-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SA6ZntqzhMjsPD9JHyPKGA2X2xWeNucdWlEjO8Mwgzsl1zjAUFkbtleZ6jRg9Qcx QDRdODaSfnwAolHfxPYqJA== 0000950134-00-004608.txt : 20000516 0000950134-00-004608.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950134-00-004608 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDUCIARY CAPITAL PARTNERS L P CENTRAL INDEX KEY: 0000841687 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 860653600 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 814-00067 FILM NUMBER: 632866 BUSINESS ADDRESS: STREET 1: 410 17TH STREET STREET 2: STE 400 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 303-446-59 MAIL ADDRESS: STREET 1: 410 17TH ST. STE 400 STREET 2: 410 17TH ST. STE 400 CITY: DENVER STATE: CO ZIP: 80202 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 2000 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 ------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------- ------------- Commission file number 0-17737 --------------- Fiduciary Capital Partners, L.P. ---------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 86-0653600 --------------------- ---------- (State of organization) (I.R.S. Employer Identification No.) 410 17th Street Suite 400 Denver, Colorado 80202 ------------------- --------- (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code (800) 866-7607 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . --- --- 2 Fiduciary Capital Partners, L.P. Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2000 Table of Contents
Page ---- Part I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) 3 Schedule of Investments - March 31, 2000 3 Balance Sheets - March 31, 2000 and December 31, 1999 5 Statements of Operations for the three months ended March 31, 2000 and 1999 6 Statements of Cash Flows for the three months ended March 31, 2000 and 1999 7 Statements of Changes in Net Assets for the three months ended March 31, 2000 and for the year ended December 31, 1999 8 Selected Per Unit Data and Ratios 9 Notes to Financial Statements 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 18
2 3 Part I. FINANCIAL INFORMATION Item 1. Financial Statements FIDUCIARY CAPITAL PARTNERS, L.P. SCHEDULE OF INVESTMENTS MARCH 31, 2000 (unaudited)
Principal Amount/ Investment Amortized % of Total Shares Investment Date Cost Value Investments - ------ ---------- ---- ---- ----- ----------- MANAGED COMPANIES: $1,967,040 LMC Corporation, 12.00% Senior Subordinated 11/01/96 Revolving Notes through due 10/31/00(1) 01/13/99 $ 1,967,040 $ 273,200 $59,468 LMC Corporation, 12.00% 02/07/00 Promissory Notes due through 8/7/00(2) 03/22/00 59,468 59,468 93,537 sh. LMC Corporation, Class B Preferred Stock* 08/09/99 935,370 1 260,400 sh. LMC Corporation, Class C Preferred Stock* 06/10/94 2,596,621 1 5,523,500 sh. LMC Corporation, 02/09/96 Common Stock* through 08/05/98 3,034,549 1 52.08 sh. LMC Credit Corp., Common Stock* 02/09/96 1 1 - ------------ ------------------------ -------- ------------ ----------- -------- 8,593,049 332,672 24.9% - ------------ ------------------------ -------- ------------ ----------- -------- $1,460,000 R.B.M. Precision Metal Products, Inc., 13.00% Senior Subordinated Secured Notes due 5/24/02(3) 05/24/95 1,421,327 750,647 14,265.6 sh. R.B.M. Precision Metal Products, Inc., Warrants to Purchase Common Stock* 05/24/95 82,955 1 14,392 sh. R.B.M. Precision Metal Products, Inc., Common Stock* 12/09/98 1 1 - ------------ ------------------------ -------- ------------ ----------- -------- 1,504,283 750,649 56.3 - ------------ ------------------------ -------- ------------ ----------- -------- Total Investments in Managed Companies (105.3% of net assets) 10,097,332 1,083,321 81.2 ------------ ----------- --------
The accompanying notes to financial statements are an integral part of this schedule. 3 4 FIDUCIARY CAPITAL PARTNERS, L.P. SCHEDULE OF INVESTMENTS MARCH 31, 2000 (unaudited)
Principal Amount/ Investment Amortized % of Total Shares Investment Date Cost Value Investments - ------ ---------- ---- ---- ----- ----------- NON-MANAGED COMPANIES: $284,377 Niigata Engineering 12/01/99 Co., Ltd., through Receivables(4)* 01/03/00 251,430 251,430 - ------------ ------------------------ -------- ------------ ----------- -------- 251,430 251,430 18.8 - ------------ ------------------------ -------- ------------ ----------- -------- 989,414 sh. WasteMasters, Inc., Common Stock(5)* 06/03/98 1,321,795 1 - ------------ ------------------------ -------- ------------ ----------- -------- 1,321,795 1 0.0 Total Investment in Non-Managed Companies (24.4% of net assets) 1,573,225 251,431 18.8 ------------ ----------- -------- Total Investments (129.7% of net assets) $ 11,670,557 $ 1,334,752 100.0% ============ =========== ========
(1) The accrual of interest on the notes was discontinued by the Fund effective July 1, 1999. (2) The Fund has committed to provide up to $111,502 of financing pursuant to the terms of these notes. The Fund has not accrued any interest income on these notes. (3) The terms of the notes provide for three equal annual installments of $486,667 commencing on May 24, 2000. However, the Fund is a party to an Intercreditor and Subordination Agreement with R.B.M. Precision Metal Products, Inc.'s ("RBM's") other creditors, which prohibits principal payments on the notes prior to October 31, 2000 and restricts payments thereafter, based on a number of financial formulas contained in the Agreement. (4) These are non-interest bearing receivables, which were purchased from LMC Corporation ("LMC") at a discount. Payments are due on May 21, 2000, November 21, 2000, May 21, 2001 and November 21, 2001 each in the amount of $55,639 and on May 21, 2002 in the amount of $61,821. (5) The WasteMasters, Inc. common stock, which trades on the OTC Bulletin Board System, is subject to a 24-month lock up period through May 2000, a call option and a right of first refusal. * Non-income producing security. The accompanying notes to financial statements are an integral part of this schedule. 4 5 FIDUCIARY CAPITAL PARTNERS, L.P. BALANCE SHEETS MARCH 31, 2000 AND DECEMBER 31, 1999 (unaudited)
2000 1999 ---- ---- ASSETS: Investments: Portfolio investments, at value: Managed companies (amortized cost - $10,097,332 and $10,031,554, respectively) $ 1,083,321 $ 1,017,543 Non-managed companies (amortized cost- $1,573,225 and $1,415,263, respectively) 251,431 93,469 Temporary investments, at amortized cost -- 649,689 ----------- ----------- Total investments 1,334,752 1,760,701 Cash and cash equivalents 291,364 218,111 Accrued interest receivable 20,432 21,924 Other assets 15,533 24,333 ----------- ----------- Total assets $ 1,662,081 $ 2,025,069 =========== =========== LIABILITIES: Payable to affiliates $ 56,781 $ 33,048 Accounts payable and accrued liabilities 575,956 582,598 Distributions payable to partners -- 310,992 ----------- ----------- Total liabilities 632,737 926,638 ----------- ----------- COMMITMENTS AND CONTINGENCIES NET ASSETS: Managing General Partner (196,777) (196,777) Limited Partners (equivalent to $1.19 and $1.26, respectively, per limited partnership unit based on 1,026,273 units outstanding) 1,226,121 1,295,208 ----------- ----------- Net assets 1,029,344 1,098,431 ----------- ----------- Total liabilities and net assets $ 1,662,081 $ 2,025,069 =========== ===========
The accompanying notes to financial statements are an integral part of these financial statements. 5 6 FIDUCIARY CAPITAL PARTNERS, L.P. STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (unaudited)
2000 1999 ---- ---- INVESTMENT INCOME: Income: Interest $ 66,625 $ 99,690 --------- --------- Total investment income 66,625 99,690 --------- --------- Expenses: Fund administration fees 35,843 35,843 Investment advisory fees 22,451 24,275 Professional fees 21,640 13,113 Administrative expenses 20,276 20,276 Independent General Partner fees and expenses 12,330 24,943 Other expenses 23,172 19,424 --------- --------- Total expenses 135,712 137,874 --------- --------- NET INVESTMENT LOSS (69,087) (38,184) NET CHANGE IN UNREALIZED LOSS ON INVESTMENTS -- 874 --------- --------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (69,087) $ (37,310) ========= =========
The accompanying notes to financial statements are an integral part of these financial statements. 6 7 FIDUCIARY CAPITAL PARTNERS, L.P. STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (unaudited)
2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net decrease in net assets resulting from operations $ (69,087) $ (37,310) Adjustments to reconcile net decrease in net assets resulting from operations to net cash (used in) provided by operating activities: Accreted discount on portfolio investments (13,037) -- Change in assets and liabilities: Accrued interest receivable 1,492 35,758 Other assets 8,800 16,608 Payable to affiliates 23,733 10,919 Accounts payable and accrued liabilities (6,642) (3,472) Net change in unrealized loss on investments -- (874) --------- --------- Net cash (used in) provided by operating activities (54,741) 21,629 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of portfolio investments (210,703) (507,840) Sale of temporary investments, net 649,689 497,322 --------- --------- Net cash provided by (used in) investing activities 438,986 (10,518) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions paid to partners (310,992) (336,271) --------- --------- Net cash used in financing activities (310,992) (336,271) --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 73,253 (325,160) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 218,111 837,202 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 291,364 $ 512,042 ========= =========
The accompanying notes to financial statements are an integral part of these financial statements. 7 8 FIDUCIARY CAPITAL PARTNERS, L.P. STATEMENTS OF CHANGES IN NET ASSETS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND FOR THE YEAR ENDED DECEMBER 31, 1999 (unaudited)
2000 1999 ---- ---- Increase in net assets resulting from operations: Net investment loss $ (69,087) $ (326,228) Net realized loss on investments -- 493,358 Net change in unrealized loss on investments -- (7,712,001) ------------ ------------ Net decrease in net assets resulting from operations (69,087) (7,544,871) Repurchase of limited partnership units -- (383,736) Return of capital distributions -- (1,319,805) ------------ ------------ Total decrease in net assets (69,087) (9,248,412) Net assets: Beginning of period 1,098,431 10,346,843 ------------ ------------ End of period (including no undistributed net investment income) $ 1,029,344 $ 1,098,431 ============ ============
The accompanying notes to financial statements are an integral part of these financial statements. 8 9 FIDUCIARY CAPITAL PARTNERS, L.P. SELECTED PER UNIT DATA AND RATIOS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (unaudited)
2000 1999 ---- ---- Per Unit Data: Investment income $ .06 $ .09 Expenses (.13) (.12) ------------- ------------- Net investment loss (.07) (.03) Distributions declared to partners -- (.30) ------------- ------------- Net decrease in net asset value (.07) (.33) Net asset value: Beginning of period 1.26 9.51 ------------- ------------- End of period $ 1.19 $ 9.18 ============= ============= Ratios (annualized): Ratio of expenses to average net assets 51.02% 5.43% Ratio of net investment loss to average net assets (25.98)% (1.50)% Number of limited partnership units at end of period 1,026,273 1,109,694
The accompanying notes to financial statements are an integral part of these selected per unit data and ratios. 9 10 FIDUCIARY CAPITAL PARTNERS, L.P. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 (unaudited) 1. GENERAL The accompanying unaudited interim financial statements include all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of FCM Fiduciary Capital Management Company ("FCM"), the Managing General Partner of Fiduciary Capital Partners, L.P. (the "Fund"), necessary to fairly present the financial position of the Fund as of March 31, 2000 and the results of its operations, changes in net assets and its cash flows for the period then ended. These financial statements should be read in conjunction with the Significant Accounting Policies and other Notes to Financial Statements included in the Fund's annual audited financial statements for the year ended December 31, 1999. 2. INVESTMENT ADVISORY FEES As compensation for its services as investment adviser, FCM is entitled to receive, subject to certain limitations, a subordinated monthly fee at the annual rate of 1% of the Fund's available capital, as defined in the Partnership Agreement. Investment advisory fees of $22,451 are payable to FCM for the three months ended March 31, 2000. The payment of these fees has been deferred pursuant to the applicable subordination provisions until the Limited Partners receive distributions equal to a cumulative non-compounded 6% return on their adjusted capital contributions, as defined in the Partnership Agreement. 3. FUND ADMINISTRATION FEES As compensation for its services as fund administrator, FCM receives a monthly fee at the annual rate of 0.45% of net proceeds available for investment, as defined in the Partnership Agreement. Fund administration fees of $35,843 were paid by the Fund for the three months ended March 31, 2000. FCM is also reimbursed, subject to various limitations, for administrative expenses incurred in providing accounting and investor services to the Fund. The Fund reimbursed FCM for administrative expenses of $20,276 for the three months ended March 31, 2000. 4. INDEPENDENT GENERAL PARTNER FEES AND EXPENSES As compensation for services rendered to the Fund, each of the Independent General Partners receives from the Fund and Fiduciary Capital Pension Partners, L.P., an affiliated fund, (collectively, the "Funds") an annual fee of $30,000, payable monthly in arrears, together with all out-of-pocket expenses. Each Fund's allocation of these fees and expenses is based on the relative number of outstanding Units. Fees and expenses paid by the Fund for the three months ended March 31, 2000 totaled $12,330. 10 11 FIDUCIARY CAPITAL PARTNERS, L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 2000 (unaudited) 5. COMMITMENTS AND CONTINGENCIES During February 2000, the Fund agreed to purchase up to $111,502 of LMC Corporation's Promissory Notes due August 7, 2000. $59,468 of this investment was funded during February and March 2000. 11 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Fund's unaudited Financial Statements and the Notes thereto. This report contains, in addition to historical information, forward-looking statements that include risks and other uncertainties. The Fund's actual results may differ materially from those anticipated in these forward-looking statements. While the Fund can not always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements, factors that might cause such a difference include general economic and business conditions, competition and other factors discussed elsewhere in this report. Readers are urged to consider statements that include the terms "believes", "expects", "plans", "anticipates", "intends" or the like to be uncertain and forward-looking. The Fund undertakes no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated or unanticipated events. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 2000, the Fund held portfolio investments in two Managed Companies and two Non-Managed Companies, with an aggregate original cost of approximately $11.7 million. The value of these portfolio investments, which were made from net offering proceeds and the reinvestment of proceeds from the sale of other portfolio investments, represents approximately 129.7% of the Fund's net assets. As of March 31, 2000, the Fund's remaining liquid assets were invested in money market funds. These funds are available to fund the annual repurchase offer, to fund follow-on investments in existing portfolio companies, to pay Fund expenses and for distribution to the partners. Pursuant to the terms of the Fund's periodic unit repurchase policy, the Fund has annually offered to purchase from its Limited Partners, up to 7.5% of its outstanding Units for an amount equal to the current net asset value per Unit, net of a fee (not to exceed 2%) to be retained by the Fund to offset expenses incurred in connection with the repurchase offer. If the number of tendered Units in any year exceeds 7.5% of the outstanding Units, the Fund's General Partners may vote to repurchase up to an additional 2% of the outstanding Units. If Units in excess of this amount are tendered, Units are purchased on a pro rata basis after giving priority to Limited Partners owning less than 100 Units. The Fund's investment period ended on December 31, 1995. Although the Fund has been permitted to make additional investments in existing portfolio companies since 1995, the Fund is no longer permitted to acquire investments in new portfolio companies. Consequently, the Fund has been in a liquidation mode. Since the middle of 1997, the Fund has liquidated a significant percentage of its investments and has distributed approximately $6.23 per Unit to the Limited Partners, with the cash coming primarily from the liquidation of these investments. During 1999, the General Partners considered a number of possible plans that would have permitted the Fund to be liquidated by the end of 2000. However, it was determined that none of these plans was feasible. As a result, it is currently expected that the Fund will remain in existence until the remaining debt investments either mature or are prepaid by the respective portfolio companies, and the remaining equity investments are sold or otherwise liquidated. 12 13 During December 1999, the Fund purchased $117,460 of Niigata Engineering Co., Ltd. ("Niigata") receivables from LMC at a cost of $92,767. An additional $166,917 of Niigata receivables were purchased during January 2000 at a cost of $151,235. These various receivables are payable on specified dates between May 21, 2000 and May 21, 2002. During February 2000, the Fund agreed to purchase up to $111,502 of LMC's Promissory Notes due August 7, 2000. $59,468 of this investment was funded during February and March 2000. Distributions payable to partners decreased from $310,992 at December 31, 1999 to zero at March 31, 2000. This decrease resulted from a decrease in the per Unit distribution rate from $0.30 for the three months ended December 31, 1999 to zero for the three months ended March 31, 2000. It is unlikely that the Fund will be able to pay quarterly distributions during the remainder of 2000 and beyond. Distributions will be addressed on a quarterly basis by the General Partners and will involve the consideration of a number of issues. Payables to affiliates increased $23,733 from $33,048 at December 31, 1999 to $56,781 at March 31, 2000. Substantially all of this increase resulted from the deferral of the payment of FCM's subordinated investment advisory fee for the three months ended March 31, 2000. The payment of these fees will be deferred pursuant to the applicable subordination provisions until the Limited Partners receive distributions equal to a cumulative non-compounded 6% return on their adjusted capital contributions, as defined in the Partnership Agreement. RESULTS OF OPERATIONS Investment Income and Expenses The Fund's net investment loss was $69,087 for the three months ended March 31, 2000 as compared to a net investment loss of $38,184 for the corresponding period of the prior year. Net investment loss per limited partnership unit increased from $0.03 to $0.07 and the ratio of net investment loss to average net assets increased from 1.50% to 25.98% for the three months ended March 31, 2000 as compared to the corresponding period of the prior year. The net investment loss for the three months ended March 31, 2000 increased primarily as a result of a decrease in investment income as compared to the corresponding period of the prior year. The impact of the decrease in investment income was partially offset by a small decrease in total expenses. Investment income decreased $33,065, or 33.2%, for the three months ended March 31, 2000, as compared to the corresponding period of the prior year. This decrease resulted primarily from the decision to stop accruing interest on the Fund's LMC debt investments effective during July 1999 and a decrease in the amount of the Fund's temporary and money market investments. The amount of the Fund's temporary and money market investments decreased because of (i) cash distributions made by the Fund during 1999 that constituted a return of capital, (ii) purchases of additional LMC follow-on investments, and (iii) the Fund's repurchase of 7.52% of its Units during the fourth quarter of 1999. The negative effect of these items was partially offset by interest income earned on the RBM Precision Metal Products, Inc. ("RBM") subordinated debt investments. As discussed below, the Fund did not record any interest income on the RBM notes during the period from August 25, 1998 through May 24, 1999. 13 14 Total expenses decreased $2,162, or 1.6%, for the three months ended March 31, 2000, as compared to the corresponding period of the prior year. This decrease resulted primarily from decreases in Independent General Partner fees and expenses and, to a lesser extent, investment advisory fees. These decreases were partially offset by increases in professional fees and other expenses incurred in connection with the Fund's LMC investments. Net Unrealized Gain (Loss) on Investments FCM values the Fund's portfolio investments on a weekly basis utilizing a variety of methods. For securities that are publicly traded and for which market quotations are available, valuations are set by the closing sales or an average of the closing bid and ask prices, as of the valuation date. Fair value for securities that are not traded in any liquid public markets or that are privately held are determined pursuant to valuation policies and procedures that have been approved by the Independent General Partners and subject to their supervision. There is a range of values that are reasonable for such investments at any particular time. Each such investment is valued initially based upon its original cost to the Fund ("cost method"). The cost method is used until significant developments affecting the portfolio company provide a basis for use of an appraisal valuation. Appraisal valuations are based upon such factors as the portfolio company's earnings, cash flow and net worth, the market prices for similar securities of comparable companies and an assessment of the portfolio company's future financial prospects. In a case of unsuccessful operations, the appraisal may be based upon liquidation value. Appraisal valuations are necessarily subjective. The Fund also may use, when available, third-party transactions in a portfolio company's securities as the basis of valuation ("private market method"). The private market method is used only with respect to completed transactions or firm offers made by sophisticated, independent investors. As of December 31, 1999, the Fund had recorded $10,335,805 of unrealized loss on investments. There were no changes to these unrealized losses on investments during the three months ended March 31, 2000. The cumulative net unrealized loss on investments as of March 31, 2000 consisted of the following components:
Net Changes in Unrealized Gain (Loss) Net Unrealized During the Three Gain (Loss) Months Ended Recorded As of Portfolio Company March 31, 2000 March 31, 2000 - ------------------------------------ --------------------- -------------- LMC $ - $ (8,260,377) RBM - (753,634) WMI - (1,321,794) ------ ------------ $ - $(10,335,805) ====== ============
LMC experienced significant cash flow shortfalls in December 1999 and January 2000. These cash flow shortfalls, combined with significant reductions in the cash available under the Company's revolving line of credit with CIT Corporation, forced a cessation of production of equipment and severely curtailed LMC's ability to fulfill orders for spare parts. LMC has held discussions with several potential purchasers of its business, in whole or in part. While no meaningful purchase offers have been received to date, LMC has consummated a consignment joint venture arrangement with respect to its spare parts business. The majority of LMC's employees have been released. 14 15 In an effort to preserve value and facilitate the possible sale of LMC's business, the Fund's General Partners approved the purchase of up to $111,502 of LMC's Promissory Notes due August 7, 2000. $59,468 of this investment was funded during February and March 2000. LMC received a notice of default, dated April 6, 2000, from CIT Corporation with respect to its revolving line of credit. On April 28, 2000, LMC filed for Chapter 11 bankruptcy protection. The Fund wrote its LMC investment down by $540,800 and $317,280 during 1995 and 1997, respectively. As a result of the above-described developments, the Fund created additional reserves of $7,402,297 against the carrying values of the Fund's LMC investment during 1999. Thus, as of March 31, 2000, the Fund's total LMC investment had a net carrying value of $332,672, versus its cost of $8,593,049. RBM had a record year for fiscal 1998, with sales of approximately $30 million and EBITDA of approximately $2.7 million. However, these sales were achieved primarily through one contract with Digital Equipment Corporation ("DEC"). During August 1998, RBM notified the Fund that anticipated sales to DEC and other large customers were expected to decline significantly in the upcoming year. Of particular concern were sales to DEC, which was acquired by Compaq Computer Corp. As a result of the expected decline in sales, RBM began the process of restructuring its debt, including the subordinated debt held by the Fund. The Fund received the quarterly interest payment that was due from RBM on August 24, 1998. The interest payment that was due during November 1998 was deferred and subsequently converted to equity pursuant to the restructuring described below. During December 1998, RBM and its lenders completed a restructuring under which a new senior lender, Wells Fargo Business Credit, replaced Bank of America. As part of this transaction, RBM's principle shareholder, 13i Capital Corporation ("13i"), contributed additional equity to the company and the subordinated lenders, including the Fund, agreed to accept shares of RBM's common stock as payment for the next three quarterly interest payments beginning with the payment that was due during November 1998. As a consequence, the Fund's ownership of RBM, on a fully diluted basis, increased from 6.6% to 8.1%, assuming exercise of its warrants. The restructuring was designed to provide RBM with a period of time in which to secure additional customers and return to a more stable financial position under which RBM could meet its interest obligations to its creditors, including the Fund. As a result of these developments, the Fund stopped accruing interest on its RBM subordinated debt effective August 24, 1998. In addition, the Fund recorded aggregate writedowns of $753,634 relating to RBM during the year ended December 31, 1998. RBM resumed paying the quarterly interest payments in cash, commencing with the quarterly interest payment due on August 24, 1999. The Fund placed a $1 aggregate valuation on the RBM common stock that was received in payments of the interest with respect to the nine-month period beginning August 25, 1998 and ending May 24, 1999. For its fiscal year ended October 31, 1999, RBM's revenues were $11.6 million versus a budget of $12.0 million. For the year, RBM's loss was $1.3 million (pretax) versus a budgeted loss of $1.9 million. RBM projects sales of approximately $17 million for its fiscal year ended October 31, 2000, with a positive EBITDA. Sales and cash flows for the quarter ended January 31, 2000 were slightly below budget. 15 16 RBM remains current with its interest payments and is currently in compliance with all of its senior and subordinated loan covenants. Originally, our debt was scheduled to be repaid over the three years ending May 2002. However, RBM will not make the principal payment scheduled for May 2000 on the Fund's note, because it is not permitted to do so under the terms of an Intercreditor and Subordination Agreement ("Intercreditor Agreement"), between the Fund and RBM's other creditors. This Intercreditor Agreement was a stipulated pre-condition to RBM's debt restructuring, which occurred in late 1998. 13i's CEO has taken over as CEO of RBM. He has hired a number of new professionals and appears to have stabilized the company. If this continues, the Fund could possibly receive a partial principal payment in the second quarter of 2001, since the Intercreditor Agreement permits such payments, limited to 85% of RBM's EBITDA. There is no assurance that any payments will be permitted and any such payments are entirely dependent upon RBM's continued improved performance. The Fund continues to urge a sale of the Company or a refinancing of the Fund's debt, but has been unable to obtain the agreement of 13i. During June 1998, the Fund exchanged its Atlas (which was in bankruptcy proceedings) subordinated notes and warrants for 989,414 shares of common stock of WMI, a waste management company. Pursuant to the terms of the agreement, the Fund is prohibited from selling its WMI common stock for 24 months. In addition, the Fund granted the entity acquiring the Fund's Atlas securities a call on the Fund's WMI common stock during the 24-month lock up period and a right of first refusal thereafter. The call price is $11.25 per share. The WMI common stock, which trades on the OTC Bulletin Board System ("WAST"), closed at $1.78 (an average of the closing bid and ask prices) on the date of the exchange (June 3, 1998). Based on this price, the Fund's WMI common stock had a trading value of $1,761,157 on the date of the exchange. However, due to a number of factors, including the speculative nature of the WMI stock, the two year lock up period and the relative size of the Fund's stock position versus the daily trading volume, FCM decided to carry the WMI stock at the same $1 nominal value that the Atlas securities were previously carried by the Fund. The Fund recorded a realized loss of $2,560,453 on the exchange, which is equal to the amount of the loss that the Fund claimed for income tax purposes from the disposition of the Atlas securities. The $1,321,794 balance of the unrealized loss previously recorded by the Fund with respect to the Atlas securities continues to be carried by the Fund as an unrealized loss. The 52-week low for the WMI common stock is $0.02 per share and the current bid price (April 28, 2000) is $0.195 per share. Readiness for Year 2000 During 1999, FCM completed a review of the accounting and other information systems that are currently being utilized by FCM and the Fund with regard to Year 2000 issues. This review involved both actual tests of parts of the information systems that were conducted by third party consultants and representations received from various software vendors. As a result of this review, FCM believed that all of these systems were Year 2000 compliant. All of the costs associated with this review were paid by FCM. 16 17 FCM also corresponded with appropriate third parties, such as the Fund's custodian and transfer agent, concerning whether their information systems were Year 2000 compliant. These third parties represented that their information systems were also Year 2000 compliant. As a result of the above discussed review, Year 2000 issues were not expected to have any material adverse effects on the Fund's results of operations or financial condition. As of April 30, 2000, the Fund has incurred no Year 2000 related issues. 17 18 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits and Reports to be filed: Exhibit No. Description 11.1 Statement of Computation of Net Investment Income Per Limited Partnership Unit. 27.1 Financial Data Schedule. (b) The Registrant did not file any reports on Form 8-K during the first quarter of the fiscal year ending December 31, 2000. The Registrant did file a report on Form 8-K on May 2, 2000 to report that LMC filed for Chapter 11 bankruptcy protection. 18 19 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Fiduciary Capital Partners, L.P. (Registrant) By: FCM Fiduciary Capital Management Company Managing General Partner Date: May 12, 2000 By: /s/ Donald R. Jackson --------------------------- Donald R. Jackson Chief Financial Officer 19 20 EXHIBIT INDEX
Exhibit No. Description - ---------- ----------- 11.1 Statement of Computation of Net Investment Income Per Limited Partnership Unit. 27.1 Financial Data Schedule.
E-1 EX-11.1 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 1 Exhibit No. 11.1 Statement of Computation of Net Investment Income Per Limited Partnership Unit 2 FIDUCIARY CAPITAL PARTNERS, L.P. STATEMENT OF COMPUTATION OF NET INVESTMENT INCOME PER LIMITED PARTNERSHIP UNIT FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
2000 1999 ---- ---- Net Investment Loss $ (69,087) $ (38,184) Percentage Allocable to Limited Partners 100% 99% ----------- ----------- Net Investment Loss Allocable to Limited Partners $ (69,087) $ (37,802) =========== =========== Weighted Average Number of Limited Partnership Units Outstanding 1,026,273 1,109,694 =========== =========== Net Investment Loss Per Limited Partnership Unit $ (.07) $ (.03) =========== ===========
EX-27.1 3 FINANCIAL DATA SCHEDULE
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 11,670,557 1,334,752 20,432 15,533 291,364 1,662,081 0 0 632,737 632,737 0 0 1,026,273 1,026,273 0 0 0 0 (10,335,805) 1,029,344 0 66,625 0 135,712 (69,087) 0 0 (69,087) 0 0 0 0 0 0 0 (69,087) 0 0 0 0 22,451 0 135,712 1,063,888 1.26 (.07) 0 0 0 0 1.19 51.02
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