PENFIELD PARTNERS, L.P.
Index to Financial Statements
June 30, 1999
PAGE(S)
Independent Accountants' Report 1
Statement of Assets and Liabilities 2
Statement of Operations 3
Statements of Changes in Partners' Capital 4
Schedule of Investments 6
Notes to Financial Statements 10
Page 1
Independent Accountant's Report
The Partners of
Penfield Partners, L.P.
We have reviewed the accompanying Statement of Assets and
Liabilities, including the Schedule of Investments of Penfield
Partners, L.P. as of June 30, 1999 and the related Statements of
Operations and Changes in Partners' Capital for the six months
then ended. These financial statements are the responsibility of
the General Partners.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying interim
period financial statements for them to be in conformity with
generally accepted accounting principles.
The Statement of Changes in Partners' Capital for the year
ended December 31, 1998 was audited by us, and we expressed an
unqualified opinion on it in our report dated January 29, 1999,
but we have not performed any audit procedures since that date.
Anchin, Block & Anchin LLP
New York, N.Y.
July 23, 1999
Page 2
PENFIELD PARTNERS, L.P.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
ASSETS
Investments in securities, at fair value $36,564,075
Cash equivalents 62,573
Receivable from broker 102,669
Accrued income 7,153
___________
TOTAL ASSETS $36,736,470
LIABILITIES
Securities sold short, at fair value $ 5,717,287
Payable to broker 5,348,187
Accrued expenses 68,745
Payable for capital withdrawals 258,285
___________
TOTAL LIABILITIES $11,392,504
PARTNERS' CAPITAL
General Partners 2,174,694
Limited Partners 23,169,272
___________
TOTAL PARTNERS' CAPITAL $25,343,966
TOTAL LIABILITIES AND PARTNERS' CAPITAL $36,736,470
___________
Net asset value per Limited Partners' Unit $ 25,000
___________
See Notes to Financial Statements
Page 3
PENFIELD PARTNERS, L.P.
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999
(Unaudited)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gains on investments, net $ 582,612
Unrealized gains on investments, net 2,410,362
___________
Total Realized and Unrealized Investment Gains $2,992,974
INVESTMENT LOSS
Income
Interest 43,915
Dividends 254,878
___________
298,793
Expenses
Administrator's fee 88,290
Independent General Partners' fees 10,000
Interest 201,553
Professional fees 31,110
Amortization of organization costs 17,162
Other 7,369
___________
355,484
Investment Loss ( 56,691)
__________
NET INCOME $2,936,283
__________
See Notes to Financial Statements
Page 4
PENFIELD PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Corporate Individual
General General Limited
Total Partner Partners Partners
___________ __________ ________ ___________
PARTNERS' CAPITAL
Beginning $21,515,968 $1,578,916 $13,864 $19,923,188
___________ ___________ ________ ___________
CHANGES IN CAPITAL FROM
Net Income 2,936,283 525,178 1,589 2,409,516
___________ ___________ ________ ___________
Partners' Transactions
Capital contributions 1,150,000 25,000 - 1,125,000
Capital transfers - 30,147 - (30,147)
Capital withdrawals (258,285) - - 258,285
___________ ___________ ________ ___________
Net Increase 891,715 55,147 - 836,568
___________ ___________ ________ ___________
Total Increase in
Partners Capital 3,827,998 580,325 1,589 3,246,084
___________ ___________ ________ ___________
PARTNERS' CAPITAL-
Ending $25,343,966 $2,159,241 $15,453 $23,169,272
___________ ___________ ________ ___________
Units Outstanding-
Beginning 860.64 63.15 .56 796.93
___________ ___________ ________ ___________
CHANGES IN UNITS
OUTSTANDING FROM
Units Sold 46.00 1.00 - 45.00
Units Transferred - 1.20 - (1.20)
Units Adjusted for
Net Income 117.45 21.01 0.06 96.38
Units Repurchased (10.33) - - (10.33)
___________ __________ ________ __________
Net Increase 153.12 23.21 0.06 129.85
___________ __________ ________ ___________
Units Outstanding-
Ending 1,013.76 86.36 .62 926.78
___________ __________ ________ ___________
</TABLE>
See Notes to Financial Statements
Page 5
PENFIELD PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Year Ended December 31, 1998
<TABLE>
<S> <C> <C> <C> <C>
CORPORATE INDIVIDUAL
GENERAL GENERAL LIMITED
TOTAL PARTNER PARTNERS PARTNERS
___________ ___________ ________ ____________
PARTNERS' CAPITAL-
Beginning $22,661,216 $1,563,270 $13,930 $21,084,016
___________ ___________ ________ ____________
CHANGES IN CAPITAL FROM
Net Income (loss) 227,226 281,093 (66) (53,801)
___________ ___________ ________ ____________
Partners' Transactions
Capital contributions 1,825,000 - - 1,825,000
Capital transfers - (265,447) - 265,447
Capital withdrawals (3,197,474) - - (3,197,474)
___________ ___________ ________ ____________
Net Decrease (1,372,474) (265,447) - (1,107,027)
___________ ___________ ________ ____________
Total (Decrease) Increase in
Partners' Capital (1,145,248) 15,646 (66) (1,160,828)
___________ ___________ ________ ____________
PARTNERS' CAPITAL-
Ending $21,515,968 $1,578,916 $13,864 $19,923,188
____________ ___________ ________ ____________
Units Outstanding-
Beginning 906.45 62.53 0.56 843.36
____________ ___________ ________ ____________
CHANGES IN UNITS
OUTSTANDING FROM
Units Sold 73.00 - - 73.00
Units Transferred - (10.62) - 10.62
Units Adjusted for
Net Income (Loss) 9.09 11.24 - (2.15)
Units Repurchased (127.90) - - (127.90)
________ _______ ______ ________
Net (Decrease) (45.81) .62 - (46.43)
Increase ________ _______ ______ ________
UNITS OUTSTANDING-
ENDING 860.64 63.15 .56 796.93
________ _______ ______ ________
</TABLE>
See Notes to Financial Statements
Page 6
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
INVESTMENT IN SECURITIES
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS 144.27%
DRUGS AND HEALTHCARE 12.13%
100,000 Cardiac Control Systems, Inc., $ 7,250
8,953 Cardiac Control Systems, Inc.,
restricted (a) 649
25,000 Jones Pharma, Inc. 984,375
21,140 Medtronic, Inc. 1,646,277
22,500 Steris Corp. 435,937
__________
3,074,488
ELECTRONICS 2.04%
80,000 Barringer Technologies, Inc. 517,500
ENERGY .98%
15,000 Chesapeake Energy Corp. 44,062
18,500 Evercel, Inc. 204,656
__________
248,718
FINANCIAL SERVICES 11.05%
135,000 Imperial Credit Industries, Inc. 957,656
132,500 MFC Bancorp Ltd. 993,750
50,000 R & G Financial Corp. 850,000
__________
2,801,406
HEALTHCARE SERVICES 5.78%
120,000 Accuhealth, Inc. (a) 82,500
266,527 Accuhealth, Inc. restricted (a) 183,237
65,000 Rehabcare Group, Inc. 1,198,437
__________
1,464,174
INDUSTRIAL AND MACHINERY 1.13%
31,760 Transnational Industries Inc.,
restricted (a) 111,160
50,000 Transnational Industries, Inc. 175,000
__________
286,160
See Notes of Financial Statements
Page 7
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1999
(Unaudited)
COMMON STOCKS (CONTINUED)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
MANUFACTURING 12.84%
60,000 Blount International, Inc. 1,631,250
55,000 CTB International Corp. 457,187
55,000 RMI Titanium Corp. 807,812
40,000 Sun Hydraulics Corp. 357,500
__________
3,253,749
MISCELLANEOUS 9.29%
240,000 Prison Realty Trust, Inc. 2,355,000
RESTAURANT, LODGING AND ENTERTAINMENT 20.50%
275,000 Casino Data Systems 1,392,187
117,500 Park Place Entertainment Corp. 1,123,133
50,000 TCI Music, Inc. 1,768,750
200,000 Trump Hotels & Casino Resorts 912,500
__________
5,196,570
RETAILING 8.92%
21,093 99 Cents Only Stores 1,053,331
30,100 Deb Shops, Inc. 598,239
20,000 Duane Reade, Inc. 610,000
__________
2,261,570
SERVICE 6.34%
30,000 Iron Mountain, Inc. 858,750
100,000 Laser Pacific Corp. 596,875
30,000 Nobel Learning Communities, Inc. 150,000
__________
1,605,625
TECHNOLOGY 28.15%
10,000 Centennial Technologies, Inc. 8,800
95,000 Cognitronics Corp. 1,454,690
35,000 Data Transmission Network Corp. 984,375
80,000 Genrad, Inc. 1,710,000
150,000 Inprise Corp. 731,250
40,000 Interlinq Software Corp. 270,000
40,000 Measurement Specialties, Inc. 485,000
165,000 Mecon, Inc. 1,237,500
50,000 Media 100, Inc. 253,125
__________
7,134,740
See Notes to Financial Statements
Page 8
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENT (CONTINUED)
June 30, 1999
(Unaudited)
INVESTMENT IN SECURITIES
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS 5.45%
40,300 Inter Tel, Inc. $ 735,475
235,000 Relm Wireless Corp. 646,250
__________
1,381,725
TRANSPORTATION 12.61%
95,200 Sea Containers Ltd. 3,195,150
UTILITIES 7.05%
100,000 Northeast Utilities 1,787,500
TOTAL COMMON STOCKS (COST $30,491,376) $36,564,075
(a) Affiliated issuer under the Investment Company Act of 1940,
inasmuch as the Fund owns more than 5% of the voting
securities of the issuer.
All percentages are relative to Partners' Capital
See Notes to Financial Statements
Page 9
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1999
(Unaudited)
SECURITIES SOLD SHORT
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS 22.56%
BIOTECH 2.59%
25,000 Coulter Pharmaceutical, Inc. $ 564,062
10,000 Zonagen Inc. 92,500
__________
656,562
CONSUMER PRODUCTS .91%
25,000 Blue Rhino Corp. 229,687
DRUGS AND HEALTHCARE 11.71%
18,200 Chromatics Color Sciences Intl. Inc. 150,150
21,140 Medtronic, Inc. 1,646,277
22,500 Steris Corp. 435,937
60,000 Sunrise Technologies, Inc. 735,000
__________
2,967,364
ENERGY .17%
15,000 Chesapeake Energy Corp. 44,062
FOOD .90%
26,000 Gardenburger, Inc. 229,125
HEALTHCARE SERVICES 2.47%
25,000 Lincare Holdings, Inc. 625,000
MISCELLANEOUS 1.37%
3,000 priceline.com, Inc. 346,687
RETAILING 2.41%
20,000 Duane Reade, Inc. 610,000
TECHNOLOGY .03%
10,000 Centennial Technologies, Inc. 8,800
TOTAL SECURITIES SOLD SHORT
(PROCEEDS $6,808,044) $5,717,287
All percentages are relative to Partners' Capital
See Notes to Financial Statements
Page 10
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Information Subsequent to December 31, 1998 is Unaudited)
ORGANIZATION Penfield Partners, L.P.("the Fund") was organized
in November 1988 in the State of Delaware as a
limited partnership for the purpose of trading in
securities. The Fund will continue until December
31, 2028 unless sooner terminated as provided for
in the Partnership Agreement. The Fund's
investment objective is to seek long-term capital
appreciation by investing and trading primarily in
equity securities and securities with equity
features of publicly listed companies.
Effective July 1, 1994, the Fund registered under
the Investment Company Act of 1940 ("1940 Act") to
operate as a nondiversified management company
and a closed-end interval fund.
REPURCHASE The Fund has adopted certain policies for its
POLICIES repurchases of units from partners as fundamental
policies which, under Rule 23c-3 promulgated under
the 1940 Act, may not be changed without the vote
of the holders of a majority of the outstanding
units (as determined under the 1940 Act). These
repurchase policies are as follows:
(a) The Fund will offer to repurchase units at
intervals of six months in accordance with the
Fund's Amended and Restated Agreement of Limited
Partnership ("Partnership Agreement").
(b) The Fund will allow its partners to submit
requests for repurchases of units by June 16th and
December 17th of each year.
(c) The Fund will establish a maximum of
fourteen days between each deadline for
repurchase requests and the applicable repurchase
date such that repurchases of units shall occur on
June 30th and December 31st of each year.
The Individual General Partners are authorized
under the Partnership Agreement to establish other
policies relating to
Page 11
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Information Subsequent to December 31, 1998 is Unaudited)
repurchases of units that are consistent with the
1940 Act. The repurchase of units by the Fund
allows partners to redeem units semi-annually,
subject to the terms and limitations set forth in
the Partnership Agreement.
On June 3, 1999, the Fund offered to repurchase up
to 25% of the outstanding units of the Fund.
Partners holding 1% of the units outstanding prior
to the repurchases on June 30, 1999 equal to
$258,285 elected to tender their units to the Fund
for repurchase.
FINANCIAL The preparation of financial statements in
STATEMENT conformity with generally accepted accounting
ESTIMATES principles may require management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date
of the financial statements and the reported
amounts of revenues and expenses during the
reporting period. Actual results could differ
from those estimates.
VALUATION OF Purchases and sales of securities are recorded on
SECURITIES a trade date basis.
Investments in securities and securities sold
short which are traded on a national securities
exchange or listed on NASDAQ are valued at the
last reported sales price on the last business day
of the year. Investments in securities and
securities sold short which are traded in the
over-the-counter market are valued at the average
of the bid and asked prices on the last trade
date.
Securities for which market quotations are not
readily available are valued at their fair value
as determined in good faith by the Individual
General Partners.
Page 12
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Information Subsequent to December 31, 1998 is Unaudited)
ORGANIZATION Organization costs are being amortized on a
COSTS straight-line basis over a period of 60 months
until June 30, 1999, when they became fully
amortized.
INCOME TAXES The Fund is not subject to income taxes. The
partners report their distributive share of
realized income or loss on their own tax returns.
CUSTODY The Partnership maintains a brokerage account with
CONCENTRATIONS ING Baring Furman Selz LLC. The Securities
Investor Protection Corporation (SIPC) insures the
brokerage account to the extent of $500,000
(including up to $100,000 for cash). Amounts in
excess of these limits are covered by additional
insurance maintained by the broker.
SECURITIES The Fund is subject to certain inherent risks
SOLD SHORT arising from its activities of selling securities
short. The ultimate cost to the Fund to acquire
these securities may exceed the liability
reflected in the financial statements. In
addition, the Fund is required to maintain
collateral with the broker to secure these short
positions.
ALLOCATION OF The net income of the Fund is allocated
INCOME (LOSS) semiannually on June 30th and December 31st,
20% to the Corporate General Partner and 80% to
all partners in proportion to the number of units
held by each. A net loss is allocated among the
partners in proportion to the number of units
owned by each. If there is a loss for an
accounting period, the 20% allocation to the
Corporate General Partner will not apply to the
future periods until the loss has been recovered.
For semiannual period ended June 30, 1999, the
fund had net income of $2,936,283. For purposes
of the 20% allocation, the net income was reduced
by a loss carryover from December 31, 1998 of
$1,247,044.
Page 13
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Information Subsequent to December 31, 1998 is Unaudited)
ALLOCATION OF All net income allocated to partners is
INCOME (LOSS) reinvested. In order to maintain a $25,000 price
(CONTINUED) per unit, the number of units held by each partner
at the close of each semiannual period is adjusted
to equal the partner's capital account divided by
$25,000.
RELATED The Administrative Agreement provides for fees
PARTY payable to the Fund's administrator, the general
TRANSACTIONS partner of the Corporate General Partner. The
administrator's fee is calculated at a rate of
.0625% of the net asset value of the Fund at the
beginning of each month (.75% per annum).
A fee is payable to each of the Independent
Individual General Partners at $10,000 per annum,
plus out-of-pocket expenses incurred by them in
performing their duties under the Partnership
Agreement.
The accompanying Statement of Assets and
Liabilities includes unpaid fees to the
administrator of $48,130.
At June 30, 1999 the Fund has an investment in
Transnational Industries, a private placement
security in which an Individual General Partner is
a director and an investor through another entity.
The investment is valued at $286,160.
PURCHASES AND Purchases and sales of securities aggregated
SALES OF $33,240,433 and $30,233,648, respectively.
SECURITIES
Page 14
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Information Subsequent to December 31, 1998 is Unaudited)
<TABLE>
SELECTED Six
FINANCIAL Months
INFORMATION Ended Years Ended
June 30, December 31,
<S> <C> <C> <C> <C> <C> <C>
__________________________________________
1999 1998 1997 1996 1995 1994
Ratio of Total
Expenses to
Average Net Assets 3.04%* 1.85% 1.94% 1.53% 2.18% 1.23%
Ratio of Investment
Loss to
Average Net Assets (.48)%* (.78)% (.96)% (.48)% (1.12)% (.48)%
Ratio of Net Income to
Average Net Assets 25.08%* .95% 19.28% 10.89% 9.59% .65%
Portfolio Turnover
Rate .95 2.39 2.10 1.82 1.19 1.87
Total Return 12.96% .68% 21.89% 13.41% 10.14% .53%
* Annualized
</TABLE>
