<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 March 31, 1996
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 (I.R.S. Employer
of 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>
March 31, December 31,
1996 1995
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Property held for sale $ 7,058,194 $ 7,050,721
Cash and cash equivalents 683,101 838,954
Other assets 5,264 7,782
----------- ------------
Total assets $ 7,746,559 $ 7,897,457
----------- ------------
----------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 141,463 $ 100,490
Unearned rental income 81,954 81,263
Accrued real estate taxes 61,108 238,178
Due to affiliates, net 34,560 33,171
Deposits due to tenants 27,227 28,635
----------- ------------
Total liabilities 346,312 481,737
----------- ------------
Partners' capital
Limited partners (29,187 limited and equivalent units issued and
outstanding) 7,305,374 7,320,693
General partners 94,873 95,027
----------- ------------
Total partners' capital 7,400,247 7,415,720
----------- ------------
Total liabilities and partners' capital $ 7,746,559 $ 7,897,457
----------- ------------
----------- ------------
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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>
Three months
ended March 31,
---------------------
1996 1995
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
REVENUES
Rental income $603,124 $584,933
Interest 4,537 4,669
-------- --------
607,661 589,602
-------- --------
EXPENSES
Property operating 181,965 179,468
General and administrative 137,127 71,116
Real estate taxes 59,104 56,394
Depreciation -- 85,506
-------- --------
378,196 392,484
-------- --------
Net income $229,465 $197,118
-------- --------
-------- --------
ALLOCATION OF NET INCOME
Limited partners $227,170 $195,147
-------- --------
-------- --------
General partners $ 2,295 $ 1,971
-------- --------
-------- --------
Net income per limited partnership unit $ 7.82 $ 6.72
-------- --------
-------- --------
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</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1995 $7,320,693 $95,027 $ 7,415,720
Net income 227,170 2,295 229,465
Distributions (242,489) (2,449 ) (244,938)
---------- -------- -----------
Partners' capital--March 31, 1996 $7,305,374 $94,873 $ 7,400,247
---------- -------- -----------
---------- -------- -----------
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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>
Three months
ended March 31,
-----------------------
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income and deposits received $ 604,925 $ 583,024
Interest received 4,537 4,669
Property operating expenses paid (183,386) (127,436)
Real estate taxes paid (236,174) (262,909)
General and administrative expenses paid (93,344) (28,691)
--------- ---------
Net cash provided by operating activities 96,558 168,657
CASH FLOWS FROM INVESTING ACTIVITIES
Property improvements (7,473) (12,858)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid to partners (244,938) (244,936)
--------- ---------
Net decrease in cash and cash equivalents (155,853) (89,137)
Cash and cash equivalents at beginning of period 838,954 760,357
--------- ---------
Cash and cash equivalents at end of period $ 683,101 $ 671,220
--------- ---------
--------- ---------
- ---------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 229,465 $ 197,118
--------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation -- 85,506
Changes in:
Other assets 2,518 1,186
Accounts payable and accrued expenses 40,973 69,131
Due to affiliates, net 1,389 25,326
Accrued real estate taxes (177,070) (206,515)
Unearned rental income 691 (3,623)
Deposits due to tenants (1,408) 528
--------- ---------
Total adjustments (132,907) (28,461)
--------- ---------
Net cash provided by operating activities $ 96,558 $ 168,657
--------- ---------
--------- ---------
- ---------------------------------------------------------------------------------------------------
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
March 31, 1996
(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 March 31,
1996 and the results of its operations and its cash flows for the three months
ended March 31, 1996 and 1995. 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, 1995.
On December 15, 1995, the Management Committee of the Partnership determined
to seek bids for all the properties held by the Partnership. The Partnership has
received bids for all the properties and is engaged in specific negotiations for
the sale of all such properties. However, there can be no assurances that such
negotiations will lead to the execution of an agreement or that any transactions
will be consummated. The limited partners will be advised if the Partnership
enters into a definitive agreement to sell the properties. Accordingly,
effective December 31, 1995, the Partnership has reclassified its properties to
held for sale and has ceased depreciating the properties for financial statement
purposes only. Properties held for sale are recorded at the lower of the
carrying amount or the estimated fair value less costs to sell.
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 three months ended March 31, 1996 and 1995 were approximately $27,000
and $31,000, respectively.
Affiliates of Messrs. Watson and Taylor, the individual General Partners,
also perform certain administrative and monitoring functions on behalf of the
Partnership. Relating to the reimbursement of these services, the Partnership
recorded $5,280 and $1,250 for the three months ended March 31, 1996 and 1995,
respectively.
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. Accordingly, the 147 units owned by PBP
have been excluded from the calculation of net income per limited partnership
unit and distributions per limited partnership unit.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 406
limited partnership units at March 31, 1996.
C. Subsequent Event
In May 1996, distributions of approximately $243,000 and $2,000 were paid to
the limited partners and to the General Partners, respectively, for the quarter
ended March 31, 1996.
5
<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. On December 15, 1995,
the Management Committee of the Partnership determined to seek bids for all the
properties held by the Partnership. The Partnership has received bids for all
the properties and is engaged in specific negotiations for the sale of all such
properties. However, there can be no assurances that such negotiations will lead
to the execution of an agreement or that any transactions will be consummated.
The limited partners will be advised if the Partnership enters into a definitive
agreement to sell the properties.
During the three months ended March 31, 1996, the Partnership's cash and cash
equivalents decreased by approximately $156,000 due to distributions to partners
and capital expenditures in excess of cash flow from property operations.
Distributions made during the three months ended March 31, 1996 totaled
approximately $245,000, of which $243,000 was paid to the limited partners and
$2,000 to the General Partners. These distributions were funded from current and
prior periods' property operations.
The Partnership's ability to make future distributions to the partners and
the amount that may be made will be affected not only by the amount of cash
generated by the Partnership from the operations of its properties, including
the amount expended for property improvements, but also by the amount from and
the timing of any sale of the Partnership's properties.
Results of Operations
Average occupancy rates for the three months ended March 31, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
March 31,
--------------
<S> <C> <C>
Property 1996 1995
------------------------------------------------------------------------------------
Hempstead 88.2% 88.1%
Pasadena 85.8 85.9
Northwest Highway 84.7 89.2
I-35 87.5 91.3
Santiago 90.4 95.3
Reinli 92.5 93.1
------------------------------------------------------------------------------------
(Average occupancy rates are calculated by averaging the monthly occupancies deter-
mined by dividing occupied square footage by available square footage as of each
month-end.)
</TABLE>
Net income increased by $32,000 for the three months ended March 31, 1996 as
compared to the corresponding period in 1995 primarily for the reasons discussed
below.
Rental income increased by approximately $18,000 for the three months ended
March 31, 1996 as compared to the corresponding period in 1995. The increase in
rental income is primarily due to higher rental rates at all of the properties
except Hempstead where rental rates decreased slightly. The higher rental rates
more than offset the decrease in average occupancies at most of the properties.
General and administrative expenses increased by approximately $66,000 for
the three months ended March 31, 1996 as compared to the corresponding period in
1995. This variance was primarily due to professional fees and other costs
relating to the anticipated solicitation of the consent of the limited partners
for the potential sale of the properties.
Depreciation expense decreased by approximately $86,000 for the three months
ended March 31, 1996 as compared to the corresponding period in 1995 due to the
reclassification of the Partnership's properties from held for use to held for
sale as of December 31, 1995. Under generally accepted accounting principles,
such properties are no longer depreciated and therefore no depreciation expense
has been recorded for the three months ended March 31, 1996.
6
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings--None
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)
27.1 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
7
<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/ Eugene D. Burak Date: May 15, 1996
----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the
Registrant
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for P-B Watson & Taylor Ltd I
and is qualified in its entirety by
reference to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000708320
<NAME> P-B Watson & Taylor I
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Mar-31-1996
<PERIOD-TYPE> 3-Mos
<CASH> 683,101
<SECURITIES> 0
<RECEIVABLES> 5,264
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 688,365
<PP&E> 12,996,747
<DEPRECIATION> (5,938,553)
<TOTAL-ASSETS> 7,746,559
<CURRENT-LIABILITIES> 346,312
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,400,247
<TOTAL-LIABILITY-AND-EQUITY> 7,746,559
<SALES> 0
<TOTAL-REVENUES> 607,661
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 378,196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 227,170
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 227,170
<EPS-PRIMARY> 7.82
<EPS-DILUTED> 0
</TABLE>
