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 QUARTER ENDED December 31, 1998

                                    OR

       |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

            For the transition period from ______ to _______ .


                      Commission File Number: 0-17150


                PAINEWEBBER DEVELOPMENT PARTNERS FOUR, LTD.
           -----------------------------------------------------
          (Exact name of registrant as specified in its charter)


            Texas                                      76-0147579
            --------                                      ----------
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                      Identification No.)


265 Franklin Street, Boston, Massachusetts                       02110
------------------------------------------                       -----
(Address of principal executive offices)                    (Zip Code)


Registrant's telephone number, including area code  (617) 439-8118
                                                    --------------

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>
                   PAINEWEBBER DEVELOPMENT PARTNERS FOUR, LTD.

                           CONSOLIDATED BALANCE SHEETS
                December 31, 1998 and March 31, 1998 (Unaudited)
                                 (In thousands)

                                     ASSETS
                                                 December 31     March 31
                                                 -----------     --------

Operating investment properties:
   Land                                          $    1,543     $   18,190
   Buildings and improvements                         8,823         78,336
                                                 ----------     ----------
                                                     10,366         96,526
   Less accumulated depreciation                     (3,470)       (30,710)
                                                 ----------     ----------
                                                      6,896         65,816

Cash and cash equivalents                             1,143          1,551
Restricted cash                                         448          2,580
Accounts receivable                                       -              6
Advances to consolidated venture                         20              -
Prepaid and other assets                                 12             72
Deferred expenses, net                                   76            608
                                                 ----------     ----------
                                                 $    8,595     $   70,633
                                                 ==========     ==========

                        LIABILITIES AND PARTNERS' DEFICIT

Accounts payable and accrued expenses            $      181     $      387
Accrued interest and fees                                 -          4,823
Tenant security deposits                                 33            566
Mortgage loans payable                                9,125         92,120
Co-venturers' share of net assets of
  consolidated ventures                               1,100          1,124
Partners' deficit                                    (1,844)       (28,387)
                                                 ----------     ----------
                                                 $    8,595     $   70,633
                                                 ==========     ==========








                             See accompanying notes.


<PAGE>


                   PAINEWEBBER DEVELOPMENT PARTNERS FOUR, LTD.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
   For the three and nine months ended December 31, 1998 and 1997 (Unaudited)
                      (In thousands, except per Unit data)

                                Three Months Ended     Nine Months Ended
                                    December 31,          December 31,          
                                -------------------    -----------------
                                 1998       1997        1998      1997
                                 ----       ----        ----      ----
Revenues:
   Rental income               $    389     $ 2,665    $  7,303  $ 7,947
   Interest income                   30          64         271      185
   Other income                      17         123         188      390
                               --------     -------    --------  -------
                                    436       2,852       7,762    8,522

Expenses:
   Property operating expenses      196       1,140       2,412    3,021
   Real estate taxes                 43         234         549      702
   Interest expense                 109       1,256       2,942    3,586
   Depreciation                      81         653       1,663    1,959
   General and administrative        96          83         322      203
                               --------     -------    --------  -------
                                    525       3,366       7,888    9,471
                               --------     -------    --------  -------
Operating loss                      (89)       (514)       (126)    (949)

Gain on sale of joint 
  venture interest                    -       2,528           -    2,528
Partnership's share of 
  unconsolidated venture's 
  loss                                -         (39)          -     (150)
Co-venturers' share of 
  consolidated ventures'
  losses                             20          44          24       76
Gain on sale of operating 
  investment property                 -           -      51,901        -
                               --------     -------    --------  -------
         
Income (loss) before
  extraordinary gain                (69)      2,019      51,799    1,505
Extraordinary gain on 
  forgiveness of debt                 -           -       2,854        -
                               --------     -------    --------  -------
Net income (loss)              $    (69)    $ 2,019    $ 54,653  $ 1,505
                               ========     =======    ========  =======

Net income (loss) per 
  Limited Partnership Unit:
   Income (loss) before 
     extraordinary gain        $  (1.58)    $ 43.74   $1,186.54  $ 32.01
   Extraordinary gain on
     forgiveness of debt              -           -       65.37        - 
                               --------     -------   ---------  -------
        
   Net income (loss)           $  (1.58)    $ 43.74   $1,251.91  $ 32.01
                               ========     =======   =========  =======
Cash distributions per
   Limited Partnership Unit    $      -     $     -   $     675  $     -
                               ========     =======   =========  =======

      The above per  Limited  Partnership  Unit  information  is based  upon the
41,644 Limited Partnership Units outstanding for each period.


                             See accompanying notes.


<PAGE>


                   PAINEWEBBER DEVELOPMENT PARTNERS FOUR, LTD.

             CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
        For the nine months ended December 31, 1998 and 1997 (Unaudited)
                                 (In thousands)

                                             General          Limited
                                             Partners         Partners
                                             --------         --------

Balance at March 31, 1997                     $ (2,683)        $(27,318)
Net income                                         172            1,333
                                              --------         --------
Balance at December 31, 1997                  $ (2,511)        $(25,985)
                                              ========         ========

Balance at March 31, 1998                     $ (2,602)        $(25,785)
Cash distributions                                   -          (28,110)
Net income                                       2,518           52,135
                                              --------         --------
Balance at December 31, 1998                  $   (84)         $ (1,760)
                                              ========         ========

























                             See accompanying notes.


<PAGE>
<TABLE>


                   PAINEWEBBER DEVELOPMENT PARTNERS FOUR, LTD.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the nine months ended December 31, 1998 and 1997
          Increase (Decrease) in Cash and Cash Equivalents (Unaudited)
                                 (In thousands)
<CAPTION>

                                                                           1998         1997
                                                                           ----         ----
<S>                                                                        <C>          <C>
Cash flows from operating activities:
   Net income                                                              $  54,653   $  1,505
   Adjustments to reconcile net income to net cash
     (used in) provided by operating activities:
     Depreciation                                                              1,663      1,959
     Amortization of deferred financing costs                                    532         86
     Amortization of deferred gain on forgiveness of debt                       (204)      (257)
     Gain on sale of joint venture interest                                        -     (2,528)
     Partnership's share of unconsolidated venture's loss                          -        150
     Co-venturers' share of consolidated ventures' losses                        (24)       (76)
     Gain on sale of operating investment property                           (51,901)         -
     Extraordinary gain on forgiveness of debt                                (2,854)         -
     Changes in assets and liabilities:
      Accounts receivable                                                          6          -
      Accounts receivable - affiliates                                             -         (4)
      Advances to consolidated venture                                           (20)         -
      Prepaid and other assets                                                    60         18
      Deferred expenses                                                            -        (50)
      Accounts payable and accrued expenses                                     (206)       (89)
      Accrued interest and fees                                               (4,823)       749
      Tenant security deposits                                                  (533)      (147)
                                                                           ---------   --------
         Total adjustments                                                   (58,304)      (189)
                                                                           ---------   --------
         Net cash (used in) provided by operating activities                  (3,651)     1,316
                                                                           ---------   --------

Cash flows from investing activities:
   Distribution from unconsolidated joint venture                                  -          -
   Additions to buildings and improvements                                    (2,312)         -
   Net proceeds from sale of operating investment property                    35,870         19
                                                                           ---------   --------

         Net cash provided by investing activities                            33,558         19
                                                                           ---------   --------

Cash flows from financing activities:
   Distributions to partners                                                 (28,110)         -
   Decrease in restricted cash                                                 2,132        (10)
   Repayment of principal on long-term debt                                   (4,337)      (524)
                                                                           ---------   --------
         Net cash used in financing activities                               (30,315)      (534)
                                                                           ---------   --------

Net increase (decrease) in cash and cash equivalents                            (408)       801
Cash and cash equivalents, beginning of period                                 1,551      1,562
                                                                           ---------   --------
Cash and cash equivalents, end of period                                   $   1,143   $  2,363
                                                                           =========   ========

Cash paid during the period for interest                                   $   7,437   $  3,008
                                                                           =========   ========

Supplemental disclosure of non-cash financing activity:
   Mortgage loan payable assumed by
     buyer of operating investment property                                $  75,600   $      -
                                                                           =========   ========


</TABLE>

                             See accompanying notes.


<PAGE>

                   PAINEWEBBER DEVELOPMENT PARTNERS FOUR, LTD.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)



1.  General and Planned Liquidation
    -------------------------------

      The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements and footnotes contained in the
Partnership's Annual Report for the year ended March 31, 1998. In the opinion of
management, the accompanying financial statements,  which have not been audited,
reflect all adjustments  necessary to present fairly the results for the interim
period. All of the accounting  adjustments reflected in the accompanying interim
financial statements are of a normal recurring nature.

      The  accompanying  financial  statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting  principles
which  requires  management to make  estimates and  assumptions  that affect the
reported amounts of assets and liabilities and disclosures of contingent  assets
and  liabilities  as of December  31, 1998 and March 31, 1998 and  revenues  and
expenses for each of the three- and  nine-month  periods ended December 31, 1998
and 1997. Actual results could differ from the estimates and assumptions used.

      The  Partnership  originally  invested the net  proceeds of the  offering,
through joint  venture  partnerships,  in six rental  apartment  properties.  As
discussed further in the Annual Report, the Partnership's  operating  properties
have  encountered  major adverse  business  developments  which,  to date,  have
resulted in the loss of three of the original investments to foreclosure and the
sale of the  Partnership's  interest in one joint venture for a nominal  amount.
Subsequent to the  resolution  of the default  status of the debt secured by The
Lakes at South Coast Apartments in fiscal 1998 (see Note 5), management analyzed
whether it would be in the Limited  Partners' best interests to continue to hold
the two remaining  assets (The Lakes and Harbour Pointe) or to pursue  potential
sale opportunities with a goal of completing a liquidation of the Partnership in
the near term. Based on such analysis,  management  concluded that a liquidation
of the  Partnership  should be undertaken if favorable  prices for The Lakes and
Harbour Pointe could be achieved.  Under the terms of the Partnership Agreement,
the affirmative vote of Limited Partners who own 51% or more of the total number
of  outstanding  units of limited  partnership  interest in the  Partnership  is
required to approve the sale of all, or substantially  all, of the Partnership's
assets.  On May 4,  1998,  the  Partnership  furnished  a  Consent  Solicitation
Statement  to the  Limited  Partners  which  sought  the  approval  to sell  the
Partnership's  two remaining assets and,  thereafter,  to liquidate and dissolve
the Partnership (collectively,  the "Sale and Liquidation").  Effective June 18,
1998, the results of the Consent Solicitation Statement were finalized,  and the
Sale and  Liquidation  was  approved  by the  required  affirmative  vote of the
Limited  Partners.   Management's  goal  has  been  to  complete  the  Sale  and
Liquidation  by the end of calendar  year 1998.  It now appears  likely that the
Sale and Liquidation  will not be completed until the second quarter of calendar
1999.

      On August 20, 1998, The Lakes Joint Venture,  a joint venture in which the
Partnership has an interest, sold The Lakes at South Coast Apartments located in
Costa  Mesa,  California,  to an  unrelated  third party for  $114,000,000.  The
Partnership  received net proceeds of approximately  $25,942,000 after deducting
closing costs of $2,530,000,  property proration adjustments of $2,195,000,  the
assumption  of the first  mortgage  principal  balance  of  $75,600,000  and the
payment of approximately  $7,733,000 in subordinated debt and deferred fees that
was  related to the  September  26, 1991  refinancing  and  modification  of the
original first mortgage debt. In connection with the sale, the Partnership  also
received approximately $2,136,000 as its share of the property's working capital
and escrows held in connection with the debt. The total proceeds received by the
Partnership  of  approximately  $28,078,000  were included in a special  capital
distribution of $28,109,700,  or $675.00 per original $1,000 investment, paid on
September 9, 1998 to unitholders of record as of August 20, 1998.

      With the sale of The Lakes,  the  Partnership  now has one remaining  real
estate  investment,  the  Harbour  Pointe  Apartments.  This  property  has been
actively marketed for sale and on August 12, 1998, a purchase and sale agreement
was signed with a prospective buyer. This prospective buyer subsequently decided
to terminate  the purchase and sale  agreement and  discontinued  its efforts to
acquire the property.  The Partnership then re-opened discussions with the other
prospective purchasers.  These prospective purchasers were provided with updated
property  information,  and asked to submit revised offers.  After reviewing the
offers,  the Partnership  selected a new prospective  purchaser and negotiated a
purchase and sale agreement.  Subsequent to the quarter ended December 31, 1998,
the prospective  purchaser  terminated the sales contract pursuant to its terms.
The  Partnership  is  currently  in the process of  re-marketing  the  property.
However,  since the sale of the Harbour Pointe property remains contingent upon,
among other things,  negotiation of a definitive  sale  agreement,  satisfactory
completion of the buyer's due diligence and formal approval by a number of third
parties of the  assumption of the  tax-exempt  bonds secured by Harbour  Pointe,
there are no assurances  that the sale of the final asset and the liquidation of
the Partnership will be completed as planned.

2.  Related Party Transactions
    --------------------------

      Included in general and administrative expenses for the nine-month periods
ended  December  31,  1998  and  1997  is  $62,000  and  $60,000,  respectively,
representing  reimbursements to an affiliate of the Managing General Partner for
providing certain financial,  accounting and investor  communication services to
the Partnership.

      Also  included  in general  and  administrative  expenses  for both of the
nine-month periods ended December 31, 1998 and 1997 is $4,000, representing fees
earned by an affiliate,  Mitchell Hutchins  Institutional  Investors,  Inc., for
managing the Partnership's cash assets.

3.  Investment in Unconsolidated Joint Venture Partnership
    ------------------------------------------------------

      The Partnership  previously had an investment in one unconsolidated  joint
venture  which  owned  an  operating   investment   property   (Lincoln   Garden
Apartments), as discussed further in the Annual Report. The unconsolidated joint
venture was accounted for by using the equity method because the Partnership did
not have a voting control interest in the venture.  Under the equity method, the
investment  was  carried at cost  adjusted  for the  Partnership's  share of the
unconsolidated venture's earnings,  losses and distributions.  The Partnership's
policy is to recognize its share of  unconsolidated  venture's  operations three
months in arrears.

    On September 18, 1997, the Partnership sold its general partnership interest
in the joint venture which owned the Lincoln Garden Apartments to its co-venture
partner for $25,000.  In effecting  such sale,  management  considered  that (i)
during  recent  years,   the  operating   performance   of  Lincoln  Garden  had
deteriorated,  (ii) since its inception,  the  Partnership had not received cash
flow from this investment and no cash flow from this asset was projected for the
future, and (iii) the joint venture partner had a priority position in the joint
venture due to certain  loans  which it  advanced to the joint  venture to cover
prior  operating  deficits.   In  addition,   management   determined  that  the
outstanding  first mortgage loan balance on the Lincoln  Garden  property was in
excess of its market  value and that future  increases in the  property's  value
were  unlikely.  Because the property  offered  little or no  opportunity  for a
return of equity, the Partnership negotiated a sale of its position to its joint
venture  partner for a nominal  amount.  The sale was structured in two parts to
minimize the  negative tax  consequences  to the Lincoln  Garden joint  venture.
Accordingly,  the Partnership received $19,000 in September 1997 for the sale of
75% of its interest in the joint  venture and received a final payment of $6,000
on October 1, 1998 for the remaining  25% of its  interest.  As of September 18,
1997, the Partnership's remaining position in the joint venture was converted to
a  limited  partnership   interest,   and  the  Partnership  had  no  continuing
involvement in the  operations of the Lincoln  Garden joint venture  through the
date in 1998 when its limited  partnership  interest  was  redeemed  for $6,000.
Consequently,  the  Partnership  wrote off the remaining  equity method carrying
value of its  investment in Lincoln  Garden during fiscal 1998.  This  write-off
resulted in a gain of  $2,528,000  because the  venture's  prior  equity  method
losses had exceeded the total of the  Partnership's  investments and advances in
the joint venture.

     Summarized  operations of the unconsolidated joint venture, for the periods
indicated, are as follows:


<PAGE>


                         Condensed Summary of Operations
             For the three and nine months ended September 30, 1997
                                 (in thousands)

                                  Three Months Ended     Nine Months Ended
                                     September  30,        September 30,      
                                  -------------------    -----------------
                                         1997                  1997
                                         ----                  ----

    Rental revenues                   $   275             $    776
    Interest and other income              12                   43
                                      -------             --------
                                          287                  819

    Property operating expenses           143                  465
    Interest expense                      128                  375
    Depreciation and amortization          74                  205
                                      -------             --------
                                          345                1,045
                                      -------             --------
    Net loss                          $   (58)            $   (226)
                                      =======             ========

    Net loss:
      Partnership's share of
        net loss                      $   (38)            $   (147)
      Co-venturer's share of
         net loss                         (20)                (79)
                                      --------            --------
                                      $   (58)            $   (226)
                                      =======             ========

               Reconciliation of Partnership's Share of Operations
              For the three and nine months ended December 31, 1997
                                 (in thousands)

                                  Three Months Ended     Nine Months Ended
                                     December 31,          December 31,  
                                  ------------------     ------------------
                                         1997                  1997
                                         ----                  ----

     Partnership's share of 
        operations, as shown above      $  (38)              $  (147)
     Amortization of excess basis           (1)                   (3)
                                        ------               -------
     Partnership's share of
        unconsolidated
        venture's loss                  $  (39)              $  (150)
                                        ======               =======


4.  Operating Investment Properties
    -------------------------------

      As of  December  31,  1998,  the  Partnership  has  an  investment  in one
consolidated  joint  venture  partnership  (two at March 31, 1998) which owns an
operating  investment  property  as more fully  described  in the  Partnership's
Annual  Report.  As discussed  further in Note 1, the  consolidated  Lakes joint
venture sold its operating  investment  property on August 20, 1998, leaving the
consolidated  Harbour Pointe joint venture as the  Partnership's  only remaining
real estate investment. The consolidated ventures have December 31 year-ends for
both tax and financial reporting purposes. Accordingly, the Partnership's policy
is to report the financial  position,  results of  operations  and cash flows of
these ventures on a three-month lag. In accordance with the Partnership's policy
of recognizing  significant lag-period  transactions in the period in which they
occur, the Partnership  accelerated the recognition of the operating  results of
The Lakes Joint  Venture and recorded a gain of  $51,901,000  on the sale of the
venture's  operating  investment property during the quarter ended September 30,
1998. All material  transactions  between the Partnership  and the  consolidated
joint ventures have been  eliminated upon  consolidation,  except for lag-period
cash transfers.  Such lag period cash transfers are accounted for as advances to
or from consolidated ventures on the accompanying balance sheets.

      As discussed in the Partnership's  Annual Report, the Partnership acquired
an interest in 71st Street  Housing  Partners,  Ltd., a joint venture  formed to
develop,  own and operate the Harbour Pointe  Apartments,  a 234-unit  two-story
garden apartment  complex located in Bradenton,  Florida,  on December 16, 1985.
Pursuant to an Amended and Restated  Agreement of the Limited  Partnership dated
August 4, 1989, the general partner interests of the co-venturers were converted
to limited partnership interests. As a result of the amendment, the Partnership,
as the sole general partner, assumed control of the operations of the property.

      The  Lakes  Joint  Venture  ("Venture")  was  formed  on May  30,  1985 in
accordance  with the  provisions of the laws of the State of California  for the
purpose of developing, owning and operating The Lakes at South Coast Apartments,
a 770-unit  apartment  complex located in Costa Mesa,  California.  As discussed
further in the Annual  Report,  on September  26, 1991,  in  conjunction  with a
refinancing  and  modification  of the  Venture's  long-term  indebtedness,  the
original   co-venture  partner  transferred  its  interest  in  the  Venture  to
Development  Partners,  Inc. ("DPI"), a Delaware  corporation and a wholly-owned
subsidiary of Paine Webber  Group,  Inc.,  and withdrew  from the Venture.  As a
result of the original co-venturer's withdrawal, the Partnership assumed control
over the operations of the Venture.

      The  following  combined  summary of property  operating  expenses for the
three and nine months  ended  September  30, 1998 (in  thousands)  includes  the
expenses of the Harbour  Pointe  Apartments  through  September 30, 1998 and the
expenses of the The Lakes at South Coast Apartments through the date of the sale
on August 20, 1998. The combined property  operating  expenses for the three and
nine months ended September 30, 1997 include  expenses for the two  consolidated
joint ventures.

                                    Three Months Ended     Nine Months Ended
                                       September 30,         September 30, 
                                    ------------------    ------------------
                                    1998       1997        1998      1997
                                    ----       ----        ----      ----
      Property operating expenses:
        Repairs and maintenance   $  84     $   324      $    741    $  781
        Utilities                    18         169           372       438
        Management fees              12         100           234       300
        Other operating and
          administrative             82         547         1,065     1,502
                                  -----     -------      --------    ------
                                  $ 196     $ 1,140      $  2,412    $3,021
                                  =====     =======      ========    ======

5.  Long-term Debt

      Long-term debt on the Partnership's balance sheet at December 31, 1998 and
March 31, 1998 consists of the following (in thousands):

                                                December 31       March 31
                                                -----------       --------

     Nonrecourse  mortgage  note payable
     which   secures    Manatee   County
     Housing Finance  Authority  Revenue
     Refunding  Bonds. The mortgage loan
     is secured by a deed to secure debt
     and a security  agreement  covering
     the real and  personal  property of
     the Harbour  Pointe  Apartments.              $ 9,125         $ 9,125

     Developer    loan   payable   which
     secured     County    of    Orange,
     California   Tax-Exempt   Apartment
     Development   Revenue  Bonds.   The
     mortgage loan was  nonrecourse  and
     was  secured  by a  first  deed  of
     trust  plus all  future  rents  and
     income  generated  by The  Lakes at
     South Coast Apartments.                             -          75,600

     Nonrecourse  loan  payable  to bank
     secured  by a third  deed of  trust
     plus all  future  rents and  income
     generated  by The  Lakes  at  South
     Coast Apartments.                                   -             926

     Prior    indebtedness     principal
     payable to bank by The Lakes  Joint
     Venture.    This   obligation   was
     nonrecourse to the joint venture.                   -           3,411

     Deferred gain from  forgiveness  of
     debt     (net    of     accumulated
     amortization  of $2,221 at December
     31, 1997).                                          -           3,058
                                                   -------         ------- 
                                                   $ 9,125         $92,120 
                                                   =======         =======

      Mortgage loan secured by the Harbour Pointe Apartments
      ------------------------------------------------------

      Original  financing for construction of the Harbour Pointe  Apartments was
provided  through  $9,200,000 of Multi-Family  Housing  Mortgage  Revenue Bonds,
Series 1985 E due December 1, 2007 (the  original  Bonds)  issued by the Manatee
County  Housing  Finance  Authority  which bore  interest  at 8.25% plus a 1.25%
letter of credit fee. An amount of $75,000 was paid on the original  bonds prior
to the  refinancing.  The original bond issue was refinanced on May 1, 1990 with
$9,125,000 Weekly  Adjustable/Fixed  Rate Multi-Family Housing Revenue Refunding
Bonds, Series 1990A, due December 1, 2007 (the Bonds).

      The interest  rate on the Bonds is adjusted  weekly to a minimum rate that
would be necessary to remarket the Bonds in a secondary  market as determined by
a bank remarketing agent. During calendar 1997, the interest rate averaged 3.78%
(3.62% in 1996). The Bonds are secured by the Harbour Pointe  Apartments.  As of
September 30, 1998 and December 31, 1997, the fair value of this debt obligation
approximated its carrying value.

      Interest on the  underlying  bonds is  intended to be exempt from  federal
income tax pursuant to Section 103 of the Internal  Revenue  Code. In connection
with obtaining the mortgage,  the  partnership  executed a Land Use  Restriction
Agreement with the Manatee  County Housing  Finance  Authority  which  provides,
among other things,  that  substantially all of the proceeds of the Bonds issued
be  utilized to finance  multi-family  housing of which 20% or more of the units
are to be leased to low and  moderate  income  families  as  established  by the
United States Department of Housing and Urban Development. In the event that the
underlying Bonds do not maintain their tax-exempt status, whether by a change in
law  or by  noncompliance  with  the  rules  and  regulations  related  thereto,
repayment of the note may be accelerated.

      Pursuant to the financing  agreement,  a bank issued an irrevocable letter
of credit to the Bond trustee in the joint  venture's  name for  $9,247,500.  An
annual fee equal to 1% of the letter of credit  balance was  payable  monthly to
the extent of net cash operating  income  available to pay such fees. The letter
of credit was scheduled to expire on December 15, 1997.  Effective  December 15,
1997,  the bank  extended the letter of credit  through  December 15, 2000.  The
agreement  provides  for an annual fee equal to 1.25% per annum on the letter of
credit.  In  addition,  the joint  venture is  required to make  quarterly  bond
sinking fund deposits of $60,000  beginning on February 15, 1998 under the terms
of the letter of credit.  Also pursuant to the  agreement,  the joint venture is
required to make  payments  equal to 75% of annual net cash flow,  as defined in
the agreement to serve as additional collateral. Any funds held will be released
upon the termination of the letter of credit,  payment of the outstanding  bonds
or the achievement of a 75% loan-to-value ratio.

      Debt secured by The Lakes at South Coast Apartments
      ---------------------------------------------------

      Original financing for construction of The Lakes at South Coast Apartments
was provided from a developer  loan in the amount of  $76,000,000  funded by the
proceeds of a public offering of tax-exempt apartment development revenue bonds.
The Venture was in default of the developer  loan beginning in December 1989 for
failure  to make  full and  timely  payments  on the  loan.  As a result  of the
Venture's default,  the required semi-annual interest and principal payments due
to the bond holders  through June of 1991 were made by the bank which had issued
an irrevocable  letter of credit securing the bonds. Under the terms of the loan
agreement,  the Venture was  responsible  for  reimbursing  the letter of credit
issuer  for  any  draws  made  against  the  letter  of  credit  which  totalled
$7,748,000.

      The  original  bond  issue was  refinanced  during  1991 and the  original
developer loan was  extinguished.  The new developer loan (1991 Developer Loan),
in the amount of $75,600,000, was payable to the County of Orange and was funded
by the  proceeds  of a  public  offering  of  tax-exempt  apartment  development
revenues bonds issued, at par, by the County of Orange,  California in September
1991.  Principal was payable upon maturity on December 1, 2006.  Interest on the
bonds was  variable,  with the rate  determined  weekly by a  remarketing  agent
(ranging from 2.95% to 4.50% during calendar  1997),  and was payable in arrears
on the first of each month. As of December 31, 1997, the fair value of this debt
obligation  approximated  its carrying  value.  As discussed in Note 1, the bond
issue was assumed by the buyer of The Lakes at South Coast  Apartments on August
20, 1998.

      The loan was  secured by a first  deed of trust plus all future  rents and
income  generated by the  operating  investment  property.  Bond  principal  and
interest  payments were secured by an  irrevocable  letter of credit issued by a
bank in the amount of $76,569,000,  expiring  December 15, 1998. The bank letter
of credit was  secured  by a second  deed of trust on the  operating  investment
property and future rents and income from the operating investment property. The
Venture  paid an annual  letter of credit  fee equal to 1.3% of the  outstanding
amount,  payable  83%  monthly  with  the  remaining  17%  deferred  and paid in
accordance  with the  Reimbursement  Agreement  (Unpaid Accrued Letter of Credit
Fees). Such Unpaid Accrued Letter of Credit Fees were $1,863,000 at December 31,
1997.  Unpaid Accrued Letter of Credit Fees of $2,011,000 were repaid out of the
sales proceeds from The Lakes on August 20, 1998.

      In conjunction  with the 1991 Developer  Loan, the Venture  entered into a
Reimbursement   Agreement  with  the  letter  of  credit  issuer  regarding  the
unreimbursed  letter of credit  draws  referred  to above.  The letter of credit
issuer agreed to forgive all outstanding  accrued interest through September 26,
1991, aggregating $1,132,000,  along with a portion of the outstanding principal
in the amount of $300,000.  In return,  the Venture made a principal  payment of
$926,000,  leaving an unpaid  balance of $6,523,000  (Prior  Indebtedness).  The
outstanding principal balance of the Prior Indebtedness bore interest payable to
the letter of credit  issuer at the rate of 11% per annum.  Interest  accrued on
the Prior  Indebtedness  from the date of closing through June 1992 was forgiven
by the letter of credit issuer.  Principal payments from available net cash flow
and the release of certain  restricted  escrow funds  described  below  totalled
$3,452,000 through August 20, 1998, leaving an outstanding  principal balance of
$3,071,000  as of August 20, 1998.  At the time of the  refinancing  the Venture
also owed the letter of credit issuer fees totalling  $2,184,000.  The letter of
credit  issuer  agreed to forgive  $1,259,000  of such unpaid  fees,  leaving an
unpaid balance of $925,000  (Deferred Prior Letter of Credit Fees).  The Venture
had a limited  right to defer  payment of interest  and  principal  on the Prior
Indebtedness and the Unpaid Accrued Letter of Credit Fees to the extent that the
net cash flow from  operations  was not  sufficient  after the  payment  of debt
service on the 1991 Developer Loan and the funding of certain required reserves.
The Prior  Indebtedness of $3,071,000,  deferred unpaid interest of $592,000 and
Deferred  Prior  Letter of Credit Fees of $925,000  were repaid out of the sales
proceeds from The Lakes at South Coast Apartments on August 20, 1998.

      In November 1988, a borrowing  arrangement with a bank was entered into to
provide funds for The Lakes.  The Venture obtained a line of credit secured by a
third trust deed on the subleasehold interest,  buildings and improvements,  and
rents and income in the amount of $6,300,000. Interest on the line of credit was
originally  payable  monthly  at 1-1/2%  over the  Citibank,  N.A.  prime  rate.
However,  because of the default status of this obligation during 1990, interest
had  accrued at a rate of prime  plus 4% through  September  26,  1991.  Accrued
interest on the line of credit,  which was payable to the same bank which issued
the  letter of credit in  connection  with the  bonds,  totalled  $1,841,000  at
September 26, 1991. The outstanding  principal balance of the line of credit was
$6,127,000 as of September 26, 1991. In conjunction  with the refinancing of the
developer  loan  described  above,  the  lender  agreed  to  forgive  all of the
outstanding accrued interest at the date of the refinancing. Interest accrued on
the  outstanding  principal  balance  at the  rate  of 11% per  annum  beginning
September  27,  1991.  Payment of interest  and  principal on the line of credit
borrowings,  prior to a sale or other disposition of the operating property, was
limited to the extent of  available  cash flow after the payment of debt service
on the developer loan and the funding of certain required reserves.  The line of
credit  borrowings  was paid in full from  available net cash flow during fiscal
1999 prior to the sale of the property.  Deferred  unpaid interest of $1,134,000
was repaid out of the sales proceeds from The Lakes at South Coast Apartments on
August 20, 1998.

      The 1991 restructuring of the Prior  Indebtedness,  the Deferred Letter of
Credit Fees and the line of credit borrowings, as described above, was accounted
for in  accordance  with  Statement of Financial  Accounting  Standards  No. 15,
"Accounting  by  Debtors  and  Creditors  for  Troubled  Debt   Restructurings".
Accordingly,  the forgiveness of debt, aggregating $5,279,000,  was deferred and
was being  amortized as a reduction of interest  expense  prospectively  using a
method  approximating the effective interest method over the estimated remaining
term of the  Venture's  indebtedness.  At March  31,  1998,  $3,058,000  of such
forgiven  debt  (net  of   accumulated   amortization)   was  reflected  on  the
accompanying  balance  sheet  and  $204,000  and  $257,000  was  amortized  as a
reduction of interest expense in the  accompanying  statements of operations for
fiscal  1999  (through  the date of the sale) and the  nine-month  period  ended
September  30,  1997,   respectively.   The  remaining  unamortized  balance  of
$2,854,000 was recognized as an  extraordinary  gain on forgiveness of debt upon
the sale of The Lakes on August 20, 1998.



<PAGE>



                   PAINEWEBBER DEVELOPMENT PARTNERS FOUR, LTD.

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information Relating to Forward-Looking Statements
--------------------------------------------------

      The following  discussion of financial condition includes  forward-looking
statements  which  reflect  management's  current  views with  respect to future
events and  financial  performance  of the  Partnership.  These  forward-looking
statements  are  subject to certain  risks and  uncertainties,  including  those
identified  in Item 7 of the  Partnership's  Annual  Report on Form 10-K for the
year ended March 31, 1998 under the heading  "Certain  Factors  Affecting Future
Operating  Results",  which could cause actual results to differ materially from
historical  results  or  those  anticipated.   The  words  "believe,"  "expect,"
"anticipate,"  and  similar  expressions  identify  forward-looking  statements.
Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements,  which were made based on facts and conditions as they existed as of
the date of this report.  The  Partnership  undertakes no obligation to publicly
update or revise  any  forward-looking  statements,  whether  as a result of new
information, future events or otherwise.

Liquidity and Capital Resources
-------------------------------

      As discussed further in the Annual Report, subsequent to the resolution of
the default status of the debt secured by The Lakes at South Coast Apartments in
fiscal 1998,  management  analyzed whether it would be in the Limited  Partners'
best  interests  to  continue  to hold the two  remaining  assets  or to  pursue
potential  sale  opportunities  with a goal of completing a  liquidation  of the
Partnership in the near term. Based on such analysis,  management concluded that
a liquidation of the  Partnership  should be undertaken if favorable  prices for
The  Lakes  and  Harbour  Pointe  could  be  achieved.  Under  the  terms of the
Partnership  Agreement,  the affirmative vote of Limited Partners who own 51% or
more of the total number of outstanding units of limited partnership interest in
the Partnership is required to approve the sale of all, or substantially all, of
the Partnership's  assets.  On May 4, 1998, the Partnership  furnished a Consent
Solicitation Statement to the Limited Partners which sought the approval to sell
the  Partnership's  two  remaining  assets and,  thereafter,  to  liquidate  and
dissolve the Partnership (collectively,  the "Sale and Liquidation").  Effective
June 18, 1998, the results of the Consent Solicitation Statement were finalized,
and the Sale and  Liquidation was approved by the required  affirmative  vote of
the  Limited  Partners.  Management's  goal  has been to  complete  the Sale and
Liquidation  by the end of calendar  year 1998.  It now appears  likely that the
Sale and Liquidation  will not be completed until the second quarter of calendar
1999. There can be no assurances,  however, that the sale of the remaining asset
and the liquidation of the Partnership will be completed within this time frame.

      As previously  reported,  management retained a national brokerage firm in
November 1997 to begin a formal marketing  program for the purpose of soliciting
proposals  to acquire  The Lakes at South  Coast  Apartments.  During the fourth
quarter of fiscal 1998,  the property was marketed  extensively.  Sales packages
were distributed to 200 international,  national, regional and local prospective
purchases.  During the quarter  ended June 30, 1998,  the  Partnership  received
offers from 14 prospective buyers.  Supplemental information on the property was
then provided to the top seven  bidders with a  requirement  that best and final
offers be returned  by April 30,  1998.  The highest  offer was from a qualified
buyer and met the  Partnership's  sale criteria.  In June 1998, the  Partnership
executed a purchase and sale agreement with this prospective buyer for an amount
in  excess  of  the  outstanding  debt  obligation.  On  August  20,  1998,  the
Partnership sold The Lakes to this unrelated third party for  $114,000,000.  The
Partnership  received net proceeds of approximately  $25,942,000 after deducting
closing costs of $2,530,000,  property proration adjustments of $2,195,000,  the
assumption  of the first  mortgage  principal  balance  of  $75,600,000  and the
payment of approximately  $7,733,000 in subordinated debt and deferred fees that
was  related to the  September  26, 1991  refinancing  and  modification  of the
original first mortgage debt. In connection with the sale, the Partnership  also
received approximately $2,136,000 as its share of the property's working capital
and escrows held in connection with the debt. The total proceeds received by the
Partnership  of  approximately  $28,078,000  was  included in a special  capital
distribution of $28,109,700,  or $675.00 per original $1,000 investment, paid on
September 9, 1998 to unitholders of record as of August 20, 1998.

      As  discussed  further in the Annual  Report,  on  September  18, 1997 the
Partnership  agreed to sell its  general  partnership  interest  in the  Lincoln
Garden joint venture to its  co-venture  partner for $25,000.  In effecting such
sale,  management  considered  that  (i)  during  recent  years,  the  operating
performance of Lincoln Garden had  deteriorated,  (ii) since its inception,  the
Partnership  had not received  cash flow from this  investment  and no cash flow
from this  asset  was  projected  for the  future,  and (iii) the joint  venture
partner had a priority  position in the joint venture due to certain loans which
it advanced to the joint venture to cover prior operating deficits. In addition,
management  determined that the  outstanding  first mortgage loan balance on the
Lincoln  Garden  property  was in excess  of its  market  value and that  future
increases in the property's  value were unlikely.  Because the property  offered
little or no opportunity for a return of equity,  the  Partnership  negotiated a
sale of its position to its joint venture partner for a nominal amount. The sale
was  structured  in two parts to minimize the negative tax  consequences  to the
Lincoln Garden joint venture.  Accordingly,  the Partnership received $19,000 in
September  1997 for the sale of 75% of its  interest  in the joint  venture  and
received a final  payment of $6,000 on October 1, 1998 for the  remaining 25% of
its interest. As of September 18, 1997, the Partnership's  remaining position in
the joint  venture was  converted  to a limited  partnership  interest,  and the
Partnership  had no  continuing  involvement  in the  operations  of the Lincoln
Garden  joint  venture  through  the date in 1998 when its  limited  partnership
interest was redeemed for $6,000.  Consequently,  the Partnership  wrote off the
remaining  equity method  carrying  value of its  investment  in Lincoln  Garden
during fiscal 1998. This write-off  resulted in a gain of $2,528,000 because the
venture's prior equity method losses had exceeded the total of the Partnership's
investments and advances in the joint venture.

      With the sale of The Lakes and the final  redemption of the  Partnership's
interest  in the Lincoln  Garden  joint  venture,  the  Partnership  now has one
remaining  real estate  investment,  the Harbour Pointe  Apartments,  a 234-unit
property located in Bradenton, Florida. The property averaged an occupancy level
of 94% for the quarter ended December 31, 1998. As previously reported, in early
fiscal 1998 the Partnership  initiated discussions with the issuer of the letter
of credit on the Harbour  Pointe  Apartments,  which was  scheduled to expire on
December  15,  1997.  During the second  quarter of fiscal  1998,  the letter of
credit issuer approved the joint  venture's  application for an extension of the
letter of credit  through  December  2000. The new terms of the letter of credit
agreement require the commencement of regular bond sinking fund contributions of
$240,000 per annum to be paid in  quarterly  installments  of $60,000  beginning
February 15,  1998.  The terms of the  extension  also  increased  the letter of
credit fee from 1% to 1.25% per annum on the  outstanding  amount of $9,247,500,
payable on a quarterly basis  beginning  February 15, 1998. The joint venture is
also  required to make annual  deposits to a  lender-controlled  escrow  account
equal to 75% of Harbour Pointe's annual net cash flow, as defined, for each year
beginning in calendar  1998.  All funds  deposited to the escrow account will be
returned  to  the  joint  venture  upon  the  earlier  of  the  termination  and
surrendering  of the  letter  of credit to the  lender or the  achievement  of a
loan-to-value  ratio  equal to or less than  75%,  as  determined  solely by the
lender.

      Recent improvements in market conditions and in the operating  performance
of the Harbour Pointe  Apartments  have increased the estimated  market value of
the  property  to a level which  exceeds the  outstanding  first  mortgage  loan
balance.  Accordingly,  during the fourth quarter of fiscal 1998 the Partnership
initiated  discussions  with  several  real estate  brokerage  firms in order to
define  potential  marketing  strategies for selling the Harbour Pointe property
and solicited  marketing  proposals from three of these firms.  After  reviewing
their respective proposals and conducting extensive interviews,  the Partnership
selected  a  national  firm that is a leading  seller  of  apartment  properties
encumbered  by  tax-exempt  bond  financing.  During the first quarter of fiscal
1999, a marketing  package was finalized,  and extensive  sales efforts began in
May 1998. As a result of such efforts, several offers to purchase Harbour Pointe
were received. On August 12, 1998, a purchase and sale agreement was signed with
a prospective  buyer. This prospective buyer  subsequently  decided to terminate
the  purchase and sale  agreement  and  discontinued  its efforts to acquire the
property.  The Partnership then re-opened discussions with the other prospective
purchasers.  These  prospective  purchasers were provided with updated  property
information, and asked to submit revised offers. After reviewing the offers, the
Partnership  selected a new prospective  purchaser and negotiated a purchase and
sale  agreement.  Subsequent  to the  quarter  ended  December  31,  1998,  this
prospective  purchaser  terminated the sales contract pursuant to its terms. The
Partnership is currently in the process of re-marketing  the property.  However,
since the sale of the Harbour Pointe property  remains  contingent  upon,  among
other  things,   negotiation  of  a  definitive  sale  agreement,   satisfactory
completion of the buyer's due diligence and formal approval by a number of third
parties of the  assumption of the  tax-exempt  bonds secured by Harbour  Pointe,
there are no assurances  that the sale of the final asset and the liquidation of
the Partnership will be completed as planned.

      At December 31, 1998, the Partnership and its consolidated  joint ventures
had available cash and cash equivalents of approximately  $1,143,000.  Such cash
and cash  equivalents  will be used for the working capital  requirements of the
Partnership  and the remaining  consolidated  venture,  with the remainder to be
returned to the Limited Partners,  along with the net proceeds received from the
sale of the  final  operating  investment  property,  after the  payment  of all
liquidation-related  expenses in conjunction with the formal  liquidation of the
Partnership.  Such a liquidation is currently planned to be completed by the end
of the second quarter of calendar 1999.

      As noted above, the Partnership  expects to be liquidated prior to the end
of calendar 1999.  Notwithstanding  this, the  Partnership  believes that it has
made all necessary  modifications to its existing systems to make them year 2000
compliant and does not expect that  additional  costs  associated with year 2000
compliance,  if any, will be material to the Partnership's results of operations
or financial position.
<PAGE>

Results of Operations
Three Months Ended December 31, 1998
------------------------------------

      For the three months ended December 31, 1998, the  Partnership  reported a
net loss of $69,000 as compared to net income of $2,019,000  for the same period
in the prior year. This unfavorable change in net income (loss) is primarily the
result of a $2,528,000 gain recognized on the sale of the Partnership's interest
in the Lincoln  Garden joint  venture in September  1997,  as discussed  further
above.  This  unfavorable  change in net income (loss) was partially offset by a
decrease in the  Partnership's  operating loss of $425,000 and a decrease in the
Partnership's   share  of   unconsolidated   venture's  loss  of  $39,000.   The
Partnership's  operating loss,  which includes the  consolidated  results of the
Lakes and Harbour  Pointe joint ventures for the three months ended December 31,
1997 includes only the consolidated  results of the Harbour Pointe joint venture
in the current  three-month  period.  As noted above, the consolidated  Lakes at
South  Coast  operating  investment  property  was sold on August 20,  1998.  In
accordance with the  Partnership's  policy to recognize  significant  lag-period
transactions in the period in which they occur, the Partnership  accelerated the
recognition  of the  operating  results of The Lakes  Joint  Venture  during the
quarter ended  September 30, 1998 and  recognized a gain of  $51,901,000  on the
sale of the operating investment property.  The major portion of the decrease in
the  Partnership's operating  loss for the  current  three-month  period  can be
attributed to the operations of The Lakes Joint Venture which  contributed a net
operating loss of $391,000 for the three months ended December 31, 1997.

      The   Partnership's   share  of   unconsolidated   venture's  loss,  which
represented the operating results of the Lincoln Garden joint venture, decreased
by $39,000 as a result of the sale of the Partnership's  interest in the Lincoln
Garden joint venture in September 1997, as discussed further above.

Nine Months Ended December 31, 1998
-----------------------------------

      As noted above, the consolidated Lakes at South Coast operating investment
property  was sold on August 20,  1998.  In  accordance  with the  Partnership's
policy to recognize significant  lag-period  transactions in the period in which
they occur, the Partnership accelerated the recognition of the operating results
of The Lakes Joint  Venture  during the  quarter  ended  September  30, 1998 and
recognized  a gain  of  $51,901,000  on the  sale  of the  operating  investment
property. The Partnership reported net income of $54,653,000 for the nine months
ended  December 31, 1998, as compared to net income of  $1,505,000  for the same
period  in  the  prior  year.  This  favorable  change  of  $53,148,000  in  the
Partnership's net operating results was primarily due to the gain on the sale of
The Lakes  operating  investment  property and a related  extraordinary  gain on
forgiveness of debt. The 1991  restructuring of the debt secured by The Lakes at
South Coast  Apartments  was  accounted  for in  accordance  with  Statement  of
Financial  Accounting Standards No. 15, "Accounting by Debtors and Creditors for
Troubled Debt Restructurings". Accordingly, the forgiveness of debt, aggregating
$5,279,000,  was  deferred  and was being  amortized  as a reduction of interest
expense prospectively using a method approximating the effective interest method
over the estimated remaining term of the Venture's  indebtedness.  The remaining
unamortized  balance of $2,854,000  was recognized as an  extraordinary  gain on
forgiveness of debt upon the sale of The Lakes on August 20, 1998. The favorable
changes in net income were partially  offset by a $2,528,000  gain recognized in
the prior period on the sale of the Partnership's interest in the Lincoln Garden
joint venture in September 1997, as discussed further above.

     In  addition  to the  gain  recognized  on the  sale of The  Lakes  and the
extraordinary  gain from forgiveness of debt, the Partnership's  increase in net
income for the current  nine-month  period was partly due to a $823,000 decrease
in the Partnership's operating loss and a $150,000 decrease in the Partnership's
share of  unconsolidated  venture's  loss as  compared to the same period in the
prior year. The current year's  results  include seven and two-thirds  months of
operating results for The Lakes  consolidated  joint venture as compared to nine
months of operating  results for The Lakes for the same period in the prior year
as a result of the sale of The Lakes  property on August 20, 1998. The favorable
change in the Partnership's  operating loss can be attributed  primarily to this
shorter  period of  operations  for The Lakes Joint Venture in the current year.
The Lakes Joint Venture was generating  operating  losses,  after  depreciation,
prior to its sale. In addition,  interest income increased by $86,000 mainly due
to interest  earned on the net proceeds  from the sale of The Lakes,  which were
temporarily  invested  pending the distribution to the Limited  Partners,  which
occurred on September  9, 1998.  The lower  operating  losses of The Lakes Joint
Venture and the increase in interest income were partially offset by an increase
in general and  administrative expenses of $119,000  for the current  nine-month
period.   General  and  administrative   expenses  increased  primarily  due  to
additional  professional  fees incurred related to the sale of the Partnership's
operating investment properties and liquidation-related costs. The Partnership's
share of unconsolidated  venture's loss, which represented the operating results
of the Lincoln  Garden joint  venture,  decreased by $150,000 as a result of the
sale of the  Partnership's  interest  in the  Lincoln  Garden  joint  venture in
September 1997, as discussed further above.

<PAGE>


                                     PART II
                                Other Information

Item 1. Legal Proceedings

                        NONE

Item 2. through 5.      NONE


Item 6. Exhibits and Reports on Form 8-K

(a)   Exhibits:         NONE

(b) Reports on Form 8-K:

      No reports on Form 8-K were filed by the registrant during the quarter for
which this report is filed.





<PAGE>




                   PAINEWEBBER DEVELOPMENT PARTNERS FOUR, LTD.


                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the  Partnership  has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                             PAINEWEBBER DEVELOPMENT
                               PARTNERS FOUR, LTD.


                                    By:  Fourth Development Fund Inc.
                                         ----------------------------
                                         Managing General Partner
 



                                    By:  /s/ Walter V. Arnold    
                                         -------------------- 
                                         Walter V. Arnold
                                         Senior Vice President and
                                         Chief Financial Officer






Dated:  February 22, 1999