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UNITED STATES
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 SEPTEMBER 30, 2002
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 33-35938
PAINEWEBBER R&D PARTNERS III, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3588219
(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
----------------------
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 [_]
----------------------
SPECIAL NOTE REGARDING
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Except for the historical information
contained herein, the matters discussed herein are forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of PaineWebber R&D Partners III, L.P. or industry results to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
the following: general economic and business conditions; fluctuations in the
value of securities for which only a limited, or no, public market exists;
dependence on the development of new technologies; dependence on timely
development and introduction of new and competitively priced products; the need
for regulatory approvals; the Sponsor Companies (hereinafter defined) having
insufficient funds to commercialize products to their maximum potential; the
restructuring of Sponsor Companies; the dependence of PaineWebber R&D Partners
III, L.P. on the skills of certain scientific personnel; and the dependence of
PaineWebber R&D Partners III, L.P. on the General Partner (hereinafter defined).
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
FORM 10-Q
SEPTEMBER 30, 2002
Table of Contents
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Statements of Financial Condition (unaudited) at
September 30, 2002 and December 31, 2001 2
Statements of Operations
(unaudited) for the three months and nine months ended
September 30, 2002 and 2001 3
Statement of Changes in Partners' Capital (Deficit)
(unaudited) for the nine months ended September 30, 2002 4
Statements of Cash Flows
(unaudited) for the nine months ended September 30,
2002 and 2001 5
Notes to Financial Statements
(unaudited) 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-11
Item 3. Quantitative and Qualitative Disclosures about Market
Risks 12
Item 4. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Certifications 15-18
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.
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF FINANCIAL CONDITION
(unaudited)
SEPTEMBER 30, DECEMBER 31,
2002 2001
- --------------------------------------------------------------------------------
Assets:
Marketable securities, at market value $1,347,377 $4,783,593
========== ==========
Liabilities and partners' capital:
Accrued liabilities $ 61,088 $ 92,681
Partners' capital 1,286,289 4,690,912
---------- ----------
Total liabilities and partners' capital $1,347,377 $4,783,593
========== ==========
- --------------------------------------------------------------------------------
See notes to financial statements.
2
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 2001
- --------------------------------------------------------------------------------------
Revenues:
Interest income $ 1,002 $ 3,843
Unrealized depreciation of marketable securities (708,326) (2,805,750)
----------- -----------
(707,324) (2,801,907)
----------- -----------
Expenses:
General and administrative costs 41,821 43,952
----------- -----------
Net loss $ (749,145) $(2,845,859)
=========== ===========
Net loss per partnership unit:
Limited partners (based on 50,000 units) $ (14.83) $ (56.35)
General partner $ (7,491.45) $(28,458.59)
======================================================================================
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 2001
- --------------------------------------------------------------------------------------
Revenues:
Interest income $ 3,588 $ 15,893
Unrealized depreciation of marketable securities (3,283,673) (1,072,799)
----------- -----------
(3,280,085) (1,056,906)
----------- -----------
Expenses:
General and administrative costs 124,538 129,616
----------- -----------
Net loss $(3,404,623) $(1,186,522)
=========== ===========
Net loss per partnership unit:
Limited partners (based on 50,000 units) $ (67.41) $ (23.49)
General partner $(34,046.23) $(11,865.22)
- --------------------------------------------------------------------------------------
See notes to financial statements.
3
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(unaudited)
LIMITED GENERAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 PARTNERS PARTNER TOTAL
- -----------------------------------------------------------------------------------------------------------
Balance at January 1, 2002 $ 6,198,567 $ (1,507,655) $ 4,690,912
Net loss (3,370,577) (34,046) (3,404,623)
------------ ------------- -------------
Balance at September 30, 2002 $ 2,827,990 $ (1,541,701) $ 1,286,289
============ ============= ==============
- -----------------------------------------------------------------------------------------------------------
See notes to financial statements.
4
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 2001
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $(3,404,623) $(1,186,522)
Adjustments to reconcile net loss to
cash provided by operating activities:
Unrealized depreciation of marketable securities 3,283,673 1,072,799
Decrease in operating assets:
Marketable securities 152,543 126,461
Decrease in operating liabilities:
Accrued liabilities (31,593) (12,738)
----------- -----------
Cash provided by operating activities -- --
----------- -----------
Cash flows from financing activities:
Distributions to partners -- --
----------- -----------
Cash at beginning of period -- --
----------- -----------
Cash at end of period $ -- $ --
=========== ===========
- --------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
The Partnership paid no cash for interest or taxes during the nine months ended
September 30, 2002 and 2001.
- --------------------------------------------------------------------------------
See notes to financial statements.
5
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BUSINESS
The financial information as of September 30, 2002, and for the periods
ended September 30, 2002 and 2001 is unaudited. However, in the opinion of
management of PaineWebber R&D Partners III, L.P. (the "Partnership"), such
information includes all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation. The results of operations reported
for the interim period ended September 30, 2002, are not necessarily indicative
of results to be expected for the year ended December 31, 2002. These financial
statements should be read in conjunction with the most recent annual report of
the Partnership on Form 10-K for the year ended December 31, 2001 and the
previously issued quarterly reports on Forms 10-Q for the quarters ended March
31, 2002 and June 30, 2002.
The Partnership is a Delaware limited partnership that commenced
operations on June 3, 1991. Paine Webber Development Corporation ("PWDC" or the
"General Partner"), an indirect, wholly-owned subsidiary of UBS Americas Inc.
(formerly Paine Webber Group Inc.) is the general partner and manager of the
Partnership. The Partnership will terminate on December 15, 2015, unless its
term is extended or reduced by the General Partner.
The principal objective of the Partnership has been to provide
long-term capital appreciation to investors through investing in the development
and commercialization of new products with technology and biotechnology
companies ("Sponsor Companies"), which have been expected to address significant
market opportunities. The Partnership has been engaged in diverse product
development projects (the "Projects") including product development contracts,
participation in other partnerships and investments in securities of Sponsor
Companies. Once the product development phase has been completed, the Sponsor
Companies have had the option to license and commercialize the products
resulting from the product development project, and the Partnership has had the
right to receive payments based upon the sale of such products.
6
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 1 CONTINUED)
The following table sets forth the proportion of each distribution to
be received by limited partners of the Partnership (the "Limited Partners") and
the General Partner (collectively, the "Partners"). All distributions to the
individual Limited Partners have been made pro rata in accordance with their
individual capital contributions.
LIMITED GENERAL
PARTNERS PARTNER
-------- -------
I. Until the value of the aggregate distributions for
each limited partnership unit ("Unit") equals
$1,000 plus simple interest on such amount accrued
at 5% per annum ("Contribution Payout")
Contribution Payout as of September 30, 2002 is
$1,562 per Unit ..................................... 99% 1%
II. After Contribution Payout and until the value of
the aggregate distributions for each Unit equals
$5,000 ("Final Payout") ............................. 80% 20%
III. After Final Payout .................................. 75% 25%
For the nine months ended September 30, 2002, the Partnership made no
cash distributions. As of this date, the Partnership has made cash and security
distributions, as valued on the dates of distribution, since inception of $1,483
and $98 per Unit, respectively. Aggregate distributions per Unit reached
Contribution Payout as of June 30, 2000.
Profits and losses of the Partnership are allocated as follows: (i)
until cumulative profits and losses for each Unit equals Contribution Payout,
99% to Limited Partners and 1% to the General Partner, (ii) after Contribution
Payout and until cumulative profits and losses for each unit equals Final
Payout, 80% to Limited Partners and 20% to the General Partner, and (iii) after
Final Payout, 75% to Limited Partners and 25% to the General Partner. As of
September 30, 2002, the cumulative profits of the Partnership were $775 per
Unit.
Pursuant to the terms of the Agreement of Limited Partnership, upon
termination of the Partnership, the General Partner is required to pay to the
Partnership an amount in cash equal to the debit balance in the General
Partner's capital account. Such amount then becomes part of the assets of the
Partnership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in conformity with accounting
principles generally accepted in the United States 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 and common stock
which are recorded at market value. Marketable securities are not considered
cash equivalents for the Statements of Cash Flows.
Realized and unrealized gains or losses are generally determined on a
specific identification method and are reflected in the Statements of Operations
during the period in which the sale or change in value occurs.
7
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 2 CONTINUED)
The Partnership invests in product development contracts with Sponsor
Companies either directly or through product development limited partnerships.
The Partnership expenses product development costs when incurred by the Sponsor
Companies and such costs are reflected as expenditures under product development
projects. Income received and/or accrued from investments in Projects is
reflected in the Statements of Operations for the period in which the income is
earned.
3. MARKETABLE SECURITIES
The Partnership held the following marketable securities at:
SEPTEMBER 30, 2002 DECEMBER 31, 2001
----------------------- -----------------------
CARRYING CARRYING
VALUE COST VALUE COST
----- ---- ----- ----
Money market fund $ 248,072 $ 248,072 $ 400,615 $ 400,615
Genzyme Molecular Oncology
(461,091 common shares) 456,481 646,609 3,688,728 646,609
Repligen Corporation
(285,700 common shares) 642,824 901,433 694,250 901,433
---------- ---------- ---------- ----------
$1,347,377 $1,796,114 $4,783,593 $1,948,657
========== ========== ========== ==========
As of September 30, 2002, the market value of Genzyme Molecular
Oncology ("GMO") was $0.99 per share as compared to $2.52 per share and $8.00
per share as of June 30, 2002 and December 31, 2001, respectively. The
Partnership recognized unrealized depreciation on its investment of 461,091
shares for the three months and nine months ended September 30, 2002 of $705,469
and $3,232,248, respectively. As of September 30, 2001 and June 30, 2001, the
market value of GMO was $7.75 per share and $13.55 per share, respectively. The
carrying value at December 31, 2000 was $9.1875 per share resulting in the
recognition of unrealized depreciation of $2,674,328 and $662,819 for the three
months and nine months ended September 30, 2001, respectively.
The market value of Repligen Corporation ("Repligen") as of September
30, 2002 was $2.25 per share decreasing from $2.26 per share as of June 30, 2002
and $2.43 per share as of December 31, 2001. The Partnership recognized
unrealized depreciation on its investment of 285,700 shares of $51,426 for the
nine months ended September 30, 2002. As of September 30, 2001 and June 30,
2001, the market value of Repligen was $1.94 and $2.40 per share as compared to
a carrying value as of December 31, 2000 of $3.375 per share. Accordingly, the
Partnership recognized unrealized depreciation for the three months and nine
months ended September 30, 2001 of $131,422 and $409,980, respectively.
8
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
4. RELATED PARTY TRANSACTIONS
The money market fund invested in by the Partnership is managed by an
affiliate of UBS PaineWebber Inc. ("PWI").
PWDC and PWI, and their affiliates, have acted in an investment banking
capacity for several of the Sponsor Companies. In addition, PWDC and its
affiliates have direct limited partnership interests in some of the same product
development limited partnerships as the Partnership.
5. PRODUCT DEVELOPMENT PROJECTS
Of the Partnership's seven original Projects, the following two
Projects are currently active: a $6.0 million investment in Alkermes Clinical
Partners, L.P., a $46.0 million limited partnership formed to fund the
development, clinical testing, manufacturing and marketing of Receptor-Mediated
Permeabilizers for use in the treatment of diseases of the brain and central
nervous system by enabling the delivery of drugs across the blood brain barrier;
and a $6.0 million investment in Cephalon Clinical Partners, L.P., a $45.0
million limited partnership formed to fund the development, clinical testing,
manufacturing and marketing of Myotrophin(TM) for use in the treatment of
amyotrophic lateral sclerosis and certain other peripheral neuropathies. As of
September 30, 2002 the Partnership is carrying these investments at zero.
If the Projects produce any product for commercial sale, the Sponsor
Companies have the option to license the Partnership's technology to manufacture
and market the products developed. In addition, the Sponsor Companies have the
option to purchase the Partnership's interest in the technology.
6. INCOME TAXES
The Partnership is not subject to federal, state or local income taxes.
Accordingly, individual Partners are required to report their distributive share
of realized income or loss on their respective federal and state income tax
returns.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
Partners' capital decreased from $4.7 million at December 31, 2001 to
$1.3 million at September 30, 2002 resulting from the recognition of a net loss
of $3.4 million for the nine months ended September 30, 2002 (as discussed in
the Results of Operations below).
The Partnership's funds are invested in a money market fund and
marketable securities until cash is needed for the payment of ongoing management
and administrative expenses incurred or remittance of cash distributions to
Partners. Liquid assets decreased from $4.8 million at December 31, 2001 to $1.3
million at September 30, 2002 resulting primarily from a decrease in the market
values of marketable securities held as of these dates.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2001:
Net loss for the quarters ended September 30, 2002 and 2001 was $0.7
million and $2.8 million, respectively, resulting primarily from the recognition
of unrealized depreciation of marketable securities.
For the quarter ended September 30, 2002, the Partnership recognized
unrealized depreciation of $0.7 million on its investments of 0.461 million
shares of GMO. The market value of GMO decreased from $2.52 per share as of June
30, 2002 to $0.99 per share as of September 30, 2002. For the quarter ended
September 30, 2001, the Partnership recognized unrealized depreciation of $2.8
million. GMO had a market value as of this date of $7.75 per share as compared
to $13.55 per share as of June 30, 2001. Accordingly, the Partnership recognized
unrealized depreciation of $2.7 million for this period. The Partnership
recognized unrealized depreciation of $0.1 million upon the decrease of
Repligen's market value from $2.40 per share as of June 30, 2001 to $1.94 per
share at September 30, 2001. The Partnership had an investment of 0.285 million
shares in Repligen.
There were no material variances in expenses for the three months ended
September 30, 2002 as compared to the same period in 2001.
NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 2001:
For the nine months ended September 30, 2002, the Partnership
recognized a net loss of $3.4 million as compared to a net loss of $1.2 million
for this same period in 2001. The variance results primarily from an unfavorable
change in unrealized depreciation of marketable securities.
The Partnership recognized unrealized depreciation of $3.3 million for
the nine months ended September 30, 2002 resulting primarily from its investment
of 0.461 million shares of GMO. GMO's market value decreased from $8.00 per
share at December 31, 2001 to $0.99 per share as of September 30, 2002. For this
same period ended September 30, 2001, the Partnership recognized unrealized
depreciation of $1.1 million. The market value of GMO as of this date was $7.75
per share as compared to a carrying value of $9.1875 per share as of December
31, 2000. The Partnership
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 2001:
recognized unrealized depreciation of $0.7 million for the nine months ended
September 30, 2001. The market value of Repligen decreased from $3.375 per share
at December 31, 2000 to $1.94 per share at September 30, 2001 resulting in
unrealized depreciation of $0.4 million on an investment of 0.285 million
shares.
There were no material variances in expenses for the nine months ended
September 30, 2002 as compared to the same period in 2001.
11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Substantially all of the Partnership's non-cash assets consist of
461,091 shares of GMO and 285,700 shares of Repligen. The Partnership acquired
these shares in connection with its investments in Projects. The Partnership
holds these shares until cash is needed for the payment of Partnership expenses
or to make cash distributions to the Partners.
The carrying values of investments subject to equity price risks are
based on quoted market prices as of the balance sheet dates. Market prices are
subject to fluctuation and, consequently, the amount realized in the subsequent
sale of an investment may significantly differ from the reported market value.
Fluctuation in the market price of a security may result from perceived changes
in the underlying economic characteristics of the issuer, the relative price of
alternative investments and general market conditions. Furthermore, amounts
realized in the sale of a particular security may be affected by the relative
quantity of the security being sold.
The table below summarizes the Partnership's equity price risks as of
September 30, 2002 and 2001 and shows the effects of a hypothetical 30% increase
and a 30% decrease in market prices as of those dates. The selected hypothetical
change does not reflect what could be considered the best or worst case
scenarios. Indeed, results could be far worse due to the nature of the equity
markets.
ESTIMATED ESTIMATED
MARKET VALUE AFTER PARTNERS' CAPITAL
HYPOTHETICAL HYPOTHETICAL AFTER HYPOTHETICAL
MARKET VALUE PRICE CHANGE CHANGE IN PRICE CHANGE IN PRICE
------------ ------------ --------------- ---------------
As of September 30, $1,099,305 30% increase $1,429,096 $1,616,080
2002 30% decrease $ 769,513 $ 956,497
As of September 30, $4,382,978 30% increase $5,697,871 $6,005,805
2001 30% decrease $3,068,085 $3,376,019
ITEM 4. CONTROLS AND PROCEDURES
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The President and
Principal Financial Officer of the General Partner, after evaluating
the effectiveness of the Partnership's disclosure controls and
procedures (as defined in the Securities Exchange Act of 1934 Rules
13a-14(c) and 15d-14(c) as of a date within 90 days of the filing date
of this Quarterly Report on Form 10-Q (the "Evaluation Date")), have
concluded that as of the Evaluation Date, the Partnership's disclosure
controls and procedures were adequate and effective to ensure that
material information relating to the Partnership would be made known to
them by others within the General Partner or its affiliates,
particularly during the period in which this Quarterly Report on Form
10-Q was being prepared.
(b) CHANGES IN INTERNAL CONTROLS. There were no significant changes in the
Partnership's internal controls or in other factors that could
significantly affect the Partnership's internal controls subsequent to
the date of their evaluation, nor any significant deficiencies or
material weaknesses in such internal controls requiring corrective
actions. As a result, no corrective actions were taken.
12
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) EXHIBITS:
99.1 Certification by Robert J. Chersi pursuant to 18 U.S.S.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification by Stephen R. Dyer pursuant to 18 U.S.S.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
b) REPORTS ON FORM 8-K:
None
13
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 14th day of
November 2002.
PAINEWEBBER R&D PARTNERS III, L.P.
By: PaineWebber Development Corporation
(General Partner)
By: /s/ Stephen R. Dyer
-------------------------------
Stephen R. Dyer
President
By: /s/ Robert J. Chersi
-------------------------------
Robert J. Chersi
Principal Financial and Accounting Officer
14
CERTIFICATIONS
- --------------
I, Stephen R. Dyer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of PaineWebber R&D
Partners III, L.P. (the "Partnership");
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Partnership as of, and for, the periods presented in
this quarterly report;
4. The Partnership's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Partnership
and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the Partnership is made
known to us by others within the Partnership, particularly
during the period in which this quarterly report is being
prepared;
(b) evaluated the effectiveness of the Partnership's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The Partnership's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Partnership's auditors and the
audit committee of the board of directors of the Partnership's general
partner (or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
Partnership's ability to record, process, summarize and report
financial data and have identified for the Partnership's
auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Partnership's internal controls.
6. The Partnership's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: November 14, 2002
/s/ Stephen R. Dyer
---------------------------------------
Name: Stephen R. Dyer
Title: President of PaineWebber
Development Corp.,
General Partner of the Partnership
15
CERTIFICATIONS
- --------------
I, Robert J. Chersi, certify that:
1. I have reviewed this quarterly report on Form 10-Q of PaineWebber R&D
Partners III, L.P. (the "Partnership");
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Partnership as of, and for, the periods presented in
this quarterly report;
4. The Partnership's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Partnership
and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the Partnership is made
known to us by others within the Partnership, particularly
during the period in which this quarterly report is being
prepared;
(b) evaluated the effectiveness of the Partnership's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The Partnership's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Partnership's auditors and the
audit committee of the board of directors of the Partnership's general
partner (or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
Partnership's ability to record, process, summarize and report
financial data and have identified for the Partnership's
auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Partnership's internal controls.
6. The Partnership's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: November 14, 2002
/s/ Robert J. Chersi
---------------------------------------
Name: Robert J. Chersi
Title: Principal Financial Officer of
PaineWebber Development Corp.,as
General Partner of the Partnership
16