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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 April 30, 1996
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: 0-24856
UST PRIVATE EQUITY INVESTORS FUND, INC.
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(Exact Name of Registrant as Specified in its Charter)
Maryland 13-3786385
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
114 West 47th Street
New York, New York 10036-1332
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (212) 852-1000
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Not applicable
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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___
Indicate the number of shares outstanding of each of Registrant's classes of
common stock as of the latest practicable date. 40,463 shares of common stock.
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INDEX
UST PRIVATE EQUITY INVESTORS FUND, INC.
PART I FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited).
Portfolio of Investments as of April 30, 1996 (Unaudited) and
October 31, 1995.
Statement of Assets and Liabilities as of April 30, 1996
(Unaudited) and October 31, 1995.
Statement of Operations for the three month period ended April 30,
1996 (Unaudited) and the six month period ended April 30,
1996 (Unaudited).
Statement of Changes in Net Assets for the six month period
ended April 30, 1996 (Unaudited).
Notes to Financial Statements (Unaudited).
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II OTHER INFORMATION
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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.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
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<CAPTION>
UST Private Equity Investors Fund, Inc. Fiscal Year End: October 31, 1996
Portfolio of Investments Quarter Ended: April 30, 1996
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April 30, 1996 October 31, 1995
(Unaudited) ----------------------
---------------
<S> <C> <C> <C> <C>
PORTFOLIO STRUCTURE
PORTFOLIO COMPANIES $3,485,000 8.58% $ -- --
PRIVATE FUNDS 1,199,971 2.95% -- --
SHORT-TERM INVESTMENTS
Commercial Paper 9,142,633 22.51% 9,399,238 23.41%
Repurchase Agreements 8,511,251 20.95% 3,646,000 9.08%
Corporate Bonds 8,247,792 20.30% 4,905,479 12.22%
U.S. Government & Agency Obligations 5,517,846 13.58% 993,890 2.48%
Bank Notes 994,820 2.45% 992,428 2.47%
Certificates of Deposit -- -- 7,000,000 17.43%
Other Short-term Investments 3,268,903 8.05% 2,619,371 6.52%
---------- --------- ---------- --------
TOTAL INVESTMENTS 40,368,216 99.37% 29,556,406 73.61%
OTHER ASSETS & LIABILITIES (NET) 256,392 0.63% 10,596,033 26.39%
----------- --------- ----------- ---------
NET ASSETS $40,624,608 100.00% $40,152,439 100.00%
========== ========== ========== =======
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<CAPTION>
UST Private Equity Investors Fund, Inc. Fiscal Year End: October 31, 1996
Statement of Assets and Liabilities Quarter Ended: April 30, 1996
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ASSETS April 30, 1996 October 31, 1995
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<S> <C> <C>
Investment Securities, at Cost $40,410,933 $29,563,366
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Investment Securities, at Value (includes repurchase 40,368,216 29,556,406
agreements of $8,511,251 at April 30, 1996) (Note 1)
Cash -- 10,977,421
Interest Receivable 300,836 332,614
Receivable From Managing Investment Advisor -- 104,101
Prepaid Assets 80,799 37,133
Unamortized Organization Costs 19,641 28,489
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TOTAL ASSETS 40,769,492 41,036,164
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LIABILITIES
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Payable for Dividends Declared -- 333,081
Managing Investment Advisory Fees Payable 39,689 --
Administration Fees Payable 22,460 7,541
Directors Fees Payable 14,919 30,000
Payable for Offering and Organization Costs -- 407,748
Accrued Expenses and Other Payables 67,816 105,355
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TOTAL LIABILITIES 144,884 883,725
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NET ASSETS $ 40,624,608 $ 40,152,439
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NET ASSETS CONSIST OF
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Accumulated Undistributed Net Investment Income $ 551,249 $ 42,802
Accumulated Net Realized Loss on Investments (521) --
Net Unrealized Depreciation of Investments (42,717) (6,960)
Par Value 405 405
Paid In Capital in Excess of Par Value 40,116,192 40,116,192
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TOTAL NET ASSETS $40,624,608 $40,152,439
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Shares of Common Stock Outstanding; par value
$.01; 100,000 shares authorized 40,463 40,463
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NET ASSET VALUE PER SHARE $1,003.99 $992.32
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<CAPTION>
UST Private Equity Investors Fund, Inc. Fiscal Year End: October 31, 1996
Statement of Operations (Unaudited) Quarter Ended: April 30, 1996
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Quarter Ended November 1, 1995 to
INVESTMENT INCOME April 30, 1996 April 30, 1996
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<S> <C> <C>
Interest Income $ 500,610 $ 1,073,064
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TOTAL INCOME 500,610 1,073,064
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EXPENSES
Management Investment Advisory Fees 82,386 152,815
Administrative Fees 7,378 14,919
Shareholder Servicing Fees 5,005 10,428
Custodial Fees 1,002 2,015
Legal fees 8,522 20,948
Audit and Other Professional Service Fees 5,941 12,854
Directors' Fees and Expenses 7,378 14,919
Shareholder Reports 2,676 6,304
Organization Expenses 1,476 2,988
Insurance Expense 18,493 37,395
Other -- 251
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TOTAL EXPENSES 140,257 275,836
Fees Waived and Reimbursed by Advisor (43,823) (100,671)
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NET EXPENSES 96,434 175,165
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NET INVESTMENT INCOME 404,176 897,899
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REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Security Transactions $ 121 $ (521)
Change in Unrealized Depreciation on Investments (57,388) (35,757)
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NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS (57,267) (36,278)
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NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 346,909 $ 861,621
============ ============
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<CAPTION>
UST Private Equity Investors Fund, Inc. Fiscal Year End: October 31, 1996
Statement of Changes in Net Assets (Unaudited) Quarter Ended: April 30, 1996
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November 1, 1995 to
April 30, 1996
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<S> <C>
OPERATIONS:
Net Investment Income $ 897,899
Net Realized Loss on Investments (521)
Change in Unrealized Depreciation on Investments (35,757)
------------
Net Increase in Net Assets Resulting From Operations 861,621
DISTRIBUTIONS TO SHAREHOLDERS:
From Net Investment Income (389,452)
---------
NET INCREASE IN NET ASSETS 472,169
NET ASSETS:
Beginning of Period 40,152,439
----------
472,169
End of Period (including accumulated undistributed
net investment income of $147,043) $ 40,624,608
==========
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UST PRIVATE EQUITY INVESTORS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
UST Private Equity Investors Fund, Inc. ("the Company") was
incorporated under the laws of the State of Maryland on September 16, 1994
and is registered under the Securities Act of 1933, as amended, as a
non-diversified, closed-end management investment company which has elected
to be treated as a business development company under the Investment Company
Act of 1940, as amended. The Company commenced operations on August 1, 1995.
Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Reference is made to
the Company's annual report included in Form 10-K as filed with the
Securities and Exchange Commission for the notes to the Financial Statements
that remain unchanged.
The following is a summary of the Company's significant accounting
policies.
(a) Portfolio valuation:
The Company values portfolio securities quarterly and at other such
times as in the Board of Directors' view, as circumstances warrant. Investments
in securities that are traded on a recognized stock exchange or on the national
securities market are valued at the last sale price for such securities on the
valuation date. Short-term debt instruments with remaining maturities of
60 days or less are valued at amortized cost, which approximates market
value. Securities and other assets for which market quotations are not
readily available are valued, pursuant to guidelines adopted by the Investment
Advisor, under the supervision of the Board of Directors.
(b) Federal income taxes:
It is the policy of the Company to continue to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code and distribute substantially all of its taxable income to its
shareholders. Therefore, no federal income or excise tax provision is
required.
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2. Purchases and Sales of Securities
Purchases of securities for the six month period ended April 30, 1996,
excluding short-term investments, for the Company aggregated $8,729,996. There
were no long-term sales. As of April 30, 1996, the Company has committed to
purchase $8,800,029 in long-term securities consisting of portfolio companies
and private funds.
Item 2. Management's Discussion and Analysis of Financial Condition and
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Results of Operations.
---------------------
Results of Operations
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UST Private Equity Investors Fund, Inc.'s (the "Company") net asset value per
common share was $1,003.99 at April 30, 1996, up $11.67 per share from the net
asset value per common share of $992.32 at October 31, 1995. This increase is
primarily the result of interest income earned by the Company net of
depreciation of its short-term securities holdings and expenses of the Company.
Realized and Unrealized Gains and Losses from
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Portfolio Investments
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For the three months ended April 30, 1996, the Company had a $57,267 net
realized and unrealized loss from investments, comprised of $121 net realized
gain on security transactions related to short-term investments and a $57,388
increase in net unrealized depreciation on investments. For the six months ended
April 30, 1996, the Company had a $36,278 net realized and unrealized loss from
investments, comprised of $521 net realized loss on security transactions
related to short-term investments and a $35,757 increase in net unrealized
depreciation on investments.
Investment Income and Expenses
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The Company earned net investment income totaling $404,176 and $897,899 for the
three month and six month period ended April 30, 1996, respectively. The
Company's net investment income for the three month and six month periods ended
April 30, 1996 were primarily the result of interest from portfolio investments
net of operating expenses.
United States Trust Company of New York (the "Managing Investment Adviser")
provides investment management and administrative services required for the
operation of the Company. In consideration of the services rendered by the
Managing Investment Adviser, the Company pays a management fee based upon a
percentage of the net assets of the Company invested or committed to be invested
in certain types of investments and an incentive fee based in part on a
percentage of realized capital gains of the Company. Such fee is determined and
payable quarterly. For the three month and six month periods ended April 30,
1996, the Managing Investment Adviser earned $82,326, and $152,815 in management
fees, respectively. For the same periods, the Managing Investment Adviser
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reimbursed other operating expenses of the Company in the amount of $43,823 and
$100,671 as a result of expenses incurred in excess of those permitted pursuant
to the Company's Prospectus.
Net Assets
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At April 30, 1996, the Company's net assets were $40,624,608, an increase of
$472,169 from net assets of $40,152,439 at October 31, 1995. The net asset value
per share of common stock was $1003.99, up $11.67 from $992.32 per share at
October 31, 1995.
Liquidity and Capital Resources
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The Company focuses its investments in the private equity securities of
later-stage venture capital companies and middle-market companies which the
Company believes offer significant long-term capital appreciation. The Company
may offer managerial assistance to certain of these companies. The Company
invests its available cash in short-term investments and marketable securities
to provide the liquidity necessary to make portfolio investments as investment
opportunities arise.
On April 30, 1996, the Company held no cash and held $35,683,245 in short-term
investments, compared to $10,977,421 in cash and $29,556,406 in short-term
investments at October 31, 1995. These changes from October 31, 1995 were
primarily the result of the Company's investment activities for the six months
ended April 30, 1996. During the quarter ended April 30, 1996, the Company
invested $1,500,000 in a combination of redeemable and convertible preferred
stock of Comm Site International, Inc. (a private venture capital company
engaged in the business of providing site acquisition and site management
services to the wireless telecommunications industry and based in Vienna,
Virginia). During the quarter ended January 31, 1996, the Company invested
$1,985,000 in a combination of preferred and common stock of Rental Service
Corporation (a private middle-market company engaged in the equipment rental
business and based in the southern United States).
In addition, during the quarter ended April 30, 1996, the Company also committed
to invest in two private funds: Lawrence Smith Horey III (a middle to late stage
venture capital fund based in New York, New York); and Sevin Rosen V (an early
stage venture capital fund with offices in Dallas, Texas and Palo Alto,
California) in the amounts of $2,000,000 each. During the quarter ended January
31, 1996, the Company also committed to invest in three private funds: Brentwood
Associates Buyout Fund II, L.P. (a Los Angeles-based private equity investment
firm); Bruckmann, Rosser & Sherrill & Co., L.P. (a New York-based buyout fund);
and Morgenthaler Venture Partners IV (a Cleveland-based venture capital/buyout
firm) in the amounts of $2,000,000 each. In connection with the Company's
commitments to private funds in the amount of $10,000,000, a total of
$1,199,971, representing capital calls, was paid by the Company; comprised of
$943,058 for the quarter ended April 30, 1996 and $256,913 for the quarter
ended January 31, 1996.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not party to any material pending legal
proceedings.
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 quarter covered by this report.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(27) Financial Data Schedule
(b) Reports on Form 8-K.
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
UST PRIVATE EQUITY INVESTORS FUND, INC.
/s/ David I. Fann
--------------------------------
By: David I. Fann, President
(Principal Executive Officer)
/s/ Brian Schmidt
-------------------------------
By: Brian Schmidt, Treasurer
(Principal Financial and
Accounting Officer)
Date: June 13, 1996
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<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM UST PRIVATE
EQUITY INVESTORS FUND, INC.'S FORM 10-Q FOR THE PERIOD ENDED APRIL 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000930454
<NAME> UST PRIVATE EQUITY INVESTORS FUND, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-1-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 40,411
<INVESTMENTS-AT-VALUE> 40,368
<RECEIVABLES> 301
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 100
<TOTAL-ASSETS> 40,769
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 145
<TOTAL-LIABILITIES> 145
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 40,117
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 40
<ACCUMULATED-NII-CURRENT> 551
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (42)
<NET-ASSETS> 40,625
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,073
<OTHER-INCOME> 0
<EXPENSES-NET> 175
<NET-INVESTMENT-INCOME> 898
<REALIZED-GAINS-CURRENT> (1)
<APPREC-INCREASE-CURRENT> (35)
<NET-CHANGE-FROM-OPS> 862
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (390)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
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<NET-CHANGE-IN-ASSETS> 472
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 153
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<AVERAGE-NET-ASSETS> 40,449
<PER-SHARE-NAV-BEGIN> 992.32
<PER-SHARE-NII> 22.19
<PER-SHARE-GAIN-APPREC> (.90)
<PER-SHARE-DIVIDEND> (9.62)
<PER-SHARE-DISTRIBUTIONS> 0.00
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<PER-SHARE-NAV-END> 1,003.99
<EXPENSE-RATIO> 0.87
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</TABLE>
