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UNITED STATES
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 October 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 000-29665
EXCELSIOR VENTURE PARTNERS III, LLC
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 13-4102528
(State or Other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
114 WEST 47TH STREET
NEW YORK, NY 10036-1532
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 852-1000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to 12(g) of the Act: NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or Section 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]
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's prospectus, dated November 20, 2000 (the
"Prospectus") as filed with the Securities and Exchange Commission on
November 27, 2000 pursuant to Rule 497 of the Securities Act of 1933 are
hereby incorporated by reference.
TABLE OF CONTENTS
Form 10-K
Item No. Report Page
- -------- -----------
PART I
1. Business 1
2. Properties 1
3. Legal Proceedings 1
4. Submission of Matters to a Vote of Security Holders 1
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 1
6. Selected Financial Data 1
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 1
7A. Quantitative and Qualitative Disclosures About Market Risk 2
8. Financial Statements and Supplementary Data 2
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 6
PART III
10. Managers and Executive Officers of the Registrant 7
11. Executive Compensation 8
12. Security Ownership of Certain Beneficial Owners and Management 8
13. Certain Relationships and Related Transactions 9
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 9
PART I
ITEM 1. BUSINESS.
The Company is currently in its offering period and, as of the
date hereof, has not accepted any subscriptions from investors or commenced
any investment operations. The first subscription closing will be held on
or about the fifth business day after receipt of subscriptions totaling
$100,000,000. We may continue to offer units of membership interest and
accept subscriptions at subsequent closings until May 11, 2001. For
additional information concerning the Company, the sections entitled "The
Company," "Investment Objective and Policies," "Risk Factors," "The
Offering" and "Management" are hereby incorporated by reference from the
Prospectus.
ITEM 2. PROPERTIES.
The Company does not own or lease physical properties.
ITEM 3. LEGAL PROCEEDINGS.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There will be no established public trading market for the
Company's units of membership interest. There was one (1) unit of
membership interest outstanding as of October 31, 2000. For additional
information concerning the unitholders, the section entitled "Description
of Units" is incorporated by reference from the Prospectus.
ITEM 6. SELECTED FINANCIAL DATA.
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
1
RESULTS OF OPERATIONS
As of October 31, 2000, the Company was still in the offering
period. The Company is offering investors the opportunity to subscribe to
make capital contributions to the Company in exchange for units of
membership interest in the Company. Units of membership interest are made
available through Charles Schwab & Co., Inc. as principal distributor and
may be sold by the distributor to investors directly or through financial
intermediaries acting as broker or agent for their customers. The Company
filed a post-effective amendment to its registration statement on November
14, 2000 lowering the minimum subscription amount required for the first
subscription closing from $250,000,000 to $100,000,000. If subscriptions
for at least $100,000,000 have not been received by May 11, 2001, the
offering will terminate.
LIQUIDITY AND CAPITAL RESOURCES
For information concerning liquidity and capital resources, the
section entitled "Use of Proceeds" is incorporated by reference from the
Prospectus.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Independent Auditors' Report
Statement of Assets and Liabilities as of October 31, 2000
Notes to Statement of Assets and Liabilities
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.
-2-
Please refer to attached pages for above-referenced Financial
Statements and Supplementary Data.
REPORT OF INDEPENDENT AUDITORS
To the Members and Board of Managers
Excelsior Venture Partners III, LLC
We have audited the accompanying statement of assets and liabilities of
Excelsior Venture Partners III, LLC (the "Fund") as of October 31, 2000.
This statement of assets and liabilities is the responsibility of the
Fund's management. Our responsibility is to express an opinion on this
statement of assets and liabilities based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
statement of assets and liabilities is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the statement of assets and liabilities. 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 audit provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of
Excelsior Venture Partners III, LLC at October 31, 2000, in conformity with
accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
New York, New York
January 19, 2001
-3-
- ---------------------------------------------------------------------------
Excelsior Venture Partners III, LLC
Statement of Assets and Liabilities
- ---------------------------------------------------------------------------
October 31, 2000
- ---------------------------------------------------------------------------
ASSETS:
Cash.......................................................... $ 500
Deferred offering costs..................................... 1,356,200
- ---------------------------------------------------------------------------
TOTAL ASSETS......................................... 1,356,700
-----------
- ----------------------------------------------------------------------------
LIABILITIES:
Offering costs payable..................................... 1,356,200
------------
- ----------------------------------------------------------------------------
TOTAL LIABILITIES.................................... 1,356,200
------------
- ---------------------------------------------------------------------------
NET ASSETS.................................................. $ 500
============
MEMBERSHIP INTERESTS OUTSTANDING............................ 1
============
NET ASSET VALUE PER UNIT ................................... $ 500
------------
===========================================================================
NET ASSETS CONSISTED OF THE FOLLOWING AT OCTOBER 31, 2000:
Paid-in capital........................................... $ 500
-----------
NET ASSETS........................................... $ 500
===========
===========================================================================
Notes to Statement of Assets and Liabilities are an integral part of
this Statement.
-4-
EXCELSIOR VENTURE PARTNERS III, LLC
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
NOTE 1 - ORGANIZATION
Excelsior Venture Partners III, LLC (the "Company") is a
non-diversified, closed-end management investment company which
has elected to be treated as a business development company under
the Investment Company Act, and which has registered its
securities for sale under the Securities Act of 1933, as amended.
The Company was established as a Delaware limited liability
company on February 18, 2000 and maintains a fiscal year end of
October 31. The Company is authorized to offer an unlimited number
of units of membership interest ("units") with no par value. The
minimum subscription is $100,000.
Certain costs incurred and to be incurred in connection with the
initial offering of units of the Company are estimated at
$1,356,200. Each member's share of these costs will be deducted
from his or her capital contribution on or shortly after the final
subscription closing. The Company has no operations to date, other
than the sale to David Fann, President and co-CEO of the Company,
of one unit on July 7, 2000.
NOTE 2 - OFFERING COSTS
The Company estimates incurring offering expenses of $1,356,200,
comprised of $1,025,000 for legal and consulting, $30,000 for
printing, $50,000 for advertising and marketing, $231,200 in
registration, and $20,000 in other offering costs.
NOTE 3 - CONTINGENT LIABILITIES
The Company has entered into an agreement with Charles Schwab &
Co., Inc. ("Schwab" or the "Distributor") whereby Schwab will pay
the organizational expenses of the Company if the Company receives
less than $300,000,000 in subscriptions from its initial public
offering of units. In the event the Company does receive
subscriptions totaling $300,000,000 or more, the Company will pay
its own organizational expenses, and each member's share of these
costs will be deducted from his or her initial capital
contribution on or shortly after the final subscription closing.
The Company estimates organizational expenses to be $50,000,
comprised of $10,000 for audit fees and $40,000 for legal and
consulting fees.
NOTE 4 - AGREEMENTS
In return for its services and expenses which the investment
adviser assumes under the Investment Advisory Agreement, the
Company will pay the investment adviser, on a quarterly basis, a
management fee at an annual rate equal to 2.00% of the Company's
average quarterly net assets through the fifth anniversary of the
final closing date and 1.00% of net assets thereafter. In addition
to the management fee, the investment adviser is entitled to
allocations and distributions equal to the "Incentive Carried
Interest." The Incentive Carried Interest is an amount equal to
20% of the Company's cumulative realized capital gains on all
direct investments determined net of cumulative realized and
unrealized losses on all investments of any type. The Incentive
Carried Interest will be determined annually as of the end of each
calendar year.
Pursuant to an Administrative, Accounting and Investor Services
Agreement, the Company retains PFPC Inc. ("PFPC"), an indirect
wholly-owned subsidiary of PNC Bank N.A., as administrator. In
addition, PFPC Trust Company serves as the Fund's custodian, and
PFPC serves as transfer agent.
The investment adviser or an affiliate will pay the Distributor
from its own assets an amount
-5-
equal to 0.02% of the total of all subscriptions received in this
offering. Pursuant to the Distribution Agreement, the Distributor
may enter into agreements with one or more financial
intermediaries ("Selling Agents") relating to the purchase of
units through such Selling Agents acting as brokers or agents for
their customers. The investment adviser or an affiliate will pay
the Distributor an on-going fee for the sale of units and the
provision of ongoing investor services in an amount equal to the
annual rate of 0.45% of the average quarterly net asset value of
all outstanding units held by investors introduced to the Company
by the Distributor through the fifth anniversary of the final
subscription closing date and at the annual rate of 0.22%
thereafter, subject to elimination upon all such fees totaling
6.5% of the gross proceeds received by the Company from this
offering.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
-6-
PART III
ITEM 10. MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Set forth below are names, ages, positions and certain other
information concerning the current managers and executive officers of the
Company as of October 31, 2000.
SERVED IN PRESENT
NAME AND AGE POSITION CAPACITY SINCE
David I. Fann 36 President and July 20, 2000
Co-Chief Executive Officer
Douglas A. Lindgren 38 Co-Chief Executive Officer July 20, 2000
and Chief Investment Officer
Alan M. Braverman 39 Executive Vice President September 6, 2000
Brian F. Schmidt 41 Chief Financial Officer and July 20, 2000
Treasurer
Frank D. Bruno 40 Assistant Treasurer July 20, 2000
Lee A. Gardella 33 Vice President July 20, 2000
James F. Rorer 30 Vice President July 20, 2000
James F. Dorment 27 Chief Administrative Officer July 20, 2000
and Secretary
John C. Hover II* 57 Chairman of the Board
and Manager May 26, 2000
Gene M. Bernstein 53 Manager May 26, 2000
Stephen V. Murphy 55 Manager May 26, 2000
Victor F. Imbimbo, Jr. 48 Manager May 26, 2000
* Indicates manager who is an "interested person" of the Company within
the meaning of the Investment Company Act of 1940.
Additional information concerning the managers and executive
officers of the Company is incorporated herein by reference from the
section entitled "Management - Board of Managers, Officers and Investment
Professionals" in the Prospectus.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, the Company's managers and
executive officers and any persons holding more than 10% of the Company's
units are required to report their ownership of units and any changes in
the ownership of the Company's units to the Company and the Securities and
Exchange Commission. These filings have all been satisfied by the Company's
managers and executive officers.
-7-
ITEM 11. EXECUTIVE COMPENSATION.
The Company has no full-time employees. Pursuant to the investment
advisory agreement, the investment adviser employs and compensates all of
the personnel of the Company, and also furnishes all office facilities,
equipment, management and other administrative services required for the
operation of the Company. In consideration of the services rendered by the
investment adviser, the Company will pay a management fee based upon
average quarterly net assets and an incentive fee based in part on a
percentage of realized capital gains of the Company.
Upon commencement of the Company's operations, managers will
receive compensation of $7,000 annually and $2,000 per meeting attended
plus reasonable expenses. The Company does not have a stock option plan,
other long-term incentive plan, retirement plan or other retirement
benefits.
The following chart provides certain information about the fees
received by the managers in the fiscal year ended October 31, 2000.
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM THE COMPANY
FROM AND FUND COMPLEX *
NAME OF PERSON/POSITION THE COMPANY PAID TO DIRECTORS
----------------------- ----------- -----------------
John C. Hover II**
Manager None $46,375 (4 Funds)
Gene M. Bernstein
Manager None $56,625 (5 Funds)
Stephen V. Murphy
Manager None $56,625 (5 Funds)
Victor F. Imbimbo, Jr.
Manager None $48,125 (5 Funds)
* The "Fund Complex" consists of UST Private Equity Investors Fund,
Inc., Excelsior Private Equity Fund II, Inc., Excelsior Venture
Partners III, LLC, Excelsior Venture Investors III, LLC and Excelsior
Hedge Fund of Funds I, LLC.
** Mr. Hover is an interested person of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of October 31, 2000, Mr. Fann, the Co-Chief Executive Officer
and President was the sole unitholder of the Company. No other person or
group is known to be the beneficial owner of the Company's units.
AMOUNT AND NATURE
OF BENEFICIAL
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (#) PERCENT OF CLASS (%)
- -------------- ------------------------------------ ----------------- -------------------
Units of David I. Fann 1 unit 100
membership c/o United States Trust Company of New York
interest 114 West 47th Street
New York, NY 10036-1532
Managers and executive officers 1 unit 100
As a group (1 person)
-8-
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has engaged in no transactions with the managers or
executive officers other than as described above, in the notes to the
financial statements, or in the Prospectus.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements
Independent Auditors' Report
Statement of Assets and Liabilities as of October 31, 2000
Notes to Statement Assets and Liabilities
2. Exhibits
(3)(a) Certificate of Formation of Limited Liability
Company (1)
(3)(b) Certificate of Amendment (1)
(3)(c) Form of Limited Liability Company Operating
Agreement (1)
(4) For instruments defining the rights of security
holders see Exhibits (3)(a), (b) and (c),
(10)(h),(i),(j) and (k) hereto and the Specimen
Certificate of the Company's units (1)
(10)(a) Form of Investment Advisory Agreement (l)
(10)(b) Form of Investment Sub-Advisory Agreement (1)
(10)(c) Form of Distribution Agreement (1)
(10)(d) Form of Selling Agent Agreement (l)
(10)(e) Form of Custodian Agreement (1)
(10)(f) Form of Administration, Accounting and Investor
Services Agreement (1)
(10)(g) Form of Escrow Agreement (1)
(10)(h) Form of Subscription Agreement for investment
in units of the Company (1)
(10)(i) Form of Subscription Agreement with Charles
Schwab & Co., Inc. for investment in units of
the Company (1)
(10)(j) Agreement with respect to Seed Capital (1)
(10)(k) Form of Subscription Agreement between the Company
and Excelsior Venture Investors III, LLC (1)
(23) Consent of Independent Auditors
(99)(a) Audit Committee Charter
-9-
(99)(b) Prospectus of the Company dated November 20,
2000 as filed with the Securities and Exchange
Commission on November 27, 2000 pursuant to Rule
497 of the Securities Act (1)
(1) Incorporated by reference to the Company's Registration
Statement on Form N-2/A as filed with the Securities and Exchange
Commission on August 10, 2000 (File No. 333-30986).
(b) 1. Reports on Form 8-K
None
-10-
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.
EXCELSIOR VENTURE PARTNERS III, LLC
Date: January 29, 2001 By: /s/ DAVID I. FANN
--------------------------------
David I. Fann, Co-Chief Executive
Officer and President
(principal executive officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ DAVID I. FANN Co-Chief Executive Officer January 29, 2001
- ------------------ and President (principle
David I. Fann executive officer)
/s/ DOUGLAS A. LINDGREN Co-Chief Executive Officer January 29, 2001
- ----------------------- and Chief Investment Officer
Douglas A. Lindgren (principle executive officer)
/s/ BRIAN F. SCHMIDT Chief Financial Officer January 29, 2001
- --------------------------- (principal financial
Brian F. Schmidt and accounting officer)
/s/ JOHN C. HOVER II Chairman of the Board January 29, 2001
- -------------------------- and Manager
John C. Hover II
/s/ GENE M. BERNSTEIN Manager January 29, 2001
- -----------------------
Gene M. Bernstein
/s/ STEPHEN V. MURPHY Manager January 29, 2001
- ---------------------
Stephen V. Murphy
/s/ VICTOR F. IMBIMBO, JR Manager January 29, 2001
- --------------------------
Victor F. Imbimbo, Jr.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT
REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
No annual report or proxy material has been, or will be, furnished to
security holders for the fiscal year ended October 31, 2000.