SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10994
--------------
For the quarterly period ended June 30, 1999
PHOENIX INVESTMENT PARTNERS, LTD.
DELAWARE 95-4191764
(State of Incorporation) (I.R.S. Employer Identification No.)
56 Prospect St., Hartford, Connecticut 06115-0480 (860) 403-7667
(Address of principal executive offices) (Registrant's telephone number)
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 ___
On July 31, 1999, the registrant had 43,909,424 shares of $.01 par value common
stock outstanding.
<PAGE>
PHOENIX INVESTMENT PARTNERS, LTD. AND SUBSIDIARIES
Quarter Ended June 30, 1999
Index
PART I - FINANCIAL INFORMATION:
Page
Item 1. Consolidated Financial Statements:
Consolidated Condensed Statements of Financial Condition. 3
June 30, 1999 and December 31, 1998
Consolidated Statements of Income ....................... 4
Three Months Ended June 30, 1999 and
Three Months Ended June 30, 1998
Consolidated Statements of Income and
Comprehensive Income .................................... 5
Six Months Ended June 30, 1999 and
Six Months Ended June 30, 1998
Consolidated Condensed Statements of Cash Flows ......... 6
Six Months Ended June 30, 1999 and
Six Months Ended June 30, 1998
Notes to Consolidated Financial Statements .............. 7
Item 2. Management's Discussion and Analysis of:
Results of Operations and Financial Condition............ 14
Liquidity and Capital Resources.......................... 20
Market Risk.............................................. 21
Impact of the Year 2000 Issue............................ 21
Cautionary Statement under Section 21E of the Securities
Exchange Act of 1934.................................. 22
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings........................................ 23
Item 4. Submission of Matters to a Vote of Security Holders...... 23
Item 6. Exhibits and Reports on Form 8-K......................... 23
Signatures........................................................ 24
2
<PAGE>
PART I. Financial Information
Item 1. Consolidated Financial Statements
Phoenix Investment Partners, Ltd. and Subsidiaries
Consolidated Condensed Statements of Financial Condition
(in thousands)
(Unaudited)
June 30, December 31,
1999 1998
Assets
Current Assets
Cash and cash equivalents $ 32,888 $ 29,298
Marketable securities, at market 18,449 16,275
Accounts receivable 37,021 35,015
Prepaid expenses and other current assets 3,782 2,951
--------- --------
Total current assets 92,140 83,539
Deferred commissions 1,811 2,798
Furniture, equipment and leasehold improvements, net 11,862 8,589
Goodwill and intangible assets, net 571,811 446,657
Long-term investments and other assets 25,391 22,135
--------- --------
Total assets $ 703,015 $563,718
========= ========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and other accrued liabilities $ 35,059 $ 39,659
Payables to related parties 3,471 3,032
Broker-dealer payable 11,082 9,568
Current portion of long-term debt 889 964
--------- --------
Total current liabilities 50,501 53,223
Deferred taxes, net 52,057 53,446
Long-term debt, net of current portion 1,394 1,718
Convertible subordinated debentures 76,364 76,364
Credit facilities 275,000 140,000
Lease obligations and other long-term liabilities 3,689 4,843
--------- --------
Total liabilities 459,005 329,594
--------- --------
Minority Interest 2,139 2,531
--------- --------
Stockholders' Equity
Common stock, $.01 par value, 100,000,000 shares
authorized, 45,645,224 and 45,172,258 shares issued,
and 43,913,124 and 43,710,458 shares outstanding 456 451
Additional paid-in capital 198,609 195,224
Retained earnings 52,655 44,482
Accumulated other comprehensive income 4,558 3,571
Unearned compensation on restricted stock (1,909) (1,529)
Treasury stock, at cost, 1,732,100 and 1,461,800 shares (12,498) (10,606)
--------- --------
Total stockholders' equity 241,871 231,593
--------- --------
Total liabilities and stockholders' equity $ 703,015 $563,718
========= ========
The accompanying notes are an integral part of these statements.
3
<PAGE>
Phoenix Investment Partners, Ltd. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share data)
(Unaudited)
Three Months Ended June 30,
1999 1998
Revenues
Investment management fees $ 63,065 $ 48,784
Mutual funds - ancillary fees 8,413 6,468
Other income and fees 1,167 730
--------- --------
Total revenues 72,645 55,982
--------- --------
Operating Expenses
Employment expenses 29,118 22,289
Other operating expenses 16,711 15,057
Depreciation and amortization of
leasehold improvements 940 960
Amortization of goodwill and intangible assets 7,991 5,509
Amortization of deferred commissions 444 265
--------- --------
Total operating expenses 55,204 44,080
--------- --------
Operating Income 17,441 11,902
--------- --------
Equity in Earnings of Unconsolidated Affiliates 301 1,126
--------- --------
Other Income - Net 653 83
--------- --------
Interest (Expense) Income - Net
Interest expense (5,119) (3,946)
Interest income 733 472
--------- --------
Total interest expense - net (4,386) (3,474)
--------- --------
Income to Minority Interest (849) (465)
--------- --------
Income Before Income Taxes 13,160 9,172
Provision for income taxes 5,780 4,041
--------- --------
Net Income 7,380 5,131
Other Comprehensive Income, Net of Tax
Unrealized gains (losses) on
securities available-for-sale 863 (2,130)
Foreign currency translation adjustment (703)
--------- --------
Total other comprehensive income (loss) 863 (2,833)
--------- --------
Comprehensive Income $ 8,243 $ 2,298
========= ========
Net Income $ 7,380 $ 5,131
Series A preferred stock dividends 34
--------- --------
Income available to common stockholders $ 7,380 $ 5,097
========= ========
Weighted average shares outstanding
Basic 43,839 44,321
Diluted 54,226 54,497
Earnings per share
Basic $ .17 $ .12
Diluted $ .15 $ .11
The accompanying notes are an integral part of these statements.
4
<PAGE>
Phoenix Investment Partners, Ltd. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share data)
(Unaudited)
Six Months Ended June 30,
1999 1998
Revenues
Investment management fees $ 118,090 $ 94,438
Mutual funds - ancillary fees 15,741 12,622
Other income and fees 2,133 1,379
--------- --------
Total revenues 135,964 108,439
--------- --------
Operating Expenses
Employment expenses 55,772 45,020
Other operating expenses 31,224 26,749
Depreciation and amortization of
leasehold improvements 1,844 1,873
Amortization of goodwill and intangible assets 14,305 11,013
Amortization of deferred commissions 1,009 605
--------- --------
Total operating expenses 104,154 85,260
--------- --------
Operating Income 31,810 23,179
--------- --------
Equity in Earnings of Unconsolidated Affiliates 466 2,055
--------- --------
Other Income - Net 698 598
--------- --------
Interest (Expense) Income - Net
Interest expense (8,905) (6,898)
Interest income 1,460 867
--------- --------
Total interest expense - net (7,445) (6,031)
--------- --------
Income to Minority Interest (1,586) (953)
--------- --------
Income Before Income Taxes 23,943 18,848
Provision for income taxes 10,525 8,292
--------- --------
Net Income 13,418 10,556
Other Comprehensive Income, Net of Tax
Unrealized gains (losses) on
securities available-for-sale 987 (2,565)
Foreign currency translation adjustment (511)
--------- --------
Total other comprehensive income (loss) 987 (3,076)
--------- --------
Comprehensive Income $ 14,405 $ 7,480
========= ========
Net Income $ 13,418 $ 10,556
Series A preferred stock dividends 1,223
--------- --------
Income available to common stockholders $ 13,418 $ 9,333
========= ========
Weighted average shares outstanding
Basic 43,749 44,132
Diluted 53,658 54,162
Earnings per share
Basic $ .31 $ .21
Diluted $ .28 $ .21
The accompanying notes are an integral part of these statements.
5
<PAGE>
Phoenix Investment Partners, Ltd. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
Six Months Ended June 30,
1999 1998
Cash Flows from Operating Activities:
Net income $ 13,418 $10,556
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of
leasehold improvements 1,844 1,873
Amortization of goodwill and intangible assets 14,305 11,013
Amortization of deferred commissions 1,009 605
Income to minority interest 1,586 953
Compensation recognized under employee
benefit plans 796
Equity in earnings of unconsolidated
affiliates, net of dividends (274) 370
Changes in other operating assets 484 (3,171)
Changes in other operating liabilities (10,357) (3,596)
-------- -------
Net cash provided by operating activities 22,811 18,603
-------- -------
Cash Flows from Investing Activities:
Purchase of subsidiaries, net of cash acquired (138,551) (5,853)
Sale (purchase) of marketable securities, net 543 (824)
Capital expenditures, net (2,769) (1,482)
Distributions to minority interest (1,978) (643)
Purchase of long-term investments (4,515) (567)
Proceeds from long-term investments 490
-------- -------
Net cash used in investing activities (146,780) (9,369)
-------- -------
Cash Flows from Financing Activities:
Proceeds from (repayment of) borrowings, net 132,868 (5,446)
Dividends paid (5,246) (6,797)
Stock repurchases (1,892) (2,002)
Proceeds from issuance of stock 2,003 1,118
Other financing activities (174)
-------- -------
Net cash provided by (used in) financing activities 127,559 (13,127)
-------- -------
Net increase (decrease) in cash and cash equivalents 3,590 (3,893)
Cash and cash equivalents, beginning of period 29,298 21,872
-------- -------
Cash and Cash Equivalents, End of Period $ 32,888 $17,979
======== =======
Supplemental Cash Flow Information:
Interest paid $ 8,799 $ 6,809
Income taxes paid $ 20,760 $13,140
The accompanying notes are an integral part of these statements.
6
<PAGE>
Phoenix Investment Partners, Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
1. Basis of Presentation
The unaudited consolidated financial statements of Phoenix Investment
Partners, Ltd. and Subsidiaries (PXP or the Company) included herein have
been prepared in accordance with the instructions to the Quarterly Report on
Form 10-Q pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is
suggested that these consolidated financial statements be read in conjunction
with the financial statements and notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998. Reclassifications
have been made, when necessary, to conform the prior period presentation to
the current period presentation.
2. Recent Accounting Pronouncements
PXP adopted Statement of Financial Accounting Standard (SFAS) No. 131,
"Disclosures about Segments of an Enterprise and Related Information," as of
December 31, 1998. This statement supercedes SFAS No. 14, "Financial
Reporting for Segments of a Business Enterprise," by replacing the "industry
segment" approach with the "management" approach. The management approach
designates the internal organization that is used by management for making
operating decisions and assessing performance as the source for reportable
segments. SFAS No. 131 also requires disclosures about products and services,
geographic areas, and major customers. As this pronouncement only addresses
financial statement disclosure, it has no impact on PXP's financial results.
(See Note 6)
3. Acquisition Related Activity
On March 1, 1999, PXP acquired the retail mutual fund and closed-end fund
businesses of the New York City-based Zweig Fund Group (Zweig) for
consideration of approximately $135 million. The agreement provides for an
additional payout of up to $29 million over the next three years, dependent
upon revenue growth of the purchased business.
The purchase price for Zweig represents the consideration paid and the direct
costs incurred by PXP related to the purchase. Preliminary analyses have been
performed in order to identify intangible assets and to allocate purchase
price to such assets. Additional information is necessary to complete the
purchase price allocation. The excess of purchase price over the fair value
of acquired net tangible assets of Zweig totaled $135.4 million. Of this
excess purchase price, $78.1 million has been preliminarily allocated to
intangible assets, primarily associated with investment management contracts,
which are being amortized over their estimated useful lives using the
straight-line method. The average estimated useful life of the intangible
assets is approximately 12 years. The remaining excess purchase price of
$57.4 million has been classified as goodwill and is being amortized over 40
years using the straight-line method. Related amortization of $3.2 million
has been expensed for the year to date period ended June 30, 1999.
7
<PAGE>
The following table summarizes the preliminary calculation and allocation of
Zweig's purchase price (in thousands):
Purchase Price:
Consideration paid $ 135,000
Transaction costs 2,391
---------
Total Purchase Price $ 137,391
=========
Purchase Price Allocation:
Fair value of acquired net assets $ 1,966
Identified intangibles 78,063
Goodwill 57,362
---------
Total Allocation of Purchase Price $ 137,391
=========
4. Pro Forma Results
PXP's financial results for 1999 include the operations of Zweig from March
1, 1999, while the second quarter and first six months of 1998 exclude the
operations of Zweig. Management believes that, for comparative purposes, the
most meaningful financial presentation for these periods is on a pro forma
basis.
The following pro forma financial information for the three and six months
ended June 30, 1999 and 1998 is derived from the historical financial
statements of PXP and Zweig, and gives effect to the acquisition of Zweig by
PXP assuming the acquisition was effected on January 1, 1998. The pro forma
financial information does not necessarily reflect the actual results that
would have been obtained had the acquisition taken effect on the
aforementioned assumed date.
Pro Forma Pro Forma
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
------- -------- ------- -------
(in thousands, except per share amounts)
Revenues $72,646 $ 67,019 $142,648 $130,043
------- -------- -------- --------
Employment expenses 29,118 24,920 58,236 50,282
Other operating expenses 18,096 19,657 35,357 35,601
Amortization of goodwill and
intangible assets 7,991 7,991 15,940 15,940
------- -------- -------- --------
Operating income 17,441 14,451 33,115 28,220
Other income - net 954 1,209 1,164 2,653
Interest expense - net (4,386) (5,366) (8,729) (9,856)
Income to minority interest (849) (465) (1,586) (953)
------- -------- -------- --------
Income before income taxes 13,160 9,829 23,964 20,064
Provision for income taxes 5,748 4,413 10,534 8,992
------- -------- -------- --------
Net income $ 7,412 $ 5,416 $ 13,430 $ 11,072
======= ======== ======== ========
Earnings per share
Basic $ .17 $ .12 $ .31 $ .22
Diluted $ .15 $ .11 $ .28 $ .22
8
<PAGE>
5. Dividends and Other Capital Transactions
On August 5, 1999, PXP's Board of Directors declared a quarterly dividend of
$.06 per common share payable September 9, 1999, to stockholders of record on
August 27, 1999. PXP intends to continue to pay quarterly cash dividends,
however, future payment of cash dividends by PXP will depend upon the
financial condition, capital requirements and earnings of PXP.
On April 3, 1998, PXP exchanged 3.2 million shares of Series A Convertible
Exchangeable Preferred Stock (Preferred Stock) for 6% Convertible
Subordinated Debentures (Debentures) due 2015. Each share of outstanding
Preferred Stock, including unpaid and accrued dividends, was exchanged for a
Debenture with a $25.00 face value. Interest on the Debentures for the period
from June 10, 1999 through September 9, 1999 will be payable on September 10,
1999 to registered holders as of August 20, 1999.
As of June 30, 1999, the Company, in accordance with the previously announced
stock repurchase program, had purchased a total of 1,732,100 shares of PXP
common stock at a cost of $12.5 million.
6. Segment Information
PXP has determined that its reportable segments are those based on the method
used for internal reporting, which disaggregates the business by customer
category. PXP's reportable segments are its retail and institutional lines of
business. The retail line primarily serves the individual investor by acting
as advisor to and, in certain instances, distributor for open-end mutual
funds and managed accounts. The institutional line provides management
services primarily to corporate entities,closed-end funds, and multi-employer
retirement funds, as well as endowment, insurance and other special purpose
funds.
The following tables summarize pertinent financial information relative to
PXP's operations:
Six Months Ended June 30, 1999 Retail Institutional All Other Total
(in thousands)
Revenues $ 86,080 $48,834 $ 1,050 $135,964
-------- ------- ------- --------
Employment and
other operating expenses 55,904 33,051 894 89,849
Amortization of goodwill
and intangible assets 7,938 6,367 14,305
-------- ------- ------- --------
Operating income 22,238 9,416 156 31,810
Other (expense) income - net (90) 294 960 1,164
Interest expense (4,520) (2,031) (2,354) (8,905)
Interest income 328 90 1,042 1,460
Minority interest (1,586) (1,586)
-------- ------- ------- --------
Income (loss) before income taxes $ 17,956 $ 6,183 $ (196) $ 23,943
======== ======= ======= ========
(in millions)
Assets under management $ 25,351 $34,143 $ -- $ 59,494
======== ======= ======= ========
9
<PAGE>
Six Months Ended June 30, 1998 Retail Institutional All Other Total
(in thousands)
Revenues $ 69,987 $37,402 $ 1,050 $108,439
-------- ------- ------- --------
Employment and
other operating expenses 50,051 24,196 74,247
Amortization of goodwill
and intangible assets 6,297 4,716 11,013
-------- ------- ------- --------
Operating income 13,639 8,490 1,050 23,179
Other income - net 2 376 2,275 2,653
Interest expense (4,865) (828) (1,205) (6,898)
Interest income 226 42 599 867
Minority interest (953) (953)
-------- ------- ------- --------
Income before income taxes $ 9,002 $ 7,127 $ 2,719 $ 18,848
======== ======= ======= ========
(in millions)
Assets under management $ 20,378 $30,169 $ -- $ 50,547
======== ======= ======= ========
The "All Other" column represents corporate office revenue and expenses which
are not directly attributable to either line of business.
There are no intersegment revenues. Balance sheet asset information by line
of business is not reported as the information is not produced internally and
is not utilized in managing the business.
7. Comprehensive Income
The components of other comprehensive income, and related tax effects, are as
follows (in thousands):
Three Months Ended June 30, 1999 Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
Unrealized gains on securities
available-for-sale:
Unrealized holding gains arising
during period $1,463 $ (600) $ 863
------ -------- -------
Other comprehensive income $1,463 $ (600) $ 863
====== ======== =======
Six Months Ended June 30, 1999 Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
Unrealized gains on securities
available-for-sale:
Unrealized holding gains arising
during period $1,673 $ (686) $ 987
------ -------- -------
Other comprehensive income $1,673 $ (686) $ 987
====== ======== =======
10
<PAGE>
Three Months Ended June 30, 1998 Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
Unrealized losses on securities
available-for-sale:
Unrealized holding losses arising
during period $(3,610) $ 1,480 $(2,130)
Foreign currency translation adjustment (1,192) 489 (703)
------- -------- -------
Other comprehensive loss $(4,802) $ 1,969 $(2,833)
======= ======== =======
Six Months Ended June 30, 1998 Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
Unrealized losses on securities
available-for-sale:
Unrealized holding losses arising
during period $(4,347) $ 1,782 $(2,565)
Foreign currency translation adjustment (866) 355 (511)
------- -------- -------
Other comprehensive loss $(5,213) $ 2,137 $(3,076)
======= ======== =======
The following tables summarize accumulated other comprehensive income
balances (in thousands):
As of June 30, 1999: Accumulated
Unrealized Other
Gains(Losses) Comprehensive
on Securities Income
Balance as of December 31, 1998 $ 3,571 $ 3,571
Current period change 987 987
-------- ---------
Balance as of June 30, 1999 $ 4,558 $ 4,558
======== =========
As of December 31, 1998: Accumulated
Foreign Unrealized Other
Currency Gains(Losses) Comprehensive
Items on Securities Income
Balance as of December 31, 1997 $ (1,171) $ 11,845 $ 10,674
Current period change 1,171 (8,274) (7,103)
-------- -------- ---------
Balance as of December 31, 1998 $ -- $ 3,571 $ 3,571
======== ======== =========
11
<PAGE>
8. Earnings Per Share
Earnings per share (EPS) is calculated in accordance with SFAS No. 128,
"Earnings per Share." Basic EPS is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding for the period. The computation of diluted EPS is similar to
basic EPS, except that the denominator is increased to include the number of
additional common shares that would have been outstanding if potentially
dilutive common shares had been issued, and the numerator is increased for
any related net income effect. Potentially dilutive shares are based on
outstanding stock options and convertible securities.
The following tables reconcile PXP's basic earnings per share to diluted
earnings per share:
For the Three Months Ended June 30, 1999
Per-Share
Income Shares Amount
(in thousands)
Basic EPS
Income available to common
stockholders $ 7,380 43,839 $ .17
======
Effect of Dilutive Securities
Stock options 887
6% convertible debentures 674 9,500
------- ------
Diluted EPS
Income available to common
stockholders and assumed
conversions $ 8,054 54,226 $ .15
======= ====== ======
For the Six Months Ended June 30, 1999
Per-Share
Income Shares Amount
(in thousands)
Basic EPS
Income available to common
stockholders $ 13,418 43,749 $ .31
======
Effect of Dilutive Securities
Stock options 409
6% convertible debentures 1,341 9,500
------- ------
Diluted EPS
Income available to common
stockholders and assumed
conversions $ 14,759 53,658 $ .28
======== ====== ======
12
<PAGE>
For the Three Months Ended June 30, 1998
Per-Share
Income Shares Amount
(in thousands)
Net income $ 5,131
Less: preferred stock dividends 34
Basic EPS
Income available to common
stockholders 5,097 44,321 $ .12
======
Effect of Dilutive Securities
Stock options 677
6% convertible debentures 652 9,499
Convertible preferred stock 34
------- ------
Diluted EPS
Income available to common
stockholders and assumed
conversions $ 5,783 54,497 $ .11
======= ====== ======
For the Six Months Ended June 30, 1998
Per-Share
Income Shares Amount
(in thousands)
Net income $ 10,556
Less: preferred stock dividends 1,223
Basic EPS
Income available to common
stockholders 9,333 44,132 $ .21
======
Effect of Dilutive Securities
Stock options 531
6% convertible debentures 652 9,499
Convertible preferred stock 1,223
------- ------
Diluted EPS
Income available to common
stockholders and assumed
conversions $ 11,208 54,162 $ .21
======== ====== ======
9. Long-term Debt
On March 17, 1999, PXP entered into a five year, $175 million Credit
Agreement with a consortium of banks. At June 30, 1999, PXP had outstanding
borrowings of $75 million under this facility. In addition, PXP had
outstanding borrowings under an existing $200 million credit facility of $200
million and $140 million at June 30, 1999 and December 31, 1998,
respectively. The Zweig acquisition was financed through borrowings from
these credit facilities. Interest rates on both credit facilities are
variable.
On March 17, 1999, PXP and the banks amended the financial covenant section
of its existing $200 million Credit Agreement to be consistent with the terms
of the new $175 million Credit Agreement.
13
<PAGE>
Phoenix Investment Partners, Ltd. and Subsidiaries
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Business Description
Phoenix Investment Partners, Ltd. and subsidiaries (PXP or the Company) provide
a variety of financial services to a broad base of institutional, corporate and
individual clients.
PXP currently operates two lines of business: retail and institutional
investment management. The retail investment management line of business
provides investment management services to individuals on a discretionary basis
(including administrative services) with products consisting of open-end mutual
funds and individually managed accounts. Individually managed accounts are
primarily administered through broker-dealer sponsored and distributed wrap
programs offered to high net-worth individuals. The institutional investment
management line of business provides discretionary and non-discretionary
investment management services primarily to corporate entities, closed-end
funds, and multi-employer retirement funds, as well as endowment, insurance, and
other special purpose funds.
The following table summarizes operating revenues, pre-tax income and assets
under management by line of business as of, and for the six months ended, June
30, 1999 and 1998:
Assets Under
Revenues Pre-Tax Income Management
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
(in thousands) (in thousands) (in millions)
Retail $ 86,080 $ 69,987 $17,956 $ 9,002 $25,351 $20,378
Institutional 48,834 37,402 6,183 7,127 34,143 30,169
All other * 1,050 1,050 (196) 2,719
------- -------- ------- ------- ------- -------
Total $135,964 $108,439 $23,943 $18,848 $59,494 $50,547
======== ======== ======= ======= ======= =======
* - All other represents corporate office revenue and expenses, which are not
attributed directly to either line of business.
14
<PAGE>
Results of Operations
Assets Under Management
At June 30, 1999, PXP had $59.5 billion of assets under management, an increase
of $6.0 billion from December 31, 1998, and $8.9 billion from June 30, 1998. The
increases from December 31, 1998 and June 30, 1998 are principally the result of
the acquisition of the New York City-based Zweig Fund Group (Zweig), on March 1,
1999, which increased assets under management by $3.7 billion as of June 30,
1999, as well as positive investment performance. Sales and deposits were offset
by withdrawals and redemptions during the aformentioned periods. The pro forma
assets under management at June 30, 1998 assumes the Zweig assets had been
acquired as of that date. Since the revenues of the Company are substantially
earned based upon assets under management, this information is important to an
understanding of the business.
Historical Pro Forma
June 30, March 31, December 31, June 30, June 30,
1999 1999 1998 1998 1998
(in millions)
Retail:
Open-end Mutual Funds $ 16,765 $16,658 $ 14,407 $ 13,867 $ 16,599
Managed Accounts * 8,586 8,120 7,322 6,511 6,511
-------- ------- -------- -------- --------
25,351 24,778 21,729 20,378 23,110
-------- ------- -------- -------- --------
Institutional:
Closed-end Funds 4,943 4,726 3,505 3,380 4,900
Institutional Accounts** 20,340 20,196 19,468 18,430 18,697
PHL General Account 8,860 8,817 8,785 8,359 8,359
-------- ------- -------- -------- --------
34,143 33,739 31,758 30,169 31,956
-------- ------- -------- -------- --------
$ 59,494 $58,517 $ 53,487 $ 50,547 $ 55,066
======== ======= ======== ======== ========
* Managed Accounts represent assets which are individually managed for retail
clients.
** Institutional Accounts include 100% of the assets managed by Seneca Capital
Management (Seneca).
Three Months Ended June 30, 1999 Compared with Three Months Ended
June 30, 1998 - Historical
Revenues for the three months ended June 30, 1999 of $72.6 million, which
includes $8.8 million for Zweig, increased $16.7 million (30%) from $56.0
million for the same period in 1998. Excluding the effects of Zweig, the
Company's revenues for the three months ended June 30, 1999 increased $7.9
million (14%) compared to the same period in 1998. Revenues for the retail and
institutional lines of business, including Zweig, increased $9.5 million and
$7.1 million, respectively.
Investment management fees of $63.1 million for the three months ended June 30,
1999, which includes $7.6 million for Zweig, increased $14.3 million (29%) as
compared to $48.8 million for the same period in 1998. Excluding Zweig,
management fees earned from the retail line of business, including managed
accounts and open-end mutual funds, increased $3.2 million due to a $2.3 billion
increase in average assets under management offset, in part, by a decrease in
the fee schedule for certain wrap programs. Excluding Zweig, management fees
earned from the institutional line of business increased $3.5 million primarily
as a result of a $3.1 billion increase in average assets under management.
Advisory accounts contributed $3.0 million to the increase in management fees as
a result of a $2.2 billion increase in average assets managed. The overall
increase in average assets managed in both the retail and institutional lines of
business is due to strong investment performance, as well as positive managed
accounts and institutional net asset flows, since June 30, 1998.
15
<PAGE>
Mutual funds - ancillary fees, a component of the retail line of business, of
$8.4 million for the three months ended June 30, 1999, which includes $.6
million for Zweig, increased $1.9 million (30%) as compared to $6.5 million for
the same period in 1998. Administrative fees and net distributor fees each
increased $.3 million as a result of an increase in average assets managed,
principally in the Phoenix-Engemann Funds. Fund accounting fees earned on
open-end mutual funds and Phoenix Home Life Mutual Insurance Company (PHL)
sponsored variable products increased $.4 million primarily as a result of an
increase in average assets under management and an approved change in the fee
structure. This change was implemented in order to reimburse Phoenix Equity
Planning Corporation (PEPCO), a wholly-owned subsidiary of PXP, for additional
administrative costs related to the out-sourcing of substantially all of PEPCO's
fund accounting operations in the first quarter of 1998. Shareholder service
agent fees increased $.4 million primarily as a result of an approved change in
the fee structure, which took effect in April 1999.
Other income and fees of $1.2 million for the three months ended June 30, 1999
increased $.4 million (60%) as compared to $.7 million for the same period in
1998, primarily due to $.5 million of fees earned administering the Zweig
closed-end funds.
Operating expenses for the three months ended June 30, 1999 of $55.2 million,
which includes $7.8 million for Zweig, increased $11.1 million (25%) from $44.1
million for the same period in 1998, of which $4.4 million and $6.0 million
related to the retail and institutional lines of business, respectively.
Employment expenses of $29.1 million for the three months ended June 30, 1999,
which includes $2.9 million for Zweig, increased $6.8 million (31%) as compared
to $22.3 million for the same period in 1998. An increase in incentive
compensation of $3.1 million resulted from improved sales in both the retail and
institutional lines of business, and improved performance by certain portfolio
managers and research analysts. Improved results by certain subsidiaries, on
which compensation is calculated, contributed $2.1 million of this increase.
Base compensation expense increased $.5 million in the second quarter of 1999
primarily as a result of annual salary adjustments. An increase in profit
sharing expense increased employment expense by $.4 million. Savings resulting
from the closing of the equity department in Hartford in early April 1999 were
offset by the severance costs related to that action, which were recorded during
the second quarter.
Other operating expenses of $16.7 million for the three months ended June 30,
1999, which includes $2.3 million for Zweig, increased $1.7 million (11%) as
compared to $15.1 million for the same period in 1998. Costs incurred on behalf
of the Phoenix-Engemann Funds (Funds), which were recovered by administrative
fees earned on the Funds, decreased by $.5 million. Increases in legal fees,
investment research fees and commissions were offset by decreases in the cost of
other services. The second quarter of 1998 included $.2 million of non-recurring
charges related to the outsourcing of PXP's fund accounting operations.
Depreciation and amortization of leasehold improvements of $.9 million for the
three months ended June 30, 1999, which includes $.1 million for Zweig, remained
relatively constant from $1.0 million for the same period in 1998.
Amortization of goodwill and intangible assets of $8.0 million for the three
months ended June 30, 1999 increased $2.5 million (45%) as compared to $5.5
million for the same period in 1998 as a result of the amortization of the
intangible assets and goodwill identified in the preliminary purchase price
allocation of Zweig.
16
<PAGE>
Amortization of deferred commissions, a component of the retail line of
business, of $.4 million for the three months ended June 30, 1999 increased $.2
million (68%) as compared to $.3 million for the same period in 1998 due to
increased redemptions of Class B mutual fund shares. Pasadena Capital
Corporation's deferred commissions asset established prior to February 1, 1998
continues to be amortized.
Operating income of $17.4 million for the three months ended June 30, 1999
increased $5.5 million (47%) as compared to $11.9 million for the same period in
1998 as a result of the changes discussed above.
Equity in earnings of unconsolidated affiliates of $.3 million for the three
months ended June 30, 1999 decreased $.8 million (73%) as compared to $1.1
million for the same period in 1998. PXP sold its investment in Beutel, Goodman
& Company, Ltd. (BG) in the fourth quarter of 1998. PXP's share of BG's income
in the second quarter of 1998 was $1.1 million. Equity earnings from PXP's joint
venture in Inverness/Phoenix Capital LLC (IPC) increased $.3 million as a result
of IPC's recognition of a fee from a significant second quarter transaction.
Other income - net of $.7 million for the three months ended June 30, 1999
increased $.6 million as compared to $83 thousand for the same period in 1998.
Losses from the sale of fixed assets during the second quarter of 1998 totaled
$.3 million. In addition, PXP recorded a loss of $.3 million related to its
investment in Greystone Capital Management (Greystone) in the second quarter of
1998.
Interest expense - net of $4.4 million for the three months ended June 30, 1999,
which includes net interest income of less than $.1 million for Zweig, increased
$.9 million (26%) as compared to $3.5 million for the same period in 1998. An
increase of $1.9 million is due to additional interest charges resulting from
the financing of the Zweig acquisition. A decrease of $.8 million is due to a
lower average outstanding principal balance on other debt and a decrease in
the average interest rate as compared to the same period in 1998. Interest on
a note receivable related to the sale of BG resulted in income of $.2 million.
Income to minority interest of $.8 million and $.5 million for the three months
ended June 30, 1999 and 1998, respectively, represents the minority
shareholders' interest in the equity earnings of Seneca, which is fully
consolidated in the Company's financial statements.
Net income for the three months ended June 30, 1999 of $7.4 million reflects an
increase of $2.3 million (44%) from the $5.1 million for the second quarter of
1998, resulting from the changes discussed above. The effective tax rate of 44%
for the three months ended June 30, 1999 remained unchanged relative to the same
period in 1998.
Six Months Ended June 30, 1999 Compared with Six Months Ended
June 30, 1998 - Historical
Revenues for the six months ended June 30, 1999 of $136.0 million, which
includes $12.0 million for Zweig, increased $27.5 million (25%) from $108.4
million for the same period in 1998. Excluding the effects of Zweig, the
Company's revenues for the six months ended June 30, 1999 increased $15.6
million (14%) compared to the same period in 1998. Revenues for the retail and
institutional lines of business, including Zweig, increased $16.1 million and
$11.4 million, respectively.
17
<PAGE>
Investment management fees of $118.1 million for the six months ended June 30,
1999, which includes $10.3 million for Zweig, increased $23.7 million (25%) as
compared to $94.4 million for the same period in 1998. Excluding Zweig,
management fees earned from the retail line of business, including managed
accounts and open-end mutual funds, increased $6.9 million primarily due to a
$2.4 billion increase in average assets under management offset, in part, by a
decrease in the fee schedule for certain wrap programs. Excluding Zweig,
management fees earned from the institutional line of business increased $6.5
million primarily as a result of a $3.4 billion increase in average assets under
management. Advisory accounts contributed $5.3 million to the increase in
management fees as a result of a $2.5 billion increase in average assets
managed. The overall increase in average assets managed in both the retail and
institutional lines of business is due to strong investment performance by
investment managers both in absolute terms and relative to the strong
performance of the market in general.
Mutual funds - ancillary fees, a component of the retail line of business, of
$15.7 million for the six months ended June 30, 1999, which includes $.9 million
for Zweig, increased $3.1 million (25%) as compared to $12.6 million for the
same period in 1998. Administrative fees and net distributor fees increased $.7
million and $.5 million, respectively, as a result of an increase in average
assets managed, principally in the Phoenix-Engemann Funds. Fund accounting
fees earned on open-end mutual funds and Phoenix Home Life Mutual Insurance
Company (PHL) sponsored variable products increased $.8 million primarily as a
result of an increase in average assets under management and an approved change
in the fee structure. This change was implemented in order to reimburse PEPCO, a
wholly-owned subsidiary of PXP, for additional administrative costs related to
the out-sourcing of substantially all of PEPCO's fund accounting operations in
the first quarter of 1998. Shareholder service agent fees increased $.3 million
primarily as a result of an approved change in the fee structure, which took
effect in April 1999.
Other income and fees of $2.1 million for the six months ended June 30, 1999
increased $.8 million (55%) as compared to $1.4 million for the same period in
1998, due to fees earned administering the Zweig closed-end funds and other
income and fees earned by Zweig.
Operating expenses for the six months ended June 30, 1999 of $104.2 million,
which includes $10.4 million for Zweig, increased $18.9 million (22%) from $85.3
million for the same period in 1998, of which $7.5 million and $10.5 million
related to the retail and institutional lines of business, respectively.
Employment expenses of $55.8 million for the six months ended June 30, 1999,
which includes $3.7 million for Zweig, increased $10.8 million (24%) as compared
to $45.0 million for the same period in 1998. An increase in incentive
compensation of $6.1 million resulted from improved sales in both the retail and
institutional lines of business, and improved performance by certain portfolio
managers and research analysts. Improved results by certain subsidiaries, on
which compensation is calculated, contributed $3.4 million of this increase.
Base compensation expense increased $.5 million in the second quarter of 1999. A
decrease of $.4 million resulted from the out-sourcing of substantially all of
PXP's fund accounting operations in the first quarter of 1998. Annual salary
adjustments increased compensation by $.9 million, partially offset by a
reduction in staff levels in 1998 particularly in the investment portfolio and
sales areas. An increase in profit sharing expense increased employment expense
by $.5 million. Savings resulting from the closing of the equity department in
Hartford in early April 1999 were offset by the severance costs related to that
action, which were recorded during the second quarter.
Other operating expenses of $31.2 million for the six months ended June 30,
1999, which includes $3.2 million for Zweig, increased $4.5 million (17%) as
compared to $26.7 million for the same period in 1998. Payments to a third party
administrator, relating to the out-sourcing of substantially all of PXP's fund
accounting operations in the first quarter of 1998, increased other operating
expenses in the retail line of business by $1.7 million. Increases in investment
research fees and commissions were offset by decreases in costs for temporary
employees and other miscellaneous expenses. The first half of 1998 included $.4
million of non-recurring charges related to the out-sourcing of substantially
all of PXP's fund accounting operations.
18
<PAGE>
Depreciation and amortization of leasehold improvements of $1.8 million for the
six months ended June 30, 1999, which includes $.2 million for Zweig, remained
relatively constant from $1.9 million for the same period in 1998. Certain fixed
assets were fully depreciated after the second quarter of 1998, reducing
depreciation expense in the current year.
Amortization of goodwill and intangible assets of $14.3 million for the six
months ended June 30, 1999 increased $3.3 million (30%) as compared to $11.0
million for the same period in 1998 as a result of the amortization of the
intangible assets and goodwill identified in the preliminary purchase price
allocation of Zweig.
Amortization of deferred commissions, a component of the retail line of
business, of $1.0 million for the six months ended June 30, 1999 increased $.4
million (67%) as compared to $.6 million for the same period in 1998 due to
increased redemptions of Class B mutual fund shares. Pasadena Capital
Corporation's deferred commissions asset established prior to February 1, 1998
continues to be amortized.
Operating income of $31.8 million for the six months ended June 30, 1999
increased $8.6 million (37%) as compared to $23.2 million for the same period in
1998 as a result of the changes discussed above.
Equity in earnings of unconsolidated affiliates of $.5 million for the six
months ended June 30, 1999 decreased $1.6 million (77%) as compared to $2.1
million for the same period in 1998. PXP sold its investment in BG in the fourth
quarter of 1998. PXP's share of BG's income for the six months ended June 30,
1998 was $2.0 million. Equity earnings from PXP's joint venture in IPC increased
$.4 million primarily as a result of IPC's recognition of a fee from a
significant second quarter transaction.
Other income - net of $.7 million for the six months ended June 30, 1999
increased $.1 million (17%) as compared to $.6 million for the same period in
1998. PXP recorded a loss of $.3 million related to its investment in Greystone
in the second quarter of 1998. A decrease of $.2 million is the result of other
less significant items.
Interest expense - net of $7.4 million for the six months ended June 30, 1999
increased $1.4 million (23%) as compared to $6.0 million for the same period in
1998. The exchange of PXP's preferred stock for convertible subordinated
debentures in April 1998 resulted in additional interest expense of $1.2 million
in 1999, while eliminating PXP's preferred stock dividend. An increase of $2.6
million is due to additional interest charges resulting from the financing of
the Zweig acquisition. A decrease of $1.8 million is primarily due to a lower
average outstanding principal balance on other debt and a decrease in the
average interest rate as compared to the same period in 1998. Other interest and
dividend income increased $.1 million. Interest on a note receivable related to
the sale of BG resulted in income of $.2 million.
Income to minority interest of $1.6 million and $1.0 million for the six months
ended June 30, 1999 and 1998, respectively, represents the minority
shareholders' interest in the equity earnings of Seneca, which is fully
consolidated in the Company's financial statements.
Net income for the six months ended June 30, 1999 of $13.4 million increased
$2.9 million (27%) from the $10.6 million for the same period in 1998, resulting
from the changes discussed above. The effective tax rate of 44% for the six
months ended June 30, 1999 remained unchanged relative to the same period in
1998.
19
<PAGE>
Three Months Ended June 30, 1999 Compared with Three Months Ended
June 30, 1998 - Pro Forma (see Note 4)
Except for the items noted below, the pro forma variances for the three months
ended June 30, 1999 compared to the same period in 1998 are substantially the
same as historical.
Investment management fees - pro forma of $63.1 million for the three months
ended June 30, 1999 increased $5.1 million (9%) from $58.0 million for the same
period in 1998. In addition to the historical variances noted above, Zweig
investment management fees decreased $1.6 million due to a $.7 billion decrease
in average assets under management resulting from the net effect of performance
and asset outflows.
Net income - pro forma of $7.4 million for the three months ended June 30, 1999
increased of $1.8 million (31%) as compared to $5.6 million for the same period
in 1998, resulting from the effects of the changes discussed above. The
effective tax rate decreased to 44% for the three months ended June 30, 1999
from 45% for the same period in 1998.
Six Months Ended June 30, 1999 Compared with Six Months Ended
June 30, 1998 - Pro Forma (see Note 4)
Except for the items noted below, the pro forma variances for the six months
ended June 30, 1999 compared to the same period in 1998 are substantially the
same as historical.
Investment management fees - pro forma of $123.6 million for the six months
ended June 30, 1999 increased $11.2 million (10%) from $112.5 million for the
same period in 1998. In addition to the historical variances noted above, Zweig
investment management fees decreased $2.2 million due to a $.6 billion decrease
in average assets under management resulting from the net effect of performance
and asset outflows.
Net income - pro forma of $13.4 million for the six months ended June 30, 1999
increased $2.2 million (19%) as compared to $11.3 million for the same period in
1998, resulting from the changes discussed above. The effective tax rate
decreased to 44% for the six months ended June 30, 1999 from 45% for the same
period in 1998.
Liquidity and Capital Resources
The Company's business is not considered to be capital intensive. Working
capital requirements for the Company have historically been provided by
operating cash flow. It is expected that such cash flows will continue to serve
as the principal source of working capital for the Company for the near future.
The Company's current capital structure, as of July 31, 1999, includes 43.9
million shares of common stock outstanding and $76.4 million of 6% Convertible
Subordinated Debentures with a principal value of $25.00 per debenture. The
current dividend rate on common stock is $.06 per share per quarter. If the
dividend rate remains constant for 1999, the total annual dividend on common
stock would be $10.5 million based upon shares outstanding at July 31, 1999. The
total annual interest expense on the debentures based upon debentures
outstanding at July 31, 1999, at an interest rate of 6%, would be $4.6 million.
20
<PAGE>
The Company has two five-year credit facilities, totaling $375 million, with no
required principal repayments prior to maturity ($200 million matures in August
2002 and $175 million matures in March 2004). The outstanding obligations under
the credit facilities at June 30, 1999 were $275 million with an average
interest rate of approximately 5.5%. The credit agreements contain financial and
operating covenants including, among other provisions, requirements that the
Company maintain certain financial ratios and satisfy certain financial tests,
restrictions on the ability to incur indebtedness, and limitations on the amount
of the Company's capital expenditures. At June 30, 1999, the Company was in
compliance with all covenants contained in the credit agreements. The Company
believes that funds from operations and amounts available under the credit
facility will provide adequate liquidity for the foreseeable future.
Management considers the liquidity of the Company to be adequate to meet present
and anticipated needs.
Market Risk
The Company is exposed to the impact of interest rate changes and changes in the
market value of its investments and assets managed. The Company does not have
any derivative investments and, as of the fourth quarter of 1998, is no longer
exposed to foreign currency fluctuations.
The Company's exposure to changes in interest rates is limited to borrowings
under two five-year credit agreements, which have variable interest rates. The
average interest rate on the credit agreements in the first half of 1999 and for
all of 1998 was approximately 5.4% and 6.0%, respectively. In addition, the
Company has Convertible Subordinated Debentures bearing interest at 6%. At
June 30, 1999, the Company estimated that the fair value of the Convertible
Subordinated Debentures approximated market value.
The Company invests excess cash in marketable securities, which consist of
mutual fund investments, of which the Company is the advisor, and U.S.
Government obligations. The fair value of these investments approximated market
value at June 30, 1999.
The Company's revenues are largely driven by the market value of its assets
under management and is therefore exposed to fluctuations in market prices.
Management fees earned on managed accounts and certain institutional accounts
(approximately 42% of total assets under management), for any given quarter, are
based on the market value of the portfolio on the last day of the preceding
quarter. Any significant increase or decline in the market value of assets
managed on the last day of a quarter would result in a corresponding increase or
decrease in revenues for the following three months.
Impact of the Year 2000 Issue
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of a company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculation causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities. In addition, other non-business
specific systems such as security alarms, elevators, telephones, etc. are
subject to malfunction due to their dependence upon computers or computer chips
for proper operation.
Based upon Company assessments, it has been determined that the Company will be
required to modify or replace portions of its software so that its computer
systems will properly utilize dates beyond December 31, 1999. The Company
believes that with modifications to existing software and conversions to new
software, the Year 2000 Issue will be mitigated. It is anticipated that such
modifications and conversions will be completed on a timely basis. The failure
of computer programs to recognize the year 2000 could have a negative impact on,
but is not limited to, the handling of securities trades, the pricing of
securities and the servicing of client accounts. If such modifications and
conversions are not made, or are not completed timely, the Year 2000 Issue would
have a material impact on the operations of the Company. As such, the Company
has created a Year 2000 Project Office to address the Year 2000 Issue.
21
<PAGE>
The Company has initiated formal communications with all of its software
vendors, service providers and information providers to determine the extent to
which the Company is vulnerable to those third parties' failure to remediate
their own Year 2000 Issue. The Company has determined the compliance status of
mission critical third party products and has completed upgrades to their
claimed compliant versions where needed. The Company's total Year 2000 project
cost and estimate to complete include the estimated costs and time associated
with the impact of a third party's Year 2000 Issue, and are based on presently
available information. However, if the systems of other companies on which the
Company's systems rely are not converted in a timely fashion, or are not
converted at all, or are converted in a manner that is incompatible with the
Company's systems, the Company's operations and financial results could be
adversely affected.
The Company is utilizing internal resources to reprogram, or replace, and test
the software for Year 2000 modifications. The assessment and inventory phases of
the project have been completed. The Company has substantially completed the
remediation, testing and contingency planning phases of the Year 2000 project
and expects to complete this work by September 30, 1999. Testing of the
contingency plans will occur during the remainder of 1999 where appropriate. The
total cost of the Year 2000 project is estimated at $5.3 million and is being
funded through operating cash flows, which are being expensed as incurred. To
date, the Company has incurred approximately $4.0 million related to the
assessment of its Year 2000 project, the development of a Year 2000 plan,
remediation, testing, and contingency planning. The total cost to the Company to
become Year 2000 compliant is not expected to have a material impact on the
Company's results of operations.
The costs of the project and the date on which the Company plans to complete the
Year 2000 modifications are based on management's best estimates and were
derived utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no guarantee that these estimates will prove to
be accurate and actual results could differ materially from those plans.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, and similar
uncertainties.
Cautionary Statement under Section 21E of the Securities Exchange Act of 1934
This quarterly report contains forward-looking statements that involve risks and
uncertainties, including, but not limited to, the following: The Company's
performance is highly dependent on the amount of assets under management, which
may decrease for a variety of reasons including changes in interest rates and
adverse economic conditions; the Company's performance is very sensitive to
changes in interest rates, which may increase from current levels; the Company's
performance is affected by the demand for and the market acceptance of the
Company's products and services; the Company's business is extremely competitive
with several competitors being substantially larger than the Company; and the
Company's performance may be impacted by changes in the performance of financial
markets and general economic conditions. The costs involved to complete the Year
2000 modifications are based on management's best estimates, which were derived
based upon assumptions relative to future events including the continued
availability of certain resources, third party modification plans and other
factors. There can be no guarantee that these estimates will be achieved and
actual results could differ materially from those plans. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties. The
potential problems related to the Year 2000 Issue could affect the ability to
provide advisory services for the Company's products. Accordingly, actual
results may differ materially from those set forth in the forward-looking
statements. Attention is also directed to other risk factors set forth in
documents filed by the Company with the Securities and Exchange Commission.
22
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings
With regard to the litigation between PXP and the former members of
Associated Surplus Dealers, as outlined in PXP's 1998 Annual Report on
Form 10-K, in April 1999 the court transferred the case to its docket
for complex cases. No new trial date has been set.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders of the registrant was held May 6,
1999 for the election of directors.
(b) The following persons were re-elected Directors of the registrant and
each continued to hold office after the meeting.
John T. Anderson Philip R. McLoughlin
Clyde E. Bartter James M. Oates
Richard H. Booth Calvin J. Pedersen
Glen D. Churchill Donna F. Tuttle
Robert W. Fiondella Ferdinand L. Verdonck
Michael E. Haylon David A. Williams
Marilyn E. LaMarche
(c) One matter was voted upon:
The results of the election of directors are as follows:
Candidate: For: Against/Withheld: Abstain/Non-vote:
John T. Anderson 39,862,435 157,839 0
Clyde E. Bartter 39,862,435 157,839 0
Richard H. Booth 39,862,435 157,839 0
Glen D. Churchill 39,862,435 157,839 0
Robert W. Fiondella 39,862,435 157,839 0
Michael E. Haylon 39,862,435 157,839 0
Marilyn E. LaMarche 39,862,435 157,839 0
Philip R. McLoughlin 39,862,435 157,839 0
James M. Oates 39,862,435 157,839 0
Calvin J. Pedersen 39,862,435 157,839 0
Donna F. Tuttle 39,862,435 157,839 0
Ferdinand L. Verdonck 39,862,435 157,839 0
David A. Williams 39,862,435 157,839 0
Item 6. Exhibits and Reports on Form 8-K
No items submitted.
23
<PAGE>
Signatures
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.
Phoenix Investment Partners, Ltd.
August 11, 1999 /s/ Philip R. McLoughlin
------------------------------
Philip R. McLoughlin, Chairman and
Chief Executive Officer
August 11, 1999 /s/ William R. Moyer
------------------------------
William R. Moyer, Chief Financial Officer
24
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<PERIOD-END> Jun-30-1999
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