<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-24412
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MACC Private Equities Inc.
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(Exact name of registrant as specified in its charter)
Delaware 42-1421406
--------------------------------------------- -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
101 Second Street S.E., Suite 800, Cedar Rapids, Iowa 52401
------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(319) 363-8249
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since
last report)
Please 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
At March 31, 1997, the registrant had issued and outstanding 1,058,961
shares of common stock.
Page 1 of 18
Exhibit Index appears at page 15
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
<S> <C> <C>
Condensed Consolidated Balance
Sheets (Unaudited) at March 31,
1997, and September 30, 1996................................... 3
Condensed Consolidated Statements of
Operations (Unaudited) for the three
months ended March 31, 1997, and
March 31, 1996, and the six months
months ended March 31, 1997, and
March 31, 1996................................................. 4
Condensed Consolidated Statements
of Cash Flows (Unaudited) for the six
months ended March 31, 1997, and
the six months ended March 31, 1996............................ 5
Notes to Condensed Consolidated
Financial Statements........................................... 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results Of Operations............... 7
PART II. OTHER INFORMATION.............................................. 11
Item 2. Changes in Securities.......................................... 11
Item 4. Submission of Matters to a
Vote of Securityholders........................................ 11
Item 6. Exhibits and Reports on Form 8-K............................... 12, 13
Signatures..................................................... 14
EXHIBIT INDEX............................................................. 15
</TABLE>
2
<PAGE> 3
PART 1 -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MACC PRIVATE EQUITIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
-------------- --------------
<S> <C> <C>
Assets
Loans and investments in portfolio securities at market
or fair value, cost of $14,693,259 $14,239,150 11,620,748
U.S. treasury bills, at cost, which approximates market 6,777,896 12,202,414
Certificates of deposit 1,657,801 1,657,801
Cash 3,136,000 321,191
Other assets, net 961,046 1,011,644
Deferred income tax 1,055,000 1,093,000
-------------- --------------
Total assets $27,826,893 27,906,798
============== ==============
Liabilities and stockholders' equity
Liabilities:
Debentures payable, net of discount $10,240,338 10,236,250
Accrued interest 259,184 259,662
Accounts payable and other liabilities 209,924 333,117
-------------- --------------
Total liabilities 10,709,446 10,829,029
-------------- --------------
Stockholders' equity:
Common stock, $.01 par value per share;
4,000,000 shares authorized;
1,058,961 shares issued and
outstanding 964,098 in 1996
(See Note 2) 10,590 9,641
Additional paid-in-capital 15,492,575 15,492,575
Net investment (loss) income (75,341) 14,077
Net realized gain on investments 2,143,732 1,616,869
Unrealized depreciation on investments (454,109) (55,393)
-------------- --------------
Total stockholders' equity $17,117,447 17,077,769
-------------- --------------
Total liabilities and stockholders' equity $27,826,893 27,906,798
============== ==============
Net assets per share $16.16 $17.71
============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
MACC PRIVATE EQUITIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
For the three For the six For the three For the six
months ended months ended months ended months ended
March 31, March 31, March 31, March 31,
1997 1997 1996 1996
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Investment income:
Interest $ 435,551 853,822 313,512 641,004
Dividends 13,741 24,941 24,071 70,581
Other 10,702 49,189 8,025 10,207
---------- ---------- ---------- ----------
Total income 459,994 927,952 345,608 721,792
---------- ---------- ---------- ----------
Operating expenses:
Interest 223,899 449,280 220,961 441,805
Management fees 171,146 342,292 156,440 313,957
Professional fees 71,206 134,206 65,754 127,065
Other operating expenses 100,484 174,446 66,281 122,960
Change in provision for
doubtful accounts (1,050) (3,854) (3,227) (6,235)
---------- ---------- ---------- ----------
Total operating expenses 565,685 1,096,370 506,209 999,552
---------- ---------- ---------- ----------
Investment expense, net
before income tax benefit (105,691) (168,418) (160,601) (277,760)
Income tax benefit 79,000 79,000 0 0
---------- ---------- ---------- ----------
Investment expense net (26,691) (89,418) (160,601) (277,760)
---------- ---------- ---------- ----------
Realized and unrealized gain on
investments:
Net realized gain on investments 658,619 661,053 157,638 658,404
Net change in unrealized appreciation/
depreciation on investments (383,053) (398,716) 123,538 (56,976)
---------- ---------- ---------- ----------
Net gain on investments
before income tax expense 275,566 262,337 281,176 601,428
Income tax expense (117,000) (117,000) (12,000) (257,000)
---------- ---------- ---------- ----------
Net gain on investments 158,566 145,337 269,176 344,428
---------- ---------- ---------- ----------
Net change in net assets
from operations $ 131,875 55,919 108,575 66,668
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
MACC PRIVATE EQUITIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
For the six For the six
months ended months ended
March 31, 1997 March 31, 1996
----------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Increase in net assets
from operations $ 55,919 66,668
------------ ------------
Adjustments to reconcile increase in
net assets from operations to net cash
(used in) provided by operating activities:
Change in provision for doubtful accounts (4,644) (6,235)
Net realized and unrealized gain on investments (262,337) (601,428)
Deferred income taxes 38,000 257,000
Other 11,183 10,858
Change in assets and liabilities:
Other assets 48,147 1,111,973
Accrued interest, accounts payable,
and other liabilities (123,671) (54,263)
------------ ------------
Total adjustments (293,322) 717,905
------------ ------------
Net cash (used in) provided by
operating activities (237,403) 784,573
------------ ------------
Cash flows from investing activities:
Proceeds from disposition of and payments on
loans and investments in portfolio securities 1,404,997 2,935,672
Purchases of loans and investments in
portfolio securities (3,761,062) (2,076,941)
Proceeds from disposition of other investments 12,841,180 7,838,653
Purchases of other investments (8,330,424) (7,157,383)
------------ ------------
Net cash provided by investing activities 2,154,691 1,540,001
------------ ------------
Cash flows from financing activities:
Dividend payment (16,241) 0
------------ ------------
Net cash used in financing activities (16,241) 0
------------ ------------
Net increase in cash and cash equivalents 1,901,047 2,324,574
Cash and cash equivalents at beginning of period 5,066,011 6,255,803
------------ ------------
Cash and cash equivalents at end of period $ 6,967,058 8,580,377
============ ============
Supplemental disclosures of cash flow information -
Cash paid during the period for interest $ 438,520 438,881
============ ============
Assets received in lieu of cash $ 214,400 0
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
MACC PRIVATE EQUITIES INC.
Notes to Condensed Consolidated Financial Statements
March 31, 1997, September 30, 1996, and March 31, 1996
(1) Basis of Presentation
The accompanying condensed consolidated financial statements, which
include the accounts of MACC Private Equities Inc. and its wholly-owned
subsidiary MorAmerica Capital Corporation (the "Company") have been prepared in
accordance with generally accepted accounting principles for investment
companies. All significant intercompany accounts and transactions have been
eliminated in consolidation.
The financial statements included herein have been prepared in accordance
with generally accepted accounting principles for interim financial information
and instructions to Form 10-Q and Article 6 of Regulation S-X. The financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto of MACC Private Equities Inc. and Subsidiaries as
of and for the year ended September 30, 1996. The information reflects all
adjustments consisting of normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of the results of
operations for the interim periods. The results of the interim period reported
are not necessarily indicative of results to be expected for the year.
(2) Common Stock
During the quarter ended March 31, 1997, the Company declared a 10% stock
dividend resulting in the issuance of 94,863 shares of common stock to its
shareholders. Cash of $16,141 was paid for fractional shares.
[Remainder of page intentionally left blank]
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This section contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "1995
Act"). Such statements are made in good faith by the Company pursuant to the
safe-harbor provisions of the 1995 Act. In connection with these safe-harbor
provisions, the Company has identified in its Annual Report to Shareholders for
the fiscal year ended September 30, 1996, important factors which could cause
actual results to differ materially from those contained in any forward-looking
statement made by or on behalf of the Company. The Company further cautions
that such factors are not exhaustive or exclusive. The Company does not
undertake to update any forward-looking statement which may be made from time
to time by or on behalf of the Company.
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended March 31, 1997, Compared to Second
Quarter and Six Months Ended March 31, 1996
Total investment income includes the Company's income from interest,
dividends and fees. Net investment expense represents total income minus
operating and interest expenses, net of applicable income taxes. The main
objective of portfolio company investments is to achieve capital appreciation,
and realized gains and losses from, and unrealized appreciation and
depreciation in, portfolio investments are not included within total investment
income. However, consistent with one of the Company's long-term goals of
achieving net investment income and increased earnings stability in future
years, a significant proportion of new portfolio investments are structured so
as to provide a current yield through interest or dividends. The Company also
earns interest on short term investments of cash funds.
During the current year, second quarter total investment income of
$459,994 was approximately 33% greater than total investment income of $345,608
for the prior year second quarter. In the current year second quarter as
compared to the prior year second quarter, interest income increased $122,039,
dividend income decreased $10,330, and other income increased $2,677. The
increase in investment income for the current year second quarter was largely
due to the increased investment level and increased interest from new portfolio
investments. The increase in interest income is attributable primarily to the
significant percentage of the new and follow-on portfolio investments made by
the Company since March 31, 1996, that were structured as subordinated
debentures.
7
<PAGE> 8
For the current year six-month period, total income of $927,952 increased
29% over total income of $721,792 in the prior year six-month period. For the
current year six-month period as compared to the prior year six-month period,
interest income increased from $641,004 to $853,822 while dividend income
decreased from $70,581 to $24,941. As indicated above, the increase in
investment income is primarily attributable to the significant percentage of the
new and follow-on portfolio investments made by the Company since March 31,
1996, that were structured as subordinated debentures.
Total operating expenses for the second quarter and six month period of
the current year total $565,685 and $1,096,370, respectively, increases of
approximately 12% and 10%, respectively, as compared to total operating
expenses for the prior year second quarter of $506,209 and six-month period of
$999,552. Management fees increased from $156,440 to $171,146 in the current
year second quarter as compared to the prior year second quarter due to the
increase in assets under management. The increase of $41,656 in other operating
expenses during the current year period as compared to the prior year period
was due primarily to the devaluation of an escrow asset in the amount of
$32,296.
During the current year second quarter and six month period, the Company
recorded a net realized gain on investments before income taxes of $658,619 and
$661,053, respectively, as compared with a net realized gain on investments
before income taxes during the prior year second quarter and six month period
of $157,638 and $658,404, respectively. The higher level of net realized gains
on investments during the current year second quarter as compared to the
current year first quarter of $2,434 is consistent with the expectations of
management expressed in the Company's quarterly report on Form 10-Q for the
three months ended December 31, 1996. Management does not attempt to maintain a
comparable level of realized gains from year to year or quarter to quarter but
instead attempts to maximize total investment portfolio appreciation through
realizing gains in the disposition of securities and investing in new portfolio
investments.
[Remainder of page intentionally left blank]
8
<PAGE> 9
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has relied upon several sources to fund its
investment activities, including the Company's U.S. treasury bills, cash
equivalents and cash, and the Small Business Investment Company ("SBIC")
capital program operated by the Small Business Administration (the "SBA").
The Company, through its wholly-owned subsidiary, MorAmerica Capital, from
time to time may seek to procure additional capital through the SBIC capital
program to provide a portion of its future investment capital requirements. At
present, there is availability of capital through the SBIC capital program and
the Company anticipates that there will be capital available in future periods.
The Company also believes that federal legislation which permits SBICs to
obtain debt financing from federal home loan banks may provide an additional
future source of debt financing for the Company.
As of March 31, 1997, the Company's U.S. treasury bills, certificates of
deposit and cash totaled $11,571,697. The Company believes that this provides
adequate funds for the Company's planned $8,500,000 in new and follow-on
investment activities during the current fiscal year, of which $3,761,063 was
invested during the first six months of the current fiscal year. The Company
does not now need additional capital to meet its anticipated cash requirements
over the next twelve months, including investment activities, operating
expenses and odd-lot shareholder stock repurchases.
Liquidity through 1999 will not be impacted by principal payments on the
Company's debentures payable because there are no scheduled principal payments
until 2000. Debentures payable are composed of $10,290,000 in principal amount
of SBA-guaranteed debentures issued by the Company's subsidiary, MorAmerica
Capital, which mature as follows: $2,450,000 in 2000, $5,690,000 in 2001 and
$2,150,000 in 2003.
While additional capital is not anticipated to be required during the
current fiscal year, the Company anticipates that it may seek additional
capital in future years, either in the form of additional SBA-guaranteed
debentures or participating securities issued by MorAmerica Capital or in the
form of common stock of the Company, to fund growth of the Company, to meet
principal payments as the outstanding SBA-guaranteed debentures become due and
payable and for other corporate purposes.
9
<PAGE> 10
PORTFOLIO ACTIVITY
During the three months ended March 31, 1997, the Company invested
$300,000 in follow-on investments in two portfolio companies. For the six
months ended March 31, 1997, the Company made total investments of $3,761,062
in nine portfolio companies, consisting of $2,906,372 invested in three new
portfolio companies and $854,690 invested in follow-on investments in six
existing portfolio companies. Subsequent to the date of this Report on Form
10-Q, the Company invested $2,887,885 in three new portfolio companies, and as
of the end of April, 1997, the Company had made total new and follow-on
investments of $6,648,947. The Company's investment level objectives for
fiscal year 1997 call for total new and follow-on investments of $8,500,000.
Based upon the total amount of new and follow-on investments made as of the end
of April, 1997, which represents 78.2% of the Company's 1997 investment goal,
the Company anticipates that it will achieve its investment level objectives
for the current fiscal year. However, management views investment level
objectives for any given year as secondary in importance to the Company's
overriding concern of investing in only those portfolio companies which satisfy
the Company's investment criteria.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Company's outstanding common stock is
determined quarterly, as soon as practicable after and as of the end of each
calendar quarter, by dividing the value of total assets minus total liabilities
by the total number of shares outstanding at the date as of which the
determination is made.
In calculating the value of total assets, securities that are traded in
the over-the-counter market or on a stock exchange are valued in accordance
with the current valuation policies of the Small Business Administration
("SBA"). Under SBA regulations, publicly traded equity securities are valued
by taking the average of the closing prices (or bid prices in the case of
over-the-counter equity securities) for the valuation date and the preceding
two days. This policy differs from the Securities and Exchange Commission's
guidelines which utilize only a one day price measurement. The Company's use
of SBA valuation procedures did not result in a material variance as of March
31, 1997, from valuations using the Securities and Exchange Commission's
guidelines.
All other investments are valued at fair value as determined in good faith
by the Board of Directors. The Board of Directors has determined that all
other investments will be valued initially at cost, but such valuation will be
subject to semi-annual adjustments if the Board of Directors determines in good
faith that cost no longer represents fair value.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no items to report.
ITEM 2. CHANGES IN SECURITIES
At its Annual Meeting on February 25, 1997, the Board of Directors
declared a stock dividend of 10% payable to shareholders of record as of March
14, 1997 and payable on March 31, 1997. On March 31, 1997 total outstanding
shares increased from 964,098 to 1,058,961. In addition, on February 25, 1997,
the Company held its 1997 Annual Meeting of Shareholders (the "Meeting") in
Cedar Rapids, Iowa. At the Meeting, the shareholders approved a proposed
amendment to the Company's Certificate of Incorporation, increasing the number
of authorized shares of common stock of the Company from 2,000,000 to
4,000,000. The Company's Certificate of Incorporation was amended accordingly
on March 11, 1997.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There are no items to report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
On February 25, 1997, the Company's 1997 Annual Meeting of Shareholders
(the "Meeting") was held in Cedar Rapids, Iowa. A quorum of 596,991 shares, or
approximately 61.5% of issued and outstanding shares as of December 31, 1996,
were represented in person or by proxy at the Meeting. The shareholders
considered four proposals at the Meeting.
With respect to the first proposal, by a vote of 584,213 shares in favor
of and 12,778 shares against, the shareholders elected three directors to serve
until the 2000 Annual Meeting of Shareholders or until their respective
successors shall be elected and qualified. These directors and the votes cast
in favor of and withheld with respect to each are as follows:
11
<PAGE> 12
<TABLE>
<CAPTION>
Director For Withheld
--------------- ------- --------
<S> <C> <C>
Todd J. Stevens 577,758 14,401
Henry T. Madden 578,715 13,444
John D. Wolfe 566,018 26,141
</TABLE>
With regard to the second proposal, the shareholders voted to ratify the
appointment of KPMG Peat Marwick LLP as independent auditors for the Company
for Fiscal Year 1997 by a vote of 577,254 in favor of ratification and 3,588
against ratification, with 16,149 shares abstaining.
The third proposal, to amend the Company's Certificate of Incorporation to
increase the number of authorized shares of common stock from 2,000,000 to
4,000,000, was approved by the shareholders. With respect to this third
proposal, the shareholders voted 512,183 in favor of the proposal and 50,759
against the proposal, with 34,049 shares abstaining.
The fourth proposal, to approve for a one-year period the policy and
practice of the Company of issuing shares of common stock of the Company at
less than net asset value per share, did not receive the vote required for
approval by the shareholders. With respect to this fourth proposal, the
shareholders voted 392,014 in favor of the proposal and 84,797 against the
proposal, with 40,786 and 79,394 abstentions and broker nonvotes, respectively.
ITEM 5. OTHER INFORMATION
There are no items to report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(3)(i)(a) Certificate of Incorporation of MACC Private
Equities Inc.
(3)(i)(b) Articles of Amendment to the Certificate of
Incorporation of MACC Private Equities Inc.,
dated March 11, 1997
(27) Financial Data Schedule
No other exhibits are applicable.
12
<PAGE> 13
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the three months ended
March 31, 1997.
[Remainder of page intentionally left blank]
13
<PAGE> 14
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.
MACC PRIVATE EQUITIES INC.
Date: 5/12/97 By: /s/ David Schroder
------------------------ --------------------------------
David Schroder, President
Date: 5/12/97 By: /s/ Robert A. Comey
------------------------ --------------------------------
Robert A. Comey, Treasurer
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
--------- ----------- ----
<S> <C> <C>
(3)(i)(a) Certificate of Incorporation 12
of MACC Private Equities Inc.
(3)(i)(b) Articles of Amendment to the 12
Certificate of Incorporation of
MACC Private Equities Inc.,
dated March 11, 1997
(27) Financial Data Schedule 16
</TABLE>
15
<PAGE> 1
CERTIFICATE OF INCORPORATION
OF
MACC PRIVATE EQUITIES INC.
ARTICLE I
NAME
The name of this Corporation is MACC PRIVATE EQUITIES INC., hereinafter
sometimes referred to as the "Corporation."
ARTICLE II
PURPOSE
The purpose of this Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
ARTICLE III
DURATION
The period of the Corporation's duration is perpetual.
ARTICLE IV
POWERS
The Corporation shall have all powers granted to corporations under the
General Corporation Law of Delaware, as amended.
ARTICLE V
AUTHORIZED SHARES
The total number of shares of stock of all classes which the Corporation
shall have authority to issue is two million (2,000,000) shares of a single
class of voting common stock and the par value of each such share is One Cent
($0.01) amounting in the aggregate to Twenty Thousand Dollars ($20,000.00).
<PAGE> 2
ARTICLE VI
RIGHTS AND PRIVILEGES
The shares designated as Common Stock shall have identical rights and
privileges in every respect. No shareholder or other person shall have any
pre-emptive right whatsoever.
ARTICLE VII
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is 1209
Orange Street, Wilmington, Delaware 19801, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
ARTICLE VIII
BY-LAWS
The Board of Directors is authorized to make, alter or repeal the By-laws
of the Corporation.
ARTICLE IX
BOARD OF DIRECTORS
A. Number and Term. The number and term of office of the
directors of the Corporation shall be as prescribed in the Corporation's
By-laws.
B. Vacancy. Any vacancy on the Board of Directors arising from
the death, resignation, retirement, disqualification or removal from office of
one or more directors shall be filled as prescribed in the By-laws.
C. Nomination. The method of nomination and conduct of the
election of directors at the annual meeting of shareholders shall be prescribed
in the By-laws. Election of directors need not be by written ballot.
ARTICLE X
NO SHAREHOLDER ACTION BY WRITTEN CONSENT
Any action required or permitted to be taken at any annual or special
meeting of shareholders of the Corporation must be effected at a duly called
annual or special meeting of the shareholders and may not be effected by
written consent of the shareholders.
<PAGE> 3
ARTICLE XI
LIMITATION OF LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for a breach of fiduciary
duty as a director, except for liability (a) for any breach of the
director's duty of loyalty to the Corporation or its shareholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the Delaware General
Corporation Law or (d) for any transaction from which the director derived any
improper personal benefit.
If the Delaware General Corporation Law hereafter is amended to further
eliminate or limit the liability of a director, then a director of the
Corporation, in addition to the circumstances in which a director is not
personally liable as set forth in the preceding sentence, shall not be liable
to the fullest extent permitted by the amended Delaware General Corporation
Law.
Any repeal or modification of the foregoing paragraphs by the shareholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE XII
INCORPORATOR
The name and mailing address of the sole incorporator is as follows:
David E. Gardels
1800 One First National Center
Omaha, Nebraska 68102
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this Certificate, hereby acknowledging, declaring
and certifying that the foregoing instrument is the act and deed of said Sole
Incorporator and the facts herein stated are true, and accordingly have
hereunto caused to be set his authorized signature this second day of March,
1994.
/s/David E. Gardels
-------------------------
David E. Gardels
Sole Incorporator
0859d
<PAGE> 1
ARTICLES OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
Pursuant to the provisions of the General Corporation Law of Delaware, the
undersigned Corporation adopts the following Articles of Amendment to its
Certificate of Incorporation:
FIRST: The name of the Corporation is MACC Private Equities Inc.
SECOND: The following amendment to the Certificate of Incorporation
contained in the following resolution was adopted by the
shareholders of the Corporation as of February 25, 1997,
in the manner prescribed by the General Corporation Law of
Delaware:
RESOLVED, that the Corporation's Certificate of
Incorporation be, and hereby is, amended by deleting the
current "ARTICLE V" thereof, and substituting the following:
ARTICLE V
AUTHORIZED SHARES
The total number of shares of stock of all classes
which the Corporation shall have authority to issue is four
million (4,000,000) shares of a single class of voting
common stock and the par value of each such share is One
Cent ($.01) amounting in the aggregate to Forty Thousand
Dollars ($40,000.00).
THIRD: Consent to the foregoing amendment has been given by all of the
directors and by the holders of a majority of the shares
entitled to vote on such amendment.
FOURTH: There is no exchange, reclassification or cancellation of
issued shares provided for in this amendment.
FIFTH: A change has been made in the amount of stated capital. The
number of authorized shares of common stock has, by virtue of
this amendment, been increased by two million (2,000,000).
The par value of each share of common stock has remained the
same. The amount of stated capital as changed by such
amendment has thereby been increased from $20,000.00 to
$40,000.00.
<PAGE> 2
DATED as of this 11th day of March, 1997.
MACC Private Equities Inc.,
a Delaware Corporation
By /s/ David R. Schroder
-----------------------------------
David R. Schroder, President
ATTEST:
/s/ David R. Schroder
- -----------------------------------
David R. Schroder, Secretary
1159/4-5
-2-
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