PENFIELD PARTNERS, L.P.
Index to Financial Statements
December 31, 1999
PAGE(S)
Independent Auditors' 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 Auditors' Report
The Partners of
Penfield Partners, L.P.
We have audited the accompanying Statement of Assets and
Liabilities, including the Schedule of Investments, of Penfield
Partners, L.P. as of December 31, 1999 and the related Statement
of Operations for the year ended and the Statements of Changes in
Partners' Capital for each of the two years in the period ended.
These financial statements are the responsibility of the
Partnership's management. 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 at December 31, 1999 by correspondence with the custodian
and brokers. 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, the financial statements referred to above
present fairly, in all material respects, the financial position
of Penfield Partners, L.P. as of December 31, 1999, the results
of its operations for the year then ended and the changes in its
partners' capital for each of the two years in the period then
ended, in conformity with generally accepted accounting
principles.
Anchin, Block & Anchin LLP
New York, N.Y.
January 14, 2000
Page 2
PENFIELD PARTNERS, L.P.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
ASSETS
Investments in securities, at fair value $30,962,928
Cash equivalents 51,219
Receivable from broker 2,204,637
Accrued income 4,031
___________
TOTAL ASSETS $33,222,815
___________
LIABILITIES
Securities sold short, at fair value $ 2,573,628
Payable to broker 3,283,338
Accrued expenses 69,316
Payable for capital withdrawals 1,048,003
___________
TOTAL LIABILITIES $ 6,974,285
___________
PARTNERS' CAPITAL
General partners 2,433,359
Limited partners 23,815,171
___________
TOTAL PARTNERS' CAPITAL $26,248,530
___________
TOTAL LIABILITIES AND PARTNERS' CAPITAL $33,222,815
___________
Net asset value per Limited Partner's Unit $ 25,000
___________
See Notes to Financial Statements
Page 3
PENFIELD PARTNERS, L.P.
STATEMENT OF OPERATIONS
December 31, 1999
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gains on investments, net $ 53,195
Unrealized gain on investments, net 4,702,613
___________
Total Realized and Unrealized Investment Gain $4,755,808
INVESTMENT LOSS
Income
Interest 98,104
Dividends 504,144
___________
602,248
Expenses
Administrator's fee 187,468
Independent general partners' fees 20,000
Interest 456,048
Professional fees 76,434
Other 29,261
___________
769,211
Investment Loss (166,963)
__________
NET INCOME $4,588,845
__________
See Notes to Financial Statements
Page 4
PENFIELD PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Year Ended December 31, 1999
<TABLE>
Corporate Individual
General General Limited
Total Partner Partners Partners
___________ __________ ________ ___________
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL
Beginning $21,515,968 $1,578,916 $13,864 $19,923,188
___________ __________ ________ ___________
CHANGES IN CAPITAL FROM
Net Income 4,588,845 957,989 2,384 3,628,472
___________ __________ ________ ____________
Partners' Transactions
Capital contributions 1,450,000 25,000 - 1,425,000
Capital transfers - (144,794) - 144,794
Capital withdrawals (1,306,283) - - (1,306,283)
___________ __________ ________ ___________
Net Increase
(Decrease) 143,717 (119,794) - 263,511
___________ __________ ________ ___________
Total Increase in
Partners Capital 4,732,562 838,195 2,384 3,891,983
___________ __________ ________ ___________
PARTNERS' CAPITAL-
Ending $26,248,530 $2,417,111 $16,248 $23,815,171
___________ __________ ________ ___________
Units Outstanding-
Beginning 860.64 63.15 .56 796.93
___________ __________ ________ ___________
CHANGES IN UNITS
OUTSTANDING FROM
Units Sold 58.00 1.00 - 57.00
Units Transferred - (5.79) - 5.79
Units Adjusted for
Net Income 183.55 38.32 .09 145.14
Units Repurchased (52.25) - - (52.25)
___________ __________ ________ __________
Net Increase 189.30 33.53 .09 155.68
___________ __________ ________ ___________
Units Outstanding-
Ending 1,049.94 96.68 .65 952.61
___________ __________ ________ ___________
</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>
CORPORATE INDIVIDUAL
GENERAL GENERAL LIMITED
TOTAL PARTNER PARTNERS PARTNERS
___________ ___________ ________ ____________
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL-
Beginning $22,661,216 $1,563,270 $13,930 $21,084,016
___________ ___________ ________ ____________
CHANGES IN CAPITAL FROM
Net Income 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 .56 843.36
____________ ___________ ________ ____________
CHANGES IN UNITS
OUTSTANDING FROM
Units Sold 73.00 - - 73.00
Units Transferred - (10.62) - 10.62
Units Issued for
Net Income 9.09 11.24 - (2.15)
Units Repurchased (127.90) - - (127.90)
________ _______ ______ ________
Net Decrease (45.81) 0.62 - (46.43)
________ _______ ______ ________
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
December 31, 1999
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS 117.96%
CONSUMER PRODUCTS 6.13%
140,000 Action Peformance Companies $1,610,000
DRUGS AND HEALTHCARE 12.07%
8,953 Cardiac Control Systems, Inc.,
restricted -
37,500 Jones Pharma, Inc. 1,628,906
42,280 Medtronic, Inc. 1,540,578
__________
3,169,484
ENERGY 1.75%
15,000 Chesapeake Energy Corp. 35,625
16,500 Evercel, Inc. 424,875
__________
460,500
FINANCIAL SERVICES 5.82%
107,500 MFC Bancorp Ltd. 954,063
50,000 R & G Financial Corp. 575,000
__________
1,529,063
HEALTHCARE SERVICES 6.26%
120,000 Accuhealth, Inc.(a) 15,000
266,527 Accuhealth, Inc. restricted (a) 33,316
75,000 Rehabcare Group, Inc. 1,593,750
__________
1,642,066
INDUSTRIAL AND MACHINERY 1.01%
31,760 Transnational Industries, Inc.
restricted (a) 103,220
50,000 Transnational Industries, Inc. 162,500
__________
265,720
MANUFACTURING 4.30%
65,000 CTB International Corp. 377,812
100,000 R T I International Metals, Inc. 750,000
__________
1,127,812
See Notes to Financial Statements
Page 7
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 1999
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMONS STOCKS (CONTINUED)
MISCELLANEOUS 2.57%
133,125 Prison Realty Trust, Inc. $ 673,945
RESTAURANT, LODGING AND ENTERTAINMENT 7.30%
315,000 Casino Data Systems 1,260,000
50,000 WMS Industries, Inc. 656,250
__________
1,916,250
RETAILING 4.84%
21,093 99 Cents Only Stores 806,807
25,000 Deb Shops, Inc. 462,500
__________
1,269,307
SERVICE 11.51%
40,000 Iron Mountain, Inc. 1,572,500
110,000 Laser Pacific Media Corp. 1,106,875
47,200 Nobel Learning Communities, Inc. 342,200
__________
3,021,575
TECHNOLOGY 29.31%
1,250 Centennial Technologies, Inc. 13,125
71,400 Cognitronics Corp. 1,204,875
50,000 Concurrent Computer Corp. 934,375
55,000 Genrad, Inc. 886,875
35,000 Interleaf, Inc. 1,176,875
45,000 Measurement Specialties, Inc. 939,375
112,500 Mecon, Inc. 1,216,406
50,000 Media 100, Inc. 1,321,875
__________
7,693,781
See Notes to Financial Statements
Page 8
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 19998
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS 12.82%
37,500 Inter Tel, Inc. $ 937,500
25,000 Liberty Digital, Inc. 1,856,250
182,500 Relm Wireless Corp. 570,313
____________
3,364,063
TRANSPORTATION 8.35%
82,300 Sea Containers Ltd. 2,191,237
UTILITIES 3.92%
50,000 Northeast Utilities 1,028,125
____________
TOTAL INVESTMENTS IN SECURITIES
(COST $22,099,701) $30,962,928
____________
(a) Affiliated issuer under the Investment Company Act of 1940,
in as much 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
December 31, 1999
SECURITIES SOLD SHORT
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS 9.80%
DRUGS AND HEALTHCARE 1.13%
30,000 Cell Pathways, Inc. $ 277,500
2,900 Chromatics Color Sciences Intl, Inc. 20,391
__________
297,891
ENERGY .14%
15,000 Chesapeake Energy Corp. 35,625
FOOD .58%
22,800 Gardenburger, Inc. 151,050
RETAILING 3.75%
8,000 Kohls Corp. 577,500
25,000 Yankee Candle, Inc. 407,812
__________
985,312
SHOES AND APPAREL 1.44%
25,000 Cutter & Buck, Inc. 378,125
TECHNOLOGY 2.76%
1,250 Centennial Technologies, Inc. 13,125
37,500 Valence Technology, Inc. 712,500
__________
725,625
TOTAL SECURITIES SOLD SHORT
(PROCEEDS $3,166,106) $2,573,628
All percentages are relative to Partners' Capital
See Notes to Financial Statements
Page 10
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
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 Fund's Agreement of Limited Partnership
("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
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.
Page 11
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
REPURCHASE The Individual General Partners are authorized
POLICIES under the Partnership Agreement to establish
(CONTINUED) other policies relating to 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 November 19, 1999, the Fund offered to
repurchase up to 25% of it's outstanding units.
Partners holding 4% of the units outstanding prior
to the repurchases on December 31, 1999 equal to
$1,048,003 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
December 31, 1999
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 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 additonal
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.
ALLOCATIONS The net income of the Partnership is allocated
OF INCOME semiannually on June 30th and December 31st, 20%
(LOSS) to the Corporate General Partner and 80% to all
partners in proportion of 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 future
periods until the loss has been recovered.
For the semi-annual period ended June 30, 1999,
the fund had net income of $2,936,283. For
purposes of the 20% allocation, net income was
reduced by a loss carryover from December 31, 1998
of $1,247,044. Net income for the six months
ended December 31, 1999 was allocated in
accordance with the 20% - 80% formula.
All net income allocated to partners is
reinvested. In order to maintain a $25,000 price
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.
Page 13
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
RELATED PARTY The Administration Agreement provides for fees
TRANSACTIONS payable to the Fund's administrator, the general
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 $49,053.
At December 31, 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 $265,720.
PURCHASES AND Purchases and sales of securities aggregated
SALES OF $58,886,749 and $60,100,279, respectively.
SECURITIES
SUBSEQUENT Effective January 1, 2000 partners' capital
CAPITAL of approximately $2,400,000 was contributed
TRANSACTIONS to the Partnership.
Page 14
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
<TABLE>
SELECTED Years Ended
FINANCIAL December 31,
INFORMATION ___________________________________________
<S> <C> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995 1994
Ratio of Total
Expenses to
Average
Net Assets 3.10% 1.85% 1.94% 1.53% 2.18% 1.23%
Ratio of
Investment
Loss to
Average
Net Assets (.67)% (.78)% (.96)% (.48)% (1.12)% (.48)%
Ratio of Net
Income to
Average
Net Assets 18.49% .95% 19.28% 10.89% 9.59% 0.65%
Portfolio Turnover
Rate 1.78 2.39 2.10 1.82 1.19 1.87
Total Return 20.24% .68% 21.89% 13.41% 10.14% .53%
</TABLE>