<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 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 0-18554
-----------
GENZYME DEVELOPMENT PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 04-3065192
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
ONE KENDALL SQUARE
CAMBRIDGE, MASSACHUSETTS 02139-1562
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(617) 252-7500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
-----------
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:
<PAGE>
NOTE REGARDING REFERENCES
Throughout this report, the words "we," "us" and "our" refer to Genzyme
Development Partners, L.P. In addition, we refer to:
o Genzyme Corporation as "Genzyme;"
o Genzyme Development Corporation II as "our general partner;" and
o Genzyme Ventures II, our joint venture with Genzyme, as "our
joint venture."
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements, including
statements concerning our:
o expected future revenues, operations and expenditures; and
o the intention of Genzyme to fund our general and administrative
expenses, and research and development programs.
These forward-looking statements represent the expectations of our
general partner as of the filing date of this Form 10-Q. Our actual results
could differ materially from those anticipated by the forward-looking statements
due to a number of factors, including:
o whether Genzyme exercises its rights to purchase the outstanding
limited partnership interests during the second half of 2000;
o our ability to successfully complete preclinical and clinical
development and obtain timely regulatory approval for our
products;
o our ability to obtain and maintain adequate patent and other
proprietary rights protection for our products;
o the content and timing of decisions made by the FDA and other
agencies regarding our products and the indications for which our
products may be approved;
o the actual size and characteristics of markets to be addressed by
our products;
o market acceptance of our products;
o the ability of Genzyme to successfully commercialize the Sepra
products in the U.S. and Canada on behalf of our joint venture;
o the amount of royalty revenue received on European sales of the
Sepra products by Genzyme;
o Genzyme's ability to obtain reimbursement for our products;
o the accuracy of our information concerning the products and
resources of competitors and potential competitors;
o funding of our general and administrative expenses and continued
funding of our research and development programs by Genzyme; and
o the risks and uncertainties described under the caption "Factors
Affecting Future Operating Results" under Item 7., "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in our Annual Report on Form 10-K for the fiscal year
ended December 31, 1999.
2
<PAGE>
NOTE REGARDING INCORPORATION BY REFERENCE
The Securities and Exchange Commission allows us to disclose important
information to you by referring you to other documents that we have filed with
the SEC. The information that we refer you to is "incorporated by reference"
into this report. Please read that information.
NOTE REGARDING TRADEMARKS
Genzyme-Registered Trademark- and Sepra Film-Registered Trademark-
are registered trademarks of Genzyme. Genzyme-sm- is a service mark of
Genzyme.
3
<PAGE>
GENZYME DEVELOPMENT PARTNERS, L.P.
FORM 10-Q, MARCH 31, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Unaudited Statements of Operations for the Three Months Ended March 31, 2000 and 1999....5
Unaudited Balance Sheets as of March 31, 2000 and December 31, 1999......................6
Unaudited Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999....7
Notes to Unaudited Financial Statements..................................................8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....10
Item 3. Quantitative and Qualitative Disclosures About Market Risk...............................13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.........................................................13
Signatures ............................................................................................14
</TABLE>
4
<PAGE>
GENZYME DEVELOPMENT PARTNERS, L.P.
FORM 10-Q, MARCH 31, 2000
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENZYME DEVELOPMENT PARTNERS, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
2000 1999
---- ----
(UNAUDITED, AMOUNTS IN THOUSANDS
EXCEPT PER UNIT DATA)
<S> <C> <C>
Royalty revenue from Genzyme............................................. $ 61 $ 48
Costs and expenses:
Administrative expenses.............................................. 18 18
------- ------
Operating income......................................................... 43 30
Other income (expenses):
Equity in net loss of joint venture (Note C)......................... - -
Investment income.................................................... - 1
--------- -------
Total other income (expenses)............................................ - 1
Net income............................................................... $ 43 $ 31
====== =====
Net income attributable to each partnership unit:
Limited Partners-based on 737 units.................................. $ 58 $ 42
====== =====
General Partner-based on 1 unit...................................... $ 430 $310
===== ====
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
5
<PAGE>
GENZYME DEVELOPMENT PARTNERS, L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---- ----
(UNAUDITED, AMOUNTS IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................................ $ 74 $ 18
Royalty receivable from Genzyme.......................................... 61 59
Investment in joint venture (Note C)..................................... - -
-------- --------
Total assets......................................................... $135 $ 77
==== =====
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accrued expenses........................................................ $ 51 $ 70
Payable to Genzyme (Note B)............................................. 141 107
------ -----
Total liabilities.................................................... 192 177
Commitments and contingencies............................................
Partners' capital (deficit) (including accumulated deficit of $34,208 as of
March 31, 2000):
General partner...................................................... (218) (218)
Class A limited partners............................................. 161 118
Class B limited partners............................................. - -
--------- --------
Total partners' capital (deficit)................................ (57) (100)
------ ----
Total liabilities and partners' capital (deficit)................ $ 135 $ 77
===== =====
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
6
<PAGE>
GENZYME DEVELOPMENT PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
2000 1999
---- ----
(UNAUDITED, AMOUNTS IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................... $ 43 $ 31
Reconciliation of net income to net cash provided by operating activities:
Increase in cash from working capital:
Royalties receivable from Genzyme............................ (2) (10)
Payable to Genzyme and accrued expenses...................... 15 18
------ ------
Net cash provided by operating activities.......................... 56 39
----- ------
Increase in cash and cash equivalents................................. 56 39
Cash and cash equivalents at beginning of period...................... 18 97
------ ------
Cash and cash equivalents at end of period............................ $ 74 $136
===== ====
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
7
<PAGE>
GENZYME DEVELOPMENT PARTNERS, L.P.
NOTES TO UNAUDITED, FINANCIAL STATEMENTS
MARCH 31, 2000
A. BASIS FOR PRESENTATION
We were formed in 1989 to develop, produce and derive income from the
sale of products that we refer to as the Sepra products in the United States and
Canada. The Sepra products are, generally, products that:
o are based in whole or in part on hyaluronic acid, which is a
naturally occurring substance that protects tissue and organs;
o are used in human clinical trials or human surgical procedures
(other than ophthalmic surgery); and
o have the effect of reducing the incidence or severity of
adhesions (scar tissue).
In August 1996, Genzyme received marketing approval from the FDA for
our first product, Sepra Film-Registered Trademark- bioresorbable membrane, and
commenced commercial sales of Sepra Film-Registered Trademark- bioresorbable
membrane in the United States on behalf of our joint venture.
Per partnership unit information is based on the number of partnership
units outstanding at the end of each period. The number of units outstanding has
not changed since the date of our capitalization.
Our unaudited financial statements should be read in conjunction with
the information, financial statements and footnotes included in our 1999 Annual
Report on Form 10-K. We prepared our unaudited financial statements following
the requirements of the SEC for interim reporting. As permitted under those
rules, certain notes or other financial information that is normally required by
generally accepted accounting principles has been condensed or omitted.
These financial statements are unaudited but include all normal and
recurring adjustments that we consider necessary for the fair presentation of
our financial position and operating results. Revenues, expenses, assets and
liabilities can vary from quarter to quarter. Therefore, the results and trends
in these interim financial statements may not be the same as those for the full
year.
B. DEVELOPMENT AGREEMENT
Our Development Agreement calls for Genzyme to develop the Sepra
products to be used as surgical aids to limit the incidence and severity of
postoperative adhesions. We were required to reimburse Genzyme for all direct
costs, a reasonable allocation of indirect costs as they relate to the
development effort and a 10% management fee, up to our available funds. We paid
a non-refundable retainer fee of $1.5 million to Genzyme when our partnership
commenced. Our general partner has the authority to terminate the research
program at any time if it is deemed to be unfeasible or uneconomical. Genzyme
has no obligation to fund the programs beyond our available funds but has done
so after we expended our available funds in the first quarter of 1994. Genzyme
has spent the following amounts on our development programs since the first
quarter of 1994:
o $1.6 million for the three months ended March 31, 2000;
o $9.0 million in 1999;
o $8.4 million in 1998;
o $7.3 million in 1997;
o $6.0 million in 1996;
o $6.4 million in 1995; and
o $6.5 million for the period April 1, 1994 through December 31,
1994.
We are not obligated to reimburse Genzyme for any of these development
expenses. Genzyme currently intends to fund our development programs through
2000 on a level consistent with previous years and the 2000 budget for the
programs.
8
<PAGE>
GENZYME DEVELOPMENT PARTNERS, L.P.
NOTES TO UNAUDITED, FINANCIAL STATEMENTS
MARCH 31, 2000
C. JOINT VENTURE AGREEMENT
We formed our joint venture with Genzyme to make and sell Sepra
products in the United States and Canada. Genzyme manufactures our Sepra
products and has the exclusive right to sell the Sepra products in the United
States and Canada on behalf of our joint venture. Genzyme currently funds the
joint venture's cash needs. Once annual revenues from sales in the United
States and Canada exceed $25 million, Genzyme will be reimbursed for general
and administrative support through a quarterly commission equal to 10% of its
revenues for each quarter.
The first $5.6 million of net profits of our joint venture will be
allocated to us, and the next $8.4 million will be allocated to Genzyme.
Afterward, 60% of the net profits will be allocated to Genzyme and 40% to us.
The first $200,000 of the joint venture's losses were allocated to us
and, thereafter, the losses are allocated 40% to us and 60% Genzyme, except to
the extent that losses allocable to us would result in the allocation of these
losses to our general partner as a result of our limited partners' capital
account balance having been previously reduced to zero. In such an event, 100%
of the losses, in excess of the first $200,000, are allocated to Genzyme. For
financial statement purposes, Genzyme currently consolidates 100% of the losses
of our joint venture funded by Genzyme's non-interest bearing loans or capital
contributions.
We did not recognize losses from the joint venture for the three
months ended March 31, 2000 or March 31, 1999 because of the reasons set
forth in the previous paragraph. According to the terms of the Amended and
Restated Joint Venture Agreement, the losses of our joint venture for each of
these periods were allocated 100% to Genzyme.
We have summarized condensed financial information of our joint venture in the
tables below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, INCREASE/
---------------------- DECREASE
2000 1999 % CHANGE
---- ---- -----------
(UNAUDITED, AMOUNTS IN THOUSANDS EXCEPT PERCENTAGE DATA)
<S> <C> <C> <C>
Revenues.................................... $1,745 $ 1,405 24%
Gross profit................................ 1,169 777 50%
Operating expenses.......................... (1,346) (1,249) 8%
Net loss.................................... (177) (472) (63)%
</TABLE>
The net loss for our joint venture decreased in the three months ended
March 31, 2000 as compared to the same period of 1999 due primarily to:
o increased sales of Sepra Film-Registered Trademark- bioresorbable
membrane; and
o improvements in manufacturing efficiency, which decreased our
joint venture's manufacturing costs.
The increased sales and reduced manufacturing costs were offset in part
by a slight increase in the costs associated with selling and marketing Sepra
Film-Registered Trademark- bioresorbable membrane in the United States and
Canada.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---- ----
(UNAUDITED, AMOUNTS IN THOUSANDS)
<S> <C> <C>
Current assets......................................... $21 $21
Noncurrent assets...................................... - -
Current liabilities.................................... 21 21
Noncurrent liabilities................................. - -
</TABLE>
9
<PAGE>
GENZYME DEVELOPMENT PARTNERS, L.P.
FORM 10-Q, MARCH 31, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
The following discussion is a summary of the key factors the management of our
general partner considers necessary in reviewing our results of operations,
liquidity and capital resources.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, INCREASE/
------------------- DECREASE
2000 1999 % CHANGE
---- ---- --------
(UNAUDITED, AMOUNTS IN THOUSANDS EXCEPT PERCENTAGE DATA)
<S> <C> <C> <C>
Royalty revenue from Genzyme............................ $ 61 $ 48 27%
Costs and expenses:
Administrative expenses........................... 18 18 0%
------ --------
Operating income........................................ 43 30 43%
Equity in net loss of joint venture..................... - - 0%
Investment income....................................... - 1 (100%)
--------- ---------
Total other income (expenses)..................... - 1 (100%)
--------- ---------
Net income.............................................. $ 43 $ 31 39%
====== =======
</TABLE>
ROYALTY REVENUE
Under our Cross License Agreement with Genzyme, we record royalty
revenue upon the shipment and passage of title of the Sepra products by
Genzyme to third parties in Europe. Our royalties are calculated based on 6%
of Genzyme's net sales of the Sepra products in this region. Royalty revenue
increased in the three months ended March 31, 2000 as compared to the same
period of 1999 due primarily to Genzyme's increased shipments of Sepra
products in Europe which resulted from Genzyme's use of a European
distributor.
EQUITY IN NET LOSS OF JOINT VENTURE
Our joint venture's net revenues were $1.7 million for the three
months ended March 31, 2000 as compared to $1.4 million for the same period
of 1999. Our joint venture incurred net losses of $0.2 million for the first
quarter of 2000, a decrease of 63% in comparison to net losses of $0.5
million for the first quarter of 1999. The decrease in net losses is
attributable to:
o increased sales of the Sepra products in the United States and
Canada; and
o improvements in manufacturing efficiency which decreased our
joint venture's manufacturing costs.
The increased sales and reduced manufacturing costs were offset in part
by a slight increase in the costs associated with introducing, selling and
marketing the Sepra products in the healthcare marketplace in United States and
Canada.
The first $5.6 million of net profits of our joint venture will be
allocated to us, and the next $8.4 million will be allocated to Genzyme.
Afterward, 60% of the net profits will be allocated to Genzyme and 40% to us.
The first $200,000 of the joint venture's losses were allocated to
us and, thereafter, the losses are allocated 40% to us and 60% Genzyme,
except to the extent that losses allocable to us would result in the
allocation of these losses to our general partner as a result of our limited
partners' capital account balance having been previously reduced to zero. In
such an event, 100% of the losses, in excess of the first $200,000, are
allocated to Genzyme. For financial statement purposes, Genzyme currently
consolidates 100% of the losses of our joint venture funded by Genzyme's
non-interest bearing loans or capital contributions.
We did not recognize losses from the joint venture for the three months
ended March 31, 2000 or March 31, 1999 because of the reasons set forth in
the previous paragraph. According to the terms of the Amended and Restated
Joint Venture Agreement, the losses of our joint venture for each of the three
months ended March 31, 2000 and 1999 were allocated 100% to Genzyme.
10
<PAGE>
NET INCOME
Our net income for the three months ended March 31, 2000 increased
in comparison to our net income for the same period of 1999 due to increased
royalty revenues.
FINANCIAL CONDITION
As of March 31, 2000, we had $74,000 in cash and cash equivalents, an
increase of $56,000 from December 31, 1999. We received $57,000 of cash from the
collection of royalties. Our remaining cash is reserved for funding general and
administrative expenses.
Our future profitability is entirely dependent upon our joint venture's
sales of the Sepra products. Our joint venture commenced operations following
receipt of FDA marketing approval of Sepra Film-Registered Trademark-
bioresorbable membrane in August 1996. Sepra Film-Registered Trademark-
bioresorbable membrane is the first Sepra Product to obtain FDA marketing
approval and was launched in the United States during the fourth quarter of
1996. Sepra Film-Registered Trademark- bioresorbable membrane is being marketed
in the United States and Canada by Genzyme on behalf of our joint venture.
We will require substantial additional funds to complete the
development and clinical testing of the Sepra products. Genzyme has funded the
research and development programs for our Sepra products on an annual basis
since the first quarter of 1994, when we depleted all of the funds we had
available to develop our products. Genzyme currently intends to continue to
provide this funding through 2000. There is no guarantee that Genzyme will
continue funding our programs. Genzyme has committed to fund our administrative
expenses in excess of our cash balance. Genzyme is not obligated to provide such
funding after 2000. If Genzyme stops funding our operations and development
programs, we cannot guarantee that we will be able to obtain any additional
financing or find it on favorable terms. If we have insufficient funds or are
unable to raise additional funds, we may delay, reduce or eliminate all or some
of our programs.
PARTNERSHIP PURCHASE OPTION AGREEMENT
Genzyme has the right to purchase our limited partnership interests
this year for a predetermined amount. Under a Partnership Purchase Option
Agreement, we granted Genzyme the option to purchase our limited partnership
interests during the 90-day period beginning on August 31, 2000. The
commencement date may be accelerated to the last day of the month in which the
aggregate distributions we receive from our joint venture are equal to $5.5
million or more. If Genzyme exercises the option, each of our limited partners
will receive approximately $35,000 per partnership unit, in cash, Genzyme common
stock, or any combination of the two. Additionally, our limited partners will
receive quarterly royalty payments for a period of ten years after the buyout
date.
EURO-THE EUROPEAN CURRENCY
On January 1, 1999, a number of European countries adopted the Euro
as their common currency. All of our revenues to date have been derived from
Genzyme's European sales of Sepra products. Since December 31, 1999, there
have been no material changes related to Genzyme's outstanding derivatives
and forward contracts, or any other material contracts as a result of the
euro conversion nor have there been any material changes in Genzyme's or our
competitive position as a result of the conversion. We incorporate by
reference our disclosure related to the euro conversion set forth under the
heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Euro - the New European Currency" in our 1999 Annual
Report on Form 10-K into this section.
YEAR 2000
We rely upon Genzyme to provide general and administrative and other
services. Our joint venture relies upon Genzyme to perform manufacturing,
marketing and sales services. The services provided to us and to our joint
venture by Genzyme involve the use of Genzyme's computer systems and equipment.
There have been no material changes in Genzyme's Year 2000 compliance program or
our potential Year 2000 exposures since December 31, 1999. We incorporate by
reference our disclosure related to Year 2000 compliance set forth under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Year 2000" in our
11
<PAGE>
1999 Annual Report on Form 10-K into this section.
12
<PAGE>
GENZYME DEVELOPMENT PARTNERS, L.P.
FORM 10-Q, MARCH 31, 2000
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule for Genzyme Development
Partners, L.P. (for EDGAR filing purposes only).
Filed with this report.
(b) Reports on Form 8-K
We did not file any reports on Form 8-K during the
quarter ending March 31, 2000.
13
<PAGE>
GENZYME DEVELOPMENT PARTNERS, L.P.
FORM 10-Q, MARCH 31, 2000
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.
GENZYME DEVELOPMENT PARTNERS, L.P.
(Registrant)
By: GENZYME DEVELOPMENT CORPORATION II,
its General Partner
DATE: May 15, 2000 By: /S/ MICHAEL S. WYZGA
--------------------------------------
Michael S. Wyzga
Treasurer and Chief Financial Officer
14
<PAGE>
GENZYME DEVELOPMENT PARTNERS, L.P.
FORM 10-Q, MARCH 31, 2000
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
NO. DESCRIPTION
<S> <C>
27 Financial Data Schedule for Genzyme Development Partners, L.P.
(for EDGAR filing purposes only). Filed with this report.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF GENZYME DEVELOPMENT PARTNERS, L.P. FOR THE
THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 74
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 135
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 135
<CURRENT-LIABILITIES> 192
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (57)
<TOTAL-LIABILITY-AND-EQUITY> 135
<SALES> 0
<TOTAL-REVENUES> 61
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 43
<INCOME-TAX> 0
<INCOME-CONTINUING> 43
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43<F1>
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>GENZYME DEVELOPMENT PARTNERS, L.P. IS A DELAWARE LIMITED PARTNERSHIP. NET
EARNINGS OR LOSS ARE REPORTED PER PARTNERSHIP UNIT INSTEAD OF PER SHARE. THE
PARTNERSHIP RECORDED NET INCOME OF $43,000 IN THE THREE MONTHS ENDED MARCH 31,
2000 WHICH WAS ALLOCATED 1% TO THE GENERAL PARTNER AND 99% TO THE LIMITED
PARTNERS.
</FN>
</TABLE>
