SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the year ended 01-16532
December 31, 1995 Commission File Number
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
(Exact name of registrant as specified in its governing instruments)
Delaware 13-3486106
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1345 Avenue of the Americas
New York, New York 10105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 969-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
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 ___.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Selected information from the Prospectus, dated July 15, 1988, and filed with
the Securities and Exchange Commission on July 19, 1988 (File No. 33-20093), is
incorporated by reference into Parts I, II and III of this Annual Report on Form
10-K.
<PAGE>
Part I
Item 1. Business
Formation
Equitable Capital Partners (Retirement Fund), L.P. (the "Retirement Fund"
or the "Registrant") was formed along with Equitable Capital Partners, L.P.
(collectively with the Retirement Fund referred to as the "Funds"). The
Certificates of Limited Partnership were filed under the Delaware Revised
Uniform Limited Partnership Act on February 2, 1988 and the Funds' operations
commenced on October 13, 1988. The Retirement Fund seeks current income and
capital appreciation potential by investing in privately structured, friendly
leveraged acquisitions and leveraged recapitalizations. The Retirement Fund
pursues this objective by investing primarily in subordinated debt and related
equity securities ("Mezzanine Investments") issued in conjunction with the
"mezzanine financing" of leveraged acquisitions and leveraged recapitalizations.
Mezzanine Investments, follow-on investments, bridge investments and certain
other investments which the Retirement Fund is permitted to invest in are
referred to herein as "Enhanced Yield Investments."
On July 22, 1993, Equitable Capital Management Corporation ("Equitable
Capital"), formerly the Managing General Partner and investment adviser of the
Funds, transferred substantially all of the assets comprising Equitable
Capital's business to Alliance Capital Management L.P. ("Alliance Capital") and
its wholly-owned subsidiary, Alliance Corporate Finance Group Incorporated
("Alliance Corporate"). In connection with such transaction, the limited
partners of the Funds, voted to approve a new investment advisory agreement
between the Funds and Alliance Corporate and also voted to admit Alliance
Corporate as Managing General Partner of the Funds the "Managing General
Partner" to succeed Equitable Capital. Accordingly, on July 22, 1993, the
closing date of the transaction described above, Alliance Corporate was admitted
as the successor Managing General Partner of the Funds. Equitable Capital
assigned all of its interest as General Partner to Alliance Corporate. Robert F.
Shapiro, Robert W. Lear, Alton G. Marshall and William G. Sharwell, who are not
affiliated with Alliance Corporate or "interested persons" of the Funds for
purposes of the Investment Company Act of 1940 as amended (the "Investment
Company Act"), serve as the Funds' independent general partners (the
"Independent General Partners"). Messrs. Shapiro and Lear have served since June
1988, and Mr. Marshall and Dr. Sharwell since 1989. The Managing General Partner
is an indirect partially-owned subsidiary of the Equitable Life Assurance
Society of the United States ("Equitable Life") and is a registered investment
adviser under the Investment Advisers Act of 1940, as amended. In addition,
Alliance Corporate was admitted as the successor investment adviser to the Funds
(the "Investment Adviser") pursuant to a new investment advisory agreement
executed as of July 22, 1993 and since such date, has been responsible, subject
to the supervision of the Independent General Partners, for the management of
the Funds' investments.
The Retirement Fund elected to operate as a business development company
under the Investment Company Act of 1940, as amended. As such, it is subject to
certain provisions of the Investment Company Act. The description of the
Retirement Fund's investment objective and policies, its management arrangements
and certain provisions of the Investment Company Act applicable to the
Retirement Fund are set forth in the information contained in the Prospectus of
the Retirement Fund, dated July 15, 1988 (the "Prospectus"), filed with the
Securities and Exchange Commission (the "Commission") pursuant to Rule 424(b)
under the Securities Act of 1933, as amended (the "Securities Act"), on July 19,
1988 under the following captions: "Investment Objective and Policies,"
"Management Arrangements" and "Regulation." Such information is incorporated by
reference into this Item 1.
The Funds jointly offered an aggregate of 1,000,000 units of limited
partnership interest ("Units") to investors in a public offering registered
under the Securities Act pursuant to a Registration Statement on Form N-2 (File
No. 33-20093), which was declared effective under the Securities Act by the
Commission on July 15, 1988. Merrill Lynch, Pierce, Fenner & Smith (the
"Agent"), an affiliate of ML Fund Administrators Inc., (the "Fund
Administrator") acted as selling agent for the Units offered by the Retirement
Fund.
<PAGE>
On October 13, 1988, the Retirement Fund issued 221,072 Units to
investors, and Equitable Capital, as Managing General Partner, admitted 26,304
investors as limited partners of the Retirement Fund (the "Limited Partners").
The net proceeds of the offering of such Units to the Retirement Fund was
$205,596,960 after giving effect to volume discounts of $223,270 and the payment
of $15,251,770 in sales commissions to the Agent. Equitable Capital, in its
capacity as Managing General Partner, contributed a demand promissory note in
the principal amount of $2,052,050 as required by the Amended and Restated
Agreement of Limited Partnership, dated as of October 13, 1988 (the "Partnership
Agreement"), pursuant to which the Retirement Fund had been organized. Equitable
Capital reduced this note by $218,504 resulting from actual syndication expenses
paid in excess of original estimates. The public offering has been concluded.
In connection with its organization and offering, the Retirement Fund
incurred $431,479 in organizational expenses and $2,043,437 in offering, sales
and marketing expenses. The organizational expenses were amortized on a
straight-line basis over a sixty month period that commenced on October 13,
1988. Such expenses were fully amortized as of October 31, 1993. The offering,
sales and marketing expenses incurred by the Retirement Fund have been paid and
have been accounted for as a charge to the capital account of the Retirement
Fund's partners. The net proceeds available for investment by the Retirement
Fund after such offering less the return of capital to the Limited Partners of
$65,065,910 equaled $138,066,135.
Investments
As set forth in the Partnership Agreement, the Retirement Fund's
investment period ended on October 12, 1991, three years after the Retirement
Fund's operations commenced. Thereafter, the Retirement Fund is not permitted to
acquire new Enhanced Yield Investments, but can make follow-on investments in
existing portfolio companies. During the year ended December 31, 1995, the
Retirement Fund made a follow-on investment in one Managed Company (as defined
in the Prospectus) at a total cost of $920 and paid $359 in additional
consideration to exercise warrants.
During the year ended December 31, 1994, the Retirement Fund made a
follow-on investment in one Managed Company at a total cost of $227. During the
year ended December 31, 1993, the Retirement Fund made two follow-on investments
in one Managed Company at a total cost of $483.
As of December 31, 1995, the Retirement Fund had a total of 14 Enhanced
Yield Investments at a net cost of $85,451,445 (inclusive of the receipt of
securities having a capitalized cost of $422,439 received as payment-in-kind
interest on certain Enhanced Yield Investments). During 1995, 1994 and 1993, the
Retirement Fund received $13,479,835, $28,095,324, and $31,274,287,
respectively, in principal payments and prepayments relating to certain Enhanced
Yield Investments.
Pending investments in Enhanced Yield Investments, the net proceeds of the
public offering were invested in certain temporary investments, consisting
principally of commercial paper with maturities of less than sixty days.
Currently, proceeds that are not invested in Enhanced Yield Investments or
returned to Limited Partners are held in such temporary investments.
New Investments in 1995
The Retirement Fund's investment period ended on October 12, 1991.
Accordingly, the Retirement Fund made no new investments in 1995.
<PAGE>
Follow-on Investments in 1995
In 1995, the Retirement Fund made a single follow-on investment as
discussed below:
RI Holdings, Inc. ("Rowe")
Rowe is engaged in the design, engineering and manufacturing of jukeboxes,
bill acceptors and currency changers.
Under the terms of Rowe's senior subordinated notes, the Retirement Fund
receives common stock at a nominal cost of one cent per share for each interest
payment date on which Rowe delivers payment-in-kind securities in lieu of making
a cash payment. On May 9, 1995, the Retirement Fund acquired 92,045.09 shares of
Common Stock of RI Holdings, Inc., for a total cost of $920.
As of December 31, 1995, the Retirement Fund's investment in RI Holdings,
Inc. totaled $7,330,251, which includes the senior subordinated PIK note.
Competition
The Retirement Fund competes with other entities having a similar
investment objective. In addition, since Enhanced Yield Investments are selected
and managed exclusively by Alliance Corporate on behalf of the Retirement Fund,
other entities which compete with Alliance Corporate with respect to such
investments therefore compete with the Retirement Fund. Competitors include
other private and public mezzanine funds, other business development companies,
investment partnerships and corporations, small business investment companies
and large industrial and financial companies investing directly or through
affiliates and individuals.
Employees
The Retirement Fund has no employees. The Managing General Partner,
subject to the supervision of the Independent General Partners, manages and
controls the Retirement Fund's investments. Certain officers of Alliance
Corporate have been designated as agents of the Retirement Fund with titles
corresponding to the titles of the offices held by such persons with Alliance
Corporate. The Retirement Fund Administrator performs administrative services
for the Retirement Fund on behalf of the Managing General Partner.
Item 2. Properties
The Retirement Fund does not own or lease any physical properties.
Item 3. Legal Proceedings
The Retirement Fund is not party to any material pending legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Units are illiquid securities and are subject to significant
restrictions on transfer. The information in the Prospectus under the caption
"Transferability of Units" is incorporated in this Item 5 by reference. There is
no established trading market for the Units. The Partnership Agreement contains
restrictions that are intended to prevent the development of a public market.
The number of holders of Units as of December 31, 1995 was 26,037. The
Managing General Partner holds a general partner interest in the Retirement Fund
and does not hold any Units. Pursuant to the terms of the Partnership Agreement,
the Retirement Fund generally makes distributions of cash interest, dividends
and other income received from investments in excess of expenses of operation
and reserves for expenses and certain investments and liabilities within 45 days
after the end of each calendar quarter. Net cash receipts representing
cumulative income and gains are distributed as soon as practicable after the
related disposition. Such distributions are allocated among the Managing General
Partner, and the Limited Partners, in general, first 99% to the Limited Partners
and 1% to the Managing General Partner until the Limited Partners have received
a cumulative priority return of 10% non-compounded on an annual basis on their
investments in Enhanced Yield Investments, second, 70% to the Limited Partners
and 30% to the Managing General Partner until the Managing General Partner has
received 20% of all current and prior distributions on such investments and,
thereafter, 80% to the Limited Partners and 20% to the Managing General Partner.
The Retirement Fund's distribution procedures are described in detail in the
Prospectus under the caption "Distributions and Allocations"; the information
under such caption is incorporated by reference in this Item 5.
On February 7, 1996, the Independent General Partners approved an
aggregate cash distribution of $10,274,966 for the three months ended December
31, 1995 which was paid on February 14, 1996. The amount distributed to Limited
Partners was $10,259,951 or $46.41 per Unit (of which $3,610,106 is capital
returned from investments during the fourth quarter of 1995), to Limited
Partners of record at December 31, 1995. On a per Unit basis, this distribution
to Limited Partners includes $23.36 of realized gains, $6.72 of income from
operations and $16.33 of return of capital. The Managing General Partner's one
percent allocation of $103,636 was reduced, in accordance with the provisions of
the Partnership Agreement, by its one percent allocation of realized gains and
capital returned from investments during the fourth quarter of 1995 of $88,621,
resulting in a net distribution of $15,015.
<PAGE>
Item 6. Selection Financial Data
<TABLE>
<CAPTION>
For the Years Ended
<S> <C> <C> <C> <C> <C>
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
TOTAL FUND INFORMATION:
Cash Distributions to $26,397,957 (a) $ 30,860,830 (c) $ 45,145,869 $ 39,262,688 $ 17,328,472
Partners
Net Assets 88,842,112 115,578,330 145,821,277 174,588,494 196,621,691
Total Assets 88,926,178 115,662,552 145,923,297 174,662,492 19,670,258
Net Investment Income 4,999,345 5,797,964 10,909,633 16,145,611 19,095,327
Net Change in Unrealized
Appreciation (Depreciation)
on Investments (6,915,689) (5,675,676) 4,082,028 12,769,101 (19,452,041)
Net Realized Gains
(Losses) on Investments 1,744,317 642,557 1,633,125 (11,466,984) -
PER UNIT OF LIMITED
PARTNERSHIP INTEREST:
Cash Distributions $ 119.13 (a) $ 139.31 (c) $ 203.56 $ 176.91 $ 77.60
Cumulative Cash
Distributions 874.99 (b) 755.86 615.55 412.99 236.08
Investment Income 32.00 38.24 61.20 86.84 96.13
Expenses (9.62) (12.28) (12.34) (14.54) (10.62)
Net Investment Income 22.38 24.09 52.93 75.10 86.43
Net Unrealized Appreciation
(Depreciation) on Investments (30.97) (25.42) 18.28 57.18 (87.11)
Net Realized Gain (Losses)
on Investments 7.81 2.88 7.45 (51.35) -
Net Asset Value 397.85 516.98 652.87 781.84 880.62
</TABLE>
(a) Includes Return of Capital of $16,458,810 or $74.45 per LP Unit.
(b) Includes Return of Capital of $368.77 per LP Unit.
(c) Includes Return of Capital of $16,118,359 or $72.91 per LP Unit.
<PAGE>
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Liquidity and Capital Resources
Net Proceeds of Offering
On October 13, 1988, the Retirement Fund completed the initial public
offering of Units, admitting 26,304 Limited Partners who purchased 221,072
Units. The net proceeds available for investment by the Retirement Fund after
such offering less return of capital to Limited Partners were $181,514,467 after
volume discounts, sales commissions and organizational, offering, sales and
marketing expenses.
Investments
During the year ended December 31, 1995, the Retirement Fund made a
follow-on investment in one Managed Company at a total cost of $920 and paid
$359 in additional consideration to exercise warrants.
As of December 31, 1995, the Retirement Fund had a total of 14 Enhanced
Yield Investments at a net cost of $85,451,445 (inclusive of the receipt of
securities having a capitalized cost of $422,439 received as payment-in-kind
interest on certain Enhanced Yield Investments).
Proceeds from Investments
During the year ended December 31, 1995, the Retirement Fund received the
following proceeds:
During the year ended December 31, 1995, the Retirement Fund received a
total of $473,000 and $14,733 from Western Pioneer, Inc. and MTI Holdings, Inc.,
respectively, as principal paydowns of the senior notes held by the Retirement
Fund. No gain or loss has been recorded on the transactions and the amounts will
be distributed as return of capital to the Limited Partners.
On August 3, 1995, the Retirement Fund sold its American Safety Razor
Company 13.5% Series B Subordinated Notes for $1,529,928 and recognized a gain
of $29,999 on the sale.
During the year ended December 31, 1995, the Retirement Fund received
$48,755 and $78,108 from Polaris Pool Systems, Inc. and Haddon Craftsman, Inc.,
respectively. The monies represent proceeds from the sale of the investments
from prior years that have been held in escrow for future adjustments and
expenses not paid on the sale dates. These proceeds were recorded and
distributed as gains.
On September 15, 1995 the Retirement Fund sold its common stock investment
in JP Foodservice, Inc. for $4,109,845, which resulted in a gain to the
Retirement Fund of $1,947,481.
During the year ended December 31, 1995, the Retirement Fund received
total proceeds of $268,723 from Multi-Turf, Inc. as paydown of the equity held,
which resulted in a gain of $248,472 to the Retirement Fund.
On October 26, 1995, Apollo Radio Holding Company, Inc. repaid its 15.0%
Subordinated Note. The Retirement Fund received total proceeds of $1,809,915
which represented all outstanding principal, accrued interest and a realized
gain of $272,730.
<PAGE>
On November 21, 1995, Lexmark International Group, Inc. ("Lexmark")
(formerly Lexmark Holding, Inc.) completed the initial public offering of shares
of common stock held by certain existing shareholders of Lexmark. After a
fifteen to one stock split, Equitable Capital Partners (Retirement Fund), L.P.
(the "Retirement Fund") held 1,403,011 shares of Lexmark common stock. The
Retirement Fund sold 401,581 shares in the offering representing 28.6% of the
shares held by the Retirement Fund for total net proceeds of $7,569,801 or a net
price of $18.85 per share. The initial cost of the shares sold by the Retirement
Fund was $2,677,207. As a result, the Retirement Fund realized a gain of
$4,892,595. The shares of Lexmark common stock are listed on the New York Stock
Exchange under the symbol LXK.
For additional information, refer to the Supplemental Schedule of Realized
Gains and Losses and Note 10 to the Financial Statements.
The Retirement Fund's Enhanced Yield Investments are typically issued in
private placement transactions and are subject to certain restrictions on
transfer, and are thus relatively illiquid. The balance of the Retirement Fund's
assets at the end of the period covered by this report was invested in Temporary
Investments, comprised of commercial paper with maturities of less than sixty
days.
The Retirement Fund, which is designed for tax-exempt investors, is not
permitted to borrow to finance investments. The Partnership Agreement imposes
certain limits on the use of proceeds from the disposition of investments for
reinvestments.
All cash dividends, interest and other income received by the Retirement
Fund in excess of expenses of operation and reserves for expenses and certain
investments and liabilities is distributed to the Limited Partners of the
Retirement Fund and to the Managing General Partner, within 45 days after the
end of each calendar quarter. Before each quarterly cash distribution, the
Retirement Fund will analyze the then current cash projections and determine the
amount of any additional reserves it deems necessary.
Participation in Enhanced Yield Investments
The Retirement Fund is invested primarily in Enhanced Yield Investments,
also known in the securities industry as "high yield securities". The securities
in which the Retirement Fund has invested were issued in conjunction with the
mezzanine financing of privately structured, friendly leveraged acquisitions,
recapitalizations and other leveraged financings, and are generally linked with
an equity participation. Enhanced Yield Investments are debt and preferred
equity securities that are below investment grade, i.e., unrated or rated by
Standard & Poor's Corporation as BB or lower or by Moody's Investor Services,
Inc. as Ba or lower. Risk of loss upon default by the issuer is significantly
greater with Enhanced Yield Investments than with investment grade securities
because Enhanced Yield Investments are generally unsecured and are often
subordinated to other creditors of the issuer. Also, these issuers usually have
high levels of indebtedness and are more sensitive to adverse economic
conditions, such as a recession or increasing interest rates, than investment
grade issuers. Most of these securities are subject to resale restrictions, and
generally there is no quoted market for such securities.
Although the Retirement Fund cannot eliminate its risks associated with
participation in Enhanced Yield Investments, it has established risk management
policies. The Retirement Fund subjects each prospective investment to rigorous
analysis, and makes only those investments that have been recommended by the
Managing General Partner and that meet the Retirement Fund's investment
guidelines or that have otherwise been approved by the Independent General
Partners.
Retirement Fund investments are measured against specified Retirement Fund
investment and performance guidelines. To limit the exposure of the Retirement
Fund's capital in any single issuer, the Retirement Fund limits the amount of
its investment in a particular issuer. The Retirement Fund also continually
monitors portfolio companies in order to minimize the risks associated with
participation in Enhanced Yield Investments.
<PAGE>
Results of Operations
For the year ended December 31, 1995, the Retirement Fund had net
investment income of $4,999,345, a decrease of $798,619 from the net investment
income of $5,797,964 for the year ended December 31, 1994. The Retirement Fund
had net investment income of $10,909,633 for the same period in 1993. Net
investment income is comprised of investment income (primarily interest income
and accrual of discount) offset by expenses. The decrease in the 1995 net
investment income versus the comparative period in 1994 reflects the decrease in
interest and discount income (excluding temporary investments) partially offset
by the decrease in Investment Advisory Fees, Fund Administration Fees and
Expenses and Valuation Expenses.
For the year ended December 31, 1995, the Retirement Fund had investment
income of $7,146,704, as compared to $8,539,846 for the same period in 1994 and
$13,664,951 for the same period in 1993. The decrease in 1995 investment income
of 16% versus 1994 was primarily due a decrease in the amount of accrual status
debt securities held by the Retirement Fund due to the sales and repayments of
two investments during 1995. (See Note 12 to the Financial Statements). The
decrease in the 1994 of investment income of 3.8% versus the comparative period
in 1993 was primarily due to the sale and non-accrual status of investments.
Additionally, investment income decreased due to the reversal of accrued
interest on obligations issued by Western Pioneer, Inc. and Tulip Holdings Corp.
in 1994.
The Retirement Fund incurred expenses of $2,147,359 for the year ended
December 31, 1995, as compared to $2,741,882 for the same period in 1994 and
$2,755,318 for the same period in 1993. The decrease in the 1995 expenses versus
the 1994 expenses of $594,523 was primarily due to a decrease in the Investment
Advisory Fee and the Fund Administration Fees and Expenses. The small decrease
in expenses from 1993 to 1994 of $13,436 reflects the decrease in the Investment
Advisory Fee and amortization of deferred organization expenses offset by the
increase in the Fund Administrative Fees and Expenses and professional fees.
The Retirement Fund experienced a decrease in net assets resulting from
operations for the year ended December 31, 1995 in the amount of $172,027, as
compared to an increase of $764,845 for the same period in 1994. The decrease in
net assets in 1995 versus 1994 is attributable to a decrease in net investment
income of $798,619, an increase in net unrealized depreciation of $1,240,013
offset by net realized gains of $1,101,760 (see Statements of Operations in the
Financial Statements). The decrease in net assets resulting from operations in
1994 versus 1993 is attributable to a decrease in net investment income of
$5,111,669, a decrease in net realized gains of $1,020,568 and an increase in
net unrealized depreciation of $9,757,704.
For the year ended December 31, 1995, the Retirement Fund incurred an
Investment Advisory Fee of $1,037,207 (as described in Note 6 to the Financial
Statements). For the years ended December 31, 1994 and 1993, the Retirement Fund
incurred Investment Advisory Fees of $1,278,599 and $1,581,950, respectively.
The decrease in Investment Advisory Fees is due to a decrease in the Retirement
Fund's Available Capital on which the Investment Advisory Fee is based,
resulting primarily from the redemption of debt obligations held by the
Retirement Fund.
The Fund Administration Fees and Expenses (as described in Note 7 to the
Financial Statements) for the years ended December 31, 1995, 1994 and 1993, were
$837,092, $1,133,720 and $830,638, respectively. The decrease of $296,628 from
1994 to 1995 is due primarily to a decrease in administrative expenses
reimbursed to the Fund Administrator pursuant to the Retirement Fund's
Administrative Services Agreement. During the year ended December 31, 1995 and
1994, the Retirement Fund incurred a total of $135,139 and $367,552,
respectively, of administrative expenses, consisting primarily of printing,
audit and tax return preparation and custodian fees paid for by the Fund
Administrator.
Independent General Partners' Fees and Expenses incurred for the years
ended December 31, 1995, 1994 and 1993, were $161,236, $160,979, and $166,441,
respectively. The changes are attributable to fluctuations in legal fees
incurred by the Independent General Partners (See Note 9 to the Financial
Statements).
The Retirement Fund incurred professional fees of $105,443, $146,956 and
$60,721 for the years ended December 31, 1995, 1994 and 1993, respectively,
which are primarily comprised of legal fees reimbursed to Equitable Life for
legal services (see Note 9 to the Financial Statements).
Unrealized Appreciation/Depreciation, and Non-Accrual of Investments
The General Partners of the Retirement Fund determine, on a quarterly
basis, the fair value of the Retirement Fund's portfolio securities that do not
have a readily ascertainable market value. They are assisted in connection with
such determination by the Managing General Partner, which has established a
valuation committee comprised of senior executives to assess the Retirement
Fund's portfolio and make recommendations regarding the value of its portfolio
securities. This valuation committee uses available market information and
appropriate valuation methodologies. In addition, the Managing General Partner
has retained Arthur D. Little, Inc., a nationally recognized independent
valuation consultant, to review such valuations.
For privately issued securities in which the Retirement Fund typically
invests, the fair value of an investment is its initial cost, adjusted for
amortization of discount or premium and as subsequently adjusted to reflect the
occurrence of significant developments. "Significant developments" are business,
economic or market events that may affect a company in which an investment has
been made or the securities comprising such investment. For example, significant
developments that could result in a write-down in value include, among other
things, events of default with respect to payment obligations or other
developments indicating that a portfolio company's performance may fall short of
acceptable levels. A write-up in value of an investment could take place when a
significant favorable development occurs, such as a transaction representing the
partial sale of an investment that would result in a capital gain or company
performance exceeding expected levels on a sustained basis.
Although the General Partners use their best judgment in determining the
fair value of these investments, there are inherent limitations in any valuation
technique involving securities of the type in which the Retirement Fund invests.
Therefore, the fair values presented herein are not necessarily indicative of
the amount which the Retirement Fund could realize in a current transaction.
For the years ended December 31, 1995 and 1994, the Retirement Fund
recorded net unrealized depreciation on Enhanced Yield Investments of $6,915,689
and $5,675,676, respectively. For the year ended December 31, 1993, the
Retirement Fund recorded net unrealized appreciation on Enhanced Yield
Investments of $4,082,028. The increase of $1,240,013 in unrealized depreciation
from 1994 to 1995 was primarily the result of writedowns in U.S. Leather
Holdings, Inc., Pergament Home Centers, Inc. and Tulip Holding Corp., offset by
unrealized appreciation in Lexmark International Group, Inc. and the reversal of
unrealized depreciation in Ampex Recording Media Corp. (See Note 12 to the
Financial Statements).
Alliance Corporate continues to monitor the Retirement Fund's portfolio
closely. As a matter of standard procedure, Alliance Corporate reviews each
portfolio company's financial statements at least quarterly, and often monthly.
Investment managers routinely review and discuss financial and operating results
with the companies' management and equity sponsors, and attend periodic board of
directors meetings, as appropriate. In some cases, Alliance Corporate officers,
acting on behalf of the Funds serve as directors on the boards of portfolio
companies. When problems arise, communication with management and sponsors often
occurs on a daily basis.
<PAGE>
The following investments have been on non-accrual status as of the
respective dates:
U.S. Leather Holdings, Inc. 15%
Senior Subordinated Note October 1, 1995
MTI Holdings, Inc. 5%
Senior Secured Note October 1, 1995
Western Pioneer, Inc. 10%
Senior Subordinated Note November 30, 1994
RI Holdings, Inc. 16%
Senior Subordinated Notes April 25, 1994
Tulip Holding, Corp. 14.5% and 16.5%
Subordinated Notes January 1, 1994
Realized Gains and Losses on Investments
For the year ended December 31, 1995, the Retirement Fund recorded net
gains of $1,744,317 on transactions involving eight Enhanced Yield Investments.
(See Note 10 to the Financial Statements and the Supplemental Schedule of
Realized Gains and Losses). For the years ended December 31, 1994 and 1993, the
Retirement Fund realized a net gain on investments of $642,557 and $1,663,125,
respectively.
<PAGE>
Item 8. Financial Statements and Supplementary Data
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
TABLE OF CONTENTS
Independent Auditors' Report
Statements of Assets, Liabilities and Partners' Capital as of
December 31, 1995 and 1994
Statements of Operations
For the Years Ended December 31, 1995, 1994, and 1993
Statements of Cash Flows
For the Years Ended December 31, 1995, 1994 and 1993
Statements of Changes in Net Assets
For the Years Ended December 31, 1995, 1994 and 1993
Statements of Changes in Partners' Capital
For the Years Ended December 31, 1995, 1994 and 1993
Schedule of Portfolio Investments - December 31, 1995
Supplemental Schedule of Realized Gains and Losses
For the Year Ended December 31, 1995
Notes to Financial Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
Equitable Capital Partners (Retirement Fund), L.P.:
We have audited the accompanying statements of assets, liabilities and partners'
capital of Equitable Capital Partners (Retirement Fund), L.P. (the "Retirement
Fund") as of December 31, 1995 and 1994, including the schedule of portfolio
investments, as of December 31, 1995, and the related statements of operations,
cash flows, changes in net assets and changes in partners' capital for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Fund's General Partners. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Retirement Fund as of December 31, 1995
and 1994, the results of its operations, its cash flows and the changes in its
net assets and partners' capital for the respective stated periods, in
conformity with generally accepted accounting principles.
As explained in Note 2, the financial statements of the Retirement Fund include
securities valued at $28,806,626 and $86,914,728 as of December 31, 1995 and
1994, respectively, representing 32.4 and 75.1 percent of total assets,
respectively, whose values have been estimated by the General Partners of the
Retirement Fund in the absence of readily ascertainable market values. We have
reviewed the procedures used by the General Partners in arriving at their
estimate of value of such securities and have inspected underlying
documentation, and, in the circumstances, we believe the procedures are
reasonable and the documentation appropriate. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly from
the values that would have been used had a ready market for the securities
existed, and the differences could be material.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of realized
gains and losses for the year ended December 31, 1995 is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements. This schedule is the responsibility of the Retirement Fund's General
Partners. Such schedule has been subjected to the auditing procedures applied in
our audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
Deloitte & Touche LLP
New York, New York
February 20, 1996
<PAGE>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<S> <C> <C> <C>
ASSETS: Notes December 31, December 31,
1995 1994
Investments 2,10,12
Enhanced Yield Investments at
Value-Managed Companies
(amortized cost of $83,389,283
at December 31, 1995 and
$93,252,115 at December 31, 1994) $ 67,489,913 $ 83,511,586
Non-Managed Companies
(amortized cost of $2,121,174 at
December 31, 1995 and $3,534,916
at December 31, 1994) 2,720,868 4,891,456
Temporary Investments
(at amortized cost) 16,536,723 23,524,901
Cash 39,180 85,291
Interest Receivable 2,12 886,589 2,238,868
Note Receivable 3,4 1,245,982 1,410,450
Prepaid Expenses 6,923 -
TOTAL ASSETS $ 88,926,178 $ 115,662,552
TOTAL LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Professional Fees Payable 9 40,833 24,161
Independent General Partners'
Fees Payable 8 10,547 9,566
Fund Administrative
Expenses Payble 7 28,445 40,168
Other Accrued Liabilities 4,241 10,327
Total Liabilities 84,066 84,222
Partners' Capital
Managing General Partner 3,4 1,058,667 1,288,272
Limited Partners (221,072) 4 87,783,445 114,290,058
Total Partner's Capital 88,842,112 115,578,330
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 88,926,178 $ 115,662,552
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
STATEMENTS OF OPERATIONS
<S> <C> <C> <C>
For the Years Ended
December 31, 1995 December 31, 1994 December 31, 1993
INVESTMENT INCOME - Notes 2,12
Interest $ 7,121,657 $ 7,622,188 $ 12,864,576
Discount 25,047 917,658 800,375
TOTAL INVESTMENT INCOME 7,146,704 8,539,846 13,664,951
EXPENSES:
Investment Advisory Fee - Note 6 1,037,207 1,278,599 1,581,950
Fund Administration Fees and
Expenses - Note 7 837,092 1,133,720 830,638
Independent General Partners'
Fees and Expenses - Note 8 161,236 160,979 166,441
Amortization of Deferred
Organization Expenses - Note 2 - - 71,633
Professional Fees - Note 9 105,443 146,956 60,721
Insurance Fees - 2,755 25,830
Valuation Expenses 6,381 18,873 18,105
TOTAL EXPENSES 2,147,359 2,741,882 2,755,318
NET INVESTMENT INCOME 4,999,345 5,797,964 10,909,633
NET CHANGE IN UNREALIZED
(DEPRECIATION) APPRECIATION ON
INVESTMENTS-Note 12 (6,915,689) (5,675,676) 4,082,028
NET REALIZED GAINS ON INVESTMENTS - Note 10 1,744,317 642,557 1,663,125
NET (DECREASE) INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ (172,027) $ 764,845 $ 16,654,786
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
STATEMENTS OF CASH FLOWS
<S> <C> <C> <C>
For the Years Ended
INCREASE IN CASH December 31, 1995 December 31, 1994 December 31, 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest and Discount Income $ 7,249,650 $ 9,648,662 $ 11,455,752
Fund Administration Fees and Expenses (848,815) (1,093,552) (830,638)
Investment Advisory Fee (1,037,207) (1,278,599) (1,581,950)
Independent General Partners' Fees and Expenses (161,259) (160,413) (179,018)
Valuation Expenses (12,466) (23,346) (21,305)
Sale (Purchase) of Temporary Investments, Net 7,779,486 (4,156,369) 5,122,687
Purchase of Enhanced Yield Investments (920) (227) (483)
Proceeds from Sales and Principal
Payments of Enhanced Yield Investments 13,479,835 28,095,324 31,274,287
Professional Fees (89,535) (149,295) (68,642)
Insurance Fees (6,923) (4,318) (4,882)
Net Cash Provided by Operating Activitites 26,351,846 30,877,867 45,165,808
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Distributions to Partners (26,397,957) (30,860,830) (45,098,287)
Net Cash Applied to Financing Activities (26,397,957) (30,860,830) (45,098,287)
Net (Decrease) Increase in Cash (46,111) 17,037 67,521
Cash at the Beginning of the Period 85,291 68,254 733
Cash at the End of the Period $ 39,180 $ 85,291 $ 68,254
</TABLE>
RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES
<TABLE>
<S> <C> <C> <C>
Net Increase in Net Assets Resulting
From Operations $ (172,027) $ 764,845 $ 16,654,786
Adjustments to Reconcile Net Increase
in Net Assets Resulting from Operations
to Net Cash Provided by Operating Activities:
Decrease in Investments 19,514,082 23,343,753 34,687,934
(Increase) Decrease in Accrued Interest 101,181 1,108,636 (2,211,349)
Amortization of Deferred Organization Expenses - - 71,633
(Decrease) Increase in Other Accrued Liabilities (6,086) (56,193) 48,520
(Decrease) Increase in Fund Administration Expenses
Payable (11,723) 40,168 -
(Increase) Decrease in Prepaid Expenses (6,923) 2,755 16,810
Net Change In Unrealized Depreciation
(Appreciation) on Investments 6,915,689 5,675,676 (4,082,028)
Increase (Decrease) in Independent General
Partners' Fees Payable 981 566 (12,578)
Increase (Decrease) in Professional Fees Payable 16,672 (2,339) (7,920)
Total Adjustments 26,523,873 30,113,022 28,511,022
Net Cash Provided by Operating Activities $ 26,351,846 $ 30,877,867 $ 45,165,808
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
STATEMENTS OF CHANGES IN NET ASSETS
<S> <C> <C> <C>
For the Years Ended
December 31, 1995 December 31, 1994 December 31, 1993
FROM OPERATIONS:
Net Increase (Decrease) in Net
Assets Resulting from Operations $ (172,027) $ 764,845 $ 16,654,786
Cash Distributions to Partners (26,397,957) (30,860,830) (45,145,869)
Reduction in Managing General
Partners' Contribution (166,234) (146,962) (276,134)
Total Decrease (26,736,218) (30,242,947) (28,767,217)
NET ASSETS:
Beginning of Period 115,578,330 145,821,277 174,588,494
End of Period $ 88,842,112 $ 115,578,330 $ 145,821,277
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<S> <C> <C> <C> <C>
Managing Limited
Notes General Partner Partners Total
FOR THE YEAR ENDED DECEMBER 31, 1993
Partners' Capital at January 1, 1993 $ 1,744,914 $ 172,843,580 $ 174,588,494
Cash Distributions to Partners (144,453) (45,001,416) (45,145,869)
Reduction in Managing General Partners'
Contribution 3 (276,134) - (276,134)
Allocation of Net Investment Income 11 109,097 10,800,536 10,909,633
Allocation of Net Unrealized
Appreciation on Investments 12 40,820 4,041,208 4,082,028
Allocation of Net Realized Gains on
Investments 10 16,631 1,646,494 1,663,125
Partners' Capital at December 31, 1993 $ 1,490,875 $ 144,330,402 $ 145,821,277
FOR THE YEAR ENDED DECEMBER 31, 1994
Partners' Capital at January 1, 1994 $ 1,490,875 $ 144,330,402 $ 145,821,277
Cash Distributions to Partners (63,290) (30,797,540) (30,860,830)
Reduction in Managing General Partners'
Contribution 3 (146,962) - (146,962)
Allocation of Net Investment Income 11 57,980 5,739,984 5,797,964
Allocation of Net Unrealized
Depreciation on Investments 12 (56,757) (5,618,919) (5,675,676)
Allocation of Net Realized Gains on
Investments 10 6,426 636,131 642,557
Partners' Capital at December 31, 1994 $ 1,288,272 $ 114,290,058 $ 115,578,330
FOR THE YEAR ENDED DECEMBER 31, 1995
Partners' Capital at January 1, 1995 $ 1,288,272 $ 114,290,058 $ 115,578,330
Cash Distributions to Partners (61,650) (26,336,307) (26,397,957)
Reduction in Managing General Partners'
Contribution 3 (166,234) - (166,234)
Allocation of Net Investment Income 11 49,993 4,949,352 4,999,345
Allocation of Net Unrealized Depreciation
on Investments 12 (69,157) (6,846,532) (6,915,689)
Allocation of Net Realized Gains on
Investments 10 17,443 1,726,874 1,744,317
Partners' Capital at December 31, 1995 $ 1,058,667 $ 87,783,445 $ 88,842,112
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
<S> <C> <C> <C> <C> <C> <C>
PRINCIPAL INVESTMENT INVESTMENT AMORTIZED VALUE % OF TOTAL
AMOUNT/SHARES INVESTMENT DATE COST COST (NOTE 2) INVESTMENTS
- -------------- ----------------------------------------------- ---------- ---------- ------------- ---------- ----------
ENHANCED YIELD INVESTMENTS
MANAGED COMPANIES
CONSUMER PRODUCTS MANUFACTURING
LEXMARK INTERNATIONAL GROUP, INC.
$ 24,103,269 Lexmark International Inc.,
Sr. Sub. Nts. 14.25% due 03/31/01* 03/27/91 $ 24,103,269 24,103,269 24,103,269
1,001,430 Warrants Lexmark International Group, Inc.,
Class B Common Stock**(d) 03/27/91 6,676,200 6,676,200 16,448,488
-------------- -------------- --------------
30,779,469 30,779,469 40,551,757 46.75
-------------- -------------- -----------------------
TULIP HOLDING CORPORATION - NOTE 12
$ 4,394,288 Tulip Holding Corp.,
Sub. Nt. 14.5% due 12/29/97*(a)(b) 12/29/89 4,378,513 4,387,394 219,714
$ 222,161 Tulip Holding Corp.,
Sub. Nt. 16.5% due 06/30/94*(a)(b)(c) 12/31/91 222,161 222,161 0
$ 716,680 Tulip Holding Corp.,
Sub. Nt. 16.5% due 06/30/94*(a)(b)(c) 12/31/92 716,680 716,680 0
$ 323,462 Tulip Holding Corp.,
Sub. Nt. 16.5% due 06/30/94*(a)(b)(c) 12/31/93 323,462 323,462 0
1,464.763 Shares Tulip Holding Corp.,
Series A Exchangeable Pref. Stock 15%*(b) 12/29/89 1,464,763 1,464,763 0
78,872 Warrants Tulip Holding Corp.,
Common Stock Purchase Warrants** 12/29/89 15,774 15,774 0
-------------- ---------------- --------------
7,121,353 7,130,234 219,714 0.25
-------------- ---------------- ----------------------
BANKING AND FINANCE
USAT HOLDINGS INC.
297 Shares USAT Holdings Inc., Common Stock** 01/05/90 &
12/19/91 3,560,182 3,560,182 3,560,182
-------------- ---------------- --------------
3,560,182 3,560,182 3,560,182 4.11
-------------- ---------------- ----------------------
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(CONTINUED)
<S> <C> <C> <C> <C> <C> <C>
PRINCIPAL INVESTMENT INVESTMENT AMORTIZED VALUE % OF TOTAL
AMOUNT/SHARES INVESTMENT DATE COST COST (NOTE 2) INVESTMENTS
- --------------- ----------------------------------------------- ----------- ------------- ------------ ------------ ------------
MISCELLANEOUS MANUFACTURING
QUANTEGY ACQUISITION CORP.
(FORMERLY AMPEX RECORDING MEDIA)
123.50 Shares Quantegy Acquisition Corp., Common Stock 11/13/95 $ 2,722,290 $ 2,722,290 $ 2,722,290
35,882 Warrants Ampex Recording Media Corp.,
Warrants to Purchase Class A Common Stock**(e) 12/31/90 &
06/28/91 288,251 288,251 143,528
-------------- ------------- -------------
3,010,541 3,010,541 2,865,818 3.30
-------------- ------------- -----------------------
RI HOLDINGS, INC. - NOTES 10, 12
$ 11,123,914 RI Holdings, Inc.,
Sr. Sub. Nts. 16% due 08/31/01*(a)(b) 04/25/94 5,826,150 5,826,150 4,660,920
150,191 Shares RI Holdings, Inc., Common Stock** 09/01/89 1,501,910 1,501,910 0
104,211.03 Shares RI Holdings, Inc., Common Stock** various 1,044 1,044 0
22,687.5 Shares RI Holdings, Inc., Common Stock** 04/25/94 227 227 0
92,045.09 Shares RI Holdings, Inc., Common Stock** 05/09/95 920 920 0
--------------- ------------- ------------
7,330,251 7,330,251 4,660,920 5.37
--------------- ------------- ----------------------
LEATHER AND LEATHER PRODUCTS
UNITED STATES LEATHER HOLDINGS, INC.
$ 14,616,000 U.S. Leather Holdings, Inc.,
Sr. Sub. Deb. 15% due 1/31/04* 08/06/93 14,515,886 14,526,875 8,769,600
$ 36,251 U.S. Leather Holdings, Inc.,
Sr. Sub. Deb. 15% due 8/05/98*(a) 11/30/93 36,251 36,251 0
$ 439,565 U.S. Leather Holdings, Inc.,
Sr. Sub. Deb. 15% due 8/05/98*(a) 02/28/94 439,565 439,565 0
$ 414,946 U.S. Leather Holdings, Inc.,
Sr. Sub. Deb. 15% due 8/05/98*(a) 11/30/94 414,946 414,946 0
$ 571,130 U.S. Leather Holdings, Inc.,
Sr. Sub. Deb. 15% due 8/05/98*(a) 02/28/95 571,130 571,130 0
$ 250,334 U.S. Leather Holdings, Inc.,
Sr. Sub. Deb. 15% due 8/05/98*(a) 05/31/95 250,334 250,334 0
$ 402,926 U.S. Leather Holdings, Inc.,
Sr. Sub. Deb. 15% due 8/05/98*(a) 08/31/95 402,926 402,926 0
$ 565,943 U.S. Leather Holdings, Inc.,
Sr. Sub. Deb. 15% due 8/05/98*(a) 11/30/95 565,943 565,943 0
2,986.41 Shares U.S. Leather Holdings, Inc.,
Sr. Sub. Pref. Stock 8%
redeemable 03/31/01*(a)(b) 08/06/93 2,024,000 2,024,000 0
150,231 Shares U.S. Leather Holdings, Inc.,
Jr. Sub. Pref. Stock *(a)(b) 08/06/93 0 0 0
150,231 Warrants U.S. Leather Holdings, Inc.,
Non-Voting Common Stock Purchase Warrants** 08/06/93 186,918 186,918 0
-------------- -------------- ------------
19,407,899 19,418,888 8,769,600 10.11
-------------- -------------- ----------------------
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(CONTINUED)
<S> <C> <C> <C> <C> <C> <C>
PRINCIPAL INVESTMENT INVESTMENT AMORTIZED VALUE % OF TOTAL
AMOUNT/SHARES INVESTMENT DATE COST COST (NOTE 2) INVESTMENTS
- -------------- ------------------------------------------------ ----------- ------------- ------------ ------------ ------------
DISTRIBUTION SERVICES
WB BOTTLING CORPORATION - NOTE 12
1,615 Shares WB Bottling Corp., Preferred Stock** 09/12/90 $ 161,500 $ 161,500 $ 0
21,463 Shares WB Bottling Corp., Common Stock** 09/12/90 &
08/11/92 87,296 87,296 0
-------------- ------------ ------------
248,796 248,796 0 0.00
-------------- ------------ ------------------------
MISCELLANEOUS RETAIL
PERGAMENT HOME CENTERS, INC.- Note 12
$ 2,543,200 Pergament Acq. Corp., Home Centers, Inc.
Floating Rate Demand Note due 07/31/00* 10/18/91 2,543,200 2,543,200 2,543,200
299.2 Shares Pergament Holdings, Corp.,
Common Stock Class B** 02/28/89 6,732,000 6,732,000 1,683,000
109.2571 Shares Pergament Holdings, Corp.,
Common Stock Class C ** 02/28/89 0 0 0
-------------- ------------ ----------
9,275,200 9,275,200 4,226,200 4.87
-------------- ------------ ------------------------
R&S STRAUSS, INC.
(FORMERLY WSR ACQUISITION CORP.)
$ 935,000 R&S Strauss, Inc.,
Sr. Sub. Nt. 15% due 05/31/00* 06/13/90 935,000 935,000 935,000
$ 1,190,000 R&S Strauss, Inc.,
Sr. Sub. Nt. 15% due 05/31/00* 06/13/90 1,190,000 1,190,000 1,190,000
-------------- ------------ -----------
2,125,000 2,125,000 2,125,000 2.45
-------------- ------------ ------------------------
PRINTING, PUBLISHING AND ALLIED LINES
AMERICAN PAPER GROUP, LTD.
$ 595,683 American Paper Group, Ltd.,
Sub. Nts. 5% due 12/31/00* 01/18/94 404,111 443,253 443,253
996 Shares American Paper Holdings Inc., Common Stock** 01/18/94 67,469 67,469 67,469
-------------- ------------ -----------
471,580 510,722 510,722 0.59
-------------- ------------ ------------------------
TOTAL INVESTMENT IN MANAGED COMPANIES $ 83,330,271 $83,389,283 $67,489,913 77.80
---------------------------------------- -------------- -------------- ------------------------
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(CONTINUED)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
PRINCIPAL INVESTMENT INVESTMENT AMORTIZED VALUE % OF TOTAL
AMOUNT/SHARES INVESTMENT DATE COST COST (NOTE 2) INVESTMENTS
- --------------- ---------------------------------------------- ----------- ------------ ------------ ---------- -------------
NON-MANAGED COMPANIES
CONSUMER PRODUCTS MANUFACTURING
AMERICAN SAFETY RAZOR COMPANY - NOTE 12
106,670 Shares ASR Acquisition Corp., Common Stock (d) 04/14/89 $ 16,778 $ 16,778 $ 840,026
1,571 Shares ASR Acquisition Corp., Common Stock (d) 05/22/89 246 246 12,372
------------ ------------ ----------
17,024 17,024 852,398 0.99
------------ ------------ ------------------------
DISTRIBUTION SERVICES
WESTERN PIONEER, INC. - Note 10
$ 4,730,800 Western Pioneer, Inc.,
Sr. Sub. Nts. 10% due 12/01/02*(b) 11/30/94 1,008,040 1,008,040 1,008,040
81,081 Warrants Western Pioneer, Inc.,
Common Stock Purchase Warrants ** 11/30/94 0 0 0
------------ ----------- ------------
1,008,040 1,008,040 1,008,040 1.16
------------ ----------- -------------------------
BROADCASTING
APOLLO RADIO HOLDING CO., INC.
29.75 Shares Apollo Radio Holding Co., Inc., Common Stock** 06/01/90 61,788 61,788 336,401
25.5 Shares Apollo Radio Holding Co., Inc., Common Stock** 04/03/90 52,962 52,962 288,349
9.2083 Warrants Apollo Radio Holding Co., Inc., Common Stock
Purchase Warrants** 04/03/90 0 0 0
------------ ------------ ----------
114,750 114,750 624,750 0.72
------------ ------------ ------------------------
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(CONTINUED)
<S> <C> <C> <C> <C> <C> <C>
PRINCIPAL INVESTMENT INVESTMENT AMORTIZED VALUE % OF TOTAL
AMOUNT/SHARES INVESTMENT DATE COST COST (NOTE 2) INVESTMENTS
- --------------- -------------------------------------------------- ----------- ------------- ----------- ---------- ------------
HEALTH SERVICES
MTI HOLDINGS, INC. - NOTES 10, 12
$ 471,360 MTI Holdings, Inc., Sr. Sec. Nt. 5% due 08/15/99* 07/01/94 $ 471,360 $ 471,360 $ 235,680
22,376 Shares MTI Holdings, Inc., Class B Common Stock** 07/01/94 510,000 510,000 0
------------- -------------- ------------
981,360 981,360 235,680 0.27
------------- -------------- ---------------------
TOTAL INVESTMENT IN NON-MANAGED COMPANIES $ 2,121,174 $ 2,121,174 $ 2,720,868 3.14
------------------------------------------ ------------- -------------- ---------------------
TOTAL INVESTMENT IN PORTFOLIO $85,451,445 $ 85,510,457 $ 70,210,781 80.94
-----------------------------
TEMPORARY INVESTMENTS
COMMERCIAL PAPER
$ 7,500,000 Greenwich Funding, 5.67% due 02/21/96 12/15/95 $ 7,419,675 $ 7,439,756 $ 7,439,756
$ 9,100,000 International Securitization, 6.00% due 01/03/96 12/29/95 9,092,417 9,096,967 9,096,967
------------- ---------------- ------------
TOTAL INVESTMENT IN COMMERCIAL PAPER $16,512,092 $ 16,536,723 $16,536,723 19.06
------------------------------------ ------------- ---------------- --------------------
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(CONCLUDED)
<S> <C> <C> <C> <C> <C> <C>
PRINCIPAL INVESTMENT INVESTMENT AMORTIZED VALUE % OF TOTAL
AMOUNT/SHARES INVESTMENT DATE COST COST (NOTE 2) INVESTMENTS
- -------------------- ------------------------------------------- ---------- ------------- ----------- ----------- ------------
TOTAL TEMPORARY INVESTMENTS $ 16,512,092 $ 16,536,723 $16,536,723 19.06
--------------------------- ------------ ------------ ------------------------
TOTAL INVESTMENT PORTFOLIO $101,963,537 $102,047,180 $86,747,504 100.00%
-------------------------- ============ ============ ========================
SUMMARY OF INVESTMENTS
Subordinated Notes $ 59,318,927 $ 59,377,939 $44,108,676 50.85
Preferred Stock 3,650,263 3,650,263 - 0.00
Common Stock and Warrants 22,482,255 22,482,255 26,102,105 30.09
Temporary Investments 16,512,092 16,536,723 16,536,723 19.06
------------- ------------ -----------------------
TOTAL INVESTMENT PORTFOLIO $101,963,537 $102,047,180 $86,747,504 100.00%
-------------------------- ============ ============= =======================
* Restricted Security
** Restricted Non-income Producing Security
*** Affiliated Companies
(a) Includes receipt of payment-in-kind securities.
(b) Non-accrual investment status.
(c) Includes capitalized deferred income.
(d) Publicly traded class of securities.
(e) Underlying security publicly traded.
</TABLE>
See the Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
SUPPLEMENTAL SCHEDULE OF REALIZED GAINS AND LOSSES
FOR THE YEAR ENDED DECEMBER 31, 1995
<S> <C> <C> <C> <C> <C>
PAR VALUE
DATE OF OR NUMBER AMORTIZED NET REALIZED
SECURITY TRANSACTION OR SHARES COST PROCEEDS GAIN (LOSS)
Polaris Pool Systems, Inc.
Common Stock 3/22/95 $ - $ - $ 40,754 $ 40,754
Total Net Realized Gains for the Three Months Ended March 31, 1995 40,754 40,754
Total Net Realized Gains for the Three Months Ended June 30, 1995 - - -
Haddon Craftsman, Inc.
Common Stock 8/9/95 - - 27,879 27,879
Polaris Pool Systems, Inc.
Common Stock 8/9/95 - - 8,001 8,001
ASR Acquisition Corp.
Series B Subordinated 13.5% Notes 8/29/95 $ 1,499,929 1,499,929 1,529,928 29,999
J.P. Foodservice, Inc.
Common Stock 9/19/95 249,957 2,162,364 4,109,845 1,947,481
Multi-Turf, Inc.
Common Stock 9/20/95 78.54 20,251 268,723 248,472
Total Net Realized Gains for the Three Months Ended September 30, 1995 3,682,544 5,944,376 2,261,832
Apollo Radio Holding Co., Inc.
Subordinated 15.0% Note 10/27/95 $ 850,000 1,537,185 1,809,915 272,730
Ampex Recording Media
Subordinated Notes Series A & B 11/13/95 $ 8,496,113 8,496,113 2,722,290 (5,773,823)
Lexmark International Group, Inc.
Common Stock 11/22/95 401,581 2,677,207 7,569,802 4,892,595
Haddon Craftsman, Inc.
Common Stock 12/7/95 - - 50,229 50,229
Total Net Realized Losses for the Three Months Ended December 31, 1995 12,710,505 12,152,236 (558,269)
Total Net Realized Gains for the Year Ended December 31, 1995 $16,393,049 $18,137,366 $1,744,317
=========== ============= ===========
(A) Proceeds represent a distribution to the Retirement Fund from the
escrow account.
</TABLE>
See the Accompanying Notes to Financial Statements.
<PAGE>
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. Organization and Purpose
Equitable Capital Partners, L.P. (the "Fund") was formed along with
Equitable Capital Partners (Retirement Fund), L.P. (the "Retirement Fund," and
collectively with the Fund referred to as the "Funds") and the Certificates of
Limited Partnership were filed under the Delaware Revised Uniform Limited
Partnership Act on February 2, 1988. The Funds' operations commenced on October
13, 1988.
On July 22, 1993, Equitable Capital Management Corporation ("Equitable
Capital"), formerly the Managing General Partner and investment adviser of the
Funds, transferred substantially all of the assets comprising Equitable
Capital's business to Alliance Capital Management L.P. ("Alliance Capital") and
its wholly-owned subsidiary, Alliance Corporate Finance Group Incorporated
("Alliance Corporate"). In connection with such transaction, the limited
partners of the Funds (the "Limited Partners") voted to approve a new investment
advisory agreement between the Funds and Alliance Corporate and also voted to
admit Alliance Corporate as Managing General Partner of the Funds to succeed
Equitable Capital. Accordingly, on July 22, 1993, the closing date of the
transaction described above, (l) Alliance Corporate was admitted as the
successor Managing General Partner of the Funds, (ll) Equitable Capital withdrew
from the Funds as Managing General Partner and assigned all of its interest as
General Partner to Alliance Corporate and (lll) Alliance Corporate succeeded
Equitable Capital as the investment advisor to the Funds pursuant to a new
investment advisory agreement. Alliance Corporate (the "Investment Adviser") is
a registered investment adviser under the Investment Advisers Act of 1940.
Prior to July 22, 1993, Equitable Capital was responsible, subject to the
supervision of the independent general partners of the Funds (the "Independent
General Partners"), for the management of the Funds' investments. As of July 22,
1993, Alliance Corporate assumed such responsibilities in its capacity as
Managing General Partner and Investment Adviser of the Funds.
The Funds have elected to operate as business development companies under
the Investment Company Act of 1940, as amended. The Funds seek current income
and capital appreciation potential through investments in privately-structured,
friendly leveraged acquisitions and other leveraged transactions. The Funds have
pursued this objective by investing primarily in subordinated debt and related
equity securities ("Enhanced Yield Investments") issued in conjunction with the
"mezzanine financing" of friendly leveraged acquisitions and leveraged
recapitalizations.
As stated in the Partnership Agreement, the Retirement Fund will terminate
on October 13, 1998, subject to the right of the Independent General Partners to
extend the term of the Retirement Fund for up to two additional one year
periods, after which the Retirement fund will liquidate any remaining
investments within five years.
2. Significant Accounting Policies
Basis of Accounting
For financial reporting purposes, the Retirement Fund's records are
maintained using the accrual method of accounting.
<PAGE>
Valuation of Investments
Securities are valued at market or fair value. Market value is used for
securities for which market quotations are readily available. For securities
without a readily ascertainable market value, fair value is determined, on a
quarterly basis, in good faith by the General Partners of the Retirement Fund.
The total value of securities without a readily ascertainable market value is
$28,806,626 and $86,914,728 as of December 31, 1995 and 1994, respectively,
representing 32.4% and 75.1% of total assets, respectively. In connection with
such determination, the Managing General Partner has established a valuation
committee comprised of senior executives to assess the Retirement Fund's
portfolio and make recommendations regarding the value of the Retirement Fund's
portfolio securities. This valuation committee uses available market information
and appropriate valuation methodologies. In addition, the Managing General
Partner has retained Arthur D. Little, Inc., a nationally recognized independent
valuation consultant, to review such valuations.
For privately issued securities in which the Retirement Fund typically
invests, the fair value of an investment is its initial cost, adjusted for
amortization of discount or premium and as subsequently adjusted to reflect the
occurrence of significant developments. "Significant developments" are business,
economic or market events that may affect a company in which an investment has
been made or the securities comprising such investment. For example, significant
developments that could result in a writedown in value include, among other
things, events of default with respect to payment obligations or other
developments indicating that a portfolio company's performance may fall short of
acceptable levels. A write-up in value of an investment could take place when a
significant favorable development occurs, such as a transaction representing the
partial sale of an investment that would result in a capital gain, or company
performance exceeding expected levels on a sustained basis. Although the General
Partners use their best judgment in determining the fair value of these
investments, there are inherent limitations in any valuation technique involving
securities of the type in which the Retirement Fund invests. Therefore, the fair
value estimates presented herein are not necessarily indicative of the amount
which the Retirement Fund could realize in a current transaction.
Temporary Investments with maturities of 60 days or less are valued at
amortized cost, which approximates market value. Temporary Investments which
mature in more than 60 days, for which market quotations are readily available,
are valued at the most recent bid price or the equivalent quoted yield obtained
from one or more of the market makers.
Interest Receivable on Investments
Investments will generally be placed on non-accrual status in the event of
a default (after applicable grace period expires) or if the Managing General
Partner determines that there is no reasonable expectation of collecting
interest.
Payment-In-Kind Securities
All payment-in-kind securities received in lieu of cash interest payments
from the Retirement Fund's portfolio companies are recorded at face value,
unless the Managing General Partner determines that there is no reasonable
expectation of collecting the full principal amounts of such securities.
<PAGE>
Income Taxes
As discussed in Note 13, no provision for income taxes has been made since
all income and losses are allocated to the Retirement Fund's partners
("Partners") for inclusion in their respective tax returns.
Deferred Organization Expenses
Organization expenses of $431,479 were fully amortized on a straight-line
basis as of October 31, 1993.
Investment Transactions
Enhanced Yield Investments - The Retirement Fund records transactions on
the date on which it obtains an enforceable right to demand the securities or
payment thereof.
Temporary Investments - The Retirement Fund records transactions on the
trade date.
Realized gains and losses on investments are determined on the basis of
specific identification for accounting and tax purposes.
Sales, Marketing and Offering Expenses and Sales Commissions
Sales commissions and selling discounts are allocated to the specific
Partners' accounts to which they are applicable. Sales, marketing and offering
expenses are allocated between the Funds in proportion to the number of units
issued by each Fund and to the Partners in proportion to their capital
contributions.
3. Note Receivable
On July 22, 1993, pursuant to the terms of the Retirement Fund's Amended
and Restated Agreement of Limited Partnership, Alliance Corporate, as the
successor Managing General Partner of the Retirement Fund, has contributed a
non-interest bearing promissory note (the "Note") to the Retirement Fund in an
aggregate amount equal to 1.01% of the aggregate Net Capital Contributions of
all Limited Partners (less distributions representing returns of capital). Net
Capital Contributions are comprised of gross offering proceeds, after giving
effect to volume discounts (and after netting of sales commissions,
organization, offering and sales and marketing expenses), less returns of
capital distributed to Limited Partners. The principal amount of the Note is
reduced proportionally as such Limited Partners receive distributions
representing additional returns of capital. Such distributions received for the
year ended December 31, 1995, resulted in a $166,234 reduction of the principal
amount of the Note. The promissory note of Equitable Capital was canceled upon
the contribution of Alliance Corporate's Note.
4. Capital Contributions
On October 13, 1988, the Retirement Fund closed the initial public
offering of its units of Limited Partner interests ("Units"). Equitable Capital,
the Retirement Fund's Managing General Partner at that time, accepted
subscriptions for 221,072 Units and admitted 26,304 Limited Partners.
The Limited Partners' total capital contributions were $220,848,730, after
giving effect to volume discounts allowed of $223,270. Equitable Capital's
aggregate capital contribution was in the form of a promissory note in the
principal amount of $2,051,783. On July 22, 1993, Equitable Capital's note was
canceled and Alliance Corporate made a capital contribution in the form of a
promissory note on such date, as described in note 3. Sales, marketing and
offering expenses and selling commissions have been charged against proceeds
resulting in net capital contributed by Limited Partners of $203,146,793.
Allocation of income, loss and distributions of cash are made in
accordance with the Partnership Agreement as further discussed in Note 11.
5. Sales, Marketing and Offering Expenses and Sales Commissions
The Retirement Fund expended a total of $416,052 for the reimbursement of
sales and marketing expenses. Aggregate sales and marketing expenses of the
Funds may not exceed $2,528,415 or .5% of the aggregate capital contributions
and were allocated proportionately to the number of Units issued by each Fund.
Aggregate sales and marketing expenses for the Funds totaled $951,683.
The Retirement Fund also paid $1,627,385 for the reimbursement of offering
expenses. These expenses, along with the offering expenses of Equitable Capital
Partners and the organizational expenses of the Funds, may not exceed
$6,000,000. Aggregate offering and organizational expenses for the Retirement
Funds totaled $4,711,806 (see Note 2 regarding the amortization of deferred
organizational expenses).
For their services as selling agent, the Retirement Fund paid sales
commissions to Merrill Lynch, Pierce, Fenner & Smith Incorporated in the amount
of $15,251,770, of which Equico Securities Corporation, an affiliate of
Equitable Capital, a related party, received $168,150 as a selected dealer.
6. Investment Advisory Fee
As of July 22, 1993, Alliance Corporate has been receiving a quarterly
Investment Advisory Fee, at the annual rate of 1.0% of the Retirement Fund's
Available Capital, with a minimum annual payment of $2,000,000 collectively for
the Funds, less 80% of commitment, transaction, investment banking and
"break-up" or other fees related to the Retirement Fund's investments
("Deductible Fees"). Available Capital is defined as the sum of the aggregate
Net Capital Contributions of the Partners less the cumulative amount of returns
of Capital distributed to Partners and realized losses from investments. Since
becoming the successor Managing General Partner of the Retirement Fund, Alliance
Corporate has not received any Deductible Fees. Alliance Corporate is a related
party of the Retirement Fund.
The Investment Advisory Fee is calculated and paid quarterly, in advance.
The Investment Advisory Fees paid by the Retirement Fund for the years ended
December 31, 1995, 1994 and 1993 were $1,037,207, $1,278,599 and $1,581,950,
respectively. The decrease in the Investment Advisory Fees, is due primarily to
the return of capital distributed to Limited Partners which reduced the
Retirement Fund's Available Capital on which the Investment Advisory Fee is
based.
7. Fund Administration Fee and Expenses
As compensation for its services during the fourth through seventh year of
operation of the Funds, ML Fund Administrators, Inc. ("MLFAI"), as the
Retirement Fund administrator, is entitled to receive from the Funds an annual
amount equal to the greater of the (I) Minimum Fee and (II) the Funds' prorated
proportion (based on the number of Units issued by the Funds) of 0.45% of the
excess of the aggregate net offering proceeds of the Units issued by the Funds
over 50% of the aggregate amount of capital reductions of the Funds (subject to
an annual maximum of $3.2 million). The Minimum Fee is 1% of the gross offering
price of Units in the Funds, but not greater than $500,000. The Retirement Fund
Administration Fee is calculated and paid quarterly, in advance. The Retirement
Fund Administration Fees paid by the Retirement Fund for the years ended
December 31, 1995, 1994 and 1993 were $701,954, $766,168 and $830,638,
respectively.
In addition to the Retirement Fund Administration Fee, MLFAI is entitled
to receive reimbursement for a portion of direct out-of-pocket expenses incurred
in connection with the administration of the Retirement Fund, commencing on
October 13, 1992. For the years ended December 31, 1995 and 1994, the Retirement
Fund incurred Administrative expenses of $135,139 and $367,552 respectively,
which consisted primarily of printing, audit and tax return preparation and
custodian fees paid for by MLFAI on behalf of the Retirement Fund.
<PAGE>
8. Independent General Partners' Fees and Expenses
As compensation for their services, each Independent General Partner is
entitled to a $30,000 annual fee (payable quarterly) from the Retirement Fund in
addition to $500 for each meeting attended plus reimbursement for any
out-of-pocket expenses. In accordance with the Retirement Fund's Partnership
Agreement, the amount of such fee is reviewed annually by the Independent
General Partners.
For the years ended December 31, 1995, 1994 and 1993, the Retirement Fund
incurred $161,236, $160,979 and $166,441, respectively, of Independent General
Partners' Fees and Expenses.
9. Related Party Transactions
For the years ended December 31, 1995, 1994 and 1993, the Retirement Fund
incurred expenses of $105,443, $68,512 and $38,509, respectively, as
reimbursement for amounts paid for legal services provided by Equitable Life in
connection with the Retirement Fund's Enhanced Yield Investments. The Retirement
Fund is paying Alliance Corporate an Investment Advisory Fee for its services as
described in Note 6. Additionally, the Retirement Fund paid sales commissions to
Equico Securities, a related party, as described in Note 5.
10. Investment Transactions
The Retirement Fund is invested primarily in Enhanced Yield Investments,
also known in the securities industry as "high yield securities". The securities
in which the Retirement Fund has invested were issued in conjunction with the
mezzanine financing of privately structured, friendly leveraged acquisitions,
recapitalizations and other leveraged financings, and are generally linked with
an equity participation. Enhanced Yield Investments are debt and preferred
equity securities that are unrated or are rated by Standard & Poor's Corporation
as BB or lower and by Moody's Investor Services, Inc. as Ba or lower. Risk of
loss upon default by the issuer is significantly greater with Enhanced Yield
Investments than with investment grade securities because Enhanced Yield
Investments are generally unsecured and are often subordinated to other
creditors of the issuer. Also, these issuers usually have high levels of
indebtedness and are more sensitive to adverse economic conditions, such as a
recession or increasing interest rates, than investment grade issuers. Most of
these securities are subject to resale restrictions and generally there is no
quoted market for such securities.
Although the Retirement Fund cannot eliminate its risks associated with
participation in Enhanced Yield Investments, it has established risk management
policies. The Retirement Fund subjects each prospective investment to rigorous
analysis and will make only those investments that have been recommended by the
Managing General Partner and that meet the Retirement Fund's investment
guidelines or that have otherwise been approved by the Independent General
Partners. Fund investments are measured against specified Fund investment and
performance guidelines. To limit the exposure of the Retirement Fund's capital
in any single issuer, the Retirement Fund limits the amount of its investment in
a particular issuer. The Retirement Fund also continually monitors portfolio
companies in order to minimize the risks associated with participation in
Enhanced Yield Investments.
During the year ended December 31, 1995, the Retirement Fund received a
total of $473,000 and $14,733 from Western Pioneer, Inc. and MTI Holdings, Inc.,
respectively, as principal paydowns of the senior notes held by the Retirement
Fund. No gain or loss has been recorded on the transactions and the amounts will
be distributed as return of capital to the Limited Partners.
On August 3, 1995, the Retirement Fund sold its American Safety Razor
Company 13.5% Series B Subordinated Notes for $1,529,928 and recognized a gain
of $29,999 on the sale.
<PAGE>
During the year ended December 31, 1995, the Retirement Fund received
$48,755 and $78,108 from Polaris Pool Systems, Inc. and Haddon Craftsman, Inc.,
respectively. The monies represent proceeds from the sale of the investments
from prior years that have been held in escrow for future adjustments and
expenses not paid on the sale dates. These proceeds were recorded and
distributed as gains.
On September 15, 1995 the Retirement Fund sold its common stock
investment in JP Foodservice, Inc. for $4,109,845, which resulted in a gain to
the Retirement Fund of $1,947,481.
During the year ended December 31, 1995, the Retirement Fund received
total proceeds of $268,723 from Multi-Turf, Inc. as paydown of the equity held,
which resulted in a gain of $248,472 to the Retirement Fund.
On October 26, 1995, Apollo Radio Holding Company, Inc. repaid its 15.0%
Subordinated Note. The Retirement Fund received total proceeds of $1,809,915
which represented all outstanding principal, accrued interest and a realized
gain of $272,730.
On November 21, 1995, Lexmark International Group, Inc. ("Lexmark")
(formerly Lexmark Holding, Inc.) completed the initial public offering of shares
of common stock held by certain existing shareholders of Lexmark. After a
fifteen to one stock split, Equitable Capital Partners (Retirement Fund), L.P.
(the "Retirement Fund") held 1,403,011 shares of Lexmark common stock. The
Retirement Fund sold 401,581 shares in the offering representing 28.6% of the
shares held by the Retirement Fund for total net proceeds of $7,569,801 or a net
price of $18.85 per share. The initial cost of the shares sold by the Retirement
Fund was $2,677,207. As a result, the Retirement Fund realized a gain of
$4,892,595. The shares of Lexmark common stock are listed on the New York Stock
Exchange under the symbol LXK.
As of December 31, 1995, the Retirement Fund had investments in ten
Managed Companies (a Managed Company is one to which the Retirement Fund, the
Managing General Partner or other persons in the Retirement Fund's investor
group makes significant managerial assistance available) and four Non-Managed
Companies (a Non-Managed Company is one to which such assistance is not
provided) totaling $85,451,445 (including $422,439 capitalized cost of
payment-in-kind securities), consisting of $59,318,927 in senior notes and
subordinated notes, $3,650,263 in preferred stock and purchase warrants and
$22,482,255 in common stock and purchase warrants.
11. Allocation of Profits and Losses
Pursuant to the terms of the Partnership Agreement, net investment income
and gains and losses on investments are generally allocated between the Managing
General Partner and the Limited Partners based upon cash distributions as
follows:
first, 99% to the Limited Partners and 1% to the Managing General Partner
until the Limited Partners have received a cumulative priority return of
10% non-compounded on an annual basis on their investments in Enhanced
Yield Investments,
second, 70% to the Limited Partners and 30% to the Managing General
Partner until the Managing General Partner has received 20% of all current
and prior distributions on such investments,
and thereafter, 80% to the Limited Partners and 20% to the Managing
General Partner.
For the year ended December 31, 1995, earnings were allocated 99% to the
Limited Partners, as a class, and 1% to the Managing General Partner.
12. Unrealized Appreciation/Depreciation, and Non-Accrual of Investments
For the year ended December 31, 1995, the Retirement Fund recorded net
unrealized depreciation on Enhanced Yield Investments of $6,915,689. Such
depreciation was the result of adjustments in value made with respect to the
following investments during 1995:
On March 31, 1995, Pergament Home Centers, Inc. Class B Common Stock was
written down from 75% to 25% of cost, resulting in unrealized depreciation of
$3,366,000.
The RI Holdings, Inc. common stock purchased on May 9, 1995 was valued at
zero, resulting in unrealized depreciation of $920 to the Retirement Fund.
On June 30, 1995, MTI Holdings, Inc. Class B Common Stock was written down
from 100% to zero and the 5% Senior Secured Note was written down from 100% to
75% of par. On September 30, 1995, MTI Holdings, Inc. 5% Senior Secured Note was
written down from 75% to 50% of par value. These writedowns resulted in total
unrealized depreciation of $746,886 to the Retirement Fund. Due to principal
paydowns during the three months ended September 30, 1995, $1,206 of unrealized
depreciation was reversed.
The Tulip Holding Corp. 14.5% Subordinated Note was written down from 50%
to 25% of par at June 30,1995 and 25% to 5% of par at September 30, 1995. This
resulted in total unrealized depreciation of $1,977,430 to the Retirement Fund.
On June 30, 1995, due to a default of an interest payment on senior notes
held by a third party, the WB Bottling Corporation preferred and common stock
held by the Retirement Fund were written down from 100% to 10% of cost. On
December 31, 1995, WB Bottling Corporation preferred stock and common stock were
written down from 10% to zero. This resulted in total unrealized depreciation of
$248,796 to the Retirement Fund.
Due to an increase in the quoted market price of JP Foodservice common
stock held by the Retirement Fund at June 30, 1995, the Retirement Fund recorded
unrealized appreciation of $1,068,566. The equity was valued at 90% of the
closing market price at June 30, 1995, due to contractual restrictions on
resale. Due to the sale of the common stock investment in JP Foodservice, Inc.
on September 15, 1995, the Retirement Fund reversed the unrealized appreciation
recorded of $987,090.
On September 30, 1995, Ampex Recording Media Corp. 14% and 18.4% Senior
Subordinated Series A & B Notes were written down from 50% to 25% of par value,
which resulted in unrealized depreciation of $2,722,289 to the Retirement Fund.
Due to an increase in the quoted market price of Ampex Recording Media Corp.
warrants held by the Retirement Fund at December 31, 1995, the Retirement Fund
recorded unrealized appreciation of $62,669. Due to a restructuring, $5,773,823
of unrealized depreciation was reversed at December 31, 1995.
On September 30, 1995, U.S. Leather Holdings, Inc. 8% Senior Subordinated
Preferred Stock and the 15% Senior Subordinated PIK Notes were written down to
zero. On December 31, 1995, U.S. Leather Holdings, Inc. 15% Senior Subordinated
Note was written down from 100% to 60% of par. These writedowns resulted in
total unrealized depreciation of $10,259,970 to the Retirement Fund.
Due to a 15-to-1 stock split and initial public offering of Lexmark common
stock on November 21, 1995, the Retirement Fund recorded unrealized appreciation
of $6,498,596. The equity was valued at 90% of the closing market price at
December 31, 1995, due to contractual restrictions on resale.
Due to the decline in the quoted market price of American Safety Razor
Company common stock, the Retirement Fund recorded a total unrealized
depreciation of $635,916 at December 31, 1995.
On December 31, 1995, Apollo Radio Holding Co., Inc. common stock was
written up from zero, resulting in unrealized appreciation of $624,750 to the
Retirement Fund.
For the years ended December 31, 1994 and 1993, the Retirement Fund
recorded net unrealized depreciation of $5,675,676 and net unrealized
appreciation of $4,082,028, respectively.
<PAGE>
The following investments have been on non-accrual status as of the
respective dates:
U.S. Leather Holdings, Inc. 15%
Senior Subordinated Note October 1, 1995
MTI Holdings, Inc. 5%
Senior Secured Note October 1, 1995
Western Pioneer, Inc. 10%
Senior Subordinated Note November 30, 1994
RI Holdings, Inc. 16%
Senior Subordinated Notes April 25, 1994
Tulip Holding, Corp. 14.5% and 16.5%
Subordinated Notes January 1, 1994
Alliance Corporate continues to monitor the Retirement Fund's portfolio
closely. As a matter of standard procedure, Alliance Corporate reviews each
portfolio company's financial statements at least quarterly, and often monthly.
Investment managers routinely review and discuss financial and operating results
with the companies' management and equity sponsors, and attend periodic board of
directors meetings, as appropriate. In some cases, Alliance Corporate officers,
acting on behalf of the Funds serve as directors on the boards of portfolio
companies. When problems arise, communication with management and sponsors often
occurs on a daily basis.
13. Income Taxes
No provision for income taxes has been made since all income and losses
are allocated to the Retirement Fund's partners for inclusion in their
respective tax returns.
Pursuant to Statement of Financial Accounting Standards No. 109 -
Accounting for Income Taxes, the Retirement Fund is required to disclose any
difference between the tax basis of the Retirement Fund's assets and liabilities
versus the amounts reported in the Financial Statements. Generally, the tax
basis of the Retirement Fund's assets approximate the amortized cost amounts
reported in the Financial Statements. This amount is computed annually and as of
December 31, 1995, the tax basis of the Retirement Fund's assets was greater
than the amounts reported in the Financial Statements by $38,950,769. This
difference is primarily attributable to unrealized depreciation on investments
which has not been recognized for tax purposes. Additionally, certain realized
gains and losses due to restructuring were treated differently for tax purposes,
but not for financial reporting purposes.
14. Subsequent Distributions
On February 7, 1996, the Independent General Partners approved an
aggregate cash distribution of $10,274,966 for the three months ended December
31, 1995, which was paid on February 14, 1996. The amount distributed to Limited
Partners was $10,259,951 or $46.41 per Unit (of which $3,610,106 is capital
returned from investments during the fourth quarter of 1995), to Limited
Partners of record at December 31, 1995. On a per Unit basis, this distribution
to Limited Partners includes $23.36 of realized gains, $6.72 of income from
operations and $16.33 of return of capital. The Managing General Partner's one
percent allocation of $103,636 was reduced, in accordance with the provisions of
the Partnership Agreement, by its one percent allocation of realized gains and
capital returned from investments during the fourth quarter of 1995 of $88,621,
resulting in a net distribution of $15,015.
<PAGE>
Item 9. Disagreements on Accounting and Financial Disclosure
None.
Part III
Item 10. Directors and Executive Officers of the Registrant
The Retirement Fund
The Retirement Fund's general partners (the "General Partners") are
responsible for the management and administration of the Retirement Fund. The
General Partners consist of Alliance Corporate succeeding Equitable Capital, as
the Managing General Partner, and four individuals serving as Independent
General Partners. Each Independent General Partner is not an "interested person"
of the Retirement Fund as such term is defined in the Investment Company Act of
1940, as amended (the "Investment Company Act").
Independent General Partners
The Independent General Partners provide overall guidance and supervision
with respect to the operations of the Retirement Fund and perform the various
duties imposed on the directors of business development companies by the
Investment Company Act of 1940. The Independent General Partners supervise the
Managing General Partner and must, with respect to any Enhanced Yield
Investment, either certify that it meets the Retirement Fund's investment
guidelines or specifically approve it. The Independent General Partners are also
responsible for approving certain transactions pursuant to the conditions of an
exemptive order issued by the Securities and Exchange Commission (the
"Commission") under which the Retirement Fund operates. In addition, if a
portfolio company is in material default with respect to its payment obligations
under any lending agreement to which it is a party or has a ratio of earnings
before interest, taxes and depreciation to cash fixed charges of 1.1 to 1 or
less for the latest fiscal year for which financial statements are available,
the Independent General Partners are required to approve any changes in the
terms of the Fund's investment in such a portfolio company.
Messrs. Robert W. Lear and Robert F. Shapiro have served as Independent
General Partners of the Retirement Fund and the Enhanced Yield Fund since June
1988. On April 12, 1989, Mr. Alton G. Marshall and Dr. William G. Sharwell were
admitted to the Retirement Fund and the Enhanced Yield Fund, increasing the
total number of Independent General Partners to four. Each Independent General
Partner shall hold office until his removal or withdrawal pursuant to the
provisions of the Partnership Agreement.
Mr. Lear, age 78, has been an Executive-in-Residence and Visiting Professor
at the Columbia University Graduate School of Business since 1977. He is also a
director of Cambrex Corp. and the Korea Fund (a closed-end investment fund). Mr.
Lear is a trustee of the Scudder Institutional Funds (mutual funds) and a member
of the advisory board of the Welsh, Carson, Anderson, Stowe Venture Capital
Funds.
Mr. Shapiro, age 61, is the President of RFS & Associates, Inc.
(consultants and investments). From 1986 to 1987 he was the Co-Chairman of
Wertheim Schroeder & Co. Inc. (investment bankers) and from 1974 to 1986 he was
the President of its predecessor, Wertheim & Co. Inc. Mr. Shapiro is a director
of TJX Companies, Inc. (specialty retailing), a director of American Building
Companies and the Burnham Fund Inc. (mutual fund). Mr. Shapiro was Chairman of
the Securities Industry Association in 1985.
Mr. Marshall, age 74, is Senior Fellow of the Nelson A. Rockefeller
Institute of Government. He is also President of Alton G. Marshall Associates,
Inc. (real estate consultants). He was Chairman and Chief Executive Officer of
Lincoln Savings Bank from 1984 to 1991. He is also a Director of New York State
Electric and Gas Corporation. He is a Trustee of EQK Realty Investors I and EQK
Green Acres (real estate investors), and a Trustee of The Hudson River Trust,
which is a mutual fund receiving investment advice from Alliance Capital.
Dr. Sharwell, age 75, served as the President of Pace University from 1984
to 1990, after retiring in 1984 as Senior Vice President of AT&T. He is also a
director of USLife Corporation, American Biogenetic Sciences, Inc. and United
States Life Insurance Company.
Managing General Partner
The Managing General Partner is responsible for purchasing investments for
the Retirement Fund which the Independent General Partners have reviewed for
compliance with the investment guidelines or otherwise approved, for providing
administrative services to the Retirement Fund and for the admission of assignee
Limited Partners to the Retirement Fund.
Management of Alliance Corporate and the Retirement Fund
The senior officers of Alliance Corporate responsible for overseeing the
management of the Retirement Fund are:
Position with Alliance Corporate Finance
Group Incorporated
Frank Savage Chairman of the Board of Directors
James R. Wilson President
William Gobbo, Jr. Senior Vice President
James D. Neidhart Senior Vice President
Laura Mah Vice President and Chief Accounting
Officer
Mr. Frank Savage, age 57, is Chairman of Alliance Corporate, Chairman of
Alliance Capital Management International and a member of the Board of Directors
of Alliance Capital Management Corporation. He is Senior Vice President of The
Equitable Life Assurance Society of the United States. He was formerly the
Chairman of Equitable Capital Management Corporation, an investment management
subsidiary of Equitable Life, which was combined with Alliance Capital in July
of 1993. Mr. Savage is a director of Lockheed Corporation, ARCO Chemical
Company, Lexmark Corporation, Essence Communications, Inc. and The Council on
Foreign Relations. He is a member of the Board of Trustees of The Johns Hopkins
University and Howard University and Chairman of the Advisory Council of the
Johns Hopkins University Nitze School of Advanced International Studies.
James R. Wilson, age 49, is the President of Alliance Corporate and is in
charge of Alliance Corporate's Finance Department. He has specialized in private
placement investment management for over 20 years. He joined Equitable Life in
1970. From 1975 to 1978, he was in charge of the Private Placement Department's
Atlanta regional office, responsible for making direct placement loans to middle
market companies. He then returned to the home office to supervise the credit
review and approval procedures of all six regional offices. In 1980, Mr. Wilson
joined the Investment Recovery Division of Equitable Capital Management
Corporation and subsequently became its head. During his tenure in investment
recovery, he was instrumental in a number of major restructuring and
recapitalizations of troubled companies and served as chairman of several
creditors' committees. Mr. Wilson was elected senior vice president and deputy
head of Equitable Capital's Corporate Finance Department in 1985, and in 1991 he
became executive vice president and head of the Corporate Finance Department. He
was named President of Alliance Corporate Finance Group in 1993 in connection
with the Alliance Capital/Equitable Capital merger. Mr. Wilson has served on
several corporate Boards and presently is a director of US Leather, Inc. He is
active in private placement industry events, has been a speaker at many industry
conferences on leveraged buyouts and mezzanine finance and served as Chairman of
the annual Private Placement Conference in 1994. Mr. Wilson is a graduate of
Denison University and holds an MBA from the University of Pittsburgh.
<PAGE>
Mr. William Gobbo, Jr., age 51, is a Senior Vice President of Alliance
Corporate. Mr. Gobbo joined Alliance Corporate through the combination with
Equitable Capital. Mr. Gobbo joined Equitable Life in 1967 as an economist in
the office of Equitable's Chief Economist. He joined the Private Placement
Department in 1976 and in 1984 became head of an investment group that was
responsible for the Department's lending activities involving financial
institutions and heavy industrial companies.
Mr. James D. Neidhart, age 51, is a Senior Vice President of Alliance
Corporate. He is head of the Investment Recovery Division of Alliance Corporate
responsible for the management of public and private investments in companies
that have encountered troubled financial situations. He has been actively
involved in over 20-25 restructuring, playing in most a leadership role
including chairmanship of committees critical to the restructuring process. Mr.
Neidhart, who joined Alliance Corporate through the combination with Equitable
Capital, had been employed by Equitable Capital in its workout group since 1986.
Prior to that, he had nine years of experience in private placement investments
and workout transactions with the Prudential Insurance Company of America, three
years of commercial lending experience with Harris Trust and Savings Bank and
served six years as an Officer in the U.S. Air Force.
Mrs. Laura Mah, age 40, is a Vice President of Alliance Capital and
co-manages the Insurance Services Group. She is responsible for accounting and
reporting for assets managed by Alliance Capital for insurance clients,
including mutual funds, partnerships, general, separate and advisory accounts.
Mrs. Mah joined Alliance Capital through the combination with Equitable Capital.
Prior to that, she was an Assistant Vice President with Shearson Lehman Hutton
for five years. She is a Certified Public Accountant.
The Investment Adviser
As a result of the combination of the businesses of Equitable Capital and
Alliance Capital, Equitable Capital's investment advisory agreement with the
Retirement Fund terminated in accordance with its terms on July 22, 1993. On
that date, Alliance Corporate succeeded Equitable Capital as the Retirement
Fund's investment advisor. As investment adviser to the Retirement Fund,
Alliance Corporate is responsible for the identification, management and
liquidation of all investments for the Retirement Fund.
The Administrator
The Administrator performs certain operating and administrative services
for the Retirement Fund on behalf of the Managing General Partner pursuant to an
administrative services agreement, dated October 13, 1988, among the Retirement
Fund, Equitable Capital and the Administrator.
The information contained in the Prospectus under the caption "Management
Arrangements" is incorporated by reference into this Item 10.
Item 11. Executive Compensation
The information with respect to compensation of the Independent General
Partners set forth under the caption "Management Arrangements -- The Independent
General Partners" in the Prospectus is incorporated by reference into this Item
11. The Retirement Fund paid Mr. Lear $36,250, Mr. Shapiro $36,250, Mr. Marshall
$36,481 and Dr. Sharwell $36,250 in fees, with respect to their services as
Independent General Partners in 1995.
The information with respect to the "Fund Administration Fee and Expenses"
payable to the Managing General Partner and the Administrator set forth under
the caption "Management Arrangements -- The Managing General Partner" in the
Prospectus is incorporated by reference into this Item 11. The Retirement Fund
paid $848,815 to the Administrator, through the Managing General Partner, in
1995.
The information with respect to the "Investment Advisory Fee" payable to
Alliance Corporate (and distributions from the Managing General Partner) set
forth under the caption "Management Arrangements -- Description of Investment
Advisory Agreements" in the Prospectus is incorporated by reference into this
Item 11. The Retirement Fund paid Alliance Corporate $1,037,207 with respect to
the Investment Advisory Fee for 1995. The Managing General Partner's 1%
allocation of net investment income from Temporary Investments, which in 1995
amounted to $5,157, is credited against the Investment Advisory Fees as required
by the Partnership Agreement.
Alliance Corporate, as Managing General Partner, received $61,650,
representing distributions of net investment income in 1995.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of the date of this report, no person or entity is known by the
Retirement Fund to be the beneficial owner of more than 5% of the total number
of outstanding Units.
The Independent General Partners and directors and officers of Alliance
Corporate own as a group, 13 Units, or less than 1% of the total Units
outstanding.
Item 13. Certain Relationships and Related Transactions
The Retirement Fund co-invests in Enhanced Yield Investments with the
Equitable Capital Partners, L.P. and certain affiliates of Equitable Capital
pursuant to the terms of an exemptive order granted by the Commission on August
11, 1988 permitting co-investments on certain terms and conditions, Equitable
Capital Partners, L.P., et al. (812-6983) IC-16522, August 11, 1988 (the
"Order"). On December 31, 1990, the Commission granted a request to: (I) permit
any person serving as an officer, director or employee of Equitable Life or any
of its subsidiaries to serve as a director of Equitable Capital; (ii) permit
Equitable Life and its subsidiaries (other than Equitable Capital) and certain
other affiliates of Equitable Capital to invest as limited partners in sponsor
limited partnerships which invest in transactions in which the Retirement Funds
also invest; and (iii) amend and restate all of the conditions and undertakings
contained in the August 11, 1988 Order to conform them to those contained in the
application filed with the Commission on behalf of Equitable Capital Partners
II, L.P. and Equitable Capital Partners (Retirement Fund) II, L.P. Equitable
Capital Partners (Retirement Fund), L.P., et al.
(812-7328) IC - 17925, December 31, 1990.
Pursuant to such arrangements, the Retirement Fund co-invested in the
Enhanced Yield Investments listed above in Item 1 with the Equitable Capital
Partners, L.P. and one or more of the following: Equitable Deal Flow Fund, L.P.,
Equitable Capital Private Income and Equity Partnership II, L.P., Equitable
Life, Equitable Variable Life Insurance Company, Tandem Insurance Group, Inc.
and Royal Tandem Insurance Company.
In connection with the transaction that resulted in the succession of
Alliance Corporate as Managing General Partner of and Investment Adviser to the
Funds, Equitable Capital and Alliance Corporate received two exemptive orders
from the Securities and Exchange Commission permitting the Funds and Alliance
Corporate to rely on the exemptive orders previously issued to Equitable Capital
and the Funds, subject to the same conditions and undertakings under such orders
as applied to Equitable Capital.
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements, Financial Statement
Schedules and Exhibits
See Item 8. Financial Statements and Supplementary Data "Table of Contents."
Exhibits
3.1 Amended and Restated Certificate of Limited Partnership,
dated as of April 12, 1989*
4.1 Amended and Restated Agreement of Limited Partnership, dated
as of October 13, 1988**
10.1 Investment Advisory Agreement, dated July 22, 1993, between
Registrant and Alliance Corporate Finance Group
Incorporated***
10.2 Administrative Services Agreement, dated October 13, 1988,
among the Registrant, Equitable Capital Management
Corporation and ML Fund Administrators, Inc.**
13.1 (a) Forms 10-Q
Form 8-K ****
28.1 Portions of Prospectus of Registrant and Equitable Capital Partners,
L.P., dated July 15, 1988, incorporated by reference into this Annual
Report on Form 10-K
* Incorporated by reference to the Retirement Fund's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989, filed with the
Securities and Exchange Commission on March 29, 1990
** Incorporated by reference to the Retirement Fund's Annual Report on
Form 10-K for the fiscal year ended December 31, 1988, filed with the
Securities and Exchange Commission on March 29, 1989
*** Incorporated by reference to the Retirement Fund's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993, filed with the
Securities and Exchange Commission on March 28, 1994.
**** Incorporated by reference to the Retirement Fund's Annual Report of
Form 10-K for the fiscal year ended December 31, 1995, filed with the
Securities and Exchange Commission on November 22, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 25th day of
March, 1996.
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
By: Alliance Corporate Finance Group Incorporated,
as Managing General Partner,
Dated: March 25, 1996 _________________________________
Frank Savage
Title: Chairman of the Board
Dated: March 25, 1996 _________________________________
Laura Mah
Title: Vice President and Chief
Accounting Officer
<PAGE>
Pursuant to the Requirements of the Securities and Exchange Act of 1934
this report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated on the 25th day of March, 1996.
Signature Title
______________________ Independent General Partner of
Robert W. Lear Equitable Capital Partners (Retirement Fund), L.P.
______________________ Independent General Partner of
Robert F. Shapiro Equitable Capital Partners (Retirement Fund), L.P.
______________________ Independent General Partner of
Alton G. Marshall Equitable Capital Partners (Retirement Fund), L.P.
______________________ Independent General Partner of
William G. Sharwell Equitable Capital Partners (Retirement Fund), L.P.
______________________
Frank Savage Chairman of the Board of Alliance Corporate
______________________
James R. Wilson President and Director of Alliance Corporate
______________________
Dave H. Williams Director of Alliance Corporate
______________________
Bruce W. Calvert Director of Alliance Corporate
______________________
John D. Carifa Director of Alliance Corporate
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 25th day of
March, 1996.
EQUITABLE CAPITAL PARTNERS (RETIREMENT FUND), L.P.
By: Alliance Corporate Finance Group Incorporated,
as Managing General Partner,
Dated: March 25, 1996 /s/ Frank Savage
Frank Savage
Title: Chairman of the Board
Dated: March 25, 1996 /s/ Laura Mah
Laura Mah
Title: Vice President and Chief
Accounting Officer
<PAGE>
Pursuant to the Requirements of the Securities and Exchange Act of 1934
this report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated on the 25th day of March, 1996.
Signature Title
/s/ Robert W. Lear Independent General Partner of
Robert W. Lear Equitable Capital Partners (Retirement Fund), L.P.
/s/ Robert F. Shapiro Independent General Partner of
Robert F. Shapiro Equitable Capital Partners (Retirement Fund), L.P.
/s/ Alton G. Marshall Independent General Partner of
Alton G. Marshall Equitable Capital Partners (Retirement Fund), L.P.
/s/ William G. Sharwell Independent General Partner of
William G. Sharwell Equitable Capital Partners (Retirement Fund), L.P.
/s/ Frank Savage
Frank Savage Chairman of the Board of Alliance Corporate
/s/ James R. Wilson
James R. Wilson President and Director of Alliance Corporate
/s/ Dave H. Williams
Dave H. Williams Director of Alliance Corporate
/s/ Bruce W. Calvert
Bruce W. Calvert Director of Alliance Corporate
/s/ John D. Carifa
John D. Carifa Director of Alliance Corporate
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary information extracted from the fourth quarter of
1995 Form 10-K Balance Sheets and Statements of Operations and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 85,451,445
<INVESTMENTS-AT-VALUE> 70,210,781
<RECEIVABLES> 2,132,571
<ASSETS-OTHER> 6,923
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 88,926,178
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 84,066
<TOTAL-LIABILITIES> 84,066
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 221,072
<SHARES-COMMON-PRIOR> 221,072
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (15,299,675)
<NET-ASSETS> 88,842,112
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,121,657
<OTHER-INCOME> 25,047
<EXPENSES-NET> 2,147,359
<NET-INVESTMENT-INCOME> 4,999,345
<REALIZED-GAINS-CURRENT> 1,744,317
<APPREC-INCREASE-CURRENT> (6,915,689)
<NET-CHANGE-FROM-OPS> (172,027)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,939,147
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 16,458,810
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (26,736,218)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,037,207
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,147,359
<AVERAGE-NET-ASSETS> 102,210,221
<PER-SHARE-NAV-BEGIN> 516.98
<PER-SHARE-NII> 22.61
<PER-SHARE-GAIN-APPREC> 7.89
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 119.41
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 401.87
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>