SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-10179
ML VENTURE PARTNERS I, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 13-3115686
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
World Financial Center, North Tower
New York, New York 10281-1326
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 449-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
================================================================================
(Title of class)
<PAGE>
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
At December 15, 1995, 11,989 units of limited partnership interest ("Units")
were held by non-affiliates of the Registrant. There is no established public
trading market for such Units.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated June 18, 1982, as
supplemented by supplements thereto dated July 13, 1982 and September 28, 1982,
are incorporated by reference in Part I and Part II hereof.
<PAGE>
PART I
Item 1. Business.
Formation
ML Venture Partners I, L.P. (the "Partnership" or the "Registrant") is a
Delaware limited partnership organized on February 12, 1982. Merrill Lynch
Venture Capital Co., L.P. (the "Managing General Partner") and four individuals
(the "Individual General Partners") are the General Partners of the Partnership.
The Managing General Partner is a New York limited partnership in which Merrill
Lynch Venture Capital Inc. (the "Management Company") is the general partner.
The Management Company is an indirect subsidiary of Merrill Lynch & Co., Inc.
and an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S").
On February 17, 1982, the Partnership elected to operate as a business
development company under the Investment Company Act of 1940. The Partnership's
investment objective is to seek long-term capital appreciation by making venture
capital investments in new and developing companies and other special investment
situations. The Partnership considers this activity to constitute the single
industry segment of venture capital investing.
The Partnership publicly offered, through MLPF&S, 12,000 units of limited
partnership interest ("Units") at $5,000 per Unit. The Units were registered
under the Securities Act of 1933 pursuant to a Registration Statement on Form
N-2 (File No. 2-76113) which was declared effective on June 18, 1982. The
offering of the 12,000 Units was completed on October 15, 1982. Gross capital
contributions to the Partnership totaled $60,610,102; $60,000,000 from the
Limited Partners, $606,102 from the Managing General Partner and $4,000 from the
Individual General Partners. Net proceeds from the offering available for
investment, after the payment of selling commissions and offering expenses,
totaled $54,680,135.
The information set forth under the captions "Risk and Other Important Factors",
"Investment Objective and Policies" and "Venture Capital Operations" on pages 8
through 16 of the prospectus of the Partnership dated June 18, 1982 filed with
the Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act of 1933, as supplemented by supplements thereto dated July 13,
1982 and September 28, 1982 filed pursuant to Rule 424(c) under the Securities
Act of 1933 (the "Prospectus"), is incorporated herein by reference.
The Venture Capital Investments
During its first four years of operations, from 1982 through 1986, the
Partnership selected its portfolio of venture capital investments in 34
companies. Through 1986, the Partnership had invested approximately $47 million
in the equity or debt securities of these 34 companies. From 1987 to 1993, the
Partnership's investment activity was limited to follow-on investments in
certain of its existing portfolio companies. As the Partnership's investment
portfolio matured, the rate of follow-on investments declined. The Partnership
did not make any investments in 1994 or 1995. The Partnership will not make
investments in new portfolio companies and does not expect to make additional
follow-on investments in its remaining portfolio companies.
As of September 30, 1995, 33 of the Partnership's 34 portfolio investments had
been fully liquidated. Investments liquidated through September 30, 1995 had a
cost of $52.8 million and returned $73.1 million for a net realized gain of
$20.2 million. At September 30, 1995, the Partnership's remaining investment
portfolio has a cost basis of $1.8 million and a fair value of $3.5 million.
Termination
The Partnership will terminate no later than December 31, 1996.
Employees
The Partnership has no employees. The Managing General Partner, subject to the
supervision of the Individual General Partners, manages and controls the
Partnership's venture capital investments. The Management Company performs, or
arranges for others to perform, the management and administrative services
necessary for the operation of the Partnership and is responsible for managing
the Partnership's short-term investments.
Item 2. Properties.
The Partnership does not own or lease physical properties.
Item 3. Legal Proceedings.
The Partnership is not a party to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this report.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The information with respect to the market for the Units set forth under the
subcaption "Substituted Limited Partners" on page 26 of the Prospectus is
incorporated herein by reference. There is no established public trading market
for the Units as of December 15, 1995.
At December 15, 1995, there were approximately 6,700 holders of Units. The
Managing General Partner and the four Individual General Partners of the
Partnership also hold interests in the Partnership.
Cash distributions paid or approved during the fiscal years ended September 30,
1995, 1994 and 1993 and cumulative distributions paid or approved through
September 30, 1995 are listed below.
<TABLE>
General Limited Per
Date of Distribution Partners Partners $5,000 Unit
- -------------------- -------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Inception to September 30, 1992 $ 3,607,506 $ 60,300,000 $ 5,025
January 26, 1993 0 3,300,000 275
April 12, 1993 0 4,200,000 350
January 20, 1994 352,300 1,200,000 100
October 12, 1995* 375,000 600,000 50
-------------- --------------- --------
Cumulative totals at September 30, 1995 $ 4,334,806 $ 69,600,000 $ 5,800
============== =============== ========
</TABLE>
* Distribution approved in July 1995 and accrued at September 30, 1995.
<PAGE>
Item 6. Selected Financial Data.
($ In Thousands, Except For Per Unit Information)
<TABLE>
Fiscal Years Ended September 30,
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C>
Cash Distributions to Partners $ 975 $ 1,552 $ 7,500 $ 9,996 $ 2,400
Cumulative Cash Distributions to Partners 73,935 72,960 71,408 63,908 53,912
Net Assets 3,869 2,948 4,537 9,006 11,895
Net Realized Gain (Loss) from Operations 82 (762) 4,493 5,839 (711)
Cumulative Net Realized Gain from
Operations 21,454 21,372 22,134 17,641 11,802
Net Realized Gain (Loss) from Investments 271 (573) 4,673 6,228 (341)
Cumulative Net Realized Gain from
Investments 20,226 19,955 20,528 15,855 9,627
PER UNIT OF LIMITED
PARTNERSHIP INTEREST:
Cash Distributions $ 50 $ 100 $ 625 $ 833 $ 200
Cumulative Cash Distributions 5,800 5,750 5,650 5,025 4,192
Net Asset Value, including Net Unrealized
Appreciation (Depreciation) of Investments 257 185 291 719 1,089
Net Realized Gain (Loss) from Operations 2 (53) 294 379 (53)
Cumulative Net Realized Gain from
Operations 1,437 1,435 1,488 1,194 815
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
At September 30, 1995, the Partnership held $1.1 million in short-term
securities with maturities of less than one year and $82,000 in an interest
bearing cash account. Interest earned from such investments for the fiscal year
ended September 30, 1995 ("fiscal 1995") was $62,000. During fiscal 1995, the
Partnership received $804,000 from the sale of certain portfolio investments.
From its inception to September 30, 1995, the Partnership had received aggregate
proceeds totaling $73.1 million from liquidated portfolio investments.
Generally, all cash received from the sale of portfolio investments, after an
adequate reserve for operating expenses, is distributed to Partners as soon as
practicable after receipt.
On July 27, 1995, the General Partners declared a cash distribution to Partners
totaling $975,000; $600,000, or $50 per Unit, to the Limited Partners and
$375,000 to the Managing General Partner. The distribution was paid on October
12, 1995 to Limited Partners of record on September 30, 1995. From its inception
through September 30, 1995, the Partnership had paid or approved cash
distributions to Partners totaling $73.9 million, primarily representing
proceeds received from the sale of portfolio investments.
Results of Operations
For the fiscal years ended September 30, 1995 and 1993, the Partnership had a
net realized gain from operations of $82,000 and $4.5 million, respectively. For
the fiscal year ended September 30, 1994, the Partnership had a net realized
loss from operations of $762,000. Net realized gain or loss from operations is
comprised of 1) net realized gain or loss from portfolio investments and 2) net
investment income or loss.
Realized Gains and Losses from Portfolio Investments - For fiscal 1995, the
Partnership had a $271,000 net realized gain from portfolio investments. The
Partnership's promissory note due from Alpharel, Inc. matured in September 1995.
In October 1995, the Partnership received $213,000 which was net of certain
contingency payments deducted from the principal amount of the note, resulting
in a realized gain of $66,000. During fiscal 1995, the Partnership sold its
85,311 common shares of Acuity Imaging, Inc. for $714,000, realizing a gain of
$114,000 and sold its 620,000 shares of DTC Data Technology Corporation
(formerly Qume Corporation) for $90,000. The sale of the Partnership's DTC
shares resulted in a $90,000 realized gain for fiscal 1995 since the cost basis
of such shares had been written-off in prior years.
For fiscal 1994, the Partnership had a $573,000 net realized loss from portfolio
investments. During fiscal 1994, the Partnership sold its 284,608 common shares
of Alpharel, Inc. in the public market for $421,000, realizing a gain of
$47,000. On March 31, 1994, the Partnership wrote-off its remaining $620,000
investment in DTC Data Technology Corporation due to the continued depressed
public market price and limited trading volume of the company's common stock.
For fiscal 1993, the Partnership had a $4.7 million net realized gain from
portfolio investments. During fiscal 1993, the Partnership sold its remaining
423,082 common shares of Viewlogic Systems, Inc. for $6.7 million, realizing a
gain of $6 million. In June 1993, the Partnership sold its investment in
BehaviorTech, Inc. for $95,000, resulting in a $126,000 realized loss and in
July 1993, sold its investment in Private Satellite Network, Inc. for $204,000,
resulting in a $46,000 realized loss. In September 1993, Optigraphics
Corporation was acquired by Alpharel. In connection with the acquisition, the
Partnership sold its preferred shares of Optigraphics for $333,000 in cash, a
$226,000 promissory note and 284,608 shares of Alpharel common stock. The
Partnership realized a loss of $847,000 from this transaction. Also during
fiscal 1993, the Partnership wrote-off $310,000 of its investment in DTC Data
Technology.
Investment Income and Expenses - Net investment loss (investment income less
operating expenses) for the fiscal years ended September 30, 1995 and 1994 was
$188,000 and $189,000, respectively. Although there was no significant change in
net investment loss for fiscal 1995 compared to fiscal 1994, operating expenses
increased by $25,000 from $225,000 in fiscal 1994 to $250,000 in fiscal 1995.
This increase in operating expenses was offset by a $26,000 increase in interest
and dividend income from $36,000 in fiscal 1994 to $62,000 in fiscal 1995. The
increase in operating expenses for fiscal 1995 compared to fiscal 1994 primarily
was due to an increase in legal fees incurred by the Partnership during fiscal
1995 relating to the termination of the Partnership. The increase in interest
and dividend income for fiscal 1995 compared to fiscal 1994 resulted from an
increase in amounts available for investment in short-term securities during
fiscal 1995.
Net investment loss increased to $189,000 for fiscal 1994 from $180,000 for
fiscal 1993. Although net investment loss increased $9,000 for fiscal 1994
compared to fiscal 1993, the management fee and other operating expenses
declined $92,000 from $317,000 for fiscal 1993 to $225,000 for fiscal 1994.
However, the reduction in operating expenses was more than offset by a $101,000
decline in interest and dividend income from $137,000 for fiscal 1993 to $36,000
for fiscal 1994. The decrease in interest and dividend income for fiscal 1994
compared to fiscal 1993 resulted from a decrease in amounts available for
investment in short-term securities during fiscal 1994.
The Management Company receives compensation at the annual rate of 2% of the net
assets of the Partnership. Such fee is determined and payable on the basis of
the Partnership's net assets at the end of each calendar quarter. The management
fee for fiscal 1995, 1994 and 1993 was $69,000, $61,000 and $110,000,
respectively. Changes in the management fee are due to fluctuations in the
Partnership's net assets. The reduced management fee for fiscal 1994 compared to
fiscal 1993 reflects the portfolio liquidations and subsequent cash
distributions that reduced the Partnership's net asset value during 1994. The
increased management fee for fiscal 1995 compared to fiscal 1994 primarily
reflects the increased fair value of the Partnership's investment in Inference
Corporation, which completed its initial public offering on June 30, 1995. The
management fee and other expenses incurred directly by the Partnership are paid
with funds provided from operations. Funds provided from operations are obtained
from interest earned from short-term investments and proceeds received from the
sale of certain portfolio investments.
Unrealized Gains and Losses and Changes in Unrealized Appreciation or
Depreciation of Portfolio Investments - For fiscal 1995, the Partnership had a
$1.8 million net unrealized gain from its portfolio investments. This unrealized
gain primarily resulted from the upward revaluation of the Partnership's
investment in Inference Corporation, reflecting the company's increased
valuation due to the completion of its initial public offering in June 1995.
Additionally for fiscal 1995, the Partnership reversed $9,000 of unrealized
losses due to the sale of Acuity shares which were sold at a gain during the
year. As a result, net unrealized appreciation of investments increased $1.8
million for fiscal 1995.
For fiscal 1994, the Partnership had a $199,000 net unrealized gain from its
portfolio investments, primarily resulting from the upward revaluation of its
investment in Acuity Imaging. Additionally for fiscal 1994, $525,000 was
transferred from unrealized loss to realized loss due to the write-off of the
Partnership's remaining investment in DTC Data Technology and the sale of its
Alpharel shares, as discussed above. The $199,000 unrealized gain and the
$525,000 transfer to realized loss resulted in a $724,000 increase in net
unrealized appreciation of investments for fiscal 1994.
For fiscal 1993, the Partnership had an $810,000 net unrealized gain from its
portfolio investments, primarily resulting from the upward revaluation of its
investment in Inference Corporation. Additionally for fiscal 1993, $2.3 million
was transferred from unrealized gain to realized gain due to the sale or
write-off of certain portfolio investments, as discussed above. The $2.3 million
transfer to realized gain offset by the additional $810,000 unrealized gain,
resulted in a $1.5 million decline in net unrealized appreciation of investments
for fiscal 1993.
Net Assets - For fiscal 1995, the Partnership had a $1.9 million net increase in
net assets resulting from operations, comprised of the $1.8 million increase in
net unrealized appreciation of investments and the $82,000 net realized gain
from operations for the fiscal year. At September 30, 1995, the Partnership's
net assets were $3.9 million, up $921,000 from $2.9 million at September 30,
1994. The $921,000 increase resulted from the $1.9 million net increase in net
assets from operations for the fiscal year partially offset by the $975,000
accrued cash distribution paid to Partners in October 1995.
For fiscal 1994, the Partnership had a $37,000 net decrease in net assets
resulting from operations, comprised of the $762,000 net realized loss from
operations partially offset by the $724,000 increase in net unrealized
appreciation of investments for the fiscal year. At September 30, 1994, the
Partnership's net assets were $2.9 million, down $1.6 million from $4.5 million
at September 30, 1993. The $1.6 million decrease resulted from the $1.55 million
cash distribution paid to Partners in January 1994 and the $37,000 net decrease
in net assets resulting from operations for fiscal 1994.
Gains and losses from investments are allocated to the Partners' capital
accounts when realized in accordance with the Partnership Agreement (see Note 3
of Notes to Financial Statements). However, for purposes of calculating the net
asset value per Unit, net unrealized appreciation or depreciation of investments
has been included as if it had been realized and allocated to the Limited
Partners in accordance with the Partnership Agreement. Pursuant to such
calculation, the net asset value per $5,000 Unit at September 30, 1995, 1994 and
1993 was $257, $185 and $291, respectively.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
ML VENTURE PARTNERS I, L.P.
INDEX
Independent Auditors' Report
Balance Sheets as of September 30, 1995 and 1994
Schedule of Portfolio Investments as of September 30, 1995 Schedule of Portfolio
Investments as of September 30, 1994
Statements of Operations for the Years Ended September 30, 1995, 1994 and 1993
Statements of Cash Flows for the Years Ended September 30, 1995, 1994 and 1993
Statements of Changes in Partners' Capital for the Years Ended September 30,
1995, 1994 and 1993
Notes to Financial Statements
NOTE - All other schedules are omitted because of the absence of conditions
under which they are required or because the required information is included in
the financial statements or the notes thereto.
<PAGE>
INDEPENDENT AUDITORS' REPORT
ML Venture Partners I, L.P.:
We have audited the accompanying balance sheets of ML Venture Partners I, L.P.,
including the schedules of portfolio investments, as of September 30, 1995 and
1994, and the related statements of operations, cash flows, and changes in
partners' capital for each of the three years in the period ended September 30,
1995. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at September 30, 1995 and 1994 by
correspondence with the custodian; where confirmation was not possible, we
performed other audit procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of ML Venture Partners I, L.P. at September 30,
1995 and 1994, and the results of its operations and its cash flows for each of
the three years in the period ended September 30, 1995 in conformity with
generally accepted accounting principles.
As explained in Note 2, the financial statements include securities valued at
$3,493,542 and $2,426,548 at September 30, 1995 and 1994, respectively,
representing 90% and 82% of net assets, respectively, whose values have been
estimated by the Managing General Partner in the absence of readily
ascertainable market values. We have reviewed the procedures used by the
Managing General Partner in arriving at its estimate of value of such securities
and have inspected underlying documentation, and, in the circumstances, we
believe the procedures are reasonable and the documentation appropriate.
However, because of the inherent uncertainty of valuation, those estimated
values may differ significantly from the values that would have been used had a
ready market for the securities existed, and the differences could be material.
Deloitte & Touche LLP
New York, New York
November 18, 1995
<PAGE>
ML VENTURE PARTNERS I, L.P.
BALANCE SHEETS
September 30,
<TABLE>
1995 1994
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ASSETS
Investments - Note 2
Portfolio investments, at fair value (cost $1,825,917 at
<S> <C> <C> <C> <C> <C> <C> <C>
September 30, 1995 and $2,572,769 at September 30, 1994) $ 3,493,542 $ 2,426,548
Short-term investments, at amortized cost - Note 7 1,099,650 -
Cash and cash equivalents 81,887 564,048
Note receivable 213,084 -
Accrued interest receivable 1,355 1,131
-------------- ---------------
TOTAL ASSETS $ 4,889,518 $ 2,991,727
============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Cash distribution payable - Note 6 $ 975,000
Accounts payable 9,104 $ 12,071
Due to Management Company - Note 4 19,441 14,812
Due to Independent General Partners - Note 5 17,250 17,250
-------------- ---------------
Total liabilities 1,020,795 44,133
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Partners' Capital:
Managing General Partner 435,850 756,459
Individual General Partners 190 188
Limited Partners (12,000 Units) 1,765,058 2,337,168
Unallocated net unrealized appreciation (depreciation)
of investments - Note 2 1,667,625 (146,221)
-------------- ---------------
Total partners' capital 3,868,723 2,947,594
-------------- ---------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 4,889,518 $ 2,991,727
============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
ML VENTURE PARTNERS I, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
September 30, 1995
Active Portfolio Investments:
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
Inference Corporation*(A)(B)
<C> <C> <C> <C>
332,157 shares of common stock Feb. 1984 $ 1,729,934 $ 3,265,519
Warrants to purchase 6,000 shares of common stock
at $5.25 per share, expiring on 12/16/97 0 27,488
Warrants to purchase 8,391 shares of common stock
at $5.00 per share, expiring on 4/19/99 4,687 40,535
Brightware, Inc.(B)
332,157 shares of common stock 91,049 160,000
Warrants to purchase 6,000 shares of common stock
at $5.25 per share, expiring on 12/16/97 0 0
Warrants to purchase 8,391 shares of common stock
at $5.00 per share, expiring on 4/19/99 247 0
- -------------------------------------------------------------------------------------------------------------------------------
Totals From Active Portfolio Investments $ 1,825,917 $ 3,493,542
=================================
</TABLE>
Supplemental Information: Liquidated Portfolio Investments(F)
<TABLE>
Liquidation Realized
Company Date Cost Gain (Loss) Return
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Auragen Systems Corp. 1985 $ 1,624,200 $ (1,614,725) $ 9,475
Automatix Incorporated 1990 1,012,913 (999,543) 13,370
BehaviorTech, Inc. 1991-1993 920,352 (825,807) 94,545
Bytel Corporation 1990 750,120 (750,020) 100
California Devices, Inc. 1987 1,957,701 (1,957,701) 0
Cimflex Teknowledge Corporation 1990/1991 1,679,576 (1,599,825) 79,751
Contemporary Communications Corporation 1990 1,040,856 70,644 1,111,500
Cygnet Technologies, Inc. 1986-1992 3,754,289 (2,670,691) 1,083,598
Dallas Semiconductor Corporation 1988/1989 1,690,417 4,914,317 6,604,734
Data Recording Systems, Inc. 1988 3,402,026 (3,271,714) 130,312
DTC Data Technology Corporation(C) 1992-1994 1,552,550 (1,462,650) 89,900
</TABLE>
<PAGE>
ML VENTURE PARTNERS I, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS - continued
September 30, 1995
Supplemental Information: Liquidated Portfolio Investments - continued(F)
<TABLE>
Liquidation Realized
Company Date Cost Gain (Loss) Return
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Envision Technology Inc. 1985 $ 812,235 $ (805,309) $ 6,926
Everex Systems, Inc. 1991/1992 750,000 236,055 986,055
Higher Order Software, Inc. 1987 632,857 (632,857) 0
IDEXX Laboratories, Inc. 1991/1992 1,032,903 2,357,935 3,390,838
ImagiTex, Inc. 1990 1,500,018 164,323 1,664,341
Intek Diagnostics, Inc. 1989 3,846,203 (3,846,202) 1
International Power Technology, Inc. 1990/1992 1,000,035 (692,659) 307,376
Itran Corp. / Acuity Imaging, Inc.(D) 1994-1995 600,000 114,414 714,414
Mentor Graphics Corporation 1990/1991 1,794,445 3,509,547 5,303,992
Network Equipment Technologies, Inc. 1987 1,000,000 3,199,678 4,199,678
Optigraphics Corporation / Alpharel, Inc.(E) 1992-1995 2,700,890 (1,734,182) 966,708
Private Satellite Network, Inc. 1991-1993 1,060,785 (856,166) 204,619
Qubix Graphic Systems Incorporated 1989 4,626,335 (4,605,353) 20,982
Signode Industries Inc. 1986 1,710,891 16,375,860 18,086,751
Systems Center, Inc. 1989 500,000 476,865 976,865
Twyford International, Inc. 1991 720,398 (548,155) 172,243
United AgriSeeds, Inc. 1987 1,995,826 1,639,900 3,635,726
Valid Logic Systems Incorporated 1985/1986 1,803,884 3,088,241 4,892,125
Viewlogic Systems, Inc. 1991/1992 1,500,000 11,558,456 13,058,456
Visic, Inc. 1986-1991 750,000 (705,723) 44,277
Visidata Corp. 1985 601,333 (601,333) 0
Xidex Corporation 1986/1987 2,524,974 2,710,711 5,235,685
Totals from Liquidated Portfolio Investments $ 52,849,012 $ 20,236,331 $ 73,085,343
--------------------------------------------------------
</TABLE>
<TABLE>
Combined Net Combined
Unrealized and Fair Value
Cost Realized Gain and Return
<S> <C> <C> <C>
Totals from Active and Liquidated Portfolio Investments $ 54,674,929 $ 21,903,956 $ 76,578,885
========================================================
</TABLE>
<PAGE>
ML VENTURE PARTNERS I, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS - continued
September 30, 1995
Supplemental Information: Liquidated Portfolio Investments(F)
(A) Public company
(B) Effective in May 1995, Inference Corporation completed a spin-off of
certain of its assets and liabilities, in a tax free transaction, to
Brightware, Inc. and all of the shares of Brightware were issued to the
Inference shareholders. The Partnership's ownership of Brightware coincided
with its ownership of Inference prior to the spin-off. On June 30, 1995,
Inference completed its initial public offering. As a result of a
conversion of preferred stock into common stock and a one-for-five reverse
split effected in connection with the offering, the Partnership exchanged
its 951,671 shares of preferred stock and warrants to purchase 71,959
shares of preferred stock of Inference for 332,157 shares of common stock
and warrants to purchase 14,391 shares of common stock. The Partnership's
Inference and Brightware securities are non-income producing. Additionally,
the Partnership's Inference securities are restricted from sale.
(C) During the fiscal year, the Partnership sold its 620,000 common shares of
DTC Data Technology Corporation, for $90,000. The Partnership's investment
in DTC Technology (formerly Qume Corporation) had been written-off in prior
periods.
(D) During the fiscal year, the Partnership sold its 85,311 shares of Acuity
Imaging, Inc. common stock for $714,000, realizing a gain of $114,000.
(E) During September 1995, the Partnership's $226,137 promissory note due from
Alpharel, Inc. was redeemed for approximately 95% of the face value of the
note reflecting a reduction to cover certain taxes and other contingent
payments allowed under the terms of the note agreement. In October 1995,
the Partnership received $213,084 as payment in full for its $226,137
promissory note.
(F) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through September 30, 1995.
* May be deemed an affiliated person of the Partnership as defined in the
Investment Company Act of 1940.
See notes to financial statements.
<PAGE>
ML VENTURE PARTNERS I, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
September 30, 1994
Active Portfolio Investments:
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
Acuity Imaging, Inc.(A)
<C> <C> <C> <C>
85,311 shares of Common Stock Aug. 1985 $ 600,000 $ 464,092
- -------------------------------------------------------------------------------------------------------------------------------
Alpharel, Inc.(A)
6% Promissory Note due 9/24/95 Apr. 1984 146,852 146,852
- -------------------------------------------------------------------------------------------------------------------------------
Inference Corporation*
951,671 shares of Preferred Stock Feb. 1984 1,820,983 1,808,670
Warrants to purchase 30,000 shares of Preferred Stock
at $1.05 per share expiring on 12/16/97 0 2,000
Warrants to purchase 41,959 shares of Preferred Stock
at $1.00 per share expiring on 4/19/99 4,934 4,934
- -------------------------------------------------------------------------------------------------------------------------------
Totals From Active Portfolio Investments $ 2,572,769 $ 2,426,548
================================
</TABLE>
Supplemental Information: Liquidated Portfolio Investments(B)
<TABLE>
Net
Cost Realized Gain Return
<S> <C> <C> <C>
Totals From Liquidated Portfolio Investments $ 52,102,160 $ 19,965,785 $ 72,067,945
=========================================================
Combined Net Combined
Unrealized and Fair Value
Cost Realized Gain and Return
Totals From Active and Liquidated Portfolio
Investments $ 54,674,929 $ 19,819,564 $ 74,494,493
=========================================================
</TABLE>
(A) Public company
(B) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through September 30, 1994.
* May be deemed an affiliated person of the Partnership as defined in the
Investment Company Act of 1940. See notes to financial statements.
<PAGE>
ML VENTURE PARTNERS I, L.P.
STATEMENTS OF OPERATIONS
For The Years Ended September 30,
<TABLE>
1995 1994 1993
-------------- ------------ ---------
INVESTMENT INCOME AND EXPENSES
<S> <C> <C> <C>
Interest and dividends $ 61,893 $ 36,467 $ 137,052
-------------- ------------ ---------------
Expenses:
Management fee - Note 4 69,449 60,561 110,353
Professional fees 78,961 60,161 71,510
Mailing and printing 35,567 39,226 65,371
Independent General Partners' fees - Note 5 63,000 63,000 66,000
Custodial fees 2,305 1,958 4,118
Miscellaneous 874 435 -
-------------- ------------ ---------------
Total expenses 250,156 225,341 317,352
-------------- ------------ ---------------
NET INVESTMENT LOSS (188,263) (188,874) (180,300)
Net realized gain (loss) from portfolio investments 270,546 (572,794) 4,673,251
-------------- ------------ ---------------
NET REALIZED GAIN (LOSS) FROM OPERATIONS
(allocable to Partners) - Note 3 82,283 (761,668) 4,492,951
Net change in unrealized appreciation or depreciation
of investments 1,813,846 724,206 (1,461,303)
-------------- ------------ ---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,896,129 $ (37,462) $ 3,031,648
============== ============ ===============
</TABLE>
See notes to financial statements.
<PAGE>
ML VENTURE PARTNERS I, L.P.
STATEMENTS OF CASH FLOWS
For The Years Ended September 30,
<TABLE>
1995 1994 1993
------------- -------------- -----------
CASH FLOWS PROVIDED FROM (USED FOR)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net investment loss $ (188,263) $ (188,874) $ (180,300)
Adjustments to reconcile net investment loss to cash provided from (used for)
operating activities:
(Increase) decrease in receivables (224) (1,131) 503,472
(Increase) decrease in accrued interest on short-term
investments (10,311) 5,131 29,444
Increase (decrease) in payables 1,662 (27,615) (38,228)
------------- -------------- ----------------
Cash provided from (used for) operating activities (197,136) (212,489) 314,388
------------- -------------- ----------------
CASH FLOWS PROVIDED FROM (USED FOR)
INVESTING ACTIVITIES
Net proceeds from the sale of portfolio investments 804,314 800,897 7,003,609
Cost of portfolio investments purchased - - (175,004)
Net return (purchase) of short-term investments (1,089,339) 948,776 3,502,495
------------- -------------- ----------------
Cash provided from (used for) investing activities (285,025) 1,749,673 10,331,100
------------- -------------- ----------------
CASH FLOWS USED FOR FINANCING ACTIVITIES
Cash distributions to Partners - (1,552,300) (10,500,000)
------------- -------------- ----------------
Increase (decrease) in cash and cash equivalents (482,161) (15,116) 145,488
Cash and cash equivalents at beginning of period 564,048 579,164 433,676
------------- -------------- ----------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 81,887 $ 564,048 $ 579,164
============= ============== ================
</TABLE>
See notes to financial statements.
<PAGE>
ML VENTURE PARTNERS I, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For The Years Ended September 30, 1993, 1994 and 1995
<TABLE>
Managing Individual Net Unrealized
General General Limited Appreciation
Partner Partners Partners (Depreciation) Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1992 $ 257,256 $ 2,295 $ 8,155,281 $ 590,876 $ 9,005,708
Cash distribution paid
January 26, 1993 - Note 6 - - (3,300,000) - (3,300,000)
Cash distribution paid
April 12, 1993 - Note 6 - - (4,200,000) - (4,200,000)
Allocation of net
investment loss - Note 3 (1,803) (12) (178,485) - (180,300)
Allocation of net realized
gain on investments - Note 3 972,036 247 3,700,968 - 4,673,251
Net change in unrealized
depreciation of investments - - - (1,461,303) (1,461,303)
------------- ------- ------------- ------------- ---------------
Balance at September 30, 1993 $ 1,227,489 $ 2,530 $ 4,177,764(A) $ (870,427) $ 4,537,356
Cash distribution paid
January 20, 1994 - Note 6 (350,000) (2,300) (1,200,000) - (1,552,300)
Allocation of net
investment loss - Note 3 (1,889) (12) (186,973) - (188,874)
Allocation of net realized loss
on investments - Note 3 (119,141) (30) (453,623) - (572,794)
Net change in unrealized
depreciation of investments - - - 724,206 724,206
------------- ------- ------------- ------------- ---------------
Balance at September 30, 1994 $ 756,459 $ 188 $ 2,337,168(A) $ (146,221) $ 2,947,594
Accrued cash distribution paid
October 12, 1995 - Note 6 (375,000) - (600,000) - (975,000)
Allocation of net
investment loss - Note 3 (1,883) (12) (186,368) - (188,263)
Allocation of net realized gain
on investments - Note 3 56,274 14 214,258 - 270,546
Net change in unrealized
depreciation of investments - - - 1,813,846 1,813,846
------------- ------- ------------- ------------- ---------------
Balance at September 30, 1995 $ 435,850 $ 190 $ 1,765,058(A) $ 1,667,625 $ 3,868,723
============= ======= ============= ============= ===============
</TABLE>
(A) The net asset value per Unit of limited partnership interest, including an
assumed allocation of net unrealized appreciation (depreciation) of
investments, was $257, $185 and $291 for the fiscal years ended September
30, 1995, 1994 and 1993, respectively. Cumulative cash distributions, paid
or accrued, to Limited Partners from inception to September 30, 1995, 1994
and 1993 totaled $5,800, $5,750 and $5,650, respectively.
See notes to financial statements.
<PAGE>
ML VENTURE PARTNERS I, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Purpose
ML Venture Partners I, L.P. (the "Partnership") is a Delaware limited
partnership formed on February 12, 1982. The Partnership's operations commenced
on October 15, 1982. Merrill Lynch Venture Capital Co., L.P., the managing
general partner of the Partnership (the "Managing General Partner"), is a New
York limited partnership formed on February 12, 1982, the general partner of
which is Merrill Lynch Venture Capital Inc. (the "Management Company"), an
indirect subsidiary of Merrill Lynch & Co., Inc.
The Partnership's objective is to realize long-term capital appreciation from
its portfolio of venture capital investments. From 1982 to 1986, the Partnership
assembled a portfolio of 34 venture capital investments in new and developing
companies and other special investment situations. The Partnership does not
engage in any other business or activity. At September 30, 1995, 33 of the 34
investments had been fully liquidated. The Partnership will not make investments
in new companies and will not reinvest the proceeds from the sale of its
remaining investments, except to make follow-on investments in existing
companies, if necessary.
At a meeting held in October 1994, the Individual General Partners voted to
extend the Partnership's termination date for an additional two-year period. As
a result of this extension, the Partnership must terminate no later than
December 31, 1996.
2. Significant Accounting Policies
Valuation of Investments - Short-term investments are carried at amortized cost
which approximates market. Portfolio investments are carried at cost until
significant developments affecting an investment provide a basis for valuation.
Thereafter, portfolio investments are carried at fair value as determined
quarterly by the Managing General Partner under the supervision of the
Individual General Partners. The venture capital portfolio investments held by
the Partnership involve a high degree of business and financial risk that can
result in substantial losses. The Managing General Partner considers such risks
in determining the valuation of the Partnership's portfolio investments.
Investment Transactions - Investment transactions are recorded on the accrual
method. Portfolio investments are recorded on the trade date, the date on which
the Partnership obtains an enforceable right to demand the securities or payment
therefor. Realized gains and losses on investments sold are computed on a
specific identification basis.
Income Taxes - No provision for income taxes has been made since all income and
losses are allocable to the Partners for inclusion in their respective tax
returns. The Partnership's net assets for financial reporting
<PAGE>
ML VENTURE PARTNERS I, L.P.
NOTES TO FINANCIAL STATEMENTS
purposes differ from its net assets for tax purposes. Net unrealized
appreciation of $1.7 million at September 30, 1995, which was recorded for
financial statement purposes, was not recognized for tax purposes. Additionally,
from inception to September 30, 1995, other timing differences relating to
realized losses totaling $1.3 million have been recorded on the Partnership's
financial statements but have not yet been reflected as realized losses for tax
purposes.
Statements of Cash Flows -The Partnership considers its interest-bearing cash
account to be cash equivalents.
3. Allocation of Partnership Profits and Losses
The Partnership Agreement provides that the Managing General Partner will be
allocated, on a cumulative basis over the life of the Partnership, 20% of net
realized capital gains or 10% of net realized capital losses. The Partnership's
net realized gains or losses in excess of this allocation to the Managing
General Partner, as well as all other income, losses, deductions and credits, if
any, will be allocated among all the Partners, including the Managing General
Partner, in the proportion of their capital contributions to the Partnership.
For the period from October 15, 1982 (commencement of operations) to September
30, 1995, the Partnership had a cumulative net realized gain of $20.2 million.
4. Related Party Transactions
The Management Company performs, or arranges for others to perform, the
management and administrative services necessary for the operation of the
Partnership. The Management Company receives compensation at the annual rate of
2% of the net assets of the Partnership. Such fee is determined and payable
quarterly.
5. Independent General Partners' Fees
As compensation for services rendered to the Partnership, each of the three
Independent General Partners receives $15,000 annually in quarterly
installments, $1,000 for each meeting of the General Partners attended or for
each other meeting, conference or engagement in connection with Partnership
activities at which attendance by an Independent General Partner is required and
$1,000 for each committee meeting attended ($500 if a committee meeting is held
on the same day as a meeting of the General Partners).
6. Cash Distributions
On October 12, 1995, the Partnership made a cash distribution to Partners
totaling $975,000; $600,000, or $50 per Unit, to Limited Partners of record on
September 30, 1995, and $375,000 to the Managing General Partner. The
distribution primarily represents proceeds received from the sale of portfolio
investments.
<PAGE>
ML VENTURE PARTNERS I, L.P.
NOTES TO FINANCIAL STATEMENTS
Cash distributions paid during the periods presented and cumulative cash
distributions paid or accrued from inception through September 30, 1995 are
listed below:
<TABLE>
General Limited Per
Date of Distribution Partners Partners $5,000 Unit
- -------------------- -------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Inception to September 30, 1992 $ 3,607,506 $ 60,300,000 $ 5,025
January 26, 1993 0 3,300,000 275
April 12, 1993 0 4,200,000 350
January 20, 1994 352,300 1,200,000 100
October 12, 1995 (accrued) 375,000 600,000 50
-------------- --------------- --------
Cumulative totals at September 30, 1995 $ 4,334,806 $ 69,600,000 $ 5,800
============== =============== ========
</TABLE>
7. Short-Term Investments
At September 30, 1995, the Partnership held investments in short-term securities
as detailed below (no short-term securities were held at September 30, 1994).
<TABLE>
Maturity Purchase Amortized
Issuer Yield Date Price Cost Face Value
<S> <C> <C> <C> <C> <C> <C>
B.M.W. U.S. Capital Corp. 5.72% 10/2/95 $ 1,089,339 $ 1,099,650 $ 1,100,000
============== ============== ===============
</TABLE>
<PAGE>
Item 9. Disagreements on Accounting and Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Partnership
GENERAL PARTNERS
The five General Partners of the Partnership are responsible for the management
and administration of the Partnership. The General Partners consist of four
Individual General Partners and the Managing General Partner. As required by the
Investment Company Act of 1940 (the "Investment Company Act"), a majority of the
General Partners must be individuals who are not "interested persons" of the
Partnership as defined in the Investment Company Act. In 1982, the Securities
and Exchange Commission ("SEC") issued an order declaring that the three
independent General Partners of the Partnership, Cornelius H. Borman, Jr., Eric
M. Javits and William M. Kelly (the "Independent General Partners"), are not
"interested persons" of the Partnership as defined in the Investment Company Act
solely by reason of their being general partners of the Partnership. The
Managing General Partner and the four Individual General Partners will serve as
General Partners until successors have been elected or until their earlier
resignation or removal.
The Individual General Partners have full authority over the management of the
Partnership and provide overall guidance and supervision with respect to the
operations of the Partnership and perform the various duties imposed on the
directors of business development companies by the Investment Company Act. In
addition to general fiduciary duties, the Individual General Partners, among
other things, supervise the management arrangements of the Partnership and
supervise the activities of the Managing General Partner.
The Managing General Partner, subject to the supervision of the Individual
General Partners, has exclusive power and authority to manage and control the
Partnership's venture capital investments. Subject to the supervision of the
Individual General Partners, the Managing General Partner is authorized to make
all decisions regarding the Partnership's venture capital investment portfolio
including, among other things, authority to find, evaluate, structure, monitor
and liquidate such investments and to provide, or arrange for the provision of,
managerial assistance to the portfolio companies in which the Partnership
invests.
Individual General Partners
Cornelius H. Borman, Jr. (1)
23 Smith Street
Chappaqua, New York 10514
Age 80
Individual General Partner since 1982
Units of the Partnership beneficially owned at December 15, 1995 - None (3)
Investment Adviser with Rockefeller Family & Associates from 1952 to
1980; General Partner of Venrock Associates, a venture capital
partnership formed by the Rockefeller family, from 1969 to 1980.
Eric M. Javits (1)
1345 Avenue of the Americas
New York, New York 10105
Age 64
Individual General Partner since 1982
Units of the Partnership beneficially owned at December 15, 1995 - None (3)
Senior counsel to Robinson, Brog, Leinwand, Reich, Genovese & Gluck,
P.C. since 1994; Consultant to the United States Department of State
from 1989 to 1990; Member of the law firm of Robinson, Brog, Leinwand,
Reich, Genovese & Gluck, P.C. and its predecessor firms from 1958 to
1989 and a senior partner of such firm from 1964 to 1989.
William M. Kelly (1)
40 Wall Street
New York, New York 10005
Age 51
Individual General Partner since 1982
Units of the Partnership beneficially owned at December 15, 1995 - One (3)
Associate of William T. Golden, Corporate Director and Trustee, since
1980; Vice President of National Aviation and Technology Company, a
registered investment company, from 1977 to 1980; Individual General
Partner of ML Venture Partners II, L.P.
Kevin K. Albert (2)
World Financial Center
North Tower
New York, New York 10281-1326
Age 43
Individual General Partner since 1991
Units of the Partnership beneficially owned at December 15, 1995 - None (3)
President of the Management Company; Managing Director of Merrill Lynch
& Co. Investment Banking Division ("MLIBK") since 1988; Vice President
of MLIBK from 1983 to 1988.
(1) Member of Audit Committee of the Individual General Partners.
(2) Interested person, as defined in the Investment Company Act.
(3) Messrs. Borman, Javits and Kelly have each contributed $1,000 to the
capital of the Partnership. Mr. Albert succeeded to the interest of a
former Individual General Partner who contributed $1,000 to the capital of
the Partnership.
<PAGE>
The Managing General Partner
Merrill Lynch Venture Capital Co., L.P. (the "Managing General Partner") is a
limited partnership organized on February 12, 1982 under the laws of the State
of New York. The Managing General Partner maintains its principal office at
North Tower, World Financial Center, New York, New York 10281-1326. The Managing
General Partner has acted as the managing general partner of the Partnership
since the Partnership commenced operations on October 15, 1982. The Managing
General Partner is engaged in no other activities at the date hereof.
The general partner of the Managing General Partner is Merrill Lynch Venture
Capital Inc. (the "Management Company"). Information concerning the Management
Company is set forth below under the Management Company.
The Partnership Agreement obligates the Managing General Partner to contribute
cash to the capital of the Partnership so that the Managing General Partner's
capital contribution at all times will be equal to one percent (1%) of the
aggregate capital contributions of all Partners of the Partnership. The Managing
General Partner has contributed $606,102 to the capital of the Partnership.
The Management Company
Merrill Lynch Venture Capital Inc. (the "Management Company") has served as the
management company for the Partnership since the Partnership commenced
operations. The Management Company performs, or arranges for others to perform,
the management and administrative services necessary for the operation of the
partnership pursuant to a Management Agreement, dated as of July 12, 1982,
between the Partnership and the Management Company.
The Management Company is an indirect subsidiary of Merrill Lynch & Co., Inc.
The Management Company, which was incorporated under Delaware law on January 25,
1982, maintains its principal office at North Tower, World Financial Center, New
York, New York 10281-1326. Set forth below is information concerning the
directors and officers of the Management Company. Unless otherwise noted, the
address of each such person is in North Tower, World Financial Center, New York,
New York, 10281-1326.
Kevin K. Albert
Director, President
Age 43
Officer or Director since 1990
Managing Director of MLIBK since 1988; Vice President of MLIBK from
1983 to 1988.
Robert F. Aufenanger
Director, Executive Vice President
Age 42
Officer or Director since 1990
Vice President of Merrill Lynch & Co. Corporate Strategy, Credit and
Research and Director of the Partnership Management Group since 1991;
Director of MLIBK from 1990 to 1991; Vice President of MLIBK from 1984
to 1990.
Robert W. Seitz
Director, Vice President
Age 49
Officer or Director since 1993
First Vice President of Merrill Lynch & Co. Corporate Strategy, Credit
and Research and a Managing Director within the Corporate Credit
Division of Merrill Lynch since 1987.
Diane T. Herte
Vice President and Treasurer
Age 35
Officer or Director since 1995
Assistant Vice President of Merrill Lynch & Co. Corporate Strategy,
Credit and Research since 1992 and joined Merrill Lynch in 1984. Ms.
Herte's responsibilities include controllership and financial
management functions for certain partnerships for which subsidiaries of
ML Leasing Equipment Corp., an affiliate of Merrill Lynch, are general
partners.
The directors of the Management Company will serve as directors until the next
annual meeting of stockholders and until their successors are elected and
qualify. The officers of the Management Company will hold office until the next
annual meeting of the Board of Directors of the Management Company and until
their successors are elected and qualify.
There are no family relationships among any of the Individual General Partners
of the Partnership and the officers and directors of the Management Company.
Item 11. Executive Compensation.
Compensation - The Partnership pays each Independent General Partner an annual
fee of $15,000 in quarterly installments, $1,000 per meeting of the General
Partners attended ($500 if a committee meeting is held on the same day as a
meeting of the General Partners) and pays all non-interested Individual General
Partners' actual out-of-pocket expenses relating to attendance at meetings. The
Independent General Partners receive $1,000 for each meeting of the audit
committee attended ($500 if the audit committee meeting is held on the same day
as a meeting of the General Partners). The aggregate fees and expenses paid by
the Partnership to the Independent General Partners for the fiscal years ended
September 30, 1995, 1994 and 1993 totaled $63,000, $63,000 and $66,000,
respectively.
Allocations and Distributions - The profits and losses of the Partnership are
determined and allocated as of the end of and within sixty days after the end of
each fiscal year. The Managing General Partner is allocated the Partnership's
net realized capital gains or losses, as the case may be, for such year so that
it receives (i) 20% of the Partnership's net capital gains calculated on a
cumulative basis over the life of the Partnership through such year, if the
Partnership has generated net realized capital gains on such cumulative basis
through such year or (ii) 10% of the Partnership's net capital losses calculated
on a cumulative basis over the life of the Partnership through such year, if the
Partnership has generated net realized capital losses on such cumulative basis
through such year. Such allocation is referred to herein as the "Managing
General Partner's Allocation". The Partnership's net realized capital gains or
losses in excess of the Managing General Partner's Allocation and all other
profits and losses, including interest or other income on funds not invested in
venture capital investments are allocated among all the Partners of the
Partnership (including the Managing General Partner) in proportion to their
capital contributions. Distributions to the Managing General Partner are not
made to the extent that the net realized gains allocated to the Managing General
Partner are offset by an amount equal to 20% of the net unrealized losses of the
Partnership determined as of the end of the fiscal year for which such
distributions were made.
For its fiscal year ended September 30, 1995, the Partnership had a net realized
gain from its portfolio investments of $270,546. In accordance with the
allocation procedure described above, the Managing General Partner was allocated
$56,274 of such realized gain. For its fiscal year ended September 30, 1994, the
Partnership had a net realized loss from its portfolio investments of $572,794.
In accordance with the allocation procedure described above, the Managing
General Partner was allocated $119,141 of such realized loss. For its fiscal
year ended September 30, 1993, the Partnership had a net realized gain from its
portfolio investments of $4,673,251. In accordance with the allocation procedure
described above, the Managing General Partner was allocated $972,036 of such
realized capital gain. The General Partners declared a cash distribution
totaling $975,000; $600,000 payable to Limited Partners of record during the
fiscal year ended September 30, 1995 and $375,000 to the General Partner. The
General Partners declared a cash distribution totaling $1.2 million payable to
Limited Partners of record during the fiscal year ended September 30, 1994. The
General Partners also received a distribution totaling $352,300 during fiscal
1994. The General Partners declared two cash distributions totaling $7.5 million
payable to Limited Partners of record during the fiscal year ended September 30,
1993.
Management Fee - The Management Agreement provides that as compensation for its
services to the Partnership, the Management Company will receive a fee at the
annual rate of 2% of the amount of the net assets of the Partnership. Such fee
is determined and payable quarterly on the basis of the net assets of the
Partnership at the end of each calendar quarter. For the fiscal years ended
September 30, 1995, 1994 and 1993, management fees earned by the Management
Company aggregated $69,000, $61,000 and $110,000, respectively.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information concerning the security ownership of the Individual General
Partners set forth in Item 10 under the subcaption "Individual General Partners"
is incorporated herein by reference.
As of December 15, 1995, no person or group is known by the Partnership to be
the beneficial owner of more than 5 percent of the Units. Mr. Kelly, an
Individual General Partner of the Partnership, owns one Unit or less than one
percent of the total Units outstanding. The Individual General Partners and the
directors and officers of the Management Company own as a group one Unit or less
than one percent of the total Units outstanding.
The Partnership is not aware of any arrangement which may result, at a
subsequent date, in a change of control of the Partnership.
<PAGE>
Item 13. Certain Relationships and Related Transactions.
Kevin K. Albert, a Director and President of the Management Company and a
Managing Director of MLIBK, joined Merrill Lynch in 1981. Robert F. Aufenanger,
a Director and Executive Vice President of the Management Company, a Vice
President of Merrill Lynch & Co. Corporate Strategy, Credit and Research and a
Director of the Partnership Management Department, joined Merrill Lynch in 1980.
Robert W. Seitz, a Director and Vice President of the Management Company, a
First Vice President of Merrill Lynch & Co. Corporate Strategy, Credit and
Research and a Managing Director within the Corporate Credit Division of Merrill
Lynch, joined Merrill Lynch in 1981. Diane T. Herte, a Vice President and
Treasurer of the Management Company and an Assistant Vice President of Merrill
Lynch & Co. Corporate Strategy, Credit and Research, joined Merrill Lynch in
1984.
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
(a) 1. Financial Statements
Balance Sheets as of September 30, 1995 and 1994
Schedule of Portfolio Investments as of September 30, 1995
Schedule of Portfolio Investments as of September 30, 1994
Statements of Operations for the Years Ended September 30,
1995, 1994 and 1993
Statements of Cash Flows for the Years Ended September 30,
1995, 1994 and 1993
Statement of Changes in Partners' Capital for the Year Ended
September 30, 1995 Statement of Changes in Partners' Capital
for the Year Ended September 30, 1994 Statement of Changes
in Partners' Capital for the Year Ended September 30, 1993
Notes to Financial Statements
2. All other schedules are omitted because of the absence of
conditions under which they are required or because the
required information is included in the financial statements
or the notes thereto.
3. Exhibits
(3) Amended and Restated Certificate and Agreement of
Limited Partnership of the Partnership, dated as
of February 12, 1982 and amended through October
6, 1982.*
(10) Management Agreement dated as of July 12, 1982 between
the Partnership and the Management Company.*
(27) Financial Data Schedule.
(28) (a) Prospectus of the Partnership dated June 18,
1982 filed with the Securities and Exchange
Commission pursuant to Rule 424(b) under the
Securities Act of 1933, as supplemented by
supplements thereto dated July 13, 1982 and
September 28, 1982, filed pursuant to Rule 424(c)
under the Securities Act of 1933.*
(28) (b) Custody Agreement dated May 31, 1983 between the
Partnership and Chemical Bank.**
(b) No reports on Form 8-K have been filed during the
fourth quarter of the fiscal year covered by this
report.
- -----------------------------
* Incorporated by reference to the Partnership's Annual Report on Form
10-K for the fiscal year ended September 30, 1982 filed with the
Securities and Exchange Commission on December 29, 1982.
** Incorporated by reference to the Partnership's Quarterly Report on Form
10-Q for the quarter ended June 30, 1983 filed with the Securities and
Exchange Commission on August 15, 1983.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on the 15th day of
December.
ML VENTURE PARTNERS I, L.P.
By: /s/ Kevin K. Albert
Kevin K. Albert
General Partner
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrants and in the capacities indicated on the 15th day of December.
<TABLE>
<S> <C> <C> <C>
By: Merrill Lynch Venture Capital Co., L.P. By: /s/ Eric M. Javits
its Managing General Partner Eric M. Javits
Individual General Partner
By: Merrill Lynch Venture Capital Inc. ML Venture Partners I, L.P.
its General Partner
By: /s/ Kevin K. Albert By: /s/ William M. Kelly
------------------------------------------------- ------------------------
Kevin K. Albert William M. Kelly
President Individual General Partner
(Principal Executive Officer) ML Venture Partners I, L.P.
By: /s/ Diane T. Herte By: /s/ Cornelius H. Borman, Jr.
Diane T. Herte Cornelius H. Borman, Jr.
Vice President and Treasurer Individual General Partner
(Principal Financial and Accounting Officer) ML Venture Partners I, L.P.
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ML VENTURE
PARTNERS I, L.P.'S FOURTH QUARTER ANNUAL REPORT ON FORM 10-K FOR THE PERIOD
ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 1,825,917
<INVESTMENTS-AT-VALUE> 3,493,542
<RECEIVABLES> 214,439
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 81,887
<TOTAL-ASSETS> 4,889,518
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,020,795
<TOTAL-LIABILITIES> 1,020,795
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 12,000
<SHARES-COMMON-PRIOR> 12,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,667,625
<NET-ASSETS> 3,868,723
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 61,893
<OTHER-INCOME> 0
<EXPENSES-NET> 250,156
<NET-INVESTMENT-INCOME> (188,263)
<REALIZED-GAINS-CURRENT> 270,546
<APPREC-INCREASE-CURRENT> 1,813,846
<NET-CHANGE-FROM-OPS> 1,896,129
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 975,000
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,897,791
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDISTRIB-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 3,408,159
<PER-SHARE-NAV-BEGIN> 185
<PER-SHARE-NII> (16)
<PER-SHARE-GAIN-APPREC> 138
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 50
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 257
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
