<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 September 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
- - - - - --------------------------------------------------------------------------------
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 __
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<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>
September 30, December 31,
1995 1994
<S> <C> <C>
- - - - - -----------------------------------------------------------------------------------------------------
ASSETS
Investment in property:
Land $ 2,960,536 $ 2,960,536
Buildings and improvements 9,453,734 9,347,790
Furniture, fixtures and equipment 499,940 489,045
Less: Accumulated depreciation (5,844,786) (5,580,646)
------------- -------------
Net investment in property 7,069,424 7,216,725
Cash and cash equivalents 844,170 760,357
Other assets 8,627 9,069
------------- -------------
Total assets $ 7,922,221 $ 7,986,151
------------- -------------
------------- -------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accrued real estate taxes $ 171,052 $ 227,374
Unearned rental income 83,379 84,236
Accounts payable and accrued expenses 95,604 81,025
Due to affiliates, net 63,480 29,183
Deposits due to tenants 29,461 23,071
------------- -------------
Total liabilities 442,976 444,889
------------- -------------
Contingencies
Partners' capital
Limited partners (29,187 limited and equivalent units
issued and outstanding) 7,383,583 7,444,980
General partners 95,662 96,282
------------- -------------
Total partners' capital 7,479,245 7,541,262
------------- -------------
Total liabilities and partners' capital $ 7,922,221 $ 7,986,151
------------- -------------
------------- -------------
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</TABLE>
The accompanying notes are an integral part of these statements
2
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<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-I
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine months Three months
ended September 30, ended September 30,
------------------------- ---------------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
- - - - - ----------------------------------------------------------------------------------------------------
REVENUES
Rental income $1,803,644 $1,720,683 $619,524 $592,836
Interest 14,328 12,144 5,115 5,248
---------- ---------- -------- --------
1,817,972 1,732,827 624,639 598,084
---------- ---------- -------- --------
EXPENSES
Property operating 519,278 477,667 170,918 161,894
Depreciation 264,140 248,387 91,008 83,746
General and administrative 192,719 226,090 73,499 62,019
Real estate taxes 169,038 172,784 56,322 57,493
---------- ---------- -------- --------
1,145,175 1,124,928 391,747 365,152
---------- ---------- -------- --------
Net income $ 672,797 $ 607,899 $232,892 $232,932
---------- ---------- -------- --------
---------- ---------- -------- --------
ALLOCATION OF NET INCOME
Limited partners $ 666,069 $ 601,820 $230,563 $230,603
---------- ---------- -------- --------
---------- ---------- -------- --------
General partners $ 6,728 $ 6,079 $ 2,329 $ 2,329
---------- ---------- -------- --------
---------- ---------- -------- --------
Net income per limited partnership unit $ 22.94 $ 20.72 $ 7.94 $ 7.94
---------- ---------- -------- --------
---------- ---------- -------- --------
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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 666,069 6,728 672,797
Distributions (727,466) (7,348 ) (734,814)
---------- -------- -----------
Partners' capital--September 30, 1995 $7,383,583 $95,662 $ 7,479,245
---------- -------- -----------
---------- -------- -----------
- - - - - -----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements
3
<PAGE>
<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-I
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months
ended September 30,
--------------------------
1995 1994
<S> <C> <C>
- - - - - ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $ 1,809,619 $1,712,128
Interest received 14,328 12,144
Property operating expenses paid (532,837) (464,270)
Real estate taxes paid (225,360) (230,276)
General and administrative expenses paid (130,284) (277,307)
----------- ----------
Net cash provided by operating activities 935,466 752,419
CASH FLOWS FROM INVESTING ACTIVITIES
Property improvements (116,839) (37,715)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (734,814) (762,996)
----------- ----------
Net increase (decrease) in cash and cash equivalents 83,813 (48,292)
Cash and cash equivalents at beginning of period 760,357 855,162
----------- ----------
Cash and cash equivalents at end of period $ 844,170 $ 806,870
----------- ----------
----------- ----------
- - - - - ---------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 672,797 $ 607,899
----------- ----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 264,140 248,387
Changes in:
Other assets 442 4,333
Accounts payable and accrued expenses 14,579 (39,577)
Accrued real estate taxes (56,322) (57,492)
Due to affiliates, net 34,297 1,757
Unearned rental income (857) (11,976)
Deposits due to tenants 6,390 (912)
----------- ----------
Total adjustments 262,669 144,520
----------- ----------
Net cash provided by operating activities $ 935,466 $ 752,419
----------- ----------
----------- ----------
- - - - - ---------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF FINANCING ACTIVITIES
Distributions to partners $ (734,814) $ (747,423)
Decrease in distribution payable -- (15,573)
----------- ----------
Distributions paid to partners $ (734,814) $ (762,996)
----------- ----------
----------- ----------
- - - - - ---------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements
4
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<PAGE>
PRUDENTIAL-BACHE/WATSON & TAYLOR, LTD.-I
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
September 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 September
30, 1995, the results of its operations for the nine and three months ended
September 30, 1995 and 1994 and its cash flows for the nine months ended
September 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 nine months ended September 30, 1995 and 1994 were approximately $71,000
and $75,000, respectively, and for the three months ended September 30, 1995 and
1994 were approximately $29,000 and $21,000, 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 $25,850 relating to the reimbursement for
these services for the period from November 1988 through December 1993 during
the three months ended March 31, 1994. Beginning January 1, 1994, the
Partnership has incurred $1,250 quarterly for the continuing reimbursement of
these services.
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 September 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 violations of the federal and New Jersey Racketeer Influenced and
Corrupt Organizations Act (``RICO'')
5
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<PAGE>
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. By order dated August 29, 1995,
the transferee court granted plaintiffs' motion for temporary class
certification, preliminarily approved a settlement entered into between
plaintiffs and PBP and PSI, scheduled a fairness hearing for November 17, 1995,
approved the form and content of the notice to class members and directed that
it be provided to class members. The full amount due under the settlement
agreement has been paid by PSI.
D. Subsequent Event
In November 1995, distributions of approximately $243,000 and $2,000 were
paid to the limited partners and General Partners, respectively, for the quarter
ended September 30, 1995.
6
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<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 nine months
ended September 30, 1995 the Partnership's cash and cash equivalents increased
by approximately $84,000 due to cash flow from property operations in excess of
capital expenditures and distributions to partners.
Distributions of approximately $243,000 and $2,000 were paid in November 1995
to the limited partners and General Partners, respectively for the quarter ended
September 30, 1995. These distributions were funded from cash flow from current
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.
Results of Operations
Occupancies at September 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
Property 1995 1994
<S> <C> <C>
- - - - - ------------------------------------------
Hempstead 87.8% 89.5%
Pasadena 90.3 90.5
Northwest Highway 85.7 87.6
I-35 86.9 89.0
Santiago 92.4 93.3
Reinli 95.7 92.5
</TABLE>
(Occupancies are calculated by dividing occupied units by total units.)
Net income increased by approximately $65,000 for the nine months ended
September 30, 1995 as compared to the corresponding period in 1994 primarily for
the reasons discussed below. There was minimal change in net income for the
three months ended September 30, 1995 as compared to the corresponding period in
1994.
Rental income increased by approximately $83,000 and $27,000 for the nine and
three months ended September 30, 1995 as compared to the corresponding periods
in 1994. Rental income increased for all of the properties primarily due to
improved rental rates. In addition, the Pasadena, Santiago and Reinli properties
had an increase in average occupancies.
Property operating expenses increased by approximately $42,000 and $9,000 for
the nine and three months ended September 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. Management fees also increased because they are
based on rental income.
General and administrative expenses decreased by approximately $33,000 for
the nine months ended September 30, 1995 but increased by approximately $11,000
for the three months ended September 30, 1995 as compared to the corresponding
periods in the prior year. The nine month decrease is primarily due to the
accrual of prior periods' general, administrative and monitoring expense
reimbursements in the first quarter of 1994 as previously discussed in Note B to
the financial statements and to the timing of certain accruals from year to
year. The three month increase is attributable to higher costs associated with
administering the Partnership.
7
<PAGE>
<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. Exhibits and Reports on Form 8-K
(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>
<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
<TABLE>
<S> <C>
By: Prudential-Bache Properties, Inc.
A Delaware corporation,
Managing General Partner
By: /s/ Eugene D. Burak Date: November 14, 1995
----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the
Registrant
</TABLE>
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 I
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-1-1995
<PERIOD-END> Sep-30-1995
<PERIOD-TYPE> 9-Mos
<CASH> 844,170
<SECURITIES> 0
<RECEIVABLES> 8,627
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,914,210
<DEPRECIATION> (5,844,786)
<TOTAL-ASSETS> 7,922,221
<CURRENT-LIABILITIES> 442,976
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,479,245
<TOTAL-LIABILITY-AND-EQUITY> 7,922,221
<SALES> 0
<TOTAL-REVENUES> 1,817,972
<CGS> 0
<TOTAL-COSTS> 1,145,175
<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> 672,797
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
