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 DECEMBER 31, 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 2-98260
PAINEWEBBER R&D PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3304143
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1285 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10019
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 713-2000
---------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange on
Title of each class which registered
------------------- ----------------
None None
---------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Limited Partnership Units
No voting stock has been issued by the Registrant. Neither a public nor
other market exists for the Units, and no such market is expected to develop,
therefore there was no quoted market price for the 37,799 Units.
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 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 the 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).
<PAGE>
PART I
ITEM 1. BUSINESS.
- ------- ---------
PaineWebber R&D Partners, L.P. (the "Partnership" or "Registrant"), is a
Delaware limited partnership that commenced operations on March 6, 1986. PWDC
Holding Company (the "Manager") is the general partner of PaineWebber
Technologies, L.P. (the "General Partner"), which is the general partner of the
Partnership. PWDC Holding Company is a wholly owned subsidiary of Paine Webber
Development Corporation ("PWDC"), an indirect wholly owned subsidiary of Paine
Webber Group Inc. ("PWG"). The principal objective of the Partnership was to
provide long-term capital appreciation to investors through investing in the
development and commercialization of new products (the "Projects") with
technology companies, which were expected to address significant market
opportunities. The Partnership will terminate on December 31, 1998, unless its
term is extended or reduced by the General Partner.
On November 14, 1994, the General Partner commenced with the dissolution
of the Partnership's assets. The General Partner does not intend to terminate
the Partnership until a lawsuit with Centocor, Inc. ("Centocor") has been fully
resolved. On July 12, 1995, the Partnership commenced an action against Centocor
in the Supreme Court of New York arising from certain agreements entered into by
Centocor and Eli Lilly & Company ("Lilly") in July 1992. The Partnership's
complaint seeks damages, interest and expenses. There is no assurance that the
Partnership's claim will be successful. See Item 3, Legal Proceedings - "Action
Against Centocor, Inc.", for a discussion on the current status of the action.
On April 1, 1995, the Partnership distributed its contingent payment rights
("CPR") due from Amgen Inc. ("Amgen") through the year 2005 from the sale of
Neupogen(R) to its General Partner and limited partners (the "Limited Partners,"
together with the General Partner, the "Partners"), but continued to receive CPR
payments on account of, and for payment to, the Partners. In 1996, a third
party, not affiliated with the Partnership, initiated a tender offer for the CPR
at a price of $420 per CPR. As of March 1, 1997, holders of 9,154 CPR
(representing approximately 24.2% of the total CPR) tendered their CPR interests
to such third party. In December 1996, the Partnership and Amgen entered into a
Consent Agreement permitting PWDC to assume the ongoing responsibility for
receiving the CPR payments and making the corresponding payments to the
Partners. At December 31, 1996, the Partnership's assets consisted of cash and
royalty income receivable. During 1996, the Partnership was not engaged in any
Projects, nor will it do so in the future.
At a meeting of the Board of Directors of PWDC (the "Board") in January
1997, the Board adopted the Policy Regarding Requests for Partner Lists attached
as Exhibit B.
PARTNERSHIP MANAGEMENT
The Partnership has contracted with the Manager, pursuant to a management
agreement (the "Management Contract"), responsibility for management and
administrative services necessary for the operation and dissolution of the
Partnership. Under the Management Contract, the Manager was entitled to receive
an annual management fee for management and administrative services provided to
the Partnership. As of January 1, 1994, the Manager elected to discontinue
charging a management fee to the Partnership.
DISTRIBUTIONS
All distributions to the Partners from the Partnership have been made pro
rata in accordance with their respective net capital contributions. The
following table sets forth the proportion of each distribution to be received by
Limited Partners and the General Partner, respectively:
<PAGE>
(ITEM 1 CONTINUED)
<TABLE>
<CAPTION>
Limited General
Partners Partner
-------- -------
<S> <C> <C>
I. Until the value of the aggregate distributions for each limited
partnership unit ("Unit") equals $1,850 plus interest on such amount
accrued at 5% per annum, compounded annually ("Contribution Payout") 99% 1%
II. After Contribution Payout and until the value of the aggregate
distributions for each Unit equals $9,250 ("Final Payout") 80% 20%
III. After Final Payout 75% 25%
</TABLE>
As of December 31, 1996, the Partnership has made cash and security
distributions, as valued on the date of distribution, since inception of $889
and $593 per Unit, respectively. The cash and security distributions do not
include distributions made in connection with the CPR since April 1995.
OTHER
At December 31, 1996, the Partnership and the General Partner had no
employees, and PWDC Holding Company, the general partner of the General Partner,
had no employees other than its executive officers (see Item 10. Directors and
Executive Officers of the Registrant). The Partnership is in dissolution and was
engaged in one primary business segment, the management of investments in
technology products and companies.
ITEM 2. PROPERTIES.
- ------- -----------
The Partnership does not own or lease any office, manufacturing or
laboratory facilities.
ITEM 3. LEGAL PROCEEDINGS.
- ------- ------------------
IN RE: PAINEWEBBER LIMITED PARTNERSHIP LITIGATION
- -------------------------------------------------
As previously disclosed on the Partnership's Form 10-K for the year ended
December 31, 1995, PaineWebber Technologies, L.P., the General Partner of the
Partnership, was named as a defendant in a class action lawsuit against
PaineWebber Incorporated ("PWI") and a number of its affiliates relating to
PWI's sale of 70 direct investment offerings, including the offering of
interests in the Partnership. In January 1996, PWI signed a memorandum of
understanding with the plaintiffs in the class action outlining the terms under
which the parties agreed to settle the case. A definitive settlement agreement
and plan of allocation was signed in July 1996 and submitted to the United
States District Court for the Southern District of New York (the "Court") for
its approval. Under that settlement, PWI agreed to pay the class $125 million
(which had previously been deposited in escrow with the Court when the
memorandum of understanding was signed) and certain additional consideration.
The additional consideration included the assignment of fees and income
attributable to the general partnership interest in the Partnership as well as
guarantees of certain minimum returns to class members. In March 1997, the Court
approved the settlement as fair and reasonable.
In February 1996, approximately 150 plaintiffs filed an action entitled
ABBATE V. PAINEWEBBER INC. in Sacramento, California Superior Court against PWI
and various affiliated entities, including the General Partner of the
Partnership, concerning the plaintiffs' purchases of various limited partnership
interests. The complaint alleges, among other things, that PWI and its related
entities committed fraud and misrepresentation and breached fiduciary duties
allegedly owed to the plaintiffs by selling or promoting limited partnership
investments that were unsuitable for the plaintiffs and by overstating the
benefits, understating the risks and failing to state material facts concerning
the investments. The complaint seeks
<PAGE>
ITEM 3 (CONTINUED)
compensatory damages of $15 million plus punitive damages. In June 1996,
additional complaints similar to the ABBATE action, but involving fewer
plaintiffs, were filed in Sacramento, San Diego and Arizona. In September 1996,
the California Superior Court dismissed many of the ABBATE plaintiffs' claims as
barred by the applicable statutes of limitation. Certain of the other complaints
were also dismissed with prejudice while others remained pending. In March 1997,
all of these actions were settled. The settlement had no effect on the
Partnership or the General Partner.
ACTION AGAINST CENTOCOR, INC.
- -----------------------------
In July 1995, the Partnership commenced an action in the Supreme Court of
the State of New York against Centocor arising out of Centocor's July 1992
transaction with Lilly. In April 1996, the court granted Centocor's motion to
dismiss the action on the grounds that New York was an inconvenient forum.
Accordingly, the Partnership refiled its claims in Delaware Superior Court.
In 1986, the Partnership and others purchased limited partnership
interests in Centocor Partners II, L.P. ("CP II"), a limited partnership formed
to develop and sell Centoxin, a Centocor drug. On February 21, 1992, Centocor
exercised its option to purchase all of the limited partnership interests in CP
II, including those held by the Partnership. The purchase agreement provided
that Centocor would thereafter pay to the former limited partners 50% of
Centocor's revenues from the licensing or sublicensing of Centoxin and 8% of
Centocor's revenues from Centoxin sales, with such payments to be made on the
last business day of the calendar quarter in which they were earned.
In July 1992, Centocor entered into a set of agreements with Lilly for the
stated purposes of Lilly making an equity investment in Centocor and furthering
the testing and eventual distribution of Centoxin. Pursuant to those agreements,
Lilly paid Centocor a total of $100 million, and Centocor conveyed to Lilly,
among other things, two million shares of Centocor common stock, exclusive
marketing rights to Centoxin and an option to acquire exclusive marketing rights
to CentoRx (now ReoPro), another Centocor drug.
The Partnership's complaint alleges, among other things, that part of the
$100 million paid by Lilly constitutes revenues to Centocor from the licensing,
sublicensing and/or sale of Centoxin, and that Centocor is obligated to pay a
percentage of that part to the former limited partners of CP II, including the
Partnership. The Partnership is seeking to proceed on behalf of itself and all
other former limited partners of CP II whose interests were acquired by Centocor
in February 1992 (the "Class"). The complaint seeks damages, interest and
expenses. Centocor has taken the positions that: it is not obligated to make any
further payments to former limited partners of CP II, and the Partnership is not
a proper Class representative. This action is presently scheduled for trial in
November 1997.
In February 1996, another former limited partner of CP II commenced a
purported class action in the Court of Common Pleas of the State of Pennsylvania
against Centocor and Lilly. The claims in that action are similar to those
asserted in the Partnership's complaint.
PWDC has been advancing, and may continue to advance, the funds necessary
to pay the Partnership's legal fees and expenses relating to this action. In the
event of a recovery on behalf of the Class, the court may award legal fees and
expenses to the Partnership's counsel, to be paid out of the recovery. It is
anticipated that: the net proceeds of any recovery will be distributed to the
members of the Class, including the Partnership, on a pro rata basis; the
Partnership and/or its counsel will reimburse PWDC; and any remaining
Partnership proceeds will be distributed to the Partners of the Partnership on a
pro rata basis.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------- ---------------------------------- -----------------
None.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
- ------- ----------------------------------------------------------------------
There is no existing public market for the Units, and no such market is
expected to develop. Effective February 1995, the General Partner discontinued
the right of Limited Partners to transfer Units, except for transfers that may
occur as a result of the laws of descent and distribution or by operation of
law. Effective February 1997, the General Partner has lifted the restriction on
Unit transferability. As of December 31, 1996, there were 6,929 limited
partners.
The Partnership distributed to its Partners, when available, the net
proceeds, if any, from royalty distributions, interest payments on portfolio
securities, net proceeds from dispositions of portfolio securities and any other
cash in excess of amounts that were necessary for the operation and dissolution
of the Partnership. The Partnership made no cash or security distributions for
the year ended December 31, 1996. For the years ended December 31, 1995 and
1994, the Partnership distributed to its Partners $2,481,752 ($65 per Unit;
$24,818 to the general partnership interest) and $6,185,290 ($162 per Unit;
$61,853 to the general partnership interest), respectively.
ITEM 6. SELECTED FINANCIAL DATA.
- ------- ------------------------
See the "Selected Financial Data (Unaudited)" on Page F-2 in this filing.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS.
- ----------------------
LIQUIDITY AND CAPITAL RESOURCES
Partners' capital approximated $90,000 at December 31, 1995 compared to a
deficit of approximately $14,000 at December 31, 1996. The reduction in
partners' capital (deficit) was a result of a net loss of $125,000 (as discussed
in Results of Operations below) offset by a capital contribution of $21,000. In
March 1996, the General Partner restored its deficit capital account balance as
of December 31, 1995, to appropriately reflect a 1% investment in the
Partnership.
Liquid assets at December 31, 1996 were $22,000 compared to $180,000 at
December 31, 1995. The decrease is primarily due to payment of general and
administrative expenses offset by the General Partner contribution. In the
furure, the General Partner does not anticipate earning sufficient cash flow to
meet working capital requirements. Therefore, the General Partner will make
capital contributions to the Partnership to fund working capital deficits until
such time as the Partnership is terminated.
RESULTS OF OPERATIONS
Year ended December 31, 1996 compared to the year ended December 31, 1995:
--------------------------------------------------------------------------
For the year ended December 31, 1996 the Partnership recognized a net
loss of $0.1 million as compared to net income of $0.9 million for the year
ended December 31, 1995. The decrease of $1.0 million resulted from a decrease
in income from product development projects of $1.1 million offset by a decrease
in expenses of $0.1 million. In 1995, income from product development projects
of $1.1 million consisted primarily of income received from Amgen with respect
to the CPR. On April 1, 1995, the Partnership distributed to its Partners the
CPR, which constituted rights to receive future income from Amgen. The
Partnership received its final CPR payment in 1995 attributable to the quarter
ended March 31, 1995. The decrease in expenses from $0.2 million in 1995 to $0.1
million in 1996 is reflective of the decreased activity of the Partnership
resulting from its plan of dissolution.
<PAGE>
(ITEM 7 CONTINUED)
Year ended December 31, 1995 compared to the year ended December 31, 1994:
--------------------------------------------------------------------------
Net income for the year ended December 31, 1995 was $0.9 million compared
to net income of $4.3 million for the year ended December 31, 1994, a decrease
of $3.4 million resulting from the dissolution of the Partnership including the
satisfaction of Partnership liabilities.
Revenues for the year ended December 31, 1995 were $1.1 million compared
to $4.6 million for the same period in 1994. Revenues consisted primarily of
income accrued or received from Amgen with respect to the CPR. In 1995, revenues
from Amgen decreased by $3.9 million from 1994. Effective April 1, 1995, the
Partnership distributed to its Partners the CPR, which constituted the rights to
receive future income from Amgen. The Partnership received its final CPR payment
in June 1995 attributable to the first quarter of 1995. In 1994, the Partnership
recognized a loss of $0.4 million resulting from the exchange of its investment
in DAVID Systems, Inc. ("DSI") pursuant to the terms of a merger between DSI and
Chipcom Corporation. Expenses for the Partnership consisted solely of general
and administrative costs of $0.3 million for 1995 and 1994.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ------- --------------------------------------------
The information in response to this item may be found under the following
captions included in this filing on Form 10-K:
Report of Independent Auditors (F-4)
Statements of Financial Conditions (Page F-5)
Statements of Operations (Page F-6)
Statements of Changes in Partners' Capital (Page F-6)
Statements of Cash Flows (Page F-7)
Notes to Financial Statements (Pages F-8 to F-11)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- --------------------------------------------------------------------------------
FINANCIAL DISCLOSURE.
- ---------------------
None.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
- -------- ---------------------------------------------------
The Registrant has no directors or executive officers. The Registrant is
managed by PWDC Holding Company (the "Manager"), the general partner of
PaineWebber Technologies, L.P. (the "General Partner"), which is the general
partner of the Partnership.
The Partnership has delegated to the Manager, pursuant to the Management
Contract, responsibility for management and administrative services necessary
for the operation of the Partnership. The Manager has sole responsibility for
the dissolution of the Partnership.
The following table sets forth certain information with respect to the
persons who are directors and executive officers of the Manager, as well as
PWDC, the parent company of the Manager. On December 31, 1991, the Manager
succeeded PWDC as the general partner of the General Partner. The following
table sets forth such persons' positions as directors and executive officers of
PWDC at December 31, 1996.
Name Age Position and Date Appointed
---- --- ---------------------------
Directors (1)
Dhananjay M. Pai 34 Director since December 1996
Gerald F. Goertz, Jr. 39 Director since April 1995
Pierce R. Smith 53 Director since June 1993 (3)
Executive Officers (2)
Dhananjay M. Pai 34 President since December 1996
Pierce R. Smith 53 Treasurer since August 1988 (3)
Dorothy F. Haughey 72 Secretary since July 1985
The directors have a one-year term of office. The officers are elected by
a majority of the directors and hold office until their successors are chosen by
the directors.
(1) Mr. Pai was appointed to this position at PWDC Holding Company in
December 1996; Mr. Smith was appointed to this position at PWDC Holding Company
in September 1993; Mr. Goertz was appointed to this position at PWDC Holding
Company in April 1995.
(2) Mr. Pai was appointed to this position at PWDC Holding Company in
December 1996; Mr. Smith and Ms. Haughey were appointed to these positions at
PWDC Holding Company in December 1991.
(3) Mr. Smith resigned these positions in PWDC and PWDC Holding Company
in February 1997 and was replaced by William J. Nolan. Mr. Nolan is a Managing
Director in the Treasury Division of PWI.
<PAGE>
(ITEM 10 CONTINUED)
DIRECTORS
MR. PAI is a Managing Director of PWI. Before joining the Principal
Transactions Group of PWI in 1990, Mr. Pai was a Vice President in the
Investment Banking Division of Drexel Burnham Lambert from 1988 to 1990. From
1983 to 1988, Mr. Pai held various positions within the Finance Division of
Drexel Burnham Lambert. Mr. Pai is a Director and President of PaineWebber
Capital, an Advisory Board Member of Rifkin Acquisition Partners LLLP, and
either a Director or Officer of certain affiliates of PWI. He holds a Bachelor
of Science degree from Wharton School of Business and a Master of Business
Administration from New York University.
MR. GOERTZ is a Senior Vice President and Director of Private Investments
of PWI. Prior to joining PWI in December 1990, Mr. Goertz was with CG Realty
Advisors and the Freeman Company. He received his Bachelor of Arts degree in
Business Administration in 1979 from Vanderbilt University and his Juris
Doctorate and Master of Business Administration from Memphis State University in
1982.
MR. SMITH was Treasurer of PWG and Executive Vice President and Treasurer
of PWI. Mr. Smith joined PWG in 1987. From 1982 to 1987, Mr. Smith was Senior
Vice President and Treasurer for Norwest Corporation, a multibank holding
company in Minneapolis. From 1980 to 1982, Mr. Smith was Vice President of the
Treasury Department for Mellon Bank in Pittsburgh and from 1973 to 1980 was Vice
President for various subsidiaries of Commercial Credit Company. Mr. Smith
received a Bachelor of Science degree in Electrical Engineering from Yale
University and a Master's degree in Business Administration from Stanford
University. He also served as a lieutenant in the United States Coast Guard.
<PAGE>
(Item 10 continued)
Executive Officers
MR. PAI, President, see "Directors" above.
MR. SMITH, Treasurer, see "Directors" above.
MS. HAUGHEY, Secretary, joined PWI in 1962. She is the Secretary of PWI.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
- -------- -----------------------
No compensation was paid to executive officers of PWDC Holding Company by
the Registrant. PWDC Holding Company serves as the Manager for the Registrant,
and pursuant to a Management Contract, is entitled to receive an annual
management fee for management and administrative services provided to the
Partnership. As of January 1, 1994, the Manager elected to discontinue the
management fee charged to the Partnership. See the section entitled "Related
Party Transactions" under the caption "Notes to Financial Statements" on pages
F-8 through F-11 included in this filing on Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- -------- ---------------------------------------------------------------
The table below lists all investors who are known to be beneficial owners
at March 1, 1997 of more than five percent of the Registrant's Units.
Class Name and Address Amount Percent of Class
- ----- ---------------- ------ ----------------
Limited Lincoln National Life 2,875 Units 7.61%
Partnership Insurance Company
Units Fort Wayne, IN 46801-0214
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- -------- -----------------------------------------------
Information in response to this item may be found in the section entitled
"Related Party Transactions" under the caption "Notes to Financial Statements"
on pages F-8 through F-11 included in this filing on Form 10-K.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K.
- -------- -------------------------------------------------------------------
The following documents are filed as part of the filing on Form 10-K.
FINANCIAL STATEMENTS
The financial statements, together with the report of Ernst & Young LLP,
are listed in the accompanying index to financial statements and notes to
financial statements appearing on page F-1.
Report of Independent Auditors (Page F-4)
Statements of Financial Condition (Page F-5)
Statements of Operations (Page F-6)
Statements of Changes in Partners' Capital (Page F-6)
Statements of Cash Flows (Page F-7)
Notes to Financial Statements (Pages F-8 to F-11)
REPORTS ON FORM 8-K
On October 1, 1996, the Partnership filed a current report on Form 8-K
relating to the election of a President of Paine Webber Development Corporation
and PWDC Holding Company.
<PAGE>
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, on this 31st day of
March 1997.
PAINEWEBBER R&D PARTNERS, L.P.
By: PaineWebber Technologies, L.P.
(General Partner)
By: PWDC Holding Company
(General partner of the General Partner)
By: Dhananjay M. Pai /s/
--------------------------------
Dhananjay M. Pai
President and Principal Executive Officer
By: William J. Nolan /s/
--------------------------------
William J. Nolan
Principal Financial and Accounting 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 indicated*, each on this 31st day of March
1997.
Dhananjay M. Pai /s/
---------------------------------
Dhananjay M. Pai
President (principal executive officer) and Director
William J. Nolan /s/
---------------------------------
William J. Nolan
Principal Financial and Accounting Officer and Director
Gerald F. Goertz, Jr. /s/
---------------------------------
Gerald F. Goertz, Jr.
Director
* The capacities listed are with respect to PWDC Holding Company, the Manager,
as well as the general partner of the General Partner of the Registrant.
<PAGE>
PAINEWEBBER R&D PARTNERS, L.P.
(a Delaware Limited Partnership)
Index to Financial Statements
<TABLE>
<CAPTION>
Description Page
- ----------- ----
<S> <C>
Index to Financial Statements F-1
Selected Financial Data (Unaudited) F-2
Quarterly Financial Information (Unaudited) F-3
Report of Independent Auditors F-4
Statements of Financial Condition, at December 31, 1996 and 1995 F-5
Statements of Operations, for the years ended December 31, 1996, 1995
and 1994
F-6
Statements of Changes in Partners' Capital, for the years ended
December 31, 1996, 1995 and 1994
F-6
Statements of Cash Flows, for the years ended December 31, 1996, 1995
and 1994
F-7
Notes to Financial Statements F-8 to F-11
</TABLE>
All schedules are omitted either because they are not applicable or the
information required to be submitted has been included in the financial
statements or notes thereto.
F-1
<PAGE>
PAINEWEBBER R&D PARTNERS, L.P.
(a Delaware Limited Partnership)
<TABLE>
<CAPTION>
Selected Financial Data (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Years ended December 31, 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Results:
Revenues $ 14,339 $ 1,092,017 $ 4,569,297 $ 7,297,680 $ 8,423,202
Net income (loss) $ (124,705) $ 842,826 $ 4,293,920 $ 3,954,638 $ 7,409,758
Net income (loss) per partnership unit:
Limited partners (A) $ (2.91) $ 22.07 $ 112.46 $ 103.58 $ 194.07
General partner $(14,806.00) $ 8,428.26 $ 42,939.20 $ 39,546.38 $ 74,097.58
Financial Condition:
Total assets $ 24,834 $ 182,437 $ 1,884,535 $ 3,717,440 $ 8,178,175
Partners' capital (deficit) $ (13,927) $ 90,065 $ 1,728,991 $ 3,620,361 $ 8,080,774
Distributions to partners $ -- $ 2,481,752 $ 6,185,290 $ 8,415,051 $ 7,890,446
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Based on 37,799 partnership units.
F-2
<PAGE>
PAINEWEBBER R&D PARTNERS, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------
Net Income (Loss)
Net Income Per Partnership Unit (A)
Revenues (Loss) Limited Partners General Partner
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Calendar 1996
4th Quarter $ 5,561 $ (24,037) $ (0.28) $ (13,799.32)
3rd Quarter 2,550 (43,558) (1.14) (435.58)
2nd Quarter 3,510 (26,004) (0.68) (260.04)
1st Quarter 2,718 (31,106) (0.81) (311.06)
- ---------------------------------------------------------------------------------------------------------
Calendar 1995
4th Quarter $ 6,116 $ (64,130) $ (1.68) $ (641.30)
3rd Quarter 6,283 (75,202) (1.97) (752.02)
2nd Quarter (64,864) (110,917) (2.91) (1,109.17)
1st Quarter 1,144,482 1,093,075 28.63 10,930.75
- ---------------------------------------------------------------------------------------------------------
Calendar 1994
4th Quarter $ 1,634,691 $ 1,542,254 $ 40.38 $ 15,422.54
3rd Quarter 1,315,022 1,268,596 33.23 12,685.96
2nd Quarter 1,319,643 1,210,365 31.71 12,103.65
1st Quarter (B) 299,941 272,705 7.14 2,727.05
- ---------------------------------------------------------------------------------------------------------
(A) Based on 37,799 limited partnership units and a 1% general partnership interest.
(B) Revenues have been restated from the amount reported at March 31, 1994.
</TABLE>
F-3
<PAGE>
Report of Independent Auditors
To the Partners of PaineWebber R&D Partners, L.P.
We have audited the accompanying statements of financial condition of
PaineWebber R&D Partners, L.P. as of December 31, 1996 and 1995, and the related
statements of operations, changes in partners' capital (deficit), and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PaineWebber R&D Partners, L.P.
at December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
Ernst & Young, LLP /s/
- ------------------------------
Ernst & Young, LLP
New York, New York
March 21, 1997
F-4
<PAGE>
PAINEWEBBER R&D PARTNERS, L.P.
(a Delaware Limited Partnership)
Statements of Financial Condition
- --------------------------------------------------------------------------------
December 31, December 31,
1996 1995
- --------------------------------------------------------------------------------
Assets:
Cash $ 22,634 $ 74,542
Marketable securities, at market value -- 105,814
Interest receivable -- 581
Royalty income receivable 2,200 1,500
-------- --------
Total assets $ 24,834 $182,437
======== ========
- --------------------------------------------------------------------------------
Liabilities and partners' capital:
Accrued liabilities $ 38,761 $ 92,372
Partners' capital (deficit) (13,927) 90,065
-------- --------
Total liabilities and partners' capital (deficit) $ 24,834 $182,437
======== ========
- --------------------------------------------------------------------------------
See notes to financial statements.
F-5
<PAGE>
PAINEWEBBER R&D PARTNERS, L.P.
(a Delaware Limited Partnership)
Statements of Operations
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
For the years ended December 31, 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Interest income $ 4,602 $ 26,706 $ 39,390
Income from product development projects 9,737 1,075,767 4,976,776
Unrealized depreciation of marketable
securities -- -- (61,454)
Realized loss on sale of marketable
securities -- (10,456) --
Realized loss on sale of investment -- -- (385,415)
----------- ----------- -----------
14,339 1,092,017 4,569,297
----------- ----------- -----------
Expenses:
General and administrative costs 139,044 249,191 275,377
----------- ----------- -----------
Net income (loss) $ (124,705) $ 842,826 $ 4,293,920
=========== =========== ===========
Net income (loss) per partnership unit:
Limited partners (based on 37,799 units) $ (2.91) $ 22.07 $ 112.46
General partner $(14,806.00) $ 8,428.26 $ 42,939.20
- -----------------------------------------------------------------------------------------------------------
See notes to financial statements
<CAPTION>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) Years ended December 31,
1996, 1995 and 1994
- -----------------------------------------------------------------------------------------------------------
Limited General
Partners Partner Total
- -----------------------------------------------------------------------------------------------------------
Balance at January 1, 1994 $ 3,604,891 $ 15,470 $ 3,620,361
Net income 4,250,981 42,939 4,293,920
Cash distributions to partners (6,123,437) (61,853) (6,185,290)
----------- ----------- -----------
Balance at December 31, 1994 1,732,435 (3,444) 1,728,991
Net income 834,398 8,428 842,826
Cash distributions to partners (2,456,934) (24,818) (2,481,752)
----------- ----------- -----------
Balance at December 31, 1995 109,899 (19,834) 90,065
Net loss (109,899) (14,806) (124,705)
Capital contribution -- 20,713 20,713
----------- ----------- -----------
Balance at December 31, 1996 $ -- $ (13,927) $ (13,927)
=========== =========== ===========
- -----------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
F-6
<PAGE>
PAINEWEBBER R&D PARTNERS, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
For the years ended December 31, 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (124,705) $ 842,826 $ 4,293,920
Adjustments to reconcile net income to cash (used for) provided by operating
activities:
Unrealized depreciation of marketable securities -- -- 61,454
Realized loss on sale of investment -- -- 385,415
Decrease (increase) in operating assets:
Marketable securities 105,814 420,688 947,265
Investments -- -- 364,585
Interest receivable 581 985 3,315
Royalty income receivable (700) 1,329,300 (147,304)
(Decrease) increase in accrued liabilities (53,611) (63,172) 58,465
----------- ----------- -----------
Cash (used for) provided by operating activities (72,621) 2,530,627 5,967,115
----------- ----------- -----------
Cash flows from financing activities:
Partner contribution 20,713 -- --
Distributions to partners -- (2,481,752) (6,185,290)
----------- ----------- -----------
Cash provided by (used for) financing activities 20,713 (2,481,752) (6,185,290)
----------- ----------- -----------
(Decrease) increase in cash (51,908) 48,875 (218,175)
Cash at beginning of year 74,542 25,667 243,842
----------- ----------- -----------
Cash at end of year $ 22,634 $ 74,542 $ 25,667
=========== =========== ===========
- -----------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
The Partnership paid no cash for interest or taxes during the years ended December 31, 1996, 1995
and 1994.
- -----------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
F-7
<PAGE>
PAINEWEBBER R&D PARTNERS, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
PaineWebber R&D Partners, L.P. (the "Partnership") is a Delaware limited
partnership that commenced operations on March 6, 1986 with a total of $62.1
million available for investment. PWDC Holding Company is the general partner of
PaineWebber Technologies, L.P. (the "General Partner"), which is the general
partner of the Partnership. PWDC Holding Company is a wholly owned subsidiary of
Paine Webber Development Corporation ("PWDC"), an indirect, wholly owned
subsidiary of Paine Webber Group Inc. The Partnership will terminate on December
31, 1998 unless its term is extended or reduced by the General Partner. The
principal objective of the Partnership was to provide long-term capital
appreciation to investors through investing in the development and
commercialization of new products with technology companies ("Sponsor
Companies"), which were expected to address significant market opportunities.
The General Partner has commenced with the dissolution of the
Partnership's assets but does not intend to terminate the Partnership until a
lawsuit with Centocor, Inc. ("Centocor") has been fully resolved (see Note 6).
On April 1, 1995, the Partnership distributed its contingent payment rights
("CPR") due from Amgen Inc. ("Amgen") through the year 2005 from the sale of
Neupogen(R) to its General Partner and limited partners (the "Limited Partners",
together with the General Partner, the "Partners"), but continued to receive CPR
payments on account of, and for payment to, the Partners. Such continuing CPR
payments are no longer available to pay expenses of the Partnership. In December
1996, the Partnership and Amgen entered into a Consent Agreement permitting PWDC
to assume the ongoing responsibility for receiving the CPR payments and making
the corresponding payments to the Partners.
F-8
<PAGE>
PAINEWEBBER R&D PARTNERS, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(NOTE 1 CONTINUED)
All distributions to the Partners from the Partnership have been made pro
rata in accordance with their respective net capital contributions. The
following table sets forth the proportion of each distribution to be received by
the Limited Partners and the General Partner, respectively:
<TABLE>
<CAPTION>
Limited General
Partners Partner
-------- -------
<S> <C> <C>
I. Until the value of the aggregate distributions for each limited
partnership unit ("Unit") equals $1,850 plus interest on such amount
accrued at 5% per annum, compounded annually ("Contribution
Payout")................................................................ 99% 1%
II. After Contribution Payout and until the value of the aggregate
distributions for each Unit equals $9,250 ("Final Payout").............. 80% 20%
III. After Final Payout...................................................... 75%. 25%
</TABLE>
For the year ended December 31, 1996, the Partnership made no cash or
security distributions. As of December 31, 1996, the Partnership has made cash
and security distributions, as valued on the date of distribution, since
inception of $889 and $593 per Unit, respectively. The cash and security
distributions do not include distributions made in connection with the CPR since
April 1995.
In March 1996, the General Partner restored its deficit capital account
balance as of December 31, 1995, to appropriately reflect a 1% investment in the
Partnership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in conformity with generally
accepted accounting principles which require management to make certain
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Marketable securities consist of a money market fund that is valued at
market value. Marketable securities were not considered cash equivalents for the
Statements of Cash Flows.
Realized and unrealized gains or losses are determined on a specific
identification method and are reflected in the Statements of Operations during
the period in which the change in value occurs.
F-9
<PAGE>
PAINEWEBBER R&D PARTNERS, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENTS
At December 31, 1994, the Partnership had an investment of 9,000,000
shares of Applied Diagnostics, Inc. (a subsidiary of Teknowledge Corporation
("Teknowledge") formerly Cimflex Teknowledge Corporation) Series A Convertible
Preferred Stock with a carrying value of zero. As of December 31, 1995, the
Partnership had been advised of the dissolution of Applied Diagnostics, Inc. The
Partnership received no distributions as a result of the dissolution. In
addition, the Partnership had one warrant to purchase 1,050,000 shares of
Teknowledge common stock with an exercise price of $3.83 which expired in
September 1995. The warrant was carried at a cost basis of zero.
In August 1994, the merger of DAVID Systems, Inc. ("DSI") into Chipcom
Corporation ("Chipcom") was approved at a special meeting of shareholders.
According to the terms of the merger, the Partnership exchanged its DSI
preferred stock with a carrying value as of December 31, 1993 of $750,000 for
cash in the amount of $364,585 resulting in the recognition of a loss of
$385,415 for the year ended December 31, 1994 in the accompanying Statements of
Operations.
4. RELATED PARTY TRANSACTIONS
The money market fund invested in by the Partnership is managed by
affiliates of PaineWebber Incorporated ("PWI").
PWDC and PWI, and its affiliates, have acted in an investment banking
capacity for several of the Sponsor Companies. In addition, PWDC and its
affiliates have had direct limited partnership interests in the same product
development limited partnerships as the Partnership.
5. INCOME TAXES
The Partnership is not subject to federal, state or local income taxes.
Accordingly, the individual Partners are required to report their distributive
shares of realized income or loss on their individual federal and state income
tax returns.
F-10
<PAGE>
PAINEWEBBER R&D PARTNERS, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
6. LEGAL PROCEEDING
In July 1995, the Partnership commenced an action in the Supreme Court of
the State of New York (the "Court") against Centocor arising out of Centocor's
July 1992 transactions with Lilly. In April 1996, the Court granted Centocor's
motion to dismiss the action on the grounds that New York was an inconvenient
forum. Accordingly, the Partnership refiled its claims in Delaware Superior
Court.
In 1986, the Partnership and others purchased limited partnership
interests in Centocor Partners II, L.P. ("CP II"), a limited partnership formed
to develop and sell Centoxin, a Centocor drug. On February 21, 1992, Centocor
exercised its option to purchase all of the limited partnership interests in CP
II, including those held by the Partnership. The purchase agreement provided
that Centocor would thereafter pay to the former limited partners 50% of
Centocor's revenues from the licensing or sublicensing of Centoxin and 8% of
Centocor's revenues from Centoxin sales, with such payments to be made on the
last business day of the calendar quarter in which they were earned.
In July 1992, Centocor entered into a set of agreements with Eli Lilly &
Company ("Lilly") for the stated purposes of Lilly making an equity investment
in Centocor and furthering the testing and eventual distribution of Centoxin.
Pursuant to those agreements, Lilly paid Centocor a total of $100 million, and
Centocor conveyed to Lilly, among other things, two million shares of Centocor
common stock, exclusive marketing rights to Centoxin and an option to acquire
exclusive marketing rights to CentoRx (now ReoPro), another Centocor drug.
The Partnership's complaint alleges, among other things, that part of the
$100 million paid by Lilly constitutes revenues to Centocor from the licensing,
sublicensing and/or sale of Centoxin, and that Centocor is obligated to pay a
percentage of that part to the former limited partners of CP II, including the
Partnership. The Partnership is seeking to proceed on behalf of itself and all
other former limited partners of CP II whose interests were acquired by Centocor
in February 1992 (the "Class"). The complaint seeks damages, interest and
expenses. Centocor has taken the positions that: it is not obligated to make any
further payments to former limited partners of CP II; and the Partnership is not
a proper Class representative. This action is presently scheduled for trial in
November 1997.
In February 1996, another former limited partner of CP II commenced a
purported class action in the Court of Common Pleas of the State of Pennsylvania
against Centocor and Lilly. The claims in that action are similar to those
asserted in the Partnership's complaint.
PWDC has been advancing, and may continue to advance, the funds necessary
to pay the Partnership's legal fees and expenses relating to this action. In the
event of a recovery on behalf of the Class, the Court may award legal fees and
expenses to the Partnership's counsel, to be paid out of the recovery. It is
anticipated that: the net proceeds of any recovery will be distributed to the
members of the Class, including the Partnership, on a pro rata basis; the
Partnership and/or its counsel will reimburse PWDC; and any remaining
Partnership proceeds will be distributed to the Partners of the Partnership on a
pro rata basis.
F-11
<PAGE>
Exhibit A
PaineWebber R&D Partners, L.P. Annual Report 1996
- --------------------------------------------------------------------------------
LETTER TO LIMITED PARTNERS
To Our Limited Partners:
PaineWebber R&D Partners, L.P. ("R&D Partners" or the "Partnership") commenced
the dissolution of the Partnership in October 1994.
In December 1996, R&D Partners and Amgen Inc. ("Amgen") entered into a Consent
Agreement (the "Agreement") permitting PaineWebber Development Corporation, the
corporate general partner of R&D Partners, to assume the ongoing obligations for
the distribution of quarterly cash payments arising from the Amgen Contingent
Payment Rights ("CPRs"). As a result of this Agreement, PWDC will make quarterly
payments to limited partners holding Amgen CPRs which are derived from Amgen's
product sales of the drug Neupogen(R) through the year 2005. Neupogen is
currently approved for the following indications: febrile neutropenia, bone
marrow transplantation, severe chronic neutropenia, and peripheral blood stem
cell treatment and is currently being evaluated in Phase III clinical trials for
other indications.
The ongoing litigation involving R&D Partners and Centocor, Inc. ("Centocor")
prevents the Partnership from terminating.
In July 1995, R&D Partners commenced an action against Centocor, arising out of
Centocor's transaction with Eli Lilly & Co. ("Lilly"). Centocor entered into a
set of agreements with Lilly in 1992 for the stated purposes of Lilly making an
equity investment in Centocor and furthering the testing and eventual
distribution of Centoxin, a Centocor drug. R&D Partners claims that former
limited partners of Centocor Partners II whose interests were purchased by
Centocor in 1992, including R&D Partners, are entitled to a percentage of the
payments that Lilly made to Centocor pursuant to those agreements. R&D Partners'
action is presently scheduled for trial in November 1997. There can be no
assurance of the outcome of this matter.
To date, for every $3,700 investment in R&D Partners,(1) limited partners have
received $2,190(2) in cash distributions including $279 received during 1996. In
addition, limited partners have had the opportunity to realize significant value
from distributed warrants. Limited partners received warrants to purchase 96
shares of Amgen common stock at a price of $8.20 per share through June 1992 and
at a price of $9.03 through June 1994. The available gain from the Amgen
warrants ranged from $713 to $6,725 for each $3,700 investment in R&D Partners.
Limited partners also received warrants to purchase 24 shares of Centocor common
stock at a price of $18.995 per share through November 1991 and at a price of
$21.495 per share from December 1991 through November 1993. The available gain
from the Centocor warrants ranged from $474 to $990 for each $3,700 investment
in R&D Partners. R&D Partners has distributed or liquidated all outstanding
warrants or equity securities to its limited partners.
R&D Partners was formed in 1986 and invested in a portfolio of eight product
development programs. Six of those programs were either terminated or concluded
by the end of 1993. Please refer to prior R&D Partners Annual Reports for a
detailed history of the Partnership's investments.
Thank you for your continued interest in R&D Partners.
Sincerely,
Robin Stanley
Vice President
PaineWebber Development Corporation
- -----------------
(1) R&D Partners was sold in $2,500 units of which $1,850 was invested in R&D
Partners and $650 was invested in zero coupon bonds. The minimum investment was
$5,000, or two units, of which $3,700 was invested in R&D Partners.
(2) The amount of $2,190 includes cash distributed in connection with the CPRs
since September 1995 of $412 per $3,700 investment in R&D Partners.
<PAGE>
Exhibit B PAINEWEBBER R&D PARTNERS, L.P.
(a Delaware Limited Partnership)
POLICY REGARDING REQUESTS FOR PARTNER LISTS
-------------------------------------------
In accordance with the provisions of the Delaware Revised Uniform Limited
Partnership Act (the "Act"), and without limiting its rights under the
Partnership Agreement or the Act, as each may be amended from time to time, the
General Partner of the Partnership has established standards applicable to
requests for lists of Limited Partners. These standards have been established in
order to assure (1) that the lists are not used for an improper or inappropriate
purpose or in any way that might be detrimental to the Partnership or the
Limited Partners; (2) that the Limited Partners have sufficient information and
opportunity to decide how they should react in response to any solicitation or
other communication addressed to them; and (3) that the Partnership and the
Limited Partners do not face an increased risk of adverse tax consequences as a
direct or indirect result of any such solicitation or communication.
The General Partner requires any request to be made in writing by a
record holder of limited partner interests with standing to request the list, to
comply strictly with all applicable requirements of law and the Partnership
Agreement, to state the purpose for which the request is made with sufficient
specificity to enable the General Partner to make the determinations specified
above, and to include an undertaking under oath by the person requesting the
list and the persons or entities on whose behalf it is requested (1) to hold the
list in strict confidence, and not to give any information derived from the list
to any third party for any purpose whatsoever, (2) to reimburse the Partnership
for costs incurred in connection with the request and for a list, including
confirming compliance with the undertakings required hereby and (3) to submit to
the jurisdiction of the courts of the State of Delaware in any dispute arising
in connection with such request and to appoint and maintain RL&F Service Corp.,
One Rodney Square, Tenth Floor, Wilmington, New Castle County, Delaware 19801
(whose reasonable fees and expenses will be paid by the Partnership) as such
person's or entity's agent in the State of Delaware for acceptance of legal
process in connection therewith. In addition, in the case of requests made for
the purpose of soliciting tenders of the Limited Partners' interests or units in
the Partnership or soliciting proxies or consents from Limited Partners or
facilitating, assisting or supporting any such solicitation, the General Partner
will, if and to the extent required by applicable law and the Partnership
Agreement, make lists available or agree to disseminate such solicitations on
behalf of requesting Limited Partners only upon receipt of an undertaking under
oath by the person requesting the list and the persons or entities on whose
behalf it is requested (1) to conduct the solicitation in accordance with the
requirements of the Securities and Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder, including full disclosure of all
material facts and, in the case of any tender offer, rights of proration and
withdrawal rights, irrespective of the number of interests or units sought, and
(2) to refrain from acquiring interests or units of any number if the General
Partners, based upon advice from counsel, conclude that such acquisition would
increase the risk of adverse tax consequences to the Partnership or the
Partners.
The General Partner shall endeavor to inform the requesting party within
30 days of receipt of the requisite undertakings whether they consider that the
proposed use of the list is improper or inappropriate or would increase the risk
of such adverse tax consequences, and may request such further assurances as may
be necessary in order to enable them to make any of the determinations specified
above.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000770470
<NAME> PAINEWEBBER R&D PARTNERS, L.P.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 22,634
<SECURITIES> 0
<RECEIVABLES> 2,200
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,834
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,834
<CURRENT-LIABILITIES> 38,761
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (13,927)
<TOTAL-LIABILITY-AND-EQUITY> 24,834
<SALES> 0
<TOTAL-REVENUES> 74,339
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 139,044
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (124,705)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (124,705)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
