SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended March 31, 1998
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 0-14217
ML VENTURE PARTNERS II, L.P.
================================================================================
(Exact name of registrant as specified in its charter)
Delaware 13-3324232
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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
Not applicable
===============================================================================
Former name, former address and former fiscal year, if changed since last report
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
<PAGE>
ML VENTURE PARTNERS II, L.P.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets as of March 31, 1998 (Unaudited) and December 31, 1997
Schedule of Portfolio Investments as of March 31, 1998 (Unaudited)
Statements of Operations for the Three Months Ended March 31, 1998 and 1997
(Unaudited)
Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997
(Unaudited)
Statement of Changes in Partners' Capital for the Three Months Ended March 31,
1998 (Unaudited)
Notes to Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ML VENTURE PARTNERS II, L.P.
BALANCE SHEETS
<TABLE>
March 31, 1998 December 31,
(Unaudited) 1997
ASSETS
Portfolio investments, at fair value (cost $13,013,680 as of
<S> <C> <C> <C> <C> <C> <C>
March 31, 1998 and December 31, 1997) $ 18,022,826 $ 17,021,243
Short-term investments, at amortized cost 4,462,071 2,979,552
Cash and cash equivalents 377,015 1,918,335
Accounts receivable 4,399 -
----------------- ------------------
TOTAL ASSETS $ 22,866,311 $ 21,919,130
================= ==================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 144,455 $ 144,890
Due to Management Company 50,000 41,349
Due to Independent General Partners 24,000 25,698
----------------- ------------------
Total liabilities 218,455 211,937
----------------- ------------------
Partners' Capital:
Managing General Partner 1,416,343 1,416,952
Individual General Partners 541 543
Limited Partners (120,000 Units) 16,221,826 16,282,135
Unallocated net unrealized appreciation of investments 5,009,146 4,007,563
----------------- ------------------
Total partners' capital 22,647,856 21,707,193
----------------- ------------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 22,866,311 $ 21,919,130
================= ==================
</TABLE>
See notes to financial statements.
<PAGE>
ML VENTURE PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited)
As of March 31, 1998
<TABLE>
Initial Investment
<S> <C> <C> <C> <C> <C> <C>
Company / Position Date Cost Fair Value
Biocircuits Corporation*(A)(B)
160,693 shares of Common Stock May 1991 $ 468,051 $ 118,009
2,000,000 shares of Preferred Stock 1,000,000 146,875
Warrants to purchase 66,667 shares of Common Stock
at $1.875 per share, expiring 1/2/99 20,833 0
- -------------------------------------------------------------------------------------------------------------------------------
Borg-Warner Security Corporation*(A)
500,000 shares of Common Stock Sept. 1988 2,500,000 7,382,813
- -------------------------------------------------------------------------------------------------------------------------------
Brightware, Inc.
144,039 shares of Common Stock May 1995 39,579 216,059
Warrants to purchase 38,737 shares of Common Stock
at $.40 per share, expiring on 4/19/99 1,138 42,611
Warrants to purchase 59,166 shares of Common Stock
at $.80 per share, expiring on 6/10/98 3,986 41,416
- -------------------------------------------------------------------------------------------------------------------------------
Clarus Medical Systems, Inc.*
179,028 shares of Preferred Stock Jan. 1991 1,000,548 895,152
Warrants to purchase 14,043 shares of Common Stock
at $.05 per share, expiring between 3/7/00 and 7/3/00 0 0
Warrants to purchase 2,826 shares of Preferred Stock
at $5.00 per share, expiring on 3/7/00 0 0
- -------------------------------------------------------------------------------------------------------------------------------
CoCensys, Inc.(A)
152,507 shares of Common Stock Feb. 1989 192,504 303,584
- -------------------------------------------------------------------------------------------------------------------------------
Corporate Express, Inc.(A)
60,000 shares of Common Stock May 1992 12,000 478,512
- -------------------------------------------------------------------------------------------------------------------------------
Diatide, Inc.*(A)
809,704 shares of Common Stock Dec. 1991 2,986,023 5,657,807
- -------------------------------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone Company, L.P.:
SPTHOR Corporation
10% Promissory Note May 1992 5,073 5,073
5.67% Bridge Loan 9,271 9,271
34.5 shares of Common Stock 154,806 154,806
- -------------------------------------------------------------------------------------------------------------------------------
I.D.E. Corporation
113,322 shares of Common Stock Mar. 1988 227,000 0
- -------------------------------------------------------------------------------------------------------------------------------
Neocrin Company
48,429 shares of Preferred Stock June 1991 363,378 0
- -------------------------------------------------------------------------------------------------------------------------------
Photon Dynamics, Inc.*(A)
425,236 shares of Common Stock Sept. 1988 2,452,226 1,148,135
Warrants to purchase 6,062 shares of Common Stock
at $5.40 per share, expiring on 6/30/00 0 0
- -------------------------------------------------------------------------------------------------------------------------------
<PAGE>
ML VENTURE PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited), continued
As of March 31, 1998
Initial Investment
Company / Position Date Cost Fair Value
Raytel Medical Corporation(A)
62,500 shares of Common Stock Feb. 1990 $ 241,639 $ 396,075
Options to purchase 27,969 shares of Common Stock
at $1.42 per share, expiring on 10/31/01 0 137,529
- -------------------------------------------------------------------------------------------------------------------------------
Sanderling Biomedical, L.P.*
80% Limited Partnership interest May 1988 1,335,625 889,099
- -------------------------------------------------------------------------------------------------------------------------------
Total Portfolio Investments $ 13,013,680 $ 18,022,826
---------------------------------
Supplemental Information: Liquidated Portfolio Investments(C)
Cost Realized Gain Return
Totals from Liquidated Portfolio Investments $ 103,519,316 $ 113,445,161 $ 216,964,477
=========================================================
Combined Net Combined
Unrealized and Fair Value
Cost Realized Gain and Return
Totals from Active & Liquidated Portfolio Investments $ 116,532,996 $ 118,454,307 $ 234,987,303
=========================================================
</TABLE>
(A) Public company
(B) On February 23, 1998, Biocircuits Corporation effected a 2.5-for-1 reverse
split of its outstanding stock. The preferred shares of Biocircuits
Corporation held by the Partnership are convertible into common shares of
the company at a ratio of 10 shares of preferred stock for 1 share of
common stock.
(C) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through March 31, 1998.
* 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 II, L.P.
STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended March 31,
<TABLE>
1998 1997
---------------- ---------
INVESTMENT INCOME AND EXPENSES
Income:
<S> <C> <C>
Interest from short-term investments $ 70,588 $ 133,365
Interest and other income from portfolio investments - 16,439
Dividend income from portfolio investments - 37,754
---------------- -----------------
Total investment income 70,588 187,558
---------------- -----------------
Expenses:
Management fee 50,000 138,389
Professional fees 30,068 43,975
Mailing and printing 27,152 72,699
Independent General Partners' fees 24,143 23,472
Custodial fees 99 3,500
Miscellaneous 46 296
---------------- -----------------
Total investment expenses 131,508 282,331
---------------- -----------------
NET INVESTMENT LOSS (60,920) (94,773)
Net realized gain from portfolio investments - 13,609,133
---------------- -----------------
NET REALIZED (LOSS) GAIN FROM OPERATIONS (60,920) 13,514,360
Change in unrealized appreciation of investments 1,001,583 (10,038,196)
---------------- -----------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 940,663 $ 3,476,164
================ =================
</TABLE>
See notes to financial statements.
<PAGE>
ML VENTURE PARTNERS II, L.P.
STATEMENTS OF CASH FLOWS (Unaudited)
For the Three Months Ended March 31,
<TABLE>
1998 1997
---------------- ---------
CASH FLOWS (USED FOR) PROVIDED FROM
OPERATING ACTIVITIES
<S> <C> <C>
Net investment loss $ (60,920) $ (94,773)
Adjustments to reconcile net investment loss to cash (used for) provided from
operating activities:
(Increase) decrease in accrued interest and accounts receivable (4,399) 44,693
Decrease (increase) in accrued interest from short-term investments 3,343 (46,835)
Increase in payables, net 6,518 189,438
---------------- ---------------
Cash (used for) provided from operating activities (55,458) 92,523
---------------- ---------------
CASH FLOWS (USED FOR) PROVIDED FROM
INVESTING ACTIVITIES
Net purchase of short-term investments (1,485,862) (10,347,843)
Cost of portfolio investments purchased - (228,926)
Net proceeds from the sale of portfolio investments - 11,472,159
Repayment of investments in notes - 2,381,659
---------------- ---------------
Cash (used for) provided from investing activities (1,485,862) 3,277,049
---------------- ---------------
(Decrease) increase in cash and cash equivalents (1,541,320) 3,369,572
Cash and cash equivalents at beginning of period 1,918,335 346,129
---------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 377,015 $ 3,715,701
================ ===============
</TABLE>
See notes to financial statements.
<PAGE>
ML VENTURE PARTNERS II, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited)
For the Three Months Ended March 31, 1998
<TABLE>
Unallocated
Managing Individual Net Unrealized
General General Limited Appreciation
Partner Partners Partners of Investments Total
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 1,416,952 $ 543 $ 16,282,135 $ 4,007,563 $ 21,707,193
Net investment loss (609) (2) (60,309) - (60,920)
Change in unrealized
appreciation of investments - - - 1,001,583 1,001,583
------------- -------- -------------- -------------- ----------------
Balance at end of period $ 1,416,343 $ 541 $ 16,221,826 $ 5,009,146(A) $ 22,647,856
============= ======== ============== ============== ================
</TABLE>
(A) The net asset value per unit of limited partnership interest, including an
assumed allocation of net unrealized appreciation of investments, was $168
at March 31, 1998. Cumulative cash distributions paid to Limited Partners
from inception to March 31, 1998 totaled $1,525 per Unit.
See notes to financial statements.
<PAGE>
ML VENTURE PARTNERS II, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Organization and Purpose
ML Venture Partners II, L.P. (the "Partnership") is a Delaware limited
partnership formed on February 4, 1986. MLVPII Co., L.P., the managing general
partner of the Partnership (the "Managing General Partner"), and four
individuals (the "Individual General Partners") are the general partners of the
Partnership. The general partner of MLVPII Co., L.P. is Merrill Lynch Venture
Capital Inc. (the "Management Company"), an indirect subsidiary of Merrill Lynch
& Co., Inc. DLJ Capital Management Corporation (the "Sub-Manager"), an indirect
subsidiary of Donaldson, Lufkin & Jenrette, Inc., is the sub-manager of the
Partnership, pursuant to a sub-management agreement among the Partnership, the
Management Company, the Managing General Partner and the Sub-Manager.
The Partnership's objective is to achieve long-term capital appreciation from
its portfolio of venture capital investments in new and developing companies and
other special investment situations. The Partnership does not engage in any
other business or activity. In July 1997, the Individual General Partners voted
to extend the term of the Partnership for an additional two-year period. The
Partnership is now scheduled to terminate on December 31, 1999. In addition, the
Individual General Partners have the right to extend the term of the Partnership
for an additional two-year period if they determine that such extension is in
the best interest of the Partnership.
2. Significant Accounting Policies
Valuation of Investments - Short-term investments are carried at amortized cost
which approximates market. Portfolio investments are carried at fair value as
determined quarterly by the Sub-Manager under the supervision of the Individual
General Partners and the Managing General Partner. The fair value of
publicly-held portfolio securities is adjusted to the closing public market
price for the last trading day of the accounting period discounted by a factor
of 0% to 50% for sales restrictions. Factors considered in the determination of
an appropriate discount include, underwriter lock-up or Rule 144 trading
restrictions, insider status where the Partnership either has a representative
serving on the company's Board of Directors or is greater than a 10%
shareholder, and other liquidity factors such as the size of the Partnership's
position in a given company compared to the trading history of the public
security. Privately-held portfolio securities are carried at cost until
significant developments affecting the portfolio company provide a basis for
change in valuation. The fair value of private securities is adjusted 1) to
reflect meaningful third-party transactions in the private market or 2) to
reflect significant progress or slippage in the development of the company's
business such that cost is no longer reflective of fair value. As a venture
capital investment fund, the Partnership's portfolio investments involve a high
degree of business and financial risk that can result in substantial losses. The
Sub-Manager considers such risks in determining the fair value of the
Partnership's portfolio investments. Use of Estimates - The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
<PAGE>
ML VENTURE PARTNERS II, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited), continued
Investment Transactions - Investment transactions are recorded on the accrual
method. Portfolio investments are recorded on the trade date, the date 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 purposes differ from its net assets for tax purposes. Net
unrealized appreciation of investments of $5 million as of March 31, 1998, which
was recorded for financial statement purposes, was not recognized for tax
purposes. Additionally, from inception to March 31, 1998, timing differences of
approximately $6.8 million have been deducted on the Partnership's financial
statements and syndication costs relating to the selling of Units totaling $11.3
million were charged to partners' capital on the financial statements. These
amounts have not been deducted or charged against partners' capital 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 the
Partnership's aggregate investment income and net realized gains and losses from
venture capital investments, provided that such amount is positive. All other
gains and losses of the Partnership are allocated among all the Partners
(including the Managing General Partner) in proportion to their respective
capital contributions to the Partnership. From its inception to March 31, 1998,
the Partnership had a $117.7 million net gain from its venture capital
investments, which includes interest and other income from portfolio investments
totaling $4.2 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 and receives a management fee at the annual rate of 2.5% of the
gross capital contributions to the Partnership, reduced by selling commissions,
organizational and offering expenses paid by the Partnership, capital
distributed and realized capital losses with a minimum annual fee of $200,000.
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 $20,000 annually in quarterly
installments, $1,500 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
$1,500 for each audit committee meeting attended ($500 if an audit committee
meeting is held on the same day as a meeting of the Independent General
Partners).
ML VENTURE PARTNERS II, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited), continued
6. Interim Financial Statements
In the opinion of MLVPII Co., L.P., the managing general partner of the
Partnership, the unaudited financial statements as of March 31, 1998, and for
the three month period then ended, reflect all adjustments necessary for the
fair presentation of the results of the interim period.
7. Classification of Portfolio Investments
As of March 31, 1998, the Partnership's investments in portfolio companies were
categorized as follows:
<TABLE>
% of
Type of Investments Cost Fair Value Net Assets*
- ------------------- -------------- --------------- -----------
<S> <C> <C> <C>
Common Stock and Warrants $ 9,299,785 $ 16,077,356 70.99%
Limited Partnerships 1,335,625 889,099 3.94%
Preferred Stock 2,363,926 1,042,027 4.60%
Debt Securities 14,344 14,344 0.06%
-------------- --------------- -----
Total $ 13,013,680 $ 18,022,826 79.59%
============== =============== ======
Country/Geographic Region
Midwestern U.S. $ 3,512,548 $ 8,756,477 38.66%
Western U.S. 6,118,959 3,439,392 15.20%
Eastern U.S. 3,382,173 5,826,957 25.73%
-------------- --------------- -------
Total $ 13,013,680 $ 18,022,826 79.59%
============== =============== ======
Industry
Business Services $ 2,512,000 $ 7,861,325 34.71%
Biotechnology 4,514,152 6,850,490 30.25%
Semiconductors/Electronics 2,452,226 1,148,135 5.07%
Medical Devices and Services 3,094,449 1,693,640 7.48%
Telecommunications 169,150 169,150 0.75%
Computer Hardware/Software 271,703 300,086 1.33%
-------------- --------------- -----
Total $ 13,013,680 $ 18,022,826 79.59%
============== =============== ======
</TABLE>
* Percentage of net assets is based on fair value.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
As of March 31, 1998, the Partnership held $4,839,086 in cash and cash
equivalents, consisting of $4,462,071 in short-term investments with maturities
of less than one year and $377,015 in an interest bearing account. Interest
earned from such investments totaled $70,588 for the three months ended March
31, 1998. Interest earned in future periods is subject to fluctuations in
short-term interest rates and changes in amounts available for investment in
such securities. Funds needed to cover future operating expenses and follow-on
investments will be obtained from the Partnership's existing cash reserves, from
interest and other investment income received and from proceeds received from
the sale of portfolio investments.
The Partnership has completed its investment phase and will not make investments
in any new portfolio companies. Therefore, cash received from the sale of
portfolio investments is distributed to Partners as soon as practicable, after
an adequate reserve for operating expenses and follow-on investments in existing
portfolio companies.
Results of Operations
For the three months ended March 31, 1998 and 1997, the Partnership had a net
realized loss from operations of $60,920 and a net realized gain from operations
of $13,514,360, respectively. 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 (interest, dividend, and other portfolio income less
operating expenses).
Realized Gains and Losses from Portfolio Investments - For the three months
ended March 31, 1998, the Partnership had no realized gains or losses from
portfolio investments.
For the three months ended March 31, 1997, the Partnership sold shares of common
stock of three of its publicly-traded portfolio companies and common stock
options of one of its privately-held companies for net proceeds totaling
$16,668,477 and a realized gain of $13,609,133.
Investment Income and Expenses - For the three months ended March 31, 1998 and
1997, the Partnership had a net investment loss of $60,920 and $94,773,
respectively. The decrease in net investment loss for the 1998 period compared
to the same period in 1997, was attributable to a $150,823 decrease in operating
expenses partially offset by a $116,970 decrease in investment income. The
decline in operating expenses primarily resulted from decreased management fees,
as discussed below, and a reduction in professional fees and mailing and
printing expenses incurred during the 1998 period. Such reduced operating
expenses reflect the decreased level of activity as the Partnership proceeds to
liquidate its remaining investments. The decline in investment income included a
$62,777 decrease in interest from short-term investments, primarily due to a
decrease in funds available for investment in such securities during the first
quarter of 1998 compared to the same period in 1997. Additionally, interest and
dividend income from portfolio investments decreased by $54,193, resulting from
the liquidation of certain income producing securities during 1997.
The Management Company is responsible for the management and administrative
services necessary for the operation of the Partnership. The Management Company
receives a management fee at an annual rate of 2.5% of the gross capital
contributions to the Partnership, reduced by selling commissions, organizational
and offering expenses paid by the Partnership, return of capital and realized
capital losses, with a minimum annual fee of $200,000. Such fee is determined
and payable quarterly. The management fee for the three months ended March 31,
1998 and 1997, was $50,000 and $138,389, respectively. The decline in the
management fee for the 1998 period compared to the same period in 1997 reflects
the continued liquidation of the Partnership's remaining portfolio investments
and subsequent distribution to Partners. The management fee will remain at the
annual minimum fee of $200,000 for 1998. The management fee is expected to
remain the same in future periods through the liquidation of the Partnership.
The management fee and other operating expenses are paid with funds provided
from operations and from existing cash reserves. Funds provided from operations
for the period were obtained from interest earned from short-term investments.
Unrealized Gains and Losses and Changes in Unrealized Appreciation of Portfolio
Investments - For the three months ended March 31, 1998, the Partnership
increased the fair value of its portfolio investments on a net basis by
$1,001,583. There were no other changes to net unrealized appreciation of
investments for the three month period ended March 31, 1998.
For the three months ended March 31, 1997, the Partnership decreased the fair
value of its portfolio investments on a net basis by $1,495,145. Additionally,
during the quarter, a net $8,543,051 of unrealized gain was transferred to
realized gain relating to portfolio investments sold during the quarter, as
discussed above. As a result, the Partnership's net unrealized appreciation of
investments was reduced by $10,038,196 for the three month period ended March
31, 1997.
Net Assets - Changes to net assets resulting from operations are comprised of
1) net realized gain or loss from operations and
2) changes to net unrealized appreciation of portfolio investments.
As of March 31, 1998, the Partnership's net assets were $22,647,856, up $940,663
from $21,707,193 as of December 31, 1997. This increase was comprised of the
$1,001,583 increase in net unrealized appreciation of investments offset by the
$60,920 net realized loss from operations for the three months ended March 31,
1998.
As of March 31, 1997, the Partnership's net assets were $45,399,200, up
$3,476,164 from $41,923,036 as of December 31, 1996. This increase was comprised
of the $13,514,360 net realized gain from operations offset by the $10,038,196
decrease in net unrealized appreciation of investments for the three months
ended March 31, 1997.
Gains and losses from investments are allocated to 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 of limited partnership interest, net unrealized appreciation of
investments has been included as if the net appreciation had been realized and
allocated to the Limited Partners in accordance with the Partnership Agreement.
Pursuant to such calculation, the net asset value per $1,000 Unit as of March
31, 1998 and December 31, 1997 was $168 and $162, respectively.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period covered
by this report.
Item 5. Other Information.
Not applicable.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(3) (a) Amended and Restated Certificate of Limited
Partnership of the Partnership, dated as of January
12, 1987. (1)
(3) (b) Amended and Restated Certificate of Limited
Partnership of the Partnership, dated July 27, 1990.
(2)
(3) (c) Amended and Restated Certificate of Limited
Partnership of the Partnership, dated March 25,
1991. (3)
(3) (d) Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of May 4,
1987. (4)
(3) (e) Amendment No. 1 dated February 14, 1989 to
Amended and Restated Agreement of Limited Partnership
of the Partnership. (5)
(3) (f) Amendment No. 2 dated July 27, 1990 to Amended
and Restated Agreement of Limited Partnership of
the Partnership. (2)
(3) (g) Amendment No. 3 dated March 25, 1991 to Amended
and Restated Agreement of Limited Partnership of
the Partnership. (3)
(3) (h) Amendment No. 4 dated May 23, 1991 to Amended
and Restated Agreement of Limited Partnership of
the Partnership. (6)
(10) (a) Management Agreement dated as of May 23, 1991
among the Partnership, Management Company and the
Managing General Partner. (6)
(10) (b) Sub-Management Agreement dated as of May 23,
1991 among the Partnership, Management Company, the
Managing General Partner and the Sub-Manager. (8)
(27) Financial Data Schedule.
(28) Prospectus of the Partnership dated February 10,
1987 filed with the Securities and Exchange
Commission pursuant to Rule 424(b) under the
Securities Act of 1933, as supplemented by a
supplement thereto dated April 21, 1987 filed
pursuant to Rule 424(c) under the Securities Act
of 1933. (7)
(b) No reports on Form 8-K have been filed during the
quarter for which this report is filed.
<PAGE>
(1) Incorporated by reference to the Partnership's Annual Report on Form
10-K for the year ended December 31, 1988 filed with the Securities and Exchange
Commission on March 27, 1989.
(2) Incorporated by reference to the Partnership's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1990 filed
with the Securities and Exchange Commission on November 14, 1990.
(3)Incorporated by reference to the Partnership's Annual Reporton Form 10-K for
the year ended December 31, 1990 filed with the Securities and Exchange
Commission on March 28, 1991.
(4) Incorporated by reference to the Partnership's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1987 filed with the
Securities and Exchange Commission on August 14, 1987.
(5) Incorporated by
reference to the Partnership's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1989 filed with the Securities and Exchange Commission on May
15, 1989.
(6) Incorporated by reference to the Partnership's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1991 filed with the Securities and
Exchange Commission on August 14, 1991.
(7) Incorporated by reference to the
Partnership's Quarterly Report on Form 10-Q for the quarter ended March 31, 1987
filed with the Securities and Exchange Commission on May 15, 1987.
(8)Incorporated by reference to the Partnership's AnnualReporton Form 10-K for
the year ended December 31, 1992 filed with the Securities and Exchange
Commission on March 26, 1993.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ML VENTURE PARTNERS II, L.P.
By: /s/ Kevin K. Albert
Kevin K. Albert
General Partner
By: MLVPII Co., L.P.,
its Managing General Partner
By: Merrill Lynch Venture Capital Inc.,
its General Partner
By: /s/ Kevin K. Albert
Kevin K. Albert
President
(Principal Executive Officer)
By: /s/ Robert Aufenanger
Robert Aufenanger
Executive Vice President and Director
By: /s/ Diane T. Herte
Diane T. Herte
Vice President and Treasurer
(Principal Financial and Accounting Officer)
Date: May 15, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ML VENTURE
PARTNERS II, L.P.'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 13,013,680
<INVESTMENTS-AT-VALUE> 18,022,826
<RECEIVABLES> 4,399
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 4,839,086
<TOTAL-ASSETS> 22,866,311
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 218,455
<TOTAL-LIABILITIES> 218,455
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 120,000
<SHARES-COMMON-PRIOR> 120,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,009,146
<NET-ASSETS> 22,647,856
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 70,588
<OTHER-INCOME> 0
<EXPENSES-NET> 131,508
<NET-INVESTMENT-INCOME> (60,920)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 1,001,583
<NET-CHANGE-FROM-OPS> 940,663
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 940,663
<ACCUMULATED-NII-PRIOR> 0
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<AVERAGE-NET-ASSETS> 22,177,524
<PER-SHARE-NAV-BEGIN> 162
<PER-SHARE-NII> (.5)
<PER-SHARE-GAIN-APPREC> 6.5
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
