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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended March 31, 1996
/ / 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 0-11965
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP
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(Exact name of Registrant as specified in its charter)
California 13-3179284
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
440 Mission Court, Suite 250, Fremont, California 94539
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 656-1855
N/A
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check CK 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 _CK_ No __
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Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
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ASSETS
Cash and cash equivalents $1,272,667 $1,308,343
Royalties receivable 127,428 105,564
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Total assets $1,400,095 $1,413,907
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accrued expenses and other liabilities $ 216,966 $ 250,281
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Contingencies
Partners' Capital
Limited partners (73,903 units issued and outstanding) 1,016,667 999,114
General partner 166,462 164,512
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Total partners' capital 1,183,129 1,163,626
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Total liabilities and partners' capital $1,400,095 $1,413,907
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</TABLE>
The accompanying notes are an integral part of these statements
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PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP
(a limited partnership)
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
----------------------
<S> <C> <C>
1996 1995
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REVENUES
Royalty income $140,985 $315,949
Interest and other income 15,927 109,985
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156,912 425,934
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EXPENSES
General and administrative 137,409 66,911
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Net income $ 19,503 $359,023
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ALLOCATION OF NET INCOME
Limited partners $ 17,553 $323,121
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General partner $ 1,950 $ 35,902
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Net income per limited partnership unit $ .24 $ 4.37
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</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNER TOTAL
<S> <C> <C> <C>
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Partners' capital--December 31, 1995 $ 999,114 $164,512 $1,163,626
Net income 17,553 1,950 19,503
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Partners' capital--March 31, 1996 $1,016,667 $166,462 $1,183,129
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</TABLE>
The accompanying notes are an integral part of these statements
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PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP
(a limited partnership)
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------------
1996 1995
<S> <C> <C>
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CASH FLOWS FROM OPERATING ACTIVITIES
Royalty income received $ 119,121 $ 161,594
Interest and other income received 15,927 15,661
General and administrative expenses paid (170,724) (29,870)
Evaluation and monitoring expenses paid -- (2,156)
State taxes withheld on distribution -- 19,379
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Net cash (used in) provided by operating activities (35,676) 164,608
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of investment in equity securities -- 1,607,712
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CASH FLOWS FROM FINANCING ACTIVITIES
Distribution -- (2,956,120)
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Net decrease in cash and cash equivalents (35,676) (1,183,800)
Cash and cash equivalents at beginning of period 1,308,343 2,010,931
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Cash and cash equivalents at end of period $ 1,272,667 $ 827,131
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RECONCILIATION OF NET INCOME TO NET CASH (USED IN) PROVIDED
BY OPERATING ACTIVITIES
Net income $ 19,503 $ 359,023
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Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Changes in:
Accrued expenses and other liabilities (33,315) 54,264
Royalties receivable (21,864) (154,355)
Interest receivable -- (94,324)
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Total adjustments (55,179) (194,415)
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Net cash (used in) provided by operating activities $ (35,676) $ 164,608
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</TABLE>
The accompanying notes are an integral part of these statements
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PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(unaudited)
A. General
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of PruTech Research and Development Partnership (the ``Partnership'')
as of March 31, 1996 and the results of its operations and its cash flows for
the three months ended March 31, 1996 and 1995. However, the operating results
for the interim periods may not be indicative of the results expected for a full
year.
In April 1996, R&D Funding Corp (the ``General Partner'') mailed to all
limited partners a Consent Solicitation Statement (the ``Statement'') asking for
their written consent to approve the liquidation and dissolution of the
Partnership, as more fully described in the Statement. It is not expected that
the Partnership's eventual total distributions will equal the partners' initial
investment.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1995.
Certain balances for prior periods have been reclassified to conform with
current financial statement presentation.
B. Related Parties
The General Partner and its affiliates perform services for the Partnership
which include but are not limited to: accounting and financial management;
registrar, transfer and assignment functions; asset management; investor
communications; printing and other administrative services. The General Partner
and its affiliates receive reimbursements for costs incurred in connection with
these services, the amount of which is limited by the provisions of the
Partnership Agreement. The costs and expenses were $74,481 and $42,315 for the
three months ended March 31, 1996 and 1995, respectively.
General and administrative expenses payable to the General Partner and its
affiliates (which are included in accrued expenses and other liabilities) at
March 31, 1996 and December 31, 1995 were $141,494 and $158,738, respectively.
Prudential Securities Incorporated, an affiliate of R&D Funding Corp, owned
145 limited partnership units at March 31, 1996.
The Partnership maintains an account with the Prudential Institutional
Liquidity Portfolio Fund, an affiliate of R&D Funding Corp, for investment of
its available cash in short-term instruments pursuant to the guidelines
established by the Partnership Agreement.
The Partnership has engaged in research and development co-investment
projects with PruTech Research and Development Partnership II, PruTech Research
and Development Partnership III, and PruTech Project Development Partnership
(collectively, the ``PruTech R&D Partnerships'') for which R&D Funding Corp
serves as the general partner. The allocation of the co-investment projects'
profits or losses among the PruTech R&D Partnerships is consistent with the
costs incurred to fund the research and development projects.
C. Contingencies
On April 15, 1994 a multiparty petition captioned Mack et al. v. Prudential
Securities Incorporated et al. (Cause No. 94-17695) was filed in the 80th
Judicial District Court of Harris County, Texas, purportedly on behalf of
investors in the Partnership against the Partnership, the General Partner,
Prudential Securities Incorporated, The Prudential Insurance Company of America
and a number of other defendants. The petition alleges common law fraud and
fraud in the inducement and negligent misrepresentation in connection with the
offering of the Partnership units; negligence and breach of fiduciary duty in
connection with the
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operation of the Partnership; civil conspiracy; and violations of the Federal
Securities Act of 1933 (sections 11 and 12), and of the Texas Securities and
Deceptive Trade Practices statutes. The suit seeks, among other things,
compensatory and punitive damages, costs and attorneys' fees. The ultimate
outcome of this litigation as well as the impact on the Partnership cannot
presently be determined.
The General Partner, Prudential Securities Incorporated and the Partnership
believe they have meritorious defenses to the complaint and intend to vigorously
defend themselves against this action.
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PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership's cash and cash equivalents decreased to approximately
$1,273,000 at March 31, 1996 from $1,308,000 at December 31, 1995. This decrease
was a result of the utilization of cash to reduce accrued expenses and other
liabilities.
In April 1996, the General Partner mailed to all limited partners a Consent
Solicitation Statement (the ``Statement'') asking for their written consent to
approve the liquidation and dissolution of the Partnership, as more fully
described in the Statement. It is not expected that the Partnership's eventual
total distributions will equal the partners' initial investment.
The level of future distributions will be based primarily on the excess of
proceeds received on the sale of the Partnership's remaining assets (as further
discussed in the Statement) as well as from royalties and interest over the
operating expenses of the Partnership.
Results of Operations
The Partnership's net income for the three months ended March 31, 1996
decreased by approximately $340,000 as compared with the same period in 1995
primarily due to decreases in royalty and interest income as well as an increase
in general and administrative expenses.
Royalty income for the three months ended March 31, 1996 decreased by
approximately $175,000 as compared with the same period in 1995 due primarily to
higher royalties recorded in 1995 from American Software, Inc.
Interest and other income decreased for the three months ended March 31, 1996
by approximately $94,000 as compared with the same period in 1995 due primarily
to interest relating to a note receivable resulting from the Partnership's
investment in Tridom Corporation which matured in June 1995.
General and administrative expenses increased by approximately $70,000 for
the three months ended March 31, 1996 as compared with the same period in 1995.
This increase was primarily due to professional and other costs incurred in 1996
in connection with the Statement as discussed above.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings--This information is incorporated by reference to Note
C to the financial statements filed herewith in Item 1 of Part 1 of the
Registrant's Quarterly Report.
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--
There were no matters which were submitted to limited partners during
the quarter ended March 31, 1996. However, in April 1996, a Consent
Solicitation Statement was sent to all limited partners. See Note A to
the financial statements filed herewith in Item 1 of Part 1 for further
information.
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K--
(a) Exhibits--
PruTech Research and Development Partnership Amended and Restated
Agreement of Limited Partnership (incorporated by reference to Exhibit
3.1 included with Registrant's Form S-1 Registration Statement, File No.
2-86528, filed on November 16, 1983)
First Amendment to the Amended and Restated Agreement of Limited
Partnership of PruTech Research and Development Partnership
(incorporated by reference to Exhibit 3 included with Registrant's
Annual Report on Form 10-K filed March 28, 1992)
Second Amendment to the Amended and Restated Agreement of Limited
Partnership of PruTech Research and Development Partnership
(incorporated by reference to Exhibit 3 included with Registrant's
Annual Report on Form 10-K filed March 31, 1994)
Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
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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.
PruTech Research and Development Partnership
<TABLE>
<S> <C>
By: R&D Funding Corp
A Delaware corporation, General Partner
By: /s/ Russell L. Allen Date: May 15, 1996
----------------------------------------
Russell L. Allen
President and Director for the
Registrant
By: R&D Funding Corp
A Delaware corporation, General Partner
By: /s/ Steven Carlino Date: May 15, 1996
----------------------------------------
Steven Carlino
Vice President
Chief Accounting Officer for the
Registrant
</TABLE>
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<TABLE> <S> <C>
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<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for PruTech Research and
Development Partnership and is qualified in its
entirety by reference to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000728248
<NAME> PruTech Research and Development Partnership
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Mar-31-1996
<PERIOD-TYPE> 3-Mos
<CASH> 1,272,667
<SECURITIES> 0
<RECEIVABLES> 127,428
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,400,095
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,400,095
<CURRENT-LIABILITIES> 216,966
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,183,129
<TOTAL-LIABILITY-AND-EQUITY> 1,400,095
<SALES> 140,985
<TOTAL-REVENUES> 156,912
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 137,409
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,503
<EPS-PRIMARY> .24
<EPS-DILUTED> 0
</TABLE>
