<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
-------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------ --------------------
Commission file number 0-17738
--------------------------------------------------
Fiduciary Capital Pension Partners, L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 86-0653603
----------------------- ------------------
(State of organization) (I.R.S. Employer
Identification No.)
410 17th Street
Suite 400
Denver, Colorado 80202
--------------------- ----------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (800) 866-7607
-------------
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 .
--- ---
<PAGE> 2
Fiduciary Capital Pension Partners, L.P.
Quarterly Report on Form 10-Q for the
Quarter Ended March 31, 1995
Table of Contents
<TABLE>
<CAPTION>
Page
Part I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements (unaudited) 3
Schedule of Investments -
March 31, 1995 3
Balance Sheets - March 31, 1995 and
December 31, 1994 6
Statements of Operations for the three months
ended March 31, 1995 and 1994 7
Statements of Cash Flows for the three months
ended March 31, 1995 and 1994 8
Statements of Changes in Net Assets for the
three months ended March 31, 1995 and
for the year ended December 31, 1994 9
Selected Per Unit Data and Ratios 10
Notes to Financial Statements 11
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 13
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 6. Exhibits and Reports on Form 8-K 18
</TABLE>
2
<PAGE> 3
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
SCHEDULE OF INVESTMENTS
MARCH 31, 1995
(unaudited)
<TABLE>
<CAPTION>
- - - - - - ----------------------------------------------------------------------------------------------------------------
Principal
Amount/ Investment Amortized % of Total
Shares Investment Date Cost Value Investments
- - - - - - ----------------------------------------------------------------------------------------------------------------
MANAGED COMPANIES:
<S> <C> <C> <C> <C> <C>
147,678 sh. Carr-Gottstein Foods Co.,
Class B Common Stock(1)* 10/23/90 $ 738,394 $ 841,765
- - - - - - ----------------------------------------------------------------------------------------------------------------
738,394 841,765 3.5
- - - - - - ----------------------------------------------------------------------------------------------------------------
340,951 sh. Neodata Corporation,
Warrants to Purchase
Common Stock and
10.00% Class A Convertible
Preferred Stock - Series 2* 12/27/90 33,912 1
32,606.87 sh. Neodata Corporation,
10.00% Class A Convertible
Preferred Stock - Series 2* 09/30/92 245,005 1
1,895.75 sh. Neodata Corporation,
Common Stock* 09/30/92 1 1
- - - - - - ----------------------------------------------------------------------------------------------------------------
278,918 3 0.0
- - - - - - ----------------------------------------------------------------------------------------------------------------
67,823 sh. KEMET Corporation, 03/28/91 &
Common Stock(2)* 07/11/91 48,075 2,408,140
- - - - - - ----------------------------------------------------------------------------------------------------------------
48,075 2,408,140 10.0
- - - - - - ----------------------------------------------------------------------------------------------------------------
267.9 sh. Huntington Holdings, Inc.,
Warrants to Purchase
Common Stock(3)* 01/31/92 85,678 561,860
- - - - - - ----------------------------------------------------------------------------------------------------------------
85,678 561,860 2.3
- - - - - - ----------------------------------------------------------------------------------------------------------------
62,606 sh. Amity Leather Products Co.,
Warrants to Purchase Class B
Common Stock* 07/30/92 85,909 758,067
22,608 sh. Amity Leather Products Co.,
Class A Common Stock* 07/30/92 226,080 273,750
- - - - - - ----------------------------------------------------------------------------------------------------------------
311,989 1,031,817 4.3
- - - - - - ----------------------------------------------------------------------------------------------------------------
$2,938,997 KB Alloys, Inc.,
20.00% Senior Subordinated
Term Notes due 6/30/01(4) 05/28/93 2,888,153 2,888,153
- - - - - - ----------------------------------------------------------------------------------------------------------------
2,888,153 2,888,153 12.0
- - - - - - ----------------------------------------------------------------------------------------------------------------
$5,023,926 Elgin National Industries, Inc.,
13.00% Senior Subordinated
Notes due 9/01/01(5) 09/24/93 4,903,049 4,903,049
5,876.1 sh. ENI Holding Corp.,
10.00% Preferred Stock
due 12/31/01 09/24/93 587,610 676,731
403.81 sh. ENI Holding Corp.,
Class B Common Stock* 09/24/93 40,381 40,381
421.6 sh. ENI Holding Corp.,
Warrants to Purchase Class B
Common Stock* 09/24/93 42,156 42,156
- - - - - - ----------------------------------------------------------------------------------------------------------------
5,573,196 5,662,317 23.5
- - - - - - ----------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to financial statements are an
integral part of this schedule.
3
<PAGE> 4
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1995
(unaudited)
<TABLE>
<CAPTION>
- - - - - - --------------------------------------------------------------------------------------------------------------------
Principal
Amount/ Investment Amortized % of Total
Shares Investment Date Cost Value Investments
- - - - - - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$917,000 Protection One Alarm
Monitoring, Inc., 12.00%
Senior Subordinated Notes
due 11/01/03 11/03/93 844,031 844,031
15,405.6 sh. Protection One, Inc.,
Warrants to Purchase
Common Stock(6)* 11/03/93 82,420 78,954
- - - - - - --------------------------------------------------------------------------------------------------------------------
926,451 922,985 3.8
- - - - - - --------------------------------------------------------------------------------------------------------------------
$2,396,000 LMC Operating Corp.,
13.00% Senior Secured
Subordinated Term Notes
due 5/31/99(7) 06/10/94 2,261,702 2,261,702
16.054 sh. LMC Operating Corp.,
Warrants to Purchase
Common Stock* 06/10/94 107,820 107,820
15.973 sh. LMC Credit Corp.,
Warrants to Purchase
Common Stock* 06/10/94 1 1
- - - - - - --------------------------------------------------------------------------------------------------------------------
2,369,523 2,369,523 9.8
- - - - - - --------------------------------------------------------------------------------------------------------------------
34,996 sh. MTI Holdings II, Inc.
Common Stock* 07/06/94 &
12/28/94 237,627 31,496
- - - - - - --------------------------------------------------------------------------------------------------------------------
237,627 31,496 0.1
- - - - - - --------------------------------------------------------------------------------------------------------------------
$2,392,000 Canadian's Corp.,
13.50% Subordinated 09/09/94 &
Notes due 9/01/02(8) 12/29/94 2,293,531 2,293,531
$291,000 Canadian's Holdings, Inc.,
12.00% Exchangeable
Redeemable Debentures 09/09/94 &
due 8/31/04(9) 12/29/94 277,709 277,709
232,987 sh. Canadian's Corp.,
Warrants to Purchase 09/09/94 &
Common Stock* 12/29/94 34,171 34,171
- - - - - - --------------------------------------------------------------------------------------------------------------------
2,605,411 2,605,411 10.8
- - - - - - --------------------------------------------------------------------------------------------------------------------
Total Investments in Managed Companies (79.3% of net assets) 16,063,415 19,323,470 80.1
- - - - - - --------------------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS:
$2,400,000 Ford Motor Credit Corporation,
5.852% Notes due 4/13/95 03/31/95 2,395,344 2,395,344
$2,400,000 Wal-Mart Stores, Inc.,
5.913% Notes due 4/13/95 03/31/95 2,395,392 2,395,392
- - - - - - --------------------------------------------------------------------------------------------------------------------
Total Temporary Investments (19.7% of net assets) 4,790,736 4,790,736 19.9
- - - - - - --------------------------------------------------------------------------------------------------------------------
Total Investments (99.0% of net assets) $20,854,151 $24,114,206 100.0%
====================================================================================================================
</TABLE>
The accompanying notes to financial statements are an
integral part of this schedule.
4
<PAGE> 5
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1995
(unaudited)
(1) The Carr-Gottstein Foods Company common stock trades on the New York Stock
Exchange. The Fund and Fiduciary Capital Partners, L.P. ("FCP") combined
own a material percentage of the outstanding shares. To reflect the
resultant lack of liquidity, the Fund valued the shares at a 5% discount
to the public market price.
(2) The KEMET Corporation common stock trades on the NASDAQ National Market
System. The Fund and FCP combined own a material percentage of the
outstanding shares. To reflect the resultant lack of liquidity, the Fund
valued the shares at a 5% discount to the public market price. (Note 6)
(3) Pursuant to the terms of the Fund's agreement with Huntington Holdings,
Inc., under certain circumstances the number of shares issuable upon
exercise of the warrants held by the Fund will increase periodically. The
first such increase occurred on February 1, 1993 when the Fund received the
right to an additional 29.6 shares.
(4) The notes will amortize in eight equal quarterly installments of $367,375
commencing on 6/30/99. The current payment of 7.0% of the interest may be
deferred at the borrower's option. During any period in which the payment
of interest is deferred, the interest rate on the notes increases from
20.00% to 21.00%.
(5) The notes will amortize in eight equal quarterly installments of $627,991
commencing on 11/30/99.
(6) The Protection One, Inc. common stock trades on the NASDAQ National Market
System.
(7) The notes will amortize as follows: $30,017 on 9/01/97, $30,992 on
12/01/97, $32,000 on 3/01/98, $33,040 on 6/01/98, $34,114 on 9/01/98,
$35,222 on 12/01/98, $36,367 on 3/01/99 and $2,164,248 on 5/31/99.
(8) The notes will amortize in twelve equal quarterly installments of $199,333
commencing on 12/01/99. The notes also bear contingent additional interest
to be computed under a specified formula.
(9) The debentures are convertible into 119,262 shares of Canadian's Corp.
common stock. The debentures also bear contingent additional interest to
be computed under a specified formula.
* Non-income producing security.
The accompanying notes to financial statements are an
integral part of this schedule.
5
<PAGE> 6
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
(unaudited)
<TABLE>
<CAPTION>
ASSETS: 1995 1994
---- ----
<S> <C> <C>
Investments (Note 6)
Portfolio investments, at value:
Managed companies (amortized cost -
$16,063,415 and $16,052,631,
respectively) $19,323,470 $19,274,598
Temporary investments, at amortized cost 4,790,736 4,179,590
----------- -----------
Total investments 24,114,206 23,454,188
Cash and cash equivalents 130,725 173,095
Accrued interest receivable 609,738 521,794
Other assets, including receivables
from sale of investments 9,003 544,921
----------- -----------
Total assets $24,863,672 $24,693,998
=========== ===========
LIABILITIES:
Payable to affiliates (Notes 2, 3 and 4) $ 29,213 $ 44,384
Accounts payable and accrued liabilities 41,101 33,542
Prepaid interest income 54,717 52,635
Distributions payable to partners 393,030 589,545
----------- -----------
Total liabilities 518,061 720,106
----------- -----------
CONTINGENCIES (Note 5)
NET ASSETS:
Managing General Partner 19,833 16,116
Limited Partners (equivalent to $18.76
and $18.47, respectively, per limited
partnership unit based on 1,296,999
units outstanding) 24,325,778 23,957,776
----------- -----------
Net assets 24,345,611 23,973,892
----------- -----------
Total liabilities and net assets $24,863,672 $24,693,998
=========== ===========
</TABLE>
The accompanying notes to financial statements are an
integral part of these financial statements.
6
<PAGE> 7
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest $599,065 $570,703
------- -------
Total investment income 599,065 570,703
------- -------
Expenses:
Investment advisory fees (Note 2) 49,757 62,552
Fund administration fees (Note 3) 29,582 29,582
Independent general partner fees
and expenses (Note 4) 16,024 15,287
Administrative expenses (Note 3) 17,224 17,190
Professional fees 14,461 10,942
Amortization 2,625 2,625
Other expenses 5,896 12,279
-------- --------
Total expenses 135,569 150,457
------- -------
NET INVESTMENT INCOME 463,496 420,246
------- -------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 263,165 496,463
Net increase (decrease) in unrealized
appreciation of investments 38,088 (8,980)
-------- ---------
Net gain on investments 301,253 487,483
------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $764,749 $907,729
======= =======
</TABLE>
The accompanying notes to financial statements are an
integral part of these financial statements.
7
<PAGE> 8
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net increase in net assets resulting from operations $764,749 $ 907,729
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided by operating activities:
Accreted discount on portfolio investments (16,952) (7,510)
Amortization 2,625 2,625
Change in assets and liabilities:
Accrued interest receivable (87,944) (28,259)
Other assets 841 1,629
Payable to affiliates (14,225) 5,855
Accounts payable and accrued liabilities 7,559 18,419
Prepaid interest income 2,082 -
Net realized gain on investments (263,165) (496,463)
Net (increase) decrease in unrealized appreciation
of investments (38,088) 8,980
------- -----------
Net cash provided by operating activities 357,482 413,005
------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of portfolio investments (946) -
Proceeds from dispositions of portfolio investments 801,785 5,274,396
(Purchase) sale of temporary investments, net (611,146) (4,963,686)
------- ----------
Net cash provided by investing activities 189,693 310,710
------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions paid to partners (589,545) (649,068)
-------- ---------
Net cash used in financing activities (589,545) (649,068)
-------- ---------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (42,370) 74,647
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 173,095 792,425
------- ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $130,725 $ 867,072
======= ============
</TABLE>
The accompanying notes to financial statements are an
integral part of these financial statements.
8
<PAGE> 9
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
AND FOR THE YEAR ENDED DECEMBER 31, 1994
(unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Increase in net assets from operations:
Net investment income $ 463,496 $ 1,758,135
Net realized gain (loss) on investments 263,165 (2,089,653)
Net increase in unrealized appreciation
of investments 38,088 3,594,544
------------- -----------
Net increase in net assets resulting
from operations 764,749 3,263,026
Repurchase of limited partnership units - (2,402,951)
Distributions to partners from -
Net investment income (393,030) (1,758,135)
Realized gain on investments - (778,614)
------------- ------------
Total increase (decrease) in net assets 371,719 (1,676,674)
Net assets:
Beginning of period 23,973,892 25,650,566
---------- ----------
End of period (includes net undistributed
net investment income of $70,466
and $0, respectively) $24,345,611 $23,973,892
========== ==========
</TABLE>
The accompanying notes to financial statements are an
integral part of these financial statements.
9
<PAGE> 10
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
SELECTED PER UNIT DATA AND RATIOS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Per Unit Data:
Investment income $ .46 $ .39
Expenses (.10) (.10)
------ ------
Net investment income .36 .29
Net realized gain on investments .20 .35
Net increase (decrease) in unrealized
appreciation of investments .03 (.01)
Distributions declared to partners (.30) (.45)
------- ------
Net increase in net asset value .29 .18
Net asset value:
Beginning of period 18.47 17.96
----- -----
End of period $18.76 $18.14
===== =====
Ratios (annualized):
Ratio of expenses to average net assets 2.24% 2.33%
Ratio of net investment income to
average net assets 7.67% 6.52%
Number of limited partnership units at end of period 1,296,999 1,427,950
</TABLE>
The accompanying notes to financial statements are an
integral part of these selected per unit data and ratios.
10
<PAGE> 11
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
(unaudited)
1. GENERAL
The accompanying unaudited interim financial statements include all
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of the Managing General Partner, necessary to fairly present the
financial position of the Fund as of March 31, 1995 and the results of its
operations, changes in net assets and its cash flows for the periods then ended.
These financial statements should be read in conjunction with the
Significant Accounting Policies and other Notes to Financial Statements included
in the Fund's annual audited financial statements for the year ended December
31, 1994.
2. INVESTMENT ADVISORY FEES
As compensation for its services as investment adviser, FCM receives a
subordinated monthly fee at the annual rate of 1% of the Fund's available
capital, as defined in the Partnership Agreement. Investment advisory fees of
$49,757 were paid by the Fund for the theee months ended March 31, 1995.
3. FUND ADMINISTRATION FEES
As compensation for its services as fund administrator, FCM receives a
monthly fee at the annual rate of .45% of net proceeds available for investment,
as defined in the Partnership Agreement. Fund administration fees of $29,582
were paid by the Fund for the three months ended March 31, 1995. FCM is also
reimbursed, subject to various limitations, for administrative expenses incurred
in providing accounting and investor services to the Fund. The Fund reimbursed
FCM for administrative expenses of $17,224 for the three months ended March 31,
1995.
4. INDEPENDENT GENERAL PARTNER FEES AND EXPENSES
As compensation for services rendered to the Fund, each of the
Independent General Partners receives from the Fund and FCP an annual fee of
$30,000, payable monthly in arrears, together with all out-of-pocket expenses.
Each Fund's allocation of these fees and expenses is based on the relative
number of outstanding Units. Fees and expenses paid by the Fund for the three
months ended March 31, 1995 totaled $16,024.
5. CONTINGENCIES
The Fund has been notified by PaineWebber Incorporated ("PaineWebber")
that FCM, the Managing General Partner of the Fund, is a named defendant in a
class action lawsuit brought in March 1995 against PaineWebber and a number of
its affiliates. FCM believes that this litigation will be resolved without
material adverse effect on the Fund's financial statements, taken as a whole.
11
<PAGE> 12
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1995
(unaudited)
6. SUBSEQUENT EVENT
On April 25, 1995, the Fund sold 5,426 shares of KEMET Corporation
common stock. The Fund received $217,040 of sales proceeds, resulting in a
realized gain of $213,194.
12
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1995, the Fund held portfolio investments in eleven
Managed Companies, with an aggregate cost of approximately $16.1 million. These
portfolio investments, which were made from net offering proceeds and the
reinvestment of proceeds from the sale of other portfolio investments, represent
approximately 79.3% of the Fund's net assets. When acquired, these portfolio
investments generally consisted of high-yield subordinated debt, linked with an
equity participation or a comparable participation feature in middle market
companies. These securities were typically issued in private placement
transactions and were subject to certain restrictions on transfer or sale,
thereby limiting their liquidity. A number of the portfolio companies have
prepaid their subordinated debt that the Fund held. In addition, three of the
portfolio companies have successfully completed initial public offerings
("IPOs") of their stock. The Fund continues to hold all of the equity components
of its original investments, except for a portion of its KEMET Corporation
("KEMET") stock.
As of March 31, 1995, the Fund's remaining assets were invested in
short-term commercial paper. These funds are available for investment, for
distribution to the partners or to fund the annual repurchase offer.
The Fund received $269,333 of proceeds from the sale of 8,705 shares of
KEMET common stock during the three months ended March 31, 1995. These sales
proceeds were used by the Fund to fund a portion of the cost of a follow-on
investment in Canadian's Corp., which was acquired on December 29, 1994.
On April 25, 1995, the Fund received $217,040 of sales proceeds from
the sale of 5,426 shares of KEMET common stock. The gain realized from this
transaction has been reserved by the Managing General Partner to partially fund
either the 1995 repurchase offer or any follow-on investments that the Fund may
make in existing portfolio companies during 1995.
The Fund expects to reinvest all available funds, including the
principal amount of any future prepayments received, in additional portfolio
investments. The Partnership Agreement provides that the Fund's investment
period will end on December 31, 1995. Thereafter, the Fund will not be permitted
to acquire investments in new portfolio companies, but will be able to make
additional investments in existing portfolio companies.
Pursuant to the terms of the Fund's periodic unit repurchase policy
that was adopted by the Fund's Limited Partners during 1993, the Fund will
annually offer to purchase from its Limited Partners up to 7.5% of its
outstanding Units for an amount equal to the current net asset value per Unit,
net of a fee (not to exceed 2%) to be retained by the Fund to offset expenses
incurred in connection with the repurchase offer. If the number of tendered
Units in any year exceeds 7.5% of the outstanding Units, the Fund's General
Partners may vote to repurchase up to an additional 2% of the outstanding Units.
The 1995 repurchase offer will be mailed to the Limited Partners during October
1995. The actual redemption of tendered Units will occur on November 21, 1995.
Accrued interest receivable increased $87,944 from $521,794 at December
31, 1994 to $609,738 at March 31, 1995. This increase resulted primarily from a
$58,780 increase in the deferred portion of the interest receivable from KB
Alloys, Inc. ("KB Alloys") with respect to the Fund's investment in $2,938,997
principal amount of 20.00% Senior Subordinated Term Notes due June 30, 2001. KB
Alloys is required to pay 13.00% interest currently, while the remaining 7.00%
of the interest may be deferred at KBAlloys' option. During any period in which
the payment of interest is deferred, the interest rate on the notes increases
from 20.00% to 21.00%. To date, KB Alloys has elected to defer payment of the
interest. At March 31, 1995, the cumulative amount of
13
<PAGE> 14
deferred interest totaled $440,605. The Fund's agreement with KB Alloys requires
KB Alloys to pay all accumulated deferred interest in excess of $452,153 no
later than August 28, 1998, and the amount of deferred interest cannot exceed
$452,153 at any time thereafter. The amount of accrued interest receivable with
respect to other portfolio investments also increased slightly during the three
months ended March 31, 1995.
Other assets decreased $535,918, from $544,921 at December 31, 1994 to
$9,003 at March 31, 1995. The balance at December 31, 1994 included a $532,452
receivable from the sale of KEMET common stock during December 1994. This amount
was received by the Fund during January 1995.
The payable to affiliates decreased $15,171 from $44,384 at December
31, 1994 to $29,213 at March 31, 1995. FCM Fiduciary Capital Management Company
("FCM") pays expenses on behalf of the Fund and is then reimbursed on a monthly
basis. The payable at March 31, 1995 decreased because the total expenses paid
by FCM on behalf of the Fund during March 1995 were less than those paid during
December 1994.
Distributions payable to partners decreased $196,515, from $589,545 at
December 31, 1994 to $393,030 at March 31, 1995. This decrease corresponds to
the percentage decrease in the quarterly distribution rate from $.45 per Unit to
$.30 per Unit (as discussed in the following paragraphs).
During the three months ended March 31, 1995, the Fund paid a cash
distribution pertaining to the fourth quarter of 1994 in the amount of $589,545.
This quarterly distribution was equal to $.45 per Unit and represented an
annualized rate equal to 9.0% of contributed capital.
As discussed in previous reports, the quarterly distributions for 1995
will be paid at a reduced rate. The distribution for the first quarter of 1995
will be paid on May 12, 1995 in an amount equal to $.30 per Unit, or an
annualized rate equal to 6.0% of contributed capital. This distribution consists
entirely of net investment income earned during the three months ended March 31,
1995.
It is currently expected that the remaining 1995 distributions will be
made at the same 6.0% rate. In the past, the Fund has realized gains from its
investments that have provided additional sources of cash for distributions.
Although there can be no assurances, the Fund may realize similar gains in 1995
that could in turn result in a higher distribution rate for subsequent quarters.
Gains can also be utilized to fund the annual repurchase offer or to fund any
follow-on investments that the Fund may make in existing portfolio companies.
The Fund's investment period will end on December 31, 1995. Although
the Fund will be permitted to make additional investments in existing portfolio
companies after 1995, the Fund will no longer be permitted to acquire
investments in new portfolio companies. This will impact the amount of the
Fund's quarterly distributions for 1996 and subsequent years because all
proceeds from dispositions or maturities of investments after December 31, 1995
will be distributed to investors, except to the extent the cash is needed to
fund the annual repurchase offer or to fund any follow-on investments that the
Fund may make in existing portfolio companies.
The Fund has been notified by PaineWebber Incorporated ("PaineWebber")
that FCM, the Managing General Partner of the Fund, is a named defendant in a
class action lawsuit brought in March 1995 against PaineWebber and a number of
its affiliates. FCM believes that this litigation will be resolved without
material adverse effect on the Fund's financial statements, taken as a whole.
14
<PAGE> 15
RESULTS OF OPERATIONS
Investment Income and Expenses
The Fund's net investment income was $463,496 for the three months
ended March 31, 1995 as compared to net investment income of $420,246 for the
corresponding period of the prior year. Net investment income per limited
partnership unit increased from $.29 to $.36 and the ratio of net investment
income to average net assets increased from 6.52% to 7.67% for the three months
ended March 31, 1995 as compared to the corresponding period of the prior year.
Net investment income for the three months ended March 31, 1995
increased as a result of a slight increase in investment income and a slight
decrease in total expenses.
Investment income increased $28,362, or 5.0%, for the three months
ended March 31, 1995 as compared to the corresponding period of the prior year.
This small increase was primarily the result of higher interest rates on the
Fund's temporary investments and a slight increase in the aggregate amount that
the Fund had invested in higher-yielding subordinated debt investments. The
positive effect of these items was partially offset by a reduction in the amount
of funds invested in temporary investments. This occurred as a result of the
repurchase of Units by the Fund during the fourth quarter of 1994, which caused
the Fund's total capital to decline by approximately 9.2%, and a slight increase
in the amount invested in non-income producing equity investments.
Total expenses decreased $14,888, or 9.9%, for the three months ended
March 31, 1995 as compared to the corresponding period of the prior year. This
decrease resulted primarily from a decrease in investment advisory fees and
other expenses. The investment advisory fees decreased as a result of the
repurchase of Units by the Fund during the fourth quarter of 1994 and the
realization during July 1994 of the loss on the Fund's Mobile Technology, Inc.
("MTI") investment. Both the repurchase of Units and the realization of the MTI
loss decreased the amount of the Fund's available capital (as defined in the
Partnership Agreement), which is the base with respect to which the investment
advisory fees are calculated. Other expenses decreased primarily as a result of
a decrease in consulting fees. These decreases were partially offset by an
increase in professional fees.
Net Realized Gain on Investments
On February 28, 1995, the Fund sold 8,705 shares of KEMET common stock.
The Fund received $269,333 of sales proceeds, resulting in a realized gain of
$263,165.
Net Unrealized Appreciation of Investments
FCM values the Fund's portfolio investments on a weekly basis utilizing
a variety of methods. For securities that are publicly traded and for which
market quotations are available, valuations are set by the closing sales, or an
average of the closing bid and ask prices, as of the valuation date.
Fair value for securities that are not traded in any liquid public
markets or that are privately held are determined pursuant to valuation policies
and procedures that have been approved by the Independent General Partners and
subject to their supervision. There is a range of values that are reasonable for
such investments at any particular time. Each such investment is valued
initially based upon its original cost to the Fund ("cost method"). The cost
method is used until significant developments affecting the portfolio company
provide a basis for use of an appraisal valuation. Appraisal valuations are
based upon such factors as the portfolio company's earnings, cash flow and net
worth, the market prices for similar securities of comparable companies and an
assessment of the portfolio company's future financial prospects. In a case of
unsuccessful operations, the appraisal may be based upon liquidation value.
Appraisal valuations are necessarily subjective. The Fund also may use, when
available, third-party transactions in a portfolio company's securities
15
<PAGE> 16
as the basis of valuation ("private market method"). The private market method
is used only with respect to completed transactions or firm offers made by
sophisticated, independent investors.
As of December 31, 1994, the Fund had recorded $3,629,064 of unrealized
appreciation and $(407,097) of unrealized depreciation of investments.
Therefore, as of December 31, 1994, the Fund had recorded a total net unrealized
appreciation of investments of $3,221,967.
The net increase in unrealized appreciation of investments during the
three months ended March 31, 1995 and the cumulative net unrealized appreciation
of investments as of March 31, 1995, consisted of the following components:
<TABLE>
<CAPTION>
Unrealized Appreciation (Depreciation) Recorded
During the Three
Months Ended As of
Portfolio Company March 31, 1995 March 31, 1995
----------------- --------------------- ----------------
<S> <C> <C>
Unrealized net appreciation recorded
during prior periods with respect to
investments disposed of during 1995 $(236,754) $ --
Carr-Gottstein (70,147) 103,371
Neodata (268,395) (278,915)
KEMET 515,452 2,360,065
Huntington -- 476,182
Amity 72,307 719,828
Elgin / ENI 15,014 89,121
Protection One 10,611 (3,466)
MTI -- (206,131)
--------- ----------
$ 38,088 $3,260,055
========= =========
</TABLE>
The amount of the Fund's unrealized appreciation or depreciation for
its other investments remains unchanged from the amounts, if any, recorded at
December 31, 1994.
Carr-Gottstein Foods Company completed an IPO of its common stock on
July 1, 1993. The stock, which trades on the New York Stock Exchange, closed at
$6.00 on March 31, 1995. This price is down from the closing price of $6.50 on
December 31, 1994. Based on the $6.00 closing trading price of the common stock,
the Fund's 147,678 shares of common stock would have a market value of $886,068.
However, the Fund's valuation guidelines require the stock to be valued at a 5%
discount to the public market price to reflect the potential market impact that
could result from the sale of the material number of shares owned by the Funds.
The Neodata Corporation ("Neodata") stock and warrants were written
down at March 31, 1995. The Partnership has consistently valued this investment
based upon a multiple of Neodata's cash flow. Because Neodata's long-term debt
presently provides for the accrual, rather than current payment, of interest,
the Company's debt has grown to a level which now exceeds the Partnership's
valuation.
KEMET completed an IPO of its common stock on October 21, 1992. The
stock, which trades on the NASDAQ National Market System, closed at $37.375 (an
average of the closing bid and ask prices) on March 31, 1995. This price is up
from the closing prices of $29.375 on December 31, 1994. The Fund held 67,823
shares of KEMET common stock as of March 31, 1995. Based on the $37.375 closing
trading price of the common stock, the Fund's stock would have a market value of
$2,534,885. However, the Fund's valuation guidelines require the stock to be
valued at a 5%
16
<PAGE> 17
discount to the public market price to reflect the potential market impact which
could result from the sale of the material number of shares owned by the Funds.
The Amity warrants and common stock were written up in value at March
31, 1995 to bring Amity's valuation more in line with the valuation of other
comparable companies in its industry.
The ENI Holding Corp. preferred stock is being written up in value
quarterly to reflect the amount of the cumulative 10% preferential dividend that
has accrued with respect to the preferred stock.
Protection One, Inc. ("Protection One") completed an IPO of its common
stock on September 29, 1994. The stock, which trades on the NASDAQ National
Market System, closed at $5.125 (an average of the closing bid and ask prices)
on March 31, 1995. The Fund holds warrants to acquire 15,405.6 shares of
Protection One common stock at a nominal exercise price. Based on the $5.125
closing trading price of the common stock, the Fund's warrants had a market
value of $78,954 as of March 31, 1995.
FCM continually monitors both the Fund's portfolio companies and the
markets, and continually evaluates the decision to hold or sell its traded
securities.
17
<PAGE> 18
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Fund has been notified by PaineWebber Incorporated ("PaineWebber")
that FCM, the Managing General Partner of the Fund, is a named defendant in a
class action lawsuit brought in March 1995 against PaineWebber and a number of
its affiliates related to its direct investment and partnership offerings. The
lawsuit alleges, among other things, that PaineWebber and the other named
defendants violated federal securities laws and the Racketeer Influenced and
Corrupt Organizations Act ("RICO") and committed common law fraud by marketing
real estate investment trusts and investment partnership interests using
deceptive practices and false and misleading sales literature. While FCM has
been advised by PaineWebber that it is a defendant in the lawsuit and
PaineWebber has provided FCM with a copy of the complaint, as of the date of
this report a complaint has not been served on FCM. The complaint was filed in
United States District Court for the Southern District of New York.
The Fund believes that the allegations in the lawsuit brought against
FCM are without merit. While PaineWebber was the sales agent for the offering of
the Fund's Units and Mezzanine Capital Corporation, a minority general partner
of FCM and a defendant in the lawsuit ("MCC"), is an affiliate of PaineWebber,
FCM is not controlled by PaineWebber. FCM is controlled by FCM Fiduciary Capital
Corporation, a corporation unaffiliated with PaineWebber. FCM intends to
vigorously pursue legal action to effect its removal as a defendant and to
defend its position against the substantive claims alleged in the complaint in
the event that it is unsuccessful in obtaining such removal.
Pursuant to certain contractual arrangements between PaineWebber and
FCM in connection with the original offering of the Units, under certain
circumstances, the Partnership may be required to indemnify PaineWebber and its
affiliates for costs and liabilities incurred in connection with this
litigation. Pursuant to the Fund's Limited Partnership Agreement, the Fund may
be required to indemnify FCM and its affiliates for cost and liabilities
incurred in connection with this litigation.
In any event, FCM believes that this litigation will be resolved
without material adverse effect on the Fund's financial statements, taken as a
whole.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits and Reports to be filed:
Exhibit No. Description
11.1 Statement of Computation of Net Investment
Income Per Limited Partnership Unit.
27 Financial Data Schedule
(b) The Registrant did not file any reports on Form 8-K during the
first quarter of the fiscal year ending December 31, 1995.
18
<PAGE> 19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Fiduciary Capital Pension Partners, L.P.
(Registrant)
By: FCM Fiduciary Capital Management Company
Managing General Partner
Date: May 10, 1995 By: /s/ Donald R. Jackson
---------------------
Donald R. Jackson
Chief Financial Officer
19
<PAGE> 20
EXHIBIT INDEX
Exhibit No. Description Page
11.1 Statement of Computation of Net Investment Income
Per Limited Partnership Unit.
27 Financial Data Schedule
E-1
<PAGE> 1
EXHIBIT 11.1
FIDUCIARY CAPITAL PENSION PARTNERS, L.P.
STATEMENT OF COMPUTATION OF NET
INVESTMENT INCOME PER LIMITED
PARTNERSHIP UNIT
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
---------------
1995 1994
---- ----
<S> <C> <C>
Net Investment Income $ 463,496 $ 420,246
Percentage Allocable to Limited Partners 99% 99%
--------- ---------
Net Investment Income Allocable
to Limited Partners $ 458,861 $ 416,044
========= =========
Weighted Average Number of Limited
Partnership Units Outstanding 1,296,999 1,427,950
========= =========
Net Investment Income Per Limited
Partnership Unit $ .36 $ .29
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial Information extracted from Form 10-Q
for the Quarter ended March 31, 1995 and is qualified in its entirety by
reference to such Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 20,854,151
<INVESTMENTS-AT-VALUE> 24,114,206
<RECEIVABLES> 609,738
<ASSETS-OTHER> 9,003
<OTHER-ITEMS-ASSETS> 130,725
<TOTAL-ASSETS> 24,863,672
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 518,061
<TOTAL-LIABILITIES> 518,061
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,296,999
<SHARES-COMMON-PRIOR> 1,296,999
<ACCUMULATED-NII-CURRENT> 70,466
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,260,055
<NET-ASSETS> 24,345,611
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 599,065
<OTHER-INCOME> 0
<EXPENSES-NET> 135,569
<NET-INVESTMENT-INCOME> 463,496
<REALIZED-GAINS-CURRENT> 263,165
<APPREC-INCREASE-CURRENT> 38,088
<NET-CHANGE-FROM-OPS> 764,749
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 393,030
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 371,719
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 49,757
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 135,569
<AVERAGE-NET-ASSETS> 24,159,752
<PER-SHARE-NAV-BEGIN> 18.47
<PER-SHARE-NII> .36
<PER-SHARE-GAIN-APPREC> .23
<PER-SHARE-DIVIDEND> .30
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.76
<EXPENSE-RATIO> 2.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
