June 30,
----------------------------------------------------
General Partner
and Class A Class B
----------------------------------------------------
1997 1996 1997 1996
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net income $50,602 $43,171 $50,602 $43,171
======= ======= ======= =======
Weighted average number of units outstanding 40,946 40,924 32,978 32,961
Weighted average effect of Limited Partnership
unit options 1,692 1,489 1,859 1,344
------- ------- ------- -------
Weighted average number of units and unit
equivalents used to calculate net income per unit 42,638 42,413 34,837 34,305
======= ======= ======= =======
Net income per unit $ 0.66 $ 0.64 $ 0.64 $ 0.47
======= ======= ======= =======
</TABLE>
<PAGE>
PIMCO Advisors L.P.
Computations of Fully Diluted Net Income Per Unit
(in thousands, except per unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended June 30,
------------------------------------------------------
General Partner
and Class A Class B
------------------------------------------------------
1997 1996 1997 1996
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net income $27,413 $23,808 $27,413 $23,808
======= ======= ======= =======
Weighted average number of units outstanding 40,946 40,928 32,992 32,961
Weighted average effect of Limited Partnership
unit options 1,669 1,514 1,702 1,383
------- ------- ------- -------
Weighted average number of units and unit equivalents
used to calculate net income per unit 42,615 42,442 34,694 34,344
======= ======= ======= =======
Net income per unit $ 0.34 $ 0.33 $ 0.37 $ 0.29
======= ======= ======= =======
</TABLE>
PIMCO Advisors L.P.
Computations of Fully Diluted Net Income Per Unit
(in thousands, except per unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended June 30,
------------------------------------------------------
General Partner
and Class A Class B
------------------------------------------------------
1997 1996 1997 1996
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net income $50,602 $43,171 $50,602 $43,171
======= ======= ======= =======
Weighted average number of units outstanding 40,946 40,924 32,978 32,961
Weighted average effect of Limited Partnership
unit options 1,725 1,494 2,082 1,369
------- ------- ------- -------
Weighted average number of units and unit equivalents
used to calculate net income per unit 42,671 42,418 35,060 34,330
======= ======= ======= =======
Net income per unit $ 0.66 $ 0.64 $ 0.64 $ 0.47
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PIMCO
ADVISORS L.P. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 29,396
<SECURITIES> 29,206
<RECEIVABLES> 72,018
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 136,055
<PP&E> 10,273<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 359,116
<CURRENT-LIABILITIES> 71,825
<BONDS> 0
0
0
<COMMON> 289,910<F2>
<OTHER-SE> (8,438)<F3>
<TOTAL-LIABILITY-AND-EQUITY> 359,116
<SALES> 0<F4>
<TOTAL-REVENUES> 219,093<F5>
<CGS> 0<F4>
<TOTAL-COSTS> 152,031<F6>
<OTHER-EXPENSES> 18,004<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 51,055
<INCOME-TAX> 453
<INCOME-CONTINUING> 50,602
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,602
<EPS-PRIMARY> .66<F8>
<EPS-DILUTED> .64<F9>
<FN>
<F1> Net of accumulated depreciation and amortization.
<F2> Entity is a partnership. Amount shown represents Partners' Capital.
<F3> Amount shown comprises Unamortized Compensation.
<F4> The partnership is in the service business and has no sales or cost of
goods sold of tangible products.
<F5> Amount shown comprises revenues from services.
<F6> Amount shown comprises costs of services.
<F7> Amount shown is from amortization of intangible assets.
<F8> Amount shown is for the Partnership's General Partner and Class A Limited
Partner Units.
<F9> Amount is for the Partnership's Class B Limited Partner Units.
</FN>
</TABLE>
