<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
OR
/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number: 0-12048
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-I
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Texas 75-1861221
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Seaport Plaza, New York, N.Y. 10292-0116
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
N/A
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check CK whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _CK_ No __
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-I
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Investment in property:
Land $ 2,960,536 $ 2,960,536
Buildings and improvements 9,441,950 9,347,790
Furniture, fixtures and equipment 499,492 489,045
Less: Accumulated depreciation (5,753,779) (5,580,646)
----------- ------------
Net investment in property 7,148,199 7,216,725
Cash and cash equivalents 670,850 760,357
Other assets 5,183 9,069
----------- ------------
Total assets $ 7,824,232 $ 7,986,151
----------- ------------
----------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accrued real estate taxes $ 114,729 $ 227,374
Unearned rental income 84,294 84,236
Accounts payable and accrued expenses 70,913 81,025
Due to affiliates, net 34,766 29,183
Deposits due to tenants 28,238 23,071
----------- ------------
Total liabilities 332,940 444,889
----------- ------------
Contingencies
Partners' capital
Limited partners (29,187 limited and equivalent units
issued and outstanding) 7,395,510 7,444,980
General partners 95,782 96,282
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Total partners' capital 7,491,292 7,541,262
----------- ------------
Total liabilities and partners' capital $ 7,824,232 $ 7,986,151
----------- ------------
----------- ------------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
2
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-I
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six months Three months
ended June 30, ended June 30,
------------------------- ---------------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
REVENUES
Rental income $1,184,120 $1,127,847 $599,187 $573,981
Interest 9,213 6,896 4,544 3,494
---------- ---------- -------- --------
1,193,333 1,134,743 603,731 577,475
---------- ---------- -------- --------
EXPENSES
Property operating 348,360 314,855 168,892 151,210
Depreciation 173,132 164,641 87,626 82,489
General and administrative 119,220 164,989 48,104 72,904
Real estate taxes 112,716 115,291 56,322 57,799
---------- ---------- -------- --------
753,428 759,776 360,944 364,402
---------- ---------- -------- --------
Net income $ 439,905 $ 374,967 $242,787 $213,073
---------- ---------- -------- --------
---------- ---------- -------- --------
ALLOCATION OF NET INCOME
Limited partners $ 435,506 $ 371,217 $240,359 $210,942
---------- ---------- -------- --------
---------- ---------- -------- --------
General partners $ 4,399 $ 3,750 $ 2,428 $ 2,131
---------- ---------- -------- --------
---------- ---------- -------- --------
Net income per limited partnership unit $ 15.00 $ 12.78 $ 8.28 $ 7.26
---------- ---------- -------- --------
---------- ---------- -------- --------
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</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1994 $7,444,980 $96,282 $ 7,541,262
Net income 435,506 4,399 439,905
Distributions (484,976) (4,899) (489,875)
---------- -------- -----------
Partners' capital--June 30, 1995 $7,395,510 $95,782 $ 7,491,292
---------- -------- -----------
---------- -------- -----------
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-I
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months
ended June 30,
--------------------------
1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $ 1,193,231 $1,127,277
Interest received 9,213 6,896
Property operating expenses paid (363,356) (311,602)
Real estate taxes paid (225,361) (230,376)
General and administrative expenses paid (108,753) (210,185)
----------- ----------
Net cash provided by operating activities 504,974 382,010
CASH FLOWS FROM INVESTING ACTIVITIES
Property improvements (104,606) (25,284)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (489,875) (492,245)
----------- ----------
Net decrease in cash and cash equivalents (89,507) (135,519)
Cash and cash equivalents at beginning of period 760,357 855,162
----------- ----------
Cash and cash equivalents at end of period $ 670,850 $ 719,643
----------- ----------
----------- ----------
- ---------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 439,905 $ 374,967
----------- ----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 173,132 164,641
Changes in:
Other assets 3,886 5,158
Accounts payable and accrued expenses (10,112) (78,432)
Accrued real estate taxes (112,645) (115,085)
Due to affiliates, net 5,583 36,489
Unearned rental income 58 (5,148)
Deposits due to tenants 5,167 (580)
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Total adjustments 65,069 7,043
----------- ----------
Net cash provided by operating activities $ 504,974 $ 382,010
----------- ----------
----------- ----------
- ---------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF FINANCING ACTIVITIES
Distributions to partners $ (489,875) $ (476,672)
Decrease in distribution payable -- (15,573)
----------- ----------
Distributions paid to partners $ (489,875) $ (492,245)
----------- ----------
----------- ----------
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The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-I
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
A. General
These financial statements have been prepared without audit. In the opinion
of Prudential-Bache Properties, Inc. (``Managing General Partner'') (``PBP''),
the financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position of
Prudential-Bache/Watson & Taylor, Ltd.-I (the ``Partnership'') as of June 30,
1995, the results of its operations for the six and three months ended June 30,
1995 and 1994 and its cash flows for the six months ended June 30, 1995 and
1994. However, the operating results for the interim periods may not be
indicative of the results expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1994.
Certain balances for the prior period have been reclassified to conform with
the current financial statement presentation.
B. Related Parties
PBP and its affiliates perform services for the Partnership which include,
but are not limited to: accounting and financial management; transfer and
assignment functions; asset management; investor communications; printing and
other administrative services. PBP and its affiliates receive reimbursements for
costs incurred in connection with these services, the amount of which is limited
by the provisions of the Partnership Agreement. The costs and expenses incurred
on behalf of the Partnership which are reimbursable to PBP and its affiliates
for the six months ended June 30, 1995 and 1994 were approximately $58,000 and
$54,000, respectively, and for the three months ended June 30, 1995 and 1994
were approximately $23,000 and $25,000, respectively.
Affiliates of Messrs. Watson and Taylor, the individual General Partners,
also perform certain administrative and monitoring functions on behalf of the
Partnership. The Partnership recorded $2,500 and $1,250 for the reimbursement of
these services for the six and three months ended June 30, 1995. The Partnership
recorded $27,250 relating to the reimbursement for these services for the period
from November 1988 through March 1994 during the three months ended March 31,
1994. An additional $1,250 was recorded during the three months ended June 30,
1994.
PBP and the individual General Partners of the Partnership own 147, 73 and 73
equivalent limited partnership units, respectively. PBP receives funds from the
Partnership, such as General Partner distributions and reimbursement of
expenses, but has waived all of its rights resulting from its ownership of
equivalent limited partnership units.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 406
limited partnership units at June 30, 1995.
C. Contingencies
There are no material legal proceedings pending by or against the Partnership
or its properties.
By order of the Judicial Panel on Multidistrict Litigation dated April 14,
1994, a number of purported class actions then pending in various federal
district courts were transferred to a single judge of the United States District
Court for the Southern District of New York and consolidated for pretrial
proceedings under the caption In re Prudential Securities Incorporated Limited
Partnerships Litigation (MDL Docket 1005). On June 8, 1994, plaintiffs in the
transferred cases filed a complaint that consolidated the previously filed
complaints and named as defendants, among others, PSI, certain of its present
and former employees and PBP. The Partnership is not named a defendant in the
consolidated complaint, but the name of the Partnership is listed as being among
the limited partnerships at issue in the case. The consolidated complaint
alleges
5
<PAGE>
<PAGE>
violations of the federal and New Jersey Racketeer Influenced and Corrupt
Organizations Act (``RICO'') statutes, fraud, negligent misrepresentation,
breach of fiduciary duties, breach of third-party beneficiary contracts and
breach of implied covenants in connection with the marketing and sales of
limited partnership interests. Plaintiffs request relief in the nature of
rescission of the purchase of securities and recovery of all consideration and
expenses in connection therewith, as well as compensation for lost use of money
invested less cash distributions; compensatory damages; consequential damages;
treble damages for defendants' RICO violations (both federal and New Jersey);
general damages for all injuries resulting from negligence, fraud, breaches of
contract, and breaches of duty in an amount to be determined at trial;
disgorgement and restitution of all earnings, profits, benefits and compensation
received by defendants as a result of their unlawful acts; costs and
disbursements of the action; reasonable attorneys' fees; and such other and
further relief as the court deems just and proper.
PSI and PBP, along with various other defendants, filed a motion to dismiss
the consolidated complaint on December 20, 1994. The motion is pending.
D. Subsequent Event
In August 1995, distributions of approximately $243,000 and $2,000 were paid
to the limited partners and General Partners, respectively, for the quarter
ended June 30, 1995.
6
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-I
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership owns and operates two mini-storage facilities and four
combination mini-storage and office/warehouse facilities. During the six months
ended June 30, 1995 the Partnership's cash and cash equivalents decreased by
approximately $89,500 primarily due to the timing of accrued real estate tax
payments as well as payments for property improvements.
Distributions made during the three months ended June 30, 1995 totaled
approximately $245,000 of which $243,000 and $2,000 were paid to the limited
partners and General Partners, respectively. These distributions were funded
from current and prior period property operations.
The Partnership's ability to make future distributions and the amount of the
distributions that may be made will be affected not only by the amount of cash
generated by the Partnership from the operations of its properties, but also by
the amount expended for property improvements and the amount set aside for
anticipated property improvements. Property improvements are currently budgeted
at approximately $105,000 for the remainder of 1995.
Results of Operations
Occupancies at June 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
Property 1995 1994
<S> <C> <C>
- ------------------------------------------
Hempstead 87.4% 89.0%
Pasadena 92.0 89.8
Northwest Highway 85.3 89.6
I-35 86.7 87.3
Santiago 98.9 98.1
Reinli 99.4 98.7
</TABLE>
(Occupancies are calculated by dividing occupied units by available units.)
Net income increased by approximately $65,000 and $30,000 for the six and
three months ended June 30, 1995 as compared to the corresponding periods in
1994 primarily for the reasons discussed below.
Rental income increased by approximately $56,000 and $25,000 for the six and
three months ended June 30, 1995 as compared to the corresponding periods in
1994. Rental income increased at Reinli, Santiago and Pasadena due to improved
rental rates and increased average occupancies. The Northwest Highway and I-35
properties also had improved rental rates which were slightly offset by
decreases in average occupancies. Revenue from the Hempstead property was flat
despite a slight decrease in rental rates.
Property operating expenses increased by approximately $34,000 and $18,000
for the six and three months ended June 30, 1995 as compared to the
corresponding periods in 1994 primarily due to increases in property level
payroll costs, utility expense at Reinli and Northwest Highway and repairs and
maintenance expense at Reinli and Santiago. Management fees also increased
because they are based on rental income.
General and administrative expenses decreased by approximately $46,000 and
$25,000 for the six and three months ended June 30, 1995 as compared to the
corresponding periods in the prior year. These decreases are primarily due
to the accrual of prior periods' general, administrative and monitoring
expense reimbursements in the first quarter of 1994 as further discussed
in Note B to the financial statements and to the timing of certain accruals
from year to year.
7
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings--This information is incorporated by reference to Note
C to the financial statements filed herewith in Item 1 of Part I of the
Registrant's Quarterly Report.
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. (a) Exhibits
Description:
4.01 Revised Certificate of Limited Partnership Interest (filed as an
exhibit to Registrant's Form 10-K for the year ended December 31,
1988 and incorporated herein by reference)
(b) Reports on Form 8-K--None
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Prudential-Bache/Watson & Taylor, Ltd.-I
By: Prudential-Bache Properties, Inc.
A Delaware corporation,
Managing General Partner
By: /s/ Robert J. Alexander Date: August 11, 1995
----------------------------------------
Robert J. Alexander
Vice President
Chief Accounting Officer for the
Registrant
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Prudential-Bache Watson & Taylor Ltd I
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000708320
<NAME> Prudential-Bache Watson & Taylor Ltd I
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Jun-30-1995
<PERIOD-TYPE> 6-Mos
<CASH> 670,850
<SECURITIES> 0
<RECEIVABLES> 5,183
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,901,978
<DEPRECIATION> (5,753,779)
<TOTAL-ASSETS> 7,824,232
<CURRENT-LIABILITIES> 332,940
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,491,292
<TOTAL-LIABILITY-AND-EQUITY> 7,824,232
<SALES> 0
<TOTAL-REVENUES> 1,193,333
<CGS> 0
<TOTAL-COSTS> 753,428
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 439,905
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
